William Blair Funds NCSR Certified annual shareholder report (management investment company)

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)

150 North Riverside Plaza, Chicago, IL		60606
(Address of principal executive offices)		(Zip Code)

Stephanie G. Braming, Principal Executive Officer
William Blair Funds
150 North Riverside Plaza, 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, 2017

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. December 31, 2017 Annual Reports transmitted to shareholders






	December 31, 2017
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

Mid Cap Growth Fund
An Overview from the Portfolio Managers	14
Portfolio of Investments	16

Small-Mid Cap Growth Fund
An Overview from the Portfolio Managers	17
Portfolio of Investments	19

Small-Mid Cap Value Fund
An Overview from the Portfolio Managers	20
Portfolio of Investments	22

Small Cap Growth Fund
An Overview from the Portfolio Managers	24
Portfolio of Investments	26

Small Cap Value Fund
An Overview from the Portfolio Managers	28
Portfolio of Investments	30

Global Markets Review and Outlook	32

Global Leaders Fund
An Overview from the Portfolio Managers	33
Portfolio of Investments	35

International Leaders Fund
An Overview from the Portfolio Managers	37
Portfolio of Investments	39

International Developed Plus Fund (formerly known as International Equity Fund)
An Overview from the Portfolio Managers	41
Portfolio of Investments	43

Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)
An Overview from the Portfolio Managers	45
Portfolio of Investments	47

International Growth Fund
An Overview from the Portfolio Managers	49
Portfolio of Investments	51

Institutional International Growth Fund
An Overview from the Portfolio Managers	56
Portfolio of Investments	58

December 31, 2017

William Blair Funds

International Small Cap Growth Fund
An Overview from the Portfolio Managers	63
Portfolio of Investments	65

Emerging Markets Leaders Fund
An Overview from the Portfolio Managers	69
Portfolio of Investments	71

Emerging Markets Growth Fund
An Overview from the Portfolio Managers	73
Portfolio of Investments	75

Emerging Markets Small Cap Growth Fund
An Overview from the Portfolio Managers	79
Portfolio of Investments	81

Fixed Income Market Review and Outlook	85

Bond Fund
An Overview from the Portfolio Managers	86
Portfolio of Investments	88

Income Fund
An Overview from the Portfolio Manager	92
Portfolio of Investments	94

Low Duration Fund
An Overview from the Portfolio Managers	96
Portfolio of Investments	98

Macro Allocation Fund
An Overview from the Portfolio Managers	102
Portfolio of Investments	104

Financial Statements	109

Notes to Financial Statements	127

Financial Highlights	151

Report of Independent Registered Public Accounting Firm	181

Trustees and Officers	183

Fund Expenses	189

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

Annual Report

December 31, 2017

Performance through December 31, 2017—Class N Shares (Unaudited)

					10 yr		Overall
					(or since	Inception	Morningstar
	1 yr		3 yr	5 yr	inception)	Date	Rating

Growth Fund
Class N		24.35	9.05	13.28	7.66	3/20/1946	*******
Morningstar Large Growth		27.67	11.06	15.29	8.31		Among 1,216
Russell 3000^®Growth Index		29.59	13.51	17.16	9.93		Large Growth Funds
S&P 500^®Index		21.83	11.41	15.79	8.50

Large Cap Growth Fund
Class N		30.88	12.63	16.78	8.92	12/27/1999	********
Morningstar Large Growth		27.67	11.06	15.29	8.31		Among 1,216
Russell 1000^��Growth Index		30.21	13.79	17.33	10.00		Large Growth Funds

Mid Cap Growth Fund
Class N		20.88	6.54	10.86	7.59	2/1/2006	*******
Morningstar Mid-Cap Growth		23.91	9.40	13.73	7.67		Among 562
Russell Midcap^®Growth Index		25.27	10.30	15.30	9.10		Mid-Cap Growth Funds

Small-Mid Cap Growth Fund
Class N		28.57	12.66	16.99	10.42	12/29/2003	*****
Morningstar Mid-Cap Growth		23.91	9.40	13.73	7.67		Among 562
Russell 2500^TMGrowth Index		24.46	10.88	15.47	9.62		Mid-Cap Growth Funds

Small-Mid Cap Value Fund
Class N		9.59	8.61	12.82	13.39	12/15/2011	*******
Morningstar Small Blend		12.28	8.71	12.99	—		Among 652
Russell 2500^TMValue Index		10.36	9.30	13.27	14.90		Small Blend Funds

Small Cap Growth Fund
Class N		26.70	12.91	17.67	9.24	12/27/1999	********
Morningstar Small Growth		21.50	9.97	13.96	8.42		Among 609
Russell 2000^®Growth Index		22.17	10.28	15.21	9.19		Small Growth Funds

Small Cap Value Fund
Class N		7.57	8.55	13.17	9.07	12/23/1996	********
Morningstar Small Blend		12.28	8.71	12.99	8.13		Among 652
Russell 2000^®Value Index		7.84	9.55	13.01	8.17		Small Blend Funds

Global Leaders Fund
Class N		30.31	10.35	11.00	5.01	10/15/2007	*******
Morningstar World Stock		23.61	8.89	10.76	4.80		Among 720
MSCI ACW IMI (net)		23.95	9.52	11.00	4.97		World Large Stock Funds

International Leaders Fund
Class N		29.65	11.51	9.89	10.77	8/16/2012	********
Morningstar Foreign Large Growth		30.87	9.04	8.51	—		Among 330
MSCI ACW Ex-U.S. IMI (net)		27.81	8.38	7.22	8.37		Foreign Large Growth Funds

December 31, 2017

William Blair Funds

Performance through December 31, 2017—Class N Shares (Unaudited)—continued

				10 yr		Overall
				(or since	Inception	Morningstar
	1 yr	3 yr	5 yr	inception)	Date	Rating

International Developed Plus Fund
Class N	23.43	7.72	7.67	1.12	5/24/2004	**
Morningstar Foreign Large Growth	30.87	9.04	8.51	2.75		Among 330
MSCI World Ex-U.S. Index (net)	24.21	7.36	7.46	1.87		Foreign Large Growth Funds

International Growth Fund
Class N	29.11	7.74	7.50	2.14	10/1/1992	**
Morningstar Foreign Large Growth	30.87	9.04	8.51	2.75		Among 330
MSCI ACW Ex-U.S. IMI (net)	27.81	8.38	7.22	2.20		Foreign Large Growth Funds

International Small Cap Growth Fund
Class N	32.17	11.41	9.76	4.87	11/1/2005	*******
Morningstar Foreign Small/Mid Growth	36.19	12.55	11.33	5.27		Among 112
MSCI ACW Ex-U.S. Small Cap Index (net)	31.65	11.96	10.03	4.69		Foreign Small/Mid Growth Funds

Emerging Markets Leaders Fund
Class N	41.68	7.08	4.48	4.75	5/3/2010	*******
Morningstar Diversified Emerging Markets	34.17	7.95	4.09	—		Among 647
MSCI Emerging Markets Index (net)	37.28	9.10	4.35	4.33		Diversified Emerging Markets Funds

Emerging Markets Growth Fund
Class N	48.53	8.60	6.00	0.94	6/6/2005	*******
Morningstar Diversified Emerging Markets	34.17	7.95	4.09	1.63		Among 647
MSCI Emerging Markets IMI (net)	36.83	9.01	4.47	1.85		Diversified Emerging Markets Funds

Emerging Markets Small Cap Growth Fund
Class N	40.09	7.47	10.58	13.25	10/24/2011	********
Morningstar Diversified Emerging Markets	34.17	7.95	4.09	—		Among 647
MSCI Emerging Markets Small Cap Index (net)	33.84	8.44	5.41	6.65		Diversified Emerging Markets Funds

Bond Fund
Class N	3.83	2.64	2.31	4.74	5/1/2007	********
Morningstar Intermediate-Term Bond	3.71	2.22	2.05	4.06		Among 847
Bloomberg Barclays U.S. Aggregate Index	3.54	2.24	2.10	4.01		Intermediate-Term Bond Funds

Income Fund
Class N	1.46	1.42	1.14	2.98	10/1/1990	********
Morningstar Short-Term Bond	1.73	1.47	1.15	2.31		Among 462
Bloomberg Barclays Intermediate Government/Credit Bond Index	2.14	1.76	1.50	3.32		Short-Term Bond Funds

Annual Report

December 31, 2017

Performance through December 31, 2017—Class N Shares (Unaudited)—continued

				10 yr		Overall
				(or since	Inception	Morningstar
	1 yr	3 yr	5 yr	inception)	Date	Rating

Low Duration Fund
Class N	0.84	0.67	0.52	1.03	12/1/2009	**
Morningstar Ultrashort Bond	1.44	1.02	0.80	—		Among 141
Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index	0.57	0.49	0.38	0.42		Ultrashort Bond Funds

Macro Allocation Fund
Class N	5.06	0.16	3.13	5.26	11/29/2011	*******
Morningstar Multialternative	5.14	1.79	2.65	—		Among 286
Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index	0.86	0.41	0.27	0.24		Multialternative Funds

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 typically 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 12/31/2017 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 1,216/1,109/787 large growth funds; Mid Cap Growth Fund **/**/*** and Small-Mid Cap Growth Fund *****/*****/***** out of 562/490/362 mid-cap growth funds; Small Cap Growth Fund ****/*****/***, out of 609/544/406 small growth funds; Small- Mid Cap Value Fund ***/***/NA and Small Cap Value Fund ***/***/**** out of 652/558/400 small blend funds; Global Leaders Fund ***/***/*** out of 720/589/333 world large stock funds; International Developed Plus Fund **/***/**, International Growth Fund **/**/**, and International Leaders Fund ****/****/NA out of 330/289/206 foreign large growth funds; International Small Cap Growth Fund ***/**/*** out of 112/106/62 foreign small/mid growth funds; Emerging Markets Leaders Fund **/***/NA, Emerging Markets Growth Fund ***/****/**, and Emerging Markets Small Cap Growth Fund ***/******/NA out of 647/467/186 diversified emerging markets funds; Bond Fund ****/***/**** out of 847/778/554 intermediate-term bond funds; Income Fund ***/***/**** out of 462/399/257 short-term bond funds; Low Duration Fund **/**/NA out of 141/110/NA ultrashort bond funds; and Macro Allocation Fund **/***/NA out of 286/163/NA multialternative funds.

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

December 31, 2017

William Blair Funds

U.S. Growth Market Review and Outlook

Growth style indices posted exceptionally strong returns for 2017. Improving economic data and solid corporate earnings growth supported a steady market advance throughout the year. Housing data indicated rising activity levels and prices, Purchasing Manager Index (“PMI”) levels suggested strength in the manufacturing sector, and unemployment neared historic lows. With rising stock and housing prices bolstering consumer net worth, confidence rose accordingly. Corporations were broadly upbeat as, in aggregate, they reported healthy earnings growth and issued forward-looking guidance that topped expectations. Furthermore, in the fourth quarter corporations indicated plans to increase capital expenditures. Not surprisingly given tight labor markets, the U.S. Federal Reserve (“Fed”) voted to raise the federal funds rate three times in 2017 and reiterated expectations for as many increases in 2018. With below-average volatility and stable inflationary expectations, equity market valuation multiples expanded, adding to 2017 returns.

The U.S. tax reform bill was signed into law in late December, notably cutting the corporate statutory tax rate to 21% from 35%. In addition, the bill allows for faster depreciation of capital investments than was previously allowed, further increasing the likelihood that higher capital spending will come to fruition. While the bill is positive for U.S. corporations, the same was not true in terms of the short-term impact on the Funds’ relative performance as stocks with higher tax rates outperformed somewhat indiscriminately on the news. Over time, we believe the market will differentiate between companies that can retain the benefit of the tax reduction and those that will lose the benefit to competitive forces. Given our bias toward companies with strong competitive positions, unique products and services, and pricing power, we feel well positioned longer-term in this regard.

As we look forward, several factors could provide continued support for equities, although contrary to the somewhat euphoric market sentiment of late, they are not without risk. While the Fed has embarked upon a path of monetary policy renormalization and U.S. short-term interest rates have begun to rise, global interest rates remain low by historic standards. Moreover, other measures of stress in the financial markets, such as high yield bond spreads, remain near cycle lows. Globally, solid economic growth rates, high corporate earnings and strengthening PMIs are other indicators of a broadly supportive environment for equities. Specifically within the U.S., corporations stand to benefit from the reduction of the corporate tax rate and the administration’s emphasis on deregulation. However, it remains to be seen how long those measures can sustain the current expansion, or if they will have a more meaningful impact on economic growth in the next expansion. As Republican control of the U.S. House and Senate potentially weakens in 2018, politicians’ attention could shift to midterm elections rather than on any legislative agenda. Lack of further progress on pro-growth initiatives and a flattening yield curve within the U.S. could dampen optimism about the sustainability of economic growth, while a potential geopolitical conflict in the Korean Peninsula remains a significant risk globally. For the time being, however, we appear to be in the midst of a classic “Goldilocks” economy, at least as it relates to the financial markets.

As we approach the ninth anniversary of the current bull market and following a particularly strong year for equities, absolute valuations are elevated relative to historical standards; however, they do not appear egregious against the backdrop of low interest rates, low inflation and narrow high yield bond spreads. While corporate profit margins remain high, one notable risk to margins going forward is pressure from rising wages. This will be of pressing concern for companies with more labor-intensive businesses and companies in more competitive industries with low barriers to entry that are unable to pass higher costs through to their customers. We continue to focus our attention on identifying durable businesses with significant competitive advantages and robust growth prospects that present compelling risk/reward opportunities. We believe portfolios with these underlying characteristics are well positioned to deliver outperformance for our clients over the long term.

Annual Report

December 31, 2017

U.S. Value Market Review and Outlook

Improving economic data and solid corporate earnings growth supported a steady market advance throughout the year, assisted by momentum from President Trump’s pro-growth initiatives. In the fourth quarter, the domestic equity market continued to gravitate higher, driven by strong corporate earnings growth and solid domestic economic data. The magnitude and breadth of the strong earnings announcements suggest that the results more than offset the impact from the hurricane disruptions in the third quarter, as evidenced by the above-consensus 3% GDP reported during the quarter. In addition to strong corporate earnings and solid economic data, continued momentum on tax reform helped support market returns as the final proposal seemed to be relatively in-line with expectations. In December, the Federal Reserve (Fed) seemed to demonstrate confidence in the sustainability of an improving domestic economy as it continued with its rate normalization process and raised the Federal Funds rate at what was outgoing Fed Chair Janet Yellen’s last meeting. While new Fed Chair Jay Powell was widely expected to replace Yellen, his formal selection was a relative non-event for the market. Although there were a number of headline concerns related to geopolitical instability and political posturing on tax reform issues, these concerns were more than offset by the strong corporate earnings results, solid domestic economic data, and the ultimate agreement on tax reform during the quarter.

As the nine-year anniversary of the current bull market approaches, many question how much longer this economic cycle can last. While solid domestic economic data and strong corporate earnings growth fueled the positive equity returns in 2017, tax reform, more specifically a lower corporate tax rate, and increased fiscal spending may be the catalysts that help extend this economic cycle. Tax reform is poised to provide a one-time benefit to earnings per share growth, particularly for smaller cap stocks, that will result in lower multiples and take some of the valuation risk out of the market.

The low and invariable interest rate environment experienced the last few years may have allowed a number of marginal companies, particularly those with higher debt levels, to survive and compete for market share longer than they would have otherwise and helped keep inflation low. A more normalized interest rate environment may benefit higher quality companies as these marginal companies, who struggle to generate the cash flow necessary to service their debt, get squeezed out.

The U.S. economy continues to be subject to a number of risks, including a monetary policy mistake by the Fed, a major geopolitical conflict, or a deceleration of global growth which could alter the trajectory of the positive economic momentum in the U.S. While we are mindful of these variables, we are persistently seeking to identify attractive risk reward opportunities based on individual company fundamentals. From our bottom up perspective, we remain constructive on corporate earnings. Although many companies may face increasing margin pressure from higher wages, some of this will be offset by a lower corporate tax rate. 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 our portfolios are well-suited to withstand a variety of market scenarios and add value over the long-term.

December 31, 2017

William Blair Funds

	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 24.35% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell 3000^®Growth Index (the “Index”), increased 29.59%. The Fund was unable to keep pace with the robust return of the Index in 2017. Style dynamics for the year were mixed, as our emphasis on companies with more durable business models and lower volatility than their peers was a headwind in the robust market environment. Mostly offsetting this headwind was our bias towards higher growth companies which was a tailwind for the year. Also, our typical underweight to mega caps was a modest headwind. On a stock specific basis, the top contributor to the Fund’s relative performance was cloud-based enterprise software provider Red Hat. Red Hat outperformed due to strong business results throughout the year as high demand for its products came from companies shifting to cloud IT infrastructures. Align Technology, a medical device company that focuses on clear aligner therapy (Invisalign), also reported strong business results throughout the year, and was a top contributor to the Fund’s performance. The company reported strong revenue growth and sales volume growth in each quarter this year, and saw growth amongst teenagers, an important market for the company, accelerate. Other top contributors were Progressive (Financials), MasterCard (Information Technology) and Amazon.com (Consumer Discretionary). The top detractor from the Fund’s performance for the year was grocery retailer Kroger, which underperformed due to food price deflation, improved competitor execution and a significant disruption to the industry with Amazon.com’s acquisition of Whole Foods Market. Diversified consumer products company Newell Brands was also a top detractor from the Fund’s performance after growth slowed in the second half of the year as retailers reduced inventories to deal with the shifting retail landscape in which more consumers are buying products online. Other top detractors from the Fund’s performance during the year were Allergan (Health Care), Starbucks (Consumer Discretionary) and Schlumberger (Energy), as well as not owning Apple (Information Technology), the largest position in the Index. Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

Annual Report

December 31, 2017

Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		24.35	%		9.05	%		13.28	%		7.66	%
Class I		24.64			9.37			13.64			8.01
Russell 3000^®Growth Index		29.59			13.51			17.16			9.93
S&P 500^®Index		21.83			11.41			15.79			8.50

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, 2017. 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, 2017

William Blair Funds

Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks
	Information Technology—38.9%
*	Acxiom Corporation		86,271	$	2,378
*	Adobe Systems, Inc.		23,705		4,154
*	Alphabet, Inc. Class “A”		22,668		23,879
	Booz Allen Hamilton Holding Corporation		89,789		3,424
*	CoStar Group, Inc.		19,798		5,879
	CSRA, Inc.		102,182		3,057
*	Facebook, Inc. Class “A”		75,987		13,409
*	Guidewire Software, Inc.		38,427		2,854
	Mastercard, Inc. Class “A”		102,615		15,532
*	MaxLinear, Inc.		112,141		2,963
	Microsoft Corporation		284,141		24,305
	National Instruments Corporation		78,553		3,270
*	Red Hat, Inc.		87,039		10,453
	Texas Instruments, Inc.		77,503		8,094
*	Ultimate Software Group, Inc.		15,695		3,425
*	Vantiv, Inc. Class “A”		91,888		6,758
*	Yelp, Inc.		87,137		3,656
					137,490
	Consumer Discretionary—18.4%
*	Amazon.com, Inc.		16,139		18,874
*	CarMax, Inc.		34,638		2,221
	Domino’s Pizza, Inc.		23,597		4,459
*	Grand Canyon Education, Inc.		42,756		3,828
*	Laureate Education, Inc.		183,305		2,486
*	Live Nation Entertainment, Inc.		76,637		3,262
	Newell Brands, Inc.		108,894		3,365
	Six Flags Entertainment Corporation		79,668		5,303
	Starbucks Corporation		186,829		10,730
*	Steven Madden, Ltd.		65,185		3,044
*	The Michaels Cos., Inc.		162,799		3,938
	Vail Resorts, Inc.		16,670		3,542
					65,052
	Health Care—15.5%
*	Align Technology, Inc.		9,417		2,092
	Allergan plc†		21,108		3,453
*	BioMarin Pharmaceutical, Inc.		28,143		2,510
	Bristol-Myers Squibb Co.		57,261		3,509
	Danaher Corporation		85,838		7,967
*	Ligand Pharmaceuticals, Inc.		18,631		2,551
	Teleflex, Inc.		14,288		3,555
	UnitedHealth Group, Inc.		59,318		13,077
*	Veeva Systems, Inc.		56,936		3,147
	West Pharmaceutical Services, Inc.		22,039		2,175
	Zoetis, Inc.		149,593		10,777
					54,813

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)
	Industrials—12.4%
	BWX Technologies, Inc.		84,052	$	5,084
	Fastenal Co.		107,486		5,879
	Raytheon Co.		38,968		7,320
	The Dun & Bradstreet Corporation		28,901		3,422
*	The Middleby Corporation		23,164		3,126
	Union Pacific Corporation		57,586		7,722
*	Verisk Analytics, Inc.		76,929		7,385
	Wabtec Corporation		48,493		3,949
					43,887
	Financials—8.3%
	Affiliated Managers Group, Inc.		15,262		3,133
	East West Bancorp, Inc.		71,116		4,326
	Intercontinental Exchange, Inc.		155,655		10,983
	The Progressive Corporation		197,762		11,138
					29,580
	Consumer Staples—4.8%
	Costco Wholesale Corporation		31,932		5,943
*	Monster Beverage Corporation		94,497		5,981
	The Estee Lauder Cos., Inc.		38,751		4,931
					16,855
	Materials—1.3%
	Ball Corporation		123,723		4,683
	Total Common Stocks—99.6% (cost $248,216)				352,360

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $2,716, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$2,716		2,716
	Total Repurchase Agreement—0.8% (cost $2,716)				2,716
	Total Investments—100.4% (cost $250,932)				355,076
	Liabilities, plus cash and other assets—(0.4)%				(1,342	)
	Net assets—100.0%			$	353,734

* = Non-income producing security

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	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 30.88% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell 1000^®Growth Index (the “Index”), increased 30.21%. Despite the robust return of the Index in 2017, the Fund outperformed the Index for the year. The Fund’s relative returns were largely the result of stock-specific dynamics, as style factors were mostly offsetting. Stock selection in Information Technology was the largest positive contributor from a sector perspective as our positions in Red Hat, Adobe Systems and MasterCard were top contributors. Cloud-based enterprise software provider Red Hat is benefitting from companies shifting to more agile cloud IT infrastructures, while creative software provider Adobe Systems continues to find additional services to sell to its customer base and capitalize on its near monopoly status in creative software. The Fund outperformed in the Information Technology sector despite not owning technology company Apple, the largest position in the Index and a strong relative performer. Other top contributors to the Fund’s performance for the year were Amazon.com (Consumer Discretionary) and Estee Lauder (Consumer Staples). The top detractor for the year was grocery retailer Kroger, which underperformed due to food price deflation, improved competitor execution and a significant disruption to the industry when Amazon.com announced it would acquire Whole Foods Market. Stock selection in the Consumer Discretionary sector also detracted from the Fund’s performance. Auto parts retailer O’Reilly Automotive was the top detractor in the sector and declined in part due to the risk of e-commerce competition negatively impacting margins in the future. Other top detractors were Chipotle Mexican Grill (Consumer Discretionary), Starbucks (Consumer Discretionary) and Schlumberger (Energy). From a style perspective, our higher growth bias, and resulting lower dividend yield exposure, was a tailwind. Mostly offsetting the higher growth benefit was our emphasis on companies with more consistent fundamentals, which was a headwind as companies with more volatile fundamentals outperformed, typical for a strong up market. Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2017

William Blair Funds

Large Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		30.88	%		12.63	%		16.78	%		8.92	%
Class I		31.29			12.91			17.07			9.21
Russell 1000^®Growth Index		30.21			13.79			17.33			10.00

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.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Large Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks
	Information Technology—37.7%
	Accenture plc†		45,350	$	6,943
*	Adobe Systems, Inc.		31,970		5,602
*	Alphabet, Inc. Class “A”		8,830		9,302
*	Alphabet, Inc. Class “C”		4,816		5,039
*	Facebook, Inc.		53,380		9,419
	Intuit, Inc.		26,000		4,102
	Mastercard, Inc.		54,780		8,292
	Microsoft Corporation		177,150		15,153
*	Red Hat, Inc.		51,020		6,128
	Texas Instruments, Inc.		65,250		6,815
					76,795
	Health Care—14.3%
*	Biogen, Inc.		13,090		4,170
	Danaher Corporation		52,470		4,870
	Stryker Corporation		18,660		2,889
	UnitedHealth Group, Inc.		43,640		9,621
	Zoetis, Inc.		105,660		7,612
					29,162
	Consumer Discretionary—13.8%
*	Amazon.com, Inc.		9,990		11,683
*	Netflix, Inc.		13,900		2,668
	Starbucks Corporation		124,240		7,135
	The Home Depot, Inc.		18,060		3,423
	Vail Resorts, Inc.		14,820		3,149
					28,058
	Industrials—13.0%
*	Copart, Inc.		56,450		2,438
	Fortive Corporation		54,690		3,957
	Raytheon Co.		17,520		3,291
	TransDigm Group, Inc.		11,200		3,076
	Union Pacific Corporation		59,080		7,922
*	Verisk Analytics, Inc.		59,760		5,737
					26,421
	Financials—8.3%
	Affiliated Managers Group, Inc.		25,670		5,269
	Intercontinental Exchange, Inc.		61,870		4,365
	The Progressive Corporation		128,870		7,258
					16,892
	Consumer Staples—6.3%
*	Monster Beverage Corporation		114,470		7,245
	The Estee Lauder Cos., Inc.		44,660		5,682
					12,927
	Materials—3.4%
	PPG Industries, Inc.		33,760		3,944
	Praxair, Inc.		19,950		3,086
					7,030

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)
	Real Estate—2.1%
*	SBA Communications Corporation		25,940	$	4,238
	Energy—0.8%
	EOG Resources, Inc.		14,250		1,538
	Total Common Stocks—99.7% (cost $148,532)				203,061

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $390, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$390		390
	Total Repurchase Agreement—0.2% (cost $390)				390
	Total Investments—99.9% (cost $148,922)				203,451
	Cash and other assets, less liabilities—0.1%				112
	Net assets—100.0%			$	203,563

† = U.S. listed foreign security

* = Non-income producing security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	Mid Cap Growth Fund

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

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Daniel Crowe Robert C. Lanphier, IV David P. Ricci	The William Blair Mid Cap Growth Fund (Class N shares) posted a 20.88% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell Midcap^®Growth Index (the “Index”), increased 25.27%. The Fund was unable to keep pace with the robust return of the Index in 2017. Style dynamics for the year were mixed as our emphasis on companies with more durable business models and better control of their destiny, compared to their peers, was a headwind in the robust market environment, while our bias towards higher growth companies was a tailwind. The Fund’s underweight to the Semiconductor industry detracted meaningfully from performance. We are often underweight Semiconductors due to the more commodity-like nature of many semiconductor products, and the limited pricing power and cyclicality of the businesses. On a stock specific basis, stock selection in the Consumer Discretionary sector, in particular the Fund’s positions in O’Reilly Automotive, Newell Brands and Tractor Supply, detracted from the Fund’s performance. Both O’Reilly Automotive and Tractor Supply declined in part due to the risk of potential competition from e-commerce. Newell Brands failed to meet consensus expectations for core organic sales growth as retailers reduced inventories, which caused the company to be negatively impacted in the short term. Other top detractors were Ball Corporation (Materials) and Signature Bank (Financials). Conversely, top contributors to the Fund’s performance were cloud-based enterprise software provider Red Hat and online vehicle auction platform Copart. Red Hat outperformed due to strong business results throughout the year as high demand for its products came from companies shifting to more agile cloud IT infrastructures. Copart saw positive trends in its business with a higher average selling price for cars and a greater number of cars in its inventory. Other top contributors were Centene and Align Technology, both of which contributed to positive stock selection in Health Care, and Costar Group (Information Technology). Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

Annual Report

December 31, 2017

Mid Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		20.88	%		6.54	%		10.86	%		7.59	%
Class I		21.18			6.78			11.13			7.87
Russell Midcap^® Growth Index		25.27			10.30			15.30			9.10

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.

Sector Diversification (Unaudited)

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

December 31, 2017

William Blair Funds

Mid Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks
	Information Technology—25.4%
	Analog Devices, Inc.		12,380	$	1,102
*	Arista Networks, Inc.		4,198		989
	Booz Allen Hamilton Holding Corporation		45,324		1,728
*	Coherent, Inc.		2,920		824
*	CoStar Group, Inc.		7,434		2,207
	CSRA, Inc.		28,770		861
*	Guidewire Software, Inc.		21,395		1,589
	j2 Global, Inc.		10,400		780
	MAXIMUS, Inc.		20,381		1,459
	Microchip Technology, Inc.		12,675		1,114
*	Red Hat, Inc.		19,505		2,343
*	Take-Two Interactive Software, Inc.		6,450		708
*	Ultimate Software Group, Inc.		7,995		1,745
*	Vantiv, Inc.		30,489		2,242
					19,691
	Industrials—20.0%
	BWX Technologies, Inc.		36,534		2,210
*	Copart, Inc.		63,705		2,751
	Equifax, Inc.		16,585		1,956
	Fortive Corporation		20,345		1,472
*	The Middleby Corporation		14,345		1,936
*	Verisk Analytics, Inc.		27,000		2,592
	Wabtec Corporation		15,105		1,230
	Xylem, Inc.		19,735		1,346
					15,493
	Consumer Discretionary—19.1%
	Aptiv plc†		9,065		769
*	CarMax, Inc.		17,760		1,139
	Domino’s Pizza, Inc.		9,360		1,769
	Hanesbrands, Inc.		50,175		1,049
*	Live Nation Entertainment, Inc.		28,920		1,231
	Newell Brands, Inc.		29,530		912
	Ross Stores, Inc.		31,590		2,535
	Six Flags Entertainment Corporation		30,440		2,026
	Tractor Supply Co.		17,460		1,305
*	Ulta Salon Cosmetics & Fragrance, Inc.		4,340		971
	Vail Resorts, Inc.		5,425		1,153
					14,859
	Health Care—17.2%
*	ABIOMED, Inc.		5,480		1,027
*	Align Technology, Inc.		4,935		1,096
*	BioMarin Pharmaceutical, Inc.		12,456		1,111
*	Centene Corporation		17,153		1,730
*	Charles River Laboratories International, Inc.		6,530		715
	Encompass Health Corporation		21,710		1,073
*	IDEXX Laboratories, Inc.		5,080		794
*	Mettler-Toledo International, Inc.		1,115		691
	Teleflex, Inc.		4,345		1,081
*	Veeva Systems, Inc.		20,345		1,125
	West Pharmaceutical Services, Inc.		8,350		824
	Zoetis, Inc.		29,270		2,108
					13,375

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)
	Financials—6.4%
	Affiliated Managers Group, Inc.		4,830	$	991
	East West Bancorp, Inc.		21,560		1,312
	The Progressive Corporation		47,035		2,649
					4,952
	Materials—6.0%
*	Axalta Coating Systems, Ltd.†		25,735		833
	Ball Corporation		57,220		2,165
	Vulcan Materials Co.		12,735		1,635
					4,633

	Real Estate—2.9%
*	SBA Communications Corporation		13,605		2,223
	Energy—2.6%
*	Concho Resources, Inc.		13,285		1,996
	Total Common Stocks—99.6% (cost $61,613)				77,222

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $560, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$560		560
	Total Repurchase Agreement—0.7% (cost $560)				560
	Total Investments—100.3% (cost $62,173)				77,782
	Liabilities, plus cash and other assets—(0.3)%				(247	)
	Net assets—100.0%			$	77,535

* = Non-income producing security

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	Small-Mid Cap Growth Fund

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

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Daniel Crowe Robert C. Lanphier, IV	The William Blair Small-Mid Cap Growth Fund (Class N shares) posted a 28.57% increase, net of fees, for the twelve months ended December 31, 2017.By comparison, the Fund’s benchmark index, the Russell 2500^TMGrowth Index (the “Index”), increased 24.46%. The Fund outperformed the Index during 2017. While style factors provided a tailwind, the majority of outperformance was the result of strong stock selection. The Fund benefitted from positive stock selection in several sectors during the year, most notably in Health Care. Positions in Exact Sciences and Align Technology were standout contributors from the sector. Exact Sciences’ colorectal screening test, Cologuard, is increasingly being viewed as the standard of care in colorectal cancer screening, while Align Technology’s clear aligner therapy, Invisalign, gained global share from traditional wires and brackets in both the adult and teen markets. Other top individual contributors to the Fund’s performance included Information Technology sector holdings 2U, Take-Two Interactive Software and Arista Networks. From a style perspective, our higher growth and larger market cap biases were tailwinds. This was partially offset by a headwind resulting from our emphasis on companies with more durable fundamentals, as companies with higher volatility fundamentals outperformed, a common dynamic in strong up markets such as 2017. The Fund’s top individual detractors for the period were Consumer Discretionary companies Tractor Supply and Universal Electronics. Tractor Supply encountered weather-driven issues and concern about margins due to increased e-commerce investment, while Universal Electronics was hampered by delays in production and delivery of new remote control technology during the year. Other notable 2017 detractors included j2 Global (Information Technology), Acadia Healthcare (Health Care) and Signature Bank (Financials). Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

December 31, 2017

William Blair Funds

Small-Mid Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year		3 Year		5 Year		10 Year
Class N	28.57	%	12.66	%	16.99	%	10.42	%
Class I	28.90		12.94		17.30		10.71
Russell 2500^TMGrowth Index	24.46		10.88		15.47		9.62

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

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Small-Mid Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks
	Information Technology—26.8%
*	2U, Inc.		403,195	$	26,010
*	Arista Networks, Inc.		88,955		20,956
	Booz Allen Hamilton Holding Corporation		923,946		35,230
*	Coherent, Inc.		67,542		19,062
*	CoStar Group, Inc.		163,335		48,502
	CSRA, Inc.		558,418		16,708
*	Euronet Worldwide, Inc.		259,892		21,901
*	Guidewire Software, Inc.		451,432		33,523
	j2 Global, Inc.		227,626		17,079
	MAXIMUS, Inc.		427,393		30,593
*	MaxLinear, Inc.		770,279		20,351
	National Instruments Corporation		468,602		19,508
	Nice, Ltd.—ADR		156,700		14,402
*	Rogers Corporation		210,827		34,137
*	Take-Two Interactive Software, Inc.		266,181		29,221
*	Vantiv, Inc. Class “A”		466,891		34,340
*	WEX, Inc.		255,979		36,152
*	Yelp, Inc.		619,371		25,989
					483,664
	Industrials—17.0%
	BWX Technologies, Inc.		855,942		51,776
*	Copart, Inc.		1,354,628		58,506
	HEICO Corporation		341,395		26,987
	Hexcel Corporation		431,119		26,665
*	SiteOne Landscape Supply, Inc.		275,137		21,103
*	Teledyne Technologies, Inc.		148,352		26,874
	The Dun & Bradstreet Corporation		129,835		15,374
*	The Middleby Corporation		264,385		35,679
	The Toro Co.		209,589		13,672
*	TransUnion		537,526		29,542
					306,178
	Consumer Discretionary—16.1%
	Adtalem Global Education, Inc.		683,954		28,760
	Cable One, Inc.		14,689		10,331
	Domino’s Pizza, Inc.		218,432		41,275
*	Grand Canyon Education, Inc.		347,760		31,135
*	Hilton Grand Vacations, Inc.		635,622		26,664
*	Live Nation Entertainment, Inc.		626,699		26,679
	Six Flags Entertainment Corporation		640,294		42,624
*	The Michaels Cos., Inc.		1,161,960		28,108
	Tractor Supply Co.		292,956		21,898
*	Universal Electronics, Inc.		334,295		15,795
	Vail Resorts, Inc.		84,034		17,855
					291,124
	Health Care—15.9%
*	ABIOMED, Inc.		149,145		27,951
*	Cambrex Corporation		484,530		23,258
*	Charles River Laboratories International, Inc.		258,527		28,296
*	DexCom, Inc.		369,984		21,233
	Encompass Health Corporation		536,232		26,495
*	Exact Sciences Corporation		325,456		17,100
*	Glaukos Corporation		383,972		9,849
*	Horizon Pharma plc†		1,775,639		25,924
*	IDEXX Laboratories, Inc.		118,828		18,582

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)
	Health Care — (continued)
*	Ligand Pharmaceuticals, Inc.		249,180	$	34,120
*	Repligen Corporation		352,962		12,806
*	Veeva Systems, Inc.		410,762		22,707
	West Pharmaceutical Services, Inc.		195,369		19,277
					287,598
	Financials—9.2%
	Affiliated Managers Group, Inc.		110,245		22,628
	Bank of the Ozarks, Inc.		682,122		33,049
	Cboe Global Markets, Inc.		209,541		26,107
	East West Bancorp, Inc.		228,034		13,871
*	Encore Capital Group, Inc.		481,060		20,253
	FirstCash, Inc.		366,515		24,721
	OM Asset Management plc†		773,552		12,957
	Virtu Financial, Inc.		712,601		13,040
					166,626
	Materials—6.8%
*	Axalta Coating Systems, Ltd.†		606,919		19,640
	Ball Corporation		903,696		34,205
	Celanese Corporation		288,488		30,891
	Martin Marietta Materials, Inc.		171,285		37,861
					122,597
	Real Estate—3.1%
	Colliers International Group, Inc.†		206,759		12,478
	FirstService Corporation†		260,800		18,235
	Jones Lang LaSalle, Inc.		166,765		24,837
					55,550
	Energy—1.7%
*	Carrizo Oil & Gas, Inc.		298,717		6,357
*	Diamondback Energy, Inc.		188,550		23,804
					30,161
	Consumer Staples—0.6%
	Nu Skin Enterprises, Inc.		160,458		10,948

	Total Common Stocks—97.2% (cost $1,414,047)				1,754,446

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $53,624, collateralized by U.S.Treasury Note, 2.000%, due 8/15/25		$53,623		53,623
	Total Repurchase Agreement—3.0% (cost $53,623)				53,623
	Total Investments—100.2% (cost $1,467,670)				1,808,069
	Liabilities, plus cash and other assets—(0.2)%				(3,061	)
	Net assets—100.0%			$	1,805,008

* = Non-income producing security

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	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 David S. Mitchell	The William Blair Small-Mid Cap Value Fund (Class N shares) posted a 9.59% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell 2500^TMValue Index (the “Index”), increased 10.36%. While style factors were more normalized in 2017, the Fund’s higher growth profile relative to the Index provided a modest tailwind during the period that was somewhat offset by its underweight to the deeper value stocks within the Index. At the sector level, stock selection within the Semiconductors and the Fund’s lack of exposure to cyclical stocks within the Information Technology sector contributed to the Fund’s relative underperformance within the sector. We feel comfortable with the Fund’s lack of exposure to cyclical stocks within the Information Technology sector given current valuations and where we are in the market cycle. The Fund’s relative underperformance within the Real Estate sector was the result of stock selection within Retail REITs and Residential REITs. Broad-based stock selection within the Consumer Discretionary sector was the largest contributor to the Fund’s relative performance. Notable sub-industry contributors within the Consumer Discretionary sector were Automobile Manufacturers, Restaurants, and Footwear. While the Fund’s lack of exposure to Mortgage REITs provided a modest headwind within the Financials sector, this was more than offset by strong stock selection within Property & Casualty Insurance and Regional Banks, resulting in the Fund’s relative outperformance within the Financials sector. Looking specifically at stock selection, the Fund’s largest detractors from relative performance were Oasis Petroleum (Energy), Gulfport Energy (Energy), and PDC Energy (Energy). The largest contributors to relative performance were the Fund’s investments in Cadence Design Systems (Information Technology), Thor Industries (Consumer Discretionary), and lululemon athletica (Consumer Discretionary). Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.

Annual Report

December 31, 2017

Small-Mid Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			Since Inception(a)
Class N		9.59	%		8.61	%		12.82	%		13.39	%
Class I		9.84			8.89			13.12			13.69
Russell 2500^TMValue Index		10.36			9.30			13.27			14.90


(a)	Since inception is for the period from December 15, 2011 (Commencement of Operations) to December 31, 2017.

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^TMValue Index consists of mid-capitalization companies with below average price-to-book ratios and forecasted growth rates.

Sector Diversification (Unaudited)

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

December 31, 2017

William Blair Funds

Small-Mid Cap Value Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	*Common Stocks*
	Financials—21.7%
	American Financial Group, Inc.		333	$	36
	CNO Financial Group, Inc.		1,455		36
*	E*TRADE Financial Corporation		1,205		60
	East West Bancorp, Inc.		798		49
	First American Financial Corporation		737		41
	FNB Corporation		2,516		35
	Hancock Holding Co.		862		43
	Hanover Insurance Group, Inc.		402		43
	Home BancShares, Inc.		1,791		42
	Iberiabank Corporation		426		33
	PacWest Bancorp		892		45
	Radian Group, Inc.		2,262		47
	Renasant Corporation		609		25
	Sandy Spring Bancorp, Inc.		618		24
	Selective Insurance Group, Inc.		801		47
	Sterling Bancorp		1,793		44
*	SVB Financial Group		186		43
*	Western Alliance Bancorp		586		33
	WSFS Financial Corporation		843		40
	Zions Bancorporation		456		23
					789
	Industrials—14.4%
	Brady Corporation		1,251		47
	EMCOR Group, Inc.		439		36
	Fortune Brands Home & Security, Inc.		677		46
	Interface, Inc.		2,179		55
	Lennox International, Inc.		251		52
	Manpowergroup, Inc.		321		41
	Old Dominion Freight Line, Inc.		432		57
	Owens Corning		604		56
	Spirit AeroSystems Holdings, Inc.		578		50
	Terex Corporation		976		47
	Wabtec Corporation		457		37
					524
	Real Estate—13.3%
	Acadia Realty Trust		1,537		42
	American Assets Trust, Inc.		1,134		43
	American Campus Communities, Inc.		1,122		46
	Camden Property Trust		433		40
	Douglas Emmett, Inc.		885		36
	Education Realty Trust, Inc.		626		22
*	Equity Commonwealth		1,461		45
	Healthcare Realty Trust, Inc.		1,349		43
	Highwoods Properties, Inc.		734		37
	National Retail Properties, Inc.		1,041		45
	Pebblebrook Hotel Trust		1,211		45
	Terreno Realty Corporation		1,099		39
					483
	Consumer Discretionary—12.1%
	Adtalem Global Education, Inc.		1,038		44
	Children’s Place, Inc.		282		41
*	Dave & Buster’s Entertainment, Inc.		658		36



	Issuer	Shares		Value

	*Common Stocks—(continued)*
	Consumer Discretionary — (continued)
	Dunkin’ Brands Group, Inc.		797	$	51
*	Grand Canyon Education, Inc.		446		40
*	Lululemon Athletica, Inc.		705		56
	Meredith Corporation		496		33
	Thor Industries, Inc.		347		52
	Vail Resorts, Inc.		147		31
	Wolverine World Wide, Inc.		1,775		57
					441
	Information Technology—8.9%
*	Acxiom Corporation		1,599		44
	Belden, Inc.		556		43
	Booz Allen Hamilton Holding Corporation		926		35
*	Cadence Design Systems, Inc.		808		34
	CSRA, Inc.		1,617		48
*	F5 Networks, Inc.		364		48
*	Inphi Corporation		923		34
	j2 Global, Inc.		521		39
					325
	Energy—7.0%
*	Exterran Corporation		692		22
*	Gulfport Energy Corporation		2,555		32
*	Helix Energy Solutions Group, Inc.		3,287		25
*	Parsley Energy, Inc.		1,301		38
	Patterson-UTI Energy, Inc.		1,454		33
*	PDC Energy, Inc.		719		37
	Range Resources Corporation		2,266		39
	Targa Resources Corporation		551		27
					253
	Utilities—6.6%
	Atmos Energy Corporation		575		49
	IDACORP, Inc.		490		45
	NiSource, Inc.		1,844		47
	ONE Gas, Inc.		634		47
	Pinnacle West Capital Corporation		618		53
					241
	Materials—6.0%
	Carpenter Technology Corporation		865		44
	FMC Corporation		399		38
	Minerals Technologies, Inc.		420		29
	PolyOne Corporation		945		41
	Sensient Technologies Corporation		376		28
	Steel Dynamics, Inc.		935		40
					220
	Health Care—5.4%
	CONMED Corporation		344		17
	Encompass Health Corporation		705		35
*	Hologic, Inc.		738		31
*	Integer Holdings Corporation		357		16
*	Magellan Health, Inc.		329		32
*	Mednax, Inc.		524		28
	PerkinElmer, Inc.		514		38
					197

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Small-Mid Cap Value Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



Issuer	Shares		Value

*Common Stocks—(continued)*
Consumer Staples—3.0%
Ingredion, Inc.		283	$	40
J&J Snack Foods Corporation		193		29
Lamb Weston Holdings, Inc.		737		42
				111
Total Common Stocks—98.4% (cost $2,750)				3,584
Total Investments—98.4% (cost $2,750)				3,584
Cash and other assets, less liabilities—1.6%				59
Net assets—100.0%			$	3,643

* = Non-income producing security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	Small Cap Growth Fund

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

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Michael P. Balkin Ward D. Sexton	The William Blair Small Cap Growth Fund (Class N shares) posted a 26.70% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell 2000^®Growth Index (the “Index”), increased 22.17%. The Fund significantly outperformed the Index during 2017. Outperformance was the result of strong stock selection, as style factors were modestly negative in the period. The Fund benefitted from positive stock selection in several sectors during the year, most notably in Information Technology and Consumer Discretionary. Positions in USA Technologies and 2U were top contributors to performance in Information Technology, while Golden Entertainment and Boot Barn Holdings were standouts in Consumer Discretionary. Golden Entertainment outperformed as the company reported strong revenue growth in its distributed gaming business and made a number of acquisitions that were well received by investors. In addition, the Fund’s position in Exact Sciences (Health Care) was a strong contributor to performance. Exact Sciences’ colorectal screening test, Cologuard, is increasingly being viewed as the standard of care in colorectal cancer screening, and the stock reacted accordingly. From a style perspective, our higher growth bias was a modest tailwind during the year, but it was offset by a more significant headwind from our typical underweight to the Biotechnology industry, which materially outperformed the Index. From a stock specific standpoint, the Fund’s top individual detractors for the period were Team (Industrials) and Fulgent Genetics (Health Care). Shares of Team, a provider of specialty inspection and maintenance services, declined as a result of weak demand for its non-discretionary services and the company’s announcement of a convertible debt offering. Fulgent Genetics underperformed on a number of fundamental setbacks, including a shift in the market toward single gene tests, away from higher priced panels. Other notable 2017 detractors included Universal Electronics (Consumer Discretionary), U.S. Auto Parts Network (Consumer Discretionary) and Pandora Media (Information Technology). Please refer to the U.S. Growth Market Review and Outlook relating to the Fund on page 6.

Annual Report

December 31, 2017

Small Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		26.70	%		12.91	%		17.67	%		9.24	%
Class I		26.99			13.19			17.97			9.52
Russell 2000^® Growth Index		22.17			10.28			15.21			9.19

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.

Sector Diversification (Unaudited)

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

December 31, 2017

William Blair Funds

Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	*Common Stocks*
	Information Technology—23.8%
*	2U, Inc.		91,720	$	5,917
*	Acxiom Corporation		215,270		5,933
*	Agilysys, Inc.		257,678		3,164
*	Cars.com, Inc.		194,350		5,605
	CSRA, Inc.		138,930		4,157
*	EPAM Systems, Inc.		40,230		4,322
*	Etsy, Inc.		208,480		4,263
*	Guidewire Software, Inc.		91,546		6,798
*	Inphi Corporation		161,100		5,896
	j2 Global, Inc.		117,434		8,811
	Littelfuse, Inc.		27,180		5,377
*	LivePerson, Inc.		60,145		692
	MAXIMUS, Inc.		82,070		5,874
*	MaxLinear, Inc.		322,341		8,516
	Nice, Ltd.—ADR		57,390		5,275
*	RealPage, Inc.		185,950		8,238
*	Rogers Corporation		27,000		4,372
*	USA Technologies, Inc.		517,556		5,046
*	Varonis Systems, Inc.		168,250		8,168
*	WNS Holdings, Ltd.—ADR		125,340		5,030
*	Yelp, Inc.		116,870		4,904
					116,358
	Consumer Discretionary—21.1%
	Adtalem Global Education, Inc.		184,340		7,752
*	At Home Group, Inc.		176,775		5,372
*	Boot Barn Holdings, Inc.		401,220		6,664
*	Bridgepoint Education, Inc.		307,678		2,554
	Cable One, Inc.		9,170		6,450
	Collectors Universe, Inc.		99,410		2,847
*	Dave & Buster’s Entertainment, Inc.		87,120		4,806
*	Gentherm, Inc.		131,600		4,178
*	Golden Entertainment, Inc.		228,629		7,465
*	Grand Canyon Education, Inc.		55,610		4,979
*	Hilton Grand Vacations, Inc.		114,430		4,800
*	IMAX Corporation†		184,520		4,272
*	Laureate Education, Inc.		320,374		4,344
	Lithia Motors, Inc.		60,610		6,885
	Nutrisystem, Inc.		92,260		4,853
	Six Flags Entertainment Corporation		117,152		7,799
*	Steven Madden, Ltd.		138,490		6,467
*	U.S. Auto Parts Network, Inc.		1,248,563		3,146
*	Universal Electronics, Inc.		133,435		6,305
*	YogaWorks, Inc.		411,111		1,163
					103,101
	Health Care—16.6%
*	AxoGen, Inc.		118,709		3,359
*	Cambrex Corporation		107,315		5,151
*	CryoLife, Inc.		242,990		4,653
*	DexCom, Inc.		85,270		4,894
	Encompass Health Corporation		163,885		8,098
*	Exact Sciences Corporation		71,104		3,736
*	Glaukos Corporation		188,906		4,845



	Issuer	Shares		Value

	*Common Stocks—(continued)*
	Health Care — (continued)
*	Horizon Pharma plc†		485,790	$	7,093
*	LHC Group, Inc.		78,310		4,797
*	Ligand Pharmaceuticals, Inc.		62,640		8,577
*	NeoGenomics, Inc.		502,371		4,451
*	Obalon Therapeutics, Inc.		197,930		1,308
*	Repligen Corporation		162,923		5,911
	Simulations Plus, Inc.		193,887		3,122
*	Supernus Pharmaceuticals, Inc.		156,160		6,223
	US Physical Therapy, Inc.		66,333		4,789
					81,007
	Industrials—14.3%
	Albany International Corporation		70,980		4,362
*	Armstrong World Industries, Inc.		101,380		6,139
*	Blue Bird Corporation		315,040		6,269
	BWX Technologies, Inc.		143,930		8,706
	Douglas Dynamics, Inc.		180,940		6,840
	ESCO Technologies, Inc.		97,440		5,871
	HEICO Corporation		77,595		6,134
*	ICF International, Inc.		78,761		4,135
	John Bean Technologies Corporation		40,225		4,457
*	Mercury Systems, Inc.		112,034		5,753
*	SiteOne Landscape Supply, Inc.		65,900		5,054
*	Team, Inc.		243,025		3,621
*	Willdan Group, Inc.		111,030		2,658
					69,999
	Financials—10.7%
	A-Mark Precious Metals, Inc.		118,010		1,736
*	BofI Holding, Inc.		242,630		7,255
*	Encore Capital Group, Inc.		124,346		5,235
	FirstCash, Inc.		174,236		11,752
	Glacier Bancorp, Inc.		131,420		5,177
	Home BancShares, Inc.		245,130		5,699
	Meta Financial Group, Inc.		105,512		9,776
	Virtu Financial, Inc.		311,825		5,706
					52,336
	Consumer Staples—5.3%
	Calavo Growers, Inc.		62,220		5,251
	MGP Ingredients, Inc.		91,370		7,025
	Nu Skin Enterprises, Inc.		114,355		7,802
*	Primo Water Corporation		463,816		5,830
					25,908
	Real Estate—2.1%
	Colliers International Group, Inc.†		84,183		5,081
	FirstService Corporation†		77,149		5,394
					10,475

	Materials—1.7%
*	Codexis, Inc.		943,300		7,877
	Orion Engineered Carbons S.A.†		17,948		459
					8,336

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

		Shares or
		Principal
	Issuer	Amount		Value

	*Common Stocks—(continued)*
	Energy—1.5%
*	Callon Petroleum Co.		266,590	$	3,239
*	Carrizo Oil & Gas, Inc.		145,743		3,101
*	Gulfport Energy Corporation		97,227		1,241
					7,581
	Telecommunication Services—1.0%
*	ORBCOMM, Inc.		499,292		5,083
	Total Common Stocks—98.1% (cost $369,628)				480,184

	*Repurchase Agreement*
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $16,006, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26, and U.S. Treasury Note, 1.625%, due 2/15/26		$16,006		16,006
	Total Repurchase Agreement—3.3% (cost $16,006)				16,006
	Total Investments—101.4% (cost $385,634)				496,190
	Liabilities, plus cash and other assets—(1.4)%				(6,780	)
	Net assets—100.0%			$	489,410

ADR = American Depository Receipt

* = Non-income producing security

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	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 David S. Mitchell	The William Blair Small Cap Value Fund (Class N shares) posted a 7.57% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Russell 2000^®Value Index (the “Index”), increased 7.84%. While style factors were more normalized in 2017 and did not have a strong influence on Fund performance, a modest tailwind from the Fund’s underweight to deep-value stocks was offset by the headwind created by the Fund’s higher quality bias as companies with lower earnings quality outperformed during the period. Within the Information Technology sector, stock selection within Semiconductors and the Fund’s lack of exposure to cyclical stocks within the sector contributed to the Fund’s relative underperformance. We feel comfortable with the Fund’s lack of exposure to the more cyclical stocks in the Information Technology sector given current valuations and where we are in the market cycle. The Fund’s relative underperformance within the Health Care sector was a result of its lack of exposure to Biotech and Pharmaceutical stocks, which was partially offset by positive stock selection within Health Care Providers & Services. The Consumer Discretionary sector was the largest contributor to the Fund’s relative performance due to broad-based stock selection, supported by contributions within the Autoparts & Equipment, Restaurants, and Footwear industries. Although the Fund’s lack of exposure to Mortgage REITs provided a headwind during the year, strong stock selection within Property & Casualty Insurance and Regional Banks more than offset this and contributed to the relative outperformance within the Financials sector. Looking specifically at stock selection, the Fund’s largest detractors from relative performance were Oasis Petroleum (Energy), SpartanNash (Consumer Staples), and CIRCOR International (Industrials). Offsetting this were the Fund’s investments in Dana (Consumer Discretionary), Kadant (Industrials), and First American Financial (Financials). Please refer to the U.S. Value Market Review and Outlook relating to the Fund on page 7.

Annual Report

December 31, 2017

Small Cap Value Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017

	1 Year			3 Year			5 Year			10 Year
Class N		7.57	%		8.55	%		13.17	%		9.07	%
Class I		7.85			8.84			13.47			9.32
Russell 2000^® Value Index		7.84			9.55			13.01			8.17

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.

Sector Diversification (Unaudited)

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

December 31, 2017

William Blair Funds

Small Cap Value Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks
	Financials—29.6%
	Banner Corporation		131,093	$	7,226
	Boston Private Financial Holdings, Inc.		473,079		7,309
	CNO Financial Group, Inc.		331,310		8,180
	CoBiz Financial, Inc.		466,659		9,329
	CVB Financial Corporation		246,524		5,808
	First American Financial Corporation		160,665		9,004
	FNB Corporation		681,188		9,414
	Glacier Bancorp, Inc.		256,412		10,100
*	Green Bancorp, Inc.		289,271		5,872
	Hancock Holding Co.		202,665		10,032
	Hanover Insurance Group, Inc.		81,554		8,814
	Home BancShares, Inc.		350,895		8,158
	Iberiabank Corporation		97,904		7,588
	National Bank Holdings Corporation		178,579		5,791
	OceanFirst Financial Corporation		237,908		6,245
	Radian Group, Inc.		571,085		11,770
	Renasant Corporation		187,391		7,663
	Sandy Spring Bancorp, Inc.		160,273		6,254
*	Seacoast Banking Corporation of Florida		278,833		7,029
	Selective Insurance Group, Inc.		186,316		10,937
	Sterling Bancorp		421,680		10,373
	Umpqua Holdings Corporation		399,354		8,307
*	Western Alliance Bancorp		163,110		9,235
	WSFS Financial Corporation		193,561		9,262
					199,700
	Industrials—12.3%
	Brady Corporation		307,127		11,640
*	Continental Building Products, Inc.		358,335		10,087
	EMCOR Group, Inc.		91,422		7,474
	Interface, Inc.		501,101		12,603
	Kadant, Inc.		65,810		6,607
*	Lydall, Inc.		114,531		5,812
*	Northwest Pipe Co.		252,850		4,840
	Standex International Corporation		70,980		7,229
	Terex Corporation		201,099		9,697
	Universal Forest Products, Inc.		181,340		6,822
					82,811
	Consumer Discretionary—11.4%
	Adtalem Global Education, Inc.		238,811		10,042
*	Cavco Industries, Inc.		47,405		7,234
	Children’s Place, Inc.		62,756		9,121
	Dana, Inc.		333,173		10,665
*	Dave & Buster’s Entertainment, Inc.		126,690		6,989
*	Grand Canyon Education, Inc.		76,365		6,837
	Meredith Corporation		108,775		7,185
*	TopBuild Corporation		106,324		8,053
	Wolverine World Wide, Inc.		326,026		10,394
					76,520
	Real Estate—11.0%
	Acadia Realty Trust		296,555		8,114
	Agree Realty Corporation		156,745		8,063
	American Assets Trust, Inc.		218,817		8,367
	Education Realty Trust, Inc.		233,565		8,156
*	Equity Commonwealth		245,745		7,498



	Issuer	Shares		Value

	Common Stocks—(continued)
	Real Estate — (continued)
	Healthcare Realty Trust, Inc.		263,466	$	8,462
	Highwoods Properties, Inc.		121,206		6,171
	LaSalle Hotel Properties		176,526		4,955
	Pebblebrook Hotel Trust		185,042		6,878
	Terreno Realty Corporation		208,928		7,325
					73,989
	Information Technology—9.6%
*	Acxiom Corporation		345,390		9,519
	ADTRAN, Inc.		362,055		7,006
	Belden, Inc.		114,352		8,825
	Booz Allen Hamilton Holding Corporation		180,458		6,881
	CSRA, Inc.		252,302		7,549
*	Inphi Corporation		178,424		6,530
	j2 Global, Inc.		90,955		6,824
	MAXIMUS, Inc.		84,299		6,034
*	MaxLinear, Inc.		210,670		5,566
					64,734
	Energy—6.4%
	Archrock, Inc.		583,028		6,122
*	Exterran Corporation		132,370		4,162
*	Halcon Resources Corporation		586,604		4,440
*	Helix Energy Solutions Group, Inc.		424,811		3,203
*	Newpark Resources, Inc.		526,634		4,529
*	PDC Energy, Inc.		122,383		6,308
	Range Resources Corporation		431,960		7,369
*	RSP Permian, Inc.		180,144		7,328
					43,461
	Utilities—6.3%
	Chesapeake Utilities Corporation		117,489		9,229
	IDACORP, Inc.		123,750		11,306
	ONE Gas, Inc.		144,032		10,552
	Southwest Gas Holdings, Inc.		139,000		11,186
					42,273
	Health Care—5.4%
	Analogic Corporation		54,825		4,592
	CONMED Corporation		148,717		7,580
	Encompass Health Corporation		166,341		8,219
*	Integer Holdings Corporation		175,838		7,965
*	Magellan Health, Inc.		81,654		7,884
					36,240
	Materials—4.6%
	Carpenter Technology Corporation		118,761		6,056
	Minerals Technologies, Inc.		93,498		6,437
	PolyOne Corporation		152,339		6,627
	Sensient Technologies Corporation		87,917		6,431
	Silgan Holdings, Inc.		193,148		5,677
					31,228
	Consumer Staples—3.3%
*	Darling Ingredients, Inc.		404,153		7,327
	J&J Snack Foods Corporation		61,483		9,335
	SpartanNash Co.		210,378		5,613
					22,275

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Small Cap Value Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

	Issuer	Shares or Principal Amount		Value

	Common Stocks—(continued)
	Telecommunication Services—0.8%
*	Cincinnati Bell, Inc.		258,175	$	5,383
	Total Common Stocks—100.7% (cost $493,938)				678,614

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $14,510, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$14,510		14,510
	Total Repurchase Agreement—2.1% (cost $14,510)				14,510
	Total Investments—102.8% (cost $508,448)				693,124
	Liabilities, plus cash and other assets—(2.8)%				(19,104	)
	Net assets—100.0%			$	674,020

* = Non-income producing security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Global Markets Review and Outlook

The 2017 market environment was characterized by strong and accelerating global economic growth. The broadening nature of growth was particularly noteworthy, as evidenced by strengthening industrial production volumes across the world. Corporate earnings results were bolstered by the expanding economic environment, providing a tailwind for investors. Beyond improving corporate performance, major national elections, especially in Europe, produced outcomes favorable for continued growth.

Risk assets led the markets in 2017. Emerging markets—which received oxygen from a weak U.S. dollar—performed the strongest, returning 36.8% in USD terms, as measured by the MSCI Emerging Markets IMI Index. Developed markets also performed well, advancing 22.4% for the year, as measured by the MSCI World IMI Index. China, which returned +50.7%, drove emerging markets’ performance to a significant extent, with additional contributions from South Korea (+46.0%), India (+43.7%), Poland (+53.6%), Chile (+43.3%) and South Africa (+34.0%)—illustrating the breadth of gains across the emerging markets landscape.

From a global sector perspective, technology led by a significant margin in 2017, advancing 41.0% for the year (as measured by the MSCI All Country World Index IMI), far outpacing the second best performer, materials, which gained 29.3%. Within technology, the software and services industry returned 42.2%, followed by semiconductors and equipment (+42.0%) and technology hardware and equipment (+37.8%). In contrast, energy (+5.2%) and telecom (+8.2%) were the worst performing sectors for the year.

The performance of William Blair’s proprietary quantitative models demonstrated that momentum, earnings trend and growth style factors outperformed during 2017, while fundamental volatility, quality and valuation factors underperformed. These style trends were more pronounced within emerging markets.

Underpinning 2017 performance was a broadening of growth in both developed and emerging markets, which we have not seen in more than a decade. As growth broadened, it also strengthened. Year-over-year growth in industrial production volumes, a proxy for growth, ranged from 3% in the United States to 8% in Brazil.

When global growth drives expansion, it shows up in corporate earnings. In 2017, returns were driven predominantly by corporate earnings growth as opposed to price-to-earnings (P/E) multiple expansion. That is not to say that P/E multiple expansion was completely absent. Delving deeper into the sectoral composition of returns, Europe and the United States benefited from P/E expansion during the year, which we would expect in response to stronger growth performance.

The synchronized global recovery is well understood, and global growth remains firm. For us, though, it is important to understand the nature of the cycle and how far we are into it. The low-volatility regimes we have experienced in the equity and fixed-income markets carry potential risks. When change comes, it will likely be difficult, because we have been shielded from natural cyclical behavior (i.e., from negative economic and market forces) for some time.

Sudden inflationary pressures and wage growth acceleration would likely alter investor return expectations, driving bond yields and volatility materially higher, while potentially triggering equity leadership rotation both across and within sectors. Financials would be expected to benefit from higher interest rates, for example, but increased caution would be warranted for financially leveraged companies. We want to be mindful of this.

Reflecting on some of the preeminent growth themes of 2017, including technology and the rise of innovation in China, we are optimistic. Despite the growing likelihood of a cyclical slowdown within the technology sector, we believe that strong secular growth will continue.

From a geographic perspective, we believe that emerging markets continue to offer attractive investment opportunities heading into 2018. In particular, there are abundant opportunities to invest in China’s growth, but we are mindful of the significant share-price gains in 2017 from the perspective of near-term momentum reversal risk.

Annual Report

December 31, 2017

	Global Leaders Fund

	The Global Leaders Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Andrew G. Flynn Kenneth J. McAtamney	The William Blair Global Leaders Fund (Class N shares) posted a 30.31% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI All Country World IMI Index (net) (the “Index”), increased 23.95%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. Within the Health Care sector, U.S. holdings Align Technology and VCA aided the Fund’s performance. Align Technology’s share price was supported by consensus beating financial results on higher average selling prices and sales volumes for the company’s clear aligners, Invisalign, which continued to take share from traditional wires and brackets globally. VCA is a leading provider of animal hospitals and diagnostic laboratories in North America. VCA’s share price surged after the company agreed to be acquired by Mars at a 31% premium to its share price in early January 2017. The stock was subsequently liquidated from the Fund’s portfolio. Chinese internet gaming company Tencent Holdings (Information Technology) was a strong contributor to performance, supported by accelerating growth in mobile gaming and continued triple-digit growth rates in the smaller cloud and payments businesses. Partially offsetting these positive effects were the Fund’s underweightings in the Materials and Health Care sectors. Stock selection in the Consumer Discretionary sector also detracted from the Fund’s performance, hampered by exposure to U.S. auto parts retailer O’Reilly Automotive, which experienced deteriorating same store sales trends amid slowing industry tailwinds. U.K.-based media company WPP also detracted from the Fund’s performance, as its share price pulled back following disappointing second-quarter financial results that showed deteriorating organic growth trends amid industry-wide contractual pressures in U.S. media, account losses and spending cuts in the Fast Moving Consumer Goods (FMCG) segment. Japanese auto manufacturer Subaru’s share price was negatively impacted by a weaker than expected operating profit due to currency headwinds, air bag-related recall costs, higher U.S. incentives including rebates offered on vehicles sold in the U.S. market, and startup costs at its Indiana operations. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

Global Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
													Since
	1 Year			3 Year			5 Year			10 Year			Inception
Class N		30.31	%		10.35	%		11.00	%		5.01	%		—
Class I		30.69			10.69			11.31			5.29			—
MSCI ACW IMI (net)		23.95			9.52			11.00			4.97			—
Institutional Class(a)		30.78			10.76			11.42			—			11.27	%
MSCI ACW IMI (net)(a)		23.95			9.52			11.00			—			10.84


(a)	Since inception is for the period from December 19, 2012 (Commencement of Operations) to December 31, 2017.

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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Global Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Western Hemisphere—57.3%
	Canada—2.8%
	Brookfield Asset Management, Inc. Class “A” (Capital markets)†		60,154	$	2,619
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		87,207		3,202
					5,821
	United States—54.5%
*	ABIOMED, Inc. (Health care equipment & supplies)		5,514		1,033
*	Adobe Systems, Inc. (Software)		22,737		3,984
	Affiliated Managers Group, Inc. (Capital markets)		14,283		2,932
*	Align Technology, Inc. (Health care equipment & supplies)		8,914		1,981
*	Alphabet, Inc. Class “A” (Internet software & services)		5,260		5,541
*	Amazon.com, Inc. (Internet & direct marketing retail)		4,780		5,590
	BlackRock, Inc. (Capital markets)		10,161		5,220
*	Boston Scientific Corporation (Health care equipment & supplies)		72,838		1,806
	Carnival Corporation (Hotels, restaurants & leisure)†		38,470		2,553
*	CoStar Group, Inc. (Internet software & services)		4,365		1,296
	Domino’s Pizza, Inc. (Hotels, restaurants & leisure)		11,941		2,256
	EOG Resources, Inc. (Oil, gas & consumable fuels)		26,123		2,819
	Equifax, Inc. (Professional services)		10,202		1,203
*	Facebook, Inc. Class “A” (Internet software & services)		19,627		3,463
	Fifth Third Bancorp (Banks)		124,904		3,790
	Intercontinental Exchange, Inc. (Capital markets)		46,323		3,269
	JPMorgan Chase & Co. (Banks)		44,756		4,786
	Lam Research Corporation (Semiconductors & semiconductor equipment)		11,850		2,181
	Mastercard, Inc. Class “A” (IT services)		24,318		3,681
*	Netflix, Inc. (Internet & direct marketing retail)		11,906		2,285
	NextEra Energy, Inc. (Electric utilities)		16,592		2,591
	Pioneer Natural Resources Co. (Oil, gas & consumable fuels)		6,738		1,165
	Prologis, Inc. (Equity REIT)		31,164		2,010
	Raytheon Co. (Aerospace & defense)		16,614		3,121
	Roper Technologies, Inc. (Electrical equipment)		5,815		1,506
*	salesforce.com, Inc. (Software)		20,415		2,087
	Southwest Airlines Co. (Airlines)		47,710		3,123
	The Boeing Co. (Aerospace & defense)		16,190		4,775
	The Estee Lauder Cos., Inc. (Personal products)		23,424		2,980
	The Goldman Sachs Group, Inc. (Capital markets)		13,089		3,335



	Issuer	Shares		Value

	Common Stocks—(continued)

	Western Hemisphere—(continued)
	United States—(continued)
	The Home Depot, Inc. (Specialty retail)		25,505	$	4,834
	Thermo Fisher Scientific, Inc. (Life sciences tools & services)		18,151		3,446
	Union Pacific Corporation (Road & rail)		27,497		3,687
	UnitedHealth Group, Inc. (Health care providers & services)		21,037		4,638
	Vail Resorts, Inc. (Hotels, restaurants & leisure)		13,012		2,765
*	Vantiv, Inc. Class “A” (IT services)		44,986		3,309
	Watsco, Inc. (Trading companies & distributors)		11,329		1,926
	Zoetis, Inc. (Pharmaceuticals)		30,535		2,200
					115,167

	Europe—14.6%
	Denmark—2.0%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		78,583		4,236
	France—5.4%
	BNP Paribas S.A. (Banks)		48,141		3,596
	LVMH Moet Hennessy Louis Vuitton SE (Textiles, apparel & luxury goods)		11,655		3,432
	Valeo S.A. (Auto components)		58,561		4,375
					11,403
	Germany—1.8%
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		142,226		3,897
	Netherlands—2.9%
	Koninklijke Philips N.V. (Health care equipment & supplies)		75,220		2,847
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		98,603		3,287
					6,134
	Sweden—1.2%
	Atlas Copco AB Class “A” (Machinery)		57,059		2,464
	Switzerland—1.3%
	Partners Group Holding AG (Capital markets)		4,113		2,819

	Emerging Asia—7.9%
	China—4.8%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		21,849		3,767
	Tencent Holdings, Ltd. (Internet software & services)		74,900		3,892
	Yum China Holdings, Inc. (Hotels, restaurants & leisure)		62,116		2,486
					10,145
	India—1.6%
	HDFC Bank, Ltd.—ADR (Banks)		33,506		3,407

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Global Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



Issuer	Shares		Value

Common Stocks—(continued)

Emerging Asia—(continued)
Taiwan—1.5%
Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		80,017	$	3,173

Asia—7.3%
Australia—2.8%
CSL, Ltd. (Biotechnology)		27,496		3,032
Macquarie Group, Ltd. (Capital markets)		36,988		2,875
				5,907
Hong Kong—2.9%
AIA Group, Ltd. (Insurance)		473,200		4,037
Galaxy Entertainment Group, Ltd. (Hotels, restaurants & leisure)		267,000		2,142
				6,179
Singapore—1.6%
Broadcom, Ltd. (Semiconductors & semiconductor equipment)†		12,767		3,280

Japan—7.1%
Daikin Industries, Ltd. (Building products)		30,200		3,574
FANUC Corporation (Machinery)		11,600		2,786
Keyence Corporation (Electronic equipment, instruments & components)		6,000		3,361
Komatsu, Ltd. (Machinery)		102,400		3,706
Start Today Co., Ltd. (Internet & direct marketing retail)		51,600		1,569
				14,996

United Kingdom—4.5%
BHP Billiton plc (Metals & mining)		152,393		3,132
Compass Group plc (Hotels, restaurants & leisure)		161,710		3,493
Unilever N.V. (Personal products)		51,771		2,917
				9,542
Total Common Stocks—98.7% (cost $148,043)				208,570


	Principal
Issuer	Amount		Value

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $2,743, collateralized by U.S. Treasury Inflation Indexed Bond, 0.625%, due 1/15/26		$2,743	$	2,743
Total Repurchase Agreement—1.3% (cost $2,743)				2,743
Total Investments—100.0% (cost $150,786)				211,313
Cash and other assets, less liabilities—0.0%				36
Net assets—100.0%			$	211,349

ADR = American Depository Receipt

REIT = Real Estate Investment Trust

† = U.S. listed foreign security

* = Non-income producing 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, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Information Technology	22.5	%
Financials	20.5	%
Consumer Discretionary	18.1	%
Industrials	15.3	%
Health Care	12.1	%
Energy	5.0	%
Consumer Staples	2.8	%
Materials	1.5	%
Utilities	1.2	%
Real Estate	1.0	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	64.2	%
Euro	11.7	%
Japanese Yen	7.2	%
Hong Kong Dollar	4.8	%
British Pound Sterling	3.2	%
Australian Dollar	2.8	%
Danish Krone	2.0	%
Canadian Dollar	1.5	%
Swiss Franc	1.4	%
Swedish Krona	1.2	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	International Leaders Fund

	The International Leaders Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Simon Fennell Kenneth J. McAtamney	The William Blair International Leaders Fund (Class N shares) posted a 29.65% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), increased 27.81%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by a combination of stock selection and an overweight in the Information Technology sector, particularly within the Internet Software & Services industry. Stock selection within Financials was another notable contributor during the period, aided by AIA Group and China Merchants Bank. AIA Group, a leading provider of life insurance throughout Asia, continued to benefit from strong demand for its products, a trend we expect to continue as more emerging market consumers enter the middle class. China Merchants Bank also posted solid operating performance as the company benefited from strong loan growth, improving credit quality, and good operating expense control. Strong results at Lonza Group, a custom manufacturer of biopharmaceuticals and specialty ingredients, and Alibaba Group, the China-based e-commerce giant, also contributed to the Fund’s outperformance for the year. Partially offsetting these positive effects were negative stock selection in the Real Estate and Consumer Discretionary sectors along with an underweight allocation in the Emerging Asia region. Within the Real Estate sector, Nippon Prologis REIT, which focuses on large scale, class-A, advanced logistics facilities in Japan, performed in line with our expectations while the stock price failed to keep up with strong broad-market returns. Despite the addition of some new supply of such logistics facilities entering the market, we continue to believe the company is well positioned to benefit from growth in e-commerce and the scarcity of modern logistics facilities in Japan. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

International Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			Since Inception
Class N(a)		29.65	%		11.51	%		9.89	%		10.77	%
Class I(a)		30.05			11.76			10.16			11.04
MSCI ACW Ex-U.S. IMI (net)(a)		27.81			8.38			7.22			8.37
Institutional Class(b)		30.08			11.88			10.30			11.14
MSCI ACW Ex-U.S. IMI (net)(b)		27.81			8.38			7.22			7.94

(a)	Since inception is for the period from August 16, 2012 (Commencement of Operations) to December 31, 2017.
(b)	Since inception is for the period from November 2, 2012 (Commencement of Operations) to December 31, 2017.

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. 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 (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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

International Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Europe–38.5%
	Belgium—1.7%
	KBC Groep N.V. (Banks)		74,300	$	6,339
	Denmark—3.2%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		163,011		8,788
	Orsted A/S (Electric utilities)		61,343		3,349
					12,137
	Finland—1.4%
	Sampo Oyj Class “A” (Insurance)		99,644		5,476
	France—12.2%
	Arkema S.A. (Chemicals)		44,758		5,454
	BNP Paribas S.A. (Banks)		94,566		7,063
	Cie Generale des Etablissements Michelin (Auto components)		31,441		4,510
	LVMH Moet Hennessy Louis Vuitton SE (Textiles, apparel & luxury goods)		31,969		9,413
	Safran S.A. (Aerospace & defense)		54,946		5,664
	Total S.A. (Oil, gas & consumable fuels)		98,873		5,462
	Valeo S.A. (Auto components)		115,424		8,624
					46,190
	Germany—3.1%
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		295,023		8,083
	Rational AG (Machinery)		5,570		3,590
					11,673
	Ireland—1.8%
	Kingspan Group plc (Building products)		156,258		6,825
	Luxembourg—0.7%
	Tenaris S.A. (Energy equipment & services)		172,426		2,723
	Netherlands—3.6%
	Koninklijke Philips N.V. (Health care equipment & supplies)		167,291		6,331
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		220,009		7,334
					13,665
	Spain—1.3%
	Amadeus IT Group S.A. (IT services)		71,260		5,140
	Sweden—3.3%
	Atlas Copco AB Class “A” (Machinery)		172,204		7,435
	Hexagon AB Class “B” (Electronic equipment, instruments & components)		98,195		4,919
					12,354
	Switzerland—6.2%
	Geberit AG (Building products)		11,030		4,857
*	Lonza Group AG (Life sciences tools & services)		27,478		7,425
	Partners Group Holding AG (Capital markets)		8,033		5,507
*	Temenos Group AG (Software)		43,816		5,620
					23,409



	Issuer	Shares		Value

	Common Stocks—(continued)

	Japan—15.2%
	Daikin Industries, Ltd. (Building products)		69,300	$	8,202
	FANUC Corporation (Machinery)		30,300		7,277
	Keyence Corporation (Electronic equipment, instruments & components)		16,500		9,243
	Komatsu, Ltd. (Machinery)		174,600		6,319
	Mitsubishi UFJ Financial Group, Inc. (Banks)		808,100		5,927
	Nippon Prologis REIT, Inc. (Equity REIT)		1,711		3,619
	Nitori Holdings Co., Ltd. (Specialty retail)		35,900		5,119
	ORIX Corporation (Diversified financial services)		402,200		6,798
	Park24 Co., Ltd. (Commercial services & supplies)		48,400		1,158
	Suzuki Motor Corporation (Automobiles)		65,400		3,792
					57,454

	Emerging Asia—14.7%
	China—10.1%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		55,219		9,521
	China Merchants Bank Co., Ltd. Class “H” (Banks)		1,668,000		6,640
	NetEase, Inc.—ADR (Internet software & services)		15,754		5,436
	Tencent Holdings, Ltd. (Internet software & services)		199,700		10,378
	Yum China Holdings, Inc. (Hotels, restaurants & leisure)		154,030		6,164
					38,139
	India—2.5%
	Hero MotoCorp, Ltd. (Automobiles)		77,791		4,640
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		180,073		4,826
					9,466
	Taiwan—2.1%
	Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & semiconductor equipment)		1,047,000		8,074

	United Kingdom—12.6%
	BHP Billiton plc (Metals & mining)		383,041		7,874
	Compass Group plc (Hotels, restaurants & leisure)		329,606		7,120
	Experian plc (Professional services)		285,219		6,300
	Ferguson plc (Trading companies & distributors)		63,127		4,543
	London Stock Exchange Group plc (Capital markets)		68,157		3,490
	Micro Focus International plc (Software)		93,108		3,172
	RELX plc (Professional services)		253,605		5,955
	St James’s Place plc (Capital markets)		243,654		4,033
	Unilever N.V. (Personal products)		95,157		5,361
					47,848

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



Issuer	Shares		Value

Common Stocks—(continued)

Canada—9.1%
Brookfield Asset Management, Inc. Class “A” (Capital markets)†		169,938	$	7,399
Canadian National Railway Co. (Road & rail)		103,579		8,541
Constellation Software, Inc. (Software)		10,336		6,266
Suncor Energy, Inc. (Oil, gas & consumable fuels)		159,192		5,845
The Toronto-Dominion Bank (Banks)		111,849		6,553
				34,604

Asia—7.7%
Australia—3.6%
CSL, Ltd. (Biotechnology)		67,362		7,427
Macquarie Group, Ltd. (Capital markets)		77,525		6,026
				13,453
Hong Kong—4.1%
AIA Group, Ltd. (Insurance)		1,240,600		10,584
Galaxy Entertainment Group, Ltd. (Hotels, restaurants & leisure)		597,000		4,791
				15,375

Emerging Europe, Mid-East, Africa—0.9%
South Africa—0.9%
Bid Corporation, Ltd. (Food & staples retailing)		141,722		3,448
Total Common Stocks—98.7% (cost $288,039)				373,792


Issuer	Principal Amount		Value

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $4,660, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$4,660	$	4,660
Total Repurchase Agreement—1.2% (cost $4,660)				4,660
Total Investments—99.9% (cost $292,699)				378,452
Cash and other assets, less liabilities—0.1%				376
Net assets—100.0%			$	378,828

ADR = American Depository Receipt

REIT = Real Estate Investment Trust

* = Non-income producing security

† = U.S. listed foreign security

At December 31, 2017, the Fund��s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	23.2	%
Industrials	20.4	%
Information Technology	20.3	%
Consumer Discretionary	14.5	%
Health Care	8.0	%
Energy	5.7	%
Materials	3.6	%
Consumer Staples	2.4	%
Real Estate	1.0	%
Utilities	0.9	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	27.7	%
Japanese Yen	15.4	%
British Pound Sterling	11.4	%
Hong Kong Dollar	8.7	%
U.S. Dollar	7.6	%
Canadian Dollar	7.3	%
Swiss Franc	6.3	%
Australian Dollar	3.6	%
Swedish Krona	3.3	%
Danish Krone	3.2	%
Indian Rupee	2.5	%
New Taiwan Dollar	2.1	%
All Other Currencies	0.9	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	International Developed Plus Fund (formerly known as International Equity Fund)

	The International Developed Plus Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

David Merjan John C. Murphy	The William Blair International Developed Plus Fund (Class N shares) posted a 23.43% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI World ex-U.S. Index (net) (the “Index”), increased 24.21%. Calendar year 2017 underperformance versus the Index was primarily driven by negative stock selection in the Consumer Discretionary and Industrials sectors, as well as the underweight allocation in the Developed Asia ex-Japan region. Within the Consumer Discretionary sector, UK media company ITV lagged amid concerns about a structurally weaker television advertising spending environment and previously announced spending cuts by leading consumer products companies. Within Industrials, UK-based distribution and outsourcing holding Bunzl lagged amid concerns about increasing competition from Amazon. The more cyclically-led environment was also a general headwind for Bunzl’s shares given the more defensive nature of the business. Swiss bathroom fixtures company Geberit also detracted from performance, as the share price weakened following disappointing 3Q financial results due to weaker organic growth and a larger than expected operating margin decline. Higher raw materials prices and a tighter market for installers were the primary culprits for the profit shortfall. Mitigating these negative effects were positive stock selection across most sectors. Utilities exposure was particularly beneficial to the Fund’s performance, propelled by Veolia Environnement SA. Headquartered in France, Veolia is a water and waste management company. Its shares benefited from increased waste volumes and accelerating momentum in the commercial business during the year. Diageo PLC and Straumann Holding AG in the Consumer Staples and Health Care sectors were additional sources of outperformance. Diageo is the UK-based beverage company, which benefited from solid organic growth in its key markets of Europe, Asia Pacific and Africa during 2017. Management’s increased operating margin guidance and £1.5 billion share buyback plan also buoyed investor sentiment. Swiss dental implant maker Straumann’s shares were driven by better than expected earnings and acquisitions which were favorably received by investors. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

International Developed Plus Fund (formerly known as International Equity Fund)

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		23.43	%		7.72	%		7.67	%		1.12	%
Class I		23.72			7.99			7.94			1.37
MSCI World Ex-U.S. Index (net)		24.21			7.36			7.46			1.87

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. 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 (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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

International Developed Plus Fund (formerly known as International Equity Fund)

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Europe, Mid-East—38.2%
	Belgium—1.5%
	UCB S.A. (Pharmaceuticals)		23,132	$	1,837
	Denmark—3.5%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		46,196		2,491
	Novozymes A/S Class “B” (Chemicals)		29,640		1,693
					4,184
	Finland—1.5%
	Kone Oyj Class ’‘B’’ (Machinery)		33,633		1,807
	France—7.9%
	BNP Paribas S.A. (Banks)		26,524		1,981
	Capgemini SE (IT services)		20,607		2,445
	Valeo S.A. (Auto components)		36,979		2,763
	Veolia Environnement S.A. (Multi-utilities)		91,521		2,336
					9,525
	Germany—5.6%
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		67,291		1,844
	MTU Aero Engines AG (Aerospace & defense)		18,992		3,404
	SAP SE (Software)		13,376		1,500
					6,748
	Ireland—2.0%
	Kerry Group plc Class “A” (Food products)		21,610		2,424
	Israel—1.1%
*	Check Point Software Technologies, Ltd. (Software)†		12,919		1,339
	Netherlands—2.8%
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		103,586		3,453
	Sweden—5.7%
	Atlas Copco AB Class “A” (Machinery)		64,261		2,775
	Boliden AB (Metals & mining)		45,355		1,551
	Swedbank AB Class “A” (Banks)		105,434		2,544
					6,870
	Switzerland—6.6%
	Geberit AG (Building products)		5,497		2,421
	Novartis AG (Pharmaceuticals)		26,706		2,258
	Partners Group Holding AG (Capital markets)		2,713		1,860
	Straumann Holding AG (Health care equipment & supplies)		2,025		1,431
					7,970

	Japan—18.8%
	Asahi Group Holdings, Ltd. (Beverages)		40,600		2,014
	Daikin Industries, Ltd. (Building products)		21,618		2,558
	FANUC Corporation (Machinery)		8,400		2,017



	Issuer	Shares		Value

	*Common Stocks—(continued)*

	Japan—(continued)
	Harmonic Drive Systems, Inc. (Machinery)		11,200	$	655
	Keyence Corporation (Electronic equipment, instruments & components)		3,300		1,849
	Komatsu, Ltd. (Machinery)		19,600		709
*	M&A Capital Partners Co., Ltd. (Capital markets)		15,336		1,003
	Nihon M&A Center, Inc. (Professional services)		24,440		1,165
	Nitori Holdings Co., Ltd. (Specialty retail)		12,300		1,754
	Omron Corporation (Electronic equipment, instruments & components)		30,200		1,801
	ORIX Corporation (Diversified financial services)		118,829		2,009
	SCSK Corporation (IT services)		28,363		1,309
	Seria Co., Ltd. (Multiline retail)		30,300		1,829
	Suruga Bank, Ltd. (Banks)		92,900		1,993
					22,665

	United Kingdom—18.2%
	Compass Group plc (Hotels, restaurants & leisure)		180,309		3,895
	Diageo plc (Beverages)		100,674		3,704
	Halma plc (Electronic equipment, instruments & components)		111,361		1,895
*	Metro Bank plc (Banks)		26,950		1,304
	Prudential plc (Insurance)		115,555		2,973
	RELX plc (Professional services)		100,804		2,367
	Rio Tinto plc (Metals & mining)		23,061		1,227
	Schroders plc (Capital markets)		42,663		2,025
	Unilever N.V. (Personal products)		45,252		2,549
					21,939

	Canada—11.6%
	Canadian National Railway Co. (Road & rail)†		34,673		2,861
	Canadian Natural Resources, Ltd. (Oil, gas & consumable fuels)		75,560		2,700
	Enerplus Corporation (Oil, gas & consumable fuels)		156,990		1,537
	Lundin Mining Corporation (Metals & mining)		309,980		2,062
	Magna International, Inc. (Auto components)		32,860		1,862
	The Toronto-Dominion Bank (Banks)†		49,996		2,929
					13,951

	Emerging Asia—4.6%
	China—0.7%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		4,585		791
	India—1.6%
	HDFC Bank, Ltd.—ADR (Banks)		19,066		1,938

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Developed Plus Fund (formerly known as International Equity Fund)

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

	Shares or
	Principal
Issuer	Amount		Value

Common Stocks—(continued)

Emerging Asia—(continued)
Taiwan—2.3%
Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		9,000	$	1,216
Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		40,999		1,625
				2,841

Asia—4.3%
Australia—1.3%
CSL, Ltd. (Biotechnology)		13,734		1,514
Hong Kong—3.0%
AIA Group, Ltd. (Insurance)		428,986		3,660

Emerging Latin America—1.0%
Peru—1.0%
Credicorp, Ltd. (Banks)†		5,996		1,244
Total Common Stocks—96.7% (cost $93,058)				116,700

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $3,858, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$3,858		3,858
Total Repurchase Agreement—3.2% (cost $3,858)				3,858
Total Investments—99.9% (cost $96,916)				120,558
Cash and other assets, less liabilities—0.1%				181
Net assets—100.0%			$	120,739

ADR = American Depository Receipt

* = Non-income producing security

† = U.S. listed foreign security

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	23.5	%
Industrials	19.4	%
Information Technology	15.1	%
Consumer Discretionary	10.4	%
Consumer Staples	9.2	%
Health Care	8.2	%
Energy	6.6	%
Materials	5.6	%
Utilities	2.0	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	24.3	%
Japanese Yen	19.4	%
British Pound Sterling	16.6	%
U.S. Dollar	10.9	%
Canadian Dollar	7.0	%
Swiss Franc	6.8	%
Swedish Krona	5.9	%
Danish Krone	3.6	%
Hong Kong Dollar	3.1	%
Australian Dollar	1.3	%
New Taiwan Dollar	1.1	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)

	The Institutional International Developed Plus Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

David Merjan John C. Murphy	The William Blair Institutional International Developed Plus Fund posted a 24.28% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI World ex-U.S. Index (net) (the “Index”), increased 24.21%. The Fund’s calendar year 2017 strong performance was primarily driven by positive stock selection across most sectors. The Fund’s Utilities exposure was particularly beneficial to performance, propelled by Veolia Environnement SA. Headquartered in France, Veolia is a water and waste management company. Its shares benefited from increased waste volumes and accelerating momentum in the commercial business during the year. Diageo PLC and Straumann Holding AG in the Consumer Staples and Health Care sectors, respectively, were additional sources of outperformance. Diageo is a UK-based beverage company which benefited from solid organic growth in its key markets of Europe, Asia Pacific and Africa during 2017. Management’s increased operating margin guidance and £1.5 billion share buyback plan also buoyed investor sentiment. Swiss dental implant maker Straumann’s shares were driven by better than expected earnings and acquisitions, which were favorably received by investors. Partially offsetting these positive effects was negative stock selection in the Consumer Discretionary and Industrials sectors, as well as the Fund’s underweight allocation in the Developed Asia ex-Japan region relative to the Index. Within the Consumer Discretionary sector, UK media company ITV lagged amid concerns about a structurally weaker television advertising spending environment and previously announced spending cuts by leading consumer products companies. Within Industrials, UK-based distribution and outsourcing company Bunzl lagged amid concerns about increasing competition from Amazon. The more cyclically led environment was also a general headwind for Bunzl’s shares given the more defensive nature of the business. Swiss bathroom fixtures company Geberit also detracted from the Fund’s relative performance, as the share price weakened following disappointing 3Q financial results due to weaker organic growth and a larger than expected operating margin decline. Higher raw materials prices and a tighter market for installers were the primary culprits for the profit shortfall. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Institutional International Developed Plus Fund		24.28	%		8.10	%		7.86	%		1.26	%
MSCI World Ex-U.S. Index (net)		24.21			7.36			7.46			1.87

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. 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. 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.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	*Common Stocks*

	*Europe, Mid-East—38.8%*
	Belgium—1.6%
	UCB S.A. (Pharmaceuticals)		3,713	$	295
	Denmark—3.5%
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		7,414		399
	Novozymes A/S Class “B” (Chemicals)		4,757		272
					671
	Finland—1.5%
	Kone Oyj Class “B’’ (Machinery)		5,398		290
	France—8.0%
	BNP Paribas S.A. (Banks)		4,257		318
	Capgemini SE (IT services)		3,307		392
	Valeo S.A. (Auto components)		5,935		444
	Veolia Environnement S.A. (Multi-utilities)		14,688		375
					1,529
	Germany—5.7%
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		10,800		296
	MTU Aero Engines AG (Aerospace & defense)		3,048		546
	SAP SE (Software)		2,147		241
					1,083
	Ireland—2.0%
	Kerry Group plc Class “A” (Food products)		3,468		389
	Israel—1.1%
*	Check Point Software Technologies, Ltd. (Software)†		2,073		215
	Netherlands—2.9%
	Royal Dutch Shell plc Class “A” (Oil, gas & consumable fuels)		16,625		554
	Sweden—5.8%
	Atlas Copco AB Class “A” (Machinery)		10,313		445
	Boliden AB (Metals & mining)		7,279		249
	Swedbank AB Class “A” (Banks)		16,921		408
					1,102
	Switzerland—6.7%
	Geberit AG (Building products)		882		388
	Novartis AG (Pharmaceuticals)		4,286		363
	Partners Group Holding AG (Capital markets)		435		298
	Straumann Holding AG (Health care equipment & supplies)		325		230
					1,279



	Issuer	Shares		Value

	Common Stocks—(continued)

	Japan—18.9%
	Asahi Group Holdings, Ltd. (Beverages)		6,500	$	322
	Daikin Industries, Ltd. (Building products)		3,506		415
	FANUC Corporation (Machinery)		1,300		312
	Harmonic Drive Systems, Inc. (Machinery)		1,800		105
	Keyence Corporation (Electronic equipment, instruments & components)		500		280
	Komatsu, Ltd. (Machinery)		3,100		112
*	M&A Capital Partners Co., Ltd. (Capital markets)		2,469		162
	Nihon M&A Center, Inc. (Professional services)		3,900		186
	Nitori Holdings Co., Ltd. (Specialty retail)		2,000		285
	Omron Corporation (Electronic equipment, instruments & components)		4,800		286
	ORIX Corporation (Diversified financial services)		19,112		323
	SCSK Corporation (IT services)		4,583		212
	Seria Co., Ltd. (Multiline retail)		4,900		296
	Suruga Bank, Ltd. (Banks)		14,900		320
					3,616

	United Kingdom—18.4%
	Compass Group plc (Hotels, restaurants & leisure)		28,938		625
	Diageo plc (Beverages)		16,157		595
	Halma plc (Electronic equipment, instruments & components)		17,873		304
*	Metro Bank plc (Banks)		4,325		209
	Prudential plc (Insurance)		18,546		477
	RELX plc (Professional services)		16,178		380
	Rio Tinto plc (Metals & mining)		3,701		197
	Schroders plc (Capital markets)		6,847		325
	Unilever N.V. (Personal products)		7,263		409
					3,521

	Canada—11.7%
	Canadian National Railway Co. (Road & rail)†		5,565		459
	Canadian Natural Resources, Ltd. (Oil, gas & consumable fuels)		12,127		433
	Enerplus Corporation (Oil, gas & consumable fuels)		25,196		247
	Lundin Mining Corporation (Metals & mining)		49,601		330
	Magna International, Inc. (Auto components)		5,274		299
	The Toronto-Dominion Bank (Banks)†		8,024		470
					2,238

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)

	Emerging Asia—4.4%
	China—0.7%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		736	$	127
	India—1.6%
	HDFC Bank, Ltd.—ADR (Banks)		3,060		311
	Taiwan—2.1%
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		1,000		135
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		6,560		260
					395

	Asia—4.4%
	Australia—1.3%
	CSL, Ltd. (Biotechnology)		2,204		243
	Hong Kong—3.1%
	AIA Group, Ltd. (Insurance)		68,871		588

	Emerging Latin America—1.1%
	Peru—1.1%
	Credicorp, Ltd. (Banks)†		962		200
	Total Common Stocks—97.7% (cost $14,397)				18,646

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $454, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26		$454		454
	Total Repurchase Agreement—2.4% (cost $454)				454
	Total Investments—100.1% (cost $14,851)				19,100
	Liabilities, plus cash and other assets—(0.1)%				(10	)
	Net assets—100.0%			$	19,090

ADR = American Depository Receipt

* = Non-income producing security

† = U.S. listed foreign security

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	23.8	%
Industrials	19.5	%
Information Technology	14.7	%
Consumer Discretionary	10.4	%
Consumer Staples	9.2	%
Health Care	8.2	%
Energy	6.6	%
Materials	5.6	%
Utilities	2.0	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	24.4	%
Japanese Yen	19.4	%
British Pound Sterling	16.7	%
U.S. Dollar	10.9	%
Canadian Dollar	7.0	%
Swiss Franc	6.9	%
Swedish Krona	5.9	%
Danish Krone	3.6	%
Hong Kong Dollar	3.2	%
Australian Dollar	1.3	%
All Other Currencies	0.7	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

		International Growth Fund

		The International Growth Fund seeks long-term capital appreciation.

		AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Simon Fennell Kenneth J. McAtamney Jeffrey A. Urbina		The William Blair International Growth Fund (Class N shares) posted a 29.11% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), increased 27.81%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. Stock selection in the Health Care and Consumer Staples sectors was particularly beneficial to the Fund’s performance. Within Health Care, Swiss biopharma holdings Lonza Group and Actelion bolstered the Fund’s relative returns. Lonza’s share price was driven by revenue growth and profit margin expansion in its commercial manufacturing and clinical development divisions, while Actelion rallied on the news that it had agreed to be taken over by Johnson & Johnson. Asahi Group Holdings within the Consumer Staples sector was an additional source of the Fund’s outperformance. The Japanese beverage company benefited from favorable operating trends in its European soft drinks business, offsetting weakness in the domestic beer business. These positive effects were partially offset by the Fund’s underweightings to the Emerging Asia and Developed Asia ex-Japan regions relative to the Index, and stock selection in the Materials and Energy sectors. Within Materials, Mexico-based Cemex was the largest detractor from the Fund’s performance. Cemex’s share price was hampered by the hurricanes on the U.S. Atlantic and Gulf Coasts, higher production costs, and pressure from lower demand in the Philippines. Within Energy, the shares of Brazilian oil and gas company Petroleo Brasileiro (Petrobras) were adversely impacted by concerns about the sustainability of the company’s turnaround in the wake of a corruption investigation involving Brazil’s President Temer, including a potential rollback of fuel price liberalization, which could adversely impact the company’s refining margins. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

International Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		29.11	%		7.74	%		7.50	%		2.14	%
Class I		29.49			8.05			7.83			2.45
MSCI ACW Ex-U.S. IMI (net)		27.81			8.38			7.22			2.20

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 (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.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Europe, Mid-East—37.7%
	Belgium—1.2%
	KBC Groep N.V. (Banks)		442,293	$	37,737
	Denmark—3.6%
	DSV A/S (Road & rail)		442,368		34,835
*	Genmab A/S (Biotechnology)		23,325		3,868
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		1,061,281		57,214
	Orsted A/S (Electric utilities)		311,050		16,980
					112,897
	Finland—0.3%
	Huhtamaki Oyj (Containers & packaging)		96,084		4,035
	Nokian Renkaat Oyj (Auto components)		98,499		4,467
					8,502
	France—11.0%
	Arkema S.A. (Chemicals)		250,277		30,495
	BNP Paribas S.A. (Banks)		674,725		50,396
	Cie Generale des Etablissements Michelin (Auto components)		172,232		24,705
	Hermes International (Textiles, apparel & luxury goods)		30,462		16,310
	Ipsen S.A. (Pharmaceuticals)		31,786		3,798
	Kering (Textiles, apparel & luxury goods)		81,204		38,291
*	Nexity S.A. (Real estate management & development)		68,322		4,068
	Orpea (Health care providers & services)		74,521		8,789
	Rubis SCA (Gas utilities)		96,899		6,857
	SEB S.A. (Household durables)		25,467		4,720
	Thales S.A. (Aerospace & defense)		229,893		24,792
	Total S.A. (Oil, gas & consumable fuels)		833,150		46,029
	Valeo S.A. (Auto components)		367,253		27,439
	Veolia Environnement S.A. (Multi-utilities)		812,698		20,746
	Vinci S.A. (Construction & engineering)		381,818		39,009
					346,444
	Germany—6.1%
	Adidas AG (Textiles, apparel & luxury goods)		117,625		23,590
	Bechtle AG (IT services)		66,456		5,543
	Carl Zeiss Meditec AG (Health care equipment & supplies)		81,707		5,074
	Covestro AG (Chemicals)		188,627		19,471
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		1,108,732		30,378
	KION Group AG (Machinery)		85,920		7,421
	MTU Aero Engines AG (Aerospace & defense)		150,108		26,908
	SAP SE (Software)		221,858		24,876
	Vonovia SE (Real estate management & development)		681,715		33,855
	Washtec AG (Machinery)		25,951		2,451
	Wirecard AG (IT services)		100,305		11,201
					190,768



	Issuer	Shares		Value

	Common Stocks—(continued)

	Europe, Mid-East—(continued)
	Ireland—1.6%
*	ICON plc (Life sciences tools & services)†		66,773	$	7,489
	Kerry Group plc Class “A” (Food products)		242,671		27,224
	Kingspan Group plc (Building products)		124,798		5,451
	Smurfit Kappa Group plc (Containers & packaging)		333,571		11,283
					51,447
	Israel—1.1%
*	Check Point Software Technologies, Ltd. (Software)†		238,543		24,718
	Frutarom Industries, Ltd. (Chemicals)		54,438		5,108
*	Wix.com, Ltd. (Internet software & services)†		56,892		3,274
					33,100
	Italy—2.9%
	Anima Holding SpA (Capital markets)		606,529		4,337
	Banca Generali SpA (Capital markets)		380,732		12,672
	Brembo SpA (Auto components)		305,571		4,645
	Enel SpA (Electric utilities)		5,057,574		31,131
	Ferrari N.V. (Automobiles)		132,367		13,889
	FinecoBank Banca Fineco SpA (Banks)		910,297		9,322
	Interpump Group SpA (Machinery)		163,248		5,136
	Recordati SpA (Pharmaceuticals)		198,643		8,833
					89,965
	Luxembourg—0.5%
	Eurofins Scientific SE (Life sciences tools & services)		24,260		14,775
	Netherlands—0.8%
	Wolters Kluwer N.V. (Professional services) .		504,999		26,346
	Spain—1.5%
	Amadeus IT Group S.A. (IT services)		424,432		30,611
	Bankinter S.A. (Banks)		1,299,654		12,326
	Prosegur Cia de Seguridad S.A. (Commercial services & supplies)		525,563		4,130
					47,067
	Sweden—2.2%
	Atlas Copco AB Class “A” (Machinery)		717,156		30,966
	Boliden AB (Metals & mining)		492,165		16,835
	Fabege AB (Real estate management & development)		215,328		4,583
	Hexpol AB (Chemicals)		388,318		3,936
	Hufvudstaden AB Class “A” (Real estate management & development)		224,788		3,601
	Husqvarna AB Class “B” (Household durables)		442,345		4,211
	Intrum Justitia AB (Commercial services & supplies)		166,539		6,158
					70,290

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Europe, Mid-East—(continued)
	Switzerland—4.9%
	Belimo Holding AG (Building products)		509	$	2,228
*	Cembra Money Bank AG (Consumer finance)		50,449		4,704
*	dormakaba Holding AG (Building products)		5,001		4,657
*	Dufry AG (Specialty retail)		47,232		7,023
*	Glencore plc (Metals & mining)		9,402,332		49,509
	Logitech International S.A. (Technology hardware, storage & peripherals)		233,055		7,869
*	Lonza Group AG (Life sciences tools & services)		144,180		38,958
	Partners Group Holding AG (Capital markets)		42,431		29,087
	Straumann Holding AG (Health care equipment & supplies)		13,471		9,518
					153,553

	Japan—17.6%
	Asahi Group Holdings, Ltd. (Beverages)		673,300		33,404
	Asahi Intecc Co., Ltd. (Health care equipment & supplies)		235,000		8,092
	Asahi Kasei Corporation (Chemicals)		2,022,200		26,086
	Bandai Namco Holdings, Inc. (Leisure products)		356,700		11,666
	Daikin Industries, Ltd. (Building products)		339,000		40,120
	FANUC Corporation (Machinery)		149,600		35,928
	Hitachi Chemical Co., Ltd. (Chemicals)		215,800		5,543
	Hoshizaki Corporation (Machinery)		47,300		4,194
	Izumi Co., Ltd. (Multiline retail)		73,300		4,567
	Japan Aviation Electronics Industry, Ltd. (Electronic equipment, instruments & components)		263,000		4,451
	Keyence Corporation (Electronic equipment, instruments & components)		44,900		25,153
	Koito Manufacturing Co., Ltd. (Auto components)		193,700		13,615
	Komatsu, Ltd. (Machinery)		654,900		23,703
	Kose Corporation (Personal products)		63,500		9,913
	MinebeaMitsumi, Inc. (Machinery)		288,100		6,042
	MISUMI Group, Inc. (Trading companies & distributors)		244,600		7,120
	Mitsubishi UFJ Financial Group, Inc. (Banks)		7,815,900		57,325
	Mitsui Mining & Smelting Co., Ltd. (Metals & mining)		131,464		7,689
	Nabtesco Corporation (Machinery)		143,900		5,517
	Nichias Corporation (Building products)		367,000		4,889
	Nihon M&A Center, Inc. (Professional services)		174,500		8,317
	Nintendo Co., Ltd. (Software)		94,400		34,509
	Nitori Holdings Co., Ltd. (Specialty retail) .		104,800		14,942
	Nomura Research Institute, Ltd. (IT services)		181,100		8,422
	Omron Corporation (Electronic equipment, instruments & components)		207,100		12,352



	Issuer	Shares		Value

	Common Stocks—(continued)

	Japan—(continued)
	Oracle Corporation Japan (Software)		36,900	$	3,059
	Otsuka Corporation (IT services)		93,000		7,131
	Persol Holdings Co., Ltd. (Professional services)		203,300		5,095
	Pola Orbis Holdings, Inc. (Personal products)		297,100		10,429
*	Renesas Electronics Corporation (Semiconductors & semiconductor equipment)		635,800		7,409
	Sankyu, Inc. (Road & rail)		110,220		4,759
	SCSK Corporation (IT services)		131,900		6,087
	Shimadzu Corporation (Electronic equipment, instruments & components)		101,500		2,308
	Sony Corporation (Household durables)		535,900		24,176
	Start Today Co., Ltd. (Internet & direct marketing retail)		192,300		5,845
	Suruga Bank, Ltd. (Banks)		234,200		5,024
	Taisei Corporation (Construction & engineering)		154,800		7,707
	TechnoPro Holdings, Inc. (Professional services)		160,900		8,739
	TIS, Inc. (IT services)		160,000		5,588
	Topcon Corporation (Electronic equipment, instruments & components)		218,900		4,735
	Toray Industries, Inc. (Chemicals)		1,325,300		12,497
	Tsuruha Holdings, Inc. (Food & staples retailing)		41,600		5,656
	Ulvac, Inc. (Semiconductors & semiconductor equipment)		92,200		5,810
	Zenkoku Hosho Co., Ltd. (Diversified financial services)		141,400		6,080
					551,693

	Emerging Asia—17.5%
	China—7.7%
*	3SBio, Inc. (Biotechnology)		2,523,500		4,955
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		208,800		36,003
	Anhui Conch Cement Co., Ltd. Class “H” (Construction materials)		2,545,500		11,973
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		33,179		4,792
*	China Mengniu Dairy Co., Ltd. (Food products)		3,378,500		10,054
	China Overseas Land & Investment, Ltd. (Real estate management & development)		5,274,000		16,977
	CSPC Pharmaceutical Group, Ltd. (Pharmaceuticals)		4,974,000		10,046
	Industrial and Commercial Bank of China, Ltd. Class “H” (Banks)		50,326,000		40,517
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		5,432,000		56,560
*	SINA Corporation (Internet software & services)†		67,408		6,762

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	China—(continued)
	Tencent Holdings, Ltd. (Internet software & services)		835,200	$	43,402
					242,041
	India—4.2%
	Adani Ports & Special Economic Zone, Ltd. (Transportation infrastructure)		717,725		4,573
	Bharat Electronics, Ltd. (Aerospace & defense)		1,674,003		4,777
	Bharti Infratel, Ltd. (Diversified telecommunication services)		677,116		4,022
	Britannia Industries, Ltd. (Food products) .		148,051		10,937
	Eicher Motors, Ltd. (Machinery)		16,143		7,676
	HDFC Bank, Ltd. (Banks)		661,654		19,400
	Hindustan Zinc, Ltd. (Metals & mining)		934,587		4,520
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		281,461		5,261
	IndusInd Bank, Ltd. (Banks)		375,632		9,695
*	MakeMyTrip, Ltd. (Internet & direct marketing retail)†		125,107		3,735
	Maruti Suzuki India, Ltd. (Automobiles)		162,561		24,795
	Motherson Sumi Systems, Ltd. (Auto components)		1,127,449		6,704
	UPL, Ltd. (Chemicals)		424,530		5,068
	Voltas, Ltd. (Construction & engineering)		859,418		8,819
	Yes Bank, Ltd. (Banks)		2,422,256		11,958
					131,940
	Indonesia—1.1%
	PT Bank Central Asia Tbk (Banks)		20,170,400		32,558
	South Korea—2.6%
*	Hugel, Inc. (Biotechnology)		7,909		4,134
	LG Innotek Co., Ltd. (Electronic equipment, instruments & components)		35,436		4,766
*	Netmarble Games Corp. (Software)		49,062		8,639
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		20,655		49,161
*	Samsung SDI Co., Ltd. (Electronic equipment, instruments & components)		56,944		10,878
	Yuhan Corporation (Pharmaceuticals)		21,343		4,366
					81,944
	Taiwan—1.7%
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		1,598,000		15,787
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		946,373		37,524
					53,311
	Thailand—0.2%
	PTT Global Chemical PCL (Chemicals)		2,573,200		6,711



	Issuer	Shares		Value

	Common Stocks—(continued)

	United Kingdom—12.0%
	3i Group plc (Capital markets)		1,516,697	$	18,706
	Ashtead Group plc (Trading companies & distributors)		572,177		15,389
	Bellway plc (Household durables)		258,396		12,430
	Burberry Group plc (Textiles, apparel & luxury goods)		645,042		15,607
	Carnival plc (Hotels, restaurants & leisure)		298,165		19,694
	Close Brothers Group plc (Capital markets)		201,184		3,933
	Compass Group plc (Hotels, restaurants & leisure)		1,760,766		38,037
	Dechra Pharmaceuticals plc (Pharmaceuticals)		181,566		5,138
	Diageo plc (Beverages)		880,073		32,379
	easyJet plc (Airlines)		234,724		4,640
	Fevertree Drinks plc (Beverages)		196,810		6,051
	Greggs plc (Hotels, restaurants & leisure)		287,597		5,432
	Halma plc (Electronic equipment, instruments & components)		308,249		5,244
	Hiscox, Ltd. (Insurance)		620,848		12,272
	Intermediate Capital Group plc (Capital markets)		577,199		8,931
	Intertek Group plc (Professional services)		199,105		13,952
	Jupiter Fund Management plc (Capital markets)		875,157		7,426
*	Metro Bank plc (Banks)		95,241		4,609
	Micro Focus International plc (Software)		277,634		9,457
	Playtech plc (Software)		428,150		4,974
	Renishaw plc (Electronic equipment, instruments & components)		87,439		6,168
	Rentokil Initial plc (Commercial services & supplies)		2,526,960		10,849
	Segro plc (Equity REIT)		1,422,129		11,271
	Spirax-Sarco Engineering plc (Machinery)		120,084		9,112
	Synthomer plc (Chemicals)		628,861		4,172
	Unilever plc (Personal products)		649,017		36,151
	Victrex plc (Chemicals)		275,771		9,822
	Vodafone Group plc (Wireless telecommunication services)		9,955,016		31,586
	WH Smith plc (Specialty retail)		445,713		14,124
					377,556

	Canada—5.8%
	Canadian National Railway Co. (Road & rail)		513,266		42,323
	Constellation Software, Inc. (Software)		20,055		12,158
	Dollarama, Inc. (Multiline retail)		114,205		14,269
	Finning International, Inc. (Trading companies & distributors)		174,716		4,409
	Hudbay Minerals, Inc. (Metals & mining)		449,507		3,980
	Rogers Communications, Inc. Class “B” (Wireless telecommunication services)		452,500		23,057
*	Shopify, Inc. Class “A” (Internet software & services)†		78,824		7,961

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Canada—(continued)
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		1,186,929	$	43,577
	The Toronto-Dominion Bank (Banks)		539,477		31,609
					183,343

	Emerging Latin America—2.9%
	Argentina—0.2%
	Grupo Financiero Galicia S.A.—ADR (Banks)		83,346		5,488
	Brazil—0.9%
	CCR S.A (Transportation infrastructure)		1,069,400		5,207
	Engie Brasil Energia S.A. (Independent power & renewable electricity producers)		296,800		3,177
	Kroton Educacional S.A. (Diversified consumer services)		2,337,900		12,968
	M Dias Branco S.A. (Food products)		163,000		2,560
	Via Varejo S.A. (Specialty retail)		674,400		4,975
					28,887
	Mexico—0.9%
	Arca Continental S.A.B. de C.V. (Beverages)		1,209,863		8,378
	Grupo Financiero Banorte S.A.B. de C.V. Class “O” (Banks)		2,826,800		15,517
	Infraestructura Energetica Nova S.A.B. de C.V. (Gas utilities)		797,200		3,900
					27,795
	Peru—0.9%
	Credicorp, Ltd. (Banks)†		140,077		29,056

	Asia—2.5%
	Australia—0.3%
	Aristocrat Leisure, Ltd. (Hotels, restaurants & leisure)		605,059		11,189
	Hong Kong—2.2%
	AIA Group, Ltd. (Insurance)		3,821,800		32,603
*	China High Precision Automation Group, Ltd. (Electronic equipment, instruments & components)**§		6,597,000		—
	Galaxy Entertainment Group, Ltd. (Hotels, restaurants & leisure)		4,380,000		35,150
					67,753

	Emerging Europe, Mid-East, Africa—1.3%
	Georgia—0.2%
	BGEO Group plc (Banks)		100,308		4,817
	Hungary—0.3%
	MOL Hungarian Oil & Gas plc (Oil, gas & consumable fuels)		843,425		9,787

	Issuer	Shares or Principal Amount		Value

	Common Stocks—(continued)

	Emerging Europe, Mid-East, Africa—(continued)
	Russia—0.3%
	Globaltrans Investment plc—GDR (Road & rail)		303,563	$	2,850
*	X5 Retail Group N.V.—GDR (Food & staples retailing)		179,679		6,787
					9,637
	South Africa—0.5%
	Bid Corporation, Ltd. (Food & staples retailing)		231,797		5,639
	Bidvest Group, Ltd. (Industrial conglomerates)		231,797		4,086
	RMB Holdings, Ltd. (Diversified financial services)		1,070,300		6,849
					16,574
	Total Common Stocks—97.3% (cost $2,380,700)				3,054,971

	Preferred Stocks
	Brazil—1.2%
	Itau Unibanco Holding S.A. (Banks)		3,003,540		38,555
	Germany—0.2%
	Fuchs Petrolub SE (Chemicals)		108,693		5,771
	Total Preferred Stocks—1.4% (cost $40,903)				44,326

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $34,165, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$34,165		34,165
	Total Repurchase Agreement—1.1% (cost $34,165)				34,165
	Total Investments—99.8% (cost $2,455,768)				3,133,462
	Cash and other assets, less liabilities—0.2%				5,604
	Net assets—100.0%			$	3,139,066

ADR = American Depository Receipt

GDR = Global Depository Receipt

REIT = Real Estate Investment Trust

* = Non-income producing security

† = U.S. listed foreign security

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. Fair Value was determined using significant unobservable inputs. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	20.2	%
Information Technology	16.9	%
Industrials	16.8	%
Consumer Discretionary	15.1	%
Materials	7.9	%
Consumer Staples	6.6	%
Health Care	6.3	%
Energy	3.2	%
Utilities	2.7	%
Real Estate	2.4	%
Telecommunication Services	1.9	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	26.2	%
Japanese Yen	17.8	%
British Pound Sterling	13.9	%
Hong Kong Dollar	8.5	%
U.S. Dollar	5.7	%
Canadian Dollar	5.7	%
Indian Rupee	4.1	%
Danish Krone	3.6	%
Swiss Franc	3.4	%
South Korean Won	2.6	%
Swedish Krona	2.3	%
Brazilian Real	2.2	%
Indonesian Rupiah	1.0	%
All Other Currencies	3.0	%
Total	100.0	%

During the year ended December 31, 2017, the Fund sold its investment in William Blair China A-Share Fund, LLC, an affiliated fund.

	Share Activity					Year Ended December 31, 2017
Security Name	Balance 12/31/2016	Purchases	Sales	Balance 12/31/2017	Value 12/31/2017	Dividend Income	Net realized gain (loss)	Change in net unrealized appreciation (depreciation)

William Blair China A-Share Fund, LLC	10,158	—	10,158	—	$—	$—	$58	$(62)

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	Institutional International Growth Fund

	The Institutional International Growth Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Simon Fennell Kenneth J. McAtamney Jeffrey A. Urbina	The William Blair Institutional International Growth Fund posted a 29.53% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. IMI Index (net) (the “Index”), increased 27.81%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. Stock selection in the Health Care and Consumer Staples sectors was particularly beneficial to the Fund’s performance. Within Health Care, Swiss biopharma holdings Lonza Group and Actelion bolstered the Fund’s relative returns. Lonza’s share price was driven by revenue growth and profit margin expansion in its commercial manufacturing and clinical development divisions, while Actelion rallied on the news that it had agreed to be taken over by Johnson & Johnson. Asahi Group Holdings within the Consumer Staples sector was an additional source of the Fund’s outperformance. The Japanese beverage company benefited from favorable operating trends in its European soft drinks business, offsetting weakness in the domestic beer business. These positive effects were partially offset by the Fund’s underweightings to the Emerging Asia and Developed Asia ex-Japan regions relative to the Index, and stock selection in the Materials and Energy sectors. Within Materials, Mexico-based Cemex was the largest detractor from the Fund’s performance. Cemex’s share price was hampered by the hurricanes on the U.S. Atlantic and Gulf Coasts, higher production costs, and pressure from lower demand in the Philippines. Within Energy, the shares of Brazilian oil and gas company Petroleo Brasileiro (Petrobras) were adversely impacted by concerns about the sustainability of the company’s turnaround in the wake of a corruption investigation involving Brazil’s President Temer, including a potential rollback of fuel price liberalization, which could adversely impact the company’s refining margins. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

Annual Report

December 31, 2017

Institutional International Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year		3 Year		5 Year		10 Year
Institutional International Growth Fund	29.53	%	8.16	%	7.93	%	2.60	%
MSCI ACW Ex-U.S. IMI (net)	27.81		8.38		7.22		2.20

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. 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. 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.

Sector Diversification (Unaudited)

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

December 31, 2017

William Blair Funds

Institutional International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Europe, Mid-East—37.9%
	Belgium—1.2%
	KBC Groep N.V. (Banks)		329,691	$	28,130
	Denmark—3.6%
	DSV A/S (Road & rail)		330,674		26,040
*	Genmab A/S (Biotechnology)		17,435		2,891
	Novo Nordisk A/S Class “B” (Pharmaceuticals)		793,278		42,766
	Orsted A/S (Electric utilities)		232,501		12,692
					84,389
	Finland—0.3%
	Huhtamaki Oyj (Containers & packaging)		71,820		3,016
	Nokian Renkaat Oyj (Auto components)		73,626		3,339
					6,355
	France—11.1%
	Arkema S.A. (Chemicals)		187,075		22,794
	BNP Paribas S.A. (Banks)		504,337		37,669
	Cie Generale des Etablissements Michelin (Auto components)		128,384		18,416
	Hermes International (Textiles, apparel & luxury goods)		22,770		12,192
	Ipsen S.A. (Pharmaceuticals)		23,759		2,839
	Kering (Textiles, apparel & luxury goods)		60,530		28,542
*	Nexity S.A. (Real estate management & development)		51,068		3,040
	Orpea (Health care providers & services)		55,703		6,570
	Rubis SCA (Gas utilities)		72,430		5,126
	SEB S.A. (Household durables)		19,036		3,528
	Thales S.A. (Aerospace & defense)		171,838		18,531
	Total S.A. (Oil, gas & consumable fuels)		622,755		34,405
	Valeo S.A. (Auto components)		274,511		20,510
	Veolia Environnement S.A. (Multi-utilities)		607,468		15,507
	Vinci S.A. (Construction & engineering)		285,397		29,158
					258,827
	Germany—6.1%
	Adidas AG (Textiles, apparel & luxury goods)		87,922		17,633
	Bechtle AG (IT services)		49,674		4,143
	Carl Zeiss Meditec AG (Health care equipment & supplies)		61,074		3,793
	Covestro AG (Chemicals)		139,861		14,437
	Infineon Technologies AG (Semiconductors & semiconductor equipment)		828,745		22,706
	KION Group AG (Machinery)		64,223		5,547
	MTU Aero Engines AG (Aerospace & defense)		112,201		20,113
	SAP SE (Software)		165,376		18,543
	Vonovia SE (Real estate management & development)		509,563		25,306
	Washtec AG (Machinery)		19,398		1,832
	Wirecard AG (IT services)		74,975		8,372
					142,425



	Issuer	Shares		Value

	Common Stocks—(continued)

	Europe, Mid-East—(continued)
	Ireland—1.6%
*	ICON plc (Life sciences tools & services)†		49,911	$	5,598
	Kerry Group plc Class “A” (Food products)		182,218		20,442
	Kingspan Group plc (Building products)		93,283		4,075
	Smurfit Kappa Group plc (Containers & packaging)		249,335		8,433
					38,548
	Israel—1.1%
*	Check Point Software Technologies, Ltd. (Software)†		177,813		18,425
	Frutarom Industries, Ltd. (Chemicals)		40,690		3,818
*	Wix.com, Ltd. (Internet software & services)†		42,526		2,447
					24,690
	Italy—2.9%
	Anima Holding SpA (Capital markets)		453,364		3,242
	Banca Generali SpA (Capital markets)		284,586		9,472
	Brembo SpA (Auto components)		228,405		3,472
	Enel SpA (Electric utilities)		3,780,394		23,269
	Ferrari N.V. (Automobiles)		98,941		10,382
	FinecoBank Banca Fineco SpA (Banks)		680,421		6,968
	Interpump Group SpA (Machinery)		122,023		3,839
	Recordati SpA (Pharmaceuticals)		148,480		6,602
					67,246
	Luxembourg—0.5%
	Eurofins Scientific SE (Life sciences tools & services)		18,133		11,044
	Netherlands—0.8%
	Wolters Kluwer N.V. (Professional services)		377,472		19,693
	Spain—1.5%
	Amadeus IT Group S.A. (IT services)		317,252		22,881
	Bankinter S.A. (Banks)		971,455		9,213
	Prosegur Cia de Seguridad S.A. (Commercial services & supplies)		392,842		3,088
					35,182
	Sweden—2.3%
	Atlas Copco AB Class “A” (Machinery)		536,054		23,146
	Boliden AB (Metals & mining)		367,879		12,584
	Fabege AB (Real estate management & development)		160,952		3,426
	Hexpol AB (Chemicals)		290,256		2,942
	Hufvudstaden AB Class “A” (Real estate management & development)		168,023		2,691
	Husqvarna AB Class “B” (Household durables)		330,641		3,148
	Intrum Justitia AB (Commercial services & supplies)		124,483		4,603
					52,540

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Institutional International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Europe, Mid-East—(continued)
	Switzerland—4.9%
	Belimo Holding AG (Building products)		380	$	1,664
*	Cembra Money Bank AG (Consumer finance)		37,709		3,516
*	dormakaba Holding AG (Building products) .		3,738		3,481
*	Dufry AG (Specialty retail)		35,305		5,250
*	Glencore plc (Metals & mining)		7,027,977		37,006
	Logitech International S.A. (Technology hardware, storage & peripherals)		174,202		5,881
*	Lonza Group AG (Life sciences tools & services)		107,771		29,120
	Partners Group Holding AG (Capital markets)		31,715		21,741
	Straumann Holding AG (Health care equipment & supplies)		10,068		7,114
					114,773

	Japan—17.7%
	Asahi Group Holdings, Ltd. (Beverages)		503,300		24,970
	Asahi Intecc Co., Ltd. (Health care equipment & supplies)		174,000		5,992
	Asahi Kasei Corporation (Chemicals)		1,511,600		19,499
	Bandai Namco Holdings, Inc. (Leisure products)		266,700		8,722
	Daikin Industries, Ltd. (Building products)		253,400		29,990
	FANUC Corporation (Machinery)		111,900		26,874
	Hitachi Chemical Co., Ltd. (Chemicals)		161,300		4,143
	Hoshizaki Corporation (Machinery)		35,400		3,139
	Izumi Co., Ltd. (Multiline retail)		54,800		3,414
	Japan Aviation Electronics Industry, Ltd. (Electronic equipment, instruments & components)		196,000		3,317
	Keyence Corporation (Electronic equipment, instruments & components)		33,500		18,767
	Koito Manufacturing Co., Ltd. (Auto components)		144,700		10,171
	Komatsu, Ltd. (Machinery)		484,800		17,546
	Kose Corporation (Personal products)		47,400		7,400
	MinebeaMitsumi, Inc. (Machinery)		215,300		4,515
	MISUMI Group, Inc. (Trading companies & distributors)		182,700		5,318
	Mitsubishi UFJ Financial Group, Inc. (Banks)		5,842,300		42,850
	Mitsui Mining & Smelting Co., Ltd. (Metals & mining)		97,225		5,686
	Nabtesco Corporation (Machinery)		107,500		4,122
	Nichias Corporation (Building products)		273,000		3,637
	Nihon M&A Center, Inc. (Professional services)		130,500		6,219
	Nintendo Co., Ltd. (Software)		70,600		25,809
	Nitori Holdings Co., Ltd. (Specialty retail)		78,300		11,164
	Nomura Research Institute, Ltd. (IT services)		135,400		6,297
	Omron Corporation (Electronic equipment, instruments & components)		154,800		9,232



	Issuer	Shares		Value

	Common Stocks—(continued)

	Japan—(continued)
	Oracle Corporation Japan (Software)		27,200	$	2,255
	Otsuka Corporation (IT services)		69,600		5,337
	Persol Holdings Co., Ltd. (Professional services)		152,000		3,810
	Pola Orbis Holdings, Inc. (Personal products)		222,000		7,792
*	Renesas Electronics Corporation (Semiconductors & semiconductor equipment)		475,200		5,537
	Sankyu, Inc. (Road & rail)		82,360		3,556
	SCSK Corporation (IT services)		98,600		4,550
	Shimadzu Corporation (Electronic equipment, instruments & components)		75,100		1,708
	Sony Corporation (Household durables)		400,500		18,067
	Start Today Co., Ltd. (Internet & direct marketing retail)		143,700		4,368
	Suruga Bank, Ltd. (Banks)		175,100		3,756
	Taisei Corporation (Construction & engineering)		115,700		5,761
	TechnoPro Holdings, Inc. (Professional services)		120,200		6,529
	TIS, Inc. (IT services)		119,600		4,177
	Topcon Corporation (Electronic equipment, instruments & components)		163,500		3,536
	Toray Industries, Inc. (Chemicals)		982,500		9,265
	Tsuruha Holdings, Inc. (Food & staples retailing)		31,200		4,242
	Ulvac, Inc. (Semiconductors & semiconductor equipment)		69,000		4,348
	Zenkoku Hosho Co., Ltd. (Diversified financial services)		105,600		4,541
					411,928

	Emerging Asia—17.6%
	China—7.8%
*	3SBio, Inc. (Biotechnology)		1,886,000		3,703
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		156,073		26,912
	Anhui Conch Cement Co., Ltd. Class “H” (Construction materials)		1,902,500		8,949
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		24,523		3,542
*	China Mengniu Dairy Co., Ltd. (Food products)		2,499,000		7,437
	China Overseas Land & Investment, Ltd. (Real estate management & development)		3,942,000		12,689
	CSPC Pharmaceutical Group, Ltd. (Pharmaceuticals)		3,716,000		7,505
	Industrial and Commercial Bank of China, Ltd. Class “H” (Banks)		37,618,000		30,286
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		4,059,500		42,269
*	SINA Corporation (Internet software & services)†		50,386		5,054

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Institutional International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	China—(continued)
	Tencent Holdings, Ltd. (Internet software & services)		624,300	$	32,442
					180,788
	India—4.2%
	Adani Ports & Special Economic Zone, Ltd. (Transportation infrastructure)		536,479		3,418
	Bharat Electronics, Ltd. (Aerospace & defense)		1,251,271		3,571
	Bharti Infratel, Ltd. (Diversified telecommunication services)		506,124		3,007
	Britannia Industries, Ltd. (Food products)		110,665		8,175
	Eicher Motors, Ltd. (Machinery)		12,066		5,738
	HDFC Bank, Ltd. (Banks)		494,566		14,501
	Hindustan Zinc, Ltd. (Metals & mining)		698,577		3,379
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		210,383		3,932
	IndusInd Bank, Ltd. (Banks)		280,775		7,247
*	MakeMyTrip, Ltd. (Internet & direct marketing retail)†		93,513		2,791
	Maruti Suzuki India, Ltd. (Automobiles)		121,511		18,533
	Motherson Sumi Systems, Ltd. (Auto components)		842,736		5,011
	UPL, Ltd. (Chemicals)		317,325		3,788
	Voltas, Ltd. (Construction & engineering)		642,390		6,592
	Yes Bank, Ltd. (Banks)		1,810,568		8,938
					98,621
	Indonesia—1.1%
	PT Bank Central Asia Tbk (Banks)		15,076,900		24,336
	South Korea—2.6%
*	Hugel, Inc. (Biotechnology)		5,911		3,090
	LG Innotek Co., Ltd. (Electronic equipment, instruments & components)		26,487		3,563
*	Netmarble Games Corp. (Software)		36,673		6,457
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		15,440		36,748
*	Samsung SDI Co., Ltd. (Electronic equipment, instruments & components)		42,564		8,131
	Yuhan Corporation (Pharmaceuticals)		15,946		3,262
					61,251
	Taiwan—1.7%
	MediaTek, Inc. (Semiconductors & semiconductor equipment)		1,195,000		11,806
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		707,386		28,048
					39,854
	Thailand—0.2%
	PTT Global Chemical PCL (Chemicals)		1,923,400		5,017



	Issuer	Shares		Value

	Common Stocks—(continued)

	United Kingdom—12.1%
	3i Group plc (Capital markets)		1,133,688	$	13,982
	Ashtead Group plc (Trading companies & distributors)		423,298		11,385
	Bellway plc (Household durables)		193,145		9,291
	Burberry Group plc (Textiles, apparel & luxury goods)		482,150		11,665
	Carnival plc (Hotels, restaurants & leisure)		222,870		14,720
	Close Brothers Group plc (Capital markets)		150,380		2,940
	Compass Group plc (Hotels, restaurants & leisure)		1,316,123		28,431
	Dechra Pharmaceuticals plc (Pharmaceuticals)		135,716		3,841
	Diageo plc (Beverages)		658,564		24,230
	easyJet plc (Airlines)		175,449		3,468
	Fevertree Drinks plc (Beverages)		147,109		4,523
	Greggs plc (Hotels, restaurants & leisure)		214,971		4,060
	Halma plc (Electronic equipment, instruments & components)		230,407		3,920
	Hiscox, Ltd. (Insurance)		464,066		9,173
	Intermediate Capital Group plc (Capital markets)		431,440		6,675
	Intertek Group plc (Professional services)		148,826		10,429
	Jupiter Fund Management plc (Capital markets)		654,155		5,551
*	Metro Bank plc (Banks)		71,191		3,445
	Micro Focus International plc (Software)		207,524		7,069
	Playtech plc (Software)		320,030		3,718
	Renishaw plc (Electronic equipment, instruments & components)		65,358		4,611
	Rentokil Initial plc (Commercial services & supplies)		1,888,830		8,110
	Segro plc (Equity REIT)		1,063,001		8,425
	Spirax-Sarco Engineering plc (Machinery)		89,759		6,811
	Synthomer plc (Chemicals)		470,056		3,119
	Unilever plc (Personal products)		485,121		27,021
	Victrex plc (Chemicals)		206,131		7,342
	Vodafone Group plc (Wireless telecommunication services)		7,441,094		23,609
	WH Smith plc (Specialty retail)		333,159		10,557
					282,121

	Canada—5.9%
	Canadian National Railway Co. (Road & rail)		383,652		31,635
	Constellation Software, Inc. (Software)		14,990		9,087
	Dollarama, Inc. (Multiline retail)		85,366		10,666
	Finning International, Inc. (Trading companies & distributors)		130,595		3,295
	Hudbay Minerals, Inc. (Metals & mining)		335,994		2,975
	Rogers Communications, Inc. Class “B” (Wireless telecommunication services)		338,200		17,233

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Institutional International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Canada—(continued)
*	Shopify, Inc. Class “A” (Internet software & services)†		58,919	$	5,951
	Suncor Energy, Inc. (Oil, gas & consumable fuels)		887,196		32,573
	The Toronto-Dominion Bank (Banks)		403,243		23,627
					137,042

	Emerging Latin America—2.9%
	Argentina—0.2%
	Grupo Financiero Galicia S.A.—ADR (Banks)		62,298		4,102
	Brazil—0.9%
	CCR S.A (Transportation infrastructure)		799,400		3,892
	Engie Brasil Energia S.A. (Independent power & renewable electricity producers)		221,800		2,374
	Kroton Educacional S.A. (Diversified consumer services)		1,747,500		9,694
	M Dias Branco S.A. (Food products)		121,800		1,913
	Via Varejo S.A. (Specialty retail)		504,100		3,719
					21,592
	Mexico—0.9%
	Arca Continental S.A.B. de C.V. (Beverages)		904,338		6,262
	Grupo Financiero Banorte S.A.B. de C.V. Class “O” (Banks)		2,093,900		11,494
	Infraestructura Energetica Nova S.A.B. de C.V. (Gas utilities)		595,800		2,915
					20,671
	Peru—0.9%
	Credicorp, Ltd. (Banks)†		104,703		21,718

	Asia—2.6%
	Australia—0.4%
	Aristocrat Leisure, Ltd. (Hotels, restaurants & leisure)		447,528		8,276
	Hong Kong—2.2%
	AIA Group, Ltd. (Insurance)		2,856,863		24,371
*	China High Precision Automation Group, Ltd. (Electronic equipment, instruments & components)**§		3,373,000		—
	Galaxy Entertainment Group, Ltd. (Hotels, restaurants & leisure)		3,274,000		26,275
					50,646

	Emerging Europe, Mid-East, Africa—1.3%
	Georgia—0.2%
	BGEO Group plc (Banks)		74,977		3,601
	Hungary—0.3%
	MOL Hungarian Oil & Gas plc (Oil, gas & consumable fuels)		630,436		7,316

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)

	Emerging Europe, Mid-East, Africa—(continued)
	Russia—0.3%
	Globaltrans Investment plc—GDR (Road & rail)		226,904	$	2,130
*	X5 Retail Group N.V.—GDR (Food & staples retailing)		134,305		5,073
					7,203
	South Africa—0.5%
	Bid Corporation, Ltd. (Food & staples retailing)		173,261		4,215
	Bidvest Group, Ltd. (Industrial conglomerates)		173,261		3,054
	RMB Holdings, Ltd. (Diversified financial services)		800,019		5,119
					12,388
	Total Common Stocks—98.0% (cost $1,787,010)				2,282,313

	Preferred Stocks
	Brazil—1.2%
	Itau Unibanco Holding S.A. (Banks)		2,245,000		28,818
	Germany—0.2%
	Fuchs Petrolub SE (Chemicals)		81,245		4,314
	Total Preferred Stocks—1.4% (cost $30,588)				33,132

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $28,655, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26		$28,654		28,654
	Total Repurchase Agreement—1.2% (cost $28,654)				28,654
	Total Investments—100.6% (cost $1,846,252)				2,344,099
	Liabilities, plus cash and other assets—(0.6)%				(13,800	)
	Net assets—100.0%			$	2,330,299

ADR = American Depository Receipt

GDR = Global Depository Receipt

REIT = Real Estate Investment Trust

* = Non-income producing security

† = U.S. listed foreign security

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. Fair value was determined using significant unobservable inputs. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Institutional International Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Financials	20.1	%
Industrials	17.5	%
Information Technology	16.9	%
Consumer Discretionary	14.5	%
Materials	7.9	%
Consumer Staples	6.6	%
Health Care	6.3	%
Energy	3.2	%
Utilities	2.7	%
Real Estate	2.4	%
Telecommunication Services	1.9	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Euro	26.2	%
Japanese Yen	17.8	%
British Pound Sterling	13.9	%
Hong Kong Dollar	8.5	%
U.S. Dollar	5.7	%
Canadian Dollar	5.7	%
Indian Rupee	4.1	%
Danish Krone	3.6	%
Swiss Franc	3.4	%
South Korean Won	2.6	%
Swedish Krona	2.3	%
Brazilian Real	2.2	%
Indonesian Rupiah	1.0	%
All Other Currencies	3.0	%
Total	100.0	%

During the year ended December 31, 2017, the Fund sold its investment in William Blair China A-Share Fund, LLC, an affiliated fund.

	Share Activity					Year Ended December 31, 2017
Security Name	Balance 12/31/2016	Purchases	Sales	Balance 12/31/2017	Value 12/31/2017	Dividend Income	Net realized gain (loss)	Change in net unrealized appreciation (depreciation)

William Blair China A-Share Fund, LLC	6,312	—	6,312	—	$—	$—	$36	$(39)

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	International Small Cap Growth Fund

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

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Simon Fennell Andrew G. Flynn	The William Blair International Small Cap Growth Fund (Class N shares) posted a 32.17% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI All Country World ex-U.S. Small Cap Index (net) (the “Index”), increased 31.65%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. The Fund’s Consumer Discretionary exposure was particularly beneficial, helped by China Lodging Group and SSP Group. China Lodging’s share price was bolstered by stronger pricing and occupancy improvement in its economy hotels segment, which drove solid earnings results throughout the year. Japanese holdings Relo Group and Kose Corporation contributed to the Fund’s outperformance in the Real Estate and Consumer Staples sectors, respectively. Relo is a provider of outsourced management of corporate rental accommodations and fringe benefit services. Relo’s share price performance was underpinned by growing demand for outsourcing services. Cosmetics company Kose benefited from successful execution of the company’s multi-brand strategy and international expansion. Partially offsetting these positive effects was negative stock selection in the Information Technology and Materials sectors along with the Fund’s underweight allocation in the Emerging Asia region relative to the Index. Within the Information Technology sector, Wix.com hindered relative returns. Despite posting better than expected financial results, the market was disappointed in Wix.com management’s higher R&D spending outlook for 2018—which it expected to weigh on near-term profit margins. Within Materials, Japan-based Hitachi Chemicals detracted from the Fund’s relative performance due in part to one-off costs, but its core business was otherwise positive due to rising demand for semiconductor consumables and electronic vehicle battery materials. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

International Small Cap Growth Fund

Performance Highlights (Unaudited)


Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		32.17	%		11.41	%		9.76	%		4.87	%
Class I		32.70			11.74			10.09			5.22
Institutional Class		32.70			11.80			10.23			5.38
MSCI ACW Ex-U.S. Small Cap Index (net)		31.65			11.96			10.03			4.69

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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Europe, Mid-East—27.8%
	Belgium—0.5%
	Melexis N.V. (Semiconductors & semiconductor equipment)		29,794	$	3,016
	Denmark—1.2%
	Royal Unibrew A/S (Beverages)		123,848		7,421
	France—2.7%
*	Nexity S.A. (Real estate management & development)		56,821		3,383
	Rubis SCA (Gas utilities)		113,890		8,059
*	Worldline S.A. (IT services)		91,864		4,483
					15,925
	Germany—3.8%
	AURELIUS Equity Opportunities SE & Co KGaA (Capital markets)		79,996		5,467
	CTS Eventim AG & Co KGaA (Media)		119,970		5,589
	GRENKE AG (Diversified financial services)		46,381		4,405
	KION Group AG (Machinery)		29,333		2,534
	Norma Group SE (Machinery)		69,911		4,695
					22,690
	Ireland—2.0%
*	ICON plc (Life sciences tools & services)†		33,232		3,727
	Kingspan Group plc (Building products)		116,750		5,100
	UDG Healthcare plc (Health care providers & services)		258,502		2,949
					11,776
	Israel—4.3%
	Elbit Systems, Ltd. (Aerospace & defense)		50,552		6,756
	Frutarom Industries, Ltd. (Chemicals)		46,500		4,363
	Mizrahi Tefahot Bank, Ltd. (Banks)		277,951		5,124
*	Orbotech, Ltd. (Electronic equipment, instruments & components)†		111,147		5,584
*	Wix.com, Ltd. (Internet software & services)†		73,356		4,222
					26,049
	Italy—4.7%
	Autogrill SpA (Hotels, restaurants & leisure)		256,397		3,538
	Banca IFIS SpA (Diversified financial services)		135,685		6,637
	Cerved Information Solutions SpA (Diversified financial services)		400,962		5,100
	DiaSorin SpA (Health care equipment & supplies)		44,259		3,930
*	Gima TT SpA (Machinery)		174,969		3,487
	Industria Macchine Automatiche SpA (Machinery)		28,067		2,283
	Recordati SpA (Pharmaceuticals)		79,202		3,522
					28,497



	Issuer	Shares		Value

	Common Stocks—(continued)

	Europe, Mid-East—(continued)
	Jersey—0.7%
	Sanne Group plc (Capital markets)		398,667	$	4,365
	Luxembourg—0.8%
	Stabilus S.A. (Machinery)		54,078		4,863
	Netherlands—0.8%
	Euronext N.V. (Capital markets)		80,125		4,981
	Sweden—4.3%
	Evolution Gaming Group AB (Hotels, restaurants & leisure)		60,116		4,254
	Indutrade AB (Trading companies & distributors)		200,474		5,464
	Intrum Justitia AB (Commercial services & supplies)		174,922		6,468
	Loomis AB Class “B” (Commercial services & supplies)		128,946		5,417
	Thule Group AB (Leisure products)		185,878		4,190
					25,793
	Switzerland—2.0%
*	Cembra Money Bank AG (Consumer finance)		51,467		4,798
*	dormakaba Holding AG (Building products)		4,422		4,118
*	Kardex AG (Machinery)		22,983		2,821
					11,737
	Japan—23.3%
	Asahi Intecc Co., Ltd. (Health care equipment & supplies)		102,400		3,526
	en-japan, Inc. (Professional services)		67,500		3,181
	Hitachi Chemical Co., Ltd. (Chemicals)		244,200		6,272
	Kose Corporation (Personal products)		41,900		6,541
	Maeda Corporation (Construction & engineering)		353,300		4,873
	Matsumotokiyoshi Holdings Co., Ltd. (Food & staples retailing)		71,400		2,940
	Meitec Corporation (Professional services)		95,800		5,033
	Nabtesco Corporation (Machinery)		168,700		6,468
	Nichias Corporation (Building products)		450,000		5,995
	Nihon M&A Center, Inc. (Professional services)		127,600		6,081
	Nissan Chemical Industries, Ltd. (Chemicals)		213,800		8,529
	Okamoto Industries, Inc. (Chemicals)		250,000		2,538
	Oracle Corporation Japan (Software)		23,900		1,981
	PALTAC Corporation (Distributors)		66,900		3,052
	Persol Holdings Co., Ltd. (Professional services)		120,400		3,018
	Pola Orbis Holdings, Inc. (Personal products)		151,700		5,325
	Relo Group, Inc. (Real estate management & development)		109,300		2,978
	Sankyu, Inc. (Road & rail)		69,220		2,989
	Seria Co., Ltd. (Multiline retail)		51,400		3,102

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



Issuer	Shares		Value

Common Stocks—(continued)

Japan—(continued)
Stanley Electric Co., Ltd. (Auto components)		166,000	$	6,740
Start Today Co., Ltd. (Internet & direct marketing retail)		167,400		5,089
Suruga Bank, Ltd. (Banks)		164,000		3,518
TIS, Inc. (IT services)		166,600		5,818
Tokyo Century Corporation (Diversified financial services)		132,600		6,437
Topcon Corporation (Electronic equipment, instruments & components)		213,600		4,620
Toridoll Holdings Corporation (Hotels, restaurants & leisure)		140,300		5,230
Tsuruha Holdings, Inc. (Food & staples retailing)		47,300		6,431
Ulvac, Inc. (Semiconductors & semiconductor equipment)		91,200		5,747
Zenkoku Hosho Co., Ltd. (Diversified financial services)		137,000		5,891
				139,943

United Kingdom—15.0%
Abcam plc (Biotechnology)		303,544		4,324
Arrow Global Group plc (Consumer finance)		761,109		4,077
Beazley plc (Insurance)		867,949		6,264
Big Yellow Group plc (Equity REIT)		389,786		4,576
Burford Capital, Ltd. (Capital markets)		345,514		5,374
Diploma plc (Trading companies & distributors)		185,531		3,124
Elementis plc (Chemicals)		1,071,000		4,166
Fevertree Drinks plc (Beverages)		122,947		3,780
Halma plc (Electronic equipment, instruments & components)		346,599		5,896
Hays plc (Professional services)		2,253,422		5,565
Hill & Smith Holdings plc (Metals & mining)		203,559		3,680
Intermediate Capital Group plc (Capital markets)		378,766		5,860
Jupiter Fund Management plc (Capital markets)		576,751		4,894
Playtech plc (Software)		362,050		4,206
Rentokil Initial plc (Commercial services & supplies)		749,765		3,219
Spirax-Sarco Engineering plc (Machinery)		48,955		3,715
SSP Group plc (Hotels, restaurants & leisure)		831,983		7,672
Ted Baker plc (Textiles, apparel & luxury goods)		72,704		2,661
Ultra Electronics Holdings plc (Aerospace & defense)		108,663		1,976
Workspace Group plc (Equity REIT)		386,761		5,232
				90,261



Issuer	Shares		Value

Common Stocks—(continued)

Emerging Asia—13.6%
China—3.2%
China Medical System Holdings, Ltd. (Pharmaceuticals)		1,669,000	$	3,892
Fuyao Glass Industry Group Co., Ltd. Class “H” (Auto components)		887,600		3,743
Kingsoft Corporation, Ltd. (Software)		1,530,000		5,092
Minth Group, Ltd. (Auto components)		586,000		3,536
Travelsky Technology, Ltd. Class “H” (IT services)		1,062,000		3,188
				19,451
India—5.3%
Bharat Electronics, Ltd. (Aerospace & defense)		1,055,917		3,014
Crompton Greaves Consumer Electricals, Ltd. (Household durables)		1,005,964		4,320
Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		294,319		5,501
Motherson Sumi Systems, Ltd. (Auto components)		922,349		5,484
Petronet LNG, Ltd. (Oil, gas & consumable fuels)		1,226,345		4,884
RBL Bank Ltd. (Banks)		708,925		5,670
UPL, Ltd. (Chemicals)		256,323		3,060
				31,933
Indonesia—0.9%
PT Bank Negara Indonesia Persero Tbk (Banks)		7,518,500		5,486
South Korea—0.1%
Loen Entertainment, Inc. (Media)		7,983		839
Taiwan—2.7%
Accton Technology Corporation (Communications equipment)		818,000		2,914
Chailease Holding Co., Ltd. (Diversified financial services)		1,213,000		3,530
Powertech Technology, Inc. (Semiconductors & semiconductor equipment)		1,550,000		4,584
Silicon Motion Technology Corporation— ADR (Semiconductors & semiconductor equipment)		89,020		4,714
Tripod Technology Corporation (Electronic equipment, instruments & components)		51,000		159
				15,901
Thailand—1.4%
Minor International PCL (Hotels, restaurants & leisure)		2,700,600		3,626
Tisco Financial Group PCL (Banks)		1,766,900		4,798
				8,424

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Asia—5.1%
	Australia—2.7%
	Challenger, Ltd. (Diversified financial services)		449,239	$	4,918
	DuluxGroup, Ltd. (Chemicals)		735,906		4,398
	Orora, Ltd. (Containers & packaging)		1,675,583		4,432
	The Star Entertainment Group, Ltd. (Hotels, restaurants & leisure)		530,869		2,518
					16,266
	Hong Kong—1.7%
	Man Wah Holdings, Ltd. (Household durables)		4,217,200		4,011
	MGM China Holdings, Ltd. (Hotels, restaurants & leisure)		2,151,600		6,513
					10,524
	New Zealand—0.7%
	Fisher & Paykel Healthcare Corp., Ltd. (Health care equipment & supplies)		391,939		3,986

	Emerging Latin America—5.0%
	Argentina—1.0%
	Grupo Supervielle S.A.—ADR (Banks)		103,050		3,021
*	Loma Negra Cia Industrial Argentina S.A.— ADR (Construction materials)		50,373		1,161
*	Pampa Energia S.A.—ADR (Electric utilities)		26,221		1,764
					5,946
	Brazil—2.7%
	CVC Brasil Operadora e Agencia de Viagens S.A. (Hotels, restaurants & leisure)		372,500		5,446
	EDP - Energias do Brasil S.A. (Electric utilities)		875,200		3,694
	Localiza Rent a Car S.A. (Road & rail)		1,047,585		6,967
					16,107
	Mexico—1.3%
	Gentera S.A.B. de C.V. (Consumer finance)		3,013,900		2,505
	Grupo Aeroportuario del Sureste S.A.B. de C.V.—ADR (Transportation infrastructure)		22,624		4,129
	Promotora y Operadora de Infraestructura S.A.B. de C.V. (Transportation infrastructure)		157,900		1,560
					8,194
	Canada—4.9%
	Canadian Western Bank (Banks)		175,319		5,474
	CES Energy Solutions Corporation (Energy equipment & services)		681,932		3,543
	Enerflex, Ltd. (Energy equipment & services)		186,679		2,278

	Issuer	Shares or Principal Amount		Value

	Common Stocks—(continued)

	Canada—(continued)
	Finning International, Inc. (Trading companies & distributors)		233,355	$	5,889
	Intertape Polymer Group, Inc. (Containers & packaging)		168,094		2,874
*	Raging River Exploration, Inc. (Oil, gas & consumable fuels)		581,001		3,698
	ShawCor, Ltd. (Energy equipment & services)		81,891		1,786
	Whitecap Resources, Inc. (Oil, gas & consumable fuels)		589,737		4,199
					29,741

	Emerging Europe, Mid-East, Africa—2.8%
	Czech Republic—1.0%
	Moneta Money Bank A.S. (Banks)		1,575,809		6,098
	South Africa—1.8%
	AVI, Ltd. (Food products)		586,478		5,241
	Bidvest Group, Ltd. (Industrial conglomerates)		300,589		5,298
					10,539
	Total Common Stocks—97.5% (cost $458,651)				586,752

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $15,884, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25		$15,884		15,884
	Total Repurchase Agreement—2.6% (cost $15,884)				15,884
	Total Investments—100.1% (cost $474,535)				602,636
	Liabilities, plus cash and other assets—(0.1)%				(883	)
	Net assets—100.0%			$	601,753

ADR = American Depository Receipt

REIT = Real Estate Investment Trust

* = Non-income producing security

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

International Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Industrials	23.1	%
Financials	22.2	%
Consumer Discretionary	15.5	%
Information Technology	11.3	%
Materials	7.8	%
Consumer Staples	6.4	%
Health Care	5.1	%
Energy	3.5	%
Real Estate	2.8	%
Utilities	2.3	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Japanese Yen	23.9	%
British Pound Sterling	16.6	%
Euro	14.5	%
Indian Rupee	5.4	%
Hong Kong Dollar	5.1	%
Canadian Dollar	5.1	%
U.S. Dollar	4.8	%
Swedish Krona	4.4	%
Australian Dollar	2.8	%
Israeli Shekel	2.8	%
Brazilian Real	2.7	%
Swiss Franc	2.0	%
New Taiwan Dollar	1.9	%
South African Rand	1.8	%
Thai Baht	1.4	%
Danish Krone	1.3	%
Crech Koruna	1.0	%
All Other Currencies	2.5	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	Emerging Markets Leaders Fund

	The Emerging Markets Leaders Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Todd M. McClone John C. Murphy Jeffrey A. Urbina	The William Blair Emerging Markets Leaders Fund (Class N shares) posted a 41.68% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets Index (net) (the “Index”), increased 37.28%. The Fund’s calendar year 2017 outperformance versus the Index was driven by a combination of stock selection and sector allocation effects. Overweightings to the Information Technology and Consumer Discretionary sectors, and underweightings to the Telecommunication Services and Real Estate sectors were beneficial. Stock selection in Financials was particularly beneficial to the Fund’s performance, bolstered by China-based Ping An Insurance. Strong premium growth in the life and property & casualty insurance segments drove the company’s share price. Ping An’s management was also optimistic on the outlook for the key Value of New Business metric—guiding for 20-30% growth in 2018. Sociedad Quimica y Minera de Chile (SQM) and Maruti Suzuki India in the Materials and Consumer Discretionary sectors were additional sources of the Fund’s outperformance. Chilé-based lithium and agricultural chemicals producer SQM’s share price was supported by rising demand and prices for lithium, which is used in rechargeable vehicle and smartphone batteries. Maruti Suzuki’s share price benefited from solid financial results amid healthy demand for the company’s passenger cars in India. Maruti’s competitive advantages include deep-reaching distribution and a premiumization strategy that has driven market share gains. Maruti’s premiumization strategy includes launching premium crossover and hatchback models at higher prices, supporting the outlook for profit margins. Partially offsetting these positive effects were negative stock selection in the Real Estate and Telecommunication Services sectors, as well as the Fund’s overweight allocation in Brazil. Within the Real Estate sector, Emaar Properties detracted from the Fund’s performance. The UAE-based property developer and hospital manager’s share price was adversely impacted by its special dividend announced in December, which fell short of investor expectations. Management cited the need to preserve liquidity in light of ongoing development of large scale projects. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

Emerging Markets Leaders Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
										Since
	1 Year			3 Year			5 Year			Inception
Class N(a)		41.68	%		7.08	%		4.48	%		4.75	%
MSCI Emerging Markets Index (net)(a)		37.28			9.10			4.35			4.33
Class I(b)		41.89			7.35			4.76			2.71
Institutional Class(b)		42.15			7.44			4.86			2.83
MSCI Emerging Markets Index (net)(b)		37.28			9.10			4.35			2.92

(a)	Since inception is for the period from May 3, 2010 (Commencement of Operations) to December 31, 2017.
(b)	Since inception is for the period from March 26, 2008 (Commencement of Operations) to December 31, 2017.

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. These risks may be magnified when investing in emerging markets. 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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Emerging Markets Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Emerging Asia—65.2%
	China—24.3%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		126,547	$	21,820
	Brilliance China Automotive Holdings, Ltd. (Automobiles)		2,146,000		5,741
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		24,366		3,519
	CSPC Pharmaceutical Group, Ltd. (Pharmaceuticals)		3,262,000		6,588
*	Ctrip.com International, Ltd.—ADR (Internet & direct marketing retail)		148,840		6,564
	NetEase, Inc.—ADR (Internet software & services)		20,146		6,952
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		1,615,500		16,821
	Shenzhou International Group Holdings, Ltd. (Textiles, apparel & luxury goods)		604,000		5,752
	TAL Education Group—ADR (Diversified consumer services)		195,107		5,796
	Tencent Holdings, Ltd. (Internet software & services)		516,700		26,851
	Yum China Holdings, Inc. (Hotels, restaurants & leisure)		241,622		9,670
					116,074
	India—15.2%
	Asian Paints, Ltd. (Chemicals)		312,951		5,688
	Bajaj Finance, Ltd. (Consumer finance)		208,724		5,755
	Bharti Infratel, Ltd. (Diversified telecommunication services)		1,106,114		6,571
	Eicher Motors, Ltd. (Machinery)		11,275		5,361
	HDFC Bank, Ltd. (Banks)		196,870		5,772
	HDFC Bank, Ltd.—ADR (Banks)		49,089		4,991
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		465,576		12,477
	IndusInd Bank, Ltd. (Banks)		241,989		6,246
	Maruti Suzuki India, Ltd. (Automobiles)		75,748		11,554
	MRF, Ltd. (Auto components)		7,281		8,250
					72,665
	Indonesia—4.9%
	PT Bank Rakyat Indonesia Persero Tbk (Banks)		29,285,200		7,857
	PT Telekomunikasi Indonesia Persero Tbk (Diversified telecommunication services)		30,506,700		9,983
	PT Unilever Indonesia Tbk (Household products)		1,346,000		5,546
					23,386
	South Korea—10.2%
	Coway Co., Ltd. (Household durables)		52,532		4,794
	Hankook Tire Co., Ltd. (Auto components)		107,297		5,472
*	LG Chem, Ltd. (Chemicals)		14,504		5,487
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		11,717		27,888
*	Shinhan Financial Group Co., Ltd. (Banks)		105,783		4,881
					48,522



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	Taiwan—6.4%
	Largan Precision Co., Ltd. (Electronic equipment, instruments & components)		40,000	$	5,403
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		637,830		25,290
					30,693
	Thailand—4.2%
	Airports of Thailand PCL (Transportation infrastructure)		4,853,400		10,127
	CP ALL PCL (Food & staples retailing)		4,221,100		9,973
					20,100

	Emerging Europe, Mid-East, Africa—15.2%
	Hungary—1.5%
	OTP Bank plc (Banks)		174,690		7,232
	Russia—1.6%
*	Yandex N.V. Class “A” (Internet software & services)†		240,225		7,867
	South Africa—9.8%
	Bid Corporation, Ltd. (Food & staples retailing)		297,071		7,227
	Bidvest Group, Ltd. (Industrial conglomerates)		563,089		9,925
	Capitec Bank Holdings, Ltd. (Banks)		78,528		6,969
	FirstRand, Ltd. (Diversified financial services)		1,288,007		7,001
	Naspers, Ltd. (Media)		56,997		15,898
					47,020
	Turkey—1.4%
	KOC Holding A.S. (Industrial conglomerates)		1,321,764		6,444
	United Arab Emirates—0.9%
	Emaar Properties PJSC (Real estate management & development)		2,154,858		4,072

	Emerging Latin America—13.4%
	Brazil—7.5%
	AMBEV S.A.—ADR (Beverages)		1,304,457		8,427
*	Atacadao Distribuicao Comercio e Industria Ltda (Food & staples retailing)		886,600		4,076
	B3 SA - Brasil Bolsa Balcao (Capital markets)		809,400		5,559
	Banco do Brasil S.A. (Banks)		122,300		1,173
	Lojas Renner S.A. (Multiline retail)		416,300		4,454
	Raia Drogasil S.A. (Food & staples retailing)		310,500		8,593
	Ultrapar Participacoes S.A. (Oil, gas & consumable fuels)		164,900		3,728
					36,010

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Emerging Markets Leaders Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

		Shares or
		Principal
	Issuer	Amount		Value

	Common Stocks—(continued)

	Emerging Latin America—(continued)
	Chile—1.0%
	Sociedad Quimica y Minera de Chile S.A.—ADR (Chemicals)		82,725	$	4,911
	Mexico—2.2%
	Grupo Aeroportuario del Pacifico S.A.B. de C.V. Class “B” (Transportation infrastructure)		182,474		1,875
	Grupo Financiero Banorte S.A.B. de C.V. Class “O” (Banks)		1,549,400		8,505
					10,380
	Peru—2.7%
	Credicorp, Ltd. (Banks)†		37,556		7,790
	Southern Copper Corporation (Metals & mining)		108,210		5,135
					12,925
	Total Common Stocks—93.8% (cost $336,357)				448,301

	Preferred Stocks
	Brazil—4.2%
	Itau Unibanco Holding S.A. (Banks)		642,850		8,252
*	Petroleo Brasileiro S.A. (Oil, gas & consumable fuels)		2,378,200		11,543
					19,795
	Total Preferred Stocks—4.2% (cost $17,198)				19,795

	Repurchase Agreement
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $9,212, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26		$9,211		9,211
	Total Repurchase Agreement—1.9% (cost $9,211)				9,211
	Total Investments—99.9% (cost $362,766)				477,307
	Cash and other assets, less liabilities—0.1%				605
	Net assets—100.0%			$	477,912

ADR = American Depository Receipt

* = Non-income producing security

† = U.S. listed foreign security

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Information Technology	26.0	%
Financials	25.1	%
Consumer Discretionary	18.7	%
Consumer Staples	9.4	%
Industrials	7.2	%
Materials	4.5	%
Telecommunication Services	3.5	%
Energy	3.3	%
Health Care	1.4	%
Real Estate	0.9	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

U.S. Dollar	25.4	%
Indian Rupee	14.5	%
Hong Kong Dollar	13.2	%
South Korean Won	10.4	%
Brazilian Real	10.1	%
South African Rand	10.0	%
Indonesian Rupiah	5.0	%
Thai Baht	4.3	%
Mexican Peso	2.2	%
Hungarian Forint	1.5	%
Turkish Lira	1.4	%
New Taiwan Dollar	1.1	%
All Other Currencies	0.9	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	Emerging Markets Growth Fund

	The Emerging Markets Growth Fund seeks long-term capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Todd M. McClone Casey K. Preyss Jeffrey A. Urbina	The William Blair Emerging Markets Growth Fund (Class N shares) posted a 48.53% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets IMI Index (net) (the “Index”), increased 36.83%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. Within the Financials sector, China-based Ping An Insurance and India’s HDFC Bank were notable contributors. Driving Ping An’s share price was strong premium growth in the life and property & casualty segments. Ping An’s management was also optimistic about the outlook for the key Value of New Business metric—estimating 20-30% growth in 2018. Additionally, China-based Geely Automobile (Consumer Discretionary) was an additional source of the Fund’s outperformance. Geely is a local auto company that has improved and expanded its products with influence from Volvo (which is owned by Geely’s parent). Geely’s sales volume increased significantly in 2017 on the back of its Boyue sport utility vehicle and three other models. Offsetting these positive effects were the Fund’s underweightings to the Materials and Utilities sectors relative to the Index. Stock selection within the Energy sector was also detrimental to the Fund’s performance. Within Energy, the shares of Brazilian oil and gas company Petroleo Brasileiro (Petrobras) were adversely impacted by concerns about the sustainability of the company’s turnaround in the wake of a corruption investigation involving Brazil’s President Temer, including a potential rollback of fuel price liberalization, which would be detrimental to the company’s refining margins. From a geographic perspective, the Fund’s underweightings to China and South Korea also hampered its relative performance. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

Emerging Markets Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		48.53	%		8.60	%		6.00	%		0.94	%
Class I		48.83			8.84			6.26			1.20
Institutional Class		49.06			8.96			6.40			1.35
MSCI Emerging Markets IMI (net)		36.83			9.01			4.47			1.85

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. These risks may be magnified when investing in emerging markets. 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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Emerging Asia—76.6%
	China—28.5%
*	Alibaba Group Holding, Ltd.—ADR (Internet software & services)		436,128	$	75,202
*	Autohome, Inc.—ADR (Internet software & services)		67,340		4,355
*	Baozun, Inc.—ADR (Internet software & services)		99,332		3,135
	BYD Co., Ltd. Class “H” (Automobiles)		607,500		5,295
	China International Travel Service Corporation, Ltd. Class “A” (Hotels, restaurants & leisure)		667,080		4,440
	China Lodging Group, Ltd.—ADR (Hotels, restaurants & leisure)		132,746		19,172
	China Molybdenum Co., Ltd. Class “H” (Metals & mining)		6,489,000		4,169
	CSPC Pharmaceutical Group, Ltd. (Pharmaceuticals)		4,758,000		9,610
	Foshan Haitian Flavouring & Food Co., Ltd. Class “A” (Food products)		555,680		4,593
	Geely Automobile Holdings, Ltd. (Automobiles)		6,001,000		20,815
	Haitian International Holdings, Ltd. (Machinery)		1,014,000		3,050
	Han’s Laser Technology Industry Group Co., Ltd. Class “A” (Machinery)		365,680		2,774
	Hangzhou Hikvision Digital Technology Co., Ltd. Class “A” (Electronic equipment, instruments & components)		1,608,816		9,635
	Inner Mongolia Yili Industrial Group Co., Ltd. Class “A” (Food products)		1,007,300		4,981
	Jiangsu Hengrui Medicine Co., Ltd. Class “A” (Pharmaceuticals)		420,419		4,452
	Kweichow Moutai Co., Ltd. Class “A” (Beverages)		67,500		7,220
	Minth Group, Ltd. (Auto components)		1,102,000		6,650
*	MMG, Ltd. (Metals & mining)		8,004,000		3,975
	New Oriental Education & Technology Group, Inc.—ADR (Diversified consumer services)		174,269		16,381
	Ping An Insurance Group Co. of China, Ltd. Class “H” (Insurance)		3,319,000		34,559
	Shanghai Fosun Pharmaceutical Group Co., Ltd. Class “H” (Pharmaceuticals)		755,000		4,846
	Silergy Corporation (Semiconductors & semiconductor equipment)		178,000		4,067
	Sino Biopharmaceutical, Ltd. (Pharmaceuticals)		2,776,000		4,925
	Sunny Optical Technology Group Co., Ltd. (Electronic equipment, instruments & components)		498,000		6,368
	TAL Education Group—ADR (Diversified consumer services)		233,851		6,948
	Tencent Holdings, Ltd. (Internet software & services)		1,617,160		84,037



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	China—(continued)
	Travelsky Technology, Ltd. Class “H” (IT services)		1,572,000	$	4,718
*	Weibo Corporation—ADR (Internet software & services)		151,570		15,681
					376,053
	India—22.5%
	Asian Paints, Ltd. (Chemicals)		356,987		6,488
	Bajaj Finance, Ltd. (Consumer finance)		567,692		15,654
	Bajaj Finserv, Ltd. (Insurance)		71,317		5,848
	Balkrishna Industries, Ltd. (Auto components)		125,130		2,340
*	Balkrishna Industries, Ltd. (Auto components)§		125,130		2,340
	Bharat Electronics, Ltd. (Aerospace & defense)		1,764,143		5,035
*	Bharat Financial Inclusion, Ltd. (Consumer finance)		356,914		5,598
	Bharat Forge, Ltd. (Auto components)		540,497		6,174
	Britannia Industries, Ltd. (Food products)		59,871		4,423
	Eicher Motors, Ltd. (Machinery)		13,979		6,647
*	Future Retail, Ltd. (Multiline retail)		331,328		2,715
	Godrej Consumer Products, Ltd. (Personal products)		361,513		5,664
	Graphite India, Ltd. (Electrical equipment)		324,320		3,611
	Havells India, Ltd. (Electrical equipment)		457,440		4,027
	HDFC Bank, Ltd. (Banks)		1,239,897		36,353
	HDFC Standard Life Insurance Co. Ltd. (Insurance)		1,450,453		8,747
	Hindustan Unilever, Ltd. (Household products)		477,606		10,194
	Housing Development Finance Corporation, Ltd. (Thrifts & mortgage finance)		1,100,047		29,480
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		555,394		10,381
	Indraprastha Gas, Ltd. (Gas utilities)		1,355,356		7,126
	IndusInd Bank, Ltd. (Banks)		858,588		22,160
	Maruti Suzuki India, Ltd. (Automobiles)		168,965		25,772
	Motherson Sumi Systems, Ltd. (Auto components)		1,275,404		7,583
	Motilal Oswal Financial Services, Ltd. (Capital markets)		205,940		4,840
	Page Industries, Ltd. (Textiles, apparel & luxury goods)		9,006		3,598
	Petronet LNG, Ltd. (Oil, gas & consumable fuels)		1,603,306		6,385
	Pidilite Industries, Ltd. (Chemicals)		329,257		4,652
*	Praxis Home Retail, Ltd. (Specialty retail)**§		17,763		5
	Titan Co., Ltd. (Textiles, apparel & luxury goods)		559,591		7,525
	Vakrangee, Ltd. (IT services)		662,706		4,350
*	Vakrangee, Ltd. (IT services)§		662,706		4,350
	Voltas, Ltd. (Construction & engineering)		465,231		4,774
	Yes Bank, Ltd. (Banks)		4,489,840		22,165
					297,004

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	Indonesia—2.5%
	PT Bank Negara Indonesia Persero Tbk (Banks)		12,794,500	$	9,336
	PT Bank Rakyat Indonesia Persero Tbk (Banks)		55,081,605		14,778
	PT Unilever Indonesia Tbk (Household products)		1,037,200		4,273
	PT United Tractors Tbk (Oil, gas & consumable fuels)		1,753,700		4,576
					32,963
	Philippines—1.6%
	Ayala Land, Inc. (Real estate management & development)		7,738,200		6,914
	BDO Unibank, Inc. (Banks)		2,308,186		7,583
	Jollibee Foods Corporation (Hotels, restaurants & leisure)		599,280		3,037
	Robinsons Retail Holdings, Inc. (Food & staples retailing)		355,890		686
	Security Bank Corporation (Banks)		617,780		3,111
					21,331
	South Korea—8.5%
	Hana Financial Group, Inc. (Banks)		363,089		16,890
*	Hugel, Inc. (Biotechnology)		6,226		3,254
*	Samsung Biologics Co., Ltd. (Life sciences tools & services)		19,615		6,798
	Samsung Electronics Co., Ltd. (Technology hardware, storage & peripherals)		27,435		65,298
	Seoul Semiconductor Co., Ltd. (Semiconductors & semiconductor equipment)		130,617		3,398
*	SK Hynix, Inc. (Semiconductors & semiconductor equipment)		223,035		15,938
					111,576
	Taiwan—8.6%
	Accton Technology Corporation (Communications equipment)		999,000		3,558
	Chailease Holding Co., Ltd. (Diversified financial services)		2,211,000		6,434
	Chroma ATE, Inc. (Electronic equipment, instruments & components)		836,000		4,551
	E.Sun Financial Holding Co., Ltd. (Banks)		5,888,255		3,740
	Global Unichip Corporation (Semiconductors & semiconductor equipment)		481,000		4,122
	Globalwafers Co., Ltd. (Semiconductors & semiconductor equipment)		475,000		6,345
	Hiwin Technologies Corporation (Machinery)		746,780		8,080
	Nanya Technology Corporation (Semiconductors & semiconductor equipment)		1,751,000		4,484
	Parade Technologies, Ltd. (Semiconductors & semiconductor equipment)		176,000		3,484



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	Taiwan—(continued)
	Taiwan Semiconductor Manufacturing Co., Ltd.—ADR (Semiconductors & semiconductor equipment)		883,516	$	35,031
	Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & semiconductor equipment)		2,782,000		21,455
	Win Semiconductors Corporation (Semiconductors & semiconductor equipment)		590,000		5,611
	Yageo Corporation (Electronic equipment, instruments & components)		513,000		6,085
					112,980
	Thailand—3.8%
	Airports of Thailand PCL (Transportation infrastructure)		8,040,000		16,776
	Beauty Community PCL (Specialty retail)		8,338,200		5,322
	Central Pattana PCL (Real estate management & development)		2,613,900		6,837
	CP ALL PCL (Food & staples retailing)		4,279,400		10,111
	Indorama Ventures PCL (Chemicals)		2,713,800		4,434
	Minor International PCL (Hotels, restaurants & leisure)		2,444,800		3,282
	Muangthai Leasing PCL Class “F” (Consumer finance)		3,439,300		4,089
					50,851
	Vietnam—0.6%
*	Hoa Phat Group JSC (Metals & mining)		2,275,650		4,695
	Vietnam Dairy Products JSC (Food products)		325,020		2,985
					7,680

	Emerging Latin America—10.7%
	Argentina—2.4%
	Banco Macro S.A.—ADR (Banks)		70,176		8,132
*	Despegar.com Corporation (Internet & direct marketing retail)†		123,629		3,397
	Grupo Financiero Galicia S.A.—ADR (Banks)		93,529		6,159
*	Loma Negra Cia Industrial Argentina S.A.— ADR (Construction materials)		213,943		4,929
*	Pampa Energia S.A.—ADR (Electric utilities)		73,892		4,972
	Telecom Argentina S.A.—ADR (Diversified telecommunication services)		116,438		4,265
					31,854
	Brazil—4.8%
	B3 SA - Brasil Bolsa Balcao (Capital markets)		1,994,300		13,696
	Iochpe-Maxion S.A. (Machinery)		607,500		4,212
	Localiza Rent a Car S.A. (Road & rail)		1,110,620		7,386
	Lojas Renner S.A. (Multiline retail)		1,233,450		13,197
	Magazine Luiza S.A. (Multiline retail)		182,200		4,406

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Latin America—(continued)
	Brazil—(continued)
	Raia Drogasil S.A. (Food & staples retailing)		344,300	$	9,529
	Smiles Fidelidade S.A. (Media)		82,345		1,884
	Via Varejo S.A. (Specialty retail)		437,700		3,229
	WEG S.A. (Machinery)		718,600		5,223
					62,762
	Chile—1.6%
	Banco Santander Chile—ADR (Banks)		371,216		11,608
	Sociedad Quimica y Minera de Chile S.A.—ADR (Chemicals)		167,474		9,943
					21,551
	Mexico—0.5%
	Grupo Aeroportuario del Pacifico S.A.B. de C.V. Class “B” (Transportation infrastructure)		349,400		3,590
	Grupo Aeroportuario del Sureste S.A.B. de C.V.—ADR (Transportation infrastructure)		18,829		3,436
					7,026
	Panama—0.6%
	Copa Holdings S.A. Class “A” (Airlines)†		58,689		7,868
	Peru—0.8%
	Credicorp, Ltd. (Banks)†		47,830		9,921

	Emerging Europe, Mid-East, Africa—10.7%
	Greece—0.2%
	JUMBO S.A. (Specialty retail)		161,160		2,881
	Hungary—0.7%
	OTP Bank plc (Banks)		223,568		9,255
	Kenya—0.4%
	Safaricom, Ltd. (Wireless telecommunication services)		17,033,054		4,458
	Russia—1.2%
*	Mail.Ru Group, Ltd.—GDR (Internet software & services)		226,238		6,538
*	Yandex N.V. Class “A” (Internet software & services)†		288,531		9,450
					15,988
	South Africa—7.0%
	Capitec Bank Holdings, Ltd. (Banks)		154,446		13,706
	Clicks Group, Ltd. (Food & staples retailing)		708,542		10,373
	FirstRand, Ltd. (Diversified financial services)		1,861,697		10,119
	Mr Price Group, Ltd. (Specialty retail)		226,800		4,489
	Naspers, Ltd. (Media)		167,793		46,802
	Sanlam, Ltd. (Insurance)		993,141		6,983
					92,472

	Shares or
	Principal
Issuer	Amount		Value

Common Stocks—(continued)

Emerging Europe, Mid-East, Africa—(continued)
Turkey—0.7%
BIM Birlesik Magazalar A.S. (Food & staples retailing)		233,312	$	4,807
Tofas Turk Otomobil Fabrikasi A.S. (Automobiles)		437,924		3,815
				8,622
United Arab Emirates—0.5%
NMC Health plc (Health care providers & services)		178,303		6,946
Total Common Stocks—98.0% (cost $885,503)				1,292,042

Preferred Stock
Brazil—0.9%
Itau Unibanco Holding S.A. (Banks)		970,660		12,460
Total Preferred Stock—0.9% (cost $11,134)				12,460

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $11,978, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26		$11,977		11,977
Total Repurchase Agreement—0.9% (cost $11,977)				11,977
Total Investments—99.8% (cost $908,614)				1,316,479
Cash and other assets, less liabilities—0.2%				2,334
Net assets—100.0%			$	1,318,813

ADR = American Depository Receipt
GDR = Global Depository Receipt
* = Non-income producing security

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. These holdings represent 0.51% of the Fund’s net assets at December 31, 2017.

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

† = U.S. listed foreign security

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Emerging Markets Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):


Information Technology	31.5	%
Financials	27.9	%
Consumer Discretionary	17.9	%
Industrials	6.6	%
Consumer Staples	6.1	%
Materials	3.9	%
Health Care	3.1	%
Real Estate	1.1	%
Energy	0.8	%
Telecommunication Services	0.7	%
Utilities	0.4	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):


Indian Rupee	22.8	%
U.S. Dollar	20.4	%
Hong Kong Dollar	14.8	%
South Korean Won	8.6	%
South African Rand	7.1	%
New Taiwan Dollar	6.3	%
Brazilian Real	5.8	%
Thai Baht	3.9	%
Yuan Renminbi	2.9	%
Indonesian Rupiah	2.5	%
Philippine Peso	1.6	%
All Other Currencies	3.3	%
Total	100.0	%

During the year ended December 31, 2017, the Fund sold its investment in William Blair China A-Share Fund, LLC, an affiliated fund.

	Share Activity										Year Ended December 31, 2017
Security Name	Balance 12/31/2016		Purchases		Sales		Balance 12/31/2017		Value 12/31/2017		Dividend Income	Net realized gain (loss)	Change in net unrealized appreciation (depreciation)

William Blair China A-Share Fund, LLC		12,462		—		12,462		—		$—	$—	$71		$(76)

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

	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 Casey K. Preyss	The William Blair Emerging Markets Small Cap Growth Fund (Class N shares) posted a 40.09% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the MSCI Emerging Markets Small Cap Index (net), increased 33.84%. The Fund’s calendar year 2017 outperformance versus the Index was primarily driven by positive stock selection across most sectors. The Fund’s Industrials exposure was particularly beneficial to relative performance, supported by Graphite India Ltd. and Taiwan-based Airtac International Group, a manufacturer of pneumatic components used in factory automation. Graphite India is a leading global manufacturer of graphite electrodes. Graphite India’s share price benefited from solid financial results and an improving outlook for sales volumes backed by a cyclical uptrend in the steel industry. India’s Bajaj Finance and China Lodging Group in the Financials and Consumer Discretionary sectors, respectively, were additional sources of the Fund’s outperformance. Bajaj Finance is a non-bank finance company predominantly focused on consumer lending. Its share price was driven by accelerating loan growth and profitability amid expanding net interest margins. China Lodging Group is a leading hotel operator in China. Partially offsetting these positive effects were the Fund’s underweight allocations in South Korea and in China relative to the Index, as well as negative stock selection in the Health Care and Real Estate sectors. Within the Health Care sector, the Fund did not hold South Korean biotech company SillaJen, which saw its share price advance 606% in USD terms during the year, bolstering the Index’s performance. Within the Real Estate sector, the Fund’s position in China property developer CIFI Holdings was detrimental as the company’s share price was negatively impacted by government policy measures to prevent real estate speculation in tier-2 cities where CIFI has exposure. The policy action, which was rolled out in September, came as a surprise given the recent muted housing price growth and weak economic data, and underscored the government’s commitment to reining in property market speculation. Please refer to the Global Markets Review and Outlook relating to the Fund on page 32.

December 31, 2017

William Blair Funds

Emerging Markets Small Cap Growth Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			Since Inception
Class N(a)		40.09	%		7.47	%		10.58	%		13.25	%
Class I(a)		40.53			7.81			10.91			13.57
MSCI Emerging Markets Small Cap Index (net)(a)		33.84			8.44			5.41			6.65
Institutional Class(b)		40.62			7.88			10.99			11.27
MSCI Emerging Markets Small Cap Index (net)(b)		33.84			8.44			5.41			5.67


(a)	Since inception is for the period from October 24, 2011 (Commencement of Operations) to December 31, 2017.
(b)	Since inception is for the period from December 20, 2012 (Commencement of Operations) to December 31, 2017.

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. These risks may be magnified when investing in emerging markets. 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 index approximates the minimum possible dividend reinvestment by deducting for the highest possible withholding tax rates of those markets.

Sector Diversification (Unaudited)

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

Annual Report

December 31, 2017

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks

	Emerging Asia—74.2%
	China—12.6%
*	3SBio, Inc. (Biotechnology)		1,412,000	$	2,772
*	51job, Inc.—ADR (Professional services)		21,677		1,319
	China Medical System Holdings, Ltd. (Pharmaceuticals)		2,128,000		4,963
	China Suntien Green Energy Corporation, Ltd. Class “H” (Oil, gas & consumable fuels)		9,392,000		2,488
	China ZhengTong Auto Services Holdings, Ltd. (Specialty retail)		1,798,500		1,821
	Dali Foods Group Co., Ltd. (Food products)		5,387,500		4,896
	Fuyao Glass Industry Group Co. Ltd. Class “H” (Auto components)		1,562,000		6,588
	Haitian International Holdings, Ltd. (Machinery)		886,000		2,665
	Hua Hong Semiconductor Ltd. (Semiconductors & semiconductor equipment)		381,200		809
	Kingboard Laminates Holdings, Ltd. (Electronic equipment, instruments & components)		987,500		1,539
	Kingsoft Corporation, Ltd. (Software)		912,000		3,035
	Minth Group, Ltd. (Auto components)		1,094,000		6,602
*	Nexteer Automotive Group, Ltd. (Auto components)		1,822,000		4,342
*	Noah Holdings, Ltd.—ADR (Capital markets)		63,369		2,933
	Silergy Corporation (Semiconductors & semiconductor equipment)		123,000		2,811
*	SINA Corporation (Internet software & services)†		11,043		1,108
*	Sogou, Inc.—ADR (Internet software & services)		142,273		1,646
	Travelsky Technology, Ltd. Class “H” (IT services)		1,018,000		3,055
	Xiabuxiabu Catering Management China Holdings Co. Ltd. (Hotels, restaurants & leisure)		1,481,500		2,977
					58,369
	India—29.9%
	Aarti Industries (Chemicals)		123,184		2,193
	Astral Polytechnik, Ltd. (Building products)		247,397		3,256
	Bajaj Finance, Ltd. (Consumer finance)		151,720		4,184
	Balkrishna Industries, Ltd. (Auto components)		124,611		2,330
*	Balkrishna Industries, Ltd. (Auto components)§		124,611		2,330
	Bharat Electronics, Ltd. (Aerospace & defense)		1,472,534		4,202
	Bharat Forge, Ltd. (Auto components)		303,566		3,468
	Britannia Industries, Ltd. (Food products)		44,020		3,252
	Can Fin Homes, Ltd. (Thrifts & mortgage finance)		186,831		1,380



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	India—(continued)
	Century Plyboards India, Ltd. (Paper & forest products)		354,973	$	1,880
	Century Textiles & Industries, Ltd. (Construction materials)		115,254		2,593
	City Union Bank, Ltd. (Banks)		900,414		2,538
	Crompton Greaves Consumer Electricals, Ltd. (Household durables)		677,612		2,910
	Dalmia Bharat, Ltd. (Construction materials)		71,530		3,587
	Delta Corporation, Ltd. (Hotels, restaurants & leisure)		738,220		3,556
	Dilip Buildcon Ltd. (Construction & engineering)		355,970		5,532
	Edelweiss Financial Services, Ltd. (Capital markets)		1,020,220		4,743
	Endurance Technologies Ltd. (Auto components)		34,408		733
	Finolex Industries, Ltd. (Chemicals)		143,146		1,478
*	Future Retail, Ltd. (Multiline retail)		241,704		1,980
	Graphite India, Ltd. (Electrical equipment)		256,787		2,859
	Gruh Finance, Ltd. (Thrifts & mortgage finance)		657,073		5,158
	Gujarat State Petronet, Ltd. (Gas utilities)		683,072		2,445
	IIFL Holdings Ltd. (Capital markets)		330,349		3,478
	Indiabulls Housing Finance, Ltd. (Thrifts & mortgage finance)		119,920		2,241
	Indraprastha Gas, Ltd. (Gas utilities)		1,268,920		6,672
	Jubilant Foodworks, Ltd. (Hotels, restaurants & leisure)		125,768		3,466
	Kansai Nerolac Paints, Ltd. (Chemicals)		234,309		2,149
	KEC International, Ltd. (Construction & engineering)		633,012		3,808
	KEI Industries, Ltd. (Electrical equipment)		453,248		2,672
	L&T Finance Holdings, Ltd. (Diversified financial services)		523,158		1,426
	Minda Industries, Ltd. (Auto components)		82,086		1,653
	Motherson Sumi Systems, Ltd. (Auto components)		891,824		5,302
	Oberoi Realty, Ltd. (Real estate management & development)		267,888		2,010
	Page Industries, Ltd. (Textiles, apparel & luxury goods)		6,362		2,542
	PC Jeweller, Ltd. (Specialty retail)		261,176		1,874
	Petronet LNG, Ltd. (Oil, gas & consumable fuels)		751,051		2,991
	Pidilite Industries, Ltd. (Chemicals)		123,785		1,749
*	Praxis Home Retail, Ltd. (Specialty retail)**§		6,048		2
	Radico Khaitan, Ltd. (Beverages)		441,504		2,030
	RBL Bank Ltd. (Banks)		250,590		2,004
*	Reliance Nippon Life Asset Management Ltd. (Capital markets)		81,276		382
	Shankara Building Products, Ltd. (Specialty retail)		47,056		1,313

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	India—(continued)
*	SKS Microfinance, Ltd. (Consumer finance)		246,230	$	3,862
	Sundram Fasteners, Ltd. (Auto components)		145,528		1,331
	Supreme Industries, Ltd. (Chemicals)		62,441		1,276
	The Phoenix Mills, Ltd. (Real estate management & development)		283,632		2,786
	Titan Co., Ltd. (Textiles, apparel & luxury goods)		235,545		3,168
	Vakrangee, Ltd. (IT services)		344,098		2,259
*	Vakrangee, Ltd. (IT services)§		449,179		2,949
	Voltas, Ltd. (Construction & engineering)		305,942		3,140
					139,122
	Indonesia—2.1%
	PT Ace Hardware Indonesia Tbk (Specialty retail)		29,555,900		2,516
	PT Bank Tabungan Negara Persero Tbk (Banks)		27,436,200		7,219
					9,735
	Malaysia—1.4%
	Inari Amertron Bhd (Electronic equipment, instruments & components)		6,230,900		5,235
	Press Metal Aluminium Holdings Bhd (Metals & mining)		967,900		1,289
					6,524
	Philippines—1.5%
*	Bloomberry Resorts Corporation (Hotels, restaurants & leisure)		13,072,900		2,855
	Jollibee Foods Corporation (Hotels, restaurants & leisure)		392,390		1,989
	Security Bank Corporation (Banks)		435,940		2,195
					7,039
	South Korea—6.1%
	E-MART, Inc. (Food & staples retailing)		6,277		1,589
*	Hugel, Inc. (Biotechnology)		1,710		894
	ING Life Insurance Korea, Ltd. (Insurance)		127,488		6,359
	Koh Young Technology, Inc. (Semiconductors & semiconductor equipment)		64,143		4,943
	Modetour Network, Inc. (Hotels, restaurants & leisure)		108,533		3,092
	NongShim Co., Ltd. (Food products)		5,286		1,748
	Seoul Semiconductor Co., Ltd. (Semiconductors & semiconductor equipment)		156,819		4,080
	Silicon Works Co., Ltd. (Semiconductors & semiconductor equipment)		35,255		1,742
*	SKCKOLONPI, Inc. (Chemicals)		58,789		2,595
*	WONIK IPS Co., Ltd. (Semiconductors & semiconductor equipment)		37,086		1,157
					28,199



Issuer	Shares		Value

Common Stocks—(continued)

Emerging Asia—(continued)
Taiwan—14.3%
Accton Technology Corporation (Communications equipment)		1,464,000	$	5,215
Airtac International Group (Machinery)		385,260		6,926
Chailease Holding Co., Ltd. (Diversified financial services)		1,350,000		3,929
Chicony Power Technology Co., Ltd. (Electrical equipment)		691,275		1,440
Chroma ATE, Inc. (Electronic equipment, instruments & components)		729,000		3,969
Global Unichip Corporation (Semiconductors & semiconductor equipment)		359,443		3,080
Globalwafers Co., Ltd. (Semiconductors & semiconductor equipment)		361,000		4,822
Gourmet Master Co., Ltd. (Hotels, restaurants & leisure)		413,600		6,046
Hiwin Technologies Corporation (Machinery)		536,520		5,805
Land Mark Optoelectronics Corporation (Semiconductors & semiconductor equipment)		135,000		1,742
Parade Technologies, Ltd. (Semiconductors & semiconductor equipment)		300,500		5,948
Powertech Technology, Inc. (Semiconductors & semiconductor equipment)		1,323,000		3,912
Sunny Friend Environmental Technology Co., Ltd. (Commercial services & supplies)		235,000		2,014
Taiwan Paiho, Ltd. (Textiles, apparel & luxury goods)		347,000		1,411
TCI Co., Ltd. (Personal products)		199,000		1,919
Voltronic Power Technology Corporation (Electrical equipment)		72,000		1,246
Win Semiconductors Corporation (Semiconductors & semiconductor equipment)		384,000		3,652
Yageo Corporation (Electronic equipment, instruments & components)		290,000		3,440
				66,516
Thailand—5.4%
Beauty Community PCL (Specialty retail)		8,028,300		5,124
Central Plaza Hotel PCL (Hotels, restaurants & leisure)		1,261,300		2,254
Energy Absolute PCL (Oil, gas & consumable fuels)		1,913,500		3,082
Indorama Ventures PCL (Chemicals)		2,476,610		4,047
Minor International PCL (Hotels, restaurants & leisure)		1,803,100		2,421
Muangthai Leasing PCL Class “F” (Consumer finance)		2,444,900		2,907
Tisco Financial Group PCL (Banks)		1,337,300		3,631
Workpoint Entertainment PCL (Media)		593,300		1,534
				25,000

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Asia—(continued)
	Vietnam—0.9%
*	Hoa Phat Group JSC (Metals & mining)		2,146,670	$	4,429

	Emerging Europe, Mid-East, Africa—13.0%
	Greece—1.0%
	Motor Oil Hellas Corinth Refineries S.A. (Oil, gas & consumable fuels)		39,277		885
	OPAP S.A. (Hotels, restaurants & leisure)		301,837		3,803
					4,688
	Kenya—1.0%
	Safaricom, Ltd. (Wireless telecommunication services)		17,803,500		4,660
	Poland—1.7%
*	Dino Polska S.A. (Food & staples retailing)		174,823		3,958
*	ING Bank Slaski S.A. (Banks)		42,824		2,529
	LPP S.A. (Textiles, apparel & luxury goods)		492		1,259
					7,746
	Romania—0.1%
	Banca Transilvania S.A. (Banks)		1,243,080		681
	Russia—1.2%
	TCS Group Holding plc—GDR (Banks)		284,067		5,355
	South Africa—6.5%
	AVI, Ltd. (Food products)		347,785		3,108
	Capitec Bank Holdings, Ltd. (Banks)		40,136		3,562
	Clicks Group, Ltd. (Food & staples retailing)		265,943		3,893
	Dis-Chem Pharmacies, Ltd. (Food & staples retailing)		1,232,221		3,635
	Mr Price Group, Ltd. (Specialty retail)		124,801		2,470
	PSG Group, Ltd. (Diversified financial services)		439,199		9,584
	The Bidvest Group, Ltd. (Industrial conglomerates)		228,654		4,031
					30,283
	Turkey—0.7%
	Ford Otomotiv Sanayi A.S. (Automobiles)		109,214		1,736
	Tofas Turk Otomobil Fabrikasi A.S. (Automobiles)		184,347		1,606
					3,342
	United Arab Emirates—0.8%
	NMC Health plc (Health care providers & services)		93,360		3,636

	Emerging Latin America—11.7%
	Argentina—4.5%
	Banco Macro S.A.—ADR (Banks)		20,825		2,413
*	Despegar.com Corporation (Internet & direct marketing retail)†		35,003		962
	Grupo Supervielle S.A.—ADR (Banks)		264,359		7,751



	Issuer	Shares		Value

	Common Stocks—(continued)

	Emerging Latin America—(continued)
	Argentina—(continued)
	IRSA Inversiones y Representaciones S.A.—ADR (Real estate management & development)		20,789	$	615
*	Loma Negra Cia Industrial Argentina S.A.—ADR (Construction materials)		130,612		3,009
	Telecom Argentina S.A.—ADR (Diversified telecommunication services)		51,755		1,896
*	Transportadora de Gas del Sur S.A. Class “B” —ADR (Oil, gas & consumable fuels)		184,908		4,111
					20,757
	Brazil—6.2%
	Arezzo Industria e Comercio S.A. (Textiles, apparel & luxury goods)		91,700		1,512
*	BK Brasil Operacao e Assessoria a Restaurantes S.A. (Hotels, restaurants & leisure)		586,200		3,093
	CVC Brasil Operadora e Agencia de Viagens S.A. (Hotels, restaurants & leisure)		485,800		7,103
	EcoRodovias Infraestrutura e Logistica S.A. (Transportation infrastructure)		1,018,100		3,775
	GAEC Educacao S.A. (Diversified consumer services)		135,000		1,152
	Iguatemi Empresa de Shopping Centers S.A. (Real estate management & development)		97,800		1,161
	Localiza Rent a Car S.A. (Road & rail)		883,795		5,878
	Multiplan Empreendimentos Imobiliarios S.A. (Real estate management & development)		51,200		1,094
	Ser Educacional S.A. (Diversified consumer services)		174,601		1,648
	Smiles Fidelidade S.A. (Media)		32,457		743
	Tegma Gestao Logistica S.A. (Road & rail)		291,600		1,741
					28,900
	Chile—0.6%
	Sociedad Matriz del Banco de Chile S.A. Class “B” (Banks)		5,558,698		2,800
	Uruguay—0.4%
*	Arcos Dorados Holdings, Inc. Class “A” (Hotels, restaurants & leisure)†		162,150		1,678
	Total Common Stocks—98.9% (cost $363,586)				459,459

	Preferred Stock
	Brazil—0.6%
	Randon Participacoes S.A. (Machinery)		1,215,500		2,627
	Total Preferred Stock—0.6% (cost $2,834)				2,627

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Emerging Markets Small Cap Growth Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)


	Principal
Issuer	Amount		Value

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $6,769, collateralized by U.S. Treasury Note, 2.250%, due 11/15/25		$6,769	$	6,769
Total Repurchase Agreement—1.4% (cost $6,769)				6,769
Total Investments—100.9% (cost $373,189)				468,855
Liabilities, plus cash and other assets—(0.9)%				(4,226	)
Net assets—100.0%			$	464,629

ADR = American Depository Receipt

GDR = Global Depository Receipt

* = Non-income producing security

† = U.S. listed foreign security

§ = Deemed illiquid pursuant to Liquidity Procedures approved by the Board of Trustees. These holdings represent 1.14% of the Fund’s net assets at December 31, 2017.

** = Fair valued pursuant to Valuation Procedures approved by the Board of Trustees. This holding represents 0.00% of the Fund’s net assets at December 31, 2017.

At December 31, 2017, the Fund’s Portfolio of Investments includes the following industry categories (as a percentage of long-term investments):

Consumer Discretionary	25.6	%
Financials	20.6	%
Information Technology	15.6	%
Industrials	14.1	%
Materials	8.4	%
Consumer Staples	6.5	%
Energy	2.9	%
Health Care	2.7	%
Real Estate	1.7	%
Telecommunication Services	1.4	%
Utilities	0.5	%
Total	100.0	%

At December 31, 2017, the Fund’s Portfolio of Investments includes the following currency categories (as a percentage of long-term investments):

Indian Rupee	30.1	%
New Taiwan Dollar	15.0	%
Hong Kong Dollar	10.5	%
U.S. Dollar	7.6	%
Brazilian Real	6.8	%
South African Rand	6.6	%
South Korean Won	6.1	%
Thai Baht	5.4	%
Indonesian Rupiah	2.1	%
Philippine Peso	1.5	%
Malaysian Ringgit	1.4	%
Polish Zloty	1.4	%
Euro	1.3	%
Kenyan Shilling	1.0	%
All Other Currencies	3.2	%
Total	100.0	%

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Fixed Income Market Review and Outlook

The Bloomberg Barclays U.S. Aggregate Index gained 3.54% during 2017, as short- and intermediate-term rates rose, long-term rates declined, and risk spreads narrowed over the course of the year. All major segments of the investment-grade bond market experienced positive total returns over the course of the year.

The Federal Open Market Committee (FOMC) increased the target range of the federal funds rate three times during 2017, by 0.25% each time. The FOMC has now hiked rates five times since 2015 when the lower bound of the federal funds target rate was near zero. At the end of the year, the federal funds futures market carried an implied probability that the FOMC will raise the target range of the federal funds rate twice during 2018, with the first rate hike occurring on the March 21, 2018 announcement.

The FOMC also began to execute its plan to gradually shrink its balance sheet during the fourth quarter of 2017. The FOMC released a schedule of the maximum amount the balance sheet would be allowed to reduce in a given month. The schedule permitted the FOMC to allow the balance sheet to reduce by $10 billion per month from October 2017 – December 2017 (60% of that amount is the maximum for U.S. Treasury securities and 40% of that amount is the maximum for agency securities (i.e., agency debt plus agency mortgage-backed securities)). This monthly cap will increase to $20 billion per month during January 2018 – March 2018, $30 billion per month during April 2018 – June 2018, $40 billion per month during July 2018 – September 2018, and $50 billion per month after September 2018, with the cap for U.S. Treasury securities and agency securities at 60% and 40%, respectively, of the total cap amount for each time period.

Despite the FOMC’s plans to reduce the balance sheet, curb its purchases of longer-term instruments, and continue hiking the federal funds rate, interest rate volatility has been low and subdued. One important reason volatility has remained low is that the FOMC communicated its plans well, with adequate advance notice, and its plans do not involve selling securities into the market.

Agency mortgage-backed securities (MBS) generated positive total returns during 2017. The best-performing segments of the market were lower-coupon 30-year pools that the FOMC has targeted in “FedTrade” to suppress mortgage rates, such as 30-year 3.0%, 3.5%, and 4.0% pools, as the market took comfort in the fact that the FOMC’s plans for balance sheet reduction continue to involve purchases of agency MBS, at least for the time being, and no selling of securities.

Corporate bonds of all tenors, credit qualities, and sectors generated strong returns during the year. Risk spreads narrowed and approached levels that have not been experienced since prior to the global financial crisis of 2008. The new issue market has been robust and open for companies to access capital in the bond markets.

We believe that the FOMC will continue to raise the federal funds rate at a measured pace over the next 12 months. The U.S. economy is growing, with forecasters predicting a real GDP growth rate of approximately 2.5%–3.0% during 2018. In addition, the U.S. labor market is adding jobs and the unemployment rate is at 4.1%. However, recent indicators of inflation have revealed slower-than-desired inflation. Estimates of wage inflation are between 3.0%–3.5% while estimates of core personal consumption expenditures (PCE) have been at 1.5%–2.0%. Macroeconomic theory predicts that a robust labor market creates wage inflation, which in turn spurs broader inflation. We believe that the FOMC will raise rates so long as inflationary pressures do not deteriorate.

We believe that the FOMC’s plans to reduce the size of the Fed’s balance sheet will be executed with little disruption to the markets. We believe this is attributable, in part, to strong communication efforts, adequate advance notice, and the absence of security sales to reduce the balance sheet. In addition, remarks by FOMC members indicate that the FOMC will err on the side of conservatism, with the permissible reduction being relatively small in scale and subject to a monthly cap. However, we believe the lower-coupon agency MBS that were purchased by the Fed will underperform higher-coupon alternatives when the FOMC ends its campaign of purchasing agency MBS.

U.S. Treasury Inflation-Protected Securities (TIPS) have market-implied breakeven inflation rates that are at levels near the lower bound of the FOMC’s stated target inflation range of 2.0%–2.5%. We believe TIPS are an attractive alternative to fixed-rate U.S. Treasury Securities to mitigate the effects of rising rates driven by accelerating inflationary pressures.

We believe that spread sectors remain attractive relative to U.S. Treasury Securities over the intermediate-to-long term. Corporate risk premiums are at levels slightly below their longer-term averages, but we believe opportunities remain. Risk premiums of higher-coupon segments of the agency MBS market remain attractive. In addition, we believe U.S. Treasury Securities are likely to struggle as the FOMC continues to tighten the federal funds rate.

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, such as low-loan balance pools.

We believe that opportunities remain in the corporate bond market despite risk spreads being slightly below their longer-term averages. We remain concerned about company-specific risks, including shareholder-friendly activities such as leveraged finance mergers and acquisitions, large share repurchases, and special dividends. Importantly, we do not believe the market will enter a period of excessive leveraged buyout activity.

December 31, 2017

William Blair Funds

	Bond Fund

	The Bond Fund seeks to outperform the Bloomberg Barclays U.S. Aggregate Index by maximizing total return through a combination of income and capital appreciation.

	AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Paul J. Sularz Christopher T. Vincent	The William Blair Bond Fund (Class N shares) returned 3.83%, net of fees, for the year ended December 31, 2017. By comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Index (the “Index”), returned 3.54%. Multiple factors contributed to the Fund’s outperformance relative to the Index during the year. The Fund’s sector allocation impacted results favorably, as the Fund was underweight to fixed-rate Treasuries and overweight to corporate bonds. The Fund experienced positive selection effects from its holdings of investment-grade corporate bonds. The Fund held positions in investment-grade bonds issued by ConocoPhillips, HSBC, Microsoft, and Citigroup that were additive to its performance. Finally, the Fund’s holdings of high-yield corporate bonds were additive to its performance during the year. The Fund held positions in high-yield bonds issued by YUM! Brands, Triumph Group, and UBS that contributed to results. There were a couple of factors that detracted from relative performance during the year. The Fund’s positioning in agency mortgage-backed securities (MBS) detracted from results. The Fund emphasized higher-coupon segments of the agency MBS market that the Federal Open Market Committee (FOMC) did not purchase in its large-scale asset purchase programs, and these securities underperformed comparable duration securities in the Index over the course of the year. In addition, the Fund held positions in bonds issued by Verizon and AT&T that underperformed comparable duration Treasuries and hindered results during the year. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 85 for additional information.

Annual Report

December 31, 2017

Bond Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		3.83	%		2.64	%		2.31	%		4.74	%
Class I		4.16			2.86			2.51			4.92
Institutional Class		4.24			2.93			2.62			5.06
Bloomberg Barclays US Aggregate Index		3.54			2.24			2.10			4.01

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

This report identifies the Fund’s investments on December 31, 2017. 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.

December 31, 2017

William Blair Funds

Bond Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)


Issuer	Principal Amount		Value

U.S. Government and U.S. Government Agency—53.2%
U.S. Treasury Inflation Indexed Notes/Bonds—5.6%
U.S. Treasury Inflation Indexed Bond, 3.875%, due 4/15/29	$	22,890	$	31,231
U.S. Treasury—0.1%
U.S. Treasury Floating Rate Note, 3M Treasury money market yield + 0.070%, 1.520%, due 4/30/19(a)		500		500
Federal Home Loan Mortgage Corp. (FHLMC)—16.4%
#E96940, 4.500%, due 6/1/18		2		2
#B13747, 5.000%, due 4/1/19		62		64
#G30254, 6.500%, due 5/1/19		1		1
#G11697, 5.500%, due 4/1/20		108		110
#G12113, 5.500%, due 5/1/21		158		163
#J02986, 6.500%, due 7/1/21		9		10
#G30255, 7.000%, due 7/1/21		1		1
#G30243, 6.000%, due 12/1/21		2		2
#G12720, 5.500%, due 6/1/22		22		23
#D95621, 6.500%, due 7/1/22		474		503
#G16026, 4.000%, due 11/1/25		5,516		5,772
#G14150, 4.500%, due 4/1/26		1,380		1,453
#J16051, 4.500%, due 7/1/26		584		614
#G02210, 7.000%, due 12/1/28		58		65
#G02183, 6.500%, due 3/1/30		15		17
#G01728, 7.500%, due 7/1/32		93		111
#C01385, 6.500%, due 8/1/32		74		84
#G01551, 6.000%, due 4/1/33		1,663		1,906
#C01623, 5.500%, due 9/1/33		90		100
#A15039, 5.500%, due 10/1/33		2		2
#A17603, 5.500%, due 1/1/34		2,000		2,264
#G01705, 5.500%, due 6/1/34		3,101		3,514
#G01843, 6.000%, due 6/1/35		17		19
#G02141, 6.000%, due 3/1/36		492		565
#G02883, 6.000%, due 4/1/37		1,549		1,762
#A62179, 6.000%, due 6/1/37		196		225
#G03711, 6.000%, due 6/1/37		646		737
#G04126, 6.000%, due 6/1/37		1,735		1,981
#A63539, 6.000%, due 7/1/37		281		322
#A62858, 6.500%, due 7/1/37		102		118
#G03170, 6.500%, due 8/1/37		199		224
#A66843, 6.500%, due 10/1/37		747		864
#G07837, 6.500%, due 2/1/38		2,387		2,743
#G04053, 5.500%, due 3/1/38		580		640
#A78138, 5.500%, due 6/1/38		293		331
#G04641, 6.000%, due 6/1/38		1,275		1,461
#G04466, 5.500%, due 7/1/38		13,613		15,411
#G04544, 6.000%, due 8/1/38		770		871
#A81799, 6.500%, due 9/1/38		357		396
#G06964, 5.500%, due 11/1/38		2,021		2,289
#G05723, 6.500%, due 11/1/38		1,262		1,459
#G05124, 6.000%, due 12/1/38		1,173		1,346
#A86143, 5.000%, due 5/1/39		38		42
#G07480, 6.000%, due 5/1/39		1,228		1,391
#G60366, 6.000%, due 10/1/39		14,848		16,958
#G05810, 5.000%, due 2/1/40		11,677		12,813
#G05875, 5.500%, due 2/1/40		546		612
#G07300, 6.000%, due 4/1/40		5,115		5,890
#G06017, 5.500%, due 6/1/40		1,052		1,175


Issuer	Principal Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal Home Loan Mortgage Corp. (FHLMC) — (continued)
#C03665, 9.000%, due 4/1/41	$	527	$	614
#G06583, 5.000%, due 6/1/41		1,575		1,734
Total FHLMC Mortgage Obligations				91,774
Federal National Mortgage Association (FNMA)—31.1%
#689612, 5.000%, due 5/1/18		3		3
#695910, 5.000%, due 5/1/18		8		8
#697593, 5.000%, due 5/1/18		7		7
#704049, 5.500%, due 5/1/18		13		13
#735357, 5.500%, due 5/1/18		15		15
#735003, 5.500%, due 7/1/18		8		8
#770395, 5.000%, due 4/1/19		1		1
#788424, 5.500%, due 9/1/19		4		5
#835563, 7.000%, due 10/1/20		8		8
#900725, 6.000%, due 8/1/21		22		22
#893325, 7.000%, due 9/1/21		6		6
#949589, 5.500%, due 8/1/22		1,692		1,773
#949592, 6.000%, due 8/1/22		2,576		2,729
#AC5410, 4.500%, due 10/1/24		191		202
#AL8529, 6.000%, due 11/1/24		4,086		4,340
#AC9560, 5.000%, due 1/1/25		1,233		1,304
#255956, 5.500%, due 10/1/25		13		14
#AL2853, 4.500%, due 6/1/26		5,906		6,234
#AL9730, 4.500%, due 2/1/27		1,908		2,013
#AL2134, 4.000%, due 7/1/27		277		293
#AL9857, 4.000%, due 2/1/29		12,137		12,721
#252925, 7.500%, due 12/1/29		1		1
#AD0729, 7.500%, due 12/1/30		9,024		10,595
#535977, 6.500%, due 4/1/31		7		7
#253907, 7.000%, due 7/1/31		1		1
#545339, 6.500%, due 11/1/31		38		43
#587849, 6.500%, due 11/1/31		9		9
#618547, 6.500%, due 11/1/31		4,409		4,970
#545437, 7.000%, due 2/1/32		44		51
#545759, 6.500%, due 7/1/32		387		439
#545869, 6.500%, due 7/1/32		1,175		1,334
#670385, 6.500%, due 9/1/32		589		668
#723260, 6.000%, due 11/1/32		524		600
#254548, 5.500%, due 12/1/32		38		42
#677290, 6.000%, due 1/1/33		1,706		1,951
#684601, 6.000%, due 3/1/33		438		500
#703391, 5.000%, due 5/1/33		143		157
#708993, 5.000%, due 6/1/33		25		28
#730131, 5.000%, due 8/1/33		53		58
#741850, 5.500%, due 9/1/33		415		462
#739243, 6.000%, due 9/1/33		588		675
#739331, 6.000%, due 9/1/33		291		334
#555800, 5.500%, due 10/1/33		42		46
#756153, 5.500%, due 11/1/33		465		519
#AL3455, 5.500%, due 11/1/33		5,705		6,459
#763798, 5.500%, due 3/1/34		76		85
#725611, 5.500%, due 6/1/34		95		105
#787816, 6.000%, due 7/1/34		282		324
#745563, 5.500%, due 8/1/34		537		600
#794474, 6.000%, due 10/1/34		41		47
#745092, 6.500%, due 7/1/35		299		340

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Bond Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)


Issuer	Principal Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA) — (continued)
#357944, 6.000%, due 9/1/35	$	13	$	15
#843487, 6.000%, due 10/1/35		88		101
#AD0979, 7.500%, due 10/1/35		69		80
#745349, 6.500%, due 2/1/36		251		291
#888305, 7.000%, due 3/1/36		9		11
#895637, 6.500%, due 5/1/36		68		78
#831540, 6.000%, due 6/1/36		22		25
#745802, 6.000%, due 7/1/36		299		346
#886220, 6.000%, due 7/1/36		250		288
#AL3449, 6.000%, due 7/1/36		1,356		1,568
#893318, 6.500%, due 8/1/36		22		25
#310037, 6.500%, due 10/1/36		162		184
#831926, 6.000%, due 12/1/36		559		636
#902974, 6.000%, due 12/1/36		177		199
#995757, 6.000%, due 2/1/37		2,032		2,338
#AB0265, 6.000%, due 2/1/37		12,262		14,086
#938440, 6.000%, due 7/1/37		77		87
#928561, 6.000%, due 8/1/37		187		214
#948689, 6.000%, due 8/1/37		166		187
#888703, 6.500%, due 8/1/37		3,668		4,300
#888967, 6.000%, due 12/1/37		612		705
#AL5819, 6.000%, due 12/1/37		1,180		1,358
#AL0904, 5.500%, due 1/1/38		46		51
#889371, 6.000%, due 1/1/38		2,755		3,168
#962058, 6.500%, due 3/1/38		1,191		1,378
#934006, 6.500%, due 9/1/38		303		351
#986856, 6.500%, due 9/1/38		133		154
#991911, 7.000%, due 11/1/38		174		193
#AL3775, 5.000%, due 1/1/39		1,624		1,788
#AD0752, 7.000%, due 1/1/39		611		732
#AA7611, 5.000%, due 5/1/39		705		774
#AA8443, 5.000%, due 6/1/39		178		196
#931492, 6.000%, due 7/1/39		156		179
#AA6898, 6.000%, due 7/1/39		453		516
#931801, 5.000%, due 8/1/39		646		707
#AC1619, 5.500%, due 8/1/39		402		449
#AD0315, 6.500%, due 8/1/39		1,950		2,164
#932279, 5.000%, due 12/1/39		73		80
#AC9569, 5.000%, due 2/1/40		1,378		1,517
#AD0761, 5.000%, due 2/1/40		224		247
#AD1594, 5.000%, due 2/1/40		232		256
#932638, 5.000%, due 3/1/40		147		160
#932751, 5.000%, due 4/1/40		3,347		3,687
#AE0082, 5.000%, due 5/1/40		376		411
AB1146, 5.000%, due 6/1/40		80		88
#AD7137, 5.500%, due 7/1/40		4,011		4,544
#BM1689, 5.500%, due 8/1/40		3,466		3,889
#AH0955, 5.000%, due 12/1/40		4,168		4,576
#AH5585, 5.000%, due 2/1/41		152		167
#AL0028, 5.000%, due 2/1/41		1,895		2,073
#AI1201, 5.500%, due 4/1/41		5,296		5,905
#AL5815, 5.500%, due 4/1/41		3,135		3,552
#BM1550, 6.000%, due 4/1/41		4,181		4,794
#AI6071, 5.000%, due 6/1/41		1,477		1,628
#AI4222, 5.000%, due 7/1/41		115		127
#AL0672, 5.000%, due 7/1/41		2,528		2,785
#AL0913, 6.000%, due 7/1/41		1,588		1,789
#AL9226, 5.500%, due 12/1/41		16,141		18,291

Issuer	NRSRO Rating (unaudited)	Principal Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA) — (continued)
#AL9225, 6.000%, due 1/1/42		$	7,733	$	8,932
#AK2733, 5.000%, due 2/1/42			1,624		1,778
Total FNMA Mortgage Obligations					174,367

Asset-Backed Securities—1.1%
Citibank Credit Card Issuance Trust, 2008-A2, Tranche A2, 1M LIBOR + 1.150%, 2.702%, 1/23/20, VRN	AAA		1,000		1,001
American Express Credit Account Master Trust, 2008-2, Tranche A, 1M LIBOR + 1.260%, 2.737%, 9/15/20, VRN	AAA		1,000		1,002
Centre Point Funding LLC—144A, 2012-2A, Tranche 1, 2.610%, 8/20/21	Baa1		1,884		1,878
SLM Private Education Loan Trust—144A, 2011-A, Tranche A3, 1M USD LIBOR + 2.500%, 3.977%, 1/15/43, VRN	AAA		2,000		2,075
Total Asset-Backed Securities					5,956

Corporate Obligations—44.6%
Baidu, Inc., 2.750%, due 6/9/19	A		4,000		4,007
Roper Industries, Inc., 6.250%, due 9/1/19	BBB		2,530		2,687
Boston Properties L.P., 5.875%, due 10/15/19	A-		4,000		4,218
Ford Motor Credit Co. LLC, 8.125%, due 1/15/20	BBB		4,000		4,433
Georgia-Pacific LLC—144A, 5.400%, due 11/1/20	A+		4,000		4,316
UBS Group AG, 5 year USD ICE Swap + 5.497% 6.875%, due 3/22/21, VRN	BBB-		2,000		2,149
JBS USA LUX SA / JBS USA Finance, Inc.—144A, 7.250%, due 6/1/21	BB-		3,000		3,064
Capital One Financial Corporation, 4.750%, due 7/15/21	A-		3,375		3,609
O’Reilly Automotive, Inc., 4.625%, due 9/15/21	BBB+		2,943		3,130
Fresenius Medical Care US Finance II, Inc.—144A, 5.875%, due 1/31/22	BBB-		2,760		3,041
Ball Corporation, 5.000%, due 3/15/22	BB+		2,500		2,678
Masco Corporation, 5.950%, due 3/15/22	BBB		4,050		4,488
Discover Financial Services, 5.200%, due 4/27/22	BBB+		3,000		3,232
Triumph Group, Inc., 5.250%, due 6/1/22	B-		2,500		2,463
Embraer S.A., 5.150%, due 6/15/22	BBB		3,400		3,646

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Bond Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Issuer		NRSRO Rating (unaudited)	Principal Amount		Value

	Corporate Obligations—(continued)
	Jones Lang LaSalle, Inc., 4.400%, due 11/15/22	Baa1		$4,218	$	4,449
	Jaguar Land Rover Automotive plc—144A, 5.625%, due 2/1/23	BB+		3,225		3,314
	Toll Brothers Finance Corporation, 4.375%, due 4/15/23	BBB-		3,875		4,035
	Itau Unibanco Holding S.A.—144A, 5.125%, due 5/13/23	Ba3		2,500		2,565
	Wells Fargo & Co., 4.480%, due 1/16/24	A		5,000		5,378
	Lennar Corporation, 4.500%, due 4/30/24	BB+		2,450		2,518
	Fibria Overseas Finance, Ltd., 5.250%, due 5/12/24	BBB-		4,000		4,295
	BRF S.A.—144A, 4.750%, due 5/22/24	BBB-		3,000		3,037
	Banco Inbursa S.A. Institucion de Banca Multiple—144A, 4.125%, due 6/6/24	BBB+		2,500		2,528
	Grupo Bimbo S.A.B. de C.V.—144A, 3.875%, due 6/27/24	BBB		2,500		2,586
	Synchrony Financial, 4.250%, due 8/15/24	BBB-		5,000		5,191
	SBA Communications Corporation, 4.875%, due 9/1/24	B+		3,000		3,090
	HSBC Holdings plc, 5 year USD ICE Swap + 3.705%, 6.375%, due 9/17/24, VRN	BBB		5,000		5,337
	JPMorgan Chase & Co., 3M USD LIBOR + 3.330%, 6.100%, due 10/1/24, VRN	BBB-		4,265		4,692
	BNP Paribas S.A., 4.250%, due 10/15/24	A		4,000		4,229
	Owens Corning, 4.200%, due 12/1/24	BBB		5,015		5,262
	Cemex S.A.B. de C.V.—144A, 5.700%, due 1/11/25	BB		3,000		3,172
	USG Corp.—144A, 5.500%, due 3/1/25	BB+		3,000		3,199
	Booz Allen Hamilton, Inc.—144A, 5.125%, due 5/1/25	B+		3,000		3,015
	Simon Property Group L.P., 3.300%, due 1/15/26	A		4,500		4,514
	Penske Automotive Group, Inc., 5.500%, due 5/15/26	B+		2,000		2,034
	Tenneco, Inc., 5.000%, due 7/15/26	BB+		3,000		3,082
	Vale Overseas, Ltd., 6.250%, due 8/10/26	BBB+		3,025		3,512
	Post Holdings, Inc.—144A, 5.000%, due 8/15/26	B		3,000		2,959
	United Rentals North America, Inc., 5.875%, due 9/15/26	BB-		2,500		2,684
	Xylem, Inc., 3.250%, due 11/1/26	BBB		1,950		1,943
	Glencore Funding LLC—144A, 4.000%, due 3/27/27	BBB		5,000		5,029

Issuer		NRSRO Rating (unaudited)	Principal Amount		Value

	Corporate Obligations—(continued)
	Sirius XM Radio, Inc.—144A, 5.000%, due 8/1/27	BB	$	2,500	$	2,519
	The Kroger Co., 8.000%, due 9/15/29	Baa1		4,098		5,452
	Yum! Brands, Inc., 6.875%, due 11/15/37	B+		2,200		2,426
	ConocoPhillips, 6.500%, due 2/1/39	A-		4,125		5,791
	Petroleos Mexicanos, 6.500%, due 6/2/41	BBB+		2,500		2,577
	Express Scripts Holding Co., 6.125%, due 11/15/41	BBB+		4,200		5,168
	Citigroup, Inc., 5.875%, due 1/30/42	A		4,000		5,280
	Bank of America Corporation, 5.875%, due 2/7/42	A		4,000		5,308
	Morgan Stanley, 6.375%, due 7/24/42	A		3,248		4,532
	Cox Communications, Inc.—144A, 4.700%, due 12/15/42	BBB+		4,300		4,169
	Mexichem S.A.B. de C.V.—144A, 5.875%, due 9/17/44	BBB		3,500		3,640
	AbbVie, Inc., 4.700%, due 5/14/45	A-		5,000		5,629
	ERP Operating L.P., 4.500%, due 6/1/45	A		4,500		4,946
	The Goldman Sachs Group, Inc., 4.750%, due 10/21/45	A		3,500		4,019
	Apple, Inc., 4.650%, due 2/23/46	AA+		5,000		5,870
	Exxon Mobil Corporation, 4.114%, due 3/1/46	Aaa		2,275		2,553
	PepsiCo, Inc., 4.450%, due 4/14/46	A+		4,500		5,126
	Verizon Communications, Inc., 4.125%, due 8/15/46	A-		5,000		4,638
	BAT Capital Corporation—144A, 4.540%, due 8/15/47	BBB+		4,500		4,758
	Brookfield Finance, Inc., 4.700%, due 9/20/47	A-		5,250		5,524
	AT&T, Inc., 5.150%, due 2/14/50	A-		5,400		5,489
	Microsoft Corporation, 4.750%, due 11/3/55	AAA		4,500		5,586
	Total Corporate Obligations					249,810
	Total Long-Term Investments—98.9% (cost $541,921)					553,638
	Total Investments—98.9% (cost $541,921)					553,638
	Cash and other assets, less liabilities—1.1%					6,117
	Net assets—100.0%				$	559,755

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Bond Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

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

144A = Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

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.

VRN = Variable Rate Note

(a) Security, or a portion of security, is segregated as collateral for the centrally cleared credit default swap, aggregating a total of $143.

Centrally Cleared Credit Default Swaps

Reference Entity

Buy/Sell
Protection

Fixed Deal
Pay Rate

Payment
Frequency

Maturity
Date

Cleared
Exchange

Notional
Amount
(in thousands)

Upfront
Payment
Received
(Paid)

Value

Unrealized
Appreciation
(Depreciation)

CDX.IG - 29

Buy

1.000%

December 2022

CME

$25,000

$555

$(601)

$(46)

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	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) returned 1.46%, net of fees, for the year ended December 31, 2017. By comparison, the Fund’s benchmark, the Bloomberg Barclays Intermediate Government/Credit Bond Index (the “Index”), returned 2.14%. Multiple factors contributed to the Fund’s underperformance relative to the Index during the year. The Fund’s sector positioning detracted from performance. The Fund was underweight corporate bonds, and within the sector underweight to BBB-rated bonds. Corporate bonds of all credit qualities performed well during the year, and BBB-rated bonds outperformed higher-quality segments. The Fund experienced positive selection effects from its corporate bond holdings. Positions in bonds issued by BNP Paribas, J.P. Morgan, Fibria Cellulose, and PeMex contributed to the Fund’s performance during the year. The Fund’s positioning in agency mortgage-backed securities (MBS) detracted from results. The Fund emphasized higher-coupon segments of the agency MBS market that the FOMC did not purchase in its large-scale asset purchase programs, and these securities underperformed comparable duration securities in the Index over the course of the year. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 85 for additional information.

Annual Report

December 31, 2017

Income Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			10 Year
Class N		1.46	%		1.42	%		1.14	%		2.98	%
Class I		1.68			1.69			1.37			3.20
Bloomberg Barclays Intermediate Government/Credit Bond Index		2.14			1.76			1.50			3.32

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

Sector Diversification (Unaudited)

The sector diversification shown is based on the total investments.

December 31, 2017

William Blair Funds

Income Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)


	Principal
Issuer	Amount		Value

U.S. Government and U.S. Government Agency—58.0%
U.S. Treasury Inflation Indexed Notes/Bonds—2.7%
U.S. Treasury Inflation Indexed Note, 1.125%, due 1/15/21	$	2,407	$	2,480
Federal Home Loan Mortgage Corp. (FHLMC)—14.1%
#E97112, 4.000%, due 5/1/18		3		3
#J05444, 6.000%, due 8/1/22		28		29
#E02388, 6.000%, due 9/1/22		55		58
#E02490, 6.000%, due 4/1/23		63		66
#J13022, 4.000%, due 9/1/25		271		281
#G16026, 4.000%, due 11/1/25		3,044		3,185
#J16051, 4.500%, due 7/1/26		669		704
#A17603, 5.500%, due 1/1/34		579		655
#G01705, 5.500%, due 6/1/34		1,091		1,236
#A45790, 7.500%, due 5/1/35		125		139
#G02141, 6.000%, due 3/1/36		246		283
#G04126, 6.000%, due 6/1/37		264		302
#G03201, 6.500%, due 6/1/37		151		172
#A66843, 6.500%, due 10/1/37		239		276
#G04564, 6.000%, due 12/1/37		232		266
#A81799, 6.500%, due 9/1/38		200		222
#G06964, 5.500%, due 11/1/38		1,263		1,431
#G60366, 6.000%, due 10/1/39		1,107		1,265
#G05875, 5.500%, due 2/1/40		109		122
#G07300, 6.000%, due 4/1/40		406		468
#C03665, 9.000%, due 4/1/41		256		298
#G06583, 5.000%, due 6/1/41		1,240		1,365
Total FHLMC Mortgage Obligations				12,826
Federal National Mortgage Association (FNMA)—41.2%
#695910, 5.000%, due 5/1/18		8		9
#740847, 6.000%, due 10/1/18		13		13
#323501, 6.500%, due 1/1/19		4		5
#751313, 5.000%, due 3/1/19		32		33
#458147, 10.000%, due 8/15/20		4		4
#835563, 7.000%, due 10/1/20		88		91
#831430, 5.500%, due 3/1/21		120		123
#888555, 5.500%, due 9/1/21		1,035		1,066
#880991, 5.500%, due 1/1/22		71		74
#735574, 8.000%, due 3/1/22		69		72
#679253, 6.000%, due 10/1/22		262		292
FNR G93-19 SH, -6.419%* 1M LIBOR + 56.169%, 11.234%, due 4/25/23, VRN		11		13
#982885, 5.000%, due 5/1/23		275		287
#933985, 5.500%, due 8/1/23		164		172
#AL8529, 6.000%, due 11/1/24		5,233		5,559
#255956, 5.500%, due 10/1/25		39		43
#AL2853, 4.500%, due 6/1/26		646		682
#AL9730, 4.500%, due 2/1/27		1,030		1,087
#256639, 5.000%, due 2/1/27		8		9
#806458, 8.000%, due 6/1/28		85		94
#AL9857, 4.000%, due 2/1/29		8,593		9,007
#880155, 8.500%, due 7/1/29		195		219
#797846, 7.000%, due 3/1/32		60		62
#745519, 8.500%, due 5/1/32		55		63
#654674, 6.500%, due 9/1/32		57		64

	NRSRO
	Rating	Principal
Issuer	(unaudited)	Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA) — (continued)
#733897, 6.500%, due 12/1/32		$	202	$	223
#254693, 5.500%, due 4/1/33			6		7
#711736, 5.500%, due 6/1/33			79		88
#555531, 5.500%, due 6/1/33			61		68
#555591, 5.500%, due 7/1/33			10		11
#AL3455, 5.500%, due 11/1/33			1,676		1,897
#776964, 5.000%, due 4/1/34			293		322
#725424, 5.500%, due 4/1/34			64		71
#888884, 5.500%, due 12/1/35			138		154
#AL3449, 6.000%, due 7/1/36			775		896
#886220, 6.000%, due 7/1/36			178		205
#928574, 6.000%, due 7/1/37			181		203
#888703, 6.500%, due 8/1/37			775		908
#928658, 6.500%, due 9/1/37			24		27
#AL5819, 6.000%, due 12/1/37			394		453
#AL6411, 7.000%, due 12/1/37			819		935
#962058, 6.500%, due 3/1/38			385		446
#991911, 7.000%, due 11/1/38			111		124
#AD0315, 6.500%, due 8/1/39			206		228
#AC3237, 5.000%, due 10/1/39			108		118
#AC9569, 5.000%, due 2/1/40			184		202
#BM1689, 5.500%, due 8/1/40			468		525
#AL0028, 5.000%, due 2/1/41			808		885
#AL5815, 5.500%, due 4/1/41			591		670
#AL9226, 5.500%, due 12/1/41			5,407		6,128
#AL9225, 6.000%, due 1/1/42			2,127		2,456
Total FNMA Mortgage Obligations					37,393

Asset-Backed Securities—3.3%
Citibank Credit Card Issuance Trust, 2008-A2, Tranche A2, 1M LIBOR + 1.150%, 2.702%, 1/23/20, VRN	AAA		500		500
American Express Credit Account Master Trust, 2008-2, Tranche A, 1M LIBOR + 1.260%, 2.737%, 9/15/20, VRN	AAA		1,000		1,002
Capital One Multi-Asset Execution Trust, 2016-A1, Tranche A1, 1M LIBOR + 0.450%, 1.927%, 2/15/22, VRN	AAA		1,000		1,005
SLM Private Education Loan Trust—144A, 2011-A, Tranche A3, 1M USD LIBOR + 2.500%, 3.977%, 1/15/43, VRN	AAA		500		519
Total Asset-Backed Securities					3,026

Corporate Obligations—39.0%
Morgan Stanley, 6.625%, due 4/1/18	A		1,000		1,011
Bank of America Corporation, 6.875%, due 11/15/18	A		1,000		1,041
Baidu, Inc., 2.750%, due 6/9/19	A		750		751
JPMorgan Chase & Co., 3M USD LIBOR + 3.320%, 5.000%, due 7/1/19, VRN	BBB-		750		764

See accompanying Notes to Financial Statements

Annual Report

December 31, 2017

Income Fund

Portfolio of Investments, December 31 2017 (all dollar amounts in thousands)

	NRSRO
	Rating	Principal
Issuer	(unaudited)	Amount		Value

Corporate Obligations—(continued)
PNC Bank NA, 1.450%, due 7/29/19	A+	$	750	$	741
Burlington Northern Santa Fe LLC, 4.700%, due 10/1/19	A		750		782
Boston Properties L.P., 5.875%, due 10/15/19	A-		1,000		1,054
Citigroup, Inc., 2.450%, due 1/10/20	A		900		901
Branch Banking & Trust Co., 3M USD LIBOR + 0.450%, 1.809%, due 1/15/20, VRN	A1		1,200		1,205
Petroleos Mexicanos, 6.000%, due 3/5/20	BBB+		500		531
Intel Corporation, 3M USD LIBOR + 0.080%, 1.493%, due 5/11/20, VRN	A+		750		748
Georgia-Pacific LLC—144A, 5.400%, due 11/1/20	A+		1,000		1,079
Mitsubishi UFJ Financial Group, Inc., 2.950%, due 3/1/21	A1		1,000		1,010
Capital One Financial Corporation, 4.750%, due 7/15/21	A-		1,000		1,069
Apple, Inc., 1.550%, due 8/4/21	AA+		750		729
Verizon Communications, Inc., 3.500%, due 11/1/21	A-		1,000		1,031
Ryder System, Inc., 3.450%, due 11/15/21	A-		900		924
Lloyds Banking Group plc, 3.000%, due 1/11/22	A+		1,000		1,006
Vale Overseas, Ltd., 4.375%, due 1/11/22	BBB+		500		518
Embraer S.A., 5.150%, due 6/15/22	BBB		500		536
Comcast Corporation, 3.125%, due 7/15/22	A-		1,000		1,025
Bancolombia S.A., 5.125%, due 9/11/22	BBB-		750		786
Jones Lang LaSalle, Inc., 4.400%, due 11/15/22	Baa1		750		791
Toll Brothers Finance Corporation, 4.375%, due 4/15/23	BBB-		500		521
BHP Billiton Finance USA, Ltd., 3.850%, due 9/30/23	A		1,000		1,066
Wells Fargo & Co., 4.480%, due 1/16/24	A		1,000		1,076
The Goldman Sachs Group, Inc., 4.000%, due 3/3/24	A		1,000		1,050
Fibria Overseas Finance, Ltd., 5.250%, due 5/12/24	BBB-		550		591
BRF S.A.—144A, 4.750%, due 5/22/24	BBB-		750		759

	NRSRO
	Rating	Principal
Issuer	(unaudited)	Amount		Value

Corporate Obligations—(continued)
Grupo Bimbo S.A.B. de C.V.—144A, 3.875%, due 6/27/24	BBB	$	500	$	517
BNP Paribas S.A., 4.250%, due 10/15/24	A		750		793
AbbVie, Inc., 3.600%, due 5/14/25	A-		1,000		1,030
ERP Operating L.P., 3.375%, due 6/1/25	A		1,000		1,021
Intercontinental Exchange, Inc., 3.750%, due 12/1/25	A		1,000		1,051
Simon Property Group L.P., 3.300%, due 1/15/26	A		1,000		1,003
ConocoPhillips Co., 4.950%, due 3/15/26	A-		900		1,023
Brookfield Finance, Inc., 4.250%, due 6/2/26	A-		750		775
Amazon.com, Inc.—144A, 3.150%, due 8/22/27	AA-		1,000		1,004
The Kroger Co., 8.000%, due 9/15/29	Baa1		775		1,031
Crown Castle Towers LLC—144A, 6.113%, due 1/15/40	A2		1,000		1,055
Total Corporate Obligations					35,399
Total Long-Term Investments—100.3% (cost $91,518)					91,124

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $775, collateralized by U.S. Treasury Note, 2.000%, due 8/15/25			775		775
Total Repurchase Agreement—0.9% (cost $775)					775
Total Investments—101.2% (cost $92,293)					91,899
Liabilities, plus cash and other assets—(1.2)%					(1,121	)
Net assets—100.0%				$	90,778

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

VRN = Variable Rate Note

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

	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

Paul J. Sularz Christopher T. Vincent	The William Blair Low Duration Fund (Class N shares) returned 0.84%, net of fees, for the year ended December 31, 2017. By comparison, the Fund’s benchmark, the Bank of America/Merrill Lynch 1-Year U.S. Treasury Note Index, returned 0.57%. Multiple factors contributed to the Fund’s outperformance relative to the Index during the year. The Fund experienced favorable results from its holdings of floating-rate corporate and asset-backed securities, which benefitted from actual and market-anticipated increases in short-term rates by the Federal Open Market Committee (FOMC). The Fund’s interest rate positioning also contributed to results, as the Fund maintained a defensive duration posture during a period when short-term rates rose. Factors that detracted from the Fund’s performance during the year included the Fund’s positioning in agency mortgage-backed securities (MBS). The Fund emphasized higher-coupon segments of the agency MBS market that the FOMC did not purchase in its large-scale asset purchase programs, and these securities underperformed comparable duration Treasuries during the year. Please refer to the Fixed Income Market Review and Outlook relating to the Fund on page 85 for additional information.

Annual Report

December 31, 2017

Low Duration Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			Since Inception(a)
Class N		0.84	%		0.67	%		0.52	%		1.03	%
Class I		0.91			0.87			0.67			1.18
Institutional Class		0.96			0.87			0.76			1.29
Bank of America Merrill Lynch 1-Year U.S. Treasury Note Index		0.57			0.49			0.38			0.42

(a)	Since inception is for the period from December 1, 2009 (Commencement of Operations) to December 31, 2017.

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.

Sector Diversification (Unaudited)

The sector diversification shown is based on the total investments.

December 31, 2017

William Blair Funds

Low Duration Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)


Issuer	Principal Amount		Value

U.S. Government and U.S. Government Agency—43.8%
U.S. Treasury—0.1%
U.S. Treasury Floating Rate Note, 3M treasury money market yield + 0.272%, 1.722%, due 1/31/18	$	250	$	250
Federal Home Loan Mortgage Corp. (FHLMC)—11.3%
#E95760, 4.500%, due 4/1/18		1		1
#E99582, 5.000%, due 9/1/18		2		2
#E99684, 5.000%, due 10/1/18		38		38
#B11362, 5.500%, due 12/1/18		4		4
#B11849, 5.500%, due 1/1/19		14		14
#B13870, 4.500%, due 5/1/19		9		9
#G11604, 5.000%, due 7/1/19		13		13
#G11596, 5.500%, due 8/1/19		13		13
#G11605, 5.500%, due 9/1/19		8		8
#B17294, 5.000%, due 11/1/19		42		43
#G11660, 5.500%, due 2/1/20		289		295
#B19222, 4.500%, due 4/1/20		40		41
#G11697, 5.500%, due 4/1/20		30		31
#J02537, 5.000%, due 9/1/20		20		21
#G11836, 5.500%, due 12/1/20		7		7
#G12113, 5.500%, due 5/1/21		56		58
#G12395, 6.000%, due 10/1/21		391		408
#E02322, 5.500%, due 5/1/22		17		17
#G12725, 6.000%, due 6/1/22		97		103
#G13124, 6.000%, due 12/1/22		220		233
#J06871, 5.500%, due 1/1/23		54		56
#J08450, 5.500%, due 7/1/23		29		30
#J08703, 5.500%, due 9/1/23		43		44
#C00351, 8.000%, due 7/1/24		40		44
#J11208, 5.000%, due 11/1/24		64		68
#J11374, 4.500%, due 12/1/24		615		647
#G00363, 8.000%, due 6/1/25		67		72
#C80329, 8.000%, due 8/1/25		13		14
#J16051, 4.500%, due 7/1/26		1,510		1,589
#G30348, 6.000%, due 7/1/27		832		930
#G04821, 8.500%, due 7/1/31		1,986		2,406
#G07290, 6.000%, due 6/1/34		1,737		1,956
#G07837, 6.500%, due 2/1/38		1,295		1,488
#G04424, 6.000%, due 6/1/38		461		516
#G04641, 6.000%, due 6/1/38		1,495		1,712
#G04778, 6.000%, due 7/1/38		72		82
#A81372, 6.000%, due 8/1/38		239		273
#G04687, 6.000%, due 9/1/38		68		78
#G04745, 6.000%, due 9/1/38		234		268
#A81799, 6.500%, due 9/1/38		188		208
#G06085, 6.500%, due 9/1/38		69		76
#G05723, 6.500%, due 11/1/38		1,147		1,327
#G05124, 6.000%, due 12/1/38		3,754		4,308
#G07480, 6.000%, due 5/1/39		2,503		2,837
#G07300, 6.000%, due 4/1/40		2,710		3,121
#4122, Tranche FP, 1M LIBOR + 0.400%, 1.877%, due 10/15/42, VRN		761		762
Total FHLMC Mortgage Obligations				26,271


Issuer	Principal Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA)—32.4%
#695838, 5.500%, due 4/1/18	$	1	$	1
#697593, 5.000%, due 5/1/18		5		5
#705741, 5.000%, due 6/1/18		4		4
#656573, 5.000%, due 6/1/18		5		5
#709848, 5.000%, due 6/1/18		4		4
#728715, 5.000%, due 7/1/18		10		10
#711991, 5.000%, due 8/1/18		6		6
#257378, 5.000%, due 9/1/18		1		1
#743183, 5.000%, due 10/1/18		3		3
#749596, 5.000%, due 11/1/18		18		19
#753866, 6.000%, due 12/1/18		21		21
#761246, 5.000%, due 1/1/19		24		24
#766059, 5.500%, due 2/1/19		22		22
#751313, 5.000%, due 3/1/19		14		14
#766276, 5.000%, due 3/1/19		60		61
#779363, 5.000%, due 6/1/19		6		6
#785259, 5.000%, due 8/1/19		33		33
#761530, 5.500%, due 8/1/19		50		51
#788424, 5.500%, due 9/1/19		18		18
#761489, 5.500%, due 9/1/19		19		19
#725953, 5.000%, due 10/1/19		12		12
#735303, 5.500%, due 10/1/19		716		727
#745877, 5.000%, due 1/1/20		32		33
#357865, 5.000%, due 7/1/20		33		34
#888105, 5.000%, due 8/1/20		1		1
#357978, 5.000%, due 9/1/20		311		320
#844026, 6.000%, due 11/1/20		151		155
#745735, 5.000%, due 3/1/21		367		378
#879607, 5.500%, due 4/1/21		21		22
#831497, 6.000%, due 4/1/21		83		85
#831525, 5.500%, due 6/1/21		29		30
#888555, 5.500%, due 9/1/21		1,714		1,765
#880993, 6.000%, due 1/1/22		5		5
#888982, 6.000%, due 12/1/22		101		107
#972934, 5.500%, due 2/1/23		121		126
#889670, 5.500%, due 6/1/23		30		32
#AE0011, 5.500%, due 9/1/23		35		36
#747339, 5.500%, due 10/1/23		139		152
#995395, 6.000%, due 12/1/23		91		96
#190988, 9.000%, due 6/1/24		22		23
#AL8529, 6.000%, due 11/1/24		19,028		20,212
#AL3422, 5.000%, due 1/1/25		443		469
#AL2853, 4.500%, due 6/1/26		2,303		2,431
#AL9730, 4.500%, due 2/1/27		5,419		5,716
#AL9857, 4.000%, due 2/1/29		4,551		4,770
#555933, 7.000%, due 6/1/32		523		587
#759336, 6.000%, due 1/1/34		1,169		1,343
#AL3401, 5.500%, due 2/1/34		1,365		1,545
#AL3449, 6.000%, due 7/1/36		1,240		1,434
#886762, 7.000%, due 9/1/36		265		302
#928574, 6.000%, due 7/1/37		93		104
#888703, 6.500%, due 8/1/37		2,894		3,393
#948637, 6.500%, due 8/1/37		301		334
#AL5819, 6.000%, due 12/1/37		1,711		1,969

See accompanying Notes to Financial Statements.

Annual Report

December 31, 2017

Low Duration Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)		Principal Amount		Value

U.S. Government and U.S. Government Agency—(continued)
Federal National Mortgage Association (FNMA) — (continued)
#AL6411, 7.000%, due 12/1/37			$	3,582	$	4,091
#965534, 6.000%, due 1/1/38				34		39
#889371, 6.000%, due 1/1/38				630		724
#975649, 6.000%, due 7/1/38				102		115
#995712, 6.000%, due 8/1/38				1,548		1,788
#AD0100, 7.000%, due 12/1/38				762		894
#AD0315, 6.500%, due 8/1/39				447		496
#AE0934, 6.500%, due 10/1/39				2,433		2,827
#AL5815, 5.500%, due 4/1/41				2,957		3,351
#AL9226, 5.500%, due 12/1/41				6,053		6,859
#AL9225, 6.000%, due 1/1/42				4,640		5,359
Total FNMA Mortgage Obligations						75,618

Asset-Backed Securities—19.6%
Nissan Auto Lease Trust, 2016-A, Tranche A2B, 1M USD LIBOR + 0.380%, 1.857%, 8/15/18, VRN		Aaa		13		13
Nissan Auto Lease Trust, 2016-B, Tranche A2B, 1M USD LIBOR + 0.280%, 1.757%, 12/17/18, VRN		Aaa		928		929
Nissan Auto Receivables 2016-A Owner Trust, 2016-A, Tranche A2B, 1M USD LIBOR + 0.350%, 1.827%, 2/15/19, VRN		Aaa		277		277
Nissan Auto Receivables Owner Trust, 2016-B, Tranche A2B, 1M USD LIBOR + 0.300%, 1.777%, 4/15/19, VRN		Aaa		600		600
Toyota Auto Receivables 2016-D Owner Trust, 2016-D, Tranche A2B, 1M USD LIBOR + 0.130%, 1.607%, 5/15/19, VRN		AAA		902		903
American Express Issuance Trust II, 2013-2, Tranche A, 1M LIBOR + 0.430%, 1.907%, 8/15/19, VRN		AAA		2,233		2,239
Nissan Master Owner Trust Receivables, 2015-A, Tranche A1, 1M LIBOR + 0.400%, 1.877%, 1/15/20, VRN		Aaa		1,915		1,915
GM Financial Automobile Leasing Trust, 2017-3, Tranche A2B, 1M LIBOR + 0.240%, 1.741%, 1/21/20, VRN		Aaa		500		500
Mercedes-Benz Master Owner Trust —144A, 2015-BA, Tranche A, 1M LIBOR + 0.380%, 1.857%, 4/15/20, VRN		Aaa		1,500		1,501
Ford Credit Auto Owner Trust, 2017-B, Tranche A2B, 1M USD LIBOR + 0.070%, 1.547%, 5/15/20, VRN		AAA		1,200		1,200

Issuer	NRSRO Rating (unaudited)		Principal Amount		Value

Asset-Backed Securities—(continued)
BMW Floorplan Master Owner Trust—144A, 2015-1A, Tranche A, 1M LIBOR + 0.500%, 1.977%, 7/15/20, VRN		AAA	$	3,675	$	3,683
American Express Credit Account Master Trust, 2008-2, Tranche A, 1M LIBOR + 1.260%, 2.737%, 9/15/20, VRN		AAA		2,000		2,003
Discover Card Execution Note Trust, 2013-A6, Tranche A6, 1M LIBOR + 0.450%, 1.927%, 4/15/21, VRN		AAA		2,000		2,007
Chase Issuance Trust, 2016-A1, Tranche A, 1M LIBOR + 0.410%, 1.887%, 5/17/21, VRN		AAA		2,024		2,033
Bank of America Credit Card Trust, 2014-A1, Tranche A, 1M LIBOR + 0.380%, 1.857%, 6/15/21, VRN		AAA		4,000		4,012
MBNA Credit Card Master Note Trust, 2004-A3, Tranche A3, 1M LIBOR + 0.260%, 1.737%, 8/16/21, VRN		AAA		3,000		3,003
Capital One Multi-Asset Execution Trust, 2014-A3, Tranche A3, 1M LIBOR + 0.380%, 1.857%, 1/18/22, VRN		AAA		1,110		1,114
Chase Issuance Trust, 2017-A1, Tranche A, 1M LIBOR + 0.300%, 1.777%, 1/18/22, VRN		AAA		3,200		3,215
Capital One Multi-Asset Execution Trust, 2016-A1, Tranche A1, 1M LIBOR + 0.450%, 1.927%, 2/15/22, VRN		AAA		3,000		3,015
Verizon Owner Trust—144A, 2017-3A, Tranche A1B, 1M LIBOR + 0.270%, 1.771%, 4/20/22, VRN		AAA		3,500		3,510
Mercedes-Benz Master Owner Trust —144A, 2017-BA, Tranche A, 1M LIBOR + 0.420%, 1.897%, 5/16/22, VRN		Aaa		2,280		2,290
GMF Floorplan Owner Revolving Trust—144A, 2017-2, Tranche A2, 1M LIBOR + 0.430%, 1.907%, 7/15/22, VRN		Aaa		2,500		2,510
SLM Student Loan Trust, 2008-4, Tranche A4,3M USD LIBOR + 1.650%, 3.017%, 7/25/22, VRN		A		810		831
SLM Private Education Loan Trust—144A, 2011-A, Tranche A3, 1M USD LIBOR + 2.500%, 3.977%, 1/15/43, VRN		AAA		2,250		2,335
Total Asset-Backed Securities						45,638

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

Low Duration Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)		Principal Amount		Value

Corporate Obligations—37.4%
Exxon Mobil Corporation, 3M USD LIBOR + 0.600%, 2.068%, due 2/28/18, VRN		Aaa	$	1,000	$	1,001
The Bank of Tokyo-Mitsubishi UFJ, Ltd.—144A, 3M USD LIBOR + 0.550%, 2.045%, due 3/5/18, VRN		A1		1,400		1,400
Bank of Montreal, 3M USD LIBOR + 0.600%, 1.950%, due 4/9/18, VRN		AA-		2,580		2,583
NBCUniversal Enterprise, Inc.—144A, 3M USD LIBOR + 0.685%, 2.044%, due 4/15/18, VRN		A-		3,075		3,080
Morgan Stanley, 3M USD LIBOR + 1.280%, 2.647%, due 4/25/18, VRN		A		2,000		2,007
The Goldman Sachs Group, Inc., 3M USD LIBOR + 1.200%, 2.578%, due 4/30/18, VRN		A		3,084		3,093
Merck & Co., Inc., 3M USD LIBOR + 0.360%, 1.796%, due 5/18/18, VRN		AA		2,500		2,502
KeyBank NA, 3M USD LIBOR + 0.520%, 2.001%, due 6/1/18, VRN		A-		2,000		2,003
Pfizer, Inc., 3M USD LIBOR + 0.300%, 1.889%, due 6/15/18, VRN		AA		1,000		1,001
Sumitomo Mitsui Banking Corporation, 3M USD LIBOR + 0.670%, 2.027%, due 10/19/18, VRN		A1		1,000		1,004
PNC Bank NA, 3M USD LIBOR + 0.400%, 1.915%, due 12/7/18, VRN		A+		3,000		3,006
Morgan Stanley, 3M USD LIBOR + 1.375%, 2.752%, due 2/1/19, VRN		A		2,185		2,210
USAA Capital Corporation—144A, 3M USD LIBOR + 0.230%, 1.607%, due 2/1/19, VRN		Aa1		1,500		1,501
Toyota Motor Credit Corporation, 3M USD LIBOR + 0.820%, 2.256%, due 2/19/19, VRN		AA-		1,000		1,008
American Honda Finance Corporation, 3M USD LIBOR + 0.825%, 2.271%, due 2/22/19, VRN		A+		1,616		1,629
Apple, Inc., 3M USD LIBOR + 0.820%, 2.274%, due 2/22/19, VRN		AA+		2,743		2,768
PepsiCo, Inc., 3M USD LIBOR + 0.590%, 2.036%, due 2/22/19, VRN		A+		1,000		1,006
Johnson & Johnson, 3M USD LIBOR + 0.270%, 1.751%, due 3/1/19, VRN		AAA		1,785		1,790
Bank of America Corporation, 3M USD LIBOR + 0.870%, 2.565%, due 4/1/19, VRN		A		2,000		2,016

Issuer	NRSRO Rating (unaudited)		Principal Amount		Value

Corporate Obligations—(continued)
Westpac Banking Corporation, 3M USD LIBOR + 0.710%, 2.123%, due 5/13/19, VRN		AA-	$	1,000	$	1,008
QUALCOMM, Inc., 3M USD LIBOR + 0.360%, 1.796%, due 5/20/19, VRN		A1		1,000		1,002
Wells Fargo Bank NA, 3M USD LIBOR + 0.600%, 2.062%, due 5/24/19, VRN		Aa2		1,500		1,511
Bank of Montreal, 3M USD LIBOR + 0.650%, 2.004%, due 7/18/19, VRN		AA-		1,000		1,007
American Express Credit Corporation, 3M USD LIBOR + 0.490%, 1.906%, due 8/15/19, VRN		A2		1,000		1,004
Shell International Finance BV, 3M USD LIBOR + 0.350%, 1.899%, due 9/12/19, VRN		Aa2		1,000		1,004
Sumitomo Mitsui Trust Bank Ltd.— 144A, 3M USD LIBOR + 0.440%, 2.053%, due 9/19/19, VRN		A1		750		750
Gilead Sciences, Inc., 3M USD LIBOR + 0.250%, 1.876%, due 9/20/19, VRN		A		1,000		1,002
Mondelez International Holdings Netherlands BV—144A, 3M USD LIBOR + 0.610%, 1.988%, due 10/28/19, VRN		A3		3,000		3,012
Daimler Finance North America LLC—144A, 3M USD LIBOR + 0.620%, 1.998%, due 10/30/19, VRN		A		1,600		1,608
United Technologies Corporation, 3M USD LIBOR + 0.350%, 1.727%, due 11/1/19, VRN		A-		1,175		1,178
Citigroup, Inc., 3M USD LIBOR + 0.790%, 2.140%, due 1/10/20, VRN		A		3,000		3,019
Branch Banking & Trust Co. 3M USD LIBOR + 0.450%, 1.809%, due 1/15/20, VRN		A1		2,000		2,009
Intel Corporation, 3M USD LIBOR + 0.080%, 1.493%, due 5/11/20, VRN		A+		2,500		2,495
Capital One Financial Corporation, 3M USD LIBOR + 0.760%, 2.173%, due 5/12/20, VRN		A-		3,000		3,015
National Australia Bank Ltd.—144A, 3M USD LIBOR + 0.510%, 1.956%, due 5/22/20, VRN		AA-		2,000		2,009
John Deere Capital Corporation, 3M USD LIBOR + 0.290%, 1.948%, due 6/22/20, VRN		A		1,000		1,001
Nissan Motor Acceptance Corp.— 144A, 3M USD LIBOR + 0.390%, 1.749%, due 7/13/20, VRN		A		1,250		1,254

See accompanying Notes to Financial Statements.

100

Annual Report

December 31, 2017

Low Duration Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Issuer	NRSRO Rating (unaudited)		Principal Amount		Value

Corporate Obligations—(continued)
Caterpillar Financial Services Corporation, 3M USD LIBOR + 0.290%, 1.777%, due 9/4/20, VRN		A	$	3,000	$	3,004
IBM Credit LLC, 3M USD LIBOR + 0.260%, 1.623%, due 1/20/21, VRN		A+		2,000		2,006
JPMorgan Chase & Co., 3M USD LIBOR + 1.480%, 2.961%, due 3/1/21, VRN		A+		3,000		3,095
Wells Fargo & Co., 3M USD LIBOR + 1.340%, 2.827%, due 3/4/21, VRN		A+		3,000		3,084
HSBC Holdings plc, 3M USD LIBOR + 2.240%, 3.763%, due 3/8/21, VRN		AA-		3,000		3,161
Bank of America Corporation, 3M USD LIBOR + 1.420%, 2.777%, due 4/19/21, VRN		A		1,000		1,033
The Goldman Sachs Group, Inc., 3M USD LIBOR + 1.360%, 2.727%, due 4/23/21, VRN		A		1,000		1,025
Westpac Banking Corporation, 3M USD LIBOR + 1.000%, 2.413%, due 5/13/21, VRN		AA-		2,000		2,035
Barclays plc, 3M USD LIBOR + 2.110%, 3.520%, due 8/10/21, VRN		A		3,000		3,141
Total Corporate Obligations						87,080
Total Long-Term Investments—100.8% (cost $236,569)						234,857


Issuer	Principal Amount			Value

Repurchase Agreement
Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $274, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26	$	274		$	274
Total Repurchase Agreement—0.1% (cost $274)					274
Total Investments—100.9% (cost $236,843)					235,131

Securities Sold, Not Yet Purchased

U.S. Government Agency
Federal National Mortgage Association (FNMA)—(6.4)%
TBA, 2.500%, due 1/1/33		(15,000	)		(14,978	)
Total Securities Sold, Not Yet Purchased—(6.4)% (proceeds $14,960)					(14,978	)
Cash and other assets, less liabilities—5.5%					12,924
Net assets—100.0%				$	233,077

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

TBA = To Be Announced - TBAs are mortgage-backed securities traded under delayed delivery commitments, settling after December 31, 2017. 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.

VRN = Variable Rate Note

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

101

		Macro Allocation Fund

		AN OVERVIEW FROM THE PORTFOLIO MANAGERS

Thomas Clarke Brian D. Singer		The William Blair Macro Allocation Fund (Class N shares) posted a 5.06% increase, net of fees, for the twelve months ended December 31, 2017. By comparison, the Fund’s benchmark index, the Bank of America/Merrill Lynch 3-Month U.S. Treasury Bill Index (the “Index”) increased 0.86%. The Fund had positive performance from its market strategy (i.e., equity and fixed income) and positive performance from its currency strategy. Detractors from the Fund’s market-oriented exposures included sector positioning within U.S. equities and short exposure to Japanese equities. Long exposure to emerging market equities contributed to the Fund’s gains, specifically from allocations in China, India, and Vietnam equities. The Fund also benefitted from long exposure to European equities. Within currency, long exposures to emerging market currencies were beneficial to the Fund’s performance, with strong performance coming from exposures to the Indian rupee, Chinese yuan, and Polish zloty. This was partially offset by a negative contribution from short exposure to the euro and Czech krona. Although there remain geopolitical risks on the horizon, we feel that the forward-looking risk environment is relatively benign. Accordingly, we increased the portfolio’s risk level from where it was at the beginning of 2017, though the current risk level remains below the strategy’s long-term expected average. We continue to look for opportunities to appropriately increase risk in the portfolio, especially in places where shorter-term macro-thematic and geopolitical risks, such as populist uprisings or elections, have receded. The Fund’s market strategy is moderately long of equities, with exposures to Europe, U.K., and emerging markets while maintaining short positions in Canadian and Japanese equity markets. The market strategy is also slightly short of fixed income securities, largely in European government bonds. Within currencies, the Fund’s strategy remains long of emerging market currencies and short of developed market currencies, which is in line with fundamental valuation opportunities. Among the Fund’s largest long currency exposures are the Philippine peso, Chinese yuan, and Indian rupee, and the largest short exposures are in the Thai baht, New Zealand dollar, and U.S. dollar.

102

Annual Report

December 31, 2017

Macro Allocation Fund

Performance Highlights (Unaudited)

Average Annual Total Return through 12/31/2017
	1 Year			3 Year			5 Year			Since Inception
Class N(a)		5.06	%		0.16	%		3.13	%		5.26	%
Class I(a)		5.50			0.47			3.41			5.54
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index(a)		0.86			0.41			0.27			0.24
Institutional Class(b)		5.51			0.56			—			1.55
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index(b)		0.86			0.41			—			0.31

(a)	Since inception is for the period from November 29, 2011 (Commencement of Operations) to December 31, 2017.
(b)	Since inception is for the period from October 21, 2013 (Commencement of Operations) to December 31, 2017.

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.

Portfolio Allocation (Unaudited)

The table below provides the allocation of the Fund’s holdings as a percent of net assets as of December 31, 2017.

Category	% of net assets
Equity Exchange-Traded Funds	65.8	%
Fixed Income Exchange-Traded Funds	4.3
Common Stocks	1.7
Foreign Government Bond	2.3
Repurchase Agreement	10.0
U.S. Government	15.2
Purchased Options	0.1
Cash and Other Assets, Less Liabilities	0.6
Net Assets	100.0	%

December 31, 2017

William Blair Funds

103

Macro Allocation Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



	Issuer	Shares		Value

	Exchange-Traded Funds—70.1%
	Equity Exchange-Traded Funds—65.8%
	Dragon Capital - Vietnam Enterprise Investments, Ltd. Class “C”		2,275,100	$	13,562
	Energy Select Sector SPDR Fund		418,600		30,248
	Financial Select Sector SPDR Fund		940,400		26,247
	Global X MSCI Argentina ETF		139,800		4,936
	Global X MSCI Greece ETF		1,983,400		20,389
	iShares Global Energy ETF		376,000		13,367
	iShares MSCI Brazil ETF		1,027,300		41,554
	iShares MSCI Frontier 100 ETF		449,845		14,899
	iShares MSCI India ETF		1,140,200		41,127
	iShares MSCI Japan ETF		338,700		20,298
	iShares MSCI Malaysia ETF		389,000		12,825
	iShares Russell 1000 Growth ETF		309,100		41,630
	iShares Russell 1000 Value ETF		1,288,700		160,237
	SPDR S&P 500 ETF Trust		1,375,500		367,066
	Utilities Select Sector SPDR Fund		466,300		24,565
	VanEck Vectors Russia ETF		1,334,700		28,309
	Total Equity Exchange-Traded Funds				861,259
	Fixed Income Exchange-Traded Funds—4.3%
	iShares iBoxx $ Investment Grade Corporate Bond ETF		324,800		39,483
	SPDR Bloomberg Barclays High Yield Bond ETF		431,600		15,848
	Total Fixed Income Exchange-Traded Funds				55,331
	Total Exchange-Traded Funds—70.1% (cost $797,656)				916,590

	Common Stocks—1.7%

	Emerging Latin America—1.6%
	Argentina—1.5%
*	Adecoagro S.A. (Food products)†		77,468		801
	Banco Macro S.A.—ADR (Banks)		12,235		1,418
	BBVA Banco Frances S.A.—ADR (Banks)		23,846		601
*	Cablevision Holding S.A.—GDR (Media)†		132,471		3,314
	Cresud SACIF y A—ADR (Real estate management & development)		23,299		515
*	Empresa Distribuidora Y Comercializadora Norte—ADR (Electric utilities)		15,414		766
	Grupo Clarin S.A. Class B,—GDR (Media)†		37,176		225
	Grupo Financiero Galicia S.A.—ADR (Banks)		54,612		3,596
	Grupo Supervielle S.A.—ADR (Banks)		33,745		989
	IRSA Inversiones y Representaciones S.A. —ADR (Real estate management & development)		14,276		423
	MercadoLibre, Inc. (Internet software & services)†		4,255		1,339
*	Pampa Energia S.A.—ADR (Electric utilities)		38,790		2,610
	Telecom Argentina S.A.—ADR (Diversified telecommunication services)		31,652		1,159

			Shares or
			Principal
	Issuer		Amount		Value

	Common Stocks—(continued)

	Emerging Latin America—(continued)
	Argentina—(continued)
	YPF S.A.—ADR (Oil, gas & consumable fuels)			130,630	$	2,993
						20,749
	Uruguay—0.1%
*	Arcos Dorados Holdings, Inc. Class “A” (Hotels, restaurants & leisure)†			123,431		1,277

	Europe—0.1%
	Luxembourg—0.1%
*	Globant S.A. (Software)†			15,327		712
	Total Common Stocks—1.7% (cost $21,373)					22,738

	Foreign Government Bond—2.3%
	Malaysia
	Malaysia Government Bond, 3.580%, due 9/28/18	MYR 121,441				30,181
	Total Foreign Government Bond—2.3% (cost $27,519)					30,181

	Repurchase Agreement—10.0%
	Fixed Income Clearing Corporation, 0.200% dated 12/29/17, due 1/2/18, repurchase price $131,092, collateralized by U.S. Treasury Inflation Index Bond, 0.625%, due 1/15/26, and U.S. Treasury Notes, 2.000%-2.250%, due 8/15/25-11/15/25		$	131,089		131,089
	Total Repurchase Agreement—10.0% (cost $131,089)					131,089

	U.S. Government—15.2%
	U.S. Treasury Bill, 1.161%, due 6/21/18			31,900		31,675
	U.S. Treasury Bill, 1.199%, due 7/19/18(a)			50,900		50,472
	U.S. Treasury Bill, 1.247%, due 8/16/18(a)			38,500		38,119
	U.S. Treasury Bill, 1.261%, due 9/13/18(a)			20,000		19,769
	U.S. Treasury Bill, 1.395%, due 10/11/18(a)			29,500		29,117
	U.S. Treasury Bill, 1.648%, due 11/8/18			15,000		14,783
	U.S. Treasury Bill, 1.671%, due 12/6/18(b)			15,000		14,762
	Total U.S. Government—15.2% (cost $199,066)					198,697
	Total Purchased Options—0.1% (cost $2,552)					1,576
	Total Investments in Securities—99.4% (cost $1,179,255)					1,300,871

See accompanying Notes to Financial Statements.

104

Annual Report

December 31, 2017

Macro Allocation Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)



Issuer	Value

Total Written Options—0.0% (premiums received $942)	$	(456	)
Cash and other assets, less liabilities—0.6%		8,225
Net assets—100.0%	$	1,308,640

* = Non-income producing security

† = U.S. listed foreign security

ADR = American Depository Receipt

GDR = Global Depository Receipt

(a) Security, or portion of security, is segregated as collateral for centrally cleared swaps and to cover initial margin requirements on open futures contracts aggregating a total value of $67,100.

(b) Security, or portion of security, is pledged as collateral for OTC swap contracts and OTC options aggregating a total value of $1,190.

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. The Fund had the following transactions during the year ended December 31 2017 with companies deemed affiliated during the year ended December 31, 2017. These securities were no longer deemed affiliated at December 31, 2017.

	Share Activity								Year Ended December 31, 2017
Security Name	Balance 12/31/2016	Purchases	Sales	Balance 12/31/2017	Value 12/31/2017			Dividend Income			Net realized gain (loss)				Change in net unrealized appreciation (depreciation)
Global X MSCI Greece ETF	2,126,000	614,000	756,600	1,983,400		$	20,389		$	434		$	(183	)		$	4,942
WisdomTree Emerging Markets Local Debt Fund ETF	326,500	—	326,500	—			—			402			(736	)			1,573
						$	20,389		$	836		$	(919	)		$	6,515

Purchased Options Contracts

Description	Counterparty	Exercise Price		Expiration Date	Number of Contracts			Notional Amount				Value				Premiums Paid (Received) by Fund				Unrealized Appreciation/ (Depreciation)
Puts
	Credit Suisse
STXE Small 200	International		282	03/16/18		187,396			EUR	55,790			$	653			$	875			$	(222	)
iShares iBoxx High Yield Bond	Citibank N.A.		85	03/16/18		14,841			$	129,503				923				1,677				(754	)
Total Purchased Options Contracts													$	1,576			$	2,552			$	(976	)

Written Options Contracts

Description	Counterparty		Exercise Price	Expiration Date	Number of Contracts			Notional Amount				Value				Premiums Paid (Received) by Fund				Unrealized Appreciation/ (Depreciation)
Puts
iShares iBoxx $ Investment Grade	Citibank N.A.		120	03/16/18		(10,768	)		$	(130,896	)		$	(456	)		$	(942	)		$	486

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

105

Macro Allocation Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Forward Foreign Currency Contracts

Settlement Date	Deliver/Receive	Counterparty	Local Currency (in thousands)	USD (Base) Purchased or Sold		Value		Net Unrealized Appreciation (Depreciation)
Purchased
3/21/18	Argentinean Peso	Citibank N.A. London	68,576	$	3,651	$	3,526		$	(125	)
3/21/18	British Pound Sterling	Citibank N.A. London	51,321		68,889		69,480			591
3/21/18	Canadian Dollar	Citibank N.A. London	6,529		5,132		5,200			68
3/21/18	Chinese Yuan Renminbi	Citibank N.A. London	747,629		112,091		114,142			2,051
3/21/18	Colombian Peso	Citibank N.A. London	264,329,861		87,075		87,960			885
3/21/18	Czech Koruna	Citibank N.A. London	118,174		5,516		5,572			56
3/21/18	Euro	Citibank N.A. London	1,929		2,303		2,327			24
3/21/18	Hong Kong Dollar	Citibank N.A. London	83,640		10,715		10,723			8
3/21/18	Indian Rupee	Citibank N.A. London	3,191,109		48,981		49,609			628
3/21/18	Indonesian Rupiah	Citibank N.A. London	4,503,239		330		332			2
3/22/18	Japanese Yen	Citibank N.A. London	9,676,103		86,571		86,244			(327	)
3/21/18	Mexican Peso	Citibank N.A. London	1,377,220		70,894		69,029			(1,865	)
3/21/18	New Turkish Lira	Citibank N.A. London	221,342		56,079		57,010			931
3/21/18	New Zealand Dollar	Citibank N.A. London	16,178		11,336		11,454			118
3/21/18	Philippine Peso	Citibank N.A. London	6,844,403		134,984		136,607			1,623
3/21/18	Polish Zloty	Citibank N.A. London	152,598		42,670		43,852			1,182
3/21/18	Singapore Dollar	Citibank N.A. London	116,927		86,680		87,536			856
3/22/18	South African Rand	Citibank N.A. London	636,699		46,547		50,838			4,291
3/21/18	South Korean Won	Citibank N.A. London	8,235,299		7,638		7,723			85
3/21/18	Swiss Franc	Citibank N.A. London	8,201		8,369		8,465			96
3/21/18	Taiwan Dollar	Citibank N.A. London	201,508		6,800		6,855			55
3/21/18	Thai Baht	Citibank N.A. London	271,753		8,349		8,354			5
									$	11,238
Sold
3/21/18	Argentinean Peso	Citibank N.A. London	581,668	$	31,570	$	29,909		$	1,661
3/21/18	Australian Dollar	Citibank N.A. London	37,576		28,590		29,314			(724	)
3/21/18	Brazilian Real	Citibank N.A. London	58,822		17,634		17,576			58
3/21/18	British Pound Sterling	Citibank N.A. London	5,661		7,606		7,664			(58	)
3/21/18	Canadian Dollar	Citibank N.A. London	54,643		42,550		43,517			(967	)
3/21/18	Chinese Yuan Renminbi	Citibank N.A. London	40,800		6,167		6,230			(63	)
3/21/18	Colombian Peso	Citibank N.A. London	21,541,516		7,202		7,168			34
3/21/18	Czech Koruna	Citibank N.A. London	1,381,272		63,889		65,130			(1,241	)
3/21/18	Euro	Citibank N.A. London	97,240		115,091		117,249			(2,158	)
3/21/18	Hong Kong Dollar	Citibank N.A. London	615,618		78,971		78,922			49
3/21/18	Hungarian Forint	Citibank N.A. London	7,530,878		28,440		29,198			(758	)
3/21/18	Indonesian Rupiah	Citibank N.A. London	588,821,674		42,929		43,279			(350	)
3/22/18	Japanese Yen	Citibank N.A. London	2,637,454		23,448		23,508			(60	)
3/21/18	New Turkish Lira	Citibank N.A. London	1,698		431		437			(6	)
3/21/18	New Zealand Dollar	Citibank N.A. London	207,245		144,804		146,726			(1,922	)
3/21/18	Philippine Peso	Citibank N.A. London	481,163		9,542		9,603			(61	)
3/21/18	Polish Zloty	Citibank N.A. London	10,426		2,950		2,996			(46	)
3/21/18	Russian Ruble	Citibank N.A. London	1,075,766		18,029		18,452			(423	)
3/21/18	Singapore Dollar	Citibank N.A. London	6,955		5,182		5,207			(25	)
3/22/18	South African Rand	Citibank N.A. London	98,544		7,623		7,867			(244	)
3/21/18	South Korean Won	Citibank N.A. London	71,179,189		65,386		66,755			(1,369	)
3/21/18	Swiss Franc	Citibank N.A. London	112,509		114,548		116,143			(1,595	)
3/21/18	Taiwan Dollar	Citibank N.A. London	2,566,484		86,003		87,315			(1,312	)
3/21/18	Thai Baht	Citibank N.A. London	4,193,034		129,206		128,899			307
									$	(11,273	)

See accompanying Notes to Financial Statements.

106

Annual Report

December 31, 2017

Macro Allocation Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Futures Contracts

Number of Contracts	Description	Expiration Date	Local Currency	Notional Amount (Local, in Thousands)	Notional Amount (USD)		Value (USD)		Net Unrealized Appreciation (Depreciation)
Long
643	CAC 40 Index	January 2018	Euro	34,147	$	41,678	$	40,971		$	(707	)
1,068	IBEX 35 Index	January 2018	Euro	107,022		131,327		128,410			(2,917	)
321	OMXS 30 Index	January 2018	Swedish Krona	50,533		6,357		6,160			(197	)
52	HSCEI Future	January 2018	Hong Kong Dollar	30,498		3,874		3,904			30
1,919	MSCI Singapore
	ETS Index	January 2018	Singapore Dollar	74,476		55,465		55,685			220
9	EURO-BTP	March 2018	Euro	1,225		1,479		1,470			(9	)
269	KOSPI 200 Index	March 2018	South Korean Won	21,933,588		20,218		20,488			270
3,569	EURO STOXX 600
	Banks Index	March 2018	Euro	32,549		39,586		39,054			(532	)
712	FTSE 100 Index	March 2018	British Pound Sterling	54,383		70,223		73,425			3,202
399	FTSE MIB Index	March 2018	Euro	43,405		54,118		52,080			(2,038	)
										$	(2,678	)
Short
156	Amsterdam Index	January 2018	Euro	16,988	$	20,677	$	20,383		$	294
78	HANG SENG Index	January 2018	Hong Kong Dollar	116,797		14,832		14,949			(117	)
182	MSCI Taiwan Index	January 2018	U.S. Dollar	7,153		7,041		7,153			(112	)
399	NIKKEI 225 Index	March 2018	Japanese Yen	4,539,623		40,100		40,290			(190	)
156	TOPIX Index	March 2018	Japanese Yen	2,834,520		24,628		25,157			(529	)
1,345	FTSE/JSE Top 40 Index	March 2018	South African Rand	715,190		56,481		57,805			(1,324	)
321	S&P TSX 60 Index	March 2018	Canadian Dollar	61,465		48,712		48,898			(186	)
26	DAX Index	March 2018	Euro	8,392		10,289		10,069			220
747	EURO STOXX 50
	Index	March 2018	Euro	26,093		32,147		31,307			840
2,049	MEX BOLSA Index	March 2018	Mexican Peso	1,025,791		49,608		52,170			(2,562	)
3,958	S&P 500 E
	Mini Index	March 2018	U.S. Dollar	529,580		522,762		529,580			(6,818	)
625	XAK Technology	March 2018	U.S. Dollar	40,231		39,437		40,231			(794	)
234	XAV Health Care	March 2018	U.S. Dollar	19,457		19,235		19,457			(222	)
469	XAY Cons Discret	March 2018	U.S. Dollar	46,834		45,600		46,834			(1,234	)
156	10YR Can Bond	March 2018	Canadian Dollar	21,026		16,967		16,727			240
87	Long Gilt	March 2018	British Pound Sterling	10,889		14,569		14,702			(133	)
										$	(12,627	)

Centrally Cleared Interest Rate Swap

Floating Rate
Reference

Pay/Receive
Floating Rate

Fixed
Rate

Pay/Receive
Payment
Frequency

Maturity
Date

Cleared
Exchange

Notional Amount
(in thousands)

Upfront
Payment
Received
(Paid)

Value

Unrealized
Appreciation
(Depreciation)

3 Month STIBOR

Receive

1.350%

1YR/3M

March 2028

LCH

200,490 SEK

$(14)

$(209)

$(195

)

Centrally Cleared Credit Default Swap

Reference
Entity

Buy/Sell
Protection

Fixed Deal
Pay Rate

Payment
Frequency

Maturity
Date

Cleared
Exchange

Notional
Amount
(in thousands)

Upfront
Payment
Received
(Paid)

Value

Unrealized
Appreciation
(Depreciation)

ITRAXX Europe S28

Sell

1.000%

December 2022

Intercontinental Exchange

EUR 23,046

$(636)

$759

$ 123

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

107

Macro Allocation Fund

Portfolio of Investments, December 31, 2017 (all dollar amounts in thousands)

Total Return Swaps

Reference
Entity

Pay/
Receive
Floating
Rate

Floating Rates

Maturity
Dates

Counterparty

Notional
Amount
(in thousands)

Market
Value

Unrealized
Appreciation
(Depreciation)

Dow Jones US Telecommunications Total Return Index

Receive

3 Month LIBOR plus 45 bp

Mar 2018

Goldman Sachs International

26,118

(294

)

(294

)

Euro Bund Future

Receive

0 bp

Mar 2018

Credit Suisse International

EUR

53,506

181

Euro STOXX Bank Gross Return Index

Receive

3 Month EURIBOR plus 20 bp

Mar 2018

Goldman Sachs International

EUR

5,467

10YR T-Note Future

Receive

0 bp

Mar 2018

Credit Suisse International

77,936

407

5YR T-Note Future

Receive

0 bp

Mar 2018

Credit Suisse International

14,208

MSCI China Small Cap Index (Net)

Pay

3 Month LIBOR plus 50 bp

Jun 2018 to Mar 2019

Citibank N.A.

16,833

1,950

MSCI China Small Cap Index (Net)

Pay

3 Month LIBOR plus 35 bp

Mar 2019

Goldman Sachs International

11,484

575

MSCI Emerging Markets Small Cap (Net)

Pay

3 Month LIBOR plus 115 bp

Mar 2019

Goldman Sachs International

14,319

608

MSCI Emerging Markets Small Cap (Net)

Pay

3 Month LIBOR plus 81 bp

Mar 2018

Credit Suisse International

11,367

2,234

MSCI International Indonesia Gross Return Index

Receive

3 Month LIBOR plus 40 bp

Mar 2018

Citibank N.A.

14,170

(641

)

(641

)

MSCI Daily Total Return Greece (Net)

Pay

3 Month LIBOR plus 75 bp

Mar 2018

Credit Suisse International

6,808

Swiss Market Index (Total Return)

Receive

3 Month LIBOR plus 132 bp

Mar 2018

Goldman Sachs International

CHF

17,901

5,196

Total Net Unrealized Appreciation (Depreciation) on Swaps

5,124

See accompanying Notes to Financial Statements.

108

Annual Report

December 31, 2017

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

			Large Cap		Mid Cap
	Growth		Growth		Growth
	Fund		Fund		Fund
Assets
Investments in securities, at cost	$	250,932	$	148,922	$	62,173
Investments in securities, at value	$	355,076	$	203,451	$	77,782
Receivable for fund shares sold		65		289		95
Receivable from Adviser		—		20		10
Dividend and interest receivable		30		32		11
Total assets		355,171		203,792		77,898
Liabilities
Payable for investment securities purchased		555		—		—
Payable for fund shares redeemed		491		31		224
Management fee payable		231		121		63
Distribution fee payable		8		5		1
Other payables and accrued expenses		152		72		75
Total liabilities		1,437		229		363
Net assets	$	353,734	$	203,563	$	77,535
Capital
Composition of net assets
Par value of shares of beneficial interest	$	31	$	15	$	7
Capital paid in excess of par value		241,091		146,886		60,296
Accumulated net investment income (loss)		6		157		—
Accumulated net realized gain (loss)		8,462		1,976		1,623
Net unrealized appreciation (depreciation) of investments and foreign currencies		104,144		54,529		15,609
Net assets	$	353,734	$	203,563	$	77,535
Class N shares
Net assets	$	34,886	$	25,604	$	6,166
Shares outstanding		3,396,621		1,917,428		564,498
Net asset value per share	$	10.27	$	13.35	$	10.92
Class I shares
Net assets	$	318,848	$	177,959	$	71,369
Shares outstanding		27,696,357		12,737,842		6,166,479
Net asset value per share	$	11.51	$	13.97	$	11.57

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

109

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

			Large Cap			Mid Cap
	Growth		Growth			Growth
	Fund		Fund			Fund
Investment income
Dividends	$	4,450	$	1,466		$	670
Interest		8		5			6
Total income		4,458		1,471			676
Expenses
Investment advisory fees		3,224		1,111			994
Distribution fees		122		44			32
Custodian fees		38		24			36
Transfer agent fees		78		24			18
Sub-transfer agent fees
Class N		62		26			19
Class I		345		150			127
Professional fees		58		37			36
Registration fees		41		31			34
Shareholder reporting fees		21		10			2
Trustee fees		49		8			11
Other expenses		48		8			13
Total expenses before expense limitation		4,086		1,473			1,322
Expenses waived or reimbursed by the Adviser		—		(159	)		(191	)
Net expenses		4,086		1,314			1,131
Net investment income (loss)		372		157			(455	)
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities		93,613		3,192			20,258
Total net realized gain (loss)		93,613		3,192			20,258
Change in net unrealized appreciation (depreciation) of:
Investments in securities		4,895		40,329			499
Change in net unrealized appreciation (depreciation)		4,895		40,329			499
Net increase (decrease) in net assets resulting from operations	$	98,880	$	43,678		$	20,302

See accompanying Notes to Financial Statements.

110

Annual Report

December 31, 2017

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

							Large Cap									Mid Cap
	Growth Fund						Growth Fund						Growth Fund
	2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	372		$	1,074		$	157		$	321		$	(455	)	$	(474	)
Net realized gain (loss) on investments, and other assets and liabilities		93,613			66,007			3,192			1,326			20,258			(1,862	)
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		4,895			(71,577	)		40,329			1,381			499			1,967
Net increase (decrease) in net assets resulting from operations		98,880			(4,496	)		43,678			3,028			20,302			(369	)
Distributions to shareholders from
Net investment income
Class N		—			—			—			(9	)		—			—
Class I		(366	)		(1,133	)		—			(334	)		—			—
Net realized gain
Class N		(10,662	)		(5,224	)		(146	)		(98	)		(986	)		(912	)
Class I		(83,448	)		(38,810	)		(993	)		(863	)		(10,476	)		(6,417	)
Total distributions		(94,476	)		(45,167	)		(1,139	)		(1,304	)		(11,462	)		(7,329	)
Capital stock transactions
Net proceeds from sale of shares		28,218			75,891			62,963			75,429			10,841			20,647
Shares issued in reinvestment of income dividends and capital gain distributions		91,558			44,227			1,030			1,134			11,050			7,111
Less cost of shares redeemed		(348,252	)		(339,147	)		(25,304	)		(25,433	)		(88,854	)		(84,124	)
Net increase (decrease) in net assets resulting from capital share transactions		(228,476	)		(219,029	)		38,689			51,130			(66,963	)		(56,366	)
Increase (decrease) in net assets		(224,072	)		(268,692	)		81,228			52,854			(58,123	)		(64,064	)
Net assets
Beginning of period		577,806			846,498			122,335			69,481			135,658			199,722
End of period	$	353,734		$	577,806		$	203,563		$	122,335		$	77,535		$	135,658
Accumulated net investment income (loss) at the end of the period	$	6		$	—		$	157		$	—		$	—		$	—

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

111

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

	Small-Mid		Small-Mid			Small Cap		Small Cap
	Cap Growth		Cap Value			Growth		Value
		Fund		Fund			Fund		Fund
Assets
Investments in securities, at cost	$	1,467,670	$	2,750		$	385,634	$	508,448
Investments in securities, at value	$	1,808,069	$	3,584		$	496,190	$	693,124
Cash		—		92			—		—
Receivable for securities sold		35,597		—			762		—
Receivable for fund shares sold		4,260		1			905		1,227
Receivable from Adviser		213		13			13		40
Dividend and interest receivable		314		4			81		752
Total assets		1,848,453		3,694			497,951		695,143
Liabilities
Payable for investment securities purchased		—		—			7,363		2,837
Payable for fund shares redeemed		41,360		1			505		17,430
Management fee payable		1,555		3			456		656
Distribution fee payable		48		—			31		6
Other payables and accrued expenses		482		47			186		194
Total liabilities		43,445		51			8,541		21,123
Net assets	$	1,805,008	$	3,643		$	489,410	$	674,020
Capital
Composition of net assets
Par value of shares of beneficial interest	$	74	$	—		$	17	$	33
Capital paid in excess of par value		1,410,116		2,827			372,635		488,656
Accumulated net investment income (loss)		—		2			—		—
Accumulated net realized gain (loss)		54,419		(20	)		6,202		655
Net unrealized appreciation (depreciation) of investments and foreign currencies		340,399		834			110,556		184,676
Net assets	$	1,805,008	$	3,643		$	489,410	$	674,020

Class N shares
Net assets	$	228,828	$	284		$	146,291	$	29,271
Shares outstanding		9,795,067		19,876			5,444,573		1,452,481
Net asset value per share	$	23.36	$	14.31		$	26.87	$	20.15
Class I shares
Net assets	$	1,576,180	$	3,359		$	343,119	$	644,749
Shares outstanding		64,374,571		235,807			11,588,310		31,145,196
Net asset value per share	$	24.48	$	14.24		$	29.61	$	20.70

See accompanying Notes to Financial Statements.

112

Annual Report

December 31, 2017

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

	Small-Mid			Small-Mid			Small Cap			Small Cap
	Cap Growth			Cap Value			Growth			Value
	Fund			Fund			Fund			Fund
Investment income
Dividends	$	9 ,838		$	51		$	2,748		$	10,583
Less foreign tax withheld		(24	)		—			(9	)		—
Interest		46			2			19			14
Total income		9,860			53			2,758			10,597
Expenses
Investment advisory fees		16,148			33			4,970			7,574
Distribution fees		478			1			360			78
Custodian fees		36			38			37			37
Transfer agent fees		88			1			32			55
Sub-transfer agent fees
Class N		270			—			209			48
Class I		1,746			3			313			944
Professional fees		115			32			55			68
Registration fees		60			37			27			40
Shareholder reporting fees		163			4			1			42
Trustee fees		100			—			29			48
Other expenses		113			1			33			34
Total expenses before expense limitation		19,317			150			6,066			8,968
Expenses waived or reimbursed by the Adviser		(1,079	)		(114	)		(67	)		(282	)
Net expenses		18,238			36			5,999			8,686
Net investment income (loss)		(8,378	)		17			(3,241	)		1,911
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities		175,827			339			72,283			47,593
Redemptions in-kind		51,377			—			—			—
Total net realized gain (loss)		227,204			339			72,283			47,593
Change in net unrealized appreciation (depreciation) of:
Investments in securities		179,918			(30	)		37,293			2,493
Change in net unrealized appreciation (depreciation)		179,918			(30	)		37,293			2,493
Net increase (decrease) in net assets resulting from operations	$	398,744		$	326		$	106,335		$	51,997

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

113

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

	Small-Mid						Small-Mid						Small Cap						Small Cap
	Cap Growth Fund						Cap Value Fund						Growth Fund						Value Fund
	2017			2016			2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	(8,378	)	$	(3,860	)	$	17		$	20		$	(3,241	)	$	(2,213	)	$	1,911		$	2,769
Net realized gain (loss) on investments, and other assets and liabilities		227,204			77,537			339			159			72,283			35,282			47,593			24,542
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		179,918			12,814			(30	)		522			37,293			30,352			2,493			117,767
Net increase (decrease) in net assets resulting from operations		398,744			86,491			326			701			106,335			63,421			51,997			145,078
Distributions to shareholders from
Net investment income
Class N		—			—			—			(1	)		—			—			—			(58	)
Class I		—			—			(12	)		(23	)		—			—			(1,332	)		(2,771	)
Net realized gain
Class N		(11,906	)		(5,332	)		(28	)		(10	)		(23,520	)		(6,573	)		(2,098	)		(1,334	)
Class I		(81,736	)		(28,097	)		(320	)		(129	)		(49,518	)		(14,099	)		(46,240	)		(26,512	)
Total distributions		(93,642	)		(33,429	)		(360	)		(163	)		(73,038	)		(20,672	)		(49,670	)		(30,675	)
Capital stock transactions
Net proceeds from sale of shares		639,389			533,654			628			640			127,343			51,636			95,517			133,395
Shares issued in reinvestment of income dividends and capital gain distributions		92,785			33,051			360			164			72,609			20,471			47,791			28,779
Less cost of shares redeemed		(494,845	)		(546,329	)		(764	)		(1,964	)		(132,737	)		(99,171	)		(180,246	)		(180,307	)
Net increase (decrease) in net assets resulting from capital share transactions		237,329			20,376			224			(1,160	)		67,215			(27,064	)		(36,938	)		(18,133	)
Increase (decrease) in net assets		542,431			73,438			190			(622	)		100,512			15,685			(34,611	)		96,270
Net assets
Beginning of period		1,262,577			1,189,139			3,453			4,075			388,898			373,213			708,631			612,361
End of period	$	1,805,008		$	1,262,577		$	3,643		$	3,453		$	489,410		$	388,898		$	674,020		$	708,631
Accumulated net investment income (loss) at the end of the period	$	—		$	—		$	2		$	—		$	—		$	—		$	—		$	—

See accompanying Notes to Financial Statements.

114

Annual Report

December 31, 2017

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

	Global Leaders Fund		International Leaders Fund			International Developed Plus Fund^(a)			Institutional International Developed Plus Fund^(b)
Assets
Investments in securities, at cost	$	150,786	$	292,699		$	96,916		$	14,851
Investments in securities, at value	$	211,313	$	378,452		$	120,558		$	19,100
Cash		—		—			—			2
Receivable for securities sold		—		249			225			33
Receivable for fund shares sold		163		217			—			—
Receivable from Adviser or an affiliate		27		31			29			14
Dividend and interest receivable		119		339			134			27
Total assets		211,622		379,288			120,946			19,176
Liabilities
Payable for fund shares redeemed		10		2			—			—
Management fee payable		178		299			101			15
Shareholder administration fee payable		9		9			—			—
Distribution fee payable		2		2			1			—
Foreign capital gains tax liability		—		24			—			—
Other payables and accrued expenses		74		124			105			71
Total liabilities		273		460			207			86
Net assets	$	211,349	$	378,828		$	120,739		$	19,090
Capital
Composition of net assets
Par value of shares of beneficial interest	$	15	$	23		$	7		$	1
Capital paid in excess of par value		149,899		291,730			97,561			15,178
Accumulated net investment income (loss)		17		(2,608	)		(323	)		(97	)
Accumulated net realized gain (loss)		889		3,950			(150	)		(241	)
Net unrealized appreciation (depreciation) of investments and foreign currencies		60,529		85,733			23,644			4,249
Net assets	$	211,349	$	378,828		$	120,739		$	19,090

Class N shares
Net assets	$	7,761	$	9,651		$	3,219			—
Shares outstanding		533,980		589,643			193,880			—
Net asset value per share	$	14.53	$	16.37		$	16.60			—
Class I shares
Net assets	$	60,067	$	60,279		$	117,520			—
Shares outstanding		4,125,613		3,667,368			7,009,812			—
Net asset value per share	$	14.56	$	16.44		$	16.76			—
Institutional Class shares
Net assets	$	143,521	$	308,898			—		$	19,090
Shares outstanding		9,855,307		18,797,557			—			1,311,662
Net asset value per share	$	14.56	$	16.43			—		$	14.55

(a)	Formerly known as International Equity Fund
(b)	Formerly known as Institutional International Equity Fund

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

115

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

	Global Leaders Fund			International Leaders Fund			International Developed Plus Fund^(a)			Institutional International Developed Plus Fund^(b)
Investment income
Dividends	$	3,637		$	7,536		$	2,273		$	399
Less foreign tax withheld		(207	)		(652	)		(210	)		(32	)
Interest		8			8			6			4
Total income		3,438			6,892			2,069			371
Expenses
Investment advisory fees		1,975			3,077			1,044			159
Distribution fees		16			17			8			—
Shareholder administration fees		90			89			—			—
Custodian fees		48			74			50			45
Transfer agent fees		15			11			4			—
Sub-transfer agent fees
Class N		8			10			4			—
Class I		39			50			101			—
Professional fees		55			79			65			69
Registration fees		47			64			33			22
Shareholder reporting fees		8			15			5			—
Trustee fees		14			17			6			1
Other expenses		18			14			7			2
Total expenses before expense limitation		2,333			3,517			1,327			298
Expenses waived or reimbursed by the Adviser or an affiliate		(294	)		(363	)		(222	)		(133	)
Net expenses		2,039			3,154			1,105			165
Net investment income (loss)		1,399			3,738			964			206
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign taxes, if applicable		10,356			7,162			3,961			681
Foreign currency transactions		(30	)		(2	)		13			(2	)
Total net realized gain (loss)		10,326			7,160			3,974			679
Change in net unrealized appreciation (depreciation) of:
Investments in securities		40,721			72,854			16,665			2,920
Foreign currency translations		8			—			8			2
Change in net unrealized appreciation (depreciation)		40,729			72,854			16,673			2,922
Net increase (decrease) in net assets resulting from operations	$	52,454		$	83,752		$	21,611		$	3,807

(a)	Formerly known as International Equity Fund
(b)	Formerly known as Institutional International Equity Fund

See accompanying Notes to Financial Statements.

116

Annual Report

December 31, 2017

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

	Global Leaders Fund						International Leaders Fund						International Developed Plus Fund^(a)						Institutional International Developed Plus Fund^(b)
	2017			2016			2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	1,399		$	1,001		$	3,738		$	1,719		$	964		$	1,031		$	206		$	269
Net realized gain (loss) on investments, and other assets and liabilities		10,326			(1,938	)		7,160			(362	)		3,974			(2,465	)		679			(833	)
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		40,729			2,151			72,854			2,416			16,673			1,794			2,922			515
Net increase (decrease) in net assets resulting from operations		52,454			1,214			83,752			3,773			21,611			360			3,807			(49	)
Distributions to shareholders from
Net investment income
Class N		(50	)		—			(117	)		(23	)		(55	)		(29	)		—			—
Class I		(566	)		(124	)		(844	)		(293	)		(2,202	)		(823	)		—			—
Institutional Class		(1,427	)		(403	)		(4,501	)		(2,350	)		—			—			(212	)		(336	)
Net realized gain
Class N		(236	)		(27	)		(71	)		—			—			—			—			—
Class I		(1,911	)		(206	)		(437	)		—			—			—			—			—
Institutional Class		(4,506	)		(559	)		(2,201	)		—			—			—			—			—
Total distributions		(8,696	)		(1,319	)		(8,171	)		(2,666	)		(2,257	)		(852	)		(212	)		(336	)
Capital stock transactions
Net proceeds from sale of shares		8,432			32,576			70,308			158,486			22,611			25,707			150			967
Shares issued in reinvestment of income dividends and capital gain distributions		8,355			1,244			6,325			1,783			2,153			780			212			336
Less cost of shares redeemed		(25,927	)		(45,952	)		(28,608	)		(22,232	)		(10,716	)		(2,564	)		(1,432	)		(383	)
Net increase (decrease) in net assets resulting from capital share transactions		(9,140	)		(12,132	)		48,025			138,037			14,048			23,923			(1,070	)		920
Increase (decrease) in net assets		34,618			(12,237	)		123,606			139,144			33,402			23,431			2,525			535
Net assets
Beginning of period		176,731			188,968			255,222			116,078			87,337			63,906			16,565			16,030
End of period	$	211,349		$	176,731		$	378,828		$	255,222		$	120,739		$	87,337		$	19,090		$	16,565
Accumulated net investment income (loss) at the end of the period	$	17		$	488		$	(2,608	)	$	(956	)	$	(323	)	$	816		$	(97	)	$	(112	)

(a)	Formerly known as International Equity Fund
(b)	Formerly known as Institutional International Equity Fund

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

117

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

	International Growth Fund			Institutional International Growth Fund			International Small Cap Growth Fund
Assets
Investments in securities, at cost	$	2,455,768		$	1,846,252		$	474,535
Investments in securities, at value	$	3,133,462		$	2,344,099		$	602,636
Foreign currency, at value (cost $1,239; $58; $21)		1,239			58			21
Receivable for securities sold		16,458			7,428			2,595
Receivable for fund shares sold		2,970			1,142			235
Receivable from Adviser or an affiliate		33			—			43
Dividend and interest receivable		6,518			4,379			673
Total assets		3,160,680			2,357,106			606,203
Liabilities
Payable for investment securities purchased		10,970			8,096			3,212
Payable for fund shares redeemed		4,860			14,913			116
Management fee payable		2,665			1,834			503
Shareholder administration fee payable		—			—			43
Distribution fee payable		161			—			1
Foreign capital gains tax liability		1,990			1,516			353
Other payables and accrued expenses		968			448			222
Total liabilities		21,614			26,807			4,450
Net asset	$	3,139,066		$	2,330,299		$	601,753
Capital
Composition of net assets
Par value of shares of beneficial interest	$	101		$	129		$	38
Capital paid in excess of par value		2,467,526			1,810,220			468,133
Accumulated net investment income (loss)		(1,201	)		(13,283	)		(10,409	)
Accumulated net realized gain (loss)		(3,183	)		36,828			16,224
Net unrealized appreciation (depreciation) of investments and foreign currencies		675,823			496,405			127,767
Net assets	$	3,139,066		$	2,330,299		$	601,753

Class N shares
Net assets	$	763,740			—		$	6,275
Shares outstanding		25,113,090			—			405,157
Net asset value per share	$	30.41			—		$	15.49
Class I shares
Net assets	$	2,375,326			—		$	338,920
Shares outstanding		76,296,723			—			21,662,329
Net asset value per share	$	31.13			—		$	15.65
Institutional Class shares
Net assets		—		$	2,330,299		$	256,558
Shares outstanding		—			128,880,452			16,305,403
Net asset value per share		—		$	18.08		$	15.73

See accompanying Notes to Financial Statements.

118

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December 31, 2017

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

	International Growth Fund			Institutional International Growth Fund			International Small Cap Growth Fund
Investment income
Dividends	$	76,188		$	53,684		$	12,987
Less foreign tax withheld		(6,430	)		(4,538	)		(1,167	)
Interest		45			40			16
Total income		69,803			49,186			11,836
Expenses
Investment advisory fees		31,506			20,918			5,682
Distribution fees		1,908			—			22
Shareholder administration fees		—			—			506
Custodian fees		353			276			132
Transfer agent fees		178			65			23
Sub-transfer agent fees
Class N		1,275			—			12
Class I		2,110			—			289
Professional fees		268			217			110
Registration fees		15			26			54
Shareholder reporting fees		222			1			24
Trustee fees		246			162			42
Other expenses		283			91			51
Total expenses before expense limitation		38,364			21,756			6,947
Expenses waived or reimbursed by the Adviser or an affiliate		(150	)		—			(506	)
Net expenses		38,214			21,756			6,441
Net investment income (loss)		31,589			27,430			5,395
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign taxes, if applicable		304,921	⁽¹⁾		176,835	⁽¹⁾		58,815
Foreign currency transactions		(1,922	)		(1,654	)		(219	)
Total net realized gain (loss)		302,999			175,181			58,596
Change in net unrealized appreciation (depreciation) of:
Investments in securities		475,067	⁽²⁾		370,237	⁽²⁾		95,693
Foreign currency translations		(1,405	)		(1,191	)		(281	)
Change in net unrealized appreciation (depreciation)		473,662			369,046			95,412
Net increase (decrease) in net assets resulting from operations	$	808,250		$	571,657		$	159,403

(1)	Includes $58 and $36 related to an affiliated fund (William Blair China A-Share Fund, LLC) for International Growth Fund and Institutional International Growth Fund, respectively.
(2)	Includes $(62) and $(39) 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.

December 31, 2017

William Blair Funds

119

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

	International Growth Fund						Institutional International Growth Fund						International Small Cap Growth Fund
	2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	31,589		$	35,114		$	27,430		$	26,072		$	5,395		$	5,962
Net realized gain (loss) on investments, and other assets and liabilities		302,999			(30,127	)		175,181			(29,234	)		58,596			2,763
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		473,662			(107,864	)		369,046			(62,962	)		95,412			(31,826	)
Net increase (decrease) in net assets resulting from operation		808,250			(102,877	)		571,657			(66,124	)		159,403			(23,101	)
Distributions to shareholders from
Net investment income
Class N		(9,771	)		(10,938	)		—			—			(118	)		(5	)
Class I		(36,754	)		(40,501	)		—			—			(8,043	)		(1,063	)
Institutional Class		—			—			(54,743	)		(23,809	)		(6,106	)		(845	)
Net realized gain
Class N		—			—			—			—			(428	)		(2	)
Class I		—			—			—			—			(23,404	)		(57	)
Institutional Class		—			—			(39,224	)		—			(17,151	)		(37	)
Total distributions		(46,525	)		(51,439	)		(93,967	)		(23,809	)		(55,250	)		(2,009	)
Capital stock transactions
Net proceeds from sale of shares		246,035			437,982			192,850			237,672			58,793			63,344
Shares issued in reinvestment of income dividends and capital gain distributions		43,593			48,138			90,689			22,693			50,424			1,827
Less cost of shares redeemed		(893,532	)		(1,029,303	)		(524,901	)		(412,093	)		(128,250	)		(98,028	)
Net increase (decrease) in net assets resulting from capital share transactions		(603,904	)		(543,183	)		(241,362	)		(151,728	)		(19,033	)		(32,857	)
Increase (decrease) in net assets		157,821			(697,499	)		236,328			(241,661	)		85,120			(57,967	)
Net assets
Beginning of period		2,981,245			3,678,744			2,093,971			2,335,632			516,633			574,600
End of period	$	3,139,066		$	2,981,245		$	2,330,299		$	2,093,971		$	601,753		$	516,633
Accumulated net investment income (loss) at the end of the period	$	(1,201	)	$	9,881		$	(13,283	)	$	13,670		$	(10,409	)	$	(2,734	)

See accompanying Notes to Financial Statements.

120

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December 31, 2017

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

		Emerging Markets Leaders Fund			Emerging Markets Growth Fund			Emerging Markets Small Cap Growth Fund
Assets
Investments in securities, at cost	$	362,766		$	908,614		$	373,189
Investments in securities, at value	$	477,307		$	1,316,479		$	468,855
Foreign currency, at value (cost $76; $5,033; $1,231)		77			5,036			1,231
Receivable for securities sold		1,291			3,883			1,449
Receivable for fund shares sold		331			263			1,167
Receivable from Adviser or an affiliate		6			17			83
Dividend and interest receivable		421			867			870
Total assets		479,433			1,326,545			473,655
Liabilities
Payable for investment securities purchased		869			810			3,657
Payable for fund shares redeemed		14			58			95
Management fee payable		435			1,214			420
Shareholder administration fee payable		6			17			37
Distribution fee payable		1			2			3
Foreign capital gains tax liability		—			5,149			4,443
Other payables and accrued expenses		196			482			371
Total liabilities		1,521			7,732			9,026
Net assets	$	477,912		$	1,318,813		$	464,629
Capital
Composition of net assets
Par value of shares of beneficial interest	$	43		$	80		$	25
Capital paid in excess of par value		365,390			947,451			378,196
Accumulated net investment income (loss)		(2,593	)		(4,010	)		(10,376	)
Accumulated net realized gain (loss)		533			(27,426	)		5,521
Net unrealized appreciation (depreciation) of investments and foreign currencies		114,539			402,718			91,263
Net assets	$	477,912		$	1,318,813		$	464,629

Class N shares
Net assets	$	2,766		$	10,479		$	15,082
Shares outstanding		250,138			647,003			808,355
Net asset value per share	$	11.06		$	16.20		$	18.66
Class I shares
Net assets	$	47,666		$	129,481		$	282,620
Shares outstanding		4,296,411			7,912,546			15,087,839
Net asset value per share	$	11.09		$	16.36		$	18.73
Institutional Class shares
Net assets	$	427,480		$	1,178,853		$	166,927
Shares outstanding		38,543,329			71,485,095			8,895,682
Net asset value per share	$	11.09		$	16.49		$	18.76

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

121

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

		Emerging Markets Leaders Fund			Emerging Markets Growth Fund			Emerging Markets Small Cap Growth Fund
Investment income
Dividends	$	6,736		$	18,428		$	7,434
Less foreign tax withheld		(628	)		(2,020	)		(553	)
Interest		10			14			8
Total income		6,118			16,422			6,889
Expenses
Investment advisory fees		4,439			13,486			4,182
Distribution fees		8			25			28
Shareholder administration fees		62			183			347
Custodian fees		132			369			313
Transfer agent fees		14			42			61
Sub-transfer agent fees
Class N		1			8			15
Class I		25			110			142
Professional fees		83			205			195
Registration fees		78			54			64
Shareholder reporting fees		13			—			42
Trustee fees		21			79			24
Other expenses		12			107			18
Total expenses before expense limitation		4,888			14,668			5,431
Expenses waived or reimbursed by the Adviser or an affiliate		(62	)		(183	)		(493	)
Net expenses		4,826			14,485			4,938
Net investment income (loss)		1,292			1,937			1,951
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities, net of foreign taxes, if applicable		27,002			120,520	⁽¹⁾		47,218
Foreign currency transactions		(167	)		(1,155	)		(920	)
Total net realized gain (loss)		26,835			119,365			46,298
Change in net unrealized appreciation (depreciation) of:
Investments in securities		108,553			355,697	⁽²⁾		81,627
Foreign currency translations		(2	)		(5,157	)		(4,270	)
Change in net unrealized appreciation (depreciation)		108,551			350,540			77,357
Net increase (decrease) in net assets resulting from operations	$	136,678		$	471,842		$	125,606

(1)	Includes $71 related to an affiliated fund (William Blair China A-Share Fund, LLC).
(2)	Includes $(76) related to an affiliated fund (William Blair China A-Share Fund, LLC).

See accompanying Notes to Financial Statements.

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Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

	Emerging Markets Leaders Fund						Emerging Markets Growth Fund						Emerging Markets Small Cap Growth Fund
		2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	1,292		$	910		$	1,937		$	5,855		$	1,951		$	2,676
Net realized gain (loss) on investments, and other assets and liabilities		26,835			(15,513	)		119,365			(78,116	)		46,298			(26,839	)
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		108,551			12,087			350,540			83,304			77,357			7,365
Net increase (decrease) in net assets resulting from operations		136,678			(2,516	)		471,842			11,043			125,606			(16,798	)
Distributions to shareholders from
Net investment income
Class N		(12	)		—			(77	)		(18	)		(391	)		(210	)
Class I		(327	)		(41	)		(1,188	)		(416	)		(8,028	)		(4,177	)
Institutional Class		(3,069	)		(513	)		(11,908	)		(4,354	)		(4,880	)		(3,339	)
Net realized gain
Class N		—			—			—			—			(35	)		—
Class I		—			—			—			—			(651	)		—
Institutional Class		—			—			—			—			(389	)		—
Total distributions		(3,408	)		(554	)		(13,173	)		(4,788	)		(14,374	)		(7,726	)
Capital stock transactions
Net proceeds from sale of shares		77,729			242,042			320,170			375,603			130,660			61,779
Shares issued in reinvestment of income dividends and capital gain distributions		3,396			549			11,322			4,054			13,084			7,014
Less cost of shares redeemed		(41,986	)		(61,696	)		(405,091	)		(331,280	)		(73,209	)		(58,248	)
Net increase (decrease) in net assets resulting from capital share transactions		39,139			180,895			(73,599	)		48,377			70,535			10,545
Increase (decrease) in net assets		172,409			177,825			385,070			54,632			181,767			(13,979	)
Net assets
Beginning of period		305,503			127,678			933,743			879,111			282,862			296,841
End of period	$	477,912		$	305,503		$	1,318,813		$	933,743		$	464,629		$	282,862
Accumulated net investment income (loss) at the end of the period	$	(2,593	)	$	(390	)	$	(4,010	)	$	4,148		$	(10,376	)	$	(7,782	)

See accompanying Notes to Financial Statements.

December 31, 2017

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123

Statements of Assets and Liabilities

As of December 31, 2017 (dollar amounts in thousands)

	Bond Fund			Income Fund			Low Duration Fund			Macro Allocation Fund
Assets
Investments in securities, at cost	$	541,921		$	91,518		$	236,569		$	1,031,133
Investments in affiliated companies, at cost		—			—			—			17,033
Repurchase agreement, at cost		—			775			274			131,089
Investments in securities, at value	$	553,638		$	91,124		$	234,857		$	1,149,393
Investments in affiliated companies, at value		—			—			—			20,389
Repurchase agreement, at value		—			775			274			131,089
Cash		—			—			—			19
Receivable for securities sold		615			—			14,960			5,196
Receivable for fund shares sold		4,266			4			1			2,696
Receivable for variation margin on futures		—			—			—			1,043
Receivable for variation margin on centrally cleared swaps		—			—			—			47
Receivable from Adviser or an affiliate		73			3			36			106
Dividend and interest receivable		4,580			563			759			2,945
Unrealized appreciation on swap contracts		—			—			—			5,196
Total assets		563,172			92,469			250,887			1,318,119
Liabilities
Security sold, not yet purchased (proceeds $—; $—; $14,960 ; $—)		—			—			14,978			—
Options written, at value (proceeds $—; $—; $—; $942)		—			—			—			456
Payable for variation margin on centrally cleared swaps		4			—			—			—
Payable for investment securities purchased		—			—			—			3,154
Payable for fund shares redeemed		2,430			1,563			2,646			1,575
Payable to custodian		532			—			—			—
Cash received as collateral, due to broker		—			—			—			2,850
Unrealized depreciation on forward foreign currency contracts		—			—			—			35
Management fee payable		144			32			63			942
Shareholder administration fee payable		60			—			19			106
Distribution fee payable		11			5			—			9
Distributions payable to shareholders		94			2			32			—
Other payables and accrued expenses		142			89			72			352
Total liabilities		3,417			1,691			17,810			9,479
Net assets	$	559,755		$	90,778		$	233,077		$	1,308,640
Capital
Composition of net assets
Par value of shares of beneficial interest	$	55		$	10		$	26		$	110
Capital paid in excess of par value		560,802			95,237			257,645			1,411,423
Accumulated net investment income (loss)		43			11			9			867
Accumulated net realized gain (loss)		(12,817	)		(4,086	)		(22,873	)		(215,486	)
Net unrealized appreciation (depreciation) of investments and foreign currencies		11,672			(394	)		(1,730	)		111,726
Net assets	$	559,755		$	90,778		$	233,077		$	1,308,640
Class N shares
Net assets	$	83,662		$	39,625		$	1,979		$	41,483
Shares outstanding		8,034,830			4,544,432			221,934			3,502,867
Net asset value per share	$	10.41		$	8.72		$	8.92		$	11.84
Class I shares
Net assets	$	384,464		$	51,153		$	131,186		$	780,075
Shares outstanding		37,308,216			5,908,803			14,723,419			65,671,591
Net asset value per share	$	10.31		$	8.66		$	8.91		$	11.88
Institutional Class shares
Net assets	$	91,629			—		$	99,912		$	487,082
Shares outstanding		8,898,536			—			11,209,949			40,955,277
Net asset value per share	$	10.30			—		$	8.91		$	11.89

See accompanying Notes to Financial Statements.

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December 31, 2017

Statements of Operations

For the Year Ended December 31, 2017 (all amounts in thousands)

	Bond Fund			Income Fund			Low Duration Fund			Macro Allocation Fund
Investment income
Dividends	$	—		$	—		$	—		$	25,269	⁽¹⁾
Less foreign tax withheld		—			—			—			(1	)
Interest		17,827			2,742			4,831			3,844
Total income		17,827			2,742			4,831			29,112
Expenses
Investment advisory fees		1,661			397			777			12,034
Distribution fees		159			70			6			125
Shareholder administration fees		687			—			263			1,373
Custodian fees		70			51			75			143
Transfer agent fees		60			12			11			345
Sub-transfer agent fees
Class N		158			71			4			99
Class I		271			23			78			822
Professional fees		62			35			40			179
Registration fees		43			75			95			36
Shareholder reporting fees		56			13			9			43
Trustee fees		42			8			16			126
Interest expense		—			—			—			889
Other expenses		49			7			13			118
Total expenses before expense limitation		3,318			762			1,387			16,332
Expenses waived or reimbursed by the Adviser or an affiliate		(792	)		(14	)		(355	)		(1,373	)
Net expenses		2,526			748			1,032			14,959
Net investment income (loss)		15,301			1,994			3,799			14,153
Realized and unrealized gain (loss)
Net realized gain (loss) on transactions from:
Investments in securities		1,989			81			(343	)		66,391	⁽²⁾
Options		—			—			—			(22,935	)
Futures contracts		—			—			—			(36,143	)
Swaps		(625	)		—			—			3,964
Forward foreign currency contracts		—			—			—			2,585
Foreign currency transactions		—			—			—			3,607
Total net realized gain (loss)		1,364			81			(343	)		17,469
Change in net unrealized appreciation (depreciation) of:
Investments in securities		5,384			(391	)		(914	)		79,289	⁽³⁾
Options		—			—			—			1,153
Futures contracts		—			—			—			(19,873	)
Swaps		119			—			—			(5,012	)
Forward foreign currency contracts		—			—			—			(6,643	)
Foreign currency translations		—			—			—			(238	)
Change in net unrealized appreciation (depreciation)		5,503			(391	)		(914	)		48,676
Net increase (decrease) in net assets resulting from operations	$	22,168		$	1,684		$	2,542		$	80,298

(1)	Includes $836 from companies deemed affiliated during the year.
(2)	Includes $(919) from companies deemed affiliated during the year.
(3)	Includes $6,515 from companies deemed affiliated during the year.

See accompanying Notes to Financial Statements.

December 31, 2017

William Blair Funds

125

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (all amounts in thousands)

	Bond Fund						Income Fund						Low Duration Fund						Macro Allocation Fund
		2017			2016			2017			2016			2017			2016			2017			2016
Operations
Net investment income (loss)	$	15,301		$	15,011		$	1,994		$	1,919		$	3,799		$	2,159		$	14,153		$	11,805
Net realized gain (loss) on investments, and other assets and liabilities		1,364			266			81			184			(343	)		(10	)		17,469			(78,226	)
Change in net unrealized appreciation (depreciation) on investments, and other assets and liabilities		5,503			8,526			(391	)		262			(914	)		(232	)		48,676			104,537
Net increase (decrease) in net assets resulting from operations		22,168			23,803			1,684			2,365			2,542			1,917			80,298			38,116
Distributions to shareholders from
Net investment income
Class N		(3,978	)		(5,237	)		(1,426	)		(1,079	)		(96	)		(149	)		(260	)		(1,182	)
Class I		(14,049	)		(11,452	)		(1,849	)		(1,868	)		(4,594	)		(3,331	)		(8,252	)		(21,809	)
Institutional Class		(3,890	)		(3,903	)		—			—			(2,290	)		(694	)		(6,654	)		(13,553	)
Total distributions		(21,917	)		(20,592	)		(3,275	)		(2,947	)		(6,980	)		(4,174	)		(15,166	)		(36,544	)
Capital stock transactions
Net proceeds from sale of shares		159,870			197,394			19,220			37,313			141,778			220,929			305,541			600,557
Shares issued in reinvestment of income dividends and capital gain distributions		20,161			18,617			3,136			2,760			6,334			3,628			13,878			34,074
Less cost of shares redeemed		(163,783	)		(156,760	)		(40,857	)		(24,285	)		(190,670	)		(73,939	)		(656,829	)		(787,172	)
Net increase (decrease) in net assets resulting from capital share transactions		16,248			59,251			(18,501	)		15,788			(42,558	)		150,618			(337,410	)		(152,541	)
Increase (decrease) in net assets		16,499			62,462			(20,092	)		15,206			(46,996	)		148,361			(272,278	)		(150,969	)
Net assets
Beginning of period		543,256			480,794			110,870			95,664			280,073			131,712			1,580,918			1,731,887
End of period	$	559,755		$	543,256		$	90,778		$	110,870		$	233,077		$	280,073		$	1,308,640		$	1,580,918
Accumulated net investment income (loss) at the end of the period	$	43		$	35		$	11		$	10		$	9		$	20		$	867		$	(6,584	)

See accompanying Notes to Financial Statements.

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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, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently consists of the following twenty-one 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

Mid Cap Growth

Small-Mid Cap Growth

Small-Mid Cap Value

Small Cap Growth

Small Cap Value

Global Equity Fund

Global Leaders

Multi-Asset and Alternative Fund

Macro Allocation

International Equity Funds

International Leaders

International Developed Plus (formerly known as International Equity)

Institutional International Developed Plus (formerly known as 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

William Blair Investment Management, LLC (the “Adviser”) serves as the Trust’s investment adviser. William Blair & Company, L.L.C. (“WBC” or the “Distributor”), an affiliate of the Adviser, serves as the Trust’s principal underwriter and distributor.

(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 for certain Funds (0.15% for Global Leaders, 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, either directly through the Trust’s distributor or through a select number of financial intermediaries. They do not carry any sales load or distribution fees and generally have lower ongoing expenses than 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 for certain Funds (0.15% for Global Leaders, 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.

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 generally $5 million. Institutional Class shares do not carry any sales load, distribution fees or sub-transfer agents fees and generally have lower ongoing expenses than Class N and Class I shares.

December 31, 2017

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127

Notes to Financial Statements

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 of record are held 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 Funds	Long-term capital appreciation.
Global Equity Funds	Long-term capital appreciation.
International Equity Funds	Long-term capital appreciation.
Bond Fund	Outperform the Bloomberg Barclays U.S. Aggregate Index by maximizing total return through a combination of income and capital appreciation.
Income Fund	High level of current income with relative stability of principal.
Low Duration Fund	Maximize total return. Total return includes both income and capital appreciation.
Macro Allocation Fund	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 (“US GAAP”), 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, 2017. 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, 2017, the Bond, Income and Low Duration Funds recognized a reduction of interest income and a corresponding increase in net realized gain of $6,878, $1,282 and $3,170, respectively (in thousands). This reclassification had no effect on the net asset value or the net assets of the Funds.

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December 31 2017

Notes to Financial Statements

The Funds do not isolate the portion of operations resulting from fluctuations in foreign currency exchange rates on investments from the fluctuations arising from changes in the value of securities held. Such currency 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 period end.

For financial reporting purposes, security and shareholder transactions are recorded on trade date in accordance with US GAAP. 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 Fixed Income 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 of 1986, as amended (the “Code”), in order to qualify as 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 in 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’ tax returns for the prior three years remains open and the returns are subject to examination.

December 31, 2017

William Blair Funds

129

Notes to Financial Statements

Adjustments to the cost of investments for tax purposes may be 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, including derivatives, for federal income tax purposes and related gross unrealized appreciation (depreciation) and net unrealized appreciation/(depreciation) at December 31, 2017, were as follows (in thousands):

							Net
			Gross		Gross		Unrealized
	Cost of		Unrealized		Unrealized		Appreciation/
Fund	Investments		Appreciation		Depreciation		(Depreciation)
Growth	$	251,306	$	107,665	$	3,895	$	103,770
Large Cap Growth		149,469		54,100		118		53,982
Mid Cap Growth		62,808		15,845		871		14,974
Small-Mid Cap Growth		1,474,381		353,791		20,103		333,688
Small-Mid Cap Value		2,771		850		37		813
Small Cap Growth		387,924		121,776		13,510		108,266
Small Cap Value		511,157		187,406		5,439		181,967
Global Leaders		152,174		59,365		226		59,139
International Leaders		295,710		83,668		926		82,742
International Developed Plus		97,538		23,261		241		23,020
Institutional International Developed Plus		14,979		4,160		39		4,121
International Growth		2,481,619		665,285		13,442		651,843
Institutional International Growth		1,864,837		488,759		9,497		479,262
International Small Cap Growth		487,777		122,674		7,815		114,859
Emerging Markets Leaders		366,707		113,682		3,082		110,600
Emerging Markets Growth		928,281		391,741		3,543		388,198
Emerging Markets Small Cap Growth		385,012		86,127		2,284		83,843
Bond		542,055		17,036		5,453		11,583
Income		92,313		747		1,161		(414	)
Low Duration		221,883		363		2,093		(1,730	)
Macro Allocation		1,174,518		138,831		23,150		115,681

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 US GAAP. The reclassifications generally relate to the tax treatment of 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, redemptions in-kind, distribution reclassifications, income on derivatives, capital gain taxes, 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, 2017, the following reclassifications were recorded (in thousands):

130

Annual Report

December 31, 2017

Notes to Financial Statements

	Accumulated			Accumulated
	Undistributed			Undistributed			Capital Paid
	Net Investment			Net Realized			in Excess
Fund	Income (Loss)			Gain/(Loss)			of Par Value
Growth	$	—		$	(24,796	)	$	24,796
Large Cap Growth		—			—			—
Mid Cap Growth		455			(3,650	)		3,195
Small-Mid Cap Growth		8,378			(78,018	)		69,640
Small-Mid Cap Value		(3	)		3			—
Small Cap Growth		3,241			(3,241	)		—
Small Cap Value		(579	)		579			—
Global Leaders		173			(173	)		—
International Leaders		72			(72	)		—
International Developed Plus		154			73,341			(73,495	)
Institutional International Developed Plus		21			90,009			(90,030	)
International Growth		3,854			130,343			(134,197	)
Institutional International Growth		360			(360	)		—
International Small Cap Growth		1,197			(1,197	)		—
Emerging Markets Leaders		(87	)		87			—
Emerging Markets Growth		3,078			(3,078	)		—
Emerging Markets Small Cap Growth		8,754			(8,761	)		7
Bond		6,624			(6,624	)		—
Income		1,282			3,295			(4,577	)
Low Duration		3,170			(3,170	)		—
Macro Allocation		8,464			(8,053	)		(411	)

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 US GAAP. 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 2017 and 2016 was as follows (in thousands):

	Distributions Paid in 2017								Distributions Paid in 2016
	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	$	351	$	3,113	$	10,311	$	80,701	$	—	$	1,075	$	5,224	$	38,868
Large Cap Growth		—		—		146		993		8		313		99		884
Mid Cap Growth		—		—		986		10,476		—		—		912		6,417
Small-Mid Cap Growth		—		—		11,906		81,736		—		—		5,332		28,097
Small-Mid Cap Value		—		12		28		320		1		24		9		129
Small Cap Growth		4,158		8,754		19,362		40,764		—		—		6,573		14,099
Small Cap Value		46		2,095		2,057		45,472		105		3,363		1,287		25,920
Global Leaders		71		739		215		1,738		—		124		27		206
International Leaders		117		844		71		437		23		293		—		—
International Developed Plus		55		2,202		—		—		29		823		—		—
International Growth		9,771		36,754		—		—		10,938		40,501		—		—
International Small Cap Growth		121		8,233		425		23,214		5		1,063		2		57

December 31, 2017

William Blair Funds

131

Notes to Financial Statements

	Distributions Paid in 2017								Distributions Paid in 2016
	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	$	12	$	327	$	—	$	—	$	—	$	41	$	—	$	—
Emerging Markets Growth		77		1,188		—		—		18		416		—		—
Emerging Markets Small Cap Growth		391		8,028		35		651		210		4,177		—		—
Bond		3,978		14,049		—		—		5,237		11,452		—		—
Income		1,426		1,849		—		—		1,079		1,868		—		—
Low Duration		96		4,594		—		—		149		3,331		—		—
Macro Allocation		260		8,252		—		—		1,182		21,809		—		—

	Distributions Paid in 2017				Distributions Paid in 2016
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Institutional		Institutional		Institutional		Institutional
Global Leaders	$	1,836	$	4,097	$	403	$	559
International Leaders		4,501		2,201		2,350		—
Institutional International Developed Plus		212		—		336		—
Institutional International Growth		54,743		39,224		23,809		—
International Small Cap Growth		6,246		17,011		845		37
Emerging Markets Leaders		3,069		—		513		—
Emerging Markets Growth		11,908		—		4,354		—
Emerging Markets Small Cap Growth		4,880		389		3,339		—
Bond		3,890		—		3,903		—
Low Duration		2,290		—		694		—
Macro Allocation		6,654		—		13,553		—

As of December 31, 2017, 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	$	938	$	—		$	7,904	$	103,770
Large Cap Growth		158		—			2,522		53,982
Mid Cap Growth		—		—			2,258		14,974
Small-Mid Cap Growth		3,042		—			58,088		333,688
Small-Mid Cap Value		—		—			3		813
Small Cap Growth		1,275		—			7,217		108,266
Small Cap Value		—		(4,103	)		7,467		181,967
Global Leaders		293		—			2,002		59,140
International Leaders		33		—			4,318		82,724
International Developed Plus		151		—			—		23,020
Institutional International Developed Plus		3		(213	)		—		4,121
International Growth		21,442		—			—		649,997
Institutional International Growth		3,400		—			38,723		477,827
International Small Cap Growth		5,236		—			13,824		114,522
Emerging Markets Leaders		258		—			1,625		110,596
Emerging Markets Growth		10,202		(21,970	)		—		383,050
Emerging Markets Small Cap Growth		560		—			6,408		79,440
Bond		99		(12,682	)		—		11,575
Income		11		(4,066	)		—		(414	)
Low Duration		43		(22,873	)		—		(1,730	)
Macro Allocation		—		(218,413	)		—		115,520

132

Annual Report

December 31, 2017

Notes to Financial Statements

As of December 31, 2017, the Funds may have unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. 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.

The following table details the Funds’ available capital loss carryforwards as of December 31, 2017, the capital loss carryforwards utilized by the Funds in 2017, and the capital loss carryforwards that expired in 2017 (in thousands):

	Available Capital Loss Carryforwards								Capital Loss		Capital Loss
	Limited by Year of Expiration		Unlimited				Total		Carryforwards		Carryforwards
Fund		2018	Short Term		Long Term		Available		Utilized in 2017		Expired in 2017
Mid Cap Growth		$ —	$	—	$	—	$	—	$	2,038	$	—
Global Leaders		—		—		—		—		986		—
International Leaders		—		—		—		—		144		—
International Developed Plus		—		—		—		—		3,696		73,495
Institutional International Developed Plus		—		213		—		213		579		90,030
International Growth		—		—		—		—		294,238		134,197
Institutional International Growth		—		—		—		—		94,970		—
Emerging Markets Leaders		—		—		—		—		22,497		—
Emerging Markets Growth		—		21,970		—		21,970		94,493		—
Emerging Markets Small Cap Growth		—		—		—		—		19,850		—
Bond		—		7,985		4,697		12,682		—		—
Income		—		1,742		2,162		3,904		—		4,577
Low Duration		955		11,239		10,679		22,873		—		—
Macro Allocation		—		166,163		52,250		218,413		—		—

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, 2017. 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, 2017.

As of December 31, 2017, the following Funds deferred, on a tax basis, qualified late year losses of (in thousands):

	Qualified Late Year Losses
	Ordinary		Net
Fund	Income		Capital
Small Cap Value	$ —		$ 4,103
Income		—		162

December 31, 2017

William Blair Funds

133

Notes to Financial Statements

(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, 2017, 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

A Fund 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 acquire 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 US GAAP 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) Redemption In-Kind

In accordance with the Trust’s prospectus, the Funds may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). For financial reporting purposes, the Fund recognizes a gain or loss on the transfer of securities depending on the value of those securities on the date of redemption. Gains and losses realized on in-kind redemptions may not be recognized for tax purposes and are reclassified from accumulated net realized gain (loss) to capital paid in excess of par value. During the year ended December 31, 2017, the Small-Mid Cap Growth Fund redeemed $143,344 (in thousands) of fund shares in-kind rather than with cash and recognized a net realized gain of $51,377 (in thousands) on the securities distributed to shareholders.

134

Annual Report

December 31, 2017

Notes to Financial Statements

(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). As of December 31, 2017, fair valuation estimates for foreign equity securities were not obtained.

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. If there were no sales that day or if no settlement price is available, such option contracts are valued at the mean between the last reported bid and ask prices. Option contracts traded in the Over-the-Counter (“OTC”) market shall be valued by an independent pricing service. Futures contracts are valued at the most recent settlement price on the exchange on which they are traded most extensively or if no settlement price is available, at the last sale price as of the close of the exchange. 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.

Swaps that are centrally cleared through an exchange are valued at the most recent settlement price provided by the exchange on which they are cleared. Total return swaps on equities, equity baskets, indices and other financial instruments are valued by an independent pricing service, or if unavailable, based on the security’s or instrument’s underlying reference asset. All other 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.

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, 2017, there were securities held in the International Growth, Institutional International Growth, Emerging Markets Growth, and Emerging Markets Small Cap Growth Funds requiring fair valuation pursuant to the Valuation Procedures approved by the Board of Trustees.

(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:

December 31, 2017

William Blair Funds

135

Notes to Financial Statements

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

	•	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 at which 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 are 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.

A description of the valuation methodologies applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis is 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 agency obligations, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities, asset-backed 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.

136

Annual Report

December 31, 2017

Notes to Financial Statements

As of December 31, 2017, the hierarchical input levels of securities in each Fund, segregated by security class or other financial instruments, are shown below (in thousands). There were no transfers between Levels as of December 31, 2017.

Investments in securities					Growth		Large Cap Growth		Mid Cap Growth
Level 1—Quoted prices
Common Stocks					$	352,360	$	203,061	$	77,222
Level 2—Other significant observable inputs
Short-Term Investments						2,716		390		560
Level 3—Significant unobservable inputs
None						—		—		—
Total investments in securities					$	355,076	$	203,451	$	77,782

Investments in securities			Small-Mid Cap Growth		Small-Mid Cap Value		Small Cap Growth		Small Cap Value
Level 1—Quoted prices
Common Stocks			$	1,754,446	$	3,584	$	480,184	$	678,614
Level 2—Other significant observable inputs
Short-Term Investments				53,623		—		16,006		14,510
Level 3—Significant unobservable inputs
None				—		—		—		—
Total investments in securities			$	1,808,069	$	3,584	$	496,190	$	693,124

Investments in securities	Global Leaders		International Leaders		International Developed Plus		Institutional International Developed Plus		International Growth
Level 1—Quoted prices
Common Stocks	$	208,570	$	373,792	$	116,700	$	18,646	$	3,048,260
Preferred Stocks		—		—		—		—		44,326
Level 2—Other significant observable inputs
Common Stocks		—		—		—		—		6,711
Short-Term Investments		2,743		4,660		3,858		454		34,165
Level 3—Significant unobservable inputs
Common Stocks		—		—		—		—		—
Total investments in securities	$	211,313	$	378,452	$	120,558	$	19,100	$	3,133,462

Investments in securities	Institutional International Growth		International Small Cap Growth		Emerging Markets Leaders		Emerging Markets Growth		Emerging Markets Small Cap Growth
Level 1—Quoted prices
Common Stocks	$	2,277,296	$	578,328	$	428,201	$	1,234,496	$	429,178
Preferred Stocks		33,132		—		19,795		12,460		2,627
Level 2—Other significant observable inputs
Common Stocks		5,017		8,424		20,100		57,546		30,281
Short-Term Investments		28,654		15,884		9,211		11,977		6,769
Level 3—Significant unobservable inputs
Common Stocks		—		—		—		—		—
Total investments in securities	$	2,344,099	$	602,636	$	477,307	$	1,316,479	$	468,855

December 31, 2017

William Blair Funds

137

Notes to Financial Statements

Investments in securities	Bond			Income		Low Duration			Macro Allocation
Assets
Level 1—Quoted Prices
Common Stocks	$	—		$	—	$	—		$	22,738
Exchange-Traded Funds		—			—		—			916,590
Level 2—Other significant observable inputs
Asset-Backed Securities		5,956			3,026		45,638			—
Corporate Obligation/Notes		249,810			35,399		87,080			—
Foreign Government		—			—		—			30,181
Purchased Options		—			—		—			1,576
Short-Term Investments		—			775		274			131,089
U.S. Government and U.S. Agency		297,872			52,699		102,139			198,697
Level 3—Significant unobservable inputs
None		—			—		—			—

Liabilities
Level 1—Quoted Prices		—			—		—			—
None		—			—		—			—
Level 2—Other significant observable inputs		—			—		—			—
Written Options		—			—		—			(456	)
Level 3—Significant unobservable inputs		—			—		—			—
None		—			—		—			—
Total investments in securities	$	553,638		$	91,899	$	235,131		$	1,300,415

Other financial instruments

Assets
Level 1—Quoted Prices
Futures Contracts	$	—		$	—	$	—		$	5,316
Level 2—Other significant observable inputs
Forward Foreign Currency Contracts		—			—		—			15,664
Swaps		—			—		—			6,254
Level 3—Significant unobservable inputs
None		—			—		—			—

Liabilities
Level 1—Quoted Prices
Futures Contracts		—			—		—			(20,621	)
Level 2—Other significant observable inputs
Forward Foreign Currency Contracts		—			—		—			(15,699	)
Futures Contracts		—			—		—			—
Swaps		(46	)		—		—			(1,130	)
U.S. Government Agency		—			—		(14,978	)		—
Level 3—Significant unobservable inputs
None		—			—		—			—

Total Other Financial Instruments	$	(46	)	$	—	$	(14,978	)	$	(10,216	)

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 and Institutional International 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 these fair value determinations, 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% and 0.00% as a percentage of net assets in the International Growth and Institutional International Growth Funds, respectively. The change in net unrealized gain (loss) related to those securities held at December 31, 2017 is included in the change in net unrealized appreciation (depreciation) of investments in the Statements of Operations.

138

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Notes to Financial Statements

(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 management fee, which is accrued daily and paid monthly, based on a specified percentage of the Fund’s average daily net assets. Each Fund’s annual management fee rate is as follows:

Domestic Equity Funds
Growth	0.75	%
Large Cap Growth	0.70	%
Mid Cap Growth	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 Fund
Global Leaders	1.00	%

International Equity Funds
International Leaders	0.95	%
International Developed Plus:
First $250 million	1.00	%
In excess of $250 million	0.90	%
Institutional International Developed Plus:
First $500 million	0.90	%
Next $500 million	0.85	%
In excess of $1 billion	0.80	%
International Growth:
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 the gross income.

December 31, 2017

William Blair Funds

139

Notes to Financial Statements

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 certain expenses in excess of the agreed upon rate through April 30, 2018. The amount the Adviser owes a Fund as of the reporting date is recorded as Receivable from Adviser in the Statements of Assets and Liabilities. The Adviser reimburses the Funds on a monthly basis. The Adviser will waive fees and/or reimburse expenses to the extent that the total expenses for the stated class of the Funds exceed the following rates (as a percentage of average daily net assets):

	Class N						Class I						Institutional Class
Fund	Effective May 1, 2017 through April 30, 2018			Effective May 1, 2016 through April 30, 2017			Effective May 1, 2017 through April 30, 2018			Effective May 1, 2016 through April 30, 2017			Effective May 1, 2017 through April 30, 2018			Effective May 1, 2016 through April 30, 2017
Growth		1.20	%		N/A			0.95	%		N/A			N/A			N/A
Large Cap Growth		1.05	%		1.05	%		0.80	%		0.80	%		N/A			N/A
Mid Cap Growth		1.30	%		1.30	%		1.05	%		1.05	%		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	%		1.35	%		1.10	%		1.10	%		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	%		1.40	%		1.15	%		1.15	%		1.00	%		1.00	%
International Leaders		1.35	%		1.35	%		1.10	%		1.10	%		0.95	%		0.95	%
International Developed Plus		1.30	%		1.30	%		1.05	%		1.05	%		N/A			N/A
Institutional International Developed Plus		N/A			N/A			N/A			N/A			0.90	%		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			1.05	%		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		0.65	%		0.70	%		0.50	%		0.55	%		0.35	%		0.40	%
Macro Allocation		1.35	%		1.35	%		1.10	%		1.10	%		0.95	%		0.95	%

140

Annual Report

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Notes to Financial Statements

For the year ended December 31, 2017, the fee waivers and/or reimbursements received by each Fund (including 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
Growth	$	—	$	—	$	—	$	—
Large Cap Growth		—		24		135		159
Mid Cap Growth		45		19		127		191
Small-Mid Cap Growth		—		158		921		1,079
Small-Mid Cap Value		111		—		3		114
Small Cap Growth		—		61		6		67
Small Cap Value		—		16		266		282
Global Leaders		204		10		80		294
International Leaders		274		11		78		363
International Developed Plus		117		4		101		222
Institutional International Developed Plus		133		—		—		133
International Growth		—		150		—		150
Institutional International Growth		—		—		—		—
International Small Cap Growth		—		13		493		506
Emerging Markets Leaders		—		5		57		62
Emerging Markets Growth		—		15		168		183
Emerging Markets Small Cap Growth		146		17		330		493
Bond		105		159		528		792
Income		—		14		—		14
Low Duration		92		6		257		355
Macro Allocation		—		75		1,298		1,373

(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 Developed Plus 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, 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. 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.

December 31, 2017

William Blair Funds

141

Notes to Financial Statements

For the year ended December 31, 2017, 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	$	10	$	80	$	90	$	90	$	—
International Leaders		11		78		89		89		—
International Small Cap Growth		13		493		506		506		—
Emerging Markets Leaders		5		57		62		62		—
Emerging Markets Growth		15		168		183		183		—
Emerging Markets Small Cap Growth		17		330		347		347		—
Bond		159		528		687		687		—
Low Duration		6		257		263		263		—
Macro Allocation		75		1,298		1,373		1,373		—

(5) Investment Transactions

Investment transactions, excluding U.S. government securities and securities whose maturities or expiration dates at the time of purchase were one year or less, for the year ended December 31, 2017, were as follows (in thousands):

Fund	Purchases		Sales
Growth	$	162,432	$	483,265
Large Cap Growth		84,700		45,846
Mid Cap Growth		60,826		138,358
Small-Mid Cap Growth		1,138,522		1,011,697
Small-Mid Cap Value		2,300		2,417
Small Cap Growth		355,090		357,366
Small Cap Value		261,198		318,013
Global Leaders		80,159		97,967
International Leaders		172,551		128,570
International Developed Plus		91,547		81,338
Institutional International Developed Plus		12,590		13,913
International Growth		2,511,940		3,130,369
Institutional International Growth		1,851,267		2,116,372
International Small Cap Growth		352,901		429,364
Emerging Markets Leaders		267,448		231,108
Emerging Markets Growth		1,099,500		1,194,037
Emerging Markets Small Cap Growth		729,852		683,349
Bond		167,854		84,460
Income		37,533		33,171
Low Duration		311,255		294,208
Macro Allocation		411,904		574,863

Investment transactions in U.S. government securities whose maturities at the time of purchase were greater than one year for the year ended December 31, 2017, were as follows (in thousands)

Fund	Purchases		Sales
Bond		$4,275	$10,129
Income		157	4,523
Low Duration		—	—

142

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Notes to Financial Statements

(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. Macro Allocation Fund may also use derivative instruments to obtain investment exposures. The derivative instruments held as of December 31, 2017, as disclosed in each Fund’s Portfolios of Investments, are representative of each Fund’s derivative instrument trading activity during the period ended December 31, 2017.

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.

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 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 in the Statement of Assets and Liabilities and are included in Investments in securities. Premiums received for written options are shown as a liability in the Statement of Assets and Liabilities. Realized gains and losses on the sale, expiration or assignment of an option are disclosed in 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

December 31, 2017

William Blair Funds

143

Notes to Financial Statements

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.

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, for example, 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. To the extent permitted by its investment policies and restrictions, a Fund may invest in the following types of swaps:

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 the period end for which a Fund is the seller of protection are disclosed in the Fund’s 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 the same 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, typically 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 in the transaction, a Fund would receive a payment for a positive return and would make a payment for a negative return. As a payer in the transaction, 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

144

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Notes to Financial Statements

variance of a reference entity. The payer agrees to exchange the fixed rate, which is the variance strike price of the reference entity, to the receiver for the floating rate, which is the 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.

The following table presents the value of financial derivative instruments, by Fund and primary risk exposure, as of December 31, 2017 and their respective location in the Statements of Assets and Liabilities (in thousands):

Assets

Liabilities

Fund and
Primary Risk Exposure

Statement of Assets
and Liabilities

Value

Statement of Assets
and Liabilities

Value

Bond

Credit

Receivable for variation margin on centrally cleared swaps

—

Payable for variation margin on centrally cleared swaps

Macro Allocation

Credit

Receivable for variation margin on centrally cleared swaps

123

Payable for variation margin on centrally cleared swaps

—

Currency

Unrealized appreciation on forward foreign currency contracts

15,664

Unrealized depreciation on forward foreign currency contracts

15,699

Equity

Receivable for variation margin on futures

5,076

Payable for variation margin on futures

20,479

Equity

Investments in securities, at value

1,576

Options written, at value

456

Equity

Unrealized appreciation on swap contracts

5,508

Unrealized depreciation on swap contracts

935

Interest rate

Unrealized appreciation on swap contracts

623

Unrealized depreciation on swap contracts

—

Interest rate

Receivable for variation margin on futures

240

Payable for variation margin on futures

142

Interest rate

Receivable for variation margin on centrally cleared swaps

—

Payable for variation margin on centrally cleared swaps

195

The table above includes cumulative appreciation/(depreciation) of exchange-traded and centrally cleared derivative contracts as reported in the applicable Fund’s Portfolio of Investments. Only variation margin receivable/payable on exchange-traded and centrally cleared derivative contracts is reported within the Statements of Assets and Liabilities.

December 31, 2017

William Blair Funds

145

Notes to Financial Statements

The following table indicates the effect of derivatives, by Fund and primary risk exposure, in the Statements of Operations for the year ended December 31, 2017 (in thousands):

	Realized Gain (Loss)				Change in Net Unrealized Appreciation (Depreciation)
Fund and Primary Risk Exposure	Statement of Operations	Value			Statement of Operations	Value
Bond
Credit	Swaps	$	(625	)	Swaps	$	119
Macro Allocation
Credit	Swaps		1,645		Swaps		21
Currency	Forward foreign currency contracts		2,585		Forward foreign currency contracts		(6,643	)
Equity	Futures contracts		(33,208	)	Futures contracts		(19,668	)
Equity	Options		(22,935	)	Options		1,153
Equity	Swaps		3,637		Swaps		(3,751	)
Interest rate	Futures contracts		(2,935	)	Futures contracts		(205	)
Interest rate	Swaps		(1,318	)	Swaps		(1,282	)

The following table is a summary by counterparty of the derivative instruments and collateral pledged/(received) included in the Macro Allocation Fund’s Statement of Assets and Liabilities at December 31, 2017 (in thousands):

	Financial Derivative Assets								Financial Derivative Liabilities
Counterparty	Forward Foreign Currency Contracts		Purchased Options		Swaps		Total		Forward Foreign Currency Contracts			Written Options			Swaps			Total			Net Market Value		Collateral Pledged (Received)			Net Exposure
Citibank N.A.	$	15,664	$	923	$	1,950	$	18,537	$	(15,699	)	$	(456	)	$	(641	)	$	(16,796	)	$	1,741	$	(2,550	)	$	(809	)
Credit Suisse		—		653		2,902		3,555		—			—			—			—			3,555		1,190			4,745
Goldman Sachs		—		—		1,279		1,279		—			—			(294	)		(294	)		985		(300	)		685

The net exposure represents the amount due from/(due to) the counterparty in the event of default. Any net exposure is generally due to changes in market value of the underlying derivative instruments on the last day of the period as timing of collateral movement occurs the following day. For Credit Suisse, the exposure is due to initial margin requirements of approximately $4,800 (in thousands) for total return swaps on futures.

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Notes to Financial Statements

(7) Fund Share Transactions

The following tables summarize the activity in capital shares of each Fund for the year ended December 31, 2017 (in thousands):

	Class N
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	2,767	$	10,496	$	41,517	$	(28,254	)		220		1,026		3,364		(2,118	)
Large Cap Growth		12,606		146		3,699		9,053			1,059		11		309		761
Mid Cap Growth		1,284		919		13,722		(11,519	)		113		85		1,153		(955	)
Small-Mid Cap Growth		87,018		11,824		76,905		21,937			3,871		514		3,528		857
Small-Mid Cap Value		19		28		27		20			2		2		2		2
Small Cap Growth		66,284		23,270		69,840		19,714			2,362		884		2,439		807
Small Cap Value		4,125		2,069		10,395		(4,201	)		203		104		508		(201	)
Global Leaders		1,070		279		780		569			78		19		59		38
International Leaders		6,217		188		1,194		5,211			432		12		81		363
International Developed Plus		691		55		1,088		(342	)		45		3		70		(22	)
International Growth		50,070		9,669		210,605		(150,866	)		1,863		324		7,645		(5,458	)
International Small Cap Growth		708		513		7,355		(6,134	)		50		34		484		(400	)
Emerging Markets Leaders		2,641		12		3,440		(787	)		271		1		338		(66	)
Emerging Markets Growth		682		70		2,510		(1,758	)		49		4		179		(126	)
Emerging Markets Small Cap Growth		5,081		423		2,964		2,540			295		24		186		133
Bond		20,164		3,940		66,445		(42,341	)		1,934		378		6,372		(4,060	)
Income		8,700		1,377		22,470		(12,393	)		986		156		2,546		(1,404	)
Low Duration		786		85		6,068		(5,197	)		87		9		672		(576	)
Macro Allocation		8,704		257		31,131		(22,170	)		745		22		2,675		(1,908	)


	Class I
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	25,451	$	81,062	$	306,735	$	(200,222	)		1,915		7,067		22,849		(13,867	)
Large Cap Growth		50,357		884		21,605		29,636			4,124		63		1,774		2,413
Mid Cap Growth		9,557		10,131		75,132		(55,444	)		795		886		6,181		(4,500	)
Small-Mid Cap Growth		552,371		80,961		417,940		215,392			24,056		3,359		17,523		9,892
Small-Mid Cap Value		609		332		737		204			42		24		50		16
Small Cap Growth		61,059		49,339		62,897		47,501			2,010		1,702		2,068		1,644
Small Cap Value		91,392		45,722		169,851		(32,737	)		4,386		2,237		8,131		(1,508	)
Global Leaders		4,803		2,421		4,692		2,532			369		169		351		187
International Leaders		25,424		1,177		9,441		17,160			1,779		73		580		1,272
International Developed Plus		21,920		2,098		9,628		14,390			1,398		128		628		898
International Growth		195,965		33,924		682,927		(453,038	)		7,092		1,111		24,114		(15,911	)
International Small Cap Growth		49,384		26,655		104,367		(28,328	)		3,353		1,752		7,013		(1,908	)
Emerging Markets Leaders		12,824		317		8,364		4,777			1,302		30		893		439
Emerging Markets Growth		16,176		1,017		23,951		(6,758	)		1,115		65		1,707		(527	)
Emerging Markets Small Cap Growth		94,539		8,107		31,293		71,353			5,769		453		1,876		4,346
Bond		134,250		12,422		84,447		62,225			13,010		1,203		8,184		6,029
Income		10,520		1,759		18,387		(6,108	)		1,201		201		2,103		(701	)
Low Duration		84,636		4,341		174,620		(85,643	)		9,393		483		19,383		(9,507	)
Macro Allocation		214,907		7,674		417,802		(195,221	)		18,321		651		35,612		(16,640	)

December 31, 2017

William Blair Funds

147

Notes to Financial Statements

	Institutional Class
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Global Leaders	$	2,559	$	5,655	$	20,455	$	(12,241	)		198		394		1,511		(919	)
International Leaders		38,667		4,960		17,973		25,654			2,552		307		1,200		1,659
Institutional International Developed Plus		150		212		1,432		(1,070	)		10		15		112		(87	)
Institutional International Growth		192,850		90,689		524,901		(241,362	)		11,839		5,115		32,006		(15,052	)
International Small Cap Growth		8,701		23,256		16,528		15,429			558		1,520		1,054		1,024
Emerging Markets Leaders		62,264		3,067		30,182		35,149			6,513		288		2,936		3,865
Emerging Markets Growth		303,312		10,235		378,630		(65,083	)		22,768		645		26,296		(2,883	)
Emerging Markets Small Cap Growth		31,040		4,554		38,952		(3,358	)		1,822		254		2,289		(213	)
Bond		5,456		3,799		12,891		(3,636	)		530		368		1,251		(353	)
Low Duration		56,356		1,908		9,982		48,282			6,253		213		1,112		5,354
Macro Allocation		81,930		5,947		207,896		(120,019	)		6,962		504		17,587		(10,121	)

							Net Change in Net Assets Relating to Fund Share Activity
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	28,218	$	91,558	$	348,252	$	(228,476	)		2,135		8,093		26,213		(15,985	)
Large Cap Growth		62,963		1,030		25,304		38,689			5,183		74		2,083		3,174
Mid Cap Growth		10,841		11,050		88,854		(66,963	)		908		971		7,334		(5,455	)
Small-Mid Cap Growth		639,389		92,785		494,845		237,329			27,927		3,873		21,051		10,749
Small-Mid Cap Value		628		360		764		224			44		26		52		18
Small Cap Growth		127,343		72,609		132,737		67,215			4,372		2,586		4,507		2,451
Small Cap Value		95,517		47,791		180,246		(36,938	)		4,589		2,341		8,639		(1,709	)
Global Leaders		8,432		8,355		25,927		(9,140	)		645		582		1,921		(694	)
International Leaders		70,308		6,325		28,608		48,025			4,763		392		1,861		3,294
International Developed Plus		22,611		2,153		10,716		14,048			1,443		131		698		876
Institutional International Developed Plus		150		212		1,432		(1,070	)		10		15		112		(87	)
International Growth		246,035		43,593		893,532		(603,904	)		8,955		1,435		31,759		(21,369	)
Institutional International Growth		192,850		90,689		524,901		(241,362	)		11,839		5,115		32,006		(15,052	)
International Small Cap Growth		58,793		50,424		128,250		(19,033	)		3,961		3,306		8,551		(1,284	)
Emerging Markets Leaders		77,729		3,396		41,986		39,139			8,086		319		4,167		4,238
Emerging Markets Growth		320,170		11,322		405,091		(73,599	)		23,932		714		28,182		(3,536	)
Emerging Markets Small Cap Growth		130,660		13,084		73,209		70,535			7,886		731		4,351		4,266
Bond		159,870		20,161		163,783		16,248			15,474		1,949		15,807		1,616
Income		19,220		3,136		40,857		(18,501	)		2,187		357		4,649		(2,105	)
Low Duration		141,778		6,334		190,670		(42,558	)		15,733		705		21,167		(4,729	)
Macro Allocation		305,541		13,878		656,829		(337,410	)		26,028		1,177		55,874		(28,669	)

148

Annual Report

December 31, 2017

Notes to Financial Statements

The following tables summarize the activity in capital shares of each Fund for the year ended December 31, 2016 (in thousands):

	Class N
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	9,467	$	5,146	$	94,833	$	(80,220	)		788		443		7,679		(6,448	)
Large Cap Growth		4,864		106		3,803		1,167			491		10		374		127
Mid Cap Growth		4,539		895		13,379		(7,945	)		406		83		1,195		(706	)
Small-Mid Cap Growth		113,600		5,308		126,533		(7,625	)		6,197		274		6,683		(213	)
Small-Mid Cap Value		125		11		809		(673	)		9		1		60		(50	)
Small Cap Growth		12,086		6,495		25,495		(6,914	)		508		256		1,107		(344	)
Small Cap Value		7,503		1,379		14,985		(6,103	)		420		68		834		(346	)
Global Leaders		1,161		25		1,045		141			102		2		91		13
International Leaders		2,880		23		296		2,607			219		2		23		198
International Developed Plus		610		28		652		(14	)		44		2		48		(2	)
International Growth		123,169		10,806		379,107		(245,132	)		5,287		456		16,222		(10,479	)
International Small Cap Growth		1,426		6		1,941		(509	)		111		—		147		(35	)
Emerging Markets Leaders		4,956		—		4,133		823			628		—		519		109
Emerging Markets Growth		858		16		1,801		(927	)		74		1		165		(91	)
Emerging Markets Small Cap Growth		1,900		209		3,416		(1,307	)		131		15		233		(88	)
Bond		47,846		5,196		67,665		(14,623	)		4,541		491		6,406		(1,373	)
Income		26,745		1,042		7,630		20,157			2,982		116		853		2,244
Low Duration		10,021		138		5,546		4,613			1,094		15		607		502
Macro Allocation		17,989		1,159		108,539		(89,391	)		1,604		102		9,603		(7,898	)

	Class I
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	66,424	$	39,081	$	244,314	$	(138,809	)		5,099		3,099		18,262		(10,064	)
Large Cap Growth		70,565		1,028		21,630		49,963			6,693		94		2,041		4,746
Mid Cap Growth		16,108		6,216		70,745		(48,421	)		1,384		547		6,111		(4,180	)
Small-Mid Cap Growth		420,054		27,743		419,796		28,001			21,989		1,375		21,830		1,535
Small-Mid Cap Value		515		153		1,155		(487	)		37		11		85		(37	)
Small Cap Growth		39,550		13,976		73,676		(20,150	)		1,629		509		3,002		(863	)
Small Cap Value		125,892		27,400		165,322		(12,030	)		6,790		1,319		9,363		(1,254	)
Global Leaders		5,749		326		6,299		(224	)		532		28		578		(17	)
International Leaders		31,408		263		13,815		17,856			2,394		21		1,064		1,352
International Developed Plus		25,097		752		1,912		23,937			1,839		55		138		1,756
International Growth		314,813		37,332		650,196		(298,051	)		12,910		1,540		26,315		(11,865	)
International Small Cap Growth		49,281		957		71,025		(20,787	)		3,795		75		5,375		(1,505	)
Emerging Markets Leaders		8,555		37		11,170		(2,578	)		1,075		5		1,466		(386	)
Emerging Markets Growth		21,878		337		57,207		(34,992	)		1,950		30		5,441		(3,461	)
Emerging Markets Small Cap Growth		43,213		3,892		47,652		(547	)		2,935		284		3,380		(160	)
Bond		138,784		9,626		64,741		83,669			13,339		918		6,186		8,070
Income		10,568		1,718		16,655		(4,369	)		1,187		193		1,872		(491	)
Low Duration		165,703		2,839		54,154		114,388			18,168		311		5,941		12,539
Macro Allocation		361,647		19,375		599,216		(218,194	)		31,812		1,704		52,704		(19,188	)

December 31, 2017

William Blair Funds

149

Notes to Financial Statements

	Institutional Class
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Global Leaders	$	25,666	$	893	$	38,608	$	(12,049	)		2,298		76		3,467		(1,094	)
International Leaders		124,198		1,497		8,121		117,574			9,710		117		612		9,214
Institutional International Developed Plus		967		336		383		920			79		29		31		77
Institutional International Growth		237,672		22,693		412,093		(151,728	)		16,189		1,572		28,755		(10,994	)
International Small Cap Growth		12,637		864		25,062		(11,561	)		964		67		1,860		(830	)
Emerging Markets Leaders		228,531		512		46,393		182,650			28,514		65		5,946		22,633
Emerging Markets Growth		352,867		3,701		272,272		84,296			30,987		332		23,869		7,451
Emerging Markets Small Cap Growth		16,666		2,913		7,180		12,399			1,128		212		488		852
Bond		10,764		3,795		24,354		(9,795	)		1,038		363		2,306		(905	)
Low Duration		45,205		651		14,239		31,617			4,958		71		1,559		3,469
Macro Allocation		220,921		13,540		79,417		155,044			19,441		1,190		6,963		13,669


							Net Change in Net Assets Relating to Fund Share Activity
	Dollars									Shares
Fund	Sales		Reinvest		Redemptions		Total			Sales		Reinvest		Redemptions		Total
Growth	$	75,891	$	44,227	$	339,147	$	(219,029	)		5,887		3,542		25,941		(16,512	)
Large Cap Growth		75,429		1,134		25,433		51,130			7,184		104		2,415		4,873
Mid Cap Growth		20,647		7,111		84,124		(56,366	)		1,790		630		7,306		(4,886	)
Small-Mid Cap Growth		533,654		33,051		546,329		20,376			28,186		1,649		28,513		1,322
Small-Mid Cap Value		640		164		1,964		(1,160	)		46		12		145		(87	)
Small Cap Growth		51,636		20,471		99,171		(27,064	)		2,137		765		4,109		(1,207	)
Small Cap Value		133,395		28,779		180,307		(18,133	)		7,210		1,387		10,197		(1,600	)
Global Leaders		32,576		1,244		45,952		(12,132	)		2,932		106		4,136		(1,098	)
International Leaders		158,486		1,783		22,232		138,037			12,323		140		1,699		10,764
International Developed Plus		25,707		780		2,564		23,923			1,883		54		183		1,754
Institutional International Developed Plus		967		336		383		920			79		29		31		77
International Growth		437,982		48,138		1,029,303		(543,183	)		18,197		1,996		42,537		(22,344	)
Institutional International Growth		237,672		22,693		412,093		(151,728	)		16,189		1,572		28,755		(10,994	)
International Small Cap Growth		63,344		1,827		98,028		(32,857	)		4,870		142		7,382		(2,370	)
Emerging Markets Leaders		242,042		549		61,696		180,895			30,217		70		7,931		22,356
Emerging Markets Growth		375,603		4,054		331,280		48,377			33,011		363		29,475		3,899
Emerging Markets Small Cap Growth		61,779		7,014		58,248		10,545			4,194		511		4,101		604
Bond		197,394		18,617		156,760		59,251			18,918		1,772		14,898		5,792
Income		37,313		2,760		24,285		15,788			4,169		309		2,725		1,753
Low Duration		220,929		3,628		73,939		150,618			24,220		397		8,107		16,510
Macro Allocation		600,557		34,074		787,172		(152,541	)		52,857		2,996		69,270		(13,417	)

(8) Subsequent Events

The Funds have evaluated subsequent events through the date of issuance of the Funds’ financial statements and have determined there is no impact to the Funds’ financial statements.

150

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Growth Fund

	Class N
							Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	11.41		$	12.52		$	13.55		$	14.79		$	12.05
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		(0.02	)		(0.04	)		(0.07	)		(0.07	)
Net realized and unrealized gain (loss) on investments		2.78			(0.08	)		0.75			1.03			4.25
Total from investment operations		2.76			(0.10	)		0.71			0.96			4.18
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		3.90			1.01			1.74			2.20			1.44
Total distributions		3.90			1.01			1.74			2.20			1.44
Net asset value, end of year	$	10.27		$	11.41		$	12.52		$	13.55		$	14.79
Total return (%)		24.35			(0.98	)		5.31			6.59			35.00
Ratios to average daily net assets (%):
Expenses		1.20			1.21			1.19			1.18			1.19
Net investment income (loss)		(0.14	)		(0.15	)		(0.29	)		(0.50	)		(0.51	)
Class N net assets at the end of the year (in thousands)	$	34,886		$	62,936		$	149,754		$	272,765		$	291,326
Portfolio turnover rate (%)		38			79			78			100			52

													Class I
							Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	12.39		$	13.50		$	14.43		$	15.56		$	12.58
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.03			0.01			(0.03	)		(0.03	)
Net realized and unrealized gain (loss) on investments		3.02			(0.10	)		0.80			1.10			4.45
Total from investment operations		3.04			(0.07	)		0.81			1.07			4.42
Less distributions from:
Net investment income		0.02			0.03			—			—			0.00	^
Net realized gain		3.90			1.01			1.74			2.20			1.44
Total distributions		3.92			1.04			1.74			2.20			1.44
Net asset value, end of year	$	11.51		$	12.39		$	13.50		$	14.43		$	15.56
Total return (%)		24.64			(0.69	)		5.69			6.96			35.43
Ratios to average daily net assets (%):
Expenses		0.92			0.90			0.89			0.86			0.85
Net investment income (loss)		0.12			0.20			0.06			(0.20	)		(0.17	)
Class I net assets at the end of the year (in thousands)	$	318,848		$	514,870		$	696,744		$	688,038		$	623,225
Portfolio turnover rate (%)		38			79			78			100			52

^	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.

See accompanying Notes to Financial Statements.
December 31, 2017		William Blair Funds	151

Financial Highlights — For a share outstanding throughout each period

Large Cap Growth Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	10.26		$	10.15		$	10.46		$	10.03		$	8.14
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		0.02			(0.02	)		(0.02	)		(0.03	)
Net realized and unrealized gain (loss) on investments		3.19			0.18			0.75			1.46			2.70
Total from investment operations		3.17			0.20			0.73			1.44			2.67
Less distributions from:
Net investment income		—			0.01			—			—			—
Net realized gain		0.08			0.08			1.04			1.01			0.78
Total distributions		0.08			0.09			1.04			1.01			0.78
Net asset value, end of year	$	13.35		$	10.26		$	10.15		$	10.46		$	10.03
Total return (%)		30.88			1.97			7.04			14.29			33.00
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.05			1.05			1.07			1.13			1.20
Expenses, before waivers and reimbursements		1.19			1.23			1.28			1.31			1.46
Net investment income (loss), net of waivers and reimbursements		(0.13	)		0.17			(0.22	)		(0.23	)		(0.36	)
Net investment income (loss), before waivers and reimbursements		(0.27	)		(0.01	)		(0.43	)		(0.41	)		(0.62	)
Class N net assets at the end of the year (in thousands)	$	25,604		$	11,860		$	10,443		$	8,831		$	6,678
Portfolio turnover rate (%)		29			44			38			50			48

	Class I
	Years Ended December 31,
		2017			2016			2015			2014			2013
Net asset value, beginning of year	$	10.70		$	10.58		$	10.84		$	10.33		$	8.35
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.04			(0.00	)^		0.00	^		(0.01	)
Net realized and unrealized gain (loss) on investments		3.33			0.19			0.78			1.52			2.77
Total from investment operations		3.35			0.23			0.78			1.52			2.76
Less distributions from:
Net investment income		—			0.03			—			—			—
Net realized gain		0.08			0.08			1.04			1.01			0.78
Total distributions		0.08			0.11			1.04			1.01			0.78
Net asset value, end of year	$	13.97		$	10.70		$	10.58		$	10.84		$	10.33
Total return (%)		31.29			2.22			7.26			14.65			33.24
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.80			0.80			0.82			0.88			0.95
Expenses, before waivers and reimbursements		0.90			0.91			0.95			1.00			1.11
Net investment income (loss), net of waivers and reimbursements		0.13			0.41			0.03			0.02			(0.11	)
Net investment income (loss), before waivers and reimbursements		0.03			0.30			(0.10	)		(0.10	)		(0.27	)
Class I net assets at the end of the year (in thousands)	$	177,959		$	110,475		$	59,038		$	50,778		$	40,513
Portfolio turnover rate (%)		29			44			38			50			48

^	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.

152

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Mid Cap Growth Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	10.69		$	11.28		$	14.20		$	15.21		$	12.65
Income (loss) from investment operations:
Net investment income (loss)		(0.08	)		(0.06	)		(0.09	)		(0.12	)		(0.13	)
Net realized and unrealized gain (loss) on investments		2.29			0.09			0.04			1.26			3.74
Total from investment operations		2.21			0.03			(0.05	)		1.14			3.61
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.98			0.62			2.87			2.15			1.05
Total distributions		1.98			0.62			2.87			2.15			1.05
Net asset value, end of year	$	10.92		$	10.69		$	11.28		$	14.20		$	15.21
Total return (%)		20.88			0.23			(0.20	)		7.53			28.77
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.30			1.30			1.32			1.35			1.35
Expenses, before waivers and reimbursements		1.49			1.45			1.43			1.35			1.42
Net investment income (loss), net of waivers and reimbursements		(0.65	)		(0.53	)		(0.65	)		(0.80	)		(0.90	)
Net investment income (loss), before waivers and reimbursements		(0.84	)		(0.68	)		(0.76	)		(0.80	)		(0.97	)
Class N net assets at the end of the year (in thousands)	$	6,166		$	16,234		$	25,105		$	37,413		$	41,849
Portfolio turnover rate (%)		59			60			65			81			83

	Class I
	Years Ended December 31,
		2017			2016			2015			2014			2013
Net asset value, beginning of year	$	11.20		$	11.76		$	14.65		$	15.58		$	12.91
Income (loss) from investment operations:
Net investment income (loss)		(0.05	)		(0.03	)		(0.06	)		(0.09	)		(0.10	)
Net realized and unrealized gain (loss) on investments		2.40			0.09			0.04			1.31			3.82
Total from investment operations		2.35			0.06			(0.02	)		1.22			3.72
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.98			0.62			2.87			2.15			1.05
Total distributions		1.98			0.62			2.87			2.15			1.05
Net asset value, end of year	$	11.57		$	11.20		$	11.76		$	14.65		$	15.58
Total return (%)		21.18			0.48			0.00			7.87			29.04
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.05			1.05			1.07			1.10			1.10
Expenses, before waivers and reimbursements		1.23			1.18			1.14			1.10			1.15
Net investment income (loss), net of waivers and reimbursements		(0.40	)		(0.26	)		(0.41	)		(0.55	)		(0.65	)
Net investment income (loss), before waivers and reimbursements		(0.58	)		(0.39	)		(0.48	)		(0.55	)		(0.70	)
Class I net assets at the end of the year (in thousands)	$	71,369		$	119,424		$	174,617		$	302,373		$	385,779
Portfolio turnover rate (%)		59			60			65			81			83

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

December 31, 2017

William Blair Funds

153

Financial Highlights — For a share outstanding throughout each period

Small-Mid Cap Growth Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	19.20		$	18.53		$	18.72		$	18.80		$	14.21
Income (loss) from investment operations:
Net investment income (loss)		(0.16	)		(0.09	)		(0.10	)		(0.12	)		(0.15	)
Net realized and unrealized gain (loss) on investments		5.62			1.29			0.93			1.68			6.01
Total from investment operations		5.46			1.20			0.83			1.56			5.86
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.30			0.53			1.02			1.64			1.27
Total distributions		1.30			0.53			1.02			1.64			1.27
Net asset value, end of year	$	23.36		$	19.20		$	18.53		$	18.72		$	18.80
Total return (%)		28.57			6.45			4.47			8.33			41.49
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		1.43			1.43			1.42			1.38			1.46
Net investment income (loss), net of waivers and reimbursements		(0.74	)		(0.51	)		(0.51	)		(0.63	)		(0.88	)
Net investment income (loss), before waivers and reimbursements		(0.82	)		(0.59	)		(0.58	)		(0.66	)		(0.99	)
Class N net assets at the end of the year (in thousands)	$	228,828		$	171,638		$	169,595		$	83,047		$	73,207
Portfolio turnover rate (%)		64			66			44			49			53

	Class I
	Years Ended December 31,
		2017			2016			2015			2014			2013
Net asset value, beginning of year	$	20.02		$	19.25		$	19.36		$	19.34		$	14.55
Income (loss) from investment operations:
Net investment income (loss)		(0.11	)		(0.05	)		(0.06	)		(0.08	)		(0.11	)
Net realized and unrealized gain (loss) on investments		5.87			1.35			0.97			1.74			6.17
Total from investment operations		5.76			1.30			0.91			1.66			6.06
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		1.30			0.53			1.02			1.64			1.27
Total distributions		1.30			0.53			1.02			1.64			1.27
Net asset value, end of year	$	24.48		$	20.02		$	19.25		$	19.36		$	19.34
Total return (%)		28.90			6.72			4.74			8.62			41.89
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		1.16			1.16			1.15			1.15			1.10
Net investment income (loss), net of waivers and reimbursements		(0.49	)		(0.28	)		(0.28	)		(0.38	)		(0.62	)
Net investment income (loss), before waivers and reimbursements		(0.55	)		(0.34	)		(0.33	)		(0.43	)		(0.62	)
Class I net assets at the end of the year (in thousands)	$	1,576,180		$	1,090,939		$	1,019,544		$	793,789		$	617,374
Portfolio turnover rate (%)		64			66			44			49			53

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

154

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Small-Mid Cap Value Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	14.53		$	12.54		$	13.63		$	14.11		$	11.29
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.04			0.04			0.00	^		0.00	^
Net realized and unrealized gain (loss) on investments		1.33			2.55			(0.47	)		0.64			4.06
Total from investment operations		1.37			2.59			(0.43	)		0.64			4.06
Less distributions from:
Net investment income		0.02			0.01			0.01			—			—
Net realized gain		1.57			0.59			0.65			1.12			1.24
Total distributions		1.59			0.60			0.66			1.12			1.24
Net asset value, end of year	$	14.31		$	14.53		$	12.54		$	13.63		$	14.11
Total return (%)		9.59			20.69			(3.13	)		4.66			36.29
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.35			1.35			1.37			1.40			1.40
Expenses, before waivers and reimbursements		4.83			4.15			3.93			4.50			4.50
Net investment income (loss), net of waivers and reimbursements		0.27			0.29			0.27			0.02			(0.04	)
Net investment income (loss), before waivers and reimbursements		(3.21	)		(2.51	)		(2.29	)		(3.08	)		(3.14	)
Class N net assets at the end of the year (in thousands)	$	284		$	267		$	855		$	946		$	1,205
Portfolio turnover rate (%)		70			45			35			69			61

	Class I
	Years Ended December 31,
		2017			2016			2015			2014			2013
Net asset value, beginning of year	$	14.47		$	12.54		$	13.63		$	14.12		$	11.29
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.08			0.07			0.05			0.03
Net realized and unrealized gain (loss) on investments		1.33			2.55			(0.47	)		0.63			4.07
Total from investment operations		1.40			2.63			(0.40	)		0.68			4.10
Less distributions from:															��
Net investment income		0.06			0.11			0.04			0.05			0.03
Net realized gain		1.57			0.59			0.65			1.12			1.24
Total distributions		1.63			0.70			0.69			1.17			1.27
Net asset value, end of year	$	14.24		$	14.47		$	12.54		$	13.63		$	14.12
Total return (%)		9.84			21.00			(2.86	)		4.96			36.69
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.10			1.10			1.12			1.15			1.15
Expenses, before waivers and reimbursements		4.55			3.92			3.72			4.16			4.24
Net investment income (loss), net of waivers and reimbursements		0.51			0.62			0.52			0.36			0.21
Net investment income (loss), before waivers and reimbursements		(2.94	)		(2.20	)		(2.08	)		(2.65	)		(2.88	)
Class I net assets at the end of the year (in thousands)	$	3,359		$	3,186		$	3,220		$	3,407		$	2,073
Portfolio turnover rate (%)		70			45			35			69			61

^	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.

December 31, 2017

William Blair Funds

155

Financial Highlights — For a share outstanding throughout each period

Small Cap Growth Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014			2013
Net asset value, beginning of year	$	25.24		$	22.47		$	25.61		$	30.02		$	23.68
Income (loss) from investment operations:
Net investment income (loss)		(0.25	)		(0.18	)		(0.22	)		(0.30	)		(0.26	)
Net realized and unrealized gain (loss) on investments		6.88			4.43			(0.93	)		1.02			12.52
Total from investment operations		6.63			4.25			(1.15	)		0.72			12.26
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		5.00			1.48			1.99			5.13			5.92
Total distributions		5.00			1.48			1.99			5.13			5.92
Net asset value, end of year	$	26.87		$	25.24		$	22.47		$	25.61		$	30.02
Total return (%)		26.70			18.89			(4.44	)		2.62			52.76
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		1.54			1.55			1.59			1.56			1.57
Net investment income (loss), net of waivers and reimbursements		(0.89	)		(0.79	)		(0.85	)		(1.00	)		(0.87	)
Net investment income (loss), before waivers and reimbursements		(0.93	)		(0.84	)		(0.94	)		(1.06	)		(0.94	)
Class N net assets at the end of the year (in thousands)	$	146,291		$	117,068		$	111,944		$	148,201		$	211,562
Portfolio turnover rate (%)		81			90			91			82			91

	Class I
	Years Ended December 31,
		2017			2016			2015			2014			2013
Net asset value, beginning of year	$	27.34		$	24.17		$	27.32		$	31.61		$	24.66
Income (loss) from investment operations:
Net investment income (loss)		(0.20	)		(0.13	)		(0.17	)		(0.23	)		(0.19	)
Net realized and unrealized gain (loss) on investments		7.47			4.78			(0.99	)		1.07			13.06
Total from investment operations		7.27			4.65			(1.16	)		0.84			12.87
Less distributions from:
Net investment income		—			—			—			—			—
Net realized gain		5.00			1.48			1.99			5.13			5.92
Total distributions		5.00			1.48			1.99			5.13			5.92
Net asset value, end of year	$	29.61		$	27.34		$	24.17		$	27.32		$	31.61
Total return (%)		26.99			19.22			(4.20	)		2.87			53.13
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		1.25			1.27			1.30			1.30			1.27
Net investment income (loss), net of waivers and reimbursements		(0.64	)		(0.54	)		(0.61	)		(0.75	)		(0.63	)
Net investment income (loss), before waivers and reimbursements		(0.64	)		(0.56	)		(0.66	)		(0.80	)		(0.65	)
Class I net assets at the end of the year (in thousands)	$	343,119		$	271,830		$	261,269		$	364,241		$	415,797
Portfolio turnover rate (%)		81			90			91			82			91

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

156

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Small Cap Value Fund

	Class N
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	20.18		$	16.68	$	17.76		$	17.63		$	13.65
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.04		0.02			(0.03	)		(0.05	)
Net realized and unrealized gain (loss) on investments		1.50			4.34		(1.05	)		0.81			5.32
Total from investment operations		1.51			4.38		(1.03	)		0.78			5.27
Less distributions from:
Net investment income		—			0.04		—			—			—
Net realized gain		1.54			0.84		0.05			0.65			1.29
Total distributions		1.54			0.88		0.05			0.65			1.29
Net asset value, end of year	$	20.15		$	20.18	$	16.68		$	17.76		$	17.63
Total return (%)		7.57			26.19		(5.77	)		4.49			38.91
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.50			1.50		1.50			1.50			1.49
Expenses, before waivers and reimbursements		1.55			1.53		1.54			1.53			1.55
Net investment income (loss), net of waivers and reimbursements		0.04			0.22		0.14			(0.17	)		(0.33	)
Net investment income (loss), before waivers and reimbursements		(0.01	)		0.19		0.10			(0.20	)		(0.39	)
Class N net assets at the end of the year (in thousands)	$	29,271		$	33,359	$	33,351		$	40,223		$	55,464
Portfolio turnover rate (%)		38			33		30			39			51

	Class I
	Years Ended December 31,
	2017		2016		2015			2014		2013
Net asset value, beginning of year	$	20.68	$	17.08	$	18.17		$	18.00	$	13.88
Income (loss) from investment operations:
Net investment income (loss)		0.06		0.09		0.08			0.02		(0.01	)
Net realized and unrealized gain (loss) on investments		1.54		4.44		(1.08	)		0.82		5.42
Total from investment operations		1.60		4.53		(1.00	)		0.84		5.41
Less distributions from:
Net investment income		0.04		0.09		0.04			0.02		0.00	^{^}
Net realized gain		1.54		0.84		0.05			0.65		1.29
Total distributions		1.58		0.93		0.09			0.67		1.29
Net asset value, end of year	$	20.70	$	20.68	$	17.08		$	18.17	$	18.00
Total return (%)		7.85		26.46		(5.47	)		4.73		39.31
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.25		1.25		1.24			1.23		1.24
Expenses, before waivers and reimbursements		1.29		1.29		1.24			1.23		1.25
Net investment income (loss), net of waivers and reimbursements		0.29		0.47		0.43			0.12		(0.07	)
Net investment income (loss),before waivers and reimbursements		0.25		0.43		0.43			0.12		(0.08	)
Class I net assets at the end of the year (in thousands)	$	644,749	$	675,272	$	579,010		$	544,963	$	352,832
Portfolio turnover rate (%)		38		33		30			39		51

^	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.

December 31, 2017

William Blair Funds

157

Financial Highlights — For a share outstanding throughout each period

Global Leaders Fund

											Class N
	Years Ended December 31,
	2017		2016			2015			2014			2013
Net asset value, beginning of year	$	11.60	$	11.58		$	11.84		$	11.43		$	9.47
Income (loss) from investment operations:
Net investment income (loss)		0.05		0.03			0.02			0.02			0.02
Net realized and unrealized gain (loss) on investments		3.46		0.04			0.27			0.41			1.96
Total from investment operations		3.51		0.07			0.29			0.43			1.98
Less distributions from:
Net investment income		0.10		—			0.01			—			0.02
Net realized gain		0.48		0.05			0.54			0.02			—
Total distributions		0.58		0.05			0.55			0.02			0.02
Net asset value, end of year	$	14.53	$	11.60		$	11.58		$	11.84		$	11.43
Total return (%)		30.31		0.62			2.49			3.76			20.86
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.37		1.36			1.39			1.50			1.50
Expenses, before waivers and reimbursements		1.63		1.62			1.61			1.62			1.63
Net investment income (loss), net of waivers and reimbursements		0.35		0.23			0.12			0.16			0.18
Net investment income (loss), before waivers and reimbursements		0.09		(0.03	)		(0.10	)		0.04			0.05
Class N net assets at the end of the year (in thousands)	$	7,761	$	5,760		$	5,588		$	5,007		$	6,403
Portfolio turnover rate (%)		41		75			55			60			70

									Class I
	Years Ended December 31,
	2017		2016		2015		2014		2013
Net asset value, beginning of year	$	11.62	$	11.59	$	11.85	$	11.42	$	9.47
Income (loss) from investment operations:
Net investment income (loss)		0.09		0.06		0.06		0.04		0.04
Net realized and unrealized gain (loss) on investments		3.47		0.05		0.26		0.43		1.95
Total from investment operations		3.56		0.11		0.32		0.47		1.99
Less distributions from:
Net investment income		0.14		0.03		0.04		0.02		0.04
Net realized gain		0.48		0.05		0.54		0.02		—
Total distributions		0.62		0.08		0.58		0.04		0.04
Net asset value, end of year	$	14.56	$	11.62	$	11.59	$	11.85	$	11.42
Total return (%)		30.69		0.98		2.77		4.08		21.05
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.07		1.05		1.10		1.25		1.25
Expenses, before waivers and reimbursements		1.33		1.31		1.32		1.33		1.35
Net investment income (loss), net of waivers and reimbursements		0.65		0.54		0.45		0.38		0.40
Net investment income (loss), before waivers and reimbursements		0.39		0.28		0.23		0.30		0.30
Class I net assets at the end of the year (in thousands)	$	60,067	$	45,772	$	45,853	$	52,090	$	53,562
Portfolio turnover rate (%)		41		75		55		60		70

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

158

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Global Leaders Fund

			Institutional Class
	Years Ended December 31,
	2017			2016		2015		2014		2013
Net asset value, beginning of year	$	11.62		$	11.59	$	11.85	$	11.42	$	9.47
Income (loss) from investment operations:
Net investment income (loss)		0.10			0.07		0.06		0.06		0.04
Net realized and unrealized gain (loss) on investments		3.47			0.05		0.27		0.43		1.97
Total from investment operations		3.57			0.12		0.33		0.49		2.01
Less distributions from:
Net investment income		0.15			0.04		0.05		0.04		0.06
Net realized gain		0.48			0.05		0.54		0.02		—
Total distributions		0.63			0.09		0.59		0.06		0.06
Net asset value, end of year	$	14.56		$	11.62	$	11.59	$	11.85	$	11.42
Total return (%)		30.78			1.03		2.85		4.24		21.23
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.00			1.00		1.03		1.10		1.10
Expenses, before waivers and reimbursements		1.10			1.11		1.11		1.13		1.14
Net investment income (loss), net of waivers and reimbursements		0.75			0.59		0.47		0.51		0.37
Net investment income (loss), before waivers and reimbursements		0.65			0.48		0.39		0.48		0.33
Institutional Class net assets at the end of the year (in thousands)	$	143,521		$	125,199	$	137,527	$	106,565	$	87,118
Portfolio turnover rate (%)		41			75		55		60		70

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

December 31, 2017

William Blair Funds

159

Financial Highlights — For a share outstanding throughout each period

International Leaders Fund

	Class N
	Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	12.88	$	12.89		$	12.25	$	12.65		$	10.81
Income (loss) from investment operations:
Net investment income (loss)		0.11		0.03			0.07		0.13			0.03
Net realized and unrealized gain (loss) on investments		3.70		0.08			0.66		(0.47	)		1.99
Total from investment operations		3.81		0.11			0.73		(0.34	)		2.02
Less distributions from:
Net investment income		0.20		0.12			0.02		0.06			0.18
Net realized gain		0.12		—			0.07		—			—
Total distributions		0.32		0.12			0.09		0.06			0.18
Net asset value, end of year	$	16.37	$	12.88		$	12.89	$	12.25		$	12.65
Total return (%)		29.65		0.88			6.01		(2.67	)		18.75
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.35		1.30			1.24		1.45			1.45
Expenses, before waivers and reimbursements		1.59		1.56			1.56		1.59			1.73
Net investment income (loss), net of waivers and reimbursements		0.72		0.24			0.51		1.00			0.29
Net investment income (loss), before waivers and reimbursements		0.48		(0.02	)		0.19		0.86			0.01
Class N net assets at the end of the year (in thousands)	$	9,651	$	2,922		$	377	$	150		$	154
Portfolio turnover rate (%)		41		59			29		79			73

	Class I
	Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	12.92	$	12.91		$	12.25	$	12.65		$	10.81
Income (loss) from investment operations:
Net investment income (loss)		0.16		0.10			0.10		0.16			0.12
Net realized and unrealized gain (loss) on investments		3.71		0.04			0.65		(0.47	)		1.94
Total from investment operations		3.87		0.14			0.75		(0.31	)		2.06
Less distributions from:
Net investment income		0.23		0.13			0.02		0.09			0.22
Net realized gain		0.12		—			0.07		—			—
Total distributions		0.35		0.13			0.09		0.09			0.22
Net asset value, end of year	$	16.44	$	12.92		$	12.91	$	12.25		$	12.65
Total return (%)		30.05		1.10			6.18		(2.43	)		19.10
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.05		1.04			1.13		1.20			1.20
Expenses, before waivers and reimbursements		1.28		1.30			1.46		1.29			1.40
Net investment income (loss), net of waivers and reimbursements		1.09		0.74			0.75		1.25			1.06
Net investment income (loss), before waivers and reimbursements		0.86		0.48			0.42		1.16			0.86
Class I net assets at the end of the year (in thousands)	$	60,279	$	30,944		$	13,474	$	9,561		$	11,629
Portfolio turnover rate (%)		41		59			29		79			73

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

160

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

International Leaders Fund

	Institutional Class
	Years Ended December 31,
	2017		2016		2015		2014			2013
Net asset value, beginning of year	$	12.92	$	12.90	$	12.24	$	12.65		$	10.80
Income (loss) from investment operations:
Net investment income (loss)		0.18		0.12		0.11		0.17			0.15
Net realized and unrealized gain (loss) on investments		3.70		0.04		0.66		(0.47	)		1.94
Total from investment operations		3.88		0.16		0.77		(0.30	)		2.09
Less distributions from:
Net investment income		0.25		0.14		0.04		0.11			0.24
Net realized gain		0.12		—		0.07		—			—
Total distributions		0.37		0.14		0.11		0.11			0.24
Net asset value, end of year	$	16.43	$	12.92	$	12.90	$	12.24		$	12.65
Total return (%)		30.08		1.25		6.33		(2.34	)		19.39
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.95		0.95		0.98		1.05			1.05
Expenses, before waivers and reimbursements		1.03		1.06		1.15		1.14			1.25
Net investment income (loss), net of waivers and reimbursements		1.18		0.92		0.88		1.33			1.31
Net investment income (loss), before waivers and reimbursements		1.10		0.81		0.71		1.24			1.11
Institutional Class net assets at the end of the year (in thousands)	$	308,898	$	221,356	$	102,227	$	78,251		$	56,991
Portfolio turnover rate (%)		41		59		29		79			73

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

December 31, 2017

William Blair Funds

161

Financial Highlights — For a share outstanding throughout each period

International Developed Plus Fund (formerly known as International Equity Fund)

	Class N
	Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	13.68	$	13.85		$	13.76	$	14.28		$	12.05
Income (loss) from investment operations:
Net investment income (loss)		0.12		0.18			0.15		0.16			0.09
Net realized and unrealized gain (loss) on investments		3.08		(0.22	)		0.06		(0.60	)		2.25
Total from investment operations		3.20		(0.04	)		0.21		(0.44	)		2.34
Less distributions from:
Net investment income		0.28		0.13			0.12		0.08			0.11
Net realized gain		—		—			—		—			—
Total distributions		0.28		0.13			0.12		0.08			0.11
Net asset value, end of year	$	16.60	$	13.68		$	13.85	$	13.76		$	14.28
Total return (%)		23.43		(0.27	)		1.54		(3.09	)		19.47
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.30		1.30			1.32		1.38			1.45
Expenses, before waivers and reimbursements		1.54		1.60			1.60		1.56			1.65
Net investment income (loss), net of waivers and reimbursements		0.78		1.30			1.01		1.11			0.73
Net investment income (loss), before waivers and reimbursements		0.54		1.00			0.73		0.93			0.53
Class N net assets at the end of the year (in thousands)	$	3,219	$	2,954		$	3,020	$	3,497		$	4,307
Portfolio turnover rate (%)		80		70			54		73			88

	Class I
	Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	13.81	$	13.98		$	13.91	$	14.43		$	12.18
Income (loss) from investment operations:
Net investment income (loss)		0.15		0.21			0.18		0.19			0.14
Net realized and unrealized gain (loss) on investments		3.12		(0.22	)		0.07		(0.59	)		2.26
Total from investment operations		3.27		(0.01	)		0.25		(0.40	)		2.40
Less distributions from:
Net investment income		0.32		0.16			0.18		0.12			0.15
Net realized gain		—		—			—		—			—
Total distributions		0.32		0.16			0.18		0.12			0.15
Net asset value, end of year	$	16.76	$	13.81		$	13.98	$	13.91		$	14.43
Total return (%)		23.72		(0.02	)		1.80		(2.80	)		19.74
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.05		1.05			1.07		1.13			1.20
Expenses, before waivers and reimbursements		1.26		1.34			1.34		1.32			1.41
Net investment income (loss), net of waivers and reimbursements		0.93		1.52			1.26		1.35			1.07
Net investment income (loss), before waivers and reimbursements		0.72		1.23			0.99		1.16			0.86
Class I net assets at the end of the year (in thousands)	$	117,520	$	84,383		$	60,886	$	65,012		$	75,271
Portfolio turnover rate (%)		80		70			54		73			88

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

162

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Institutional International Developed Plus Fund (formerly known as Institutional International Equity Fund)

	Institutional Class
	Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	11.84	$	12.12		$	12.01	$	12.70		$	10.82
Income (loss) from investment operations:
Net investment income (loss)		0.16		0.20			0.15		0.21			0.13
Net realized and unrealized gain (loss) on investments		2.71		(0.24	)		0.08		(0.65	)		2.00
Total from investment operations		2.87		(0.04	)		0.23		(0.44	)		2.13
Less distributions from:
Net investment income		0.16		0.24			0.12		0.25			0.25
Net realized gain		—		—			—		—			—
Total distributions		0.16		0.24			0.12		0.25			0.25
Net asset value, end of year	$	14.55	$	11.84		$	12.12	$	12.01		$	12.70
Total return (%)		24.28		(0.27	)		1.91		(3.50	)		19.78
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.93		1.00			1.00		1.03			1.10
Expenses, before waivers and reimbursements		1.68		1.77			1.76		1.63			1.12
Net investment income (loss), net of waivers and reimbursements		1.16		1.69			1.23		1.61			1.12
Net investment income (loss), before waivers and reimbursements		0.41		0.92			0.47		1.01			1.10
Institutional Class net assets at the end of the year (in thousands)	$	19,090	$	16,565		$	16,030	$	14,574		$	100,805
Portfolio turnover rate (%)		73		75			54		61			84

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

December 31, 2017

William Blair Funds

163

Financial Highlights — For a share outstanding throughout each period

International Growth Fund

	Class N
	Years Ended December 31,
	2017		2016			2015			2014			2013
Net asset value, beginning of year	$	23.86	$	24.94		$	25.24		$	26.30		$	22.43
Income (loss) from investment operations:
Net investment income (loss)		0.21		0.20			0.18			0.31			0.27
Net realized and unrealized gain (loss) on investments		6.73		(0.92	)		(0.25	)		(1.15	)		3.89
Total from investment operations		6.94		(0.72	)		(0.07	)		(0.84	)		4.16
Less distributions from:
Net investment income		0.39		0.36			0.23			0.22			0.29
Net realized gain		—		—			—			—			—
Total distributions		0.39		0.36			0.23			0.22			0.29
Net asset value, end of year	$	30.41	$	23.86		$	24.94		$	25.24		$	26.30
Total return (%)		29.11		(2.88	)		(0.27	)		(3.19	)		18.57
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.45		1.43			1.42			1.44			1.44
Expenses, before waivers and reimbursements		1.47		1.43			1.42			1.44			1.44
Net investment income (loss), net of waivers and reimbursements		0.78		0.84			0.71			1.17			1.13
Net investment income (loss), before waivers and reimbursements		0.76		0.84			0.71			1.17			1.13
Class N net assets at the end of the year (in thousands)	$	763,740	$	729,544		$	1,023,588		$	978,433		$	1,418,083
Portfolio turnover rate (%)		82		101			70			79			97

	Class I
	Years Ended December 31,
	2017		2016			2015			2014			2013
Net asset value, beginning of year	$	24.42	$	25.51		$	25.82		$	26.91		$	22.94
Income (loss) from investment operations:
Net investment income (loss)		0.30		0.29			0.27			0.36			0.35
Net realized and unrealized gain (loss) on investments		6.89		(0.94	)		(0.28	)		(1.13	)		3.99
Total from investment operations		7.19		(0.65	)		(0.01	)		(0.77	)		4.34
Less distributions from:
Net investment income		0.48		0.44			0.30			0.32			0.37
Net realized gain		—		—			—			—			—
Total distributions		0.48		0.44			0.30			0.32			0.37
Net asset value, end of year	$	31.13	$	24.42		$	25.51		$	25.82		$	26.91
Total return (%)		29.49		(2.54	)		(0.03	)		(2.86	)		18.96
Ratios to average daily net assets (%):
Expenses		1.14		1.13			1.14			1.14			1.11
Net investment income (loss)		1.08		1.16			1.02			1.36			1.43
Class I net assets at the end of the year (in thousands)	$	2,375,326	$	2,251,701		$	2,655,156		$	2,705,054		$	2,877,541
Portfolio turnover rate (%)		82		101			70			79			97

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

164

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Institutional International Growth Fund

	Institutional Class
	Years Ended December 31,
	2017		2016			2015			2014			2013
Net asset value, beginning of year	$	14.55	$	15.08		$	15.26		$	17.40		$	14.89
Income (loss) from investment operations:
Net investment income (loss)		0.21		0.18			0.19			0.26			0.25
Net realized and unrealized gain (loss) on investments		4.07		(0.54	)		(0.18	)		(0.71	)		2.56
Total from investment operations		4.28		(0.36	)		0.01			(0.45	)		2.81
Less distributions from:
Net investment income		0.44		0.17			0.09			0.32			0.30
Net realized gain		0.31		—			0.10			1.37			—
Total distributions		0.75		0.17			0.19			1.69			0.30
Net asset value, end of year	$	18.08	$	14.55		$	15.08		$	15.26		$	17.40
Total return (%)		29.53		(2.40	)		0.09			(2.66	)		18.90
Ratios to average daily net assets (%):
Expenses		0.97		0.98			0.96			0.97			0.97
Net investment income (loss)		1.22		1.25			1.18			1.50			1.58
Institutional Class net assets at the end of the year (in thousands)	$	2,330,299	$	2,093,971		$	2,335,632		$	2,339,169		$	2,440,149
Portfolio turnover rate (%)		84		105			70			83			97

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

December 31, 2017

William Blair Funds

165

Financial Highlights — For a share outstanding throughout each period

International Small Cap Growth Fund

											Class N
						Years Ended December 31,
	2017		2016			2015		2014			2013
Net asset value, beginning of year	$	12.87	$	13.50		$	12.56	$	16.08		$	13.46
Income (loss) from investment operations:
Net investment income (loss)		0.12		0.10			0.05		0.03			0.10
Net realized and unrealized gain (loss) on investments		3.98		(0.72	)		1.16		(1.38	)		3.35
Total from investment operations		4.10		(0.62	)		1.21		(1.35	)		3.45
Less distributions from:
Net investment income		0.32		0.01			0.24		0.18			0.16
Net realized gain		1.16		0.00	^		0.03		1.99			0.67
Total distributions		1.48		0.01			0.27		2.17			0.83
Net asset value, end of year	$	15.49	$	12.87		$	13.50	$	12.56		$	16.08
Total return (%)		32.17		(4.60	)		9.67		(8.43	)		25.80
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.47		1.44			1.47		1.58			1.59
Expenses, before waivers and reimbursements		1.62		1.59			1.62		1.58			1.59
Net investment income (loss), net of waivers and reimbursements		0.85		0.77			0.34		0.20			0.67
Net investment income (loss), before waivers and reimbursements		0.70		0.62			0.19		0.20			0.67
Class N net assets at the end of the year (in thousands)	$	6,275	$	10,361		$	11,350	$	13,676		$	18,910
Portfolio turnover rate (%)		64		73			90		127			111

	Class I
	Years Ended December 31,
		2017		2016			2015		2014			2013
Net asset value, beginning of year	$	13.00	$	13.65		$	12.70	$	16.23		$	13.58
Income (loss) from investment operations:
Net investment income (loss)		0.14		0.14			0.09		0.09			0.15
Net realized and unrealized gain (loss) on investments		4.07		(0.75	)		1.18		(1.40	)		3.37
Total from investment operations		4.21		(0.61	)		1.27		(1.31	)		3.52
Less distributions from:
Net investment income		0.40		0.04			0.29		0.23			0.20
Net realized gain		1.16		0.00	^		0.03		1.99			0.67
Total distributions		1.56		0.04			0.32		2.22			0.87
Net asset value, end of year	$	15.65	$	13.00		$	13.65	$	12.70		$	16.23
Total return (%)		32.70		(4.41	)		10.00		(8.10	)		26.11
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.16		1.15			1.16		1.28			1.30
Expenses, before waivers and reimbursements		1.31		1.30			1.31		1.28			1.30
Net investment income (loss), net of waivers and reimbursements		0.92		1.06			0.66		0.56			0.96
Net investment income (loss), before waivers and reimbursements		0.77		0.91			0.51		0.56			0.96
Class I net assets at the end of the year (in thousands)	$	338,920	$	306,526		$	342,232	$	364,161		$	508,758
Portfolio turnover rate (%)		64		73			90		127			111

^	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.

166

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

International Small Cap Growth Fund

	Institutional Class
	Years Ended December 31,
		2017		2016			2015		2014			2013
Net asset value, beginning of year	$	13.07	$	13.72		$	12.77	$	16.32		$	13.64
Income (loss) from investment operations:
Net investment income (loss)		0.15		0.15			0.10		0.12			0.18
Net realized and unrealized gain (loss) on investments		4.08		(0.74	)		1.18		(1.41	)		3.41
Total from investment operations		4.23		(0.59	)		1.28		(1.29	)		3.59
Less distributions from:
Net investment income		0.41		0.06			0.30		0.27			0.24
Net realized gain		1.16		0.00	^		0.03		1.99			0.67
Total distributions		1.57		0.06			0.33		2.26			0.91
Net asset value, end of year	$	15.73	$	13.07		$	13.72	$	12.77		$	16.32
Total return (%)		32.70		(4.31	)		10.03		(7.91	)		26.49
Ratios to average daily net assets (%):
Expenses		1.08		1.07			1.08		1.06			1.06
Net investment income (loss)		0.99		1.13			0.76		0.74			1.20
Institutional Class net assets at the end of the year (in thousands)	$	256,558	$	199,746		$	221,018	$	245,103		$	408,524
Portfolio turnover rate (%)		64		73			90		127			111

^	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.

December 31, 2017

William Blair Funds

167

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Leaders Fund

	Class N
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	7.84		$	7.73	$	9.06		$	9.10		$	9.20
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.02		0.02			0.05			(0.02	)
Net realized and unrealized gain (loss) on investments		3.26			0.09		(1.34	)		0.14			(0.05	)
Total from investment operations		3.27			0.11		(1.32	)		0.19			(0.07	)
Less distributions from:
Net investment income		0.05			—		—			0.00	^		0.03
Net realized gain		—			—		0.01			0.23			—
Total distributions		0.05			—		0.01			0.23			0.03
Net asset value, end of year	$	11.06		$	7.84	$	7.73		$	9.06		$	9.10
Total return (%)		41.68			1.42		(14.56	)		2.17			(0.74	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.47			1.57		1.64			1.65			1.65
Expenses, before waivers and reimbursements		1.62			1.81		1.89			1.82			1.83
Net investment income (loss), net of waivers and reimbursements		0.14			0.29		0.18			0.51			(0.23	)
Net investment income (loss), before waivers and reimbursements		(0.01	)		0.05		(0.07	)		0.34			(0.41	)
Class N net assets at the end of the year (in thousands)	$	2,766		$	2,479	$	1,599		$	1,832		$	1,959
Portfolio turnover rate (%)		59			135		110			131			131

	Class I
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	7.87		$	7.74	$	9.08		$	9.10		$	9.18
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.04		0.05			0.08			0.05
Net realized and unrealized gain (loss) on investments		3.27			0.10		(1.36	)		0.15			(0.10	)
Total from investment operations		3.29			0.14		(1.31	)		0.23			(0.05	)
Less distributions from:
Net investment income		0.07			0.01		0.02			0.02			0.03
Net realized gain		—			—		0.01			0.23			—
Total distributions		0.07			0.01		0.03			0.25			0.03
Net asset value, end of year	$	11.09		$	7.87	$	7.74		$	9.08		$	9.10
Total return (%)		41.89			1.82		(14.37	)		2.62			(0.60	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.25			1.30		1.29			1.40			1.40
Expenses, before waivers and reimbursements		1.40			1.54		1.54			1.60			1.58
Net investment income (loss), net of waivers and reimbursements		0.24			0.52		0.53			0.84			0.51
Net investment income (loss), before waivers and reimbursements		0.09			0.28		0.28			0.64			0.33
Class I net assets at the end of the year (in thousands)	$	47,666		$	30,346	$	32,862		$	28,475		$	34,590
Portfolio turnover rate (%)		59			135		110			131			131

^	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.

168

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Leaders Fund

	Institutional Class
	Years Ended December 31,
		2017		2016		2015			2014		2013
Net asset value, beginning of year	$	7.86	$	7.74	$	9.07		$	9.10	$	9.18
Income (loss) from investment operations:
Net investment income (loss)		0.03		0.03		0.04			0.08		0.06
Net realized and unrealized gain (loss) on investments		3.28		0.10		(1.33	)		0.16		(0.10	)
Total from investment operations		3.31		0.13		(1.29	)		0.24		(0.04	)
Less distributions from:
Net investment income		0.08		0.01		0.03			0.04		0.04
Net realized gain		—		—		0.01			0.23		—
Total distributions		0.08		0.01		0.04			0.27		0.04
Net asset value, end of year	$	11.09	$	7.86	$	7.74		$	9.07	$	9.10
Total return (%)		42.15		1.74		(14.24	)		2.68		(0.46	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.19		1.25		1.25			1.25		1.25
Expenses, before waivers and reimbursements		1.19		1.34		1.35			1.42		1.42
Net investment income (loss), net of waivers and reimbursements		0.33		0.39		0.49			0.83		0.68
Net investment income (loss), before waivers and reimbursements		0.33		0.30		0.39			0.66		0.51
Institutional Class net assets at the end of the year (in thousands)	$	427,480	$	272,678	$	93,217		$	75,875	$	36,509
Portfolio turnover rate (%)		59		135		110			131		131

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

December 31, 2017

William Blair Funds

169

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Growth Fund

	Class N
	Years Ended December 31,
	2017			2016		2015			2014		2013
Net asset value, beginning of year	$	10.99		$	10.85	$	12.91		$	13.28	$	13.40
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		0.03		0.04			0.08		0.05
Net realized and unrealized gain (loss) on investments		5.35			0.13		(1.98	)		0.37		0.09
Total from investment operations		5.33			0.16		(1.94	)		0.45		0.14
Less distributions from:
Net investment income		0.12			0.02		—			0.08		0.01
Net realized gain		—			—		0.12			0.74		0.25
Total distributions		0.12			0.02		0.12			0.82		0.26
Net asset value, end of year	$	16.20		$	10.99	$	10.85		$	12.91	$	13.28
Total return (%)		48.53			1.49		(15.03	)		3.40		1.05
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.50			1.50		1.50			1.64		1.68
Expenses, before waivers and reimbursements		1.65			1.65		1.65			1.64		1.68
Net investment income (loss), net of waivers and reimbursements		(0.14	)		0.28		0.33			0.55		0.39
Net investment income (loss), before waivers and reimbursements		(0.29	)		0.13		0.18			0.55		0.39
Class N net assets at the end of the year (in thousands)	$	10,479		$	8,488	$	9,367		$	12,638	$	13,723
Portfolio turnover rate (%)		91			105		121			101		118

	Class I
	Years Ended December 31,
		2017			2016		2015			2014		2013
Net asset value, beginning of year	$	11.10		$	10.96	$	13.01		$	13.38	$	13.50
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.06		0.07			0.11		0.08
Net realized and unrealized gain (loss) on investments		5.40			0.13		(2.00	)		0.37		0.10
Total from investment operations		5.41			0.19		(1.93	)		0.48		0.18
Less distributions from:
Net investment income		0.15			0.05		—			0.11		0.05
Net realized gain		—			—		0.12			0.74		0.25
Total distributions		0.15			0.05		0.12			0.85		0.30
Net asset value, end of year	$	16.36		$	11.10	$	10.96		$	13.01	$	13.38
Total return (%)		48.83			1.73		(14.83	)		3.65		1.36
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.27			1.26		1.25			1.40		1.41
Expenses, before waivers and reimbursements		1.42			1.41		1.40			1.40		1.41
Net investment income (loss), net of waivers and reimbursements		0.08			0.53		0.58			0.79		0.62
Net investment income (loss), before waivers and reimbursements		(0.07	)		0.38		0.43			0.79		0.62
Class I net assets at the end of the year (in thousands)	$	129,481		$	93,668	$	130,491		$	166,488	$	152,588
Portfolio turnover rate (%)		91			105		121			101		118

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

170

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Growth Fund

	Institutional Class
	Years Ended December 31,
	2017		2016		2015			2014		2013
Net asset value, beginning of year	$	11.18	$	11.05	$	13.09		$	13.46	$	13.59
Income (loss) from investment operations:
Net investment income (loss)		0.02		0.07		0.08			0.14		0.12
Net realized and unrealized gain (loss) on investments		5.46		0.12		(2.00	)		0.37		0.08
Total from investment operations		5.48		0.19		(1.92	)		0.51		0.20
Less distributions from:
Net investment income		0.17		0.06		—			0.14		0.08
Net realized gain		—		—		0.12			0.74		0.25
Total distributions		0.17		0.06		0.12			0.88		0.33
Net asset value, end of year	$	16.49	$	11.18	$	11.05		$	13.09	$	13.46
Total return (%)		49.06		1.71		(14.67	)		3.85		1.49
Ratios to average daily net assets (%):
Expenses		1.17		1.19		1.17			1.18		1.19
Net investment income (loss)		0.17		0.60		0.61			1.00		0.87
Institutional Class net assets at the end of the year (in thousands)	$	1,178,853	$	831,587	$	739,253		$	806,708	$	833,711
Portfolio turnover rate (%)		91		105		121			101		118

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

December 31, 2017

William Blair Funds

171

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Small Cap Growth Fund

	Class N
	Years Ended December 31,
	2017			2016			2015			2014		2013
Net asset value, beginning of year	$	13.73		$	14.84		$	16.52		$	15.12	$	12.99
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.09			(0.01	)		0.04		0.05
Net realized and unrealized gain (loss) on investments		5.46			(0.88	)		(1.05	)		2.13		2.08
Total from investment operations		5.47			(0.79	)		(1.06	)		2.17		2.13
Less distributions from:
Net investment income		0.50			0.32			—			0.03		—
Net realized gain		0.04			—			0.62			0.74		0.00	^
Total distributions		0.54			0.32			0.62			0.77		0.00	^
Net asset value, end of year	$	18.66		$	13.73		$	14.84		$	16.52	$	15.12
Total return (%)		40.09			(5.33	)		(6.40	)		14.41		16.42
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.64			1.61			1.65			1.65		1.65
Expenses, before waivers and reimbursements		1.83			1.82			1.94			1.74		2.19
Net investment income (loss), net of waivers and reimbursements		0.08			0.62			(0.06	)		0.21		0.38
Net investment income (loss), before waivers and reimbursements		(0.11	)		0.41			(0.35	)		0.12		(0.16	)
Class N net assets at the end of the year (in thousands)	$	15,082		$	9,263		$	11,306		$	10,745	$	9,313
Portfolio turnover rate (%)		183			157			167			124		138

	Class I
	Years Ended December 31,
	2017			2016			2015			2014		2013
Net asset value, beginning of year	$	13.77		$	14.90		$	16.52		$	15.13	$	12.99
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.13			0.05			0.02		0.05
Net realized and unrealized gain (loss) on investments		5.47			(0.89	)		(1.05	)		2.20		2.12
Total from investment operations		5.55			(0.76	)		(1.00	)		2.22		2.17
Less distributions from:
Net investment income		0.55			0.37			—			0.09		0.03
Net realized gain		0.04			—			0.62			0.74		0.00	^
Total distributions		0.59			0.37			0.62			0.83		0.03
Net asset value, end of year	$	18.73		$	13.77		$	14.90		$	16.52	$	15.13
Total return (%)		40.53			(5.11	)		(6.03	)		14.73		16.70
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		1.31			1.30			1.31			1.40		1.40
Expenses, before waivers and reimbursements		1.50			1.51			1.52			1.49		1.72
Net investment income (loss), net of waivers and reimbursements		0.49			0.87			0.30			0.15		0.35
Net investment income (loss), before waivers and reimbursements		0.30			0.66			0.09			0.06		0.03
Class I net assets at the end of the year (in thousands)	$	282,620		$	147,949		$	162,375		$	119,662	$	58,123
Portfolio turnover rate (%)		183			157			167			124		138

^	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.


172	Annual Report	December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Emerging Markets Small Cap Growth Fund

	Institutional Class
	Years Ended December 31,
	2017		2016			2015			2014		2013
Net asset value, beginning of year	$	13.79	$	14.92		$	16.53		$	15.14	$	13.00
Income (loss) from investment operations:
Net investment income (loss)		0.10		0.14			0.06			0.06		0.07
Net realized and unrealized gain (loss) on investments		5.47		(0.89	)		(1.05	)		2.18		2.11
Total from investment operations		5.57		(0.75	)		(0.99	)		2.24		2.18
Less distributions from:
Net investment income		0.56		0.38			0.00	^		0.11		0.04
Net realized gain		0.04		—			0.62			0.74		0.00	^
Total distributions		0.60		0.38			0.62			0.85		0.04
Net asset value, end of year	$	18.76	$	13.79		$	14.92		$	16.53	$	15.14
Total return (%)		40.62		(5.05	)		(5.97	)		14.85		16.80
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		1.29		1.31			1.31			1.34		1.56
Net investment income (loss), net of waivers and reimbursements		0.57		0.94			0.34			0.37		0.47
Net investment income (loss), before waivers and reimbursements		0.53		0.88			0.28			0.28		0.16
Institutional Class net assets at the end of the year (in thousands)	$	166,927	$	125,650		$	123,160		$	123,496	$	91,663
Portfolio turnover rate (%)		183		157			167			124		138

^	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.


December 31, 2017	William Blair Funds	173

Financial Highlights — For a share outstanding throughout each period

Bond Fund

	Class N
	Years Ended December 31,
	2017		2016		2015			2014			2013
Net asset value, beginning of year	$	10.41	$	10.34	$	10.74		$	10.60		$	11.28
Income (loss) from investment operations:
Net investment income (loss)		0.27		0.27		0.27			0.31			0.32
Net realized and unrealized gain (loss) on investments		0.12		0.18		(0.29	)		0.23			(0.47	)
Total from investment operations		0.39		0.45		(0.02	)		0.54			(0.15	)
Less distributions from:
Net investment income		0.39		0.38		0.38			0.40			0.42
Net realized gain		—		—		—			0.00	^		0.11
Total distributions		0.39		0.38		0.38			0.40			0.53
Net asset value, end of year	$	10.41	$	10.41	$	10.34		$	10.74		$	10.60
Total return (%)		3.83		4.40		(0.23	)		5.10			(1.37	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.65		0.65		0.61			0.65			0.65
Expenses, before waivers and reimbursements		0.82		0.82		0.79			0.85			0.82
Net investment income (loss), net of waivers and reimbursements		2.57		2.60		2.60			2.90			2.89
Net investment income (loss), before waivers and reimbursements		2.40		2.43		2.42			2.70			2.72
Class N net assets at the end of the year (in thousands)	$	83,662	$	125,866	$	139,303		$	16,720		$	11,389
Portfolio turnover rate (%)		17		17		32			35			41

	Class I
	Years Ended December 31,
	2017		2016		2015			2014			2013
Net asset value, beginning of year	$	10.30	$	10.24	$	10.64		$	10.49		$	11.17
Income (loss) from investment operations:
Net investment income (loss)		0.29		0.30		0.31			0.33			0.33
Net realized and unrealized gain (loss) on investments		0.13		0.16		(0.31	)		0.23			(0.48	)
Total from investment operations		0.42		0.46		—			0.56			(0.15	)
Less distributions from:
Net investment income		0.41		0.40		0.40			0.41			0.42
Net realized gain		—		—		—			0.00	^		0.11
Total distributions		0.41		0.40		0.40			0.41			0.53
Net asset value, end of year	$	10.31	$	10.30	$	10.24		$	10.64		$	10.49
Total return (%)		4.16		4.55		(0.05	)		5.37			(1.28	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.43		0.41		0.41			0.50			0.50
Expenses, before waivers and reimbursements		0.60		0.58		0.59			0.60			0.58
Net investment income (loss), net of waivers and reimbursements		2.79		2.83		2.93			3.07			3.05
Net investment income (loss), before waivers and reimbursements		2.62		2.66		2.75			2.97			2.97
Class I net assets at the end of the year (in thousands)	$	384,464	$	322,174	$	237,587		$	149,466		$	145,939
Portfolio turnover rate (%)		17		17		32			35			41

^	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.

174

Annual Report

December 31, 2017

Financial Highlights — For a share outstanding throughout each period

Bond Fund

	Institutional Class
	Years Ended December 31,
	2017		2016		2015			2014			2013
Net asset value, beginning of year	$	10.29	$	10.23	$	10.63		$	10.48		$	11.16
Income (loss) from investment operations:
Net investment income (loss)		0.30		0.30		0.32			0.34			0.35
Net realized and unrealized gain (loss) on investments		0.13		0.17		(0.31	)		0.23			(0.48	)
Total from investment operations		0.43		0.47		0.01			0.57			(0.13	)
Less distributions from:
Net investment income		0.42		0.41		0.41			0.42			0.44
Net realized gain		—		—		—			0.00	^		0.11
Total distributions		0.42		0.41		0.41			0.42			0.55
Net asset value, end of year	$	10.30	$	10.29	$	10.23		$	10.63		$	10.48
Total return (%)		4.24		4.61		0.01			5.53			(1.13	)
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		0.37		0.37		0.38			0.41			0.39
Net investment income (loss), net of waivers and reimbursements		2.87		2.90		3.01			3.23			3.19
Net investment income (loss), before waivers and reimbursements		2.85		2.88		2.98			3.17			3.15
Institutional Class net assets at the end of the year (in thousands)	$	91,629	$	95,216	$	103,904		$	97,341		$	87,527
Portfolio turnover rate (%)		17		17		32			35			41

^	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.

December 31, 2017

William Blair Funds

175

Financial Highlights — For a share outstanding throughout each period

Income Fund

	Class N
	Years Ended December 31,
	2017			2016		2015			2014		2013
Net asset value, beginning of year	$	8.86		$	8.90	$	9.12		$	9.11	$	9.55
Income (loss) from investment operations:
Net investment income (loss)		0.16			0.16		0.15			0.18		0.20
Net realized and unrealized gain (loss) on investments		(0.03	)		0.06		(0.11	)		0.10		(0.35	)
Total from investment operations		0.13			0.22		0.04			0.28		(0.15	)
Less distributions from:
Net investment income		0.27			0.26		0.26			0.27		0.29
Net realized gain		—			—		—			—		—
Total distributions		0.27			0.26		0.26			0.27		0.29
Net asset value, end of year	$	8.72		$	8.86	$	8.90		$	9.12	$	9.11
Total return (%)		1.46			2.44		0.39			3.06		(1.61	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.85			0.79		0.81			0.84		0.85
Expenses, before waivers and reimbursements		0.88			0.79		0.81			0.84		1.03
Net investment income (loss), net of waivers and reimbursements		1.80			1.80		1.71			1.99		2.13
Net investment income (loss), before waivers and reimbursements		1.77			1.80		1.71			1.99		1.95
Class N net assets at the end of the year (in thousands)	$	39,625		$	52,710	$	32,942		$	34,020	$	41,662
Portfolio turnover rate (%)		37			22		21			30		41

	Class I
	Years Ended December 31,
	2017			2016		2015			2014		2013
Net asset value, beginning of year	$	8.80		$	8.83	$	9.05		$	9.05	$	9.48
Income (loss) from investment operations:
Net investment income (loss)		0.18			0.18		0.18			0.20		0.21
Net realized and unrealized gain (loss) on investments		(0.03	)		0.06		(0.12	)		0.09		(0.34	)
Total from investment operations		0.15			0.24		0.06			0.29		(0.13	)
Less distributions from:
Net investment income		0.29			0.27		0.28			0.29		0.30
Net realized gain		—			—		—			—		—
Total distributions		0.29			0.27		0.28			0.29		0.30
Net asset value, end of year	$	8.66		$	8.80	$	8.83		$	9.05	$	9.05
Total return (%)		1.68			2.78		0.63			3.20		(1.41	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.62			0.57		0.55			0.59		0.70
Expenses, before waivers and reimbursements		0.62			0.57		0.55			0.59		0.77
Net investment income (loss), net of waivers and reimbursements		2.03			2.05		1.97			2.24		2.30
Net investment income (loss), before waivers and reimbursements		2.03			2.05		1.97			2.24		2.23
Class I net assets at the end of the year (in thousands)	$	51,153		$	58,160	$	62,722		$	64,834	$	64,152
Portfolio turnover rate (%)		37			22		21			30		41

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

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Financial Highlights — For a share outstanding throughout each period

Low Duration Fund

	Class N
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	9.07		$	9.16	$	9.38		$	9.52		$	9.83
Income (loss) from investment operations:
Net investment income (loss)		0.11			0.09		0.07			0.11			0.10
Net realized and unrealized gain (loss) on investments		(0.04	)		0.02		(0.07	)		(0.00)	^		(0.16	)
Total from investment operations		0.07			0.11		—			0.11			(0.06	)
Less distributions from:
Net investment income		0.22			0.20		0.22			0.25			0.25
Net realized gain		—			—		—			—			—
Total distributions		0.22			0.20		0.22			0.25			0.25
Net asset value, end of year	$	8.92		$	9.07	$	9.16		$	9.38		$	9.52
Total return (%)		0.84			1.16		0.01			1.20			(0.62	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.61			0.68		0.60			0.70			0.70
Expenses, before waivers and reimbursements		0.79			0.83		0.77			0.75			0.71
Net investment income (loss), net of waivers and reimbursements		1.22			0.98		0.71			1.19			1.06
Net investment income (loss), before waivers and reimbursements		1.04			0.83		0.54			1.14			1.05
Class N net assets at the end of the year (in thousands)	$	1,979		$	7,237	$	2,712		$	4,969		$	5,158
Portfolio turnover rate (%)		109			81		106			83			56

	Class I
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	9.07		$	9.16	$	9.37		$	9.52		$	9.83
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.11		0.08			0.13			0.12
Net realized and unrealized gain (loss) on investments		(0.05	)		0.02		(0.05	)		(0.01	)		(0.17	)
Total from investment operations		0.08			0.13		0.03			0.12			(0.05	)
Less distributions from:
Net investment income		0.24			0.22		0.24			0.27			0.26
Net realized gain		—			—		—			—			—
Total distributions		0.24			0.22		0.24			0.27			0.26
Net asset value, end of year	$	8.91		$	9.07	$	9.16		$	9.37		$	9.52
Total return (%)		0.91			1.40		0.30			1.24			(0.47	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.41			0.44		0.42			0.55			0.55
Expenses, before waivers and reimbursements		0.59			0.59		0.59			0.60			0.56
Net investment income (loss), net of waivers and reimbursements		1.45			1.20		0.87			1.35			1.24
Net investment income (loss), before waivers and reimbursements		1.27			1.05		0.70			1.30			1.23
Class I net assets at the end of the year (in thousands)	$	131,186		$	219,714	$	107,137		$	104,433		$	122,583
Portfolio turnover rate (%)		109			81		106			83			56

^	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.

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Financial Highlights — For a share outstanding throughout each period

Low Duration Fund

	Institutional Class
	Years Ended December 31,
	2017			2016		2015			2014			2013
Net asset value, beginning of year	$	9.07		$	9.16	$	9.38		$	9.53		$	9.83
Income (loss) from investment operations:
Net investment income (loss)		0.14			0.11		0.09			0.14			0.13
Net realized and unrealized gain (loss) on investments		(0.05	)		0.02		(0.07	)		(0.01	)		(0.15	)
Total from investment operations		0.09			0.13		0.02			0.13			(0.02	)
Less distributions from:
Net investment income		0.25			0.22		0.24			0.28			0.28
Net realized gain		—			—		—			—			—
Total distributions		0.25			0.22		0.24			0.28			0.28
Net asset value, end of year	$	8.91		$	9.07	$	9.16		$	9.38		$	9.53
Total return (%)		0.96			1.43		0.22			1.40			(0.20	)
Ratios to average daily net assets (%):
Expenses, net of waivers and reimbursements		0.37			0.40		0.40			0.40			0.39
Expenses, before waivers and reimbursements		0.40			0.40		0.42			0.43			0.39
Net investment income (loss), net of waivers and reimbursements		1.51			1.25		0.94			1.45			1.37
Net investment income (loss), before waivers and reimbursements		1.48			1.25		0.92			1.42			1.37
Institutional Class net assets at the end of the year (in thousands)	$	99,912		$	53,122	$	21,863		$	68,095		$	46,485
Portfolio turnover rate (%)		109			81		106			83			56

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

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Financial Highlights — For a share outstanding throughout each period

Macro Allocation Fund

	Class N
	Years Ended
	Periods Ended December 31										October 31,
	2017		2016		2015			2014(a)			2014		2013
Net asset value, beginning of year	$	11.34	$	11.32	$	12.14		$	13.07		$	12.61	$	11.28
Income (loss) from investment operations:
Net investment income (loss)		0.06		0.04		0.04			0.04			0.02		0.05
Net realized and unrealized gain (loss) on investments		0.51		0.19		(0.80	)		(0.31	)		0.76		1.59
Total from investment operations		0.57		0.23		(0.76	)		(0.27	)		0.78		1.64
Less distributions from:
Net investment income		0.07		0.21		0.06			0.66			0.09		0.11
Net realized gain		—		—		—			—			0.23		0.20
Total distributions		0.07		0.21		0.06			0.66			0.32		0.31
Net asset value, end of year	$	11.84	$	11.34	$	11.32		$	12.14		$	13.07	$	12.61
Total return (%)*		5.06		2.01		(6.24	)		(2.00	)		6.34		14.87
Ratios to average daily net assets (%)**:
Expenses (excluding interest or short dividend expense), net of waivers and reimbursements		1.31		1.23		1.27			1.35			1.35		1.35
Expenses, net of waivers and reimbursements		1.37		1.23		1.27			1.38			1.47		1.49
Expenses, before waivers and reimbursements		1.52		1.38		1.42			1.46			1.60		1.78
Net investment income (loss), net of waivers and reimbursements		0.50		0.32		0.32			2.06			0.20		0.37
Net investment income (loss), before waivers and reimbursements		0.35		0.17		0.17			1.98			0.07		0.08
Class N net assets at the end of the year (in thousands)	$	41,483	$	61,376	$	150,606		$	150,778		$	150,785	$	97,498
Portfolio turnover rate (%)*		43		50		34			17			59		10

											Class I
	Years Ended
	Periods Ended December 31										October 31,
	2017		2016		2015			2014(a)			2014		2013
Net asset value, beginning of year	$	11.38	$	11.38	$	12.22		$	13.15		$	12.66	$	11.31
Income (loss) from investment operations:
Net investment income (loss)		0.11		0.08		0.09			0.05			0.04		0.07
Net realized and unrealized gain (loss) on investments		0.51		0.18		(0.82	)		(0.31	)		0.78		1.60
Total from investment operations		0.62		0.26		(0.73	)		(0.26	)		0.82		1.67
Less distributions from:
Net investment income		0.12		0.26		0.11			0.67			0.10		0.12
Net realized gain		—		—		—			—			0.23		0.20
Total distributions		0.12		0.26		0.11			0.67			0.33		0.32
Net asset value, end of year	$	11.88	$	11.38	$	11.38		$	12.22		$	13.15	$	12.66
Total return (%)*		5.50		2.26		(6.00	)		(1.94	)		6.60		15.06
Ratios to average daily net assets (%)**:
Expenses (excluding interest or short dividend expense), net of waivers and reimbursements		0.96		0.97		0.98			1.07			1.10		1.10
Expenses, net of waivers and reimbursements		1.02		0.97		0.99			1.10			1.22		1.24
Expenses, before waivers and reimbursements		1.17		1.12		1.14			1.10			1.27		1.41
Net investment income (loss), net of waivers and reimbursements		0.90		0.67		0.73			2.33			0.32		0.62
Net investment income (loss), before waivers and reimbursements		0.75		0.52		0.58			2.33			0.27		0.45
Class I net assets at the end of the year (in thousands)	$	780,075	$	937,244	$	1,155,051		$	649,756		$	617,531	$	224,860
Portfolio turnover rate (%)*		43		50		34			17			59		10

(a)	For the period November 1, 2014 to December 31, 2014.
*	Rates not annualized for periods that are less than a year.
**	Rates are annualized for periods that are less than a year.

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

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Financial Highlights — For a share outstanding throughout each period

Macro Allocation Fund

	Institutional Class
	Periods Ended
	Periods Ended December 31,										October 31,
	2017		2016		2015			2014(b)			2014		2013(a)
Net asset value, beginning of year	$	11.40	$	11.39	$	12.23		$	13.16		$	12.66	$	12.63
Income (loss) from investment operations:
Net investment income (loss)		0.12		0.09		0.12			0.05			0.04		0.00	^
Net realized and unrealized gain (loss) on investments		0.51		0.19		(0.84	)		(0.31	)		0.79		0.03
Total from investment operations		0.63		0.28		(0.72	)		(0.26	)		0.83		0.03
Less distributions from:
Net investment income		0.14		0.27		0.12			0.67			0.10		—
Net realized gain		—		—		—			—			0.23		—
Total distributions		0.14		0.27		0.12			0.67			0.33		—
Net asset value, end of year	$	11.89	$	11.40	$	11.39		$	12.23		$	13.16	$	12.66
Total return (%)*		5.51		2.44		(5.92	)		(1.91	)		6.71		0.24
Ratios to average daily net assets (%)**:
Expenses (excluding interest or short dividend expense), net of waivers and reimbursements		0.86		0.89		0.90			0.88			0.93		0.95
Expenses, net of waivers and reimbursements		0.92		0.89		0.90			0.91			1.05		1.00
Expenses, before waivers and reimbursements		0.92		0.89		0.90			0.91			1.05		1.11
Net investment income (loss), net of waivers and reimbursements		1.04		0.81		0.95			2.54			0.32		(0.99	)
Net investment income (loss), before waivers and reimbursements		1.04		0.81		0.95			2.54			0.32		(1.10	)
Institutional Class net assets at the end of the year (in thousands)	$	487,082	$	582,298	$	426,230		$	158,152		$	150,447	$	5,014
Portfolio turnover rate (%)*		43		50		34			17			59		10

(a)	For the period October 21, 2013 (Commencement of Operations) to October 31, 2013.
(b)	For the period November 1, 2014 to December 31, 2014.
*	Rates not annualized for periods that are less than a year.
**	Rates are 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.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Trustees of William Blair Funds

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the William Blair Funds (the “Trust”) (comprising the Growth Fund, Large Cap Growth Fund, Mid Cap Growth Fund, Small-Mid Cap Growth Fund, Small-Mid Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Global Leaders Fund, International Leaders Fund, International Developed Plus Fund, Institutional International Developed Plus 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 referred to as the “Funds”)), including the portfolios of investments, as of December 31, 2017, and the related statements of operations, changes in net assets, and the financial highlights for each of the periods indicated in the table below and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds comprising the William Blair Funds at December 31, 2017, the results of their operations, changes in net assets, and financial highlights for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.

William Blair Funds	Statement of operations	Statements of changes in net assets	Financial highlights
Growth Fund Large Cap Growth Fund Mid Cap Growth Fund Small-Mid Cap Growth Fund Small-Mid Cap Value Fund Small Cap Growth Fund Small Cap Value Fund Global Leaders Fund International Leaders Fund International Developed Plus Fund Institutional International Developed Plus 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	For the year ended December 31, 2017	For each of the two years in the period ended December 31, 2017	For each of the five years in the period ended December 31, 2017
Macro Allocation Fund	For the year ended December 31, 2017	For each of the two years in the period ended December 31, 2017	For each of three years in the period ended December 31, 2017, and the period from November 1, 2014 through December 31, 2014, and each of the two years in the period ended October 31, 2014.

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Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more William Blair investment companies since 1989.

Chicago, Illinois
February 22, 2018

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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 their other significant affiliations are set forth below. The address of each officer and trustee is 150 North Riverside Plaza, Chicago, Illinois 60606.

Name and Year of Birth	Position(s) Held with Trust	Term of Office⁽¹⁾and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Trust Complex Overseen by Trustee	Other Directorships Held by Trustee
Interested Trustees
Richard W. Smirl, 1967*	Trustee and Senior Vice President	Trustee since 2010 and Senior Vice President since 2008	Partner, William Blair & Company, L.L.C. and William Blair Investment Management LLC; Limited Partner, WBC Holdings, L.P.; Member, WBC GP L.L.P. Director, William Blair International, Ltd. (U.K.)	21	Director, William Blair SICAV; Director, William Blair MAS Ltd.

Non-Interested Trustees
Vann A. Avedisian, 1964⁽²⁾	Trustee	Since 2012	Principal, Highgate Holdings (hotel investments) (since 2009); formerly, co-founder and Managing Director, Oxford Capital Partners Inc. (1994 to 2006)	21	Potbelly Corporation (2001 to 2015)
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) (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) (2003 to 2010)	21	Council Member, Independent Directors Council; AmericaFirst Quantitative Funds (5 portfolios) (2012 to 2016)

	†	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’).
	*	Effective January 2, 2018, Mr. Smirl resigned as a trustee and officer of the Trust and from all offices and positions that he held with William Blair & Company, L.L.C. and its affiliates and subsidiaries.

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183

Name and Year of Birth	Position(s) Held with Trust	Term of Office⁽¹⁾and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Trust Complex Overseen by Trustee	Other Directorships Held by Trustee
Daniel N. Leib, 1966⁽³⁾	Trustee	Since 2016	Chief Executive Officer, Donnelley Financial Solutions, Inc. (since 2016); formerly, Executive Vice President and Chief Financial Officer, (2011 to 2016) and Group Chief Financial Officer (2009 to 2011), R.R. Donnelley & Sons Company	21	None
Phillip O. Peterson, 1944	Trustee	Since 2007	Retired; formerly, President, Strong Mutual Funds (2004 to 2005); prior thereto, Partner, KPMG LLP (1981-2000)	21	The Hartford Group of Mutual Funds (89 portfolios); Symetra Mutual Funds Trust (variable annuity funds) (2012 to 2014)
Donald J. Reaves, 1946⁽⁴⁾	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)	21	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)	21	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 (since 2005); formerly, Managing Partner of various divisions at Accenture (1994-2004)	21	Mutual Trust Financial Group, provider of insurance and investment products
Steven R. Zenz, 1954	Trustee	Since 2018	Consultant, Steven R. Zenz Consulting LLC (merger and acquisition transactions and SEC reporting and filings) (since 2011); formerly, Partner, KPMG LLP (1987-2010)⁽⁵⁾	21	Frankly Inc. (technology products and services for media industry) (since 2016); RedBrick Health Corporation (health care technology for employee wellness) (since 2015); Insignia Systems, Inc. (in-store advertising services for consumer packaged goods manufacturers) (since 2013)

	(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. The Board of Trustees approved an exception to this retirement policy to defer the retirement of Mr. Seeley and Mr. Peterson until February 2018.
	(2)	Mr. Avedisian served as a member of the Board of Directors of Potbelly Corporation (“Potbelly”) from 2001 to 2015. 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 two entities affiliated with William Blair.

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	(3)	The Funds and William Blair use Donnelley Financial Solutions, Inc. (“DFS”), formerly a company of R.R. Donnelley & Sons Company (“RRD”), for financial printing and other services. DFS was formed as a spin-off from RRD in October 2016 and is a public company. The Funds and William Blair paid DFS approximately $11,000 for the period from spin-off through December 31, 2016 and $172,000 in 2017 for the services provided. DFS’s revenue was $221 million for the period from spin-off through December 31, 2016 and is expected to be approximately $1 billion in 2017. Mr. Leib, as the Chief Executive Officer of DFS, is not directly involved in any of the services provided to the Funds or William Blair and his compensation is not materially affected by the fees DFS receives from the Funds and William Blair. The Funds and William Blair paid RRD approximately $129,000 and $919 in 2016 through the date of the DFS spin-off and 2017, respectively, for the services provided. RRD’s revenue was over $8 billion in 2016 for the period from January 1 to September 30, 2016 and is expected to be over $6.5 billion in 2017. Mr. Leib, as former Executive Vice President and Chief Financial Officer of RRD, was not directly involved in any of the services provided to the Funds or William Blair and his compensation was not materially affected by the fees RRD received from the Funds and William Blair.
	(4)	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.
	(5)	The Funds engage KPMG to provide foreign tax services in Taiwan. KPMG does not provide audit or audit-related services to the Funds. Mr. Zenz is a former partner of KPMG and receives pension/retirement funds from KPMG.

Name and Year of Birth	Position(s) Held with Trust	Term of Office⁽¹⁾ and Length of Time Served	Principal Occupation(s) During Past 5 Years

Officers

Michael P. Balkin, 1959	Senior Vice President	Since 2008	Partner, William Blair

Stephanie G. Braming, 1970	President, and prior thereto Senior Vice President	President since 2018, and Senior Vice President 2014-2018	Partner, William Blair

Thomas Clarke, 1968	Senior Vice President	Since 2011	Partner, William Blair (since 2014); formerly, Associate, William Blair (2011-2014)

Daniel Crowe, 1972	Senior Vice President	Since 2016	Partner, William Blair (since 2015); formerly, Associate, William Blair

Simon Fennell, 1969	Senior Vice President	Since 2013	Partner, William Blair (since 2013); formerly, Associate, William Blair (2011-2013)

Andrew G. Flynn, 1961	Senior Vice President	Since 2013	Partner, William Blair

David C. Fording, 1967	Senior Vice President	Since 2006	Partner, William Blair

James S. Golan, 1961	Senior Vice President	Since 2005	Partner, William Blair

Michael A. Jancosek, 1959	Senior Vice President	Since 2000	Partner, William Blair

John F. Jostrand, 1954	Senior Vice President	Since 1999	Partner, William Blair

Chad M. Kilmer, 1975	Senior Vice President	Since 2006	Partner, William Blair

Robert C. Lanphier IV, 1956	Senior Vice President	Since 2003	Partner, William Blair

Mark T. Leslie, 1967	Senior Vice President	Since 2005	Partner, William Blair

December 31, 2017

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185

Name and Year of Birth	Position(s) Held with Trust	Term of Office⁽¹⁾ and Length of Time Served	Principal Occupation(s) During Past 5 Years

Kenneth J. McAtamney, 1966	Senior Vice President	Since 2008	Partner, William Blair

Todd M. McClone, 1968	Senior Vice President	Since 2005	Partner, William Blair

David Merjan, 1960	Senior Vice President	Since 2008	Partner, William Blair

David S. Mitchell, 1960	Senior Vice President	Since 2003	Partner, William Blair

John C. Murphy, 1969	Senior Vice President	Since 2014	Partner, William Blair

Casey K. Preyss, 1976	Senior Vice President	Since 2015	Partner, William Blair

David P. Ricci, 1958	Senior Vice President	Since 2006	Partner, William Blair

Ward D. Sexton, 1974	Senior Vice President	Since 2016	Partner, William Blair

Brian D. Singer, 1960	Senior Vice President	Since 2011	Partner, William Blair

Jeffrey A. Urbina, 1955	Senior Vice President	Since 1998	Partner, William Blair

Christopher T. Vincent, 1956	Senior Vice President	Since 2002	Partner, William Blair

Paul J. Sularz, 1967	Vice President	Since 2009	Associate, William Blair (2006-2012 and since 2014); Partner, William Blair (2012-2014)

Colette M. Garavalia, 1961	Treasurer	Since 2000	Associate, William Blair

Andrew T. Pfau, 1970	Secretary	Since 2009	Associate, William Blair

John M. Raczek, 1970	Assistant Treasurer	Since 2010	Associate, William Blair

Walter R. Randall, Jr., 1960	Chief Compliance Officer and Assistant Secretary	Since 2009	Associate, William Blair

Robert J. Toner, 1967	Assistant Secretary	Since 2016	Associate, William Blair (since 2015); formerly, Managing Director and Counsel, Wellington Management & Company LLP (2007-2015)

(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.

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(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 Funds’ 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, 2017 (in thousands):

Fund	Capital Gain Dividend
Growth	$	115,809
Large Cap Growth		1,139
Mid Cap Growth		15,134
Small-Mid Cap Growth		111,007
Small-Mid Cap Value		348
Small Cap Growth		60,126
Small Cap Value		47,529
Global Leaders		6,050
International Leaders		2,709
Institutional International Growth		39,224
International Small Cap Growth		40,650
Emerging Markets Small Cap Growth		1,075

December 31, 2017

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187

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 Developed Plus Fund), shareholder administration fees (for Class N and Class I shares of the Global Leaders 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, but which are currently being waived) 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, 2017 to December 31, 2017.

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 your actual ending account balance or the expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund to the costs of investing in 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 administration fees. These fees are discussed 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.

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Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2017		12/31/2017		the Period (a)		Expense Ratio
Growth Fund
Class N-actual return	$	1,000.00	$	1,118.03		$6.30		1.20
Class N-hypothetical 5% return	$	1,000.00	$	1,044.05		$6.08		1.20
Class I-actual return	$	1,000.00	$	1,119.08		$4.83		0.92
Class I-hypothetical 5% return	$	1,000.00	$	1,045.44		$4.67		0.92
Large Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,164.63		$5.64		1.05
Class N-hypothetical 5% return	$	1,000.00	$	1,044.79		$5.32		1.05
Class I-actual return	$	1,000.00	$	1,165.83		$4.30		0.80
Class I-hypothetical 5% return	$	1,000.00	$	1,046.03		$4.06		0.80
Mid Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,096.96		$6.76		1.30
Class N-hypothetical 5% return	$	1,000.00	$	1,043.55		$6.59		1.30
Class I-actual return	$	1,000.00	$	1,098.10		$5.46		1.05
Class I-hypothetical 5% return	$	1,000.00	$	1,044.79		$5.32		1.05
Small-Mid Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,108.94		$7.06		1.35
Class N-hypothetical 5% return	$	1,000.00	$	1,043.31		$6.84		1.35
Class I-actual return	$	1,000.00	$	1,109.90		$5.75		1.10
Class I-hypothetical 5% return	$	1,000.00	$	1,044.55		$5.58		1.10
Small-Mid Cap Value Fund
Class N-actual return	$	1,000.00	$	1,092.89		$7.01		1.35
Class N-hypothetical 5% return	$	1,000.00	$	1,043.31		$6.84		1.35
Class I-actual return	$	1,000.00	$	1,093.83		$5.71		1.10
Class I-hypothetical 5% return	$	1,000.00	$	1,044.55		$5.58		1.10
Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,097.41		$7.80		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.56		$7.60		1.50
Class I-actual return	$	1,000.00	$	1,099.05		$6.51		1.25
Class I-hypothetical 5% return	$	1,000.00	$	1,043.80		$6.33		1.25
Small Cap Value Fund
Class N-actual return	$	1,000.00	$	1,082.14		$7.74		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.56		$7.60		1.50
Class I-actual return	$	1,000.00	$	1,083.71		$6.46		1.25
Class I-hypothetical 5% return	$	1,000.00	$	1,043.80		$6.33		1.25
Global Leaders Fund
Class N-actual return	$	1,000.00	$	1,143.42		$7.28		1.37
Class N-hypothetical 5% return	$	1,000.00	$	1,043.21		$6.94		1.37
Class I-actual return	$	1,000.00	$	1,145.28		$5.69		1.07
Class I-hypothetical 5% return	$	1,000.00	$	1,044.69		$5.42		1.07
Institutional Class-actual return	$	1,000.00	$	1,146.02		$5.32		1.00
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.04		$5.07		1.00
International Leaders Fund
Class N-actual return	$	1,000.00	$	1,125.25		$7.11		1.35
Class N-hypothetical 5% return	$	1,000.00	$	1,043.31		$6.84		1.35
Class I-actual return	$	1,000.00	$	1,126.90		$5.54		1.05
Class I-hypothetical 5% return	$	1,000.00	$	1,044.79		$5.32		1.05
Institutional Class-actual return	$	1,000.00	$	1,127.16		$5.01		0.95
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.29		$4.82		0.95
International Developed Plus Fund
Class N-actual return	$	1,000.00	$	1,103.60		$6.78		1.30
Class N-hypothetical 5% return	$	1,000.00	$	1,043.55		$6.59		1.30
Class I-actual return	$	1,000.00	$	1,105.20		$5.48		1.05
Class I-hypothetical 5% return	$	1,000.00	$	1,044.79		$5.32		1.05

December 31, 2017

William Blair Funds

189

Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2017		12/31/2017		the Period (a)		Expense Ratio
Institutional International Developed Plus Fund
Institutional Class-actual return	$	1,000.00	$	1,107.19		$4.86		0.93
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.39		$4.72		0.93
International Growth Fund
Class N-actual return	$	1,000.00	$	1,129.23		$7.66		1.45
Class N-hypothetical 5% return	$	1,000.00	$	1,042.81		$7.34		1.45
Class I-actual return	$	1,000.00	$	1,131.31		$6.02		1.14
Class I-hypothetical 5% return	$	1,000.00	$	1,044.35		$5.78		1.14
Institutional International Growth Fund
Institutional Class-actual return	$	1,000.00	$	1,131.28		$5.13		0.97
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.19		$4.92		0.97
International Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,133.23		$7.78		1.47
Class N-hypothetical 5% return	$	1,000.00	$	1,042.71		$7.45		1.47
Class I-actual return	$	1,000.00	$	1,135.68		$6.14		1.16
Class I-hypothetical 5% return	$	1,000.00	$	1,044.25		$5.88		1.16
Institutional Class-actual return	$	1,000.00	$	1,135.11		$5.72		1.08
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.64		$5.48		1.08
Emerging Markets Leaders Fund
Class N-actual return	$	1,000.00	$	1,179.16		$7.94		1.47
Class N-hypothetical 5% return	$	1,000.00	$	1,042.71		$7.45		1.47
Class I-actual return	$	1,000.00	$	1,179.20		$6.75		1.25
Class I-hypothetical 5% return	$	1,000.00	$	1,043.80		$6.33		1.25
Institutional Class-actual return	$	1,000.00	$	1,179.84		$6.43		1.19
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.10		$6.03		1.19
Emerging Markets Growth Fund
Class N-actual return	$	1,000.00	$	1,197.59		$8.17		1.50
Class N-hypothetical 5% return	$	1,000.00	$	1,042.56		$7.60		1.50
Class I-actual return	$	1,000.00	$	1,197.97		$6.92		1.27
Class I-hypothetical 5% return	$	1,000.00	$	1,043.70		$6.44		1.27
Institutional Class-actual return	$	1,000.00	$	1,198.91		$6.38		1.17
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,044.20		$5.93		1.17
Emerging Markets Small Cap Growth Fund
Class N-actual return	$	1,000.00	$	1,173.53		$8.84		1.64
Class N-hypothetical 5% return	$	1,000.00	$	1,041.87		$8.30		1.64
Class I-actual return	$	1,000.00	$	1,174.96		$7.06		1.31
Class I-hypothetical 5% return	$	1,000.00	$	1,043.50		$6.64		1.31
Institutional Class-actual return	$	1,000.00	$	1,175.26		$6.74		1.25
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,043.80		$6.33		1.25
Bond Fund
Class N-actual return	$	1,000.00	$	1,016.93		$3.25		0.65
Class N-hypothetical 5% return	$	1,000.00	$	1,046.78		$3.30		0.65
Class I-actual return	$	1,000.00	$	1,018.99		$2.15		0.43
Class I-hypothetical 5% return	$	1,000.00	$	1,047.87		$2.18		0.43
Institutional Class-actual return	$	1,000.00	$	1,019.42		$1.75		0.35
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,048.26		$1.78		0.35
Income Fund
Class N-actual return	$	1,000.00	$	1,005.16		$4.23		0.85
Class N-hypothetical 5% return	$	1,000.00	$	1,045.78		$4.31		0.85
Class I-actual return	$	1,000.00	$	1,006.19		$3.08		0.62
Class I-hypothetical 5% return	$	1,000.00	$	1,046.93		$3.15		0.62
Low Duration Fund
Class N-actual return	$	1,000.00	$	1,005.64		$3.03		0.61
Class N-hypothetical 5%	$	1,000.00	$	1,046.98		$3.10		0.61
Class I-actual return	$	1,000.00	$	1,006.24		$2.04		0.41
Class I-hypothetical 5%	$	1,000.00	$	1,047.97		$2.08		0.41
Institutional Class-actual return	$	1,000.00	$	1,005.28		$1.84		0.37
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,048.17		$1.88		0.37

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Fund Expenses (Unaudited)

	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During		Annualized
Expense Example	7/1/2017		12/31/2017		the Period (a)		Expense Ratio
Macro Allocation Fund
Class N-actual return	$	1,000.00	$	1,022.66		$6.57		1.31
Class N-hypothetical 5%	$	1,000.00	$	1,043.50		$6.64		1.31
Class I-actual return	$	1,000.00	$	1,025.23		$4.82		0.96
Class I-hypothetical 5%	$	1,000.00	$	1,045.24		$4.87		0.96
Institutional Class-actual return	$	1,000.00	$	1,025.39		$4.32		0.86
Institutional Class-hypothetical 5% return	$	1,000.00	$	1,045.74		$4.36		0.86

(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).

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191

	BOARD OF TRUSTEES (as of February 22, 2018)

	Vann A. Avedisian
	Principal, Highgate Holdings
	Kathleen T. Barr
	Retired Senior Managing Director, PNC Capital Advisors, LLC
	Daniel N. Leib
	Chief Executive Officer, Donnelley Financial Solutions, Inc.
	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
	Thomas J. Skelly
	Retired Managing Partner, Accenture
	Steven R. Zenz
	Retired Partner, KPMG LLP
	Officers
	Michael P. Balkin, Senior Vice President
	Stephanie G. Braming, 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
	Ward D. Sexton, Senior Vice President
	Brian D. Singer, Senior Vice President
	Jeffrey A. Urbina, Senior Vice President
	Christopher T. Vincent, Senior 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
	Robert J. Toner, 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
	DST Asset Manager Solutions, Inc.
	(formerly 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)

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William Blair Funds


DOMESTIC EQUITY	GLOBAL EQUITY	FIXED INCOME
Growth Fund	Global Leaders Fund	Bond Fund
Large Cap Growth Fund		Income Fund
Mid Cap Growth Fund	INTERNATIONAL EQUITY	Low Duration Fund
Small-Mid Cap Growth Fund	International Leaders Fund
Small-Mid Cap Value Fund	International Developed Plus Fund	MULTI-ASSET AND
Small Cap Growth Fund	Institutional International Developed Plus Fund	ALTERNATIVE
Small Cap Value Fund	International Growth Fund	Macro Allocation 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		150 North Riverside Plaza
williamblairfunds.com		Chicago, Illinois 60606	00103188

Item 2.

Code of Ethics

(a) Registrant has adopted a code of ethics (the “Code”) that applies to its principal executive officer and principal financial officer (the “Covered Officers”).

(b) No disclosures are required pursuant to this Item 2(b).

(d) During the period covered by the report, registrant did not grant any waivers, including implicit waivers, from the provisions of the Code.

(e) Not applicable.

(f) A copy of the Code is filed as Exhibit 12(a)(1) to this Form N-CSR.

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. Daniel N. Leib, 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, 2016 and 2017, Ernst & Young, LLP, the Registrant’s principal accountant (“E&Y”), billed the Registrant $684,300 and $663,600, 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, 2016 and 2017, 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. For the fiscal years ended December 31, 2016 and 2017, 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, 2016 and 2017, E&Y billed the Registrant $205,850 and $239,900, 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 review of year-end tax reporting. For the fiscal years ended December 31, 2016 and 2017, 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, 2016 and 2017, E&Y did not bill the Registrant for products and services other than the services reported above. For the fiscal year ended December 31, 2016 and 2017, 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 the 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. None of the Audit-Related and Tax Services billed by E&Y for the fiscal years ended December 31, 2016 and 2017 discussed above were approved by the Audit Committee pursuant to a waiver of these Pre-Approval Policies and Procedures.

Non-Audit Fees

For the fiscal years ended December 31, 2016 and 2017, E&Y billed the Trust $205,850 and $239,900, respectively, in non-audit fees (tax services). For the same periods, E&Y billed the Adviser and its control affiliates $0 and $0, respectively, in non-audit fees.

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

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)

Certifications of the Principal Executive Officer and Principal Financial Officer of the issuer as required by Rule 30a-2(b) of the Investment Company Act of 1940 are filed as exhibits hereto.

SIGNATURES

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/ Stephanie G. Braming
By:		Stephanie G. Braming
		President (Principal Executive Officer)

Date: February 28, 2018

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/ Stephanie G. Braming

By:

Stephanie G. Braming

President

(Principal Executive Officer)

Date: February 28, 2018

/s/ Colette M. Garavalia

By:

Colette M. Garavalia

Treasurer

(Principal Financial Officer)

Date: February 28, 2018

William Blair Funds N-CSRCertified annual shareholder report (management investment company)