SCHEDULE 14A INFORMATION


PROXY STATEMENT PURSUANT TO SECTION 14(a)

14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934


(AMENDMENT NO. ____)


Filed by the Registrant [X]


Filed by a Party other than the Registrant [ ]


Check the appropriate box:


[  ]

Preliminary Proxy Statement.


[  ]

Confidential, for Useuse of the Commission Only (as permitted by Rule 14a-6(e)(2)).


[X]

Definitive Proxy Statement.


[  ]

Definitive Additional Materials.


[  ]

Soliciting Material Pursuant to §240.14a-12


§240.14a-12.

                     BAIRD FUNDS, INC.                     

(Name of Registrant as Specified in its Charter)


(Name of Person(s) Filing Proxy Statement

if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):


[X]

No fee required.


required

[  ]

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


0-11

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11

(Set forth the amount on which the filing fee is calculated and state how it was determined):

(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate of transaction:

(5)

Total fee paid:


[  ]

Fee paid previously with preliminary materials.


[  ]

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing forfilingfor which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or theorthe Form or Schedule and the date of its filing.


(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

 









BAIRD CORE BOND FUND


FUNDS, INC.

777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
November 9, 2007
Dear Shareholder:
We are pleased to enclose proxy materials for a seriesspecial meeting of shareholders of Baird Funds, Inc.

(a Wisconsin Corporation)


777 East Wisconsin Avenue, 29th Floor

Milwaukee, Wisconsin  53202


November 20, 2002


Dear Shareholder:


As a shareholder (the “Funds”) to be held on December 19, 2007 relating to the election of the Baird Core Bond Fund (the “Fund”), you are being askedthree current directors and two director nominees to vote on the proposal described below and in the enclosed materials.


The Board of Directors of the Fund has determined that it would be in the best interests of the Fund and its shareholders if the Fund were to amend its investment objective.  Currently, the investment objective of the Fund is to seek an annual rate of total return, before Fund expenses, which outperforms the annual rate of total return of the Lehman Brothers Government/Credit Bond Index (the “Government/Credit Bond Index”).  The amendment you are being asked to approve would change the investment objective of the Fund so that instead of seeking to outperform the Government/Credit Bond Index, the Fund would seek to outperform the Lehman Brothers U.S. Universal Bond Index.


The proposed change to the Fund’s investment objective that you are being asked to approve is part of a larger plan to restructure the Fund’s investment policy as it relates to the Fund’s investments in non-investment grade debt securities.  Currently, such investments are permitted only under limited circumstances.  That is, if a particular security in which the Fund invests were to be downgraded after purchase such that it no longer meets the Fund’s credit quality standards, the Fund may continue to hold the security only so long as less than 5% of the Fund’s net assets are invested in such non-investment grade debt securities. As part of the planned restructuring, the Fund would be permitted to invest up to 20% of its net assets in such non-investment grade securities.  Another part of this restructuring involves changing the name of the Fund to the “Baird Core Plus Bond Fund” to better reflect the type of securities in which the Fund will invest.  Neither the proposed change in investment policy nor the proposed name change require shareholder approval, and so you are not being asked to approve these changes.  However, we do not intend to implement these additional changes if we do not receive the requisite shareholder vote to approve the change in investment objective.


Funds.

The Board of Directors currently consists of four directors, G. Frederick Kasten, Jr., John W. Feldt, George C. Kaiser and Frederick P. Stratton, Jr.  Mr. Kaiser is retiring as of the Fund recommends a voteFORend of the proposalyear and we thank him for his service.  In connection with Mr. Kaiser’s retirement, we have nominated two persons as additional directors, Marlyn J. Spear and Cory L. Nettles.  Their election would expand the Board to changefive directors.  The addition of two new directors should enhance the Fund’s investment objective.governance of the Funds by adding new perspectives to the current directors’ institutional knowledge.  The Board believesof Directors, upon the recommendation of the Nominating Committee, has approved this proposal and recommends that among other things,shareholders of the change will allowFunds vote FOR the Fund to pursue an investment strategy that could result in enhanced returns to shareholders.  The attached materials provide more information aboutelection of the proposed change in the Fund’s investment objective, which we urge you to read carefully.


directors and director nominees.

Your vote is important regardless of how many shares you own.  Voting your shares early will help prevent costly follow-up mail and telephone solicitation.  AfterFor your convenience, we have made arrangements for you reviewto vote by telephone or via the Internet.  Information on how to vote is contained in the enclosed materials, we ask that youproxy statement and proxy card.  You may also voteFOR the proposed change in investment objective.  Please vote for the proposal by completing, dating and signing yourthe enclosed proxy card, and mailing it to us today in the enclosed postage-paid envelope.


envelope provided.

If you have any questions after considering the enclosed materials, please call toll-free 1-866-44-BAIRD.  Thank you for investing in the FundFunds and for your continuing support.

Very truly yours,

Sincerely,




Mary Ellen Stanek
President

Baird Funds, Inc.


Enclosures










BAIRD CORE BOND FUND


a series of Baird Funds, Inc.

FUNDS, INC.

(a Wisconsin corporation)



NOTICE OF SPECIAL MEETING OF SHAREHOLDERS



The Baird Core Bond Fund (the

A special meeting of shareholders of the following investment portfolios (each, a “Fund” and collectively, the “Funds”), a series of Baird Funds, Inc. (the “Corporation”),a Wisconsin corporation, will hold a Special Meeting of Shareholdersbe held on Monday,Wednesday, December 30, 2002,19, 2007 at 10:00 a.m., Central Time.  The meeting will be held at the Corporation’s principal offices located atof Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, 29th Floor, Milwaukee, Wisconsin  53202.  Wisconsin:
Baird Aggregate Bond FundBaird Short-Term Bond Fund
Baird Core Plus Bond Fund Baird LargeCap Fund
Baird Intermediate Bond Fund  Baird MidCap Fund
Baird Intermediate Municipal Bond Fund Baird SmallCap Fund
At the meeting, we will ask shareholders to consider and act upon:


1.

A proposal to approve an amendment to the Fund’s investment objective; and


2.

Any other business properly brought before the meeting (and any adjournments or postponements thereof).


                1.  The election of three current directors, John W. Feldt, G. Frederick Kasten, Jr., and Frederick P. Stratton, Jr., and two director nominees, Marlyn J. Spear and Cory L. Nettles, to the Board of Directors to serve until their successors are duly qualified and elected; and
                2.  To consider and act upon any other business that may be properly brought before the meeting or any postponement or adjournment of the meeting.
Only shareholders of record at the close of business on November 8, 2002,October 31, 2007, the record date for this meeting, are entitled to notice of, and to vote at, the Meeting,meeting, and any adjournments or postponements thereof.


YOUR VOTE IS IMPORTANT!

PLEASE RETURN YOUR PROXY CARD PROMPTLY.


_________________________________________
You are cordially invited to attend the meeting of shareholders.  If you do not expect to attend the meeting, pleaseyou may vote by telephone, by the Internet or indicate your voting instructions on the enclosed proxy card, date and sign the card, and return it in the postage-paid envelope provided.  Information on how to vote via the Internet or by telephone is included on the proxy card.  Your prompt return of the enclosed proxy card will help assure a quorum at the meeting and avoid additional expenses associated with further solicitation.  Voting via the Internet or telephone is fast, convenient, and your vote is immediately confirmed and tabulated.  Most important, by using the Internet or telephone, you help us reduce postage and proxy tabulation costs.  Please do not return the enclosed paper proxy card if you are voting via the Internet or by telephone.
If you wish to attend the meeting and vote your shares in person at that time, you will still be able to do so.  You may revoke your proxy before it is exercised by submitting to the Secretary of the FundFunds a written notice of revocation or a subsequently signed proxy card, or by attending the meeting and voting in person.



By Order of the Board of Directors




Brett R. Meili

Charles M. Weber
Secretary



Milwaukee, Wisconsin

November 20, 2002








9, 2007

PROXY STATEMENT


November 20, 2002


9, 2007

BAIRD FUNDS, INC.

777 East Wisconsin Avenue

Milwaukee, WI 53202

1-866-44BAIRD


Relating to a

1-866-44Baird
SPECIAL MEETING OF SHAREHOLDERS

To be held on December 30, 2002


19, 2007

General.  This Proxy Statement is being sent to you in connection with the solicitation of proxies by the Board of Directors of Baird Funds, Inc. (the “Corporation”) for use at thea special meeting of shareholders (the “Meeting”) with respect to the eight investment portfolios of the Corporation (each, a “Fund” and collectively the “Funds”).  The Funds are the Baird Aggregate Bond Fund, Baird Core Plus Bond Fund, (the “Fund”) toBaird Intermediate Bond Fund, Baird Intermediate Municipal Bond Fund, Baird Short-Term Bond Fund, Baird LargeCap Fund, Baird MidCap Fund and the Baird SmallCap Fund.  Each Fund, except Baird Short-Term Bond Fund, has two classes of shares:  Investor Class and Institutional Class.  The Baird Short-Term Bond Fund consists of a single class of shares:  Institutional Class.  The annual meeting of shareholders will be held at the Corporation’s principal offices of Robert W. Baird & Co. Incorporated located at 777 East Wisconsin Avenue, 29th Floor, Milwaukee, Wisconsin 53202, on Monday,Wednesday, December 30, 2002,19, 2007, at 10:00 a.m., Central Time, and at any adjournments or postponements of the Meeting, for the purposes set forth in the enclosed Notice of Special Meeting of Shareholders.Meeting.  The Notice of SpecialAnnual Meeting of Shareholders, this Proxy Statement and the enclosed proxy card are first being mailed to shareholders on or about November 20, 2002.


7, 2007.

The purposes of the Meeting, as set forth in the Notice of Special Meeting of Shareholders, are to:  (1) elect three current directors and two director nominees to the Board of Directors of the Corporation; and (2) consider and act upon such other business that may be properly brought before the Meeting or any adjournment or postponement thereof.  More information about the election of directors is provided below.
Record Date; Shareholders Entitled to Vote.  Only the shareholders of record of the FundFunds at the close of business on November 8, 2002October 31, 2007 (the “Record Date”) will be entitled to notice of, and to vote at, the Meeting, and any adjournments or postponements thereof.  Each such shareholder will be entitled to one vote per share (and a fractional vote per fractional share) on allthe matters presented at the Meeting.  Shareholders of both Investor Class shares and Institutional Class shares of the Fundall Funds are being solicitedentitled to vote at the Meeting,Meeting.  Shareholders of all Funds are eligible to vote for the election of directors and shareholders of both classes will vote together as a single group on all matters presented at the Meeting.  that proposal.
As of the Record Date, there were 27,632 issued andthe aggregate number of outstanding Investor Class shares and 4,730,532 issued and outstanding Institutional Class shares, for a total of 4,758,164 issued and outst anding shares of the Fund.

Corporation that were entitled to vote at the Meeting was 147,705,673.93, divided by Fund as follows:

Fund Name
Number of Shares
Baird Aggregate Bond Fund64,569,696.97
Baird Core Plus Bond Fund  9,102,669.23
Baird Intermediate Bond Fund36,296,023.80
Baird Intermediate Municipal Bond Fund  9,895,249.87
Baird Short-Term Bond Fund18,648,696.39
Baird LargeCap Fund  3,051,410.36
Baird MidCap Fund  3,690,700.87
Baird SmallCap Fund  2,451,226.44

Voting of Proxies.Whether you expect to be personally present at the Meeting or not, we encourage you to vote by proxy.  You can do this by completing, dating, signing and returning the accompanying proxy card using the enclosed postage-paid envelope.  envelope or by voting via the Internet or by telephone.  You may also vote in person at the Meeting.  Even if you intend to vote your shares in person at the Meeting, you are urged to complete and return the enclosed proxy card or to vote via the Internet or by telephone.  Voting before the Meeting will not prevent you from voting at the Meeting if you desire to do so, as your vote by proxy is revocable at your option.  If you vote via the Internet or telephone, you do not need to mail your proxy card.
To vote via the Internet, or by telephone, please have your control number located on your enclosed proxy card available and follow the instructions included on the proxy card or provided with this proxy statement.
If you choose to vote by proxy, your shares will be voted as you instruct.  If no choice is indicated, your shares will be votedFOR the proposal set forth in the Noticeelection of Special Meeting of Shareholders,each director nominee and in accordance with the best judgment of the persons named as proxies on such other matters that may properly come before the Meeting.


Any shareholder giving a proxy may revoke it at any time before it is exercised at the Meeting by submitting to the Secretary of the FundCorporation a written notice of revocation or a subsequently signed proxy card or by attending the Meeting and voting in person.  If not so revoked, the shares represented by the proxy will be voted at the Meeting, and any adjournments or postponements of the Meeting, as instructed.  Attendance by a shareholder at the Meeting does not itself revoke a proxy.


Quorum Required to Hold Meeting.In order to transact business at the Meeting, a “quorum” must be present at the Meeting.  Under the Corporation’s By-laws,Bylaws, a quorum is constituted bydefined as the presence, in person or by proxy, of a majority of the issued and outstanding Investor Class and Institutional Class sharescommon stock of the FundCorporation entitled to vote at the Meeting.


For purposes of determining the presence of a quorum for the transaction of business at the Meeting, abstentions and broker “non-votes” will be treated as shares that are present, but which have not been voted.  Broker non-votes are shares held in “street name” for which the broker indicatesindicated that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.  Accordingly, shareholders are urged to forward their voting instructions promptly.


If a quorum is not present at the Meeting or a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies.  Any such adjournment would require the affirmative vote of a majority of the shares of the FundFunds represented at the Meeting to be adjourned.  The persons named as proxies will vote those proxies that they are entitled to voteFORthe proposal in favor of such an adjournment and will vote those proxies required to be votedAGAINST the proposal against such adjournment.


Method and Cost of Proxy Solicitation.  Shareholder votes will be solicited by the Corporation primarily by mail.  The solicitation may also include telephone, facsimile or oral communications by certain officers of the Corporation or officers or employees of the Fund or the Fund’sFunds’ investment adviser, Robert W. Baird & Co. Incorporated (the “Adviser”), who will not be paid for these services.  The Adviser will pay the costs of the Meeting and the expenses incurred in connection with the solicitation of proxies.  The Adviser will also reimburse brokers and other nominees for their reasonable expenses in communicating with the person(s) for whom they hold shares of the Fund.


Funds.

2
Share Ownership.  The following table sets forth information regarding the beneficial ownership of the Fund’sFunds’ outstanding shares as of the Record Date by (i) the directors and executive officers of the Fund, (ii) the directors and executive officers of the Fund as a group, and (iii) persons who are known by the FundCorporation to own beneficially or of record more than 5% of the Fund’s outstanding shares.  Unless otherwise indicated, the addressone or both classes of shares of any Fund.  No person owns beneficially or of record 5% or more of the persons listed below is 777 East Wisconsin Avenue, Milwaukee, Wisconsin  53202.



Name and Address


Class

Nature of

Ownership

Amount

(in shares)

Percentage

of Class

Percentage

of Fund

John W. Feldt

1848 University Avenue

Madison, Wisconsin  53705

None

—

—

—

—

George C. Kaiser

759 North Milwaukee Street

Milwaukee, Wisconsin  53202

None

—

—

—

—

Stephen A. Roell

5757 North Green Bay Avenue

Milwaukee, Wisconsin  53201

None

—

—

—

—

G. Frederick Kasten, Jr.

None

—

—

—

—

Mary Ellen Stanek

Institutional

Beneficial

28,464

*

*

Joel D. Vrabel

None

—

—

—

—

Glen F. Hackmann

None

—

—

—

—

Russell P. Schwei

None

—

—

—

—

Leonard M. Rush

None

—

—

—

—

Brett R. Meili

None

—

—

—

—

      

Directors and executive officers

as a group (10 persons)

Institutional

Beneficial

28,464

*

*

Band & Co.

c/o Firstar Bank

P.O. Box 1787

Milwaukee, WI  53201-1787

Institutional

Record

1,097,211

23.19%

23.06%

Conref & Co.

FBO Strattec SEC Corp Ret

P.O. Box 1787

Milwaukee, WI  53201-1787

Institutional

Record

927,574

19.61%

19.49%

Strafe & Co.

FBO Reinhart Et Al Pension

P.O. Box 160

Westerville, OH  43086-0160

Institutional

Record

552,979

11.69%

11.62%

Seippel Perpetual Ltd. Partnership

111 Henry Street

P.O. Box 160

Beaver Dam, WI  53916-0160

Institutional

Record

511,279

10.81%

10.75%

State Street Bank Trust

Robert W. Baird & Co. Inc.

U/A Dated March 18, 1998

105 Rosemont Road

Westwood, MA  02090-2318

Institutional

Record

326,216

6.90%

6.86%

Wabank & Co.

P.O. Box 648

Waukesha, WI  53187-0648

Institutional

Record

281,638

5.95%

5.92%

Muggs & Co.

c/o Firstar Bank

P.O. Box 1787

Milwaukee, WI  53201-1787

Institutional

Record

264,193

5.58%

5.55%


*  Less than 1%


Based on the foregoing, asshares of the Record Date, no person ownedBaird Short-Term Bond Fund.

Fund
Name and Address
Share Class
Number of
Shares
Percentage
of Class
Percentage
of Fund
Percentage
 of all Funds
 
Aggregate Bond Fund
 
 
Capinco
c/o U.S. Bank
P.O. Box 1787
Milwaukee, WI 53201-1787
 
 
Institutional
 
 
 
5,703,125
 
 
 
8.98%
 
 
 
8.83%
 
3.86%
 
Mori & Co.
911 Main Street, Suite 201
Kansas City, MO 64105-5304
 
Institutional
 
3,866,0846.09%5.99%2.62%
 
Mitra & Co.
c/o Marshall & Ilsley Co.
11270 W. Park Place, Suite 400
Milwaukee, WI 53224-3638
 
Institutional
 
3,738,6965.89%5.79%2.53%
 
U.S. Bank FBO
MKE FDN Corporation
Permanent Fund
P.O. Box 1787
Milwaukee, WI 53201-1787
 
Institutional
 
3,664,7725.77%5.68%2.48%
 
Charles Schwab & Co., Inc.
For the Sole Benefit of its
Customers
101 Montgomery St.
San Francisco, CA 94104-4151
 
Investor630,67858.35%*0.98%0.43%
 
Lakeview Village Inc.
9011 Park Street
Lenexa, KS 66215-3353
 
Investor363,98833.67%*0.56%0.25%
Core Plus Bond Fund
Charles Schwab & Co., Inc.
For the Sole Benefit of its
Customers
101 Montgomery St.
San Francisco, CA 94104-4151
 
Institutional2,151,87723.93%23.64%1.46%
 
Strafe & Co.
FAO Indian Community School of Milwaukee
P.O. Box 160
Westerville, OH 43086-0160
 
Institutional2,143,98323.85%23.55%1.45%
 
Associated Trust Co., NA
FBO Reinhart, Boerner, Van
Deuren S.C.
401(k) Profit Sharing Plan
P.O. Box 22037
Green Bay, WI 54305-2037
 
Institutional1,396,82215.54%15.34%0.95%
 
Principal Financial Group
711 High Street
Des Moines, IA 50309-2732
Institutional554,3566.17%6.09%0.38%

3
Fund
 
Name and Address
Share Class
Number of
Shares
Percentage
of Class
Percentage
of Fund
Percentage
 of all Funds
 
Core Plus Bond Fund (continued)
 
National City Bank TTEE
FBO Vincentian Collaborative
Services TR
Attn: Trust Mutual Funds
P.O. Box 94984
Cleveland, OH 44101-4984
 
 
Institutional
 
521,776
 
5.80%
 
5.73%
 
0.35%
 
Charles Schwab & Co., Inc.
For the Sole Benefit of its
Customers
101 Montgomery St.
San Francisco, CA 94104-4151
 
Investor28,91025.92%*0.32%0.02%
 
Stuart M.Krupnick & Rhoda J.
Krupnick
1243 Park Plaza Drive
Columbus, OH 43213-2649
 
Investor8,9858.06%0.10%0.01%
Intermediate Bond Fund
State Street Bank & Trust Co.
CHP Workers Compensation Self Insurance Trust
615 Elsinore Pl.
Cincinnati, OH 45202-1459
 
Institutional2,670,3997.42%7.36%0.01%
 
Mitra & Co. FBO 98
c/o M&I Trust Company
11270 W. Park Place, Suite 400
Milwaukee, WI 53224-3638
 
Institutional2,623,9327.29%7.23%1.78%
 
Wells Fargo Bank, NA
FBO Hazelden Investment-Mutual
Fund
P.O. Box 1533
Minneapolis, MN 55480-1533
 
Institutional2,420,7116.73%6.67%1.64%
 
Wells Fargo Bank, NA
FBO Strattec Security
P.O. Box 1533
Minneapolis, MN 55480-1533
 
Institutional2,409,6636.70%6.64%1.63%
 
Capinco
c/o U.S. Bank
P.O. Box 1787
Milwaukee, WI 53201-1787
 
Institutional1,831,9045.09%5.05%1.24%
 
SEI Private Trust Company
c/o Harris Bank ID 940
One Freedom Valley Drive
Oaks, PA 19456
 
Investor228,31174.92%*0.63%0.15%
Intermediate Municipal Bond Fund
Northern Trust Company
FBO MSE LLC
50 S. La Salle Street
Chicago, IL 60603-1006
 
Institutional966,3209.80%9.77%0.65%
 
National Financial Services LLC
FBO LaSalle Bank
135 S. La Salle Street
Chicago, IL  60603-4177
 
Institutional628,1086.37%6.35%0.43%
4

Fund
Name
and Address
Share Class
Number of
Shares
Percentage
of Class
Percentage
of Fund
Percentage
 of all Funds
       
Intermediate Municipal Bond Fund (continued)
Maril & Co.
c/o M&I Trust Company N.A.
11270 W. Park Place Suite 400
Milwaukee, WI 53224-3638
 
Institutional6115,1146.24%6.22%0.42%
 
Charles H. Heide & Ann Heide
4020 Chicory Road
Racine, WI 53403-4063
 
Institutional574,2515.82%5.80%0.39%
 
Charles H. Heide & Kathryn H.
Heide
58255 6th Place
Kenosha, WI 53144-7216
 
Institutional574,2515.82%5.80%0.39%
 
Ben Abrohams
2506 N. Terrace Ave.
Milwaukee, WI 53211-3820
 
Investor10,52029.03%*0.11%0.01%
 
Timothy J. Bowers &
Mary C. Bowers
2307 E. Newberry Blvd.
Milwaukee, WI 53211-3763
 
Investor7,84221.64%0.08%0.01%
 
Bernard V. Orlov TTEE
1645 Birdsong Ct.
Blacklick, OH  43004-9640
 
Investor7,08619.55%0.07%0.00%
 
Molly H. Abrohams
2506 N. Terrace Ave.
Milwaukee, WI 53221-3820
 
Investor4,07911.26%0.04%0.00%
 
Dr. Frank P. Begun &
Audrey L. Begun
1004 N. 70th St.
Wauwatosa, WI 53213-3106
 
Investor2,9778.21%0.03%0.00%
 
Lidia Paz-Baker
3801 Canterbury Road Unit 415
Baltimore, MD 21218-2371
 
Investor2,3046.36%0.02%0.00%
LargeCap Fund
Principal Financial Group
711 High Street
Des Moines, IA 50309-2732
 
Institutional1,439,62748.52%*47.18%*0.97%
 
Baird Foundation
Robert W. Baird & Co. Inc.
777 East Wisconsin Avenue
Milwaukee, WI 53202
 
Institutional940,32531.69%*30.82%*0.64%
 
Stifel Nicolaus & Co., Inc.
Gerald Hallisey TTEE
501 N. Broadway
St. Louis, MO 63102-2131
 
Investor13,62816.15%0.45%0.01%
 
Stifel Nicolaus & Co., Inc.
Anthony J Rizzo
501 N. Broadway
St. Louis, MO 63102-2131
 
Investor9,65811.44%0.32%0.01%
 
Stifel Nicolaus & Co., Inc.
Warren P Jensen TTEE
501 N. Broadway
St. Louis, MO 63102-2131
Investor8,1869.70%0.27%0.01%
5

Fund
 
Name and Address
Share Class
Number of
Shares
Percentage
of Class
Percentage
of Fund
Percentage
 of all Funds
       
MidCap Fund
Regents of the University of
Colorado
4840 Pearl East Circle, Suite 103
Boulder, CO 80309-0025
 
Institutional1,231,65537.93%*33.37%*0.83%
 
Principal Financial Group
711 High Street
Des Moines, IA 50309-2732
 
Institutional716,15822.06%19.40%0.48%
 
Baird Foundation
Robert W. Baird & Co. Inc.
777 East Wisconsin Avenue
Milwaukee, WI 53202
 
Institutional312,8659.64%8.48%0.21%
 
Calvert Health System
100 Hospital Road
Prince Frederick, MD 20678-4017
 
Institutional283,4338.73%7.68%0.19%
 
Charles Schwab & Co., Inc.
For the Sole Benefit of its
Customers
101 Montgomery St.
San Francisco, CA 94104-4151
 
Investor95,45221.51%2.59%0.06%
 
Stifel Nicolaus & Co., Inc.
Gerald Hallisey TTEE
501 N. Broadway
St. Louis, MO 63102-2131
 
Investor43,7999.87%1.19%0.03%
 
Associated Trust Company
FBO Milwaukee Public Museum
Inc.
P.O. Box 22037
Green Bay, WI 54305-2037
 
Investor23,2725.24%0.63%0.02%
SmallCap Fund
Principal Financial Group
711 High Street
Des Moines, IA 50309-2732
 
Institutional985,66840.63%*40.21%*0.67%
 
Stifel Nicolaus & Co., Inc.
Gerald Hallisey TTEE
501 N. Broadway
St. Louis, MO 63102-2131
 
Investor11,65646.09%*0.48%0.01%
 
Robert W. Baird & Co. Inc. TTEE
FBO John G. Doerr Rollover IRA
23 Annandale
Nashville, TN 37215-5820
 
Investor2,70910.71%0.11%0.00%
 
Barbara H. Mullett
N57W30850 Lakewood Drive
Hartland, WI 53029-9304
 
Investor2,2298.82%0.09%0.00%
 
LPL Financial Services
9785 Towne Centre Drive
San Diego, CA 92121-1968
 
Investor2,1068.33%0.09%0.00%
 
MAC & Co.
P.O. Box 3198
Pittsburgh, PA 15230-3198
Investor1,3975.52%0.06%0.00%

*Denotes a shareholder who owns a controlling interest (i.e., more than 25%) of the shares of a Fund or a class of shares of a Fund.  Other than such shareholders, no person controls any Fund, any class of shares of a Fund, or the Corporation.
6
As of the Record Date, each executive officer, director and director nominee individually, and the executive officers, directors and director nominees as a group, did not own any outstanding Investor Class shares of any Fund and owned less than 1% of the outstanding shares) in the Fund or in any classInstitutional Class shares of the Fund.


Baird Aggregate Bond, Baird Core Plus Bond, Baird Intermediate Bond and Baird Short-Term Bond Funds.  As of the Record Date, the officers and directors as a group owned 1% or more of the outstanding shares of the following Funds:

 Fund Percentage of Institutional ClassPercentage of Fund
    
 LargeCap Fund 1.10% 1.07%
 MidCap Fund5.75%5.07%
 SmallCap Fund 2.35%2.33%
 Intermediate Municipal Bond Fund4.11%4.09%
Other Information.As noted above, the Fund’sFunds’ investment adviser is Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.  The Adviser also serves as principal underwriter and distributor of shares of the Fund’s principal distributor and as its administrator.Funds.  U.S. Bancorp Fund Services, LLC, 615 Michigan Street, Milwaukee, Wisconsin 53202 (“USBFS”), serves as administrator, transfer agent, dividend disbursing agent, and fund accountant for the Fund, and, pursuant to authority delegated to USBFS by the Adviser, USBFS also provides certain administrative services to the Fund.


Funds.

COPIES OF THE FUND’SFUNDS’ MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE AVAILABLE WITHOUT CHARGE UPON WRITING TO BAIRD FUNDS, c/o U.S. BANCORP FUND SERVICES, LLC, P.O. BOX 701, MILWAUKEE, WISCONSIN 53201-070153202-0701 OR BY CALLING, TOLL-FREE, 1-866-44BAIRD.


  THESE REPORTS ARE ALSO AVAILABLE ON THE FUNDS’ WEBSITE AT WWW.BAIRDFUNDS.COM.

To avoid sending duplicate copies of materials to households, the Fund mailsFunds mail only one copy of each annual and semi-annual report, prospectus and any other shareholder mailings to shareholders having the same address in the Fund’sFunds’ records.  The consolidation of these mailings, called householding,known as “householding,” benefits the FundFunds through reduced mailing expenses.


If you want to receive multiple copies of these materials or request householding in the future, please write to, or call,contact the FundFunds at the address and/or telephone number set forth above.  Individual copies of reports will be sent to you within 30 days after the Fund receivesFunds receive your request to stop householding.


Only one copy of this Proxy Statement and related materials (with the exception of the proxy card) is being delivered to shareholders sharing the same address, unless the Fund hasFunds have received instructions to the contrary.  In the event the Fund receivesFunds receive a request to deliver multiple copies of these materials, the FundFunds will send such materials to the person(s) making such request promptly.



PROPOSAL 1:  TO APPROVE AN AMENDMENT TO

THE FUND’S INVESTMENT OBJECTIVE


ELECTION OF DIRECTORS
At a meeting held on November 4, 2002,the Meeting, shareholders of the Funds will be asked to elect five nominees to constitute the Board of Directors of the Fund determined that it would beCorporation, consisting of three current directors and two new director nominees.  The nominees are John W. Feldt, G. Frederick Kasten, Jr., Cory L. Nettles, Marlyn J. Spear and Frederick P. Stratton, Jr.  The persons named as proxies intend to vote for the election of such nominees as directors of the Corporation unless such authority has been withheld in the best interestsproxy.  Messrs. Feldt, Kasten and Stratton currently serve as directors of the FundCorporation, while Ms. Spear  and its shareholdersMr. Nettles, if the Fund were to amend its investment objective by changing the benchmark index against which performanceelected, will become new directors effective as of the Fund is measured.  Because the Fund’s investment objective isJanuary 1, 2008.  On December 31, 2007, George C. Kaiser, a fundamental policy of the Fund,director since 2000, will be retiring from the Board must solicit shareholder approval of any change in that policy.Directors.  Accordingly, for the reasons set forth below, the Board is soliciting your approval of the proposed change in the Fund’s investment objective.


The Proposal.  The Fund’s current investment objective is to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers Government/Credit Bond Index (the “Government/Credit Bond Index”).  The Government/Credit Bond Index is an unmanaged index representing a market value weighted performance benchmark for government and corporate fixed-rate debt issues with maturities between one and thirty years or more.


The Board of Directors has approved, and recommends that the shareholders of the Fund approve, changing the Fund’s investment objective so that instead of comparing the Fund’s performance to the Government/Credit Bond Index, the Fund’s performance would be compared to the Lehman Brothers U.S. Universal Bond Index (the “Universal Bond Index”).   The Universal Bond Index is designed to capture a broad range of fixed-income securities issued in U.S. dollars, including U.S. government and investment grade debt, as well as non-investment grade bonds, Eurobonds, Rule 144A securities (i.e., illiquid securities) and emerging market debt.  Please refer to the charts below for comparative data of these two indices.  Accordingly, as amended, the Fund’s investment objective would be to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Universal Bond Index.


 

Benchmark Comparisons as of 9/30/02

 
   
  

Universal

Govt/Credit

 

Yield to Maturity

4.83%

3.99%

 

Total Return*

7.69%

9.15%

 

Duration

3.88 years

5.48 years

 

Average Maturity

6.98 years

8.75 years

 

Number of Issues

10,657

4,886

 

                     

  
 

*  year to date

  


Quality Breakdown as of 09/30/02

Sector Breakdown as of 9/30/02

 

Universal

Govt/Credit

 

Universal

Govt/Credit

U.S. Treasury

20%

 

37%

 

U.S. Treasury

20%

 

37%

 

Government Agency

43%

 

19%

 

Government Agency

11%

 

20%

 

Aaa

6%

 

5%

 

Corporate

27%

 

37%

 

Aa

6%

 

8%

 

International

7%

 

6%

 

A

10%

 

16%

 

Mortgages/CMBS

34%

 

0%

 

Baa

9%

 

15%

 

Asset Backed

   1%

 

   0%

 

Below Baa

   6%

 

   0%

  

100%

 

100%

 
 

100%

 

100%

      


Background and Reasons for the Proposal.  The proposal to change the Fund’s investment objective that you are being asked to approve is part of a larger plan to restructure the Fund’s investment policy as it relates to the Fund’s investments in lower-rated debt securities.  This plan involves the following three elements:  


(1)

a change in the Fund’s investment policy relating to investments in lower-rated debt securities (which are currently permitted only under limited circumstances),


(2)

a change in the benchmark index to which the Fund’s performance is compared to reflect the Fund’s ability to invest in lower-rated debt securities (currently, the Fund’s performance is compared to the Government/Credit Bond Index, which does not include non-investment grade securities), and


(3)

a change in the Fund’s name from the “Baird Core Bond Fund” to the “Baird Core Plus Bond Fund” to better reflect the type of securities in which the Fund will invest.


Of the three changes noted above, the only change that requires shareholder approval is the change in the Fund’s benchmark index, since the benchmark index is included in the Fund’s investment objective.  The other changes do not require shareholder approval, and so the Board of Directors is not asking youcurrently consists of four directors, and the directors have determined to vote on these other matters.


Investment Policy relatingincrease the size of the Board to Lower-Rated Debt Securities.  Currently,five members.

7
Each person has agreed to be named in this proxy statement and to serve if elected.  The Board has no reason to believe that any person will become unavailable for the Fund is generally prohibited from purchasing lower-rated debt securities.  As set forth inelection as a director. However, if that should occur before the Fund’s prospectus, all debt securities purchasedMeeting, your proxy will be voted for the individuals recommended by the Fund must be “investment grade,” as rated by at least one rating agency or, if unrated, as determinedBoard to be of comparable quality byfill the Adviser.  Investment grade securities are those securities rated in onevacancies.
The following table presents certain information regarding current directors of the four highest categories by Standard & Poor's (“S&P”), Moody's, Fitch Ratings, or another nationally recognized statistical rating organization.  Under the current policy, average credit quality for the Fund is expected to be at least the second highest rating category of S&P or Moody's.  After purchase, a security may cease to be rated or may have its rating reduced below the minimum rating required by the Fund for purchase.  In such cases, the Adviser may continue to hold the lower-rated security, but only so long as less than 5% of the Fund's net assets consist of debt securities that have fallen below investment grade.


At the meeting held on November 4, 2002, the Board of Directors approved a change in the Fund’s investment policy relating to lower-rated debt securities that would allow the Fund to invest up to 20% of its net assets in debt securities that are below investment grade.  The Board believes that this change will provide the Adviser with additional flexibility in making investment decisions on behalf of the Fund by allowing the Adviser to take advantage of opportunities to invest in securities which have the potential for enhanced returns.  The Board also believes that the Adviser’s ability to manage the Fund’s assets in the changing investment environment currently facing the Fund will be enhanced, and that investment management opportunities will be increased by the proposed change.  Specifically, the Adviser will be relieved of the pressur e to sell a security in the Fund’s investment portfolio that has been downgraded, at least with respect to 20% of the Fund’s net assets,Funds and the variety of debt securities available for purchase, which would consist of not only investment grade but also non-investment grade securities, will increase substantially.


Risks of Investing in Lower-Rated Debt Securities.  While the Board of Directors believes that the change in investment policy described above will provide the Fund with greater flexibility to respond to future investment opportunities, the Board also understands that such added flexibility may result in an increase in the level of risk associated with an investment in the Fund.  Specifically, more of the Fund’s assets may be invested in non-investment grade debt securities, which generally offer higher yields than investment grade securities, but which also involve greater risks,two new nominees, including the possibility of default or bankruptcy.  In addition, non-investment grade debt securities, which are also sometimes referred to as “junk bonds,” tend to be more sensitive to economic conditions than are higher-rated securities.  As a resu lt, they generally involve more credit risk than securities in the higher-rated categories.  During an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of junk bond securities may experience financial stress and may not have sufficient revenues to meet their payment obligations.  The risk of loss due to default by an issuer of these securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors.  The Fund may have difficulty disposing of certain junk bond securities because there may be a thin trading market for such securities.  To the extent a secondary trading market does exist, it is generally not as liquid as the secondary market for higher-rated securities.  Periods of economic uncertainty generally result in increased volatility in the market prices of these securities, which, in turn, would result in increased volatility in the F und's net asset value.


Benchmark Index in Fund’s Investment Objective.  Currently, the Fund attempts to seek an annual rate of total return, before Fund expenses, that outperforms the total return of the Government/Credit Bond Index.  The Government/Credit Bond Index consists of government and corporate debt securities which are generally high-quality with low risk characteristics.  The Fund’s investments are based on, but do not attempt to replicate, the securities included in this Index.principal occupations.  In addition, the Fund attempts to keeptable includes information concerning other directorships held by each director or nominee in reporting companies under the durationSecurities Exchange Act of its portfolio securities substantially equal to that of the Government/Credit Bond Index.  The term “duration” refers to a measure of a fixed income security’s average life that reflects the present value of the security’s cash flow and, accordingly, is a measure of price sensitivity to int erest rate changes.


Because of the change in the Fund’s1934 or registered investment policy as it relates to lower-rated debt securities discussed above, the Board of Directors determined that it would be in the best interests of the Fund and its shareholders to also change the benchmark index against which the Fund’s performance is measured to provide a more meaningful comparison tool.  The Universal Bond Index, which is the new benchmark index that is being proposed, is more diversified than the Government/Credit Bond Index in that it includes a broad range of fixed-income securities issued in U.S. dollars, including U.S. government and investment grade debt, as well as non-investment grade bonds, Eurobonds, Rule 144A securities (i.e., illiquid securities) and emerging market debt.  The change in the Fund’s benchmark index is expected to result in an immediate decrease in the dur ation and average maturity range of the Fund’s portfolio as the Adviser adjusts the Fund’s portfolio holdings to better reflect the securities included in the new benchmark index.  The reason for this decrease is that the Universal Bond Index includes a mortgage component, while the Government/Credit Bond Index does not.  Due to the relatively low duration and average maturity of mortgage-backed securities in today’s low interest rate environment, the Universal Bond Index currently has a lower overall duration and maturity than the Government/Credit Bond Index.  There can be no guarantee that this trend will continue in the future, especially if the interest rate environment changes.  The change in benchmark index is also expected to result in a modest increase in portfolio turnover and related transaction costs.


As previously noted, the proposed change in the Fund’s benchmark index requires shareholder approval because the benchmark index is part of the Fund’s investment objective.


Fund Name Change.  The final element in the plan to restructure the Fund involves changing the name of the Fund to the “Baird Core Plus Bond Fund.”  The Board of Directors approved this change at the meeting held on November 4, 2002 because of its belief that the name change would better reflect the change in the Fund’s investment policy relating to lower-rated debt securities.  Typically, mutual funds that invest exclusively or primarily in investment grade debt instruments are referred to as “core” funds, while mutual funds that also invest a portion of their net assets (i.e., typically ranging from 10-30%) in non-investment grade debt instruments are referred to as “core plus” funds.  The Board felt that the name change would be appropriate based on the change in investment policy described above.


Required Vote.  Approval of the proposal to change the investment objective of the Fund requires the affirmative vote of a majority of the outstanding voting securities of the Fund.  Undercompanies under the Investment Company Act of 1940, as amended (the “1940 Act”), a “majority.  Information is listed separately for the nominee who is an “interested person” (as defined in the 1940 Act) of the outstanding voting securities”Funds (the “Interested Director”) and those directors and nominee who are not considered to be interested persons of the Funds (the “Independent Directors”).  The Board’s Nominating Committee, consisting of Messrs. Kaiser, Feldt, and Stratton, selected and nominated Ms. Spear and Mr. Nettles after considering the Adviser’s recommendation.  The Nominating Committee also determined to nominate all current directors for election to the Board, other than Mr. Kaiser who will be retiring.  As explained following the table, beginning on January 1, 2008 and assuming the three current directors and the two director nominees are elected to the Board of Directors, the Board will consist of five persons, four of whom will be considered Independent Directors (Mr. Feldt, Mr. Kasten, Mr. Stratton and Ms. Spear) and one of whom will be considered an Interested Director (Mr. Nettles).

Independent Director Nominees
Name, Address and Age
Position Held
with the
Funds
Term of Office
and Length of
Time Served
Principal
Occupation(s)
During Past 5 Years
Number of
Portfolios in
Complex Over-
seen by Director
(if elected)
Other
Directorships
Held by Director
John W. Feldt
c/o University of Wisconsin
Foundation
1848 University Avenue
Madison, WI  53705
Age:  65
Independent
Director
Indefinite;
Since September
2000
Retired; Senior Vice
President-Finance,
University of
Wisconsin Foundation
(1985-2006); Vice
President-Finance,
University of
Wisconsin Foundation
(1980-1985); Associate
Director, University
of Wisconsin
Foundation (1967-
1980)
8
Director of
Thompson Plumb
Funds, Inc., a mutual
fund complex (2
portfolios); Director
of Nakoma Mutual
Funds, a mutual fund complex (1 portfolio)
Frederick P. Stratton, Jr.
10134 N. Port Washington
Road, #2B
Mequon, WI 53092
Age:  68
Independent
Director
Indefinite;
Since May 2004
Retired; Chairman
Emeritus, Briggs &
Stratton Corporation,
a manufacturing
company, since 2003;
Chairman of the
Board, Briggs &
Stratton Corporation
(2001-2002);
Chairman and CEO,
Briggs & Stratton
Corporation (1986-
2001)
8
Director of Weyco
Group, Inc., a men’s
footwear distributor; Wisconsin Energy Corporation and its subsidiaries
Wisconsin Electric
Power Company and Wisconsin Gas LLC
8

Name, Address and Age
Position Held
with the
Funds
Term of Office
and Length of
Time Served
Principal
Occupation(s)
During Past 5 Years
Number of
Portfolios in
Complex Over-
seen by Director
(if elected)
Other
Directorships
Held by Director
Marlyn J. Spear
P.O. Box 530
500 Elm Grove Road
Elm  Grove, WI 53122
Age: 54
Independent
Director
Nominee
Indefinite;
Length – N/A
Chief Investment
Officer, Building
Trades United
Pension Trust Fund
since July 1989;
Investment Officer,
Northwestern Mutual
Financial Network
(1988-1989); Assistant
Vice-President, Firstar
Trust Company
(1978-1987); Financial
Analyst, Harco
Holdings, Inc. (1976-
1978)
8
Management
Trustee of AFL-
CIO Housing
Investment Trust

G. Frederick Kasten, Jr.*
777 East Wisconsin Avenue
Milwaukee, WI  53202
Age:  68
Director and
Chairman
Indefinite;
Since September
2000
Retired; Chairman, the
Adviser (January
2000-December
2005); Chairman and
CEO, the Adviser
(January 1998-January
2000); President,
Chairman and CEO,
the Adviser (June
1983-January 1998);
President, the Adviser
(January 1979-January
1983)
8
Director of Regal-
Beloit Corporation,
a manufacturing
company

*Mr. Kasten is currently considered an “interested person” of the Corporation (as defined in the 1940 Act) because he had served as Chairman of the Board of the Adviser until December 31, 2005.  As of January 1, 2008, Mr. Kasten will no longer be deemed an “interested person” because more than two years will have elapsed since he last served as Chairman of the Adviser and he no longer owns any shares of capital stock of the Adviser (or its affiliates), having redeemed his remaining interest in Baird Financial Corporation, the Adviser’s parent company in May 2007.  In connection with this sale there was no arrangement or understanding with respect to the composition of the Board of Directors of the Corporation or the Adviser, or with respect to the selection of appointment of any officer of the Corporation or the Adviser.
9

Interested Director Nominee
Name, Address and Age
Position Held
with the
Funds
Term of Office
and Length of
Time Served
Principal
Occupation(s)
During Past 5 Years
Number of
Portfolios in
Complex Over-
seen by Director
(if elected)
Other
Directorships
Held by Director
Cory L. Nettles**
Generation Growth Capital,
Inc.
411 East Wisconsin Avenue,
Suite 1710, Milwaukee, WI
53202
Age:  37
Director
Nominee
Indefinite;
Length – N/A
Managing Director,
Generation Growth
Capital, Inc. (since
March 2007); Of
Counsel, Quarles &
Brady LLP (since
March 2007); Partner,
Quarles & Brady LLP
(January 2005 – March
2007); Secretary,
Wisconsin Department
of Commerce (January
2003 – January 2005);
Associate, Quarles &
Brady LLP (July 1996
– December 2002)
8
Director of Weyco
Group, Inc., a men’s
footwear distributor;
Director of The
Private Bank, a
financial institution

**Mr. Nettles is an “interested person” of the Corporation (as defined in the 1940 Act) because of his employment with the law firm, Quarles & Brady LLP, which provides legal services to the Adviser.  The legal services that Quarles & Brady LLP has provided to the Adviser include litigation, real estate and miscellaneous securities related matters that did not relate to the Corporation or the Funds.  

Responsibilities of the Board
The business and affairs of the Funds are managed under the direction of the Board of Directors, including general oversight and review of investment policies and activities of each Fund.  The Board also elects the officers of the Corporation, who are responsible for supervising and administering each Fund’s day-to-day operations.  The Board held four meetings during the fiscal year ended December 31, 2006.  Each incumbent director attended at least 75% of the Board meetings and the meetings of the Board committees on which the director served during such period.  
Shareholders wishing to communicate with the Board of Directors or individual directors should send such correspondence to the offices of Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.  Shareholder communications will be sent directly to the applicable Board member(s).  The Corporation currently does not have a policy with respect to Board members’ attendance at shareholder meetings.
Standing Committees
The Board of Directors has two standing committees: an Audit Committee and a Nominating Committee.  These committees are comprised solely of Independent Directors.
The Audit Committee has adopted a written charter setting forth, among other things, requirements with respect to the composition of the Audit Committee, the purposes of the Audit Committee, and the Audit Committee’s duties and powers.  The Audit Committee is responsible for (1) overseeing the accounting and financial reporting policies and procedures of the Corporation and each of its series, the Corporation’s internal control over financial reporting and disclosure controls and procedures, and, as deemed appropriate by the Committee, the internal controls of the Corporation’s service providers; (2) overseeing the quality, objectivity, and integrity of the Corporation’s financial statements and the independent audit thereof; (3) approving, prior to appointment, the engagement of the Corporation’s independent auditors, and in connection therewith, monitoring the independent auditor’s qualifications, independence, and performance; and (4) acting as a liaison between the independent auditor and the full Board of Directors of the Corporation.  The Audit Committee currently consists of John W. Feldt, George C. Kaiser and Frederick P. Stratton, Jr.  A copy of the Audit Committee charter can be found at the Baird Funds’ website at www.bairdfunds.com under “Charters and Policies.”  The Audit Committee met two times in 2006 and has met once during 2007.
10
The Nominating Committee provides assistance to the Board of Directors in the selection of candidates for election to the Board of Directors, including (1) identifying, as necessary, new candidates who are qualified to serve as directors of the Corporation; (2) recommending to the Board of Directors the candidates for election to the Board of Directors; and (3) monitoring and advising the Board of Directors on matters relating to director compensation.  The Nominating Committee has adopted a written charter setting forth, among other things, requirements with respect to the composition of the Nominating Committee, the purpose of the Nominating Committee and guidelines for selecting candidates for election to the Board of Directors.  The guidelines set forth certain factors to be considered with respect to director candidates, such as background, experience in business, financial expertise and experience outside the business community, such as academia.  The Nominating Committee will consider properly qualified candidates submitted by shareholders.  Shareholders who wish to recommend a director nominee may do so by submitting the appropriate information about the candidate to the Secretary of the Corporation. The Nominating Committee currently consists of John W. Feldt, George C. Kaiser and Frederick P. Stratton, Jr., all of whom are Independent Directors.  A copy of the Nominating Committee charter can be found at the Baird Funds’ website at www.bairdfunds.com under “Charters and Policies.” The Nominating Committee met once in 2006 and has met twice during 2007.
Board Compensation
Each Independent Director currently receives an aggregate annual fee of $16,000, plus $1,500 per Board meeting attended.  In addition, each Independent Director is reimbursed for travel and other expenses incurred in connection with attendance at such meetings.  Committee members do not receive compensation for committee meetings attended.  Directors who are deemed “interested persons” of the Corporation, as defined in the 1940 Act, currently receive no compensation or expense reimbursement from the Funds or the Adviser for serving in such capacity.  However, if the director nominees are elected, it is expected that Mr. Nettles would receive the same compensation as the Independent Directors despite the fact that he would be an “interested person” of the Corporation, and Mr. Kasten would receive compensation beginning in January 2008 because he would then become an Independent Director.  Neither the Corporation nor the Funds maintain any deferred compensation, pension or retirement plans, and no pension or retirement benefits are accrued as part of Corporation or Fund meansexpenses.  The following table sets forth the compensation received by each incumbent Independent Director for the fiscal period ended December 31, 2006.

Name
Aggregate
Compensation
From Funds(1)
Pension or
Retirement Benefits
Accrued as Part of
Fund Expenses
Estimated Annual
Benefits Upon
Retirement
Total
Compensation
from Funds and
Fund Complex
Paid to
Directors(1)
     
John W. Feldt$22,000$0$0$22,000
George C. Kaiser$22,000$0$0$22,000
Frederick P. Stratton, Jr.$22,000$0$0$22,000

11
(1) Compensation shown in the above table represents the total compensation paid to the Independent Directors in respect of their services to all eight series of the Corporation.  Of the compensation paid to each such director, $2,750 was paid out of the assets of the Baird LargeCap Fund, $2,750 was paid out of the assets of the Baird MidCap Fund, $2,750 was paid out of the assets of the Baird SmallCap Fund, and $13,750 was paid by the Adviser.
Director Ownership of Funds
The following table shows each Director’s ownership of shares of the Funds as of the Record Date (Note: the Directors only own the Institutional Class of shares).  The beneficial ownership is stated using the following ranges:  None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or over $100,000.
Independent Directors and Nominee
Name of Fund
John W. Feldt
Frederick P.
Stratton, Jr.
Marlyn J. Spear
LargeCap FundNoneOver $100,000None
MidCap Fund
$50,001 -
$100,000
Over $100,000None
SmallCap Fund$10,001 - $50,000$50,001 - $100,000None
Intermediate Bond FundNoneOver $100,000None
Aggregate Bond FundNoneNoneNone
Short-Term Bond FundNoneNoneNone
Intermediate Municipal Bond FundNone$50,001 - $100,000None
Core Plus Bond FundNoneNoneNone
Aggregate Dollar Range of Securities Beneficially Owned
in All Registered Investment Companies Overseen by
Director in Family of Investment Companies
Over $100,000
Over $100,000
None
Interested Director and Nominee
Name of Fund
G. Frederick Kasten,
Jr.*
Cory L. Nettles
LargeCap FundNoneNone
MidCap FundNoneNone
SmallCap FundNoneNone
Intermediate Bond FundNoneNone
Aggregate Bond FundNoneNone
Short-Term Bond FundNoneNone
Intermediate Municipal Bond FundOver $100,000None
Core Plus Bond FundNoneNone
Aggregate Dollar Range of Securities Beneficially Owned in
All Registered Investment Companies Overseen by Director
in Family of Investment Companies
Over $100,000
None

*As noted under the “Independent Director Nominees” table above, Mr. Kasten is currently considered an “interested person” of the Corporation (as defined in the 1940 Act) but, as of January 1, 2008, will be considered an Independent Director.
12
Officers of the Corporation
The following table presents certain information regarding the current officers of the Corporation, including their principal occupations. Officers are not separately compensated by the Corporation or any of the Funds for the services they provide.
Name, Address and Age
Position(s)
Held with the Corporation
Term of Office
and Length of
Time Served
Principal Occupation(s) During Past 5 Years
Mary Ellen Stanek
777 East Wisconsin Avenue Milwaukee, WI  53202
Age:  51
President
Re-elected by
Board annually;
Since September
2000
Managing Director, the Adviser, and Chief Investment Officer, Baird Advisors, a department of the Adviser, since March 2000; President and CEO, Firstar Investment Research & Management Company, LLC (“FIRMCO”) (November 1998-February 2000); President, Firstar Funds, Inc. (December 1998-February 2000); President and Chief Operating Officer, FIRMCO (March 1994-November 1998)
J. Bary Morgan
777 East Wisconsin Avenue Milwaukee, WI  53202
Age: 41
Senior Vice
President
Re-elected by
Board annually;
Since February
2003
Chief Investment Officer, Baird Investment Management, a department of the Adviser, since January 2004; Managing Director, the Adviser since January 2001; Director, Baird Investment Management (January 2001-January 2004); Senior Vice President, the Adviser (January 2000-January 2001); First Vice President, the Adviser (January 1996-January 2000)
Todd S. Nichol
777 East Wisconsin Avenue Milwaukee, WI  53202
Age: 45
Vice President
and Chief
Compliance
Officer
Re-elected by
Board annually;
Since August 2004
Chief Compliance Officer, the Adviser since October 2004; Assistant Compliance Director, the Adviser since August 2002; Senior Vice President, the Adviser since January 2005; First Vice President, the Adviser (January 2004-January 2005); Vice President, the Adviser (August 2002-January 2004); Vice President – Risk Management, BNY Clearing Services, LLC, a division of The Bank of New York (August 1995-August 2002)
Russell P. Schwei
777 East Wisconsin Avenue Milwaukee, WI  53202
Age: 48
Vice President
Re-elected by
Board annually;
Since September
2000
Operations Director, the Adviser since July 1992; Managing Director, the Adviser since January 1997; Chief Financial Officer and Managing Director, the Adviser (February 1999-December 1999)
Leonard M. Rush
777 East Wisconsin Avenue Milwaukee, WI  53202
Age: 61
Treasurer
Re-elected by
Board annually;
Since September
2000
Chief Financial Officer, the Adviser since January 2000
Charles M. Weber
777 East Wisconsin Avenue
Milwaukee, WI 53202
Age: 44
Secretary
Re-elected by
Board annually;
Since September
2005
Senior Vice President and Associate General Counsel, the Adviser since July 2005; Partner, Quarles & Brady LLP, a law firm (October 1998-June 2005)
Laura E. Piotrowski
777 East Wisconsin Avenue
Milwaukee, WI 53202
Age: 37
Assistant
Treasurer
Re-elected by
Board annually;
Since August
2007
Senior Vice President and Controller of Capital Markets and Asset Management, the Adviser since January 2003;  First Vice President, the Adviser (January 2001-January 2003); Vice President, the Adviser (January 1999-January 2001)
Robert A. Johnson
777 East Wisconsin Avenue
Milwaukee, WI 53202
Age 44
AML
Compliance
Officer
Re-elected by
Board annually;
Since August
2004
Compliance Officer, the Adviser since 1998, and AML Compliance Officer, the Adviser since January 2004
Bret T. Reese
777 East Wisconsin Avenue
Milwaukee, WI 53202
Age: 38
Assistant
Secretary
Re-elected by
Board annually;
Since August
2006
Vice President and Staff Attorney, the Adviser since June 2005; Senior Financial Analyst, the Adviser (August 2004-June 2005); Financial Analyst, Stark & Roth, Inc., a hedge fund (June 2001-August 2002)

13
Required Vote
Approval of the election of directors requires the affirmative vote of the lesser of (i) 67% or morea plurality of the shares of the Fund presentrepresented at the Meeting, or represented by proxy if the holders of more than 50%provided at least a quorum (a majority of the outstanding shares of the Corporation) is represented in person or by proxy.  “Plurality” means that the individuals with the largest number of votes are presentelected as directors up to the maximum number of directors to be chosen at the MeetingMeeting.  In the election of directors, votes may be cast in favor or represented by proxy, or (ii) more than 50%withheld.  Votes that are withheld and broker non-votes will have no effect on the outcome of the outstanding shares.election of directors.  For purposes of the election of directors, Investor Class and Institutional Class shares of all of the Funds will vote requiredtogether as a single group.  Unless otherwise instructed, the proxies will vote for all nominees.  In the event any of the nominees are not candidates for election at the meeting due to approveevents not now known or anticipated, the proposal, abstentions and broker non-votes are treatedproxies will vote for such other persons as votes against the proposal.


If shareholders approve this proposal, the change in the Fund’s investment objective will be implemented as soon as practicable after the Meeting, as will the Fund’s name change and its change in investment policy relating to lower-rated securities.  Currently, it is anticipated that the effective dateBoard of these changes will be Tuesday, December 31, 2002.  If, on the other hand, shareholders fail to approve this proposal, the Fund’s investment objective will remain unchanged, as will the Fund’s name and investment policy relating to lower-rated securities.


Directors may designate.

Recommendation of the Board of Directors.Directors
The Board of Directors recommends that the shareholders vote FOR the election of each of the Fund believesnominees to the Board.
INFORMATION ON INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Grant Thornton LLP (“GT”) was selected by the Board of Directors, including a majority of the Independent Directors, as independent auditors for the Funds for the fiscal year ending December 31, 2007.  Representatives of GT are not expected to be present at the Meeting. The aggregate fees billed for professional services by GT during the last two fiscal years were as follows:
 
Fiscal Year Ended 12/31/06
Fiscal Year Ended 12/31/05
   
Audit Fees$105,000$100,000
Audit-Related Fees——
Tax Fees$25,200$24,000
All Other Fees——
   
In the above table, “audit fees” are fees billed for professional services for the audit of the Funds’ annual financial statements or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.  “Tax fees” are fees billed for professional services rendered for tax compliance, tax advice and tax planning.
The Audit Committee has adopted pre-approval policies and procedures that require the Audit Committee to pre-approve all audit and non-audit services rendered to the Funds, as well as all non-audit services provided to the Adviser and any entity affiliated with the Adviser with respect to any engagement that relates directly to the operations and financial reporting of the Funds.  In accordance with its policies and procedures, the Audit Committee pre-approved all audit and tax services provided by GT during fiscal 2006.  During the past two fiscal years, the Funds did not receive any non-audit services from GT pursuant to any waivers of the pre-approval requirement under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.  All of GT’s hours spent on auditing the Funds’ financial statements were attributed to work performed by full-time permanent employees of GT.
During the last two fiscal years, GT has served as the auditor to the Adviser and has rendered non-audit services to the Adviser and an affiliate of the Adviser.  The non-audit services consisted of tax services provided to investment partnerships affiliated with the Adviser, which partnerships do not provide ongoing services to the Funds; verification and related analytical services provided to the Adviser in connection with its various GIPS composite performance presentations; and a 2006 tax analysis regarding the Adviser’s ownership and sale of certain securities.  GT charged the following amounts for such non-audit services to the Adviser and its affiliates:  $165,600 in 2006 and $142,350 in 2005.  The Audit Committee has concluded that the proposed change inprovision of these audit services to the Fund’s investment objectiveAdviser and non-audit services to Adviser-affiliated partnerships is in the best interests of Fund shareholders and, therefore, unanimously recommends that shareholders vote in favor of the change.  



PROPOSAL 2:  compatible with GT’s independence.

14
OTHER MATTERS


The Board of Directors knows of no other matters to be brought before the Meeting.  If anysuch other matters properly come before the Meeting, it is the intention of the persons acting pursuant to the enclosed proxy card to vote the shares represented by such proxies in accordance with their best judgment with respect to such matters.

CONSENT TO ELECTRONIC DELIVERY OF DOCUMENTS
In order to save future printing and mailing expenses, the Corporation is requesting shareholders to consider consenting to the electronic delivery of certain documents.  Shareholders can provide their consent by following the instructions set forth on the proxy card.  By consenting to electronic delivery, shareholders may receive all future prospectuses, prospectus supplements, annual and semi-annual reports, proxy statements and other shareholder communications for the Funds via e-mail or the Internet.  This consent has no expiration date.  However, shareholders may revoke their consent to electronic delivery at any time by contacting the Funds in writing at Baird Funds, Inc., c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by calling 1-866-44BAIRD (1-866-442-2473) and request that documents be sent to them by mail. You may also receive a paper copy of any of the documents identified above at no additional charge by contacting us at the above address or telephone number.

To receive documents electronically, you must provide your e-mail address and have access to browser software (such as Microsoft Internet Explorer) and Adobe Acrobat (available at www.adobe.com at no cost) to view documents in Portable Document Format (PDF) and have a connection to the Internet.

Please note that shareholders who consent to electronic delivery of documents must provide the Corporation with their e-mail address.  Shareholders will need to notify the Corporation of any changes to their e-mail address.  The Corporation will only use e-mail addresses for the purpose of communicating with shareholders.  The Corporation will not sell or provide shareholder e-mail addresses to third parties.

FUTURE MEETINGS; SHAREHOLDER PROPOSALS

The Fund isFunds are generally not required to hold annual meetings of shareholders and the FundFunds generally doesdo not hold a meeting of shareholders in any year, unless certain specified shareholder actions, such as the election of directors or the approval of a new advisory agreement, are required to be taken under the 1940 Act.  By observing this policy, the Fund seeksFunds seek to avoid the expenses customarily incurred in the preparation of proxy material and the holding of shareholders’ meetings, as well as the related expenditure of staff time.


A shareholder desiring to submit a proposal intended to be presented at any meeting of shareholders of the FundFunds hereafter called should send the proposal to the Secretary of the FundFunds at the Corporation’s principal offices within a reasonable time before the solicitation of proxies for such meeting occurs.  The mere submission of a proposal by a shareholder does not guarantee that such proposal will be included in the proxy statement because certain rules under the federal securities laws must be complied with before inclusion of the proposal is required.  Also, the submission does not mean that the proposal will be presented at the meeting.  For a shareholder proposal to be considered at a shareholders’ meeting, it must be a proper matter for consideration under Wisconsin law.

By Order of the Board of Directors

Brett R. Meili

Charles M. Weber
Secretary

Milwaukee, Wisconsin

November 20, 2002







15
BAIRD FUNDS, INC.

BAIRD CORE BOND FUND


PROXY FOR SPECIAL MEETING OF SHAREHOLDERS



This proxy is solicited on behalf of the Board of Directors of Baird Funds, Inc. (the “Corporation”) and relates to a proposal with respect to the Baird Core Bond Fund (the “Fund”), a series of the Corporation..  The undersigned hereby appoints Brett MeiliMary Ellen Stanek and Lisa Kollmeyer,Leonard M. Rush, or either of them, as proxies for the undersigned, with full power of substitution in each of them, to attend thea Special Meeting of the Shareholders of the FundCorporation to be held at 777 East Wisconsin Avenue, 29th Floor, Milwaukee, Wisconsin, on Monday,Wednesday, December 30, 2002,19, 2007, at 10:00 a.m., local time,Central Standard Time, and any adjournment or postponement thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting.  The undersigned hereby acknowledges receipt of the Notice of the Special Meeting of Shareholders and of the accompanying Proxy Statement and revokes any proxy heretofore given with respect to such meeting.

The votes entitled to be cast by the undersigned will be cast as instructed below.  If this proxy is executed, but no instruction is given, the votes entitled to be cast by the undersigned will be cast “FOR” the proposal described in the Proxy Statement and in the discretion of the above-named proxies on any other matter that may properly come before the meeting or any adjournment or postponement thereof.

 

DATE:                                                      , 2002

2007.
  
 

NOTE:  Please date and sign exactly as your name appears on the records of the Fund.Funds.  If joint owners, each holder should sign this proxy.  When signing as attorney, executor, administrator, trustee, guardian or officer of a corporation or other entity or in another representative capacity, please give your full title.

  
  
Signature                (Title, if applicable)
 
 

Signature(s)

(Title(s), if applicable)

Signature of Joint Owner (if any)




The Board of Directors recommends a

Ways to Vote
You may voteFOR the following:

Please indicate by fillingmarking, signing and dating mailing your proxy card and returning it in the appropriate boxes below.

1.

A proposalpostage-paid envelope we have provided.

You may also vote via the Internet at www.proxyvote.com. Have your proxy card available, log on to approve an amendmentwww.proxyvote.com, enter your control number shown on your proxy card and follow the instructions on the website to cast your vote.
You may vote by telephone by calling 1--800-454-8683.  Have your proxy card available, enter your control number shown on the proxy card and follow the recorded instructions.  Please note that you will not be available to consent to the Fund’s  

FOR

AGAINST

ABSTAIN

investment objective, such that it reads as follows:

[   ]

[   ]

[   ]

“The investment objectiveelectronic delivery of documents if you vote by telephone.

[Please see reverse side for the Fundmatters on which your vote is requested]

Election of Directors
(1)  John W. Feldt(4)  Cory L. Nettles oFOR all nominees oWITHOUT AUTHORITY
(2)  G. Frederick Kasten, Jr.(5)  Marlyn J. Spearlisted (except asto vote for all nominees
(3)  Frederick P. Stratton, Jr.marked to thelisted at left
contrary below)

(Instructions:  To withhold authority to provide

an annual rate of total return, before Fund expenses,

greater thanvote for any indicated nominee, write the annual rate of total return of

number(s) on the

Lehman Brothers U.S. Universal Bond Index.”


line above.)

In their discretion, the named proxies may vote to transactand otherwise represent the shareholder(s) on such other business as may properly come before the meeting, or any adjournment or postponement thereof.

WE NEED YOUR VOTE BEFORE DECEMBER 30, 2002



Your vote

The votes entitled to be cast by the undersigned will be cast as instructed above.  If this proxy is important.  If you do not expectexecuted, but no instruction is given, the votes will be cast “FOR” the election of all of the nominees to attendthe Board of Directors of the Corporation and in the discretion of the above-named proxies on any other matter that may properly come before the meeting please complete and returnor any adjournment or postponement thereof.
Consent to Electronic Delivery of Documents
¨           By checking this proxy card promptly inbox, the enclosed postage-paid envelope.  Your prompt voting by proxy will help assure a quorum at the meeting.  Voting by proxy will not prevent you from personally casting your votes at the meeting.  You may revoke your proxy before it is exercised at the meeting by submittingundersigned hereby consents to the Secretarydelivery of prospectuses, prospectus supplements, annual and semi-annual reports, proxy statements and other shareholder communications for the Fund a written notice of revocation or a subsequently signed proxy card,Funds by e-mail or by attendinge-mail notice to retrieve these documents via the meeting and voting in person.

Internet.  This consent may be revoked at any time by contacting the Corporation.  For more information, please refer to the Proxy Statement. The undersigned’s e-mail address to which documents relating to the Funds may be sent is as follows:


E-Mail Address:_____________________________________________

THANK YOU FOR YOUR TIME





 2