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:  811-09997

Baird Funds, Inc.

(Exact name of registrant as specified in charter)

777 East Wisconsin Avenue

Milwaukee, WI 53202

(Address of principal executive offices) (Zip code)

Charles M. Weber

Robert W. Baird & Co. Incorporated

777 East Wisconsin Avenue

Milwaukee, WI 53202

(Name and address of agent for service)

1-866-442-2473

Registrant's telephone number, including area code

Date of fiscal year end: December 31, 2007

Date of reporting period: June 30, 2007

Item 1. Reports to Stockholders.

Semi-Annual Report - Baird Funds

June 30, 2007

Baird Intermediate Bond Fund

Baird Aggregate Bond Fund

Baird Intermediate Municipal Bond Fund

Baird Core Plus Bond Fund

Baird Short-Term Bond Fund

TABLE OF CONTENTS

	Page
BAIRD INTERMEDIATE BOND FUND	1
BAIRD AGGREGATE BOND FUND	15
BAIRD INTERMEDIATE MUNICIPAL BOND FUND	30
BAIRD CORE PLUS BOND FUND	37
BAIRD SHORT-TERM BOND FUND	46
ADDITIONAL INFORMATION ON FUND EXPENSES	56
STATEMENTS OF ASSETS AND LIABILITIES	58
STATEMENTS OF OPERATIONS	59
STATEMENTS OF CHANGES IN NET ASSETS	60
FINANCIAL HIGHLIGHTS	65
NOTES TO THE FINANCIAL STATEMENTS	74
ADDITIONAL INFORMATION	88

This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Cautionary Note on Analyses, Opinions and Outlooks:  In this report we offer analyses and opinions on the performance of individual securities, companies, industries, sectors, markets, interest rates and governmental policies, including predictions, forecasts and outlooks regarding possible future events.  These can generally be identified as such because the context of the statements may include such words as “believe,” “should,” “will,” “expects,” “anticipates,” “hopes” and words of similar effect.  These statements reflect the portfolio managers’ good faith beliefs and judgments and involve risks and uncertainties, including the risk that the portfolio managers’ analyses, opinions and outlooks are or will prove to be inaccurate.  It is inherently difficult to correctly assess and explain the performance of particular securities, sectors, markets, interest rate movements, governmental actions or general economic trends and conditions, and many unforeseen factors contribute to the performance of Baird Funds.  Investors are, therefore, cautioned not to place undue reliance on subjective judgments contained in this report.

Baird Intermediate Bond Fund

June 30, 2007

The Baird Intermediate Bond Fund seeks an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers Intermediate Government/Credit Bond Index.  The Lehman Brothers Intermediate Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and ten years.

Portfolio Characteristics

Quality Distribution*	Sector Weightings*

Net Assets:	$	324,303,641	Annualized Expense Ratio:
SEC 30-Day Yield:**			Institutional Class:	0.30	%
Institutional Class:		5.13%	Investor Class:	0.55	%***
Investor Class:		4.99%	Portfolio Turnover Rate:****	24.1	%
Average Effective Duration:	3.67 years		Total Number of Holdings:	262
Average Effective Maturity:	4.85 years

*	Percentages shown are based on the Fund’s total net assets.
**	SEC yields are based on SEC guidelines and are calculated for the 30 days ended June 30, 2007.
***	Includes 0.25% 12b-1 fee.
****	Not annualized.

Page 1

Baird Intermediate Bond Fund

Average Annual Total Returns

							Since
For the Periods Ended June 30, 2007	One Year			Five Years			Inception(1)
Baird Intermediate Bond Fund – Institutional Class Shares		6.28	%		4.51	%		5.81%
Baird Intermediate Bond Fund – Investor Class Shares		6.01	%		4.23	%		5.56%
Lehman Brothers Intermediate Government/Credit Bond Index(2)		5.76	%		4.15	%		5.45%

(1)	For the period from September 29, 2000 (commencement of operations) through June 30, 2007.
(2)	The Lehman Brothers Intermediate Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and ten years.  This index does not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 2

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2%
Asset Backed Securities – 5.2%
$	441,119	Amresco Residential
		Securities Mortgage
		Loan Trust,
		Series 1998-1, Class A6,
		6.51%, 08/25/2027	$	439,678
	855,872	Bayview Financial
		Acquisition Trust,
		Series 2005-B, Class 1A2,
		4.696%, 04/28/2039		849,644
	13,643	CitiFinancial Mortgage
		Securities, Inc.,
		Series 2004-1, Class AF2,
		2.645%, 04/25/2034		13,231
	11,540	Contimortgage Home
		Equity Trust,
		Series 1999-1, Class A7,
		6.97%, 12/25/2013		11,501
		Countrywide Asset-Backed
		Certificates:
	2,215,000	Series 2006-S3, Class A2,
		6.085%, 06/25/2021		2,220,401
	2,200,000	Series 2005-12, Class 1A2,
		4.847%, 02/25/2036		2,183,931
	375,000	Series 2006-13, Class 1AF3,
		5.944%, 01/25/2037		374,633
	75,000	Series 2006-9, Class 1AF3,
		5.859%, 10/25/2046		74,918
	1,500,000	Credit Based Asset
		Servicing and Securities,
		Series 2005-CB1,
		Class AF4,
		4.6118%, 01/25/2035		1,491,634
		Delta Funding Home
		Equity Loan Trust:
	223,652	Series 1997-2, Class A6,
		7.04%, 06/25/2027		222,927
	193,125	Series 1999-1, Class A6F,
		6.34%, 12/15/2028		192,761
	657,991	Series 1999-2, Class A7F,
		7.03%, 08/15/2030		656,492
	150,000	Discover Card
		Master Trust I,
		Series 2003-4, Class A1,
		5.43%, 05/15/2011		150,243
	48,634	Equivantage Home
		Equity Loan Trust,
		Series 1996-3, Class A3,
		7.70%, 09/25/2027		48,478
		GMAC Mortgage
		Corporation Loan Trust:
	1,325,463	Series 2004-GH1,
		Class A2,
		4.39%, 12/25/2025		1,314,797
	1,383,067	Series 2004-J4, Class A2,
		5.50%, 09/25/2034		1,370,470
		Green Tree Financial
		Corporation:
	1,190,767	Series 1998-2, Class A5,
		6.24%, 11/01/2016		1,186,637
	1,525,177	Series 1998-3, Class A5,
		6.22%, 03/01/2030		1,514,210
	558,949	Series 1998-4, Class A5,
		6.18%, 04/01/2030		551,317
	5,213	Series 1999-3, Class A5,
		6.16%, 02/01/2031		5,213

The accompanying notes are an integral part of these financial statements.

Page 3

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Asset Backed Securities – 5.2% (cont.)
$	126,036	IMC Home Equity
		Loan Trust,
		Series 1998-1, Class A6,
		7.02%, 06/20/2029	$	125,697
	246,484	Oakwood Mortgage
		Investors, Inc.,
		Series 1999-B, Class A3,
		6.45%, 11/15/2017		228,063
	1,500,000	Popular Asset Backed
		Mortgage Pass Thru Trust,
		Series 2005-B, Class AF3,
		4.62%, 08/25/2035		1,487,915
	23,748	Residential Asset
		Mortgage Products, Inc.,
		Series 2003-RS7,
		Class AI6,
		5.34%, 08/25/2033		23,159
				16,737,950
Financial – 17.9%
		Allfirst Financial, Inc.
		Subordinated Notes:
	1,550,000	7.20%, 07/01/2007		1,550,000
	875,000	6.875%, 06/01/2009		897,163
		American General Finance
		Corporation Notes:
	25,000	4.625%, 09/01/2010		24,335
	550,000	4.00%, 03/15/2011		520,365
	630,000	AmSouth Bancorporation
		Subordinated Debentures,
		6.75%, 11/01/2025		660,271
	691,000	AmSouth Bank NA
		Subordinated Notes,
		6.45%, 02/01/2008		694,693
	500,000	AMVESCAP PLC Notes,
		5.375%, 02/27/2013 f		485,568
	1,335,000	Anthem, Inc.,
		6.80%, 08/01/2012		1,397,353
	725,000	Banco Santander
		Chile SA,
		7.00%, 07/18/2007 f		725,483
	310,000	Bank of America
		Corporation
		Subordinated Notes,
		10.20%, 07/15/2015		392,550
	400,000	Bank of Oklahoma
		Subordinated Notes,
		7.125%, 08/15/2007		400,675
	925,000	Bank of Tokyo-
		Mitsubishi/UFJ NY,
		7.40%, 06/15/2011		986,207
		Bank One Corporation
		Subordinated Notes:
	180,000	6.00%, 02/17/2009		181,527
	1,043,000	10.00%, 08/15/2010		1,162,344
	1,595,000	BankAmerica Institutional,
		8.07%, 12/31/2026
		(Acquired 01/04/2006,
		06/01/2006, 10/11/2006,
		01/24/2007, and 05/07/2007;
		Cost $500,456, $682,331,
		$417,508, $26,010, and
		$52,079, respectively)*		1,659,358
	480,000	Bankers Trust Corporation
		Subordinated Notes,
		7.375%, 05/01/2008		485,806
	2,500,000	Banponce Trust I, Series A,
		8.327%, 02/01/2027		2,604,075
	1,000,000	BOI Capital Funding No. 2,
		5.571%, 02/01/2049
		(Acquired 01/20/2006;
		Cost $1,000,000)* f		948,183

The accompanying notes are an integral part of these financial statements.

Page 4

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Financial – 17.9% (cont.)
$	300,000	CIT Group Company
		of Canada,
		5.20%, 06/01/2015 f	$	278,947
		CIT Group, Inc.:
	200,000	5.40%, 01/30/2016		188,617
	1,500,000	6.10%, 03/15/2067
		(Callable 03/15/2017)		1,366,083
	1,336,000	Comerica Incorporated
		Subordinated Notes,
		7.25%, 08/01/2007		1,337,862
	850,000	Compass Bank
		Subordinated Notes,
		8.10%, 08/15/2009		891,846
	260,000	Corestates Capital Trust I,
		8.00%, 12/15/2026
		(Acquired 11/29/2005;
		Cost $276,398)*		269,292
	1,325,000	Countrywide Financial
		Corporation
		Subordinated Notes,
		6.25%, 05/15/2016		1,301,285
	441,352	First National Bank of
		Chicago Pass Thru
		Certificates,
		8.08%, 01/05/2018		490,802
	1,100,000	First National Bank of
		Omaha Subordinated
		Notes, 7.32%, 12/01/2010		1,122,366
	1,900,000	First Union Capital,
		7.9349%, 01/15/2027		1,975,945
	775,000	FMR Corporation Notes,
		4.75%, 03/01/2013
		(Acquired 02/26/2003;
		Cost $777,379)*		745,789
	800,000	General Electric Capital
		Corporation Notes,
		6.00%, 06/15/2012		814,268
	1,000,000	Genworth Financial
		Inc. Notes,
		5.75%, 06/15/2014		995,635
	1,975,000	Glencore Funding LLC,
		6.00%, 04/15/2014
		(Acquired 03/31/2004,
		02/02/2005, 04/26/2006
		and 12/04/2006; Cost
		$794,280, $146,738,
		$282,792 and $720,432,
		respectively)*		1,938,310
	500,000	Goldman Sachs
		Group, Inc. Bonds,
		5.15%, 01/15/2014		480,454
	1,000,000	Great West Life &
		Annuity Insurance,
		7.153%, 05/16/2046
		(Acquired 05/16/2006;
		Cost $1,000,000)*		1,024,097
	1,195,000	Health Care Service
		Corporation Notes,
		7.75%, 06/15/2011
		(Acquired 06/20/2001,
		01/26/2005 and
		10/19/2006; Cost
		$497,765, $373,500 and
		$397,317, respectively)*		1,277,051
	400,000	Highmark, Inc. Notes,
		6.80%, 08/15/2013
		(Acquired 08/14/2003;
		Cost $399,088)*		414,341
	25,000	HSBC Finance
		Corporation Notes,
		5.00%, 06/30/2015		23,416

The accompanying notes are an integral part of these financial statements.

Page 5

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Financial – 17.9% (cont.)
$	1,050,000	Istar Financial, Inc.,
		5.95%, 10/15/2013	$	1,034,379
	500,000	J.P. Morgan Chase
		& Company
		Subordinated Notes,
		6.625%, 03/15/2012		519,863
	846,000	Lehman Brothers
		Holdings, Inc. Notes,
		8.50%, 08/01/2015		977,843
	1,600,000	Lehman Brothers
		Holdings Senior Notes,
		8.80%, 03/01/2015		1,873,181
	600,000	Marsh & McLennan
		Companies, Inc.,
		5.375%, 07/15/2014		561,337
	375,000	Met Life Global
		Funding Senior Notes,
		4.50%, 05/05/2010
		(Acquired 08/04/2005
		and 03/22/2007;
		Cost $123,925 and
		$245,931, respectively)*		365,777
	1,000,000	Morgan Stanley
		Dean Witter Debentures,
		10.00%, 06/15/2008		1,040,718
	25,000	Morgan Stanley
		Subordinated Notes,
		4.75%, 04/01/2014		23,346
	1,530,000	National Australia
		Bank Ltd. Subordinated
		Notes, Series A,
		8.60%, 05/19/2010 f		1,658,792
	534,000	National City Bank of
		Kentucky Subordinated
		Notes, 6.30%, 02/15/2011		546,343
	1,100,000	Navigators Group Inc.
		Senior Unsecured Notes,
		7.00%, 05/01/2016		1,101,280
	760,000	NB Capital Trust IV,
		8.25%, 04/15/2027		790,630
	1,000,000	North Fork Capital
		Trust II,
		8.00%, 12/15/2027		1,046,170
	800,000	Phoenix Companies,
		6.675%, 02/16/2008		802,984
	1,319,000	PNC Funding
		Corporation,
		7.50%, 11/01/2009		1,378,330
	1,500,000	Premium Asset
		Senior Notes,
		4.125%, 03/12/2009
		(Acquired 12/20/2006
		and 05/10/2007; Cost
		$935,000 and $480,000,
		respectively)*		1,422,416
	25,000	Protective Life
		Corporation Senior Notes,
		4.30%, 06/01/2013		23,459
	700,000	Residential Capital
		Corporation,
		6.875%, 06/30/2015		678,941
	805,000	SAFECO
		Corporation Notes,
		6.875%, 07/15/2007		805,364
	546,000	SAFECO Corporation
		Senior Notes,
		7.25%, 09/01/2012		581,606
	550,000	Santander Central
		Hispano Insurances,
		6.375%, 02/15/2011 f		565,215

The accompanying notes are an integral part of these financial statements.

Page 6

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Financial – 17.9% (cont.)
		SLM Corporation Notes:
$	1,516,000	4.50%, 07/26/2010	$	1,401,715
	25,000	5.375%, 05/15/2014		21,423
	1,000,000	St. Paul Travelers, Inc.,
		6.25%, 06/20/2016		1,016,514
	1,046,000	Toll Road Inv. Part II,
		0.00%, 02/15/2011
		(Acquired 09/28/2004;
		Cost $782,046)* ^		854,315
	1,320,000	Transamerica Finance
		Corporation Debentures,
		0.00%, 03/01/2010 ^		1,130,638
	350,000	UFJ Finance Aruba AEC,
		6.75%, 07/15/2013 f		369,563
	870,000	Union Planters
		Corporation
		Subordinated Notes,
		6.50%, 03/15/2018		875,799
	500,000	Washington Mutual Bank
		Subordinated Notes,
		6.875%, 06/15/2011		519,632
		Westdeutsche Landesbank
		Subordinated Notes: f
	25,000	6.05%, 01/15/2009		25,213
	1,495,000	4.796%, 07/15/2015		1,407,039
				58,132,187
Industrial – 17.8%
	450,000	Alcan, Inc. Notes,
		5.00%, 06/01/2015 f		418,611
	1,745,000	American Standard Inc.,
		7.375%, 02/01/2008		1,759,246
	1,008,000	Ameritech
		Capital Funding,
		6.45%, 01/15/2018		1,020,499
	300,000	Bellsouth Corporation,
		4.75%, 11/15/2012		286,706
		Bunge Ltd. Finance
		Corporation Notes:
	800,000	5.35%, 04/15/2014		759,965
	1,085,000	5.10%, 07/15/2015		1,002,489
	375,000	Caesars Entertainment
		Senior Notes,
		7.50%, 09/01/2009		383,438
	1,000,000	Clear Channel
		Communications Senior
		Unsubordinated Notes,
		5.50%, 12/15/2016		823,960
	125,000	Comcast Cable
		Communication Holdings,
		8.375%, 03/15/2013		139,539
	525,000	Comcast Corporation,
		6.50%, 01/15/2017		536,002
	50,000	Comcast Corporation
		Senior Subordinated Notes,
		10.625%, 07/15/2012		59,372
	50,000	Computer Sciences
		Corporation Notes,
		6.25%, 03/15/2009		50,427
	24,815	Continental Airlines, Inc.
		Pass Thru Certificates,
		Series 1998-1,
		6.541%, 03/15/2008		24,784
	960,000	Cooper Industries,
		Inc. Notes,
		5.25%, 07/01/2007		960,000
	1,281,000	COX
		Communications Inc.,
		7.125%, 10/01/2012		1,353,343
	225,000	Daimlerchrysler Co LLC,
		12.375%, 05/01/2020		367,088

The accompanying notes are an integral part of these financial statements.

Page 7

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Industrial – 17.8% (cont.)
$	1,000,000	D.R. Horton Inc.
		Unsubordinated Notes,
		6.50%, 04/15/2016	$	956,765
	1,125,000	Deutsche Telekom
		International
		Finance BV,
		8.00%, 06/15/2010 f		1,199,091
	300,000	Dollar General
		Corporation,
		8.625%, 06/15/2010		326,126
	875,000	Donnelley (R.R.) & Sons
		Co., 6.125%, 01/15/2017		851,938
	2,434,000	Ensco International,
		Inc. Notes,
		6.75%, 11/15/2007		2,444,826
	500,000	Fiserv, Inc. Notes,
		4.00%, 04/15/2008		494,108
	623,000	Ford Capital BV
		Debentures,
		9.50%, 06/01/2010 f		632,345
	300,000	Ford Motor
		Company Debentures,
		9.215%, 09/15/2021		273,750
		General Motors Acceptance
		Corporation Notes:
	1,025,000	7.75%, 01/19/2010		1,037,641
	200,000	6.75%, 12/01/2014		191,531
	550,000	General Motors Nova
		Scotia Finance Company,
		6.85%, 10/15/2008 f		547,250
		Halliburton
		Company Notes:
	475,000	5.625%, 12/01/2008		475,733
	675,000	5.50%, 10/15/2010		674,345
	700,000	Hanson Australia Funding,
		5.25%, 03/15/2013 f		684,305
	650,000	Hanson PLC Notes,
		6.125%, 08/15/2016 f		665,432
	975,000	Hutchison Whampoa
		International Limited,
		6.25%, 01/24/2014
		(Acquired 11/19/2003
		and 02/08/2005; Cost
		$749,228
		and $244,602,
		respectively)* f		988,794
	1,000,000	Ingersoll-Rand
		Company Debentures,
		6.391%, 11/15/2027 f		1,036,969
	1,000,000	International Paper
		Company Notes,
		6.50%, 11/15/2007		1,001,806
	1,100,000	Johnson Controls Inc.
		Senior Notes,
		5.50%, 01/15/2016		1,065,102
	675,000	Laboratory Corporation
		of America Holdings,
		5.50%, 02/01/2013		650,282
	550,000	Lafarge SA Notes,
		6.50%, 07/15/2016 f		562,979
	500,000	Limited Brands, Inc.,
		5.25%, 11/01/2014		465,079
	400,000	Marathon
		Oil Corporation,
		6.00%, 07/01/2012 f		405,492
	1,550,000	Masco Corporation,
		6.125%, 10/03/2016		1,524,648
	650,000	New York Telephone
		Company Debentures,
		8.625%, 11/15/2010		700,283
	1,748,000	Nextel Communications
		Senior Notes,
		6.875%, 10/31/2013		1,734,941

The accompanying notes are an integral part of these financial statements.

Page 8

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Industrial – 17.8% (cont.)
$	700,000	PCCW Capital II Ltd.,
		6.00%, 07/15/2013
		(Acquired 07/10/2003;
		Cost $696,731)* f	$	693,722
	600,000	Pearson Dollar Finance
		PLC, 5.70%, 06/01/2014
		(Acquired 09/28/2005;
		Cost $618,138)* f		578,914
	1,545,000	Plum Creek Timberlands,
		5.875%, 11/15/2015		1,495,871
	1,500,000	Premcor Refining
		Group Inc. Senior Notes,
		9.50%, 02/01/2013		1,597,148
		Qwest Capital
		Funding, Inc.:
	350,000	7.00%, 08/03/2009		350,000
	100,000	7.25%, 02/15/2011		99,500
	1,000,000	Reed Elsevier
		Capital Notes,
		4.625%, 06/15/2012		953,533
	500,000	SBC Communications,
		Inc. Notes,
		5.625%, 06/15/2016		488,665
	650,000	Sealed Air Corporation
		Senior Notes,
		5.375%, 04/15/2008
		(Acquired 04/09/2003;
		Cost $646,490)*		646,456
	209,369	Southwest Airlines
		Company
		Pass Thru Certificates,
		Series 1996-A1,
		7.67%, 01/02/2014		211,023
	500,000	Sprint Nextel
		Corporation,
		6.00%, 12/01/2016		474,328
	1,100,000	Sunoco, Inc.
		Senior Notes,
		5.75%, 01/15/2017		1,060,160
		TCI Communications,
		Inc. Debentures:
	325,000	7.875%, 08/01/2013		356,126
	583,000	8.75%, 08/01/2015		674,181
		Telecom Italia Capital: f
	1,360,000	4.95%, 09/30/2014		1,260,075
	425,000	5.25%, 10/01/2015		395,193
	681,000	Tele-Communications,
		Inc. Debentures,
		9.80%, 02/01/2012		786,046
	1,425,000	Telefonica
		Emisiones, S.A.U.,
		6.421%, 06/20/2016 f		1,444,882
	1,000,000	Time Warner Cable, Inc.,
		5.85%, 05/01/2017
		(Acquired 04/04/2007,
		Cost $997,690)*		972,648
	250,000	Time Warner
		Companies, Inc.,
		6.875%, 06/15/2018		259,130
	1,075,000	Time Warner Companies
		Inc. Debentures,
		9.125%, 01/15/2013		1,234,848
	1,470,000	Transocean, Inc.,
		6.625%, 04/15/2011 f		1,510,500
	275,000	Tribune Company,
		5.25%, 08/15/2015		218,050
		Tyco International
		Group S.A.: f
	1,425,000	6.375%, 10/15/2011		1,467,979
	650,000	6.00%, 11/15/2013		667,443

The accompanying notes are an integral part of these financial statements.

Page 9

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Industrial – 17.8% (cont.)
		United AirLines, Inc.
		Pass Thru Certificates:
$	576,792	6.201%, 09/01/2008	$	582,560
	269,959	10.02%, 03/22/2014		146,115
	245,275	7.762%, 12/31/2049		226,420
	1,000,000	Univision
		Communication, Inc.,
		3.50%, 10/15/2007		990,000
	1,500,000	Vale Overseas Limited,
		6.25%, 01/23/2017 f		1,487,730
	1,050,000	Viacom, Inc.,
		7.70%, 07/30/2010		1,110,274
		Waste Management, Inc.:
	1,175,000	6.875%, 05/15/2009		1,201,702
	25,000	5.00%, 03/15/2014		23,332
	500,000	Willamette Industries,
		Inc. Notes,
		6.60%, 06/05/2012		507,952
				57,709,536
International (U.S. $ Denominated) – 1.6%
	275,000	Corp Andina
		De Fomento Notes,
		7.375%, 01/18/2011 f		289,735
		Korea Development
		Bank Notes: f
	450,000	4.25%, 11/13/2007		447,254
	1,050,000	3.875%, 03/02/2009		1,023,408
	350,000	4.625%, 09/16/2010		341,706
	1,000,000	5.125%, 02/14/2011		984,933
	350,000	National Bank
		of Hungary
		Yankee Debentures,
		8.875%, 11/01/2013 f		409,264
	1,700,000	PEMEX Project Funding
		Master Trust,
		9.125%, 10/13/2010 f		1,870,000
				5,366,300
Mortgage Backed Securities – 18.2%
		Bank of America
		Alternative Loan Trust:
	394,360	Series 2003-11, Class 4A1,
		4.75%, 01/25/2019		374,888
	1,607,196	Series 2004-2, Class 5A1,
		5.50%, 03/25/2019		1,598,243
	1,508,674	Series 2004-11, Class 4A1,
		5.50%, 12/25/2019		1,479,444
	1,627,311	Series 2006-3, Class 6A1,
		6.00%, 04/25/2036		1,634,113
	1,117,861	Bank of America
		Funding Corporation,
		Series 2003-3, Class 1A41,
		5.50%, 10/25/2033		1,089,398
		Citicorp Mortgage
		Securities, Inc.:
	1,467,531	Series 2004-5, Class 1A25,
		5.50%, 10/25/2014		1,455,849
	1,482,386	Series 2004-4, Class A5,
		5.50%, 06/25/2034		1,450,713
		Countrywide Alternative
		Loan Trust:
	515,960	Series 2005-5R, Class A2,
		4.75%, 12/25/2018		507,736
	1,620,952	Series 2005-50CB, Class
		4A1, 5.00%, 11/25/2020		1,597,084
	2,847,075	Series 2006-7CB, Class
		3A1, 5.25%, 05/25/2021		2,810,658
	46,490	Series 2004-18CB,
		5.125%, 09/25/2034		46,273

The accompanying notes are an integral part of these financial statements.

Page 10

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Mortgage Backed Securities – 18.2% (cont.)
$	50,000	Series 2005-10CB,
		Class 1A6,
		5.50%, 05/25/2035	$	48,999
	1,876,914	Countrywide Home
		Loans, Inc.,
		Series 2003-18, Class A3,
		5.25%, 07/25/2033		1,858,991
	4,015,251	CS First Boston Mortgage
		Securities Corp.,
		Series 1998-C2, Class A2,
		6.30%, 11/15/2030		4,046,794
		Federal Gold Loan
		Mortgage Corporation
		(FGLMC) Pass Through
		Certificates:
	1,984,566	6.00%, 06/01/2021		1,993,454
	60,744	6.00%, 07/01/2028		60,645
		Federal Home Loan
		Mortgage Corporation
		(FHLMC):
	1,641,296	Series 3033, Class LU,
		5.50%, 03/15/2013		1,638,922
	1,309,977	Series 2695, Class UA,
		5.50%, 09/15/2014		1,303,559
	620,131	Series R001, Class AE,
		4.375%, 04/15/2015		602,392
	2,070,302	Series R003, Class VA,
		5.50%, 08/15/2016		2,058,595
	2,492,618	Series 3122, Class VA,
		6.00%, 01/15/2017		2,506,277
	1,950,159	Series R010, Class VA,
		5.50%, 04/15/2017		1,937,177
	640,569	Series R009, Class AJ,
		5.75%, 12/15/2018		635,452
	55,644	Series 1395, Class G,
		6.00%, 10/15/2022		55,547
	639,363	Series 2970, Class DA,
		5.50%, 01/15/2023		636,303
		Federal National
		Mortgage Association
		(FNMA):
	1,336,843	Series 2006-B2, Class AB,
		5.50%, 05/25/2014		1,328,271
	1,500,000	Series 2003-24, Class PC,
		5.00%, 11/25/2015		1,483,295
	1,330,320	Series 2006-B1, Class AB,
		6.00%, 06/25/2016		1,330,420
	50,000	Series 2003-35, Class TD,
		5.00%, 12/25/2016		49,461
	223,785	Series 1991-137, Class H,
		7.00%, 10/25/2021		230,979
	188,558	Series 1992-136, Class PK,
		6.00%, 08/25/2022		189,392
	96,269	Series 1993-32, Class H,
		6.00%, 03/25/2023		95,447
	593,831	Series 2002-95, Class MD,
		5.00%, 07/25/2026		591,111
	294,471	Series 2002-77, Class QP,
		5.00%, 09/25/2026		293,089
	2,925,944	Series 2004-W6,
		Class 1A6,
		5.50%, 07/25/2034		2,891,197
		Government National
		Mortgage Association
		(GNMA):
	308,032	Series 2003-12,
		Class ON,
		4.00%, 02/16/2028		306,701
	495,035	Series 1999-4, Class ZB,
		6.00%, 02/20/2029		496,128

The accompanying notes are an integral part of these financial statements.

Page 11

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Mortgage Backed Securities – 18.2% (cont.)
		J.P. Morgan Alternative
		Loan Trust:
$	1,610,777	Series 2006-A1,
		Class 2A1,
		5.797%, 03/25/2036	$	1,609,040
	3,000,000	Series 2006-S2,
		Class A2,
		5.81%, 05/25/2036		2,989,104
	934,415	Lehman Mortgage Trust,
		Series 2006-4, Class 3A1,
		5.00%, 08/25/2021		917,533
	606,989	Master Alternative
		Loans Trust,
		Series 2004-3, Class 1A1,
		5.00%, 03/25/2019		584,038
	547,937	Salomon Brothers
		Mortgage Securities VII,
		Series 2003-UP2, Class A2,
		4.00%, 06/25/2033		524,984
		Washington Mutual:
	3,556,829	Series 2004-CB3, Class 3A,
		5.50%, 10/25/2019		3,535,516
	814,751	Series 2004-CB4, Class
		21A, 5.50%, 12/25/2019		809,807
		Washington Mutual, Inc.
		Pass-Thru Certificates:
	2,641,450	Series 2004-CB1, Class
		5A, 5.00%, 06/25/2019		2,539,094
	1,506,454	Series 2004-CB3, Class
		4A, 6.00%, 10/25/2019		1,506,970
	1,176,976	Series 2004-CB4, Class
		22A, 6.00%, 12/25/2019		1,186,014
				58,915,097
Taxable Municipal Bonds – 0.4%
		Tobacco Settlement
		Financing Corporation:
	185,000	5.92%, 06/01/2012		184,519
	1,025,864	6.36%, 05/15/2025		1,024,910
				1,209,429
Utilities – 9.2%
	1,715,000	Cilcorp Inc. Senior Notes,
		8.70%, 10/15/2009		1,772,264
	50,000	Commonwealth Edison,
		5.95%, 08/15/2016		48,949
	1,000,000	Dominion Resources
		Inc., Series C,
		5.15%, 07/15/2015		949,808
	1,400,000	Duke Capital LLC Notes,
		5.668%, 08/15/2014		1,350,377
	600,000	Energy Transfer Partners,
		5.65%, 08/01/2012		593,008
	300,000	Exelon Corporation
		Senior Notes,
		6.75%, 05/01/2011		309,096
	2,500,000	Kinder Morgan Finance,
		5.70%, 01/05/2016 f		2,304,192
	391,379	Kiowa Power Partners LLC,
		4.811%, 12/30/2013
		(Acquired 11/19/2004;
		Cost $403,331)*		376,695
	300,000	Korea Electric Power
		Corporation,
		6.75%, 08/01/2027 f		328,517
		MidAmerican Energy
		Holdings Company
		Senior Notes:
	800,000	4.625%, 10/01/2007		798,053
	1,500,000	7.52%, 09/15/2008		1,532,821

The accompanying notes are an integral part of these financial statements.

Page 12

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
Utilities – 9.2% (cont.)
$	1,400,000	National Grid PLC Senior
		Unsecured Notes,
		6.30%, 08/01/2016 f	$	1,425,549
	25,000	National Rural Utilities,
		4.375%, 10/01/2010		24,188
	100,000	Nisource Finance
		Corporation,
		7.875%, 11/15/2010		106,478
	1,500,000	ONEOK, Inc.
		Senior Notes,
		7.125%, 04/15/2011		1,565,347
	400,000	ONEOK Partners
		LP Notes,
		5.90%, 04/01/2012		401,923
	1,417,000	Panhandle Eastern
		Pipeline Senior Notes,
		4.80%, 08/15/2008		1,404,271
	1,990,000	Pepco Holdings, Inc.,
		5.50%, 08/15/2007		1,990,796
	1,475,000	PPL Energy Supply, LLC
		Bonds, Series A
		5.70%, 10/15/2015		1,424,412
	388,000	PPL Energy Supply, LLC
		Senior Notes,
		6.40%, 11/01/2011		394,085
	900,000	Progress Energy, Inc.
		Senior Notes,
		6.85%, 04/15/2012		943,420
	175,000	PSE&G Energy Holdings
		LLC Senior Notes,
		8.50%, 06/15/2011		185,354
		PSE&G Power LLC:
	275,000	7.75%, 04/15/2011		293,594
	425,000	5.00%, 04/01/2014		402,023
	828,723	RGS (I&M) Funding
		Corporation Debentures,
		9.82%, 12/07/2022		988,534
	3,500,000	System Energy Resources
		1st Mortgage,
		4.875%, 10/01/2007		3,493,819
	800,000	Transcontinental Gas Pipe
		Line Corporation
		Senior Notes,
		8.875%, 07/15/2012		896,000
	313,586	Tristate Gen & Trans Assn,
		Series 2003, 6.04%,
		01/31/2018 (Acquired
		10/14/2003; Cost $313,586)*		309,805
		Vectren Utility Holdings:
	900,000	6.625%, 12/01/2011		925,628
	525,000	5.25%, 08/01/2013		501,713
	900,000	Verizon Communications
		Debentures,
		6.84%, 04/15/2018		945,761
	25,000	Verizon Communications
		Senior Unsecured Notes,
		5.55%, 02/15/2016		24,357
	600,000	Williams Companies,
		Inc. Notes,
		8.125%, 03/15/2012		636,750
	325,000	Yosemite Securities Trust I,
		8.25%, 11/15/2004
		(Acquired 04/26/2001;
		Cost $340,415)* f		269,750
				29,917,337

The accompanying notes are an integral part of these financial statements.

Page 13

Baird Intermediate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.2% (cont.)
U.S. Government Agency Issues – 11.9%
		Federal National Mortgage
		Association (FNMA):
$	3,085,000	7.25%, 01/15/2010	$	3,233,370
	34,525,000	6.00%, 05/15/2011		35,433,525
				38,666,895
U.S. Treasury Obligations – 12.0%
		U.S. Treasury Bonds,
	29,150,000	9.125%, 05/15/2018		38,792,266
		Total Long-Term
		Investments
		(Cost $309,527,685)		305,446,997
COLLATERAL POOL INVESTMENT
FOR SECURITIES ON LOAN – 26.3%
(Cost $85,409,679)
(Please Refer to Note 6)				85,409,679
SHORT-TERM INVESTMENTS – 5.4%
Money Market Funds – 5.4%
	12,468,548	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		12,468,548
	4,979,405	AIM STIT-STIC
		Prime Portfolio		4,979,405
		Total Short-Term
		Investments
		(Cost $17,447,953)		17,447,953
		Total Investments
		(Cost $412,385,317) –
		125.9%		408,304,629
		Liabilities in Excess of
		Other Assets – (25.9)%		(84,000,988	)
		TOTAL NET
		ASSETS – 100.0%	$	324,303,641

^	Non-Income Producing
*	Restricted Security Deemed Liquid
f	Foreign Security

The accompanying notes are an integral part of these financial statements.

Page 14

Baird Aggregate Bond Fund

June 30, 2007

The Baird Aggregate Bond Fund seeks an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers Aggregate Bond Index.  The Lehman Brothers Aggregate Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year.

Portfolio Characteristics

Quality Distribution*	Sector Weightings*

Net Assets:	$	507,158,635	Annualized Expense Ratio:
SEC 30-Day Yield:**			Institutional Class:	0.30	%
Institutional Class:		5.50%	Investor Class:	0.55	%***
Investor Class:		5.25%	Portfolio Turnover Rate:****	21.5	%
Average Effective Duration:	4.70 years		Total Number of Holdings:	314
Average Effective Maturity:	7.27 years

*	Percentages shown are based on the Fund’s total net assets.
**	SEC yields are based on SEC guidelines and are calculated for the 30 days ended June 30, 2007.
***	Includes 0.25% 12b-1 fee.
****	Not annualized.

Page 15

Baird Aggregate Bond Fund

Average Annual Total Returns

			Since
For the Periods Ended June 30, 2007	One Year	Five Years	Inception(1)
Baird Aggregate Bond Fund – Institutional Class Shares	6.69%	5.32%	6.51%
Baird Aggregate Bond Fund – Investor Class Shares	6.39%	5.12%	6.28%
Lehman Brothers Aggregate Bond Index(2)	6.12%	4.48%	5.77%

(1)	For the period from September 29, 2000 (commencement of operations) through June 30, 2007.
(2)	The Lehman Brothers Aggregate Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year.  This index does not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 16

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1%
Asset Backed Securities – 10.1%
$	7,700,000	American Express Credit
		Account Master Trust,
		Series 2005-5, Class A,
		5.36%, 02/15/2013	$	7,700,548
	2,000,000	Bayview Financial
		Acquisition Trust,
		Series 2006-A, Class 1A2,
		5.483%, 02/28/2041		1,986,978
	50,839	Citifinancial Mortgage
		Securities, Inc.,
		Series 2003-2, Class AF3,
		3.0429%, 05/25/2033		50,477
		Contimortgage Home
		Equity Trust:
	15,613	Series 1999-1, Class A7,
		6.97%, 12/25/2013		15,560
	4,600	Series 1997-2, Class A9,
		7.09%, 04/15/2028		4,591
	48,753	Series 1999-3, Class A8,
		5.8843%, 05/25/2029		48,765
		Countrywide Asset-Backed
		Certificates:
	4,100,000	Series 2006-S2, Class A2,
		5.627%, 07/25/2027		4,087,642
	2,000,000	Series 2005-17, Class 1AF2,
		5.363%, 03/25/2030		1,989,264
	95,203	Series 2004-12, Class AF3,
		4.022%, 12/25/2030		94,880
	1,500,000	Series 2004-15, Class AF6,
		4.613%, 04/25/2035		1,422,513
	3,300,000	Series 2005-1, Class AF6,
		5.03%, 07/25/2035		3,230,653
	1,243,565	Series 2005-10, Class AF2,
		4.493%, 02/25/2036		1,237,626
	3,000,000	Series 2005-10, Class AF6,
		4.915%, 02/25/2036		2,845,323
	2,000,000	Series 2005-17, Class 1AF,
		5.564%, 05/25/2036		1,947,600
	3,000,000	Series 2007-S1, Class A6,
		5.693%, 11/25/2036		2,898,818
		Credit Based Asset
		Servicing and Securities:
	1,000,000	Series 2005-CB1, Class
		AF4, 4.615%, 01/25/2035		994,423
	2,000,000	Series 2005-CB8, Class
		AF2, 5.303%, 12/25/2035		1,957,349
	397,652	Equivantage Home
		Equity Loan Trust,
		Series 1996-3, Class A3,
		7.70%, 09/25/2027		396,377
		GE Capital Mortgage
		Services, Inc.:
	7,217	Series 1997-HE4, Class
		A7, 6.735%, 12/25/2028		7,193
	88,239	Series 1999-HE1, Class
		A7, 6.265%, 04/25/2029		87,949
	523,209	GMAC Mortgage
		Corporation Loan Trust,
		Series 2004-GH1, Class
		A2, 4.39%, 12/25/2025		518,999
		Green Tree Financial
		Corporation:
	1,269,145	Series 1993-3, Class A7,
		6.40%, 10/15/2018		1,279,057
	180,201	Series 1993-4, Class A5,
		7.05%, 01/15/2019		181,709
	313	Series 1995-4, Class A5,
		6.95%, 06/15/2025		313
	1,030,967	Series 1998-2, Class A5,
		6.24%, 11/01/2016		1,027,391
	185,249	Series 1997-6, Class A8,
		7.07%, 01/15/2029		189,166

The accompanying notes are an integral part of these financial statements.

Page 17

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Asset Backed Securities – 10.1% (cont.)
$	2,134,691	Series 1998-3, Class A5,
		6.22%, 03/01/2030	$	2,119,342
	1,259,032	Series 1998-4, Class A5,
		6.18%, 04/01/2030		1,241,841
	1,997,968	GSAA Home Equity Trust,
		Series 2005-1, Class AF2,
		4.316%, 11/25/2034		1,948,092
	415,857	IMC Home Equity Loan
		Trust, Series 1997-5, Class
		A10, 6.88%, 11/20/2028		414,796
	103,491	Impac CMB Trust,
		Series 2004-4, Class 2A2,
		5.249%, 09/25/2034		101,877
	123,242	Oakwood Mortgage
		Investors, Inc.,
		Series 1999-B, Class A3,
		6.45%, 11/15/2017		114,032
		RAAC Series:
	190,842	Series 2004-SP1, Class
		AI2, 4.38%, 01/25/2022		188,990
	1,200,000	Series 2004-SP1, Class
		AI4, 5.285%, 08/25/2027		1,167,544
	3,000,000	Renaissance Home
		Equity Loan Trust,
		Series 2007-1, Class AF3,
		5.612%, 04/25/2037		2,966,340
		Residential Asset
		Mortgage Products, Inc.:
	1,548,397	Series 2003-RS7, Class
		AI6, 5.34%, 08/25/2033		1,509,949
	1,000,000	Series 2005-RS1, Class
		AI6, 4.713%, 01/25/2035		950,179
		Residential Asset
		Securities Corporation:
	219,836	Series 2003-KS5, Class
		AI6, 3.62%, 07/25/2033		205,549
	299,801	Series 2004-KS2, Class
		AI6, 4.30%, 03/25/2034		283,161
	1,600,000	Stingray Pass Thru
		Certificates, Series 2005,
		5.902%, 01/12/2015
		(Acquired 09/01/2006,
		Cost $274,210)*		1,531,168
		Structured Asset
		Securities Corporation:
	471,991	Series 2004-11XS, Class
		1A3A, 4.76%, 06/25/2034		469,278
	38,527	Series 2004-16XS, Class
		A2, 4.91%, 08/25/2034		38,384
				51,451,686
Financial – 10.6%
	600,000	American General Finance
		Corporation Senior Notes,
		8.45%, 10/15/2009		638,213
	200,000	AmSouth Bancorporation
		Subordinated Debentures,
		6.75%, 11/01/2025		209,610
	275,000	AMVESCAP PLC Notes,
		5.375%, 02/27/2013 f		267,063
	300,000	BAC Capital Trust VI,
		5.625%, 03/08/2035		267,866
	1,015,000	Bank of America
		Corporation
		Subordinated Notes,
		10.20%, 07/15/2015		1,285,283
	400,000	Bank of Oklahoma
		Subordinated Notes,
		7.125%, 08/15/2007		400,675
	1,435,000	Bank of Tokyo-
		Mitsubishi/UFJ NY,
		7.40%, 06/15/2011		1,529,954

The accompanying notes are an integral part of these financial statements.

Page 18

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Financial – 10.6% (cont.)
$	929,000	Bank One Corporation
		Subordinated Notes,
		10.00%, 08/15/2010	$	1,035,300
	330,000	Bankers Trust
		Corporation
		Subordinated Notes,
		7.25%, 10/15/2011		349,969
	2,175,000	Banponce Trust I,
		8.327%, 02/01/2027
		(Callable 09/21/2007)		2,265,545
	2,000,000	Capmark Financial Group,
		Inc., 6.30%, 05/10/2017
		(Acquired 05/03/2007;
		Cost $1,996,780)*		1,968,106
	325,000	CIT Group Company
		of Canada,
		5.20%, 06/01/2015 f		302,192
		CIT Group, Inc.:
	500,000	5.40%, 01/30/2016		471,544
	1,070,000	6.10%, 03/15/2067
		(Callable 03/15/2017)		974,473
	1,181,000	Compass Bank
		Subordinated Notes,
		8.10%, 08/15/2009		1,239,141
	875,000	Countrywide Financial
		Corporation
		Subordinated Notes,
		6.25%, 05/15/2016		859,339
	1,000,000	Credit Agricole S A,
		6.637%, 05/29/2049
		(Acquired 05/23/2007;
		Cost $1,000,000)* f		972,067
	1,135,000	First Empire Capital Trust
		I, 8.234%, 02/01/2027		1,183,054
	625,000	First Empire Capital Trust
		II, 8.277%, 06/01/2027		651,792
	639,961	First National Bank
		of Chicago Pass
		Thru Certificates,
		8.08%, 01/05/2018	711,662
	2,875,000	First National Bank of
		Omaha Subordinated
		Notes, 7.32%, 12/01/2010		2,933,457
	1,748,000	First Union Capital,
		7.935%, 01/15/2027
		(Callable 09/21/2007)		1,817,869
	2,718,000	First Union Institutional
		Capital I, 8.04%,
		12/01/2026 (Callable
		09/07/2007)		2,829,870
	545,000	First Union Institutional
		Capital II, 7.85%,
		01/01/2027 (Callable
		09/07/2007)		566,893
	675,000	FMR Corporation Notes,
		4.75%, 03/01/2013
		(Acquired 02/26/2003
		and 03/15/2007; Cost
		$250,768 and $415,463,
		respectively)*		649,558
	1,575,000	Glencore Funding LLC,
		6.00%, 04/15/2014
		(Acquired 03/31/2004,
		02/02/2005, 10/31/2005
		and 12/04/2006; Cost
		$496,425, $122,281,
		$231,168 and $695,590,
		respectively)*		1,545,741
	850,000	Goldman Sachs Capital I,
		6.345%, 02/15/2034		810,659

The accompanying notes are an integral part of these financial statements.

Page 19

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Financial – 10.6% (cont.)
$	1,000,000	Great West Life &
		Annuity Insurance,
		7.153%, 05/16/2046
		(Acquired 05/16/2006;
		Cost $1,000,000)*	$	1,024,097
	500,000	Health Care Service
		Corporation Notes,
		7.75%, 06/15/2011
		(Acquired 06/20/2001
		and 01/26/2005; Cost
		$150,908 and $345,000,
		respectively)*		534,331
	275,000	Highmark, Inc. Notes,
		6.80%, 08/15/2013
		(Acquired 08/14/2003;
		Cost $274,373)*		284,860
	400,000	HSBC USA Capital Trust I,
		7.808%, 12/15/2026
		(Callable 09/07/07)
		(Acquired 03/08/2007;
		Cost $415,969)*		415,616
	900,000	J.P. Morgan Chase &
		Company Notes,
		5.875%, 03/15/2035		821,329
	1,150,000	Jefferies Group Inc.,
		6.25%, 01/15/2036		1,077,603
	565,000	Liberty Mutual
		Insurance Notes,
		7.697%, 10/15/2097
		(Acquired 03/26/2003;
		Cost $361,510)*		549,695
	1,000,000	Lincoln National
		Corporation, 6.05%,
		04/20/2067 (Callable
		04/20/2017)		954,784
	300,000	Marsh & McLennan
		Companies, Inc.,
		5.375%, 07/15/2014		280,668
	475,000	Morgan Stanley
		Subordinated Notes,
		4.75%, 04/01/2014		443,574
	1,346,000	Navigators Group Inc.
		Senior Unsecured Notes,
		7.00%, 05/01/2016		1,347,567
	1,757,000	NB Capital Trust IV,
		8.25%, 04/15/2027
		(Callable 09/07/2007)		1,827,811
	2,500,000	North Fork Capital Trust II,
		8.00%, 12/15/2027
		(Callable 12/15/2007)		2,615,425
	600,000	Phoenix Companies,
		6.675%, 02/16/2008		602,238
	1,000,000	Premium Asset Senior
		Notes, 4.125%, 03/12/2009
		(Acquired 12/20/2006;
		Cost $935,000)*		948,277
	1,000,000	Republic New York
		Capital I, 7.75%,
		11/15/2026 (Callable
		09/07/2007)		1,036,600
	700,000	Republic New York
		Corporation Debentures,
		9.125%, 05/15/2021		887,606
	1,775,000	Residential Capital
		Corporation,
		6.875%, 06/30/2015		1,721,599
	500,000	SLM Corporation Notes,
		5.625%, 08/01/2033		389,872
	1,000,000	St. Paul Travelers,
		6.75%, 06/20/2036		1,033,749

The accompanying notes are an integral part of these financial statements.

Page 20

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Financial – 10.6% (cont.)
$	500,000	State Street Institutional
		Cap B, 8.035%,
		03/15/2027 (Acquired
		09/06/2006; Cost
		$524,155)*	$	520,695
	2,000,000	Suntrust Capital II,
		7.90%, 06/15/2027
		(Called 07/06/2007)		2,081,640
	1,000,000	Symetra Financial
		Corporation Senior Notes,
		6.125%, 04/01/2016
		(Acquired 03/23/2006;
		Cost $995,570)*		988,918
	225,000	UFJ Finance Aruba AEC,
		6.75%, 07/15/2013 f		237,576
	1,534,000	Westdeutsche Landesbank
		Subordinated Notes,
		4.796%, 07/15/2015		1,443,744
	750,000	Willis Group NA,
		5.625%, 07/15/2015		698,342
				53,505,111
Industrial – 10.8%
	500,000	Alcan, Inc.,
		5.75%, 06/01/2035 f		443,199
		Ameritech Capital
		Funding Debentures:
	1,450,752	9.10%, 06/01/2016		1,626,531
	1,000,000	6.45%, 01/15/2018		1,012,400
	1,000,000	Anadarko Petroleum
		Corporation,
		6.45%, 09/15/2036		961,827
		AOL Time Warner, Inc.:
	1,100,000	7.625%, 04/15/2031		1,178,508
	175,000	7.70%, 05/01/2032		189,236
	875,000	AT&T Wireless Services,
		Inc. Senior Notes,
		8.75%, 03/01/2031		1,090,793
	450,000	British Telecom PLC,
		8.625%, 12/15/2030 f		588,953
	600,000	Bunge Ltd. Finance
		Corporation Notes,
		5.35%, 04/15/2014		569,974
	275,000	Caesars Entertainment
		Senior Notes,
		7.50%, 09/01/2009		281,188
	800,000	Clear Channel
		Communications Senior
		Unsubordinated Notes,
		5.50%, 12/15/2016		659,168
	825,000	Comcast Corporation
		Senior Subordinated
		Notes, 10.625%,
		07/15/2012		979,633
	580,000	ConAgra Foods, Inc.
		Senior Unsecured Notes,
		5.819%, 06/15/2017		564,591
	120,000	ConAgra Foods, Inc.
		Subordinated Notes,
		9.75%, 03/01/2021		150,777
		Continental Airlines, Inc.
		Pass Thru Certificates:
	9,340	Series 1997-4,
		6.80%, 07/02/2007		9,339
	19,387	Series 1998-1,
		6.541%, 09/15/2009		19,363
	124,034	Series 2000-2,
		8.312%, 10/02/2012		127,134
	423,062	Series 1997-4,
		6.90%, 01/02/2018		431,523
	1,775,000	COX Communications
		Inc., 7.125%, 10/01/2012		1,875,241

The accompanying notes are an integral part of these financial statements.

Page 21

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Industrial – 10.8% (cont.)
$	2,000,000	CVS Caremark Corp.,
		5.75%, 06/01/2017	$	1,929,644
	1,000,000	D.R. Horton Inc.
		Unsubordinated Notes,
		6.50%, 04/15/2016		956,765
	441,000	DaimlerChrysler Co LLC,
		12.375%, 05/01/2020		719,493
	250,000	Deutsche Telekom
		International Finance BV,
		8.25%, 06/15/2030 f		299,641
	1,500,000	Donnelley (R.R.) & Sons
		Co., 6.125%, 01/15/2017		1,460,466
	142,574	FedEx Corporation
		Pass Thru Certificates,
		6.845%, 01/15/2019		150,326
	475,000	Ford Capital BV
		Debentures, 9.50%,
		06/01/2010 f		482,125
	403,000	Ford Motor Company
		Debentures, 9.215%,
		09/15/2021		367,737
		General Motors Acceptance
		Corporation Notes:
	100,000	7.25%, 03/02/2011		99,672
	150,000	6.75%, 12/01/2014		143,648
	650,000	Health Management
		Association,
		6.125%, 04/15/2016		611,662
	625,000	Hutchison Whampoa
		International Limited,
		6.25%, 01/24/2014
		(Acquired 06/02/2004
		and 02/08/2005; Cost
		$333,834 and $298,958,
		respectively)* f		633,842
	850,000	Johnson Controls Inc.,
		Senior Notes,
		6.00%, 01/15/2036		800,372
	1,000,000	Jones Intercable, Inc.,
		7.625%, 04/15/2008		1,014,678
	650,000	Knight-Ridder, Inc.,
		5.75%, 09/01/2017		556,202
	400,000	Laboratory Corporation
		of America,
		5.625%, 12/15/2015		385,547
	900,000	Lafarge SA Notes,
		7.125%, 07/15/2036		944,706
	1,000,000	Masco Corporation,
		6.125%, 10/03/2016		983,644
	1,500,000	Nextel Communications,
		7.375%, 08/01/2015		1,499,356
	320,000	Pactiv Corporation,
		7.95%, 12/15/2025		342,603
	400,000	PCCW Capital II Ltd.,
		6.00%, 07/15/2013
		(Acquired 07/10/2003;
		Cost $398,132)* f		396,412
	745,000	Plum Creek Timberlands,
		5.875%, 11/15/2015		721,310
	2,000,000	Premcor Refining Group
		Inc. Senior Notes,
		9.50%, 02/01/2013		2,129,530
	2,000,000	Premcor Refining Group,
		7.50%, 06/15/2015		2,062,046
		Qwest Capital
		Funding, Inc.:
	300,000	7.00%, 08/03/2009		300,000
	200,000	7.25%, 02/15/2011		199,000

The accompanying notes are an integral part of these financial statements.

Page 22

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Industrial – 10.8% (cont.)
$	3,000,000	Sealed Air Corporation
		Senior Notes, 5.375%,
		04/15/2008 (Acquired
		04/09/2003, 06/04/2007
		and 06/06/2007; Cost
		$248,650, $2,494,950
		and $249,488,
		respectively)*	$	2,983,644
	358,000	Sprint Capital
		Corporation,
		8.75%, 03/15/2032		402,081
	957,083	System Energy Resources,
		5.129%, 01/15/2014		925,901
	680,000	TCI Communications,
		Inc. Debentures,
		7.875%, 08/01/2013		745,124
	2,100,000	Telecom Italia Capital,
		7.20%, 07/18/2036 f		2,158,932
	2,000,000	Telefonica Emisiones SA,
		6.221%, 07/03/2017 f		1,994,992
	1,000,000	Teva Pharmaceutical
		Finance LLC,
		5.55%, 02/01/2016		958,186
	1,000,000	Time Warner Cable, Inc.,
		6.55%, 05/01/2037
		(Acquired 04/04/2007;
		Cost $993,560)*		966,507
		Tyco International
		Group S.A.: f
	1,468,000	6.125%, 01/15/2009		1,486,657
	875,000	6.375%, 10/15/2011		901,391
	300,000	6.00%, 11/15/2013		308,051
		United AirLines, Inc.
		Pass Thru Certificates:
	634,471	6.201%, 09/01/2008		640,816
	269,803	7.762%, 12/31/2049		249,062
	1,487,000	Univision
		Communication, Inc.,
		3.50%, 10/15/2007		1,472,130
	479,154	U.S. Airways Pass Thru
		Certificate, Series 1998-1,
		6.85%, 01/30/2018		497,122
		Vale Overseas Limited: f
	350,000	8.25%, 01/17/2034		409,395
	1,400,000	6.875%, 11/21/2036		1,407,260
	675,000	Viacom, Inc.,
		7.70%, 07/30/2010		713,748
	1,875,000	Vodafone Group PLC,
		6.15%, 02/27/2037 f		1,744,294
	1,000,000	Wal-Mart Stores,
		5.25%, 09/01/2035		874,149
				54,789,247
International
(U.S. $ Denominated) – 0.7%
		Corp Andina
		De Fomento Notes: f
	50,000	7.375%, 01/18/2011		52,679
	340,000	5.75%, 01/12/2017		333,777
		Korea Electric
		Power Corporation: f
	100,000	7.75%, 04/01/2013		109,748
	2,165,000	6.70%, 08/01/2027		2,370,796
	510,000	National Bank of
		Hungary Yankee
		Debentures,
		8.875%, 11/01/2013 f		596,357
	301,000	United Mexican
		States Notes,
		6.75%, 09/27/2034 f		321,016
				3,784,373

The accompanying notes are an integral part of these financial statements.

Page 23

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Mortgage Backed Securities – 37.7%
		Bank of America
		Alternative Loan Trust:
$	645,024	Series 2003-4, Class 2A1,
		5.00%, 06/25/2018	$	634,037
	910,060	Series 2003-11, Class 4A1,
		4.75%, 01/25/2019		865,126
	685,592	Series 2004-6, Class 4A1,
		5.00%, 07/25/2019		671,962
	705,141	Series 2004-11, Class 4A1,
		5.50%, 12/25/2019		691,479
	1,145,976	Series 2005-2, Class 4A1,
		5.50%, 03/25/2020		1,138,128
	4,903,962	Series 2007-1, Class 1A1,
		6.103%, 04/25/2022		4,910,112
	2,000,034	Series 2003-11, Class 2A1,
		6.00%, 01/25/2034		1,989,558
	1,162,135	Series 2005-2, Class 1CB2,
		5.50%, 03/25/2035		1,147,399
	1,417,085	Series 2005-9, Class 1CB3,
		5.50%, 10/25/2035		1,400,336
	848,594	Series 2005-11, Class
		1CB4, 5.50%, 12/25/2035		838,515
	2,717,250	Series 2006-5, Class CB7,
		6.00%, 06/25/2036		2,713,224
		Chase Mortgage
		Finance Corporation:
	1,113,689	Series 2003-S13, Class
		A11, 5.50%, 11/25/2033		1,106,009
	2,000,000	Series 2006-A1, Class 2A3,
		6.00%, 09/25/2036		1,995,112
	771,819	Citicorp Mortgage
		Securities, Inc.,
		Series 2004-3, Class A2,
		5.25%, 05/25/2034		759,001
	1,957,974	Citigroup Mortgage
		Loan Trust, Inc.,
		Series 2005-9, Class 2A2,
		5.50%, 11/25/2035		1,945,336
		Countrywide Alternative
		Loan Trust:
	1,841,991	Series 2005-50CB, Class
		4A1, 5.00%, 11/25/2020		1,814,869
	4,412,912	Series 2006-7CB, Class
		3A1, 5.25%, 05/25/2021		4,356,467
	2,027,300	Series 2006-J5, Class 3A1,
		6.116%, 07/25/2021		2,037,990
	2,764,422	Series 2006-43CB, Class
		2A1, 6.00%, 02/25/2022		2,768,072
	1,500,000	Series 2005-10CB, Class
		1A6, 5.50%, 05/25/2035		1,469,979
	919,025	Countrywide Home
		Loans, Inc., Series
		2003-39, Class A5,
		5.00%, 05/25/2012		908,077
	1,573,639	CS First Boston
		Mortgage Securities Corp.,
		Series 2004-4, Class 2A5,
		5.50%, 06/25/2015		1,558,690
	2,420,545	Deutsche Securities Inc.
		Mortgage, Series
		2006-AR5, Class 21A,
		6.00%, 10/25/2021		2,431,711
		Federal Gold Loan
		Mortgage Corporation
		(FGLMC):
	1,903,299	6.00%, 06/01/2020		1,914,161
	966,237	5.00%, 06/01/2023		924,683
	2,024,996	6.50%, 06/01/2029		2,068,640
	2,757,478	5.50%, 01/01/2036		2,665,738
	5,612,868	6.00%, 12/01/2036		5,565,207

The accompanying notes are an integral part of these financial statements.

Page 24

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Mortgage Backed Securities – 37.7% (cont.)
		Federal Home Loan
		Mortgage Corporation
		(FHLMC):
$	260,543	6.50%, 07/01/2014	$	266,493
	863,591	5.50%, 11/01/2022		844,489
	750,570	5.50%, 07/01/2023		734,018
	1,168,428	Series 3124, Class VP,
		6.00%, 06/15/2014		1,179,289
	527,630	Series 2695, Class UA,
		5.50%, 09/15/2014		525,045
	2,052,259	Series R007, Class AC,
		5.875%, 05/15/2016		2,050,164
	2,378,645	Series R003, Class VA,
		5.50%, 08/15/2016		2,365,194
	2,560,632	Series 3097, Class MC,
		6.00%, 11/15/2016		2,577,736
	785,605	Series 2391, Class QR,
		5.50%, 12/15/2016		783,240
	14,277	Series 2533, Class PC,
		5.00%, 10/15/2017		14,252
	4,452,182	Series R009, Class AJ,
		5.75%, 12/15/2018		4,416,619
	244,014	Series 206, Class E,
		0.00%, 07/15/2019 ^		241,087
	951,127	Series R010, Class AB,
		5.50%, 12/15/2019		937,724
	124,349	Series 141, Class D,
		5.00%, 05/15/2021		123,661
	100,959	Series 1074, Class I,
		6.75%, 05/15/2021		100,785
	669,458	Series 1081, Class K,
		7.00%, 05/15/2021		692,242
	114,954	Series 163, Class F,
		7.83%, 07/15/2021		114,392
	219,117	Series 188, Class H,
		7.00%, 09/15/2021		218,035
	101,203	Series 1286, Class A,
		6.00%, 05/15/2022		101,026
	2,600,000	Series 1694, Class PK,
		6.50%, 03/15/2024		2,667,661
	43,499	Series 2141, Class N,
		5.55%, 11/15/2027		43,435
	1,075,000	Series 2664, Class LG,
		5.50%, 07/15/2028		1,068,281
		Federal National Mortgage
		Association (FNMA):
	1,440,478	5.50%, 07/01/2015		1,423,614
	2,459,266	5.00%, 02/01/2018		2,385,427
	3,045,882	5.00%, 12/01/2019		2,954,840
	870,373	5.50%, 01/01/2023		851,121
	2,662,035	5.50%, 07/01/2023		2,602,733
	2,522,200	6.00%, 03/01/2026		2,517,813
	8,366,862	6.00%, 05/01/2026		8,352,309
	714,641	6.00%, 03/01/2033		711,329
	549,399	5.00%, 11/01/2033		517,515
	980,794	6.00%, 11/01/2034		973,600
	3,142,389	5.50%, 02/01/2035		3,042,414
	4,057,188	5.00%, 11/01/2035		3,811,909
	17,020,055	5.50%, 04/01/2036		16,457,232
	2,362,830	5.50%, 11/01/2036		2,280,030
	2,506,581	Series 2006-B2, Class AB,
		5.50%, 05/25/2014		2,490,507
	1,000,000	Series 2003-27, Class OJ,
		5.00%, 07/25/2015		989,385
	500,000	Series 2003-24, Class PC,
		5.00%, 11/25/2015		494,432
	104,704	Series 2002-56, Class MC,
		5.50%, 09/25/2017		104,088
	497,571	Series 1989-37, Class G,
		8.00%, 07/25/2019		526,620
	102,141	Series 1989-94, Class G,
		7.50%, 12/25/2019		106,787

The accompanying notes are an integral part of these financial statements.

Page 25

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Mortgage Backed Securities – 37.7% (cont.)
$	24,085	Series 1990-58, Class J,
		7.00%, 05/25/2020	$	24,851
	265,874	Series 1990-76, Class G,
		7.00%, 07/25/2020		272,269
	106,157	Series 1990-105, Class J,
		6.50%, 09/25/2020		107,136
	39,819	Series 1990-108, Class G,
		7.00%, 09/25/2020		40,477
	40,587	Series 1991-1, Class G,
		7.00%, 01/25/2021		41,410
	87,077	Series 1991-86, Class Z,
		6.50%, 07/25/2021		88,205
	343,018	Series 2003-28, Class KA,
		4.25%, 03/25/2022		329,177
	39,812	Series G92-30, Class Z,
		7.00%, 06/25/2022		40,892
	1,053,201	Series 1993-58, Class H,
		5.50%, 04/25/2023		1,043,933
	31,295	Series 2003-17, Class QR,
		4.50%, 11/25/2025		31,044
	770,682	Series 2003-31, Class KG,
		4.50%, 12/25/2028		763,474
	673,839	Series 1998-66, Class C,
		6.00%, 12/25/2028		668,590
	106,937	Series 2003-44, Class AB,
		3.75%, 05/25/2033		98,143
	2,857,642	Series 2004-W6, Class
		1A4, 5.50%, 07/25/2034		2,843,492
	3,142,209	Series 2004-W6, Class
		1A6, 5.50%, 07/25/2034		3,104,894
	2,500,000	Series 2004-W10, Class
		A24, 5.00%, 08/25/2034		2,466,816
		First Horizon Alternative
		Mortgage Securities:
	1,376,688	Series 2005-FA7, Class
		2A1, 5.00%, 09/25/2020		1,354,842
	2,219,795	Series 2006-FA6,
		Class 3A1,
		5.75%, 11/25/2021		2,209,627
	3,810,524	Series 2006-FA8,
		Class 2A1,
		5.75%, 02/25/2037		3,792,270
	2,750,000	First Union National Bank
		Commercial Mortgage
		Securities Inc., Series
		2001-C4, Class A2,
		6.223%, 12/12/2033		2,806,256
		GE Capital Commercial
		Mortgage Corporation:
	6,447,661	Series 2000-1, Class A2,
		6.496%, 01/15/2033		6,610,367
	1,200,000	Series 2002-3A, Class AZ,
		4.996%, 12/10/2037		1,167,721
	2,500,000	Series 2004-C3, Class A4,
		5.189%, 07/10/2039		2,417,846
	5,200,000	GMAC Commercial
		Mortgage Securities, Inc.,
		Series 2003-C1, Class A2,
		4.079%, 05/10/2036		4,803,163
		Government National
		Mortgage Association
		(GNMA):
	800,000	Series 2004-78, Class C,
		4.658%, 04/16/2029		763,117
	581,061	6.00%, 11/20/2033		579,197
	1,285,000	Series 2004-100, Class B,
		4.603%, 02/16/2043		1,220,486
	1,610,777	J.P. Morgan Alternative
		Loan Trust, Series
		2006-A1, Class 2A1,
		5.797%, 03/25/2036		1,609,040

The accompanying notes are an integral part of these financial statements.

Page 26

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Mortgage Backed Securities – 37.7% (cont.)
		J.P. Morgan
		Mortgage Trust:
$	3,000,000	Series 2006-A7,
		Class 2A4R, 5.462%,
		01/25/2037	$	2,966,159
	4,000,000	Series 2007-A2,
		Class 2A3,
		5.718%, 04/25/2037		3,966,133
	999,771	Master Alternative Loans
		Trust, Series 2003-5, Class
		6A1, 6.00%, 08/25/2033		990,067
	2,000,000	Regions Funding Trust II,
		6.625%, 05/15/2047		1,913,134
	840,921	Residential Accredit Loans,
		Inc., Series 2004-QS6,
		Class A1, 5.00%,
		05/25/2019		825,285
	800,000	Residential Funding
		Mortgage Security I,
		Series 2003-S11, Class A2,
		4.00%, 06/25/2018		754,114
	2,082,160	Salomon Brothers
		Mortgage Securities VII,
		Series 2003-UP2, Class A2,
		4.00%, 06/25/2033		1,994,940
	1,800,000	Wachovia Bank
		Commercial Mortgage
		Trust, Series 2003-C3,
		Class A2, 4.867%,
		02/15/2035		1,730,000
		Washington Mutual, Inc.
		Pass-Through Certificates:
	2,687,792	Series 2004-CB1, Class
		5A, 5.00%, 06/25/2019		2,583,640
	1,852,938	Series 2004-CB3, Class
		4A, 6.00%, 10/25/2019		1,853,573
	1,181,389	Series 2004-CB4, Class
		21A, 5.50%, 12/25/2019		1,174,220
				190,998,191
Taxable Municipal Bonds – 0.9%
	1,000,000	Cuyahoga County
		Ohio Industrial
		Development Revenue,
		9.125%, 10/01/2023		1,161,740
	2,225,000	Tobacco Settlement
		Authority Iowa,
		6.50%, 06/01/2023		2,194,295
		Tobacco Settlement
		Financing Corporation:
	300,000	5.92%, 06/01/2012		299,220
	760,730	6.36%, 05/15/2025		760,023
				4,415,278
Utilities – 5.4%
	1,025,000	American Electric Power,
		Inc., 5.75%, 08/16/2007		1,023,936
	466,000	Beaver Valley Funding
		Corporation Debentures,
		9.00%, 06/01/2017		519,343
	1,000,000	Canadian National
		Resources,
		6.25%, 03/15/2038		946,184
		Dominion Resources, Inc.:
	500,000	7.195%, 09/15/2014		546,174
	1,147,000	6.75%, 12/15/2032		1,232,872
	1,000,000	Duke Capital LLC Notes,
		5.668%, 08/15/2014		964,555
	750,000	Energy Transfer Partners,
		5.65%, 08/01/2012		741,259
	300,000	Exelon Corporation
		Senior Notes,
		6.75%, 05/01/2011		309,096

The accompanying notes are an integral part of these financial statements.

Page 27

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
Utilities – 5.4% (cont.)
$	2,250,000	Kinder Morgan
		Energy Partners,
		6.95%, 01/15/2038	$	2,272,581
	600,000	Kinder Morgan Energy
		Partners Senior Notes,
		6.30%, 02/01/2009		606,437
	900,000	Kinder Morgan Finance,
		5.70%, 01/05/2016 f		829,509
	234,828	Kiowa Power Partners LLC,
		4.811%, 12/30/2013
		(Acquired 11/19/2004;
		Cost $241,999)*		226,017
	750,000	MidAmerican Energy
		Holdings Company
		Senior Notes,
		7.63%, 10/15/2007		753,991
	1,325,000	National Grid PLC
		Senior Unsecured Notes,
		6.30%, 08/01/2016 f		1,349,180
	1,550,000	NiSource Finance
		Corporation,
		7.875%, 11/15/2010		1,650,414
	650,000	Ocean Energy Inc.,
		4.375%, 10/01/2007		648,101
	425,000	ONEOK, Inc.
		Senior Notes,
		7.125%, 04/15/2011		443,515
	850,000	Pacific Gas & Electric
		Company 1st Mortgage,
		6.05%, 03/01/2034		823,386
	1,000,000	Plains All American
		Pipeline Senior Notes,
		5.625%, 12/15/2013		980,793
	300,000	PPL Energy Supply, LLC
		Senior Notes,
		6.40%, 11/01/2011		304,705
	175,000	PSE&G Energy Holdings
		LLC Senior Notes,
		8.50%, 06/15/2011		185,354
		PSE&G Power LLC:
	250,000	7.75%, 04/15/2011		266,904
	350,000	5.00%, 04/01/2014		331,078
	1,608,698	RGS (I&M) Funding
		Corporation Debentures,
		9.82%, 12/07/2022		1,918,919
	1,400,000	Southern Natural Gas,
		5.90%, 04/01/2017
		(Acquired 03/14/2007;
		Cost $1,397,676)*		1,354,105
	3,000,000	System Energy Resources
		1st Mortgage,
		4.875%, 10/01/2007		2,994,702
	700,000	Transcontinental Gas
		Pipe Line Corporation
		Senior Notes,
		8.875%, 07/15/2012		784,000
	179,192	Tristate Gen & Trans Assn,
		6.04%, 01/31/2018
		(Acquired 10/14/2003;
		Cost $179,192)*		177,032
	500,000	Vectren Utility Holdings,
		6.625%, 12/01/2011		514,237
	1,200,000	Verizon Communications
		Debentures,
		6.84%, 04/15/2018		1,261,015
	550,000	Williams Companies,
		Inc. Notes,
		8.125%, 03/15/2012		583,687
				27,543,081

The accompanying notes are an integral part of these financial statements.

Page 28

Baird Aggregate Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 94.1% (cont.)
U.S. Government Agency Issues – 7.1%
		Federal National Mortgage
		Association (FNMA):
$	32,925,000	6.00%, 05/15/2011	$	33,791,422
	2,275,988	5.50%, 09/01/2034		2,203,578
				35,995,000
U.S. Treasury Obligations – 10.8%
	49,300,000	U.S. Treasury Bond,
		6.25%, 08/15/2023		54,742,276
		Total Long-Term
		Investments
		(Cost $483,024,625)		477,224,243
COLLATERAL POOL INVESTMENT
FOR SECURITIES ON LOAN – 28.8%
(Cost $146,071,574)
(Please Refer to Note 6)				146,071,574
Shares
SHORT-TERM INVESTMENTS – 4.9%
Money Market Funds – 4.9%
	19,090,708	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		19,090,708
	5,647,102	Short-Term Investment
		Trust Prime Portfolio –
		AIM Fund		5,647,102
		Total Short-Term
		Investments
		(Cost $24,737,810)		24,737,810
		Total Investments
		(Cost $653,834,009) –
		127.8%		648,033,627
		Liabilities in Excess of
		Other Assets – (27.8)%		(140,874,992	)
		TOTAL NET
		ASSETS – 100.0%	$	507,158,635

^     Non-Income Producing

*     Restricted Security Deemed Liquid

The accompanying notes are an integral part of these financial statements.

Page 29

Baird Intermediate Municipal Bond Fund

June 30, 2007

The Baird Intermediate Municipal Bond Fund seeks current income that is substantially exempt from federal income tax.  A secondary objective is to provide total return with relatively low volatility of principal.  The Fund strives to achieve an annual rate of return, before Fund expenses, greater than the annual rate of the total return of the Lehman Brothers 7-Year General Obligation Bond Index.  The Lehman Brothers 7-Year General Obligation Bond Index is an unmanaged, market value weighted index consisting of investment grade state and local general obligation bonds that have been issued as part of an offering of at least $50 million; have a minimum amount outstanding of at least $5 million; have been issued within the last five years; and have a maturity of six to eight years.

Portfolio Characteristics

Quality Distribution*	Sector Weightings*

Net Assets:	$	65,086,668	Annualized Expense Ratio:
SEC 30-Day Yield:**			Institutional Class:	0.30	%
Institutional Class:		4.04%	Investor Class:	0.55	%***
Investor Class:		3.79%	Portfolio Turnover Rate:****	1.5	%
Average Effective Duration:	4.83 years		Total Number of Holdings:	60
Average Effective Maturity:	5.76 years

*	Percentages shown are based on the Fund’s total net assets.
**	SEC yields are based on SEC guidelines and are calculated for the 30 days ended June 30, 2007.
***	Includes 0.25% 12b-1 fee.
****	Not annualized.

Page 30

Baird Intermediate Municipal Bond Fund

Average Annual Total Returns

			Since
For the Periods Ended June 30, 2007	One Year	Five Years	Inception(1)
Baird Intermediate Municipal Bond Fund – Institutional Class Shares	4.16%	3.67%	4.54%
Baird Intermediate Municipal Bond Fund – Investor Class Shares	3.82%	3.43%	4.28%
Lehman Brothers 7-Year General Obligation Bond Index(2)	4.14%	3.92%	4.36%

(1)

For the period from March 30, 2001 (commencement of operations) through June 30, 2007.

(2)

The Lehman Brothers 7-Year General Obligation Bond Index is an unmanaged, market value weighted index comprised of investment grade state and local general obligation bonds that have been issued as part of an offering of at least $50 million, have a minimum amount outstanding of at least $5 million, have been issued within the last five years and have a maturity of six to eight years.  This index does not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 31

Baird Intermediate Municipal Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
MUNICIPAL BONDS – 96.5%
Arizona – 2.4%
$	1,415,000	Arizona Health Facilities
		Authority Hospital
		Revenue, 6.375%,
		12/01/2037 (Pre-refunded
		to 12/01/2012)	$	1,580,230
Arkansas – 0.8%
	500,000	Springdale Arkansas Sales
		& Use Tax Revenue, 4.00%,
		07/01/2016 (Pre-refunded
		to various dates)		498,855
California – 1.3%
	500,000	Golden State Tobacco
		Securitization Corporation,
		6.25%, 06/01/2033		543,785
	290,000	Santa Rosa California
		Hospital Revenue, 10.30%,
		03/01/2011 (ETM)		327,964
				871,749
Colorado – 3.9%
	2,000,000	Adams County Colorado
		Single Family Mortgage
		Revenue, 8.875%,
		08/01/2012 (ETM)		2,439,400
	90,000	Colorado Springs Colorado
		Utilities Revenue, 5.80%,
		11/15/2010 (ETM)		92,556
				2,531,956
Delaware – 2.5%
	1,500,000	Delaware State Economic
		Development Authority
		Revenue, 6.75%,
		01/01/2013 (ETM)		1,629,090
Florida – 2.7%
	300,000	Jacksonville Florida Health
		Facility Authority Hospital
		Revenue, 11.50%,
		10/01/2012 (ETM)		403,332
	210,000	Orange County Florida
		Health Revenue, 8.75%,
		10/01/2009 (ETM)		221,733
	1,000,000	Orlando Florida Utilities
		Commission Water &
		Electric Revenue, 6.75%,
		10/01/2017 (ETM)		1,164,030
				1,789,095
Georgia – 1.8%
	1,020,000	Fulton County Georgia
		Hospital Authority
		Revenue, 7.875%,
		10/01/2013 (ETM)		1,166,166
Illinois – 8.5%
	1,000,000	Chicago Illinois General
		Obligation Project and
		Refunding, 5.00%,
		01/01/2017 (FSA Insured)		1,051,520
	1,440,000	Chicago Illinois
		Metropolitan Water
		Reclamation District
		General Obligation, 7.00%,
		12/01/2010 (ETM)		1,580,040
	1,430,000	Cook County Illinois
		School District No. 100,
		8.10%, 12/01/2016 (ETM)		1,859,572
	1,000,000	Lake County Community
		High School District No.
		128, 5.00%, 01/01/2013		1,044,330
				5,535,462

The accompanying notes are an integral part of these financial statements.

Page 32

Baird Intermediate Municipal Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
MUNICIPAL BONDS – 96.5% (cont.)
Indiana – 0.5%
$	285,000	Indiana Toll Road
		Commission, 9.00%,
		01/01/2015 (ETM)	$	352,211
Iowa – 2.4%
	1,010,000	Des Moines Iowa
		Metropolitan Wastewater
		Reclamation Authority,
		5.00%, 06/01/2015
		(MBIA Insured)		1,066,641
	470,000	Muscatine Iowa Electric
		Revenue, 6.70%,
		01/01/2013 (ETM)		503,441
				1,570,082
Louisiana – 6.1%
	745,000	Denham Springs-Livingston
		Housing and Mortgage
		Finance Authority, 7.20%,
		08/01/2010 (ETM)		814,151
	400,000	Houma-Terrebonne Public
		Trust Financing Authority,
		7.30%, 04/01/2010 (ETM)		433,240
	1,000,000	Houma-Terrebonne Public
		Trust Financing Authority
		Single Family Mortgage
		Revenue, 7.30%,
		04/01/2011 (ETM)		1,109,790
	1,450,000	Jefferson Parish Louisiana
		Home Mortgage
		Authority, 7.10%,
		08/01/2010 (ETM)		1,583,502
				3,940,683
Minnesota – 1.0%
	600,000	Western Minnesota
		Municipal Power
		Agency, 6.375%,
		01/01/2016 (ETM)		651,462
Mississippi – 1.6%
	600,000	Mississippi Housing
		Financial Corporation,
		0.00%, 06/01/2015
		(ETM) ^		429,624
	595,000	Mississippi State, 6.20%,
		02/01/2008 (ETM)		602,241
				1,031,865
Nevada – 3.2%
	1,965,000	Reno Nevada Capital
		Improvement Revenue,
		5.50%, 06/01/2019
		(Pre-refunded to
		06/01/2012)		2,093,236
New Jersey – 2.3%
	1,000,000	New Jersey State
		Transportation Trust Fund
		Authority, 6.00%,
		12/15/2017 (Pre-refunded
		12/15/2011)		1,083,630
		New Jersey State Turnpike
		Authority: (ETM)
	262,000	6.75%, 01/01/2009		266,368
	130,000	6.50%, 01/01/2016		147,507
				1,497,505
New York – 2.0%
	1,000,000	New York, New York,
		5.00%, 03/01/2016
		(FGIC Insured)		1,053,870

The accompanying notes are an integral part of these financial statements.

Page 33

Baird Intermediate Municipal Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
MUNICIPAL BONDS – 96.5% (cont.)
New York – 2.0% (cont.)
$	225,000	TSASC Inc. New York,
		4.75%, 06/01/2022	$	223,659
				1,277,529
North Carolina – 0.4%
	225,000	North Carolina Eastern
		Municipal Power Agency
		Power Systems
		Revenue, 6.40%,
		01/01/2021 (ETM)		261,884
Ohio – 0.3%
	150,000	Miamisburg Ohio Water
		Revenue, 7.00%,
		11/15/2016 (ETM)		168,267
Oklahoma – 4.0%
	2,360,000	Tulsa County Oklahoma
		Home Financing Authority
		Single Family Mortgage
		Revenue, 6.90%,
		08/01/2011 (ETM)		2,621,299
Pennsylvania – 4.9%
	780,000	Philadelphia Pennsylvania
		Gas Works, 7.00%,
		05/15/2020 (ETM)		907,631
	1,285,000	Pittsburgh Pennsylvania
		Water & Sewer Authority,
		7.25%, 09/01/2014 (ETM)		1,417,946
	1,000,000	Wilson Pennsylvania Area
		School District, 0.00%,
		05/15/2011 (AMBAC
		Insured) ^		851,410
				3,176,987
South Carolina – 0.5%
	285,000	Greenville South
		Carolina Waterworks
		Revenue, 7.00%,
		02/01/2010 (ETM)		306,486
South Dakota – 1.1%
	665,000	Heartland Consumers
		Power District, 7.00%,
		01/01/2016 (ETM)		740,418
Tennessee – 3.4%
	430,000	Metropolitan Government
		Nashville & Davidson
		County Tennessee H&E,
		6.10%, 07/01/2010 (ETM)		441,743
	1,545,000	Metropolitan Government
		Nashville & Davidson
		County Tennessee Water
		& Sewer Revenue, 6.50%,
		12/01/2014 (ETM)		1,762,752
				2,204,495
Texas – 36.2%
	1,125,000	Barbers Hill Texas
		Independent School
		District General Obligation,
		5.00%, 02/15/2017
		(PSF Guaranteed)		1,178,584
	1,000,000	Copperas Cove
		Texas Independent
		School District,
		5.00%, 08/15/2016
		(PSF Guaranteed)		1,054,470
	1,500,000	Cypress-Fairbanks
		Texas Independent
		School District,
		5.00%, 02/15/2017
		(PSF Guaranteed)		1,579,245

The accompanying notes are an integral part of these financial statements.

Page 34

Baird Intermediate Municipal Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
MUNICIPAL BONDS – 96.5% (cont.)
Texas – 36.2% (cont.)
$	1,625,000	Frisco Texas Independent
		School District,
		6.00%, 08/15/2018
		(PSF Guaranteed)	$	1,836,575
	1,000,000	Georgetown
		Texas Independent
		School District,
		5.00%, 02/15/2016
		(PSF Guaranteed)		1,051,610
	1,920,000	Houston Texas Sewer
		System Revenue, 9.375%,
		10/01/2013 (ETM)		2,298,835
	1,315,000	La Porte Texas
		Independent School District,
		5.00%, 02/15/2018
		(MBIA Insured)		1,368,954
	1,735,000	Lufkin Texas Independent
		School District,
		5.00%, 08/15/2015
		(PSF Guaranteed)		1,823,849
	1,265,000	Mission Consolidation
		Independent School District,
		5.00%, 02/15/2019
		(PSF Guaranteed)		1,317,738
	1,295,000	Rockwall Texas
		Independent School District,
		5.00%, 02/15/2015
		(PSF Guaranteed)		1,365,293
	775,000	Sam Rayburn Texas
		Municipal Power Agency,
		6.00%, 09/01/2010 (ETM)		810,828
	1,565,000	San Antonio Texas Electric
		& Gas Revenue, 5.65%,
		02/01/2019 (ETM)		1,732,799
	2,000,000	San Antonio Texas
		Independent School District,
		5.00%, 08/15/2017
		(PSF Guaranteed)		2,100,520
	575,000	Socorro Texas
		Independent School District,
		5.25%, 08/15/2012
		(PSF Guaranteed)		605,998
	345,000	Texas Public Building
		Authority Revenue, 7.125%,
		08/01/2011 (ETM)		370,530
	1,900,000	Trinity River Authority
		Texas Revenue,
		5.50%, 02/01/2021
		(MBIA Insured)		2,037,123
	1,000,000	University of Houston Texas,
		5.25%, 02/15/2012
		(FSA Insured)		1,051,260
				23,584,211
Utah – 1.1%
	605,000	Salt Lake City Utah
		Hospital Revenue, 8.125%,
		05/15/2015 (ETM)		690,063
Washington – 1.6%
	1,000,000	Washington State,
		5.00%, 09/01/2013
		(FGIC Insured)		1,042,330
		Total Municipal Bonds
		(Cost $63,801,191)		62,813,616

The accompanying notes are an integral part of these financial statements.

Page 35

Baird Intermediate Municipal Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
SHORT-TERM INVESTMENTS – 1.6%
Money Market Fund – 1.6%
$	1,015,220	Tax Free Investment
		Company Cash Reserve
		Portfolio – AIM Fund	$	1,015,220
		Total Short-Term
		Investments
		(Cost $1,015,220)		1,015,220
		Total Investments
		(Cost $64,816,411) –
		98.1%		63,828,836
		Other Assets in Excess
		of Liabilities – 1.9%		1,257,832
		TOTAL NET
		ASSETS – 100.0%	$	65,086,668

ETM – Escrowed to Maturity

^     Non-Income Producing

The accompanying notes are an integral part of these financial statements.

Page 36

Baird Core Plus Bond Fund

June 30, 2007

The Baird Core Plus Bond Fund seeks an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers U.S. Universal Bond Index.  The Lehman Brothers U.S. Universal Bond Index is an unmanaged, market value weighted index of fixed income securities issued in U.S. dollars, including U.S. government and investment grade debt, non-investment grade debt, asset-backed and mortgage-backed securities, Eurobonds, 144A securities and emerging market debt, with maturities of at least one year.

Portfolio Characteristics

Quality Distribution*	Sector Weightings*

Net Assets:	$	59,540,748	Annualized Expense Ratio:
SEC 30-Day Yield:**			Institutional Class:	0.30	%
Institutional Class:		5.58%	Investor Class:	0.55	%***
Investor Class:		5.28%	Portfolio Turnover Rate:****	30.0	%
Average Effective Duration:	4.74 years		Total Number of Holdings:	168
Average Effective Maturity:	7.65 years

*	Percentages shown are based on the Fund’s total net assets.
**	SEC yields are based on SEC guidelines and are calculated for the 30 days ended June 30, 2007.
***	Includes 0.25% 12b-1 fee.
****	Not annualized.

Page 37

Baird Core Plus Bond Fund

Average Annual Total Returns

			Since
For the Periods Ended June 30, 2007	One Year	Five Years	Inception(1)
Baird Core Plus Bond Fund – Institutional Class Shares	7.72%	6.13%	6.68%
Baird Core Plus Bond Fund – Investor Class Shares	7.48%	5.86%	6.42%
Lehman Brothers U.S. Universal Bond Index(2)	6.62%	5.42%	6.43%

(1)

For the period from September 29, 2000 (commencement of operations) through June 30, 2007.

(2)

The Lehman Brothers U.S. Universal Bond Index is an unmanaged, market value weighted index of fixed income securities issued in U.S. dollars, including U.S. government and investment grade debt, non-investment grade debt, asset-backed and mortgage-backed securities, Eurobonds, 144A securities and emerging market debt, with maturities of at least one year.  This index does not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 38

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1%
Asset Backed Securities – 10.8%
$	900,000	American Express Credit
		Account Master Trust,
		Series 2005-5, Class A,
		5.36%, 02/15/2013	$	900,064
	106,377	Contimortgage Home
		Equity Loan Trust,
		Series 1997-5, Class A6,
		6.87%, 03/15/2024		106,180
		Countrywide Asset-Backed
		Certificates:
	600,000	Series 2005-10, Class AF6,
		4.915%, 02/25/2036		569,065
	400,000	Series 2006-S9, Class A3,
		5.728%, 08/25/2036		393,753
	300,000	Series 2006-10, Class 1AF3,
		5.971%, 09/25/2046		300,019
	325,000	Discover Card Master Trust
		I, Series 2005-2, Class A,
		5.35%, 04/17/2012		325,495
	353,418	Federal Express
		Corporation Pass Thru
		Certificates, Series B2,
		7.11%, 01/02/2014		371,177
		GMAC Mortgage
		Corporation Loan Trust:
	56,066	Series 2004-HE5, Class A3,
		3.97%, 09/25/2034		55,630
	500,000	Series 2005-HE3, Class A2,
		5.47%, 02/25/2036		500,302
		Green Tree Financial
		Corporation:
	39,166	Series 1997-1, Class A5,
		6.86%, 03/15/2028		40,024
	327,579	Series 1998-3, Class A5,
		6.22%, 03/01/2030		325,224
	370,303	Series 1998-4, Class A5,
		6.18%, 04/01/2030		365,247
	70,424	Oakwood Mortgage
		Investors, Inc.,
		Series 1999-B, Class A3,
		6.45%, 11/15/2017		65,161
		Renaissance Home
		Equity Loan Trust:
	300,000	Series 2006-2, Class AF3,
		5.797%, 08/25/2036		299,692
	500,000	Series 2007-1, Class AF2,
		5.512%, 04/25/2037		496,773
	290,986	Residential Asset Mortgage
		Products, Inc., Series
		2003-RS10, Class AI7,
		4.85%, 11/25/2033		279,086
	395,704	Residential Asset Securities
		Corporation, Series
		2003-KS5, Class AI6,
		3.62%, 07/25/2033		369,988
	400,000	Stingray Pass Thru
		Certificates, Series 2005,
		5.902%, 01/12/2015
		(Acquired 05/10/2007,
		Cost $380,000)*		382,792
	300,000	Structured Asset Securities
		Corporation, Series
		2005-7XS, Class 1A4B,
		5.44%, 04/25/2035		292,586
				6,438,258
Financial – 7.9%
	300,000	Bank of America
		Corporation
		Subordinated Notes,
		10.20%, 07/15/2015		379,887

The accompanying notes are an integral part of these financial statements.

Page 39

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Financial – 7.9% (cont.)
$	200,000	Banponce Trust I,
		8.327%, 02/01/2027
		(Callable 09/21/2007)	$	208,326
	350,000	First National
		Bank of Omaha
		Subordinated Notes,
		7.32%, 12/01/2010		357,116
	250,000	First Union Capital,
		7.935%, 01/15/2027
		(Callable 09/21/2007)		259,993
	350,000	Glencore Funding LLC,
		6.00%, 04/15/2014
		(Acquired 03/31/2004
		and 12/04/2006; Cost
		$148,928 and $198,740,
		respectively)*		343,498
	30,000	Goldman Sachs Group LP,		33,072
		8.00%. 03/01/2013
		(Acquired 05/19/2006;
		Cost $33,031)*
	100,000	Health Care Service
		Corporation Notes,
		7.75%, 06/15/2011
		(Acquired 01/26/2005;
		Cost $115,000)*		106,866
	300,000	Istar Financial, Inc.,
		5.85%, 03/15/2017		287,763
	300,000	Jefferies Group, Inc.,
		6.45%, 06/08/2027		292,762
	350,000	Lehman Brothers
		Holdings Senior Notes,
		8.80%, 03/01/2015		409,758
	375,000	Liberty Mutual Insurance
		Notes, 7.697%, 10/15/2097
		(Acquired 03/26/2003;
		Cost $239,982)*		364,842
	100,000	Marsh & McLennan
		Companies, Inc.,
		5.375%, 07/15/2014		93,556
	300,000	Martin Marietta Materials,
		Inc., 6.25%, 05/01/2037		290,906
	100,000	Principal Financial Group
		(AU) Senior Notes, 8.20%,
		08/15/2009 (Acquired
		09/16/2005; Cost
		$112,015)* f		105,436
	300,000	Regions Financing Trust II,
		6.625%, 05/01/2077
		(Callable 05/15/2027)		286,970
	375,000	Residential Capital
		Corporation,
		6.875%, 06/30/2015		363,718
	200,000	Santander
		Financial Issuances,
		6.375%, 02/15/2011 f		205,533
	300,000	Travelers Companies, Inc.,
		6.25%, 03/15/2067		288,285
				4,678,287
Industrial – 15.4%
	300,000	AOL Time Warner, Inc.,
		7.625%, 04/15/2031		321,411
	100,000	AT&T Wireless Services,
		Inc. Senior Notes,
		8.75%, 03/01/2031		124,662
	472,061	Atlas Air, Inc.
		Pass Thru Certificates,
		8.707%, 07/02/2021		509,826
		Bunge Ltd. Finance
		Corporation Notes:
	150,000	5.35%, 04/15/2014		142,493
	100,000	5.10%, 07/15/2015		92,395

The accompanying notes are an integral part of these financial statements.

Page 40

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Industrial – 15.4% (cont.)
$	375,000	Clear Channel
		Communications,
		4.50%, 01/15/2010	$	358,328
		Continental Airlines, Inc.
		Pass Thru Certificates:
	14,322	Series 1997-4,
		6.80%, 07/02/2007		14,320
	89,955	Series 1998-1,
		6.541%, 09/15/2009		89,842
	212,629	Series 2000-2,
		8.312%, 10/02/2012		217,945
	64,824	Series 1997-4,
		6.90%, 01/02/2018		66,121
	100,000	COX Communications
		Inc. Notes,
		7.875%, 08/15/2009		104,517
	100,000	Deutsche Telekom
		International Finance BV,
		8.25%, 06/15/2030 f		119,857
	350,000	Dollar General Corporation,
		8.625%, 06/15/2010		380,480
	250,000	Donnelley (R.R.) & Sons
		Co., 6.125%, 01/15/2017		243,411
	400,000	Ford Motor
		Company Debentures,
		9.215%, 09/15/2021		365,000
		General Motors Acceptance
		Corporation Notes:
	75,000	7.75%, 01/19/2010		75,925
	250,000	6.75%, 12/01/2014		239,414
	175,000	General Motors
		Nova Scotia
		Finance Company,
		6.85%, 10/15/2008 f		174,125
	350,000	Hanson PLC Notes,
		6.125%, 08/15/2016 f		358,309
	350,000	Health Management
		Association,
		6.125%, 04/15/2016		329,356
	150,000	Hutchison Whampoa
		International Limited,
		6.25%, 01/24/2014
		(Acquired 06/23/2005;
		Cost $161,474)* f		152,122
	322,000	Marathon Oil
		Corporation Debentures,
		9.125%, 01/15/2013		374,835
	350,000	New York Telephone
		Company Debentures,
		8.625%, 11/15/2010		377,076
	200,000	PCCW Capital II Ltd.,
		6.00%, 07/15/2013
		(Acquired 07/10/2003;
		Cost $199,066)* f		198,206
	300,000	Plum Creek Timberlands,
		5.875%, 11/15/2015		290,460
	300,000	Sprint Capital Corporation,
		8.75%, 03/15/2032		336,939
	250,000	Sungard Data Systems Inc.
		Notes, 3.75%, 01/15/2009		241,250
	175,000	TCI Communications, Inc.
		Debentures,
		7.875%, 08/01/2013		191,760
	350,000	Telecom Italia Capital,
		7.20%, 07/18/2036 f		359,822
	200,000	Telefonica Emisiones,
		S.A.U.,
		6.421%, 06/20/2016 f		202,790
	92,000	Time Warner Companies,
		Inc., 6.875%, 06/15/2018		95,360
	25,000	Time Warner
		Entertainment Senior Notes,
		8.875%, 10/01/2012		28,258

The accompanying notes are an integral part of these financial statements.

Page 41

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Industrial – 15.4% (cont.)
		Tyco International
		Group S.A.: f
$	150,000	6.125%, 01/15/2009	$	151,906
	50,000	6.00%, 11/15/2013		51,342
		United AirLines, Inc.
		Pass Thru Certificates:
	324,446	Series 2001-1,
		6.201%, 09/01/2008		327,690
	73,583	7.762%, 12/31/2049		67,926
		Univision
		Communication, Inc.:
	158,000	3.50%, 10/15/2007		156,420
	250,000	3.875%, 10/15/2008		240,938
		Vale Overseas Limited: f
	100,000	8.25%, 01/17/2034		116,970
	125,000	6.875%, 11/21/2036		125,648
	150,000	Viacom, Inc.,
		7.70%, 07/30/2010		158,611
	150,000	Viacom, Inc. Senior Notes,
		6.25%, 04/30/2016		147,742
	500,000	Vodafone Group PLC,
		6.15%, 02/27/2037 f		465,145
				9,186,953
International (U.S. $ Denominated) – 1.6%
	500,000	Export-Import
		Bank Korea Notes,
		4.625%, 03/16/2010 f		489,256
	400,000	PEMEX Project Funding
		Master Trust,
		9.125%, 10/13/2010 f		440,000
				929,256
Mortgage Backed Securities – 38.2%
		Bank of America
		Alternative Loan Trust:
	202,231	Series 2005-2, Class 4A1,
		5.50%, 03/25/2020		200,846
	408,356	Series 2006-2, Class 6A1,
		5.50%, 03/25/2021		405,141
	600,000	Bayview Financial
		Acquisition Trust,
		Series 2007-A,
		6.205%, 05/28/2037		599,924
	700,000	Chase Mortgage
		Finance Corporation,
		Series 2006-A1, Class 2A3,
		6.00%, 09/25/2036		698,289
		Citigroup Mortgage
		Loan Trust, Inc.:
	276,885	Series 2005-9, Class 2A2,
		5.50%, 11/25/2035		275,098
	392,584	Series 2005-9, Class 22A2,
		6.00%, 11/25/2035		389,395
		Countrywide Alternative
		Loan Trust:
	406,725	Series 2006-7CB, Class 3A1,
		5.25%, 05/25/2021		401,523
	368,590	Series 2006-43CB, Class
		2A1, 6.00%, 02/25/2022		369,076
	453,455	Deutsche Securities Inc.
		Mortgage, Series 2006-AR5,
		Class 21A, 6.00%,
		10/25/2021		455,547
		Federal Gold Loan
		Mortgage Corporation
		(FGLMC):
	672,149	5.50%, 11/01/2017		664,483
	662,633	5.00%, 12/01/2020		640,876
	345,142	6.00%, 06/01/2021		346,688
	74,862	6.50%, 09/01/2028		76,478
	125,495	6.50%, 12/01/2028		128,204
	89,408	6.50%, 05/01/2029		91,335
	89,389	6.50%, 06/01/2029		91,315

The accompanying notes are an integral part of these financial statements.

Page 42

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Mortgage Backed Securities – 38.2% (cont.)
		Federal Home Loan
		Mortgage Corporation
		(FHLMC):
$	365,889	Series 3122, Class VA,
		6.00%, 01/15/2017	$	367,894
	585,048	Series R010, Class VA,
		5.50%, 04/15/2017		581,153
	19,303	Series 1053, Class G,
		7.00%, 03/15/2021		19,257
	41,893	Series 136, Class E,
		6.00%, 04/15/2021		41,747
	300,000	Series 2673, Class NC,
		5.50%, 05/15/2021		297,247
	263,732	Series 2804, Class VC,
		5.00%, 07/15/2021		252,698
	38,149	Series 1122, Class G,
		7.00%, 08/15/2021		38,083
	89,318	Series 1186, Class I,
		7.00%, 12/15/2021		91,265
	231,701	Series 3132, Class MA,
		5.50%, 12/15/2023		229,792
	203,368	Series 2598, Class QC,
		4.50%, 06/15/2027		200,105
		Federal National Mortgage
		Association (FNMA):
	281,583	5.00%, 02/01/2018		273,128
	195,920	5.00%, 10/01/2018		190,064
	195,340	5.00%, 11/01/2018		189,502
	154,956	5.50%, 03/01/2023		151,504
	923,319	5.50%, 07/01/2023		902,750
	336,293	6.00%, 03/01/2026		335,708
	58,464	6.50%, 09/01/2028		59,670
	103,690	6.50%, 02/01/2029		105,829
	227,098	5.50%, 01/01/2032		220,065
	465,899	5.50%, 02/01/2035		451,076
	2,738,047	5.50%, 04/01/2036		2,647,505
	19,642	Series 1989-94, Class G,
		7.50%, 12/25/2019		20,536
	78,949	Series 1990-15, Class J,
		7.00%, 02/25/2020		80,285
	14,920	Series 1991-21, Class J,
		7.00%, 03/25/2021		15,339
	285,391	Series 1991-43, Class J,
		7.00%, 05/25/2021		294,564
	359,783	Series 1991-65, Class Z,
		6.50%, 06/25/2021		367,010
	359,244	Series 1992-129, Class L,
		6.00%, 07/25/2022		360,736
	111,311	Series 1993-32, Class H,
		6.00%, 03/25/2023		110,360
	594,960	Series 1993-58, Class H,
		5.50%, 04/25/2023		589,725
	252,223	Series 2003-31, Class KG,
		4.50%, 12/25/2028		249,864
	51,310	Series 2003-44, Class AB,
		3.75%, 05/25/2033		47,091
	292,594	Series 2004-W6, Class 1A6,
		5.50%, 07/25/2034		289,120
	570,676	FHLMC Remic Series,
		Series R010, Class AB,
		5.50%, 12/15/2019		562,634
		First Horizon Alternative
		Mortgage Securities:
	360,210	Series 2006-FA6, Class 3A1,
		5.75%, 11/25/2021		358,560
	571,579	Series 2006-FA8, Class 2A1,
		5.75%, 02/25/2037		568,841
	825,000	First Union National Bank
		Commercial Mortgage
		Securities Inc., Series
		2001-C4, Class A2,
		6.223%, 12/12/2033		841,877

The accompanying notes are an integral part of these financial statements.

Page 43

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Mortgage Backed Securities – 38.2% (cont.)
		GE Capital Commercial
		Mortgage Corporation:
$	796,888	Series 2000-1, Class A2,
		6.496%, 01/15/2033	$	816,997
	600,000	Series 2004-C3, Class A4,
		5.189%, 07/10/2039		580,283
		Government National
		Mortgage Association
		(GNMA):
	162,378	6.00%, 12/20/2028		162,077
	60,071	6.50%, 01/20/2029		61,410
	154,950	6.00%, 11/20/2033		154,453
		J.P. Morgan Mortgage Trust:
	500,000	Series 2006-A7, Class 2A4R,
		5.462%, 01/25/2037		494,360
	500,000	Series 2007-A2, Class 2A3,
		5.718%, 04/25/2037		495,767
		Master Alternative
		Loans Trust:
	649,818	Series 2005-3, Class 4A1,
		5.50%, 03/25/2020		643,121
	196,925	Series 2003-5, Class 6A1,
		6.00%, 08/25/2033		195,013
	500,000	Wachovia Bank Commercial
		Mortgage Trust,
		Series 2003-C3, Class A2,
		4.867%, 02/15/2035		480,556
		Washington Mutual, Inc.
		Pass-Thru Certificates:
	216,259	Series 2004-CB1, Class 5A,
		5.00%, 06/25/2019		207,879
	241,033	Series 2004-CB3, Class 4A,
		6.00%, 10/25/2019		241,115
				22,769,833
Taxable Municipal Bonds – 0.5%
	265,134	Tobacco Settlement
		Financing Corporation,
		6.36%, 05/15/2025		264,887
Utilities – 5.9%
	200,000	Commonwealth Edison,
		5.40%, 12/15/2011		195,904
	150,000	Energy Transfer Partners,
		5.65%, 08/01/2012		148,252
		Kinder Morgan Energy
		Partners Senior Notes:
	350,000	5.35%, 08/15/2007		349,878
	250,000	6.95%, 01/15/2038		252,509
	78,276	Kiowa Power Partners LLC,
		4.811%, 12/30/2013
		(Acquired 11/19/2004;
		Cost $83,667)*		75,339
	400,000	ONEOK, Inc. Senior Notes,
		7.125%, 04/15/2011		417,426
	50,000	Pacific Gas & Electric
		Company 1st Mortgage,
		6.05%, 03/01/2034		48,434
	300,000	Pepco Holdings, Inc.,
		6.125%, 06/01/2017		296,478
	200,000	PPL Energy Supply LLC,
		6.20%, 05/15/2016		198,171
	200,000	PSE&G Energy Holdings
		LLC Senior Notes,
		8.50%, 06/15/2011		211,833
	50,000	PSI Energy, Inc. Debentures,
		7.85%, 10/15/2007		50,282
	292,490	RGS (I&M) Funding
		Corporation Debentures,
		9.82%, 12/07/2022		348,894
	300,000	Southern Natural Gas,
		5.90%, 04/01/2017
		(Acquired 03/14/2007;
		Cost $299,502)*		290,165

The accompanying notes are an integral part of these financial statements.

Page 44

Baird Core Plus Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 95.1% (cont.)
Utilities – 5.9% (cont.)
$	89,596	Tristate Gen & Trans Assn,
		6.04%, 01/31/2018
		(Acquired 10/14/2003;
		Cost $89,596)*	$	88,516
	200,000	TXU Corporation,
		6.375%, 01/01/2008		200,497
		Williams Cos. Inc. Notes:
	100,000	7.125%, 09/01/2011		102,500
	200,000	7.875%, 09/01/2021		215,000
				3,490,078
U.S. Government Agency Issues – 4.3%
	2,500,000	Federal National Mortgage
		Association (FNMA),
		6.00%, 05/15/2011		2,565,788
U.S. Treasury Obligations – 10.5%
		U.S. Treasury Bond,
	5,650,000	6.25%, 08/15/2023		6,273,709
		Total Long-Term
		Investments
		$(57,317,116)		56,597,049
COLLATERAL POOL INVESTMENT
FOR SECURITIES ON LOAN – 25.8%
(Cost $15,379,028)
(Please Refer to Note 6)				15,379,028
SHORT-TERM INVESTMENTS – 5.0%
Money Market Funds – 5.0%
	2,325,094	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		2,325,094
	667,390	Short-Term Investment
		Trust Prime Portfolio –
		AIM Fund		667,390
		Total Short-Term
		Investments
		(Cost $2,992,484)		2,992,484
		Total Investments
		(Cost $75,688,628) –
		125.9%		74,968,561
		Liabilities in Excess of
		Other Assets – (25.9)%		(15,427,813	)
		TOTAL NET
		ASSETS – 100.0%	$	59,540,748

*     Restricted Security Deemed Liquid

f      Foreign Security

The accompanying notes are an integral part of these financial statements.

Page 45

Baird Short-Term Bond Fund

June 30, 2007

The Baird Short-Term Bond Fund seeks an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers 1-3 Year Government/Credit Bond Index.  The Lehman Brothers 1-3 Year Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and three years.

Portfolio Characteristics

Quality Distribution*	Sector Weightings*

Net Assets:	$	168,490,911	Annualized Expense Ratio:
SEC 30-Day Yield:**			Institutional Class:	0.30	%
Institutional Class:		5.33%	Portfolio Turnover Rate:***	23.8	%
Average Effective Duration:	1.71 years		Total Number of Holdings:	159
Average Effective Maturity:	2.05 years

*	Percentages shown are based on the Fund’s total net assets.
**	SEC yields are based on SEC guidelines and are calculated for the 30 days ended June 30, 2007.
***	Not annualized.

Page 46

Baird Short-Term Bond Fund

Average Annual Total Returns

For the Periods Ended June 30, 2007	One Year	Since Inception(1)
Baird Short-Term Bond Fund – Institutional Class	5.51%	3.08%
Lehman Brothers 1-3 Year Government/Credit Bond Index(2)	5.34%	2.91%

(1)	For the period from August 31, 2004 (commencement of operations) to June 30, 2007.
(2)	The Lehman Brothers 1-3 Year Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and three years.  This index does not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 47

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6%
Asset Backed Securities – 8.7%
$	400,000	AESOP Funding II LLC,
		Series 2005-1A, Class A1,
		3.95%, 04/20/2009
		(Acquired 02/17/2005;
		Cost $399,964)*	$	396,214
	520,966	Bayview Financial
		Acquisition Trust,
		Series 2005-B, Class 1A2,
		4.696%, 04/28/2039		517,174
	61,398	Chase Manhattan
		Auto Owner Trust,
		Series 2003-C, Class A4,
		2.94%, 06/15/2010		61,027
	545,731	CitiFinancial Mortgage
		Securities, Inc.,
		Series 2004-1, Class AF2,
		2.645%, 04/25/2034		529,258
	164,599	CNH Equipment Trust,
		Series 2005-A, Class A3,
		4.02%, 04/15/2009		163,863
		Countrywide Asset-Backed
		Certificates:
	1,500,000	Series 2006-S7, Class A2,
		5.571%, 11/25/2035		1,492,004
	829,044	Series 2005-10, Class AF2,
		4.493%, 02/25/2036		825,084
	1,153,000	Series 2005-12, Class 1A2,
		4.847%, 02/25/2036		1,144,579
	725,000	Series 2005-13, Class AF2,
		5.294%, 04/25/2036		721,335
	1,000,000	Series 2006-13,
		Class 1AF3,
		5.944%, 01/25/2037		999,020
	1,500,000	Series 2006-9, Class 1AF3,
		5.859%, 10/25/2046		1,498,351
	500,000	Ford Credit Auto
		Owner Trust,
		Series 2005-B, Class A4,
		4.38%, 01/15/2010		495,685
	3,500,000	GMAC Mortgage
		Corporation Loan Trust,
		Series 2005-HE3, Class
		A2, 5.47%, 02/25/2036		3,502,115
	834,951	Green Tree Financial
		Corporation,
		Series 1998-3, Class A5,
		6.22%, 03/01/2030		828,947
	698,755	Merrill Lynch Mortgage
		Investors Inc.,
		Series 2005-A8,
		Class A1C1,
		5.25%, 08/25/2036		689,090
		Residential Asset
		Mortgage Products, Inc.:
	273,164	Series 2004-RS12, Class
		AI3, 3.981%, 04/25/2029		272,098
	389,474	Series 2003-RS7, Class
		AI6, 5.34%, 08/25/2033		379,803
	30,934	Residential Asset
		Securities Corporation,
		Series 2004-KS4, Class
		AI3, 3.08%, 08/25/2029		30,682
	89,130	Residential Funding
		Mortgage Securities,
		Series 2003-HS3, Class
		AI2, 3.15%, 07/25/2018		88,456
				14,634,785
Financial – 15.8%
	1,405,000	Allfirst Financial, Inc.
		Subordinated Notes,
		7.20%, 07/01/2007		1,405,000

The accompanying notes are an integral part of these financial statements.

Page 48

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Financial – 15.8% (cont.)
$	140,000	American General Finance
		Corporation Notes,
		4.50%, 11/15/2007	$	139,614
	594,000	Bank of Oklahoma
		Subordinated Notes,
		7.125%, 08/15/2007		595,002
	251,000	Bank United Notes,
		8.00%, 03/15/2009		259,983
	472,000	Bankers Trust Corporation
		Subordinated Notes,
		7.375%, 05/01/2008		477,709
	1,156,000	BNY Capital I Notes,
		Series B,
		7.97%, 12/31/2026
		(Callable 09/07/2007)		1,202,067
	500,000	Capital One Bank Notes,
		4.875%, 05/15/2008		497,701
	100,000	Chubb Corporation
		Senior Notes,
		7.125%, 12/15/2007		100,658
	210,000	CIT Group Inc.
		Senior Notes,
		5.50%, 11/30/2007		209,974
	200,000	Citicorp
		Subordinated Notes,
		7.00%, 07/01/2007		200,000
	375,000	Citifinancial Debentures,
		10.00%, 05/15/2009		405,177
	675,000	Comerica Incorporated
		Subordinated Notes,
		7.25%, 08/01/2007		675,941
	550,000	Compass Bank
		Subordinated Notes,
		8.10%, 08/15/2009		577,076
	388,000	Corestates Capital Trust I,
		8.00%, 12/15/2026
		(Callable 09/07/2007)
		(Acquired 01/26/2006
		and 05/31/2006;
		Cost $211,938 and
		$196,930, respectively)*		401,866
	500,000	Countrywide Home
		Loans Notes,
		4.125%, 09/15/2009		484,963
	537,000	Credit Suisse First Boston
		USA Inc. Senior Notes,
		6.50%, 06/01/2008		541,918
	1,000,000	First National
		Bank of Omaha
		Subordinated Notes,
		7.32%, 12/01/2010		1,020,333
	800,000	First Union Capital,
		7.935%, 01/15/2027
		(Callable 09/21/2007)		831,977
	200,000	Franchise Finance
		Corporation Notes,
		7.07%, 01/15/2008		201,474
	273,000	Goldman Sachs
		Group, Inc. Senior
		Unsubordinated Notes,
		7.80%, 01/28/2010		288,253
	575,000	Key Bank NA
		Subordinated Notes,
		6.50%, 10/15/2027
		(Callable and Putable
		04/15/2008)		580,929
	400,000	Lehman Brothers
		Holdings, Inc. Notes,
		3.50%, 08/07/2008		391,665

The accompanying notes are an integral part of these financial statements.

Page 49

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Financial – 15.8% (cont.)
$	200,000	Marsh & McLennan
		Cos, Inc.,
		3.625%, 02/15/2008	$	197,397
	2,421,000	MBNA Capital Series A,
		8.278%, 12/01/2026
		(Callable 09/07/2007)		2,526,505
	438,000	Morgan Stanley,
		8.00%, 06/15/2010		467,798
	720,000	NB Capital Trust IV,
		8.25%, 04/15/2027
		(Callable 09/07/2007)		749,017
	625,000	New York Life
		Global Funding,
		3.875%, 01/15/2009
		(Acquired 01/23/2006;
		Cost $608,075)*		611,469
	1,000,000	North Fork Capital Trust
		II, 8.00%, 12/15/2027
		(Callable 12/15/2007)		1,046,170
	700,000	Phoenix Companies,
		6.675%, 02/16/2008		702,611
	633,000	PNC Financial Services
		Subordinated Notes,
		9.65%, 06/15/2009		679,333
	530,000	PNC Funding
		Corporation,
		6.125%, 02/15/2009		535,578
		Popular North
		America, Inc.:
	1,030,000	4.25%, 04/01/2008		1,019,455
	365,000	4.70%, 06/30/2009		359,503
	350,000	PPL Capital Funding
		Trust I, Series A,
		4.33%, 03/01/2009		343,027
	1,500,000	Premium Asset Senior
		Notes, 4.125%,
		03/12/2009 (Acquired
		05/10/2007;
		Cost $1,440,000)*		1,422,415
	275,000	Principal Life Global,
		3.625%, 04/30/2008
		(Acquired 08/17/2005;
		Cost $268,452)*		269,984
	155,000	Republic New York
		Corporation
		Subordinated Notes,
		9.70%, 02/01/2009		164,730
	600,000	Residential
		Capital Corporation,
		6.125%, 11/21/2008		594,524
	487,000	SAFECO
		Corporation Notes,
		6.875%, 07/15/2007		487,220
	550,000	Santander Financial
		Issuances,
		6.375%, 02/15/2011 f		565,215
	200,000	Transamerica Corporation
		Debentures,
		9.375%, 03/01/2008		203,703
	1,300,000	Unitrin, Inc.
		Senior Notes,
		5.75%, 07/01/2007		1,300,000
	850,000	Unum Group,
		5.859%, 05/15/2009		852,434
				26,587,368
Industrial – 18.9%
	1,500,000	American Standard, Inc.,
		7.375%, 02/01/2008		1,512,246

The accompanying notes are an integral part of these financial statements.

Page 50

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Industrial – 18.9% (cont.)
$	306,000	Bell Telephone Co.
		Pennsylvania Debentures,
		7.375%, 07/15/2007	$	306,143
	150,000	BellSouth
		Telecommunication
		Debentures,
		5.875%, 01/15/2009		150,832
	225,000	British Telecom
		PLC Notes,
		8.625%, 12/15/2010 f		245,873
	1,000,000	Bunge Limited
		Finance Corporation,
		4.375%, 12/15/2008		983,656
	874,000	Cadbury Schweppes
		U.S. Finance Notes,
		3.875%, 10/01/2008
		(Acquired 08/30/2005
		and 02/14/2007; Cost
		$685,461 and $170,084,
		respectively)*		855,674
	1,190,000	Chelsea Property Group,
		7.25%, 10/21/2007		1,194,918
	200,000	Comcast Cable
		Communications,
		Inc. Notes,
		6.20%, 11/15/2008		201,587
	1,070,000	Computer Sciences
		Corporation Notes,
		3.50%, 04/15/2008		1,053,383
	581,000	COX Communications
		Inc. Notes,
		7.875%, 08/15/2009		607,244
	662,000	Devon Energy
		Corporation Debentures,
		10.125%, 11/15/2009		724,431
	1,000,000	Donnelley (R.R.)
		& Sons Notes,
		3.75%, 04/01/2009		969,611
	1,000,000	Fiserv Inc.,
		3.00%, 06/27/2008		973,839
	1,423,000	FMC Corporation Notes,
		7.00%, 05/15/2008		1,432,069
	300,000	Ford Motor Credit
		Company Senior Notes,
		4.95%, 01/15/2008		297,754
	250,000	General Motors
		Acceptance Corporation
		Notes, 6.125%,
		08/28/2007		250,170
		Halliburton
		Company Notes:
	225,000	5.625%, 12/01/2008		225,347
	500,000	5.50%, 10/15/2010		499,515
	1,200,000	ICI Wilmington,
		7.05%, 09/15/2007		1,202,830
		International Paper
		Company Notes:
	885,000	6.50%, 11/15/2007		886,598
	675,000	4.00%, 04/01/2010		647,893
	700,000	Johnson Controls
		Inc. Notes,
		6.30%, 02/01/2008		700,963
	1,013,000	Marathon Oil
		Corporation Notes,
		6.85%, 03/01/2008		1,021,702
	1,082,000	Motorola, Inc.,
		4.608%, 11/16/2007		1,078,100
	450,000	News America Holdings,
		7.375%, 10/17/2008		458,973
	1,275,000	Pepco Holdings, Inc.,
		5.50%, 08/15/2007		1,275,510

The accompanying notes are an integral part of these financial statements.

Page 51

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Industrial – 18.9% (cont.)
$	1,240,000	Premcor Refining
		Group Inc. Senior Notes,
		9.50%, 02/01/2013
		(Callable 02/01/2008)	$	1,320,309
	1,575,000	Sealed Air Corporation
		Senior Notes, 5.375%,
		04/15/2008 (Acquired
		07/07/2006 and
		05/04/2007; Cost
		$989,890 and $574,425,
		respectively)*		1,566,413
	1,402,000	Southwestern
		Bell Telephone
		Company Notes,
		6.625%, 07/15/2007		1,402,286
	500,000	Sprint Capital
		Corporation Notes,
		6.375%, 05/01/2009		506,144
	1,000,000	Telecom Italia Capital,
		4.00%, 11/15/2008 f		978,744
	1,145,000	Thomson Corporation,
		5.75%, 02/01/2008 f		1,145,962
	255,000	Time Warner
		Companies, Inc.,
		8.18%, 08/15/2007		255,869
	750,000	Time Warner Companies,
		Inc. Debentures,
		7.48%, 01/15/2008		758,896
	1,500,000	Transocean Inc., 5.56%,
		09/05/2008 (Callable
		09/05/2007) f		1,500,980
	480,660	United AirLines, Inc.
		Pass Thru Certificates,
		6.201%, 09/01/2008		485,467
	1,050,000	Univision
		Communication, Inc.,
		3.50%, 10/15/2007		1,039,500
	1,105,000	Vodafone Group PLC,
		7.75%, 02/15/2010 f		1,160,695
				31,878,126
International (U.S. $ Denominated) – 0.6%
	175,000	Export-Import
		Bank Korea Notes,
		4.625%, 03/16/2010 f		171,240
	600,000	Korea Development
		Bank Notes,
		3.875%, 03/02/2009 f		584,804
	200,000	PEMEX Project
		Funding Master Trust,
		6.125%, 08/15/2008 f		201,200
				957,244
Mortgage Backed Securities – 17.0%
	989,036	Bank of America
		Alternative Loan Trust,
		Series 2003-4, Class 2A1,
		5.00%, 06/25/2018		972,190
		Citicorp Mortgage
		Securities, Inc.:
	262,194	Series 2003-11, Class 2A8,
		5.50%, 12/25/2033		259,561
	771,819	Series 2004-3, Class A2,
		5.25%, 05/25/2034		759,001
	447,840	Series 2004-4, Class A2,
		5.25%, 06/25/2034		433,596
		Countrywide Alternative
		Loan Trust:
	1,473,593	Series 2005-50CB, Class
		4A1, 5.00%, 11/25/2020		1,451,895
	1,028,036	Series 2005-34CB, Class
		1A6, 5.50%, 09/25/2035		1,022,955

The accompanying notes are an integral part of these financial statements.

Page 52

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Mortgage Backed Securities – 17.0% (cont.)
$	983,484	Series 2005-73CB,
		Class 1A7,
		5.50%, 01/25/2036	$	977,023
	1,435,023	Series 2006-28CB,
		Class A17,
		6.00%, 10/25/2036		1,431,503
	1,784,556	Credit Suisse First Boston
		Mortgage Securities Corp.,
		Series 1998-C2, Class A2,
		6.30%, 11/15/2030		1,798,575
		Deutsche Alternative
		Securities Inc. Mortgage:
	1,249,894	Series 2003-3, Class 2A5,
		5.00%, 10/25/2033		1,241,768
	2,075,000	Series 2005-4, Class A2,
		5.05%, 09/25/2035		2,053,668
		Federal Home Loan
		Mortgage Corporation
		(FHLMC):
	97,485	Series 2548, Class HA,
		4.50%, 01/15/2010		96,234
	615,256	Series 2835, Class VK,
		5.50%, 11/15/2012		613,395
	600,834	Series 3033, Class LU,
		5.50%, 03/15/2013		599,965
	1,053,429	Series 3124, Class VP,
		6.00%, 06/15/2014		1,063,221
	309,829	Series 2789, Class VM,
		5.50%, 04/15/2015		308,200
	1,000,000	Series 2390, Class PW,
		6.00%, 04/15/2015		1,005,600
	238,700	Series 2541, Class JB,
		5.00%, 02/15/2016		236,823
	639,363	Series 2970, Class DA,
		5.50%, 01/15/2023		636,303
		Federal National Mortgage
		Association (FNMA):
	680,295	5.50%, 07/01/2015		677,875
	1,175,000	Series 2003-24, Class LC,
		5.00%, 12/25/2015		1,162,899
	912,219	Series 2006-B1, Class AB,
		6.00%, 06/25/2016		912,288
	113,258	Series 2002-77, Class QP,
		5.00%, 09/25/2026		112,727
	1,905,095	Series 2004-W6, Class
		1A4, 5.50%, 07/25/2034		1,895,661
	1,000,000	Series 2004-W10, Class
		A24, 5.00%, 08/25/2034		986,726
	2,000,000	J.P. Morgan Alternative
		Loan Trust, Series
		2006-S2, Class A2,
		5.81%, 05/25/2036		1,992,736
	1,500,000	Renaissance Home
		Equity Loan Trust,
		Series 2007-2, Class AF2,
		5.675%, 06/25/2037		1,493,676
	1,200,000	Residential Accredit Loans
		Inc., Series 2003-QS17,
		Class CB3, 5.50%,
		09/25/2033		1,193,550
		Washington Mutual, Inc.
		Pass-Thru Certificates:
	678,959	Series 2004-CB4, Class
		21A, 5.50%, 12/25/2019		674,839
	588,488	Series 2004-CB4, Class
		22A, 6.00%, 12/25/2019		593,007
				28,657,460
Taxable Municipal Bonds – 1.8%
	453,373	Educational Enhancement
		Funding Corporation,
		6.72%, 06/01/2025		452,562

The accompanying notes are an integral part of these financial statements.

Page 53

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
Taxable Municipal Bonds – 1.8% (cont.)
$	70,000	Erie, Pennsylvania
		General Obligation,
		5.60%, 11/15/2007	$	70,094
	675,000	Missouri State
		Housing Development
		Revenue Bond,
		5.74%, 03/01/2037		675,364
	500,000	Redding California
		Redevelopment Agency
		Tax Allocation,
		6.00%, 09/01/2010		504,620
	475,000	Richmond Joint Powers
		Financing Authority
		Tax Allocation,
		7.35%, 09/01/2010		489,849
	897,376	Tobacco Settlement
		Financing Corporation,
		Series 2001A, Class A,
		6.36%, 05/15/2025		896,542
				3,089,031
Utilities – 8.3%
	1,000,000	Baltimore Gas &
		Electric Company Notes,
		5.78%, 10/01/2008		1,001,268
	940,000	Cilcorp Inc. Senior Notes,
		8.70%, 10/15/2009		971,387
	1,610,000	Commonwealth
		Edison Notes,
		3.70%, 02/01/2008		1,591,272
		Kinder Morgan Energy
		Partners Senior Notes:
	150,000	5.35%, 08/15/2007		149,948
	1,000,000	6.30%, 02/01/2009		1,010,728
		MidAmerican Energy
		Holdings Company
		Senior Notes:
	200,000	4.625%, 10/01/2007		199,513
	1,275,000	7.63%, 10/15/2007		1,281,784
	500,000	7.52%, 09/15/2008		510,940
	1,000,000	Nisource Finance
		Corporation,
		7.875%, 11/15/2010		1,064,783
	900,000	Ocean Energy Inc.,
		4.375%, 10/01/2007		897,370
	1,332,000	Panhandle Eastern
		Pipeline Senior Notes,
		4.80%, 08/15/2008		1,320,035
	250,000	PSE&G Power LLC,
		3.75%, 04/01/2009		242,662
	860,000	System Energy Resources
		1st Mortgage,
		4.875%, 10/01/2007		858,481
	598,000	Texas-New Mexico Power
		Co., 6.125%, 06/01/2008
		(Callable 09/07/2007)		599,025
	750,000	TXU Corporation,
		6.375%, 01/01/2008		751,864
	1,500,000	TXU Electric Delivery Co.,
		5.725%, 09/16/2008
		(Callable 09/16/2007)
		(Acquired 03/13/2007;
		Cost $1,500,000)*		1,500,495
				13,951,555
U.S. Government Agency Issues – 14.7%
	1,000,000	Federal Home Loan
		Bank (FHLB),
		4.70%, 10/07/2010		982,340

The accompanying notes are an integral part of these financial statements.

Page 54

Baird Short-Term Bond Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Principal
Amount			Value
LONG-TERM INVESTMENTS – 93.6% (cont.)
U.S. Government Agency Issues – 14.7% (cont.)
$	23,150,000	Federal National Mortgage
		Association (FNMA),
		6.00%, 05/15/2011	$	23,759,192
				24,741,532
U.S. Treasury Obligations – 7.8%
	13,250,000	U.S. Treasury Note,
		4.875%, 04/30/2011		13,230,337
		Total Long-Term
		Investments
		(Cost $158,637,996)		157,727,438
COLLATERAL POOL INVESTMENT
FOR SECURITIES ON LOAN – 23.4%
(Cost $39,373,797)
(Please Refer to Note 6)				39,373,797
SHORT-TERM INVESTMENTS – 5.1%
Money Market Funds – 5.1%
	6,506,921	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		6,506,921
	2,111,413	Short-Term Investment
		Trust Prime Portfolio –
		AIM Fund		2,111,413
		Total Short-Term
		Investments
		(Cost $8,618,334)		8,618,334
		Total Investments
		(Cost $206,630,127) –
		122.1%		205,719,569
		Liabilities in Excess of
		Other Assets – (22.1)%		(37,228,658	)
		TOTAL NET
		ASSETS – 100.0%	$	168,490,911

*     Restricted Security Deemed Liquid

f      Foreign Security

The accompanying notes are an integral part of these financial statements.

Page 55

Baird Funds, Inc.

Additional Information on Fund Expenses       June 30, 2007 (Unaudited)

Example

As a shareholder of a mutual fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, such as management fees; distribution and/or service (12b-1) fees; and other fund expenses.  Although the Funds do not charge any sales loads, redemption fees, or other transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U. S. Bancorp Fund Services, LLC, the Funds’ transfer agent.  If you request that a redemption be made by wire transfer, currently the Funds’ transfer agent charges a $15.00 fee.

This Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (1/1/07 – 6/30/07).

Actual Expenses

The third and fourth columns of the following table provide information about account values based on actual returns and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the fourth column entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fifth and sixth columns of the following table provide information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.  Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs.  Therefore, the sixth column of the table (entitled “Expenses Paid During the Period”) is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs could have been higher.

Page 56

Baird Funds, Inc.

Additional Information on Fund Expenses       June 30, 2007 (Unaudited)

Actual vs. Hypothetical Returns

For the Six Months Ended June 30, 2007

					Hypothetical (5% return
			Actual		before expenses)
	Fund’s	Beginning	Ending	Expenses	Ending	Expenses
	Annualized	Account	Account	Paid	Account	Paid
	Expense	Value	Value	During	Value	During
	Ratio(1)	1/1/07	6/30/07	Period(1)	6/30/07	Period(1)
Baird Intermediate Bond Fund
Institutional Class	0.30%	$1,000.00	$1,015.60	$1.50	$1,023.31	$1.51
Investor Class	0.55%	$1,000.00	$1,013.90	$2.75	$1,022.07	$2.76
Baird Aggregate Bond Fund
Institutional Class	0.30%	$1,000.00	$1,012.50	$1.50	$1,023.31	$1.51
Investor Class	0.55%	$1,000.00	$1,012.00	$2.74	$1,022.07	$2.76
Baird Intermediate Municipal
Bond Fund
Institutional Class	0.30%	$1,000.00	$1,003.10	$1.49	$1,023.31	$1.51
Investor Class	0.55%	$1,000.00	$1,001.80	$2.73	$1,022.07	$2.76
Baird Core Plus Bond Fund
Institutional Class	0.30%	$1,000.00	$1,013.50	$1.50	$1,023.31	$1.51
Investor Class	0.55%	$1,000.00	$1,013.00	$2.75	$1,022.07	$2.76
Baird Short-Term Bond Fund
Institutional Class	0.30%	$1,000.00	$1,021.40	$1.50	$1,023.31	$1.51

⁽¹⁾ Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181 days and divided by 365 to reflect the one-half year period.

Page 57

Baird Funds, Inc.

Statements of Assets and Liabilities       June 30, 2007 (Unaudited)

							Baird
	Baird			Baird			Intermediate			Baird			Baird
	Intermediate			Aggregate			Municipal			Core Plus			Short-Term
	Bond Fund			Bond Fund			Bond Fund			Bond Fund			Bond Fund
ASSETS:
Investments, at value (cost $368,015,356;
$577,950,455; $64,816,411; $67,699,291
& $186,175,611, respectively)	$	363,934,668		$	572,150,073		$	63,828,836		$	66,979,224		$	185,265,053
Repurchase agreements		44,369,961			75,883,554			—			7,989,337			20,454,516
(cost $44,369,961; $75,883,554; $0;
$7,989,337; & $20,454,516, respectively)
Interest receivable		3,902,664			5,053,039			1,113,759			636,352			1,749,547
Receivable for investments sold		12,689			7,613			—			2,538			—
Receivable for Fund shares sold		5,371,062			2,281,824			163,660			12,189			575,305
Total assets		417,591,044			655,376,103			65,106,255			75,619,640			208,044,421
LIABILITIES:
Payable for collateral
received for securities loaned		85,409,679			146,071,574			—			15,379,028			39,373,797
Payable for securities purchased		7,798,065			2,000,000			—			—			133,929
Payable for Fund shares repurchased		—			15,972			—			47,641			4,650
Payable to Advisor and Distributor		79,659			121,427			19,587			14,992			41,134
Payable to the Custodian		—			—			—			602,188			—
Other liabilities		—			8,495			—			35,043			—
Total liabilities		93,287,403			148,217,468			19,587			16,078,892			39,553,510
NET ASSETS	$	324,303,641		$	507,158,635		$	65,086,668		$	59,540,748		$	168,490,911
NET ASSETS CONSIST OF:
Capital stock	$	331,125,290		$	514,250,441		$	66,096,195		$	60,258,953		$	169,629,137
Accumulated undistributed
net investment income		327,776			591,995			109,075			70,324			208,989
Accumulated net realized loss
on investments sold		(3,068,737	)		(1,883,419	)		(131,027	)		(68,462	)		(436,657	)
Net unrealized depreciation on investments		(4,080,688	)		(5,800,382	)		(987,575	)		(720,067	)		(910,558	)
NET ASSETS	$	324,303,641		$	507,158,635		$	65,086,668		$	59,540,748		$	168,490,911
INSTITUTIONAL CLASS SHARES
Net Assets	$	323,665,311		$	504,559,013		$	64,769,222		$	58,888,002		$	168,490,911
Shares outstanding ($0.01 par value,
unlimited shares authorized)		31,046,708			48,607,502			6,233,716			5,868,437			17,208,706
Net asset value, offering and
redemption price per share	$	10.43		$	10.38		$	10.39		$	10.03		$	9.79
INVESTOR CLASS SHARES
Net Assets	$	638,330		$	2,599,622		$	317,446		$	652,746
Shares outstanding ($0.01 par value,
unlimited shares authorized)		59,375			245,068			29,984			63,361
Net asset value, offering and
redemption price per share	$	10.75		$	10.61		$	10.59		$	10.30

The accompanying notes are an integral part of these financial statements.

Page 58

Baird Funds, Inc.

Statements of Operations       Period Ended June 30, 2007 (Unaudited)

							Baird
	Baird			Baird			Intermediate			Baird			Baird
	Intermediate			Aggregate			Municipal			Core Plus			Short-Term
	Bond Fund			Bond Fund			Bond Fund			Bond Fund			Bond Fund
INVESTMENT INCOME:
Interest income	$	8,954,151		$	11,403,648		$	1,389,265		$	1,585,436		$	4,126,016
Income from securities lending		25,204			21,618			—			3,638			11,676
Total investment income		8,979,355			11,425,266			1,389,265			1,589,074			4,137,692
EXPENSES:
Investment advisory fee		413,017			506,223			81,724			68,996			198,059
Administration fee		82,603			101,245			16,345			13,799			39,612
Distribution expense – Investor Class Shares		1,565			2,990			578			476			—
Total expenses		497,185			610,458			98,647			83,271			237,671
NET INVESTMENT INCOME		8,482,170			10,814,808			1,290,618			1,505,803			3,900,021
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments		210,440			(701,817	)		(23,038	)		61,308			(79,811	)
Change in unrealized appreciation/
depreciation on investments		(3,463,789	)		(5,853,007	)		(1,110,444	)		(857,648	)		(423,817	)
Net realized and unrealized
loss on investments		(3,253,349	)		(6,554,824	)		(1,133,482	)		(796,340	)		(503,628	)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS	$	5,228,821		$	4,259,984		$	157,136		$	709,463		$	3,396,393

The accompanying notes are an integral part of these financial statements.

Page 59

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird Intermediate Bond Fund
	Period Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	8,482,170		$	13,559,600
Net realized gain (loss) on investments		210,440			(1,654,036	)
Change in unrealized appreciation/depreciation on investments		(3,463,789	)		1,569,947
Net increase in net assets resulting from operations		5,228,821			13,475,511
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		42,068,068			111,704,742
Shares issued to holders in reinvestment of dividends		7,388,090			11,932,463
Cost of shares redeemed		(50,062,261	)		(30,115,437	)
Net increase (decrease) in net assets resulting
from capital share transactions		(606,103	)		93,521,768
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		(8,331,157	)		(13,507,486	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net investment income		(30,533	)		(77,646	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(3,738,972	)		93,412,147
NET ASSETS:
Beginning of period		328,042,613			234,630,466
End of period (including undistributed net investment
income of $327,776 and $207,297, respectively)	$	324,303,641		$	328,042,613

The accompanying notes are an integral part of these financial statements.

Page 60

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird Aggregate Bond Fund
	Period Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	10,814,808		$	13,269,201
Net realized loss on investments		(701,817	)		(888,625	)
Change in unrealized appreciation/depreciation on investments		(5,853,007	)		639,350
Net increase in net assets resulting from operations		4,259,984			13,019,926
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		200,829,278			155,486,669
Shares issued to holders in reinvestment of dividends		8,391,522			11,939,014
Cost of shares redeemed		(32,678,660	)		(58,822,570	)
Net increase in net assets resulting
from capital share transactions		176,542,140			108,603,113
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		(10,342,159	)		(13,106,942	)
From realized gains		—			(120,758	)
Total Distributions		(10,342,159	)		(13,227,700	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net investment income		(57,807	)		(60,662	)
From realized gains		—			(525	)
Total Distributions		(57,807	)		(61,187	)
TOTAL INCREASE IN NET ASSETS		170,402,158			108,334,152
NET ASSETS:
Beginning of period		336,756,477			228,422,325
End of period (including undistributed net investment
income of $591,995 and $177,153, respectively)	$	507,158,635		$	336,756,477

The accompanying notes are an integral part of these financial statements.

Page 61

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird Intermediate Municipal Bond Fund
	Period Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	1,290,618		$	2,561,679
Net realized loss on investments		(23,038	)		(106,983	)
Change in unrealized appreciation/depreciation on investments		(1,110,444	)		81,453
Net increase in net assets resulting from operations		157,136			2,536,149
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		7,819,202			36,672,168
Shares issued to holders in reinvestment of dividends		945,341			2,042,052
Cost of shares redeemed		(8,124,099	)		(28,525,030	)
Other capital contributions (Note 3)		2,595			—
Net increase in net assets resulting
from capital share transactions		643,039			10,189,190
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		(1,183,320	)		(2,536,465	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net investment income		(7,694	)		(34,881	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(390,839	)		10,153,993
NET ASSETS:
Beginning of period		65,477,507			55,323,514
End of period (including undistributed net investment
income of $109,075 and $9,471, respectively)	$	65,086,668		$	65,477,507

The accompanying notes are an integral part of these financial statements.

Page 62

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird Core Plus Bond Fund
	Period Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	1,505,803		$	1,758,723
Net realized gain (loss) on investments		61,308			(55,454	)
Change in unrealized appreciation/depreciation on investments		(857,648	)		405,659
Net increase in net assets resulting from operations		709,463			2,108,928
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		9,411,216			35,731,850
Shares issued to holders in reinvestment of dividends		1,401,626			1,429,836
Cost of shares redeemed		(2,353,051	)		(18,311,499	)
Other capital contributions (Note 3)		531			71
Net increase in net assets resulting
from capital share transactions		8,460,322			18,850,258
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		(1,459,054	)		(1,727,098	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net investment income		(9,928	)		(15,311	)
TOTAL INCREASE IN NET ASSETS		7,700,803			19,216,777
NET ASSETS:
Beginning of period		51,839,945			32,623,168
End of period (including undistributed net investment
income of $70,324 and $33,503, respectively)	$	59,540,748		$	51,839,945

The accompanying notes are an integral part of these financial statements.

Page 63

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird Short-Term Bond Fund
	Period Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	3,900,021		$	5,655,808
Net realized loss on investments		(79,811	)		(247,795	)
Change in unrealized appreciation/depreciation on investments		(423,817	)		518,820
Net increase in net assets resulting from operations		3,396,393			5,926,833
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		28,932,211			79,434,155
Shares issued to holders in reinvestment of dividends		3,713,065			5,464,609
Cost of shares redeemed		(12,386,052	)		(33,715,361	)
Net increase in net assets resulting
from capital share transactions		20,259,224			51,183,403
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		(3,769,417	)		(5,563,493	)
TOTAL INCREASE IN NET ASSETS		19,886,200			51,546,743
NET ASSETS:
Beginning of period		148,604,711			97,057,968
End of period (including undistributed net investment
income of $208,989 and $78,385, respectively)	$	168,490,911		$	148,604,711

The accompanying notes are an integral part of these financial statements.

Page 64

Baird Funds, Inc.

Financial Highlights

	Baird Intermediate Bond Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.52		$	10.55		$	10.83		$	10.88		$	10.86		$	10.60
Income from investment operations:
Net investment income		0.27			0.51			0.46			0.47	(1)		0.49			0.56
Net realized and unrealized
gains (losses) on investments		(0.10	)		(0.03	)		(0.27	)		(0.05	)		0.14			0.27
Total from investment operations		0.17			0.48			0.19			0.42			0.63			0.83
Less distributions:
Dividends from net investment income		(0.26	)		(0.51	)		(0.47	)		(0.47	)		(0.49	)		(0.56	)
Distributions from net realized gains		—			—			—			(0.00	)(2)		(0.12	)		(0.01	)
Total distributions		(0.26	)		(0.51	)		(0.47	)		(0.47	)		(0.61	)		(0.57	)
Net asset value, end of period	$	10.43		$	10.52		$	10.55		$	10.83		$	10.88		$	10.86
Total return		1.56	%(3)		4.70	%		1.77	%		3.91	%		5.89	%		8.02	%
Supplemental data and ratios:
Net assets, end of period	$	323,665,311		$	326,835,399		$	231,800,807		$	191,563,699		$	149,836,855		$	146,236,339
Ratio of expenses to average net assets		0.30	%(4)		0.30	%		0.30	%		0.30	%		0.30	%		0.30	%
Ratio of net investment income
to average net assets		5.14	%(4)		4.90	%		4.34	%		4.32	%		4.39	%		5.20	%
Portfolio turnover rate(5)		24.1	%(3)		44.8	%		42.1	%		44.8	%		64.4	%		41.1	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 65

Baird Funds, Inc.

Financial Highlights

	Baird Intermediate Bond Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.85		$	10.86		$	11.13		$	11.17		$	11.13		$	10.71
Income from investment operations:
Net investment income		0.26			0.50	(1)		0.45			0.45	(1)		0.48			0.54	(1)
Net realized and unrealized
gains (losses) on investments		(0.11	)		(0.03	)		(0.28	)		(0.05	)		0.14			0.27
Total from investment operations		0.15			0.47			0.17			0.40			0.62			0.81
Less distributions:
Dividends from net investment income		(0.25	)		(0.48	)		(0.44	)		(0.44	)		(0.46	)		(0.38	)
Distributions from net realized gains		—			—			—			(0.00	)(2)		(0.12	)		(0.01	)
Total distributions		(0.25	)		(0.48	)		(0.44	)		(0.44	)		(0.58	)		(0.39	)
Net asset value, end of period	$	10.75		$	10.85		$	10.86		$	11.13		$	11.17		$	11.13
Total return		1.39	%(3)		4.47	%		1.56	%		3.65	%		5.61	%		7.74	%
Supplemental data and ratios:
Net assets, end of period	$	638,330		$	1,207,214		$	2,829,659		$	3,012,328		$	1,321,648		$	1,127,162
Ratio of expenses to average net assets		0.55	%(4)		0.55	%		0.55	%		0.55	%		0.55	%		0.55	%
Ratio of net investment income
to average net assets		4.89	%(4)		4.65	%		4.09	%		4.07	%		4.14	%		4.95	%
Portfolio turnover rate(5)		24.1	%(3)		44.8	%		42.1	%		44.8	%		64.4	%		41.1	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not Annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 66

Baird Funds, Inc.

Financial Highlights

	Baird Aggregate Bond Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.51		$	10.54		$	10.74		$	10.71		$	10.69		$	10.51
Income from investment operations:
Net investment income		0.27			0.52			0.49	(1)		0.49	(1)		0.56			0.62
Net realized and unrealized
gains (losses) on investments		(0.14	)		(0.03	)		(0.19	)		0.07			0.20			0.23
Total from investment operations		0.13			0.49			0.30			0.56			0.76			0.85
Less distributions:
Dividends from net investment income		(0.26	)		(0.52	)		(0.49	)		(0.50	)		(0.56	)		(0.62	)
Distributions from net realized gains		—			(0.00	)(2)		(0.01	)		(0.03	)		(0.18	)		(0.05	)
Total distributions		(0.26	)		(0.52	)		(0.50	)		(0.53	)		(0.74	)		(0.67	)
Net asset value, end of period	$	10.38		$	10.51		$	10.54		$	10.74		$	10.71		$	10.69
Total return		1.25	%(3)		4.88	%		2.85	%		5.30	%		7.19	%		8.30	%
Supplemental data and ratios:
Net assets, end of period	$	504,559,013		$	334,907,855		$	227,132,399		$	115,382,862		$	91,550,534		$	87,847,176
Ratio of expenses to average net assets		0.30	%(4)		0.30	%		0.30	%		0.30	%		0.30	%		0.30	%
Ratio of net investment income
to average net assets		5.34	%(4)		5.11	%		4.56	%		4.58	%		4.85	%		5.75	%
Portfolio turnover rate(5)		21.5	%(3)		52.4	%		46.0	%		72.6	%		106.7	%		51.2	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 67

Baird Funds, Inc.

Financial Highlights

	Baird Aggregate Bond Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.73		$	10.75		$	10.95		$	10.88		$	10.84		$	10.57
Income from investment operations:
Net investment income		0.26			0.50			0.47	(1)		0.48	(1)		0.55			0.60	(1)
Net realized and unrealized
gains (losses) on investments		(0.13	)		(0.02	)		(0.19	)		0.07			0.19			0.23
Total from investment operations		0.13			0.48			0.28			0.55			0.74			0.83
Less distributions:
Dividends from net investment income		(0.25	)		(0.50	)		(0.47	)		(0.45	)		(0.52	)		(0.51	)
Distributions from net realized gains		—			(0.00	)(2)		(0.01	)		(0.03	)		(0.18	)		(0.05	)
Total distributions		(0.25	)		(0.50	)		(0.48	)		(0.48	)		(0.70	)		(0.56	)
Net asset value, end of period	$	10.61		$	10.73		$	10.75		$	10.95		$	10.88		$	10.84
Total return		1.20	%(3)		4.61	%		2.54	%		5.20	%		6.95	%		8.08	%
Supplemental data and ratios:
Net assets, end of period	$	2,599,622		$	1,848,622		$	1,289,926		$	708,858		$	719,844		$	845,481
Ratio of expenses to average net assets		0.55	%(4)		0.55	%		0.55	%		0.55	%		0.55	%		0.55	%
Ratio of net investment income
to average net assets		5.09	%(4)		4.86	%		4.31	%		4.33	%		4.60	%		5.50	%
Portfolio turnover rate(5)		21.5	%(3)		52.4	%		46.0	%		72.6	%		106.7	%		51.2	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 68

Baird Funds, Inc.

Financial Highlights

	Baird Intermediate Municipal Bond Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.55		$	10.56		$	10.81		$	10.91		$	10.86		$	10.25
Income from investment operations:
Net investment income(1)		0.21			0.39			0.39			0.40			0.42			0.43
Net realized and unrealized
gains (losses) on investments		(0.18	)		(0.01	)		(0.25	)		(0.11	)		0.10			0.64
Total from investment operations		0.03			0.38			0.14			0.29			0.52			1.07
Less distributions:
Dividends from net investment income		(0.19	)		(0.39	)		(0.39	)		(0.39	)		(0.43	)		(0.46	)
Distributions from net realized gains		—			—			—			—			(0.04	)		(0.00	)(2)
Total distributions		(0.19	)		(0.39	)		(0.39	)		(0.39	)		(0.47	)		(0.46	)
Net asset value, end of period	$	10.39		$	10.55		$	10.56		$	10.81		$	10.91		$	10.86
Total return		0.31	%(3)		3.69	%		1.33	%		2.69	%		4.91	%		10.72	%
Supplemental data and ratios:
Net assets, end of period	$	64,769,222		$	64,932,629		$	53,831,848		$	36,889,211		$	30,234,195		$	31,221,508
Ratio of expenses to average net assets		0.30	%(4)		0.30	%		0.30	%		0.30	%		0.30	%		0.30	%
Ratio of net investment income
to average net assets		3.95	%(4)		3.72	%		3.64	%		3.70	%		3.88	%		4.11	%
Portfolio turnover rate(5)		1.5	%(3)		25.1	%		13.7	%		4.2	%		17.7	%		32.6	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 69

Baird Funds, Inc.

Financial Highlights

	Baird Intermediate Municipal Bond Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.75		$	10.75		$	10.99		$	11.09		$	11.02		$	10.27
Income from investment operations:
Net investment income(1)		0.20			0.37			0.37			0.38			0.40			0.41
Net realized and unrealized
gains (losses) on investments		(0.18	)		(0.01	)		(0.25	)		(0.12	)		0.10			0.64
Total from investment operations		0.02			0.36			0.12			0.26			0.50			1.05
Less distributions:
Dividends from net investment income		(0.18	)		(0.36	)		(0.36	)		(0.36	)		(0.39	)		(0.30	)
Distributions from net realized gains		—			—			—			—			(0.04	)		(0.00	)(2)
Total distributions		(0.18	)		(0.36	)		(0.36	)		(0.36	)		(0.43	)		(0.30	)
Net asset value, end of period	$	10.59		$	10.75		$	10.75		$	10.99		$	11.09		$	11.02
Total return		0.18	%(3)		3.44	%		1.13	%		2.40	%		4.69	%		10.46	%
Supplemental data and ratios:
Net assets, end of period	$	317,446		$	544,878		$	1,491,666		$	4,611,766		$	756,792		$	706,207
Ratio of expenses to average net assets		0.55	%(4)		0.55	%		0.55	%		0.55	%		0.55	%		0.55	%
Ratio of net investment income
to average net assets		3.70	%(4)		3.47	%		3.39	%		3.45	%		3.63	%		3.86	%
Portfolio turnover rate(5)		1.5	%(3)		25.1	%		13.7	%		4.2	%		17.7	%		32.6	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 70

Baird Funds, Inc.

Financial Highlights

	Baird Core Plus Bond Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.16		$	10.06		$	10.38		$	10.45		$	10.45		$	10.42
Income from investment operations:
Net investment income		0.27			0.55	(1)		0.51	(1)		0.54			0.56			0.62
Net realized and unrealized
gains (losses) on investments		(0.13	)		0.09			(0.28	)		0.10			0.36			0.07
Total from investment operations		0.14			0.64			0.23			0.64			0.92			0.69
Less distributions:
Dividends from net investment income		(0.27	)		(0.54	)		(0.54	)		(0.53	)		(0.56	)		(0.62	)
Distributions from net realized gains		—			—			(0.01	)		(0.18	)		(0.36	)		(0.04	)
Total distributions		(0.27	)		(0.54	)		(0.55	)		(0.71	)		(0.92	)		(0.66	)
Net asset value, end of period	$	10.03		$	10.16		$	10.06		$	10.38		$	10.45		$	10.45
Total return		1.35	%(2)		6.58	%		2.23	%		6.29	%		8.94	%		6.90	%
Supplemental data and ratios:
Net assets, end of period	$	58,888,002		$	51,551,017		$	32,173,459		$	32,495,641		$	42,709,634		$	54,221,923
Ratio of expenses to average net assets		0.30	%(3)		0.30	%		0.30	%		0.30	%		0.30	%		0.30	%
Ratio of net investment income
to average net assets		5.46	%(3)		5.49	%		4.92	%		4.85	%		4.56	%		6.03	%
Portfolio turnover rate(4)		30.0	%(2)		62.0	%		37.6	%		52.5	%		103.1	%		66.8	%

(1)	Calculated using average shares outstanding during the period.
(2)	Not annualized.
(3)	Annualized.
(4)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 71

Baird Funds, Inc.

Financial Highlights

	Baird Core Plus Bond Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	10.42		$	10.30		$	10.62		$	10.67		$	10.65		$	10.49
Income from investment operations:
Net investment income		0.25			0.54	(1)		0.49	(1)		0.53			0.53	(1)		0.60	(1)
Net realized and unrealized
gains (losses) on investments		(0.12	)		0.09			(0.29	)		0.10			0.37			0.07
Total from investment operations		0.13			0.63			0.20			0.63			0.90			0.67
Less distributions:
Dividends from net investment income		(0.25	)		(0.51	)		(0.51	)		(0.50	)		(0.52	)		(0.47	)
Distributions from net realized gains		—			—			(0.01	)		(0.18	)		(0.36	)		(0.04	)
Total distributions		(0.25	)		(0.51	)		(0.52	)		(0.68	)		(0.88	)		(0.51	)
Net asset value, end of period	$	10.30		$	10.42		$	10.30		$	10.62		$	10.67		$	10.65
Total return		1.30	%(2)		6.34	%		1.93	%		6.09	%		8.60	%		6.58	%
Supplemental data and ratios:
Net assets, end of period	$	652,746		$	288,928		$	449,709		$	125,847		$	124,481		$	296,026
Ratio of expenses to average net assets		0.55	%(3)		0.55	%		0.55	%		0.55	%		0.55	%		0.55	%
Ratio of net investment income
to average net assets		5.21	%(3)		5.24	%		4.67	%		4.60	%		4.31	%		5.78	%
Portfolio turnover rate(4)		30.0	%(2)		62.0	%		37.6	%		52.5	%		103.1	%		66.8	%

(1)	Calculated using average shares outstanding during the period.
(2)	Not annualized.
(3)	Annualized.
(4)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 72

Baird Funds, Inc.

Financial Highlights

	Baird Short-Term Bond Fund – Institutional Class
	Six Months
	Ended									August 31, 2004(1)
	June 30, 2007			Year Ended December 31,						through
	(Unaudited)			2006			2005			December 31, 2004
Per Share Data:
Net asset value, beginning of period	$	9.81		$	9.79		$	9.93		$	10.00
Income from investment operations:
Net investment income		0.24			0.43			0.33			0.08
Net realized and unrealized
gains (losses) on investments		(0.03	)		0.02			(0.15	)		(0.07	)
Total from investment operations		0.21			0.45			0.18			0.01
Less distributions:
Dividends from net investment income		(0.23	)		(0.43	)		(0.32	)		(0.08	)
Net asset value, end of period	$	9.79		$	9.81		$	9.79		$	9.93
Total return		2.14	%(2)		4.65	%		1.85	%		0.10	%(2)
Supplemental data and ratios:
Net assets, end of period	$	168,490,911		$	148,604,711		$	97,057,968		$	31,973,000
Ratio of expenses to average net assets		0.30	%(3)		0.30	%		0.30	%		0.30	%(3)
Ratio of net investment income
to average net assets		4.92	%(3)		4.48	%		3.52	%		2.60	%(3)
Portfolio turnover rate		23.8	%(2)		41.1	%		31.8	%		16.7	%(2)

(1)	Commencement of operations.
(2)	Not annualized.
(3)	Annualized.

The accompanying notes are an integral part of these financial statements.

Page 73

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

1. ORGANIZATION

Baird Funds, Inc. (the “Corporation”) was incorporated on June 9, 2000 as a Wisconsin corporation and is registered as an open-end investment management company under the Investment Company Act of 1940, as amended (the “1940 Act”).  The accompanying financial statements include the Baird Intermediate Bond Fund, Baird Aggregate Bond Fund, Baird Intermediate Municipal Bond Fund, Baird Core Plus Bond Fund and Baird Short-Term Bond Fund (each, a “Fund” and collectively, the “Funds”), five of the eight portfolios comprising the Corporation, each of which is diversified within the meaning of the 1940 Act.  Robert W. Baird & Co. Incorporated (“Baird” or the “Advisor”) serves as investment advisor to the Funds.

The Baird Intermediate Bond Fund, Baird Aggregate Bond Fund and Baird Core Plus Bond Fund commenced operations with the sale of both Institutional and Investor class shares on September 29, 2000.  The Baird Intermediate Municipal Bond Fund commenced operations with the sale of both Institutional and Investor Class shares on March 30, 2001.  The Baird Short-Term Bond Fund commenced operations with the sale of Institutional Class shares on August 31, 2004.  The Institutional Class shares are not subject to a distribution and service (12b-1) fee, while the Investor Class shares are subject to a distribution and service (12b-1) fee up to 0.25%.

The investment objective of the Baird Intermediate Bond Fund is to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers Intermediate Government/Credit Bond Index.  The Lehman Brothers Intermediate Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and ten years.

The investment objective of the Baird Aggregate Bond Fund is to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers Aggregate Bond Index.  The Lehman Brothers Aggregate Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year.

The primary investment objective of the Baird Intermediate Municipal Bond Fund is to provide current income that is substantially exempt from federal income tax.  A secondary objective is to provide total return with relatively low volatility of principal.

The investment objective of the Baird Core Plus Bond Fund is to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers U.S. Universal Bond Index. The Lehman Brothers U.S. Universal Bond Index is an unmanaged, market value weighted index of fixed income securities issued in U.S. dollars, including U.S. government and investment grade debt, non-investment grade debt, asset-backed and mortgage-backed securities, Eurobonds, 144A securities and emerging market debt, with maturities of at least one year.

The investment objective of the Baird Short-Term Bond Fund is to provide an annual rate of total return, before Fund expenses, greater than the annual rate of total return of the Lehman Brothers 1-3 Year Government/Credit Bond Index.  The Lehman Brothers 1-3 Year Government/Credit Bond Index is an unmanaged, market value weighted index of investment grade, fixed-rate debt, including government and corporate securities, with maturities between one and three years.

Page 74

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements.  These policies are in conformity with accounting principles generally accepted in the United States of America.

a)	Investment Valuation– Because market quotations for most debt securities are not readily available, debt securities are stated at fair value as furnished by an independent pricing service, which uses valuation methods such as matrix pricing and other analytical pricing models, as well as market transactions and dealer quotations.  Debt securities purchased with a remaining maturity of 60 days or less are valued at acquisition cost, plus or minus any amortized discount or premium.  Investments in mutual funds are valued at their stated net asset value.  Common stocks that are listed on a securities exchange (other than NASDAQ) are valued at the last quoted sales price.  Securities traded on NASDAQ are valued at the NASDAQ Official Closing Price.  Price information on listed stocks is taken from the exchange where the security is primarily traded.  Securities that were not traded on the valuation date, as well as stocks that are not listed on an exchange, including NASDAQ, are valued at the average of the current bid and asked price.  Other assets and securities for which no quotations are readily available are valued at fair value as determined in good faith by the Advisor in accordance with procedures approved by the Corporation’s Board of Directors.  In accordance with such procedures, the Advisor may use broker quotes or, if the broker quotes are unavailable or deemed to be unreliable, fair value will be determined by a valuation committee of the Advisor.  In certain limited instances, the Advisor may also determine the fair value of a debt security for up to two trading days using a constant spread methodology authorized by the Board.  In determining fair value, the valuation committee takes into account all relevant factors and available information.  Consequently, the price of the security used by a Fund to calculate its NAV may differ from quoted or published prices for the same security.  Fair value pricing involves subjective judgments and there is no single standard for determining a security’s fair value.  As a result, different mutual funds could reasonably arrive at a different fair value for the same security.  It is possible that the fair value determined for a security is materially different from the value that could be realized upon the sale of that security or from the values that other mutual funds may determine.
	In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  Management has determined that SFAS No. 157 will have no material impact on the Funds’ financial statements.
b)	Unregistered Securities– Four of the Funds own certain investment securities which are unregistered and thus restricted with respect to resale.  These securities consist of securities issued pursuant to Rule 144A under the Securities Act of 1933, which are deemed to be liquid based on several factors.  The value of such securities for the Baird Intermediate Bond, Baird Aggregate Bond, Baird Core Plus Bond and Baird Short-Term Bond Funds were $15,767,926 (4.86% of net assets), $19,603,917 (3.87% of net assets), $2,143,297 (3.60% of net assets) and $7,024,530 (4.17% of net assets), respectively, at June 30, 2007.

Page 75

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES (cont.)

c)	Foreign Securities– The Funds may invest in U.S. dollar-denominated debt obligations of foreign companies and foreign governments. Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and the U.S. government.  These risks include currency rate fluctuations, political and economic instability and differences in financial reporting standards and less strict regulation of securities markets.  Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. government. Occasionally, events that affect these values and exchange rates may occur after the close of the exchange on which such securities are traded.  If such events materially affect the value of a Fund’s securities, these securities may be valued at their fair value pursuant to procedures adopted by the Board of Directors.
d)	Federal Income Taxes– The Funds intend to continue to qualify as regulated investment companies as provided in subchapter M of the Internal Revenue Code and to distribute substantially all of their taxable income to their shareholders in a manner which results in no tax cost to the Funds.  Therefore, no federal income or excise tax provision is recorded.
	Effective June 29, 2007, the Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48),“Accounting for Uncertainty in Income Taxes,” a clarification of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return.  Management has determined that FIN 48 had no material impact on the Funds’ financial statements.
e)	Allocation of Income and Expenses– Each Fund is charged for those expenses directly attributable to it.  Expenses directly attributable to a class of shares, such as Rule 12b-1 distribution fees, are charged to that class of shares.  Income, expenses and realized and unrealized gains and losses are allocated to the classes based on their respective net assets.  Expenses that are not directly attributable to a Fund are allocated among the Funds in the series in proportion to their assets.
f)	Distributions to Shareholders– Dividends from net investment income are declared and paid monthly.  Distributions of net realized capital gains, if any, are declared and paid at least annually.
g)	Use of Estimates– The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
h)	Other– Investment and shareholder transactions are recorded on trade date.  The Funds determine the gain or loss realized from investment transactions by comparing the original cost of the security lot sold with the net sales proceeds.  Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis.  Premiums and discounts on the purchase of securities are amortized/accreted using the effective interest

Page 76

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES (cont.)

	method.  Accounting principles generally accepted in the United States of America require that permanent financial reporting and tax differences be reclassified in the capital accounts.
i)	Guarantees and Indemnifications– In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses.  The Funds’ maximum exposure under these arrangements is unknown and would involve future claims against the Funds that have not yet occurred.  Based on experience, the Funds would expect the risk of loss to be remote.

3. CAPITAL SHARE TRANSACTIONS

The following table summarizes the capital share transactions of each Fund for the past two fiscal periods:

BAIRD INTERMEDIATE BOND FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		3,819,189		$	40,237,194		Shares sold		168,809		$	1,830,874
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		700,483			7,365,153		reinvestment of dividends		2,114			22,937
Shares redeemed		(4,535,565	)		(47,633,480	)	Shares redeemed		(222,832	)		(2,428,781	)
Net decrease		(15,893	)	$	(31,133	)	Net decrease		(51,909	)	$	(574,970	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		31,062,601					Beginning of period		111,284
End of period		31,046,708					End of period		59,375
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		10,666,486		$	111,623,242		Shares sold		7,531		$	81,500
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		1,136,626			11,873,363		reinvestment of dividends		5,495			59,100
Shares redeemed		(2,710,776	)		(28,370,722	)	Shares redeemed		(162,273	)		(1,744,715	)
Net increase		9,092,336		$	95,125,883		Net decrease		(149,247	)	$	(1,604,115	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		21,970,265					Beginning of period		260,531
End of period		31,062,601					End of period		111,284

Page 77

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3. CAPITAL SHARE TRANSACTIONS (cont.)

BAIRD AGGREGATE BOND FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		19,002,721		$	199,548,080		Shares sold		119,258		$	1,281,198
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		794,765			8,337,474		reinvestment of dividends		5,040			54,048
Shares redeemed		(3,068,786	)		(32,126,923	)	Shares redeemed		(51,483	)		(551,737	)
Net increase		16,728,700		$	175,758,631		Net increase		72,815		$	783,509
Shares Outstanding:							Shares Outstanding:
Beginning of period		31,878,802					Beginning of period		172,253
End of period		48,607,502					End of period		245,068
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		14,798,845		$	154,503,654		Shares sold		91,604		$	983,015
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		1,141,334			11,883,604		reinvestment of dividends		5,207			55,410
Shares redeemed		(5,615,794	)		(58,350,968	)	Shares redeemed		(44,506	)		(471,602	)
Net increase		10,324,385		$	108,036,290		Net increase		52,305		$	566,823
Shares Outstanding:							Shares Outstanding:
Beginning of period		21,554,417					Beginning of period		119,948
End of period		31,878,802					End of period		172,253

Page 78

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3. CAPITAL SHARE TRANSACTIONS (cont.)

BAIRD INTERMEDIATE MUNICIPAL BOND FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		741,254		$	7,804,180		Shares sold		1,399		$	15,022
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		89,310			937,720		reinvestment of dividends		711			7,621
Shares redeemed		(748,935	)		(7,879,374	)	Shares redeemed		(22,789	)		(244,725	)
Other capital							Other capital
contributions(1)		—			2,555		contributions(1)		—			40
Net increase		81,629		$	865,081		Net decrease		(20,679	)	$	(222,042	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		6,152,087					Beginning of period		50,663
End of period		6,233,716					End of period		29,984
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		3,475,609		$	36,579,100		Shares sold		8,603		$	93,068
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		191,986			2,016,861		reinvestment of dividends		2,354			25,191
Shares redeemed		(2,611,483	)		(27,462,382	)	Shares redeemed		(98,994	)		(1,062,648	)
Net increase		1,056,112		$	11,133,579		Net decrease		(88,037	)	$	(944,389	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		5,095,975					Beginning of period		138,700
End of period		6,152,087					End of period		50,663

(1) Voluntary reimbursement by Advisor of fees associated with the Fund’s investments in other investment companies.

Page 79

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3. CAPITAL SHARE TRANSACTIONS (cont.)

BAIRD CORE PLUS BOND FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		877,829		$	8,957,172		Shares sold		43,595		$	454,044
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		137,404			1,393,534		reinvestment of dividends		778			8,092
Shares redeemed		(221,971	)		(2,261,782	)	Shares redeemed		(8,736	)		(91,269	)
Other capital							Other capital
contributions(1)		—			526		contributions(1)		—			5
Net increase		793,262		$	8,089,450		Net increase		35,637		$	370,872
Shares Outstanding:							Shares Outstanding:
Beginning of period		5,075,175					Beginning of period		27,724
End of period		5,868,437					End of period		63,361
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		3,548,621		$	35,649,048		Shares sold		8,089		$	82,802
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		141,751			1,416,531		reinvestment of dividends		1,301			13,305
Shares redeemed		(1,814,933	)		(18,051,110	)	Shares redeemed		(25,330	)		(260,389	)
Other capital							Other capital
contributions(2)		—			71		contributions(2)		—			0	(3)
Net increase		1,875,439		$	19,014,540		Net decrease		(15,940	)	$	(164,282	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		3,199,736					Beginning of period		43,664
End of period		5,075,175					End of period		27,724

(1)	Voluntary reimbursement by Advisor of fees associated with the Fund’s investments in other investment companies.
(2)	Reimbursement for NAV Break.
(3)	Amount is less than $1.

Page 80

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3. CAPITAL SHARE TRANSACTIONS (cont.)

BAIRD SHORT-TERM BOND FUND

	Six Months Ended							Year Ended
	June 30, 2007							December 31, 2006
Institutional Class Shares	Shares			Amount			Institutional Class Shares	Shares			Amount
Shares sold		2,943,265		$	28,932,211		Shares sold		8,124,186		$	79,434,155
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		378,446			3,713,065		reinvestment of dividends		559,203			5,464,609
Shares redeemed		(1,260,168	)		(12,386,052	)	Shares redeemed		(3,449,049	)		(33,715,361	)
Net increase		2,061,543		$	20,259,224		Net increase		5,234,340		$	51,183,403
Shares Outstanding:							Shares Outstanding:
Beginning of period		15,147,163					Beginning of period		9,912,823
End of period		17,208,706					End of period		15,147,163

4. INVESTMENT TRANSACTIONS AND INCOME TAX INFORMATION

During the six months ended June 30, 2007, purchases and sales of investment securities (excluding short-term investments) were as follows:

					Baird
	Baird		Baird		Intermediate		Baird		Baird
	Intermediate		Aggregate		Municipal		Core Plus		Short-Term
	Bond Fund		Bond Fund		Bond Fund		Bond Fund		Bond Fund
Purchases:
U.S. Government	$	41,462,122	$	79,461,097	$	—	$	5,301,655	$	9,048,729
Other	$	33,475,063	$	162,142,438	$	1,781,236	$	17,948,644	$	31,747,302
Sales:
U.S. Government	$	52,888,242	$	33,458,705	$	—	$	9,213,271	$	12,689,766
Other	$	35,194,044	$	50,941,813	$	969,760	$	6,686,929	$	20,291,513

Page 81

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

4. INVESTMENT TRANSACTIONS AND INCOME TAX INFORMATION (cont.)

At December 31, 2006, gross unrealized appreciation and depreciation of investments and distributable ordinary income and long-term capital gains for federal tax purposes were as follows:

							Intermediate
	Intermediate			Aggregate			Municipal			Core Plus			Short-Term
	Bond Fund			Bond Fund			Bond Fund			Bond Fund			Bond Fund
Cost of Investments	$	352,890,822		$	355,290,950		$	64,184,619		$	55,485,672		$	162,277,229
Gross unrealized appreciation	$	2,414,197		$	3,195,824		$	612,696		$	733,192		$	282,887
Gross unrealized depreciation		(3,173,709	)		(3,304,445	)		(495,225	)		(614,191	)		(769,628	)
Net unrealized appreciation/depreciation	$	(759,512	)	$	(108,621	)	$	117,471		$	119,001		$	(486,741	)
Undistributed ordinary income	$	207,297		$	177,153		$	9,471		$	33,503		$	78,385
Undistributed long-term capital gain		—			—			—			—			—
Total distributable earnings	$	207,297		$	177,153		$	9,471		$	33,503		$	78,385
Other accumulated gains (losses)	$	(3,136,565	)	$	(1,020,356	)	$	(336,718	)	$	(111,190	)	$	(356,847	)
Total accumulated earnings (losses)	$	(3,688,780	)	$	(951,824	)	$	(209,776	)	$	41,314		$	(765,203	)

On the Statements of Asset and Liabilities, the following adjustments were made for permanent tax adjustments:

	Undistributed Net			Accumulated Net			Paid In
	Investment Income (Loss)			Realized Gain (Loss)			Capital
Baird Intermediate Bond Fund	$	78,450		$	(78,450	)		—
Baird Aggregate Bond Fund	$	65,084		$	(65,084	)		—
Baird Intermediate Municipal Bond Fund		—		$	(38,217	)	$	38,217
Baird Core Plus Bond Fund	$	17,189		$	(17,189	)		—
Baird Short-Term Bond Fund	$	(54,150	)	$	54,150			—

The permanent differences primarily relate to reclasses from paydown gains and losses from asset backed securities.

Page 82

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

4. INVESTMENT TRANSACTIONS AND INCOME TAX INFORMATION (cont.)

The tax components of dividends paid during the periods shown below were as follows:

	Six Months Ended				Year Ended
	June 30, 2007				December 31, 2006
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distributions		Distributions		Distributions		Distributions
Baird Intermediate Bond Fund	$	8,361,690	$	—	$	13,585,132	$	—
Baird Aggregate Bond Fund	$	10,399,966	$	—	$	13,167,714	$	121,173
Baird Intermediate Municipal Bond Fund	$	—	$	—	$	—	$	—
Baird Core Plus Bond Fund	$	1,468,982	$	—	$	1,742,409	$	—
Baird Short-Term Bond Fund	$	3,769,417	$	—	$	5,563,493	$	—

For the six months ended June 30, 2007 and the year ended December 31, 2006, distributions of $1,191,014 and $2,571,346, respectively, from the Baird Intermediate Municipal Bond Fund were tax-exempt.

Under the current tax law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year.  For the year ended December 31, 2006, the Baird Intermediate Bond, Baird Aggregate Bond, Baird Intermediate Municipal Bond, Baird Core Plus Bond and Baird Short-Term Bond Funds elected to defer capital losses occurring between November 1, 2006 and December 31, 2006 in the amount of $6,343, $73,662, $94,149, $72,252 and $40,321, respectively.

At December 31, 2006, the Baird Intermediate Bond, Baird Aggregate Bond, Baird Intermediate Municipal Bond, Baird Core Plus Bond and Baird Short-Term Bond Funds had accumulated net realized capital loss carryovers of $3,130,445, $945,859, $242,569, $38,938 and $316,526, respectively.  With respect to Baird Intermediate Bond Fund, $485,569 of the capital loss carryovers expire in 2012, $938,114 expire in 2013 and $1,706,762 expire in 2014.  With respect to Baird Aggregate Bond Fund, $945,859 of the capital loss carryovers expire in 2014.  With respect to Baird Intermediate Municipal Bond Fund, $6,626 of the capital loss carryovers expire in 2012, $184,660 expire in 2013 and $51,283 expire in 2014.  With respect to Baird Core Plus Fund, $5,975 of the capital loss carryovers expire in 2013 and $32,963 expire in 2014.  With respect to Baird Short-Term Bond Fund, $8,150 of the capital loss carryovers expire in 2012, $59,190 expire in 2013 and $249,186 expire in 2014.  To the extent these Funds realize future net capital gains, those gains will be offset by any unused capital loss carryovers.

5. INVESTMENT ADVISORY AND OTHER AGREEMENTS

The Funds have entered into an Investment Advisory Agreement with Baird for the provision of investment advisory services. Pursuant to the Investment Advisory Agreement, the Advisor is entitled to receive a fee, calculated daily and payable monthly, at the annual rate of 0.25% for the Baird Intermediate Bond Fund, Baird Aggregate Bond Fund, Baird Intermediate Municipal Bond Fund, Baird Core Plus Bond Fund and Baird Short-Term Bond Fund as applied to the respective Fund’s average daily net assets.  Certain officers of the Advisor are also officers of the Funds.

Page 83

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

5. INVESTMENT ADVISORY AND OTHER AGREEMENTS (cont.)

The Funds have entered into an Administration Agreement with Baird.  Under the Administration Agreement, the Advisor assumes and pays all expenses of the applicable Fund other than the investment advisory fees, borrowing costs, commissions and other costs directly related to portfolio securities transactions, extraordinary or non-recurring expenses and fees under the 12b-1 plan.  Pursuant to the Administration Agreement, the Advisor is entitled to receive a fee, calculated daily and payable monthly, at the annual rate of 0.05% for each of the Baird Intermediate Bond, Baird Aggregate Bond, Baird Intermediate Municipal Bond, Baird Core Plus Bond and Baird Short-Term Bond Funds as applied to the respective Fund’s average daily net assets.

U.S. Bancorp Fund Services, LLC serves as transfer agent, administrator, and accounting services agent for the Funds.  U.S. Bank, N.A. serves as custodian for the Funds.

Baird is the distributor of the Funds pursuant to a distribution agreement.

6. SECURITIES LENDING

Each Fund may lend up to one-third of its total assets (including such loans) to borrowers under terms of participation in a securities lending program administered by U.S. Bancorp Asset Management, an affiliate of the Funds’ custodian, transfer agent and administrator.  The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the market value of any loaned securities at the time of the loan, plus accrued interest.

The Funds receive compensation in the form of fees and earn interest on the cash collateral.  The amount of fees depends on a number of factors including the type of security, length of the loan and credit standing of the borrower.  Each Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period.  Each Fund has the right under the terms of the securities lending agreement to recover the securities from the borrower on demand.

As of June 30, 2007, the Baird Intermediate Bond, Baird Aggregate Bond, Baird Core Plus Bond and Baird Short-Term Bond Funds had loaned securities that were collateralized by cash equivalents.  The cash collateral is invested by the custodian with the approval of the Advisor.  Although the cash collateral is generally invested in readily marketable, high quality, short-term obligations, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending.  A Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although this risk is mitigated by the collateral and by contract with the securities lending agent.

As of June 30, 2007, the market value of the securities on loan and payable on collateral due to broker were as follows:

	Market Value of		Payable on Collateral
	Securities on Loan		due to Broker
Baird Intermediate Bond Fund	$	83,681,639	$	85,409,679
Baird Aggregate Bond Fund		143,130,779		146,071,574
Baird Core Plus Bond Fund		15,075,719		15,379,028
Baird Short-Term Bond Fund		38,550,441		39,373,797

Page 84

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

6. SECURITIES LENDING (cont.)

Individual reinvested cash collateral jointly pooled with collateral received by other Baird Funds as of June 30, 2007 is as follows:

	Intermediate		Aggregate		Core Plus		Short-Term		Other
	Bond Fund		Bond Fund		Bond Fund		Bond Fund		Baird Funds		Total
Cantor Fitzgerald
Repurchase Agreement(1)	$	13,527,427	$	23,135,230	$	2,435,774	$	6,236,132	$	4,665,437	$	50,000,000
CS First Boston
Repurchase Agreement(2)		9,469,199		16,194,661		1,705,041		4,365,293		3,265,806		35,000,000
Morgan Stanley
Repurchase Agreement(3)		8,657,554		14,806,547		1,558,895		3,991,125		2,985,879		32,000,000
Bear Stearns
Repurchase Agreement(4)		6,763,714		11,567,615		1,217,886		3,118,067		2,332,718		25,000,000
Fenway Funding LLC
Discount Commercial Paper		4,328,776		7,403,273		779,448		1,995,563		1,492,940		16,000,000
Duke Funding LLC
Discount Commercial Paper		3,787,680		6,477,864		682,016		1,746,117		1,306,323		14,000,000
Antalis Funding
Discount Commercial Paper		3,563,124		6,093,819		641,583		1,642,598		1,228,876		13,170,000
Rams Funding LLC
Discount Commercial Paper		2,976,034		5,089,751		535,870		1,371,949		1,026,396		11,000,000
Valcour Bay Capital Co. LLC
Discount Commercial Paper		2,976,034		5,089,751		535,870		1,371,949		1,026,396		11,000,000
KKR Atlantic Funding Trust
Discount Commercial Paper		2,705,485		4,627,046		487,155		1,247,227		933,087		10,000,000
Laguna Discount
Commercial Paper		2,705,485		4,627,046		487,155		1,247,227		933,087		10,000,000
Lehman Brothers
Repurchase Agreement(5)		2,705,485		4,627,046		487,155		1,247,227		933,087		10,000,000
Ocala Funding LLC
Discount Commercial Paper		2,705,485		4,627,046		487,155		1,247,227		933,087		10,000,000
Sashsen Funding
Discount Commercial Paper		2,705,485		4,627,046		487,155		1,247,227		933,087		10,000,000
Concord Minutemen Capital
Company Interest Bearing
Commercial Paper		2,434,937		4,164,341		438,438		1,122,504		839,780		9,000,000

Page 85

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

6. SECURITIES LENDING (cont.)

	Intermediate		Aggregate		Core Plus		Short-Term		Other
	Bond Fund		Bond Fund		Bond Fund		Bond Fund		Baird Funds		Total
Morgan Stanley
Repurchase Agreement(6)		2,164,388		3,701,637		389,724		997,781		746,470		8,000,000
Park Granada LLC
Discount Commercial Paper		1,893,840		3,238,932		341,008		873,059		653,161		7,000,000
Thornburg Mortgage Capital
Discount Commercial Paper		1,893,840		3,238,932		341,008		873,059		653,161		7,000,000
Concord Minutemen Capital
Company Interest Bearing
Commercial Paper		1,352,743		2,313,523		243,578		623,613		466,543		5,000,000
Laguna ABS Ltd.
Discount Commercial Paper		1,352,743		2,313,523		243,578		623,613		466,543		5,000,000
KKR Atlantic Funding Trust
Discount Commercial Paper		1,082,194		1,850,818		194,862		498,891		373,235		4,000,000
Morgan Stanley
Repurchase Agreement(7)		1,082,194		1,850,818		194,862		498,891		373,235		4,000,000
Rams Funding LLC
Discount Commercial Paper		1,082,194		1,850,818		194,862		498,891		373,235		4,000,000
Valcour Bay Capital Co. LLC
Discount Commercial Paper		1,082,194		1,850,818		194,862		498,891		373,235		4,000,000
Merrill Lynch Premier
Institutional Fund		292,556		500,342		52,678		134,868		100,899		1,081,343
Federated Prime
Obligations Fund		118,889		203,331		21,410		54,808		41,002		439,440
	$	85,409,679	$	146,071,574	$	15,379,028	$	39,373,797	$	29,456,705	$	315,690,783

(1)	(Dated 06/29/07), 5.36%, Due 07/02/07 (Repurchase Proceeds $50,029,370), (Collateralized by Mortgage Backed Securities)
(2)	(Dated 06/29/07), 5.425%, Due 07/02/07 (Repurchase Proceeds $35,020,808), (Collateralized by Agency Mortgage Backed Securities)
(3)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $32,019,077), (Collateralized by Mortgage Backed Securities)
(4)	(Dated 06/29/07), 5.50%, Due 07/02/07 (Repurchase Proceeds $25,015,068), (Collateralized by Mortgage Backed Securities)
(5)	(Dated 06/29/07), 5.49%, Due 07/02/07 (Repurchase Proceeds $10,006,016), (Collateralized by Corporate Bonds)
(6)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $8,004,769), (Collateralized by Mortgage Backed Securities)
(7)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $4,002,385), (Collateralized by Mortgage Backed Securities)

Page 86

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

7. LINE OF CREDIT

The Corporation maintains an uncommitted, senior secured line of credit (“LOC”) with U.S. Bank, N.A. to provide the Funds a temporary liquidity source to meet unanticipated redemptions.  Under the terms of the LOC, borrowings for each Fund are limited to one-third of the total assets (including the amount borrowed) of the respective Fund, or as otherwise indicated within the Funds’ agreement with the Bank.  The Bank charges interest at the Bank’s Prime Rate less 1%.  During the period January 1, 2007 through June 30, 2007, the Baird Bond Funds did not draw upon the line of credit.

8. DISTRIBUTION AND SHAREHOLDER SERVICE PLAN

The Funds have adopted a distribution and shareholder service plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act.  The Plan allows the Funds to compensate Baird for the costs incurred in distributing the Funds’ Investor Class shares, including amounts paid to brokers or dealers, at an annual rate not to exceed 0.25% of the average daily net assets of the Funds’ Investor Class shares.  The Baird Intermediate Bond, Baird Aggregate Bond, Baird Intermediate Municipal Bond and Baird Core Plus Bond Funds incurred $1,565, $2,990, $578 and $476, respectively, in fees pursuant to the Plan during the six months ended June 30, 2007.

Page 87

Additional Information

Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling toll free, 1-866-44BAIRD, or by accessing the Funds’ website at www.bairdfunds.com; and by accessing the SEC’s website at www.sec.gov.

Each Fund’s proxy voting record for the most recent 12-month period ended June 30, if applicable, is available without charge, upon request, by calling toll free, 1-866-44BAIRD, or by accessing the Funds’ website at www.bairdfunds.com; and by accessing the SEC’s website at www.sec.gov.  The Funds generally do not vote proxies because the securities held in their portfolios, consisting of bonds and other fixed-income securities, are not entitled to vote.

Portfolio Holdings Disclosure

The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Funds’ Forms N-Q are available on the SEC website at 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 Public Reference Room may be obtained by calling 1-800-732-0330.  The Funds’ Forms N-Q may also be obtained by calling toll-free 1-866-44BAIRD.

Page 88

(This Page Intentionally Left Blank.)

Baird Funds, Inc.

c/o U.S. Bancorp Fund Services, LLC

P.O. Box 701

Milwaukee, WI 53201-0701

1-866-44BAIRD

Board of Directors

G. Frederick Kasten, Jr. (Chairman)

John W. Feldt

George C. Kaiser

Frederick P. Stratton, Jr.

Investment Advisor and Distributor

Robert W. Baird & Co. Incorporated

777 East Wisconsin Avenue

Milwaukee, WI 53202

Administrator and Transfer Agent

U.S. Bancorp Fund Services, LLC

P.O. Box 701

615 East Michigan Street

Milwaukee, WI 53202

Custodian

U.S. Bank, N.A.

1555 N. RiverCenter Drive, Suite 302

Milwaukee, WI 53212

Legal Counsel

Godfrey & Kahn, S.C.

780 North Water Street

Milwaukee, WI 53202

Independent Registered Public Accounting Firm

Grant Thornton LLP

175 West Jackson Boulevard, 13th Floor

Chicago, IL 60604

Semi-Annual Report - Baird Funds

June 30, 2007

Baird LargeCap Fund

Baird MidCap Fund

Baird SmallCap Fund

TABLE OF CONTENTS

Page

BAIRD LARGECAP FUND	1
BAIRD MIDCAP FUND	5
BAIRD SMALLCAP FUND	9
ADDITIONAL INFORMATION ON FUND EXPENSES	13
STATEMENTS OF ASSETS AND LIABILITIES	15
STATEMENTS OF OPERATIONS	16
STATEMENTS OF CHANGES IN NET ASSETS	17
FINANCIAL HIGHLIGHTS	20
NOTES TO THE FINANCIAL STATEMENTS	26
ADDITIONAL INFORMATION	36

This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Cautionary Note on Analyses, Opinions and Outlooks:  In this report we offer analyses and opinions on the performance of individual securities, companies, industries, sectors, markets, interest rates and governmental policies, including predictions, forecasts and outlooks regarding possible future events.  These can generally be identified as such because the context of the statements may include such words as “believe,” “should,” “will,” “expects,” “anticipates,” “hopes” and words of similar effect.  These statements reflect the portfolio managers’ good faith beliefs and judgments and involve risks and uncertainties, including the risk that the portfolio managers’ analyses, opinions and outlooks are or will prove to be inaccurate.  It is inherently difficult to correctly assess and explain the performance of particular securities, sectors, markets, interest rate movements, governmental actions or general economic trends and conditions, and many unforeseen factors contribute to the performance of Baird Funds.  Investors are, therefore, cautioned not to place undue reliance on subjective judgments contained in this report.

Baird LargeCap Fund

A June 30, 2007 summary of the Fund’s top 10 holdings and equity sector analysis compared to the Russell 1000^® Growth Index is shown below.

Top 10 Holdings*
Praxair, Inc.	3.0%
ITT Industries, Inc.	2.8%
Cisco Systems, Inc.	2.8%
Emerson Electric Company	2.8%
Costco Wholesale Corporation	2.8%
Corning Incorporated	2.8%
Abbott Laboratories	2.8%
Illinois Tool Works, Inc.	2.8%
Johnson Controls, Inc.	2.7%
State Street Corporation	2.6%
Net Assets:	$29,740,828
Portfolio Turnover Rate:	41.1%	#
Number of Equity Holdings:	46
Annualized Portfolio Expense Ratio:***
INSTITUTIONAL CLASS:	0.75%
INVESTOR CLASS:	1.00%	****

Equity Sector Analysis**

*	The Fund’s portfolio composition is subject to change and there is no assurance that the Fund will continue to hold any particular security.  Percentages shown relate to the Fund’s total net assets as of June 30, 2007.
**	Percentages shown in parentheses relate to the Fund’s total equity investments as of June 30, 2007, and may not add up to 100% due to rounding.
***	The Advisor has contractually agreed to limit the Fund’s total annual fund operating expenses to 0.75% of average daily net assets for the Institutional Class shares and 1.00% of average daily net assets for the Investor Class shares, at least through April 30, 2008.
****	Includes 0.25% 12b-1 fee.
#	Not annualized.

Page 1

Baird LargeCap Fund

Average Annual Total Returns

For the Periods Ended June 30, 2007	One Year	Five Years	Since Inception(1)
Baird LargeCap Fund – Institutional Class Shares	12.53%	5.64%	-1.05%
Baird LargeCap Fund – Investor Class Shares	12.18%	5.33%	-1.32%
Russell 1000® Growth Index(2)	19.05%	9.28%	-3.75%

(1)

For the period from September 29, 2000 (commencement of operations) through June 30, 2007.

(2)

The Russell 1000® Growth Index measures the performance of those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth rates.  The Russell 1000® Index consists of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 90% of the total market capitalization of the Russell 3000® Index, which in turn is comprised of the 3,000 largest U.S. domiciled publicly traded common stocks by market capitalization.  These indices do not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 2

Baird LargeCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 99.4%
Air Freight & Logistics – 1.6%
	11,200	Expeditors International
		of Washington, Inc.	$	462,560
Auto Components – 2.7%
	6,970	Johnson Controls, Inc.		806,917
Biotechnology – 4.6%
	9,726	Genentech, Inc.*		735,869
	16,124	Gilead Sciences, Inc.*		625,127
				1,360,996
Capital Markets – 5.1%
	7,295	Legg Mason, Inc.		717,682
	11,512	State Street Corporation		787,421
				1,505,103
Chemicals – 5.5%
	17,642	Ecolab, Inc.		753,313
	12,484	Praxair, Inc.		898,723
				1,652,036
Commercial Banks – 2.0%
	12,644	Marshall & Ilsley Corp.		602,234
Communications Equipment – 5.6%
	30,153	Cisco Systems, Inc.*		839,761
	32,430	Corning Incorporated*		828,587
				1,668,348
Computers & Peripherals – 3.9%
	4,860	Apple Computer, Inc.*		593,114
	19,877	Network Appliance, Inc.*		580,408
				1,173,522
Consumer Finance – 2.6%
	9,727	Capital One Financial
		Corporation		762,986
Electrical Equipment – 4.6%
	13,781	Agilent Technologies, Inc.*		529,742
	17,841	Emerson Electric Company		834,959
				1,364,701
Energy Equipment & Services – 3.4%
	7,140	Schlumberger Limited f		606,472
	7,460	Weatherford
		International Ltd.* f		412,090
				1,018,562
Food & Staples Retailing – 7.9%
	14,250	Costco Wholesale Corp.		833,910
	22,531	Sysco Corporation		743,298
	17,476	Walgreen Company		760,905
				2,338,113
Health Care Equipment & Supplies – 4.4%
	7,275	Cytyc Corporation*		313,625
	14,014	St Jude Medical, Inc.*		581,441
	5,057	Zimmer Holdings, Inc.*		429,289
				1,324,355
Health Care Providers & Services – 2.2%
	9,239	Cardinal Health, Inc.		652,643
Hotels Restaurants & Leisure – 1.3%
	14,595	Starbucks Corporation*		382,973
IT Services – 5.6%
	21,821	Iron Mountain
		Incorporated*		570,183
	11,406	Paychex, Inc.		446,203
	31,445	Western Union Company		654,999
				1,671,385
Machinery – 10.8%
	10,213	Danaher Corporation		771,081
	15,198	Illinois Tool Works, Inc.		823,580
	12,350	ITT Industries, Inc.		843,258
	12,322	Oshkosh Truck
		Corporation		775,300
				3,213,219
Multiline Retail – 4.2%
	6,882	Kohl’s Corporation*		488,828
	12,100	Target Corporation		769,560
				1,258,388

The accompanying notes are an integral part of these financial statements.

Page 3

Baird LargeCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 99.4% (cont.)
Oil & Gas – 1.2%
	7,785	Southwestern Energy
		Company*	$	346,433
Pharmaceuticals – 5.8%
	15,406	Abbott Laboratories		824,991
	7,460	Allergan, Inc.		429,994
	8,186	Novartis AG – ADR f		458,989
				1,713,974
Semiconductor & Semiconductor Equipment – 2.4%
	18,646	Texas Instruments
		Incorporated*		701,649
Software – 5.7%
	13,476	Adobe Systems,
		Incorporated*		541,062
	12,157	Electronic Arts Inc.*		575,269
	19,617	Microsoft Corporation		578,113
				1,694,444
Specialty Retail – 4.2%
	15,080	Best Buy Co, Inc.		703,784
	23,343	Staples, Inc.		553,929
				1,257,713
Trading Companies & Distributors – 2.1%
	15,236	Fastenal Company		637,779
		Total Common Stocks
		(Cost $24,982,295)		29,571,033
COLLATERAL POOL INVESTMENT
FOR SECURITIES ON LOAN – 34.0%
(Cost $10,095,119)
(Please Refer to Note 6)				10,095,119
Principal
Amount
SHORT-TERM INVESTMENTS – 0.6%
Money Market Fund – 0.6%
$	175,680	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		175,680
		Total Short-Term
		Investments
		(Cost $175,680)		175,680
		Total Investments
		(Cost $35,253,094) –
		134.0%		39,841,832
		Liabilities in Excess of
		Other Assets – (34.0)%		(10,101,004	)
		TOTAL NET
		ASSETS – 100.0%	$	29,740,828

ADR – American Depository Receipt

* Non-Income Producing

f Foreign Security

The accompanying notes are an integral part of these financial statements.

Page 4

Baird MidCap Fund

A June 30, 2007 summary of the Fund’s top 10 holdings and equity sector analysis compared to the Russell Midcap^® Growth Index is shown below.

Top 10 Holdings*
Cytyc Corporation	3.3%
Harsco Corporation	2.9%
Harris Corporation	2.8%
GameStop Corporation – Class A	2.7%
Tractor Supply Company	2.7%
Stericycle, Inc.	2.7%
Advance Auto Parts, Inc.	2.6%
Roper Industries, Inc.	2.6%
Gentex Corporation	2.5%
Joy Global Inc.	2.5%
Net Assets:	$40,018,215
Portfolio Turnover Rate:	35.2%	#
Number of Equity Holdings:	47
Annualized Portfolio Expense Ratio:***
INSTITUTIONAL CLASS:	0.85%
INVESTOR CLASS:	1.10%	****

Equity Sector Analysis**

*	The Fund’s portfolio composition is subject to change and there is no assurance that the Fund will continue to hold any particular security.  Percentages shown relate to the Fund’s total net assets as of June 30, 2007.
**	Percentages shown in parentheses relate to the Fund’s total equity investments as of June 30, 2007, and may not add up to 100% due to rounding.
***	The Advisor has contractually agreed to limit the Fund’s total annual fund operating expenses to 0.85% of average daily net assets for the Institutional Class shares and 1.10% of average daily net assets for the Investor Class shares, at least through April 30, 2008.
****	Includes 0.25% 12b-1 fee.
#	Not annualized.

Page 5

Baird MidCap Fund

Average Annual Total Returns

For the Periods Ended June 30, 2007	One Year	Five Years	Since Inception(1)
Baird MidCap Fund – Institutional Class Shares	13.56%	9.75%	4.82%
Baird MidCap Fund – Investor Class Shares	13.28%	9.47%	4.58%
Russell Midcap® Growth Index(2)	19.73%	15.45%	3.88%

(1)

For the period from December 29, 2000 (commencement of operations) through June 30, 2007.

(2)

The Russell Midcap® Growth Index measures the performance of those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth rates.  The Russell Midcap® Index consists of the 800 smallest companies in the Russell 1000® Index, which represent approximately 30% of the total market capitalization of the Russell 1000® Index.  The Russell 1000® Index consists of the largest companies in the Russell 3000® Index, which in turn is comprised of the 3,000 largest U.S. domiciled publicly traded common stocks by market capitalization.  These indices do not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 6

Baird MidCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 97.2%
Air Freight & Logistics – 1.1%
	10,725	Expeditors International
		of Washington, Inc.	$	442,943
Auto Components – 2.5%
	51,347	Gentex Corporation		1,011,022
Biotechnology – 2.4%
	12,149	Cephalon, Inc.*		976,658
Capital Markets – 1.8%
	16,076	Eaton Vance Corporation		710,238
Commercial Banks – 8.6%
	23,241	East West Bancorp, Inc.		903,610
	16,895	Marshall & Ilsley
		Corporation		804,709
	19,111	Wintrust Financial
		Corporation		838,017
	11,747	Zions Bancorporation		903,462
				3,449,798
Commercial Services & Supplies – 3.9%
	13,908	Brady Corporation –
		Class A		516,543
	23,884	Stericycle, Inc.*		1,061,883
				1,578,426
Communications Equipment – 2.8%
	20,785	Harris Corporation		1,133,822
Electrical Equipment – 4.8%
	18,181	Roper Industries, Inc.		1,038,135
	26,904	Trimble Navigation
		Limited*		866,309
				1,904,444
Energy Equipment & Services – 6.3%
	13,184	Cameron International
		Corporation*		942,260
	11,665	Oceaneering
		International, Inc.*		614,046
	16,113	Smith International, Inc.		944,866
				2,501,172
Food & Staples Retailing – 3.2%
	24,483	United Natural
		Foods, Inc.*		650,758
	16,475	Whole Foods Market, Inc.		630,993
				1,281,751
Health Care Equipment & Supplies – 10.5%
	31,029	Cytyc Corporation*		1,337,660
	13,361	Gen-Probe, Incorporated*		807,272
	13,747	Hologic, Inc.*		760,347
	13,243	ResMed, Inc.*		546,406
	17,926	Varian Medical
		Systems, Inc.*		762,034
				4,213,719
Health Care Technology – 1.5%
	10,971	Cerner Corporation*		608,561
Hotels Restaurants & Leisure – 3.4%
	24,927	The Cheesecake
		Factory Incorporated*		611,210
	8,775	Chipotle Mexican
		Grill, Inc.*		748,332
				1,359,542
Internet Software & Services – 1.7%
	13,835	Akamai Technologies, Inc.*		672,934
IT Services – 5.4%
	6,979	Cognizant Technology
		Solutions Corporation*		524,053
	23,652	Global Payments, Inc.		937,802
	26,578	Iron Mountain
		Incorporated*		694,483
				2,156,338
Life Sciences Tools & Services – 3.6%
	10,323	Covance Inc.*		707,745
	19,131	Pharmaceutical Product
		Development, Inc.		732,143
				1,439,888

The accompanying notes are an integral part of these financial statements.

Page 7

Baird MidCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 97.2% (cont.)
Machinery – 7.8%
	22,478	Harsco Corporation	$	1,168,856
	17,223	Joy Global Inc.		1,004,618
	15,135	Oshkosh Truck
		Corporation		952,294
				3,125,768
Media – 1.9%
	12,305	Lamar Advertising
		Co. – Class A		772,262
Office Electronics – 2.0%
	20,579	Zebra Technologies
		Corporation – Class A*		797,230
Oil & Gas – 2.1%
	19,197	Southwestern
		Energy Company*		854,267
Semiconductor & Semiconductor Equipment – 2.5%
	26,591	Microchip Technology
		Incorporated		984,931
Software – 2.8%
	30,318	Activision, Inc.*		566,037
	12,713	NAVTEQ*		538,268
				1,104,305
Specialty Retail – 12.4%
	25,656	Advance Auto Parts, Inc.		1,039,838
	37,537	Chico’s FAS, Inc.*		913,651
	14,254	Dick’s Sporting
		Goods, Inc.*		829,155
	28,030	GameStop Corporation –
		Class A*		1,095,973
	20,408	Tractor Supply Company*		1,062,236
				4,940,853
Trading Companies & Distributors – 2.2%
	21,276	Fastenal Company		890,613
		Total Common Stocks
		(Cost $29,745,424)		38,911,485
COLLATERAL POOL INVESTMENT FOR SECURITIES ON LOAN – 48.4%
(Cost $19,361,586)
(Please Refer to Note 6)				19,361,586
Principal
Amount
SHORT-TERM INVESTMENTS – 6.0%
Money Market Funds – 6.0%
$	1,601,632	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		1,601,632
	796,870	Short-Term Investment
		Trust Prime Portfolio –
		AIM Fund		796,870
				2,398,502
		Total Short-Term
		Investments
		(Cost $2,398,502)		2,398,502
		Total Investments
		(Cost $51,505,512) –
		151.6%		60,671,573
		Liabilities in Excess of
		Other Assets – (51.6)%		(20,653,358	)
		TOTAL NET
		ASSETS – 100.0%	$	40,018,215

* Non-Income Producing

The accompanying notes are an integral part of these financial statements.

Page 8

Baird SmallCap Fund

A June 30, 2007 summary of the Fund’s top 10 holdings and equity sector analysis compared to the Russell 2000^® Growth Index is shown below.

Top 10 Holdings*
Illumina, Inc.	3.3%
Oceaneering International, Inc.	3.3%
DTS, Inc.	3.1%
Natus Medical Incorporated	3.0%
Tractor Supply Company	3.0%
Allscripts Healthcare Solutions, Inc.	3.0%
SRA International, Inc. – Class A	3.0%
LKQ Corporation	2.9%
Plexus Corp.	2.8%
Heartland Payment Systems, Inc.	2.7%
Net Assets:	$34,877,558
Portfolio Turnover Rate:	47.8%	#
Number of Equity Holdings:	44
Annualized Portfolio Expense Ratio:***
INSTITUTIONAL CLASS:	0.95%
INVESTOR CLASS:	1.20%	****

Equity Sector Analysis**

*	The Fund’s portfolio composition is subject to change and there is no assurance that the Fund will continue to hold any particular security.  Percentages shown relate to the Fund’s total net assets as of June 30, 2007.
**	Percentages shown in parentheses relate to the Fund’s total equity investments as of June 30, 2007, and may not add up to 100% due to rounding.
***	The Advisor has contractually agreed to limit the Fund’s total annual fund operating expenses to 0.95% of average daily net assets for the Institutional Class shares and 1.20% of average daily net assets for the Investor Class shares, at least through April 30, 2008.
****	Includes 0.25% 12b-1 fee.
#	Not annualized.

Page 9

Baird SmallCap Fund

Average Annual Total Returns

For the Periods Ended June 30, 2007	One Year	Since Inception(1)
Baird SmallCap Fund – Institutional Class Shares	5.60%	7.09%
Baird SmallCap Fund – Investor Class Shares	5.63%	6.92%
Russell 2000® Growth Index(2)	16.83%	11.76%

(1)

For the period from June 30, 2004 (commencement of operations) through June 30, 2007.

(2)

The Russell 2000® Growth Index measures the performance of those Russell 2000® Index companies with higher price-to-book and higher forecasted growth rates.  The Russell 2000® Index consists of the 2,000 smallest U.S. domiciled publicly-traded common stocks that are included in the Russell 3000® Index.  These common stocks represent approximately 10% of the U.S. equity market.  These indices do not reflect any deduction for fees, expenses or taxes.  A direct investment in an index is not possible.

The returns shown in the table above reflect reinvestment of dividends and/or capital gains distributions in additional shares.  The returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Past performance does not guarantee future results.  Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

For information about the performance of the Fund as of the most recent month-end, please call 1-866-44BAIRD or visit www.bairdfunds.com.  Mutual fund performance changes over time and current performance may be lower or higher than that stated.

Page 10

Baird SmallCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 99.1%
Airlines – 1.7%
	24,696	SkyWest, Inc.	$	588,506
Commercial Banks – 8.1%
	23,942	Boston Private Financial
		Holdings, Inc.		643,322
	24,694	Pinnacle Financial
		Partners, Inc.*		725,016
	24,443	United Community
		Banks, Inc.		632,829
	18,894	Wintrust Financial
		Corporation		828,502
				2,829,669
Commercial Services & Supplies – 6.6%
	19,153	Brady Corporation –
		Class A		711,342
	36,785	Marlin Business
		Services Corporation*		783,888
	26,964	Mobile Mini, Inc.*		787,349
				2,282,579
Distributors – 2.9%
	40,823	LKQ Corporation*		1,006,695
Diversified Financial Services – 2.7%
	32,001	Heartland Payment
		Systems, Inc.*		938,589
Electronic Equipment & Instruments – 12.1%
	31,744	Argon ST, Inc.*		736,778
	34,232	Daktronics, Inc.		735,303
	49,388	DTS, Inc.*		1,075,177
	42,832	Plexus Corp.*		984,708
	21,975	ScanSource, Inc.*		702,980
				4,234,946
Energy Equipment & Services – 6.5%
	9,070	Dawson Geophysical
		Company*		557,442
	10,585	GulfMark Offshore, Inc.*		542,164
	21,928	Oceaneering
		International, Inc.*		1,154,290
				2,253,896
Food & Staples Retailing – 2.4%
	31,997	United Natural
		Foods, Inc.*		850,480
Health Care Equipment & Supplies – 5.5%
	18,142	Kyphon Inc.*		873,537
	66,011	Natus Medical
		Incorporated*		1,050,895
				1,924,432
Health Care Providers & Services – 14.2%
	40,813	Allscripts Healthcare
		Solutions, Inc.*		1,039,915
	29,729	Computer Programs
		& Systems, Inc.		921,004
	19,149	HealthExtras, Inc.*		566,428
	16,886	Healthways, Inc.*		799,890
	37,549	Nighthawk Radiology
		Holdings, Inc.*		677,760
	34,767	Providence Service
		Corporation*		928,974
				4,933,971
Hotels Restaurants & Leisure – 4.8%
	11,588	Panera Bread
		Company – Class A*		533,743
	14,617	PF Chang’s China
		Bistro, Inc.*		514,518
	15,373	Red Robin Gourmet
		Burgers, Inc.*		620,608
				1,668,869
IT Services – 5.2%
	27,967	Forrester Research, Inc.*		786,712

The accompanying notes are an integral part of these financial statements.

Page 11

Baird SmallCap Fund

Schedule of Investments       June 30, 2007 (Unaudited)

Shares			Value
COMMON STOCKS – 99.1% (cont.)
IT Services – 5.2% (cont.)
	41,073	SRA International,
		Inc. – Class A*	$	1,037,504
				1,824,216
Leisure Equipment & Products – 2.1%
	18,146	RC2 Corporation*		726,021
Life Sciences Tools & Services – 3.3%
	28,471	Illumina, Inc.*		1,155,638
Machinery – 4.6%
	11,338	Bucyrus International,
		Inc. – Class A		802,504
	22,391	ESCO Technologies, Inc.*		811,898
				1,614,402
Road & Rail – 1.6%
	29,235	Knight
		Transportation, Inc.		566,574
Software – 5.5%
	30,743	ANSYS, Inc.*		814,690
	37,507	Cogent Inc.*		550,978
	17,637	THQ Inc.*		538,281
				1,903,949
Specialty Retail – 5.0%
	25,443	Hibbett Sporting
		Goods, Inc.*		696,629
	20,156	Tractor Supply Company*		1,049,120
				1,745,749
Trading Companies & Distributors – 4.3%
	23,683	Applied Industrial
		Technologies, Inc.		698,649
	14,867	Watsco, Inc.		808,765
				1,507,414
		Total Common Stocks
		(Cost $28,645,212)		34,556,595
Principal
Amount
SHORT-TERM INVESTMENTS – 2.0%
Money Market Fund – 2.0%
$	709,392	Short-Term Investment
		Company Liquid Assets
		Portfolio – AIM Fund		709,392
		Total Short-Term
		Investments
		(Cost $709,392)		709,392
		Total Investments
		(Cost $29,354,604) –
		101.1%		35,265,987
		Liabilities in Excess of
		Other Assets – (1.1)%		(388,429	)
		TOTAL NET
		ASSETS – 100.0%	$	34,877,558

* Non-Income Producing

The accompanying notes are an integral part of these financial statements.

Page 12

Baird Funds, Inc.

Additional Information on Fund Expenses      June 30, 2007 (Unaudited)

Example

As a shareholder of a mutual fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, such as management fees; distribution and/or service (12b-1) fees; and other fund expenses.  Although the Funds do not charge any sales loads, redemption fees, or other transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U. S. Bancorp Fund Services, LLC, the Funds’ transfer agent.  If you request that a redemption be made by wire transfer, currently the Funds’ transfer agent charges a $15.00 fee.

This Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (1/1/07 – 6/30/07).

Actual Expenses

The third and fourth columns of the following table provide information about account values based on actual returns and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the fourth column entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fifth and sixth columns of the table below provide information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.  Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs.  Therefore, the sixth column of the table (entitled “Expenses Paid During the Period”) is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs could have been higher.

Page 13

Baird Funds, Inc.

Additional Information on Fund Expenses      June 30, 2007 (Unaudited)

Actual vs. Hypothetical Returns

For the Six Months Ended June 30, 2007

					Hypothetical (5% return
			Actual		before expenses)
	Fund’s	Beginning	Ending	Expenses	Ending	Expenses
	Annualized	Account	Account	Paid	Account	Paid
	Expense	Value	Value	During	Value	During
	Ratio(1)	01/1/07	06/30/07	Period(1)	06/30/07	Period(1)
Baird LargeCap Fund
Institutional Class	0.75%	$1,000.00	$1,062.10	$3.83	$1,021.08	$3.76
Investor Class	1.00%	$1,000.00	$1,060.00	$5.11	$1,019.84	$5.01
Baird MidCap Fund
Institutional Class	0.85%	$1,000.00	$1,132.90	$4.50	$1,020.58	$4.26
Investor Class	1.10%	$1,000.00	$1,130.90	$5.81	$1,019.34	$5.51
Baird SmallCap Fund
Institutional Class	0.95%	$1,000.00	$1,014.10	$4.74	$1,020.08	$4.76
Investor Class	1.20%	$1,000.00	$1,015.00	$6.00	$1,018.84	$6.01

⁽¹⁾ Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181 days and divided by 365 to reflect the one-half year period.

Page 14

Baird Funds, Inc.

Statements of Assets and Liabilities       June 30, 2007 (Unaudited)

	Baird LargeCap			Baird MidCap		Baird SmallCap
	Fund			Fund		Fund
ASSETS:
Investments, at value (cost $30,008,723;	$	34,597,461		$	50,613,312	$	35,265,987
$41,447,251; and $29,354,604, respectively)
Repurchase agreements (cost $5,244,371;		5,244,371			10,058,261		—
$10,058,261; and $0, respectively)
Dividends receivable		13,897			4,181		3,028
Interest receivable		1,962			8,528		7,114
Receivable for investments sold		—			588,854		268,395
Receivable for fund shares sold		4,330			128		2,000
Other assets		15,340			13,028		18,744
Total assets		39,877,361			61,286,292		35,565,268
LIABILITIES:
Payable for collateral received for securities loaned		10,095,119			19,361,586		—
Payable to Advisor and Distributor		8,591			22,407		10,176
Payable for securities purchased		—			1,843,545		—
Payable for fund shares repurchased		—			122		621,647
Accrued expenses and other liabilities		32,823			40,417		55,887
Total liabilities		10,136,533			21,268,077		687,710
NET ASSETS	$	29,740,828		$	40,018,215	$	34,877,558
NET ASSETS CONSIST OF:
Capital stock	$	27,419,727		$	28,653,884	$	28,165,298
Accumulated undistributed net investment income		40,621			—		—
Accumulated net realized gain (loss) on investments sold		(2,308,258	)		2,198,270		800,877
Net unrealized appreciation on investments		4,588,738			9,166,061		5,911,383
NET ASSETS	$	29,740,828		$	40,018,215	$	34,877,558
INSTITUTIONAL CLASS SHARES
Net Assets	$	28,765,921		$	35,102,331	$	34,545,151
Shares outstanding
($0.01 par value, unlimited shares authorized)		3,175,778			3,322,474		2,830,787
Net asset value, offering and redemption price per share	$	9.06		$	10.57	$	12.20
INVESTOR CLASS SHARES
Net Assets	$	974,907		$	4,915,884	$	332,407
Shares outstanding
($0.01 par value, unlimited shares authorized)		108,163			474,112		27,367
Net asset value, offering and redemption price per share	$	9.01		$	10.37	$	12.15

The accompanying notes are an integral part of these financial statements.

Page 15

Baird Funds, Inc.

Statements of Operations       Six Months Ended June 30, 2007 (Unaudited)

	Baird LargeCap			Baird MidCap			Baird SmallCap
	Fund			Fund			Fund
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld
of $1,637, $0, $0, respectively)	$	125,080		$	101,659		$	94,336
Interest		19,522			32,257			67,694
Income from securities lending		3,488			10,281			15,130
Total investment income		148,090			144,197			177,160
EXPENSES:
Investment advisory fees		92,171			141,485			225,665
Administration fees		5,635			7,171			12,232
Shareholder servicing fees		8,588			8,697			40,984
Fund accounting fees		13,091			13,628			15,965
Professional fees		12,902			12,302			13,302
Federal and state registration		14,580			13,258			16,710
Directors fees		4,268			4,218			4,268
Custody fees		3,449			5,716			5,676
Reports to shareholders		1,634			4,833			6,177
Distribution fees – Investor Class Shares (Note 8)		1,316			5,672			5,978
Interest Expense (Note 7)		954			155			226
Miscellaneous expenses		869			1,930			2,227
Total expenses		159,457			219,065			349,410
Expense reimbursement by Advisor		(51,784	)		(53,043	)		(91,219	)
Total expenses		107,673			166,022			258,191
NET INVESTMENT INCOME (LOSS)		40,417			(21,825	)		(81,031	)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments		453,813			2,915,255			709,436
Change in unrealized appreciation/depreciation
on investments		1,285,261			1,837,947			(877,644	)
Net realized and unrealized gain (loss) on investments		1,739,074			4,753,202			(168,208	)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS	$	1,779,491		$	4,731,377		$	(249,239	)

The accompanying notes are an integral part of these financial statements.

Page 16

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird LargeCap Fund
	Six Months Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment income	$	40,417		$	112,242
Net realized gain on investments		453,813			3,822,130
Change in unrealized appreciation/depreciation on investments		1,285,261			(3,222,372	)
Net increase in net assets resulting from operations		1,779,491			712,000
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		5,302,047			8,900,784
Shares issued to holders in reinvestment of dividends		—			112,014
Cost of shares redeemed		(5,870,987	)		(10,858,598	)
Net decrease in net assets resulting from
capital share transactions		(568,940	)		(1,845,800	)
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net investment income		—			(110,900	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net investment income		—			(1,174	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,210,551			(1,245,874	)
NET ASSETS:
Beginning of period		28,530,277			29,776,151
End of period (including undistributed net investment income
of $40,621 and $203, respectively)	$	29,740,828		$	28,530,277

The accompanying notes are an integral part of these financial statements.

Page 17

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird MidCap Fund
	Six Months Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment loss	$	(21,825	)	$	(134,222	)
Net realized gain on investments		2,915,255			5,175,206
Change in unrealized appreciation/depreciation on investments		1,837,947			(5,482,914	)
Net increase (decrease) in net assets resulting from operations		4,731,377			(441,930	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		5,543,768			27,770,122
Shares issued to holders in reinvestment of dividends		—			6,860,350
Cost of shares redeemed		(7,337,765	)		(80,341,536	)
Net decrease in net assets resulting from
capital share transactions		(1,793,997	)		(45,711,064	)
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net realized gains		—			(5,953,538	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net realized gains		—			(990,249	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		2,937,380			(53,096,781	)
NET ASSETS:
Beginning of period		37,080,835			90,177,616
End of period	$	40,018,215		$	37,080,835

The accompanying notes are an integral part of these financial statements.

Page 18

Baird Funds, Inc.

Statements of Changes in Net Assets

	Baird SmallCap Fund
	Six Months Ended
	June 30, 2007			Year Ended
	(Unaudited)			December 31, 2006
OPERATIONS:
Net investment loss	$	(81,031	)	$	(293,827	)
Net realized gain on investments		709,436			1,686,398
Change in unrealized appreciation/depreciation on investments		(877,644	)		2,986,275
Net increase (decrease) in net assets resulting from operations		(249,239	)		4,378,846
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		9,005,260			36,379,202
Shares issued to holders in reinvestments of dividends		—			420,515
Cost of shares redeemed		(45,590,637	)		(16,364,194	)
Net increase (decrease) in net assets resulting from
capital share transactions		(36,585,377	)		20,435,523
DISTRIBUTIONS TO
INSTITUTIONAL CLASS SHAREHOLDERS:
From net realized gains		—			(425,164	)
DISTRIBUTIONS TO
INVESTOR CLASS SHAREHOLDERS:
From net realized gains		—			(50,691	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(36,834,616	)		24,338,514
NET ASSETS:
Beginning of period		71,712,174			47,373,660
End of period	$	34,877,558		$	71,712,174

The accompanying notes are an integral part of these financial statements.

Page 19

Baird Funds, Inc.

Financial Highlights

	Baird LargeCap Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	8.53		$	8.33		$	8.13		$	7.78		$	6.41		$	8.63
Income from investment operations:
Net investment income		0.01			0.04			0.04	(1)		0.06	(1)		0.02			0.02
Net realized and unrealized
gains (losses) on investments		0.52			0.20			0.24			0.35			1.37			(2.22	)
Total from investment operations		0.53			0.24			0.28			0.41			1.39			(2.20	)
Less distributions:
Dividends from net investment income		—			(0.04	)		(0.08	)		(0.06	)		(0.02	)		(0.02	)
Net asset value, end of period	$	9.06		$	8.53		$	8.33		$	8.13		$	7.78		$	6.41
Total return		6.21	%(2)		2.89	%		3.39	%		5.21	%		21.75	%		(25.53	)%
Supplemental data and ratios:
Net assets, end of period	$	28,765,921		$	27,442,329		$	27,375,626		$	64,754,140		$	59,743,783		$	48,900,767
Ratio of expenses to average net assets		0.75	%(3)		0.75	%		0.75	%		0.75	%		0.75	%		0.75	%
Ratio of expenses to average
net assets (before waivers)		1.12	%(3)		1.12	%		0.93	%		0.93	%		0.95	%		0.95	%
Ratio of net investment income
to average net assets		0.30	%(3)		0.44	%		0.46	%		0.72	%		0.34	%		0.23	%
Ratio of net investment income (loss)
to average net assets (before waivers)		(0.07	)%(3)		0.07	%		0.28	%		0.54	%		0.14	%		0.03	%
Portfolio turnover rate(4)		41.1	%(2)		63.9	%		28.6	%		23.2	%		24.8	%		16.2	%

(1)	Calculated using average shares outstanding during the period.
(2)	Not annualized.
(3)	Annualized.
(4)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 20

Baird Funds, Inc.

Financial Highlights

	Baird LargeCap Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	8.50		$	8.29		$	8.09		$	7.75		$	6.40		$	8.61
Income from investment operations:
Net investment income		0.00	(1)(2)		0.01			0.02	(1)		0.04	(1)		0.01			0.00	(2)
Net realized and unrealized
gains (losses) on investments		0.51			0.21			0.23			0.35			1.35			(2.21	)
Total from investment operations		0.51			0.22			0.25			0.39			1.36			(2.21	)
Less distributions:
Dividends from net investment income		—			(0.01	)		(0.05	)		(0.05	)		(0.01	)		(0.00	)(2)
Net asset value, end of period	$	9.01		$	8.50		$	8.29		$	8.09		$	7.75		$	6.40
Total return		6.00	%(3)		2.64	%		3.15	%		5.00	%		21.20	%		(25.65	)%
Supplemental data and ratios:
Net assets, end of period	$	974,907		$	1,087,948		$	2,400,525		$	1,900,053		$	634,160		$	647,018
Ratio of expenses to average net assets		1.00	%(4)		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Ratio of expenses to average
net assets (before waivers)		1.37	%(4)		1.37	%		1.18	%		1.18	%		1.20	%		1.20	%
Ratio of net investment income (loss)
to average net assets		0.05	%(4)		0.19	%		0.21	%		0.47	%		0.09	%		(0.02	)%
Ratio of net investment income (loss)
to average net assets (before waivers)		(0.32	)%(4)		(0.18	)%		0.03	%		0.29	%		(0.11	)%		(0.22	)%
Portfolio turnover rate(5)		41.1	%(3)		63.9	%		28.6	%		23.2	%		24.8	%		16.2	%

(1)	Calculated using average shares outstanding during the period.
(2)	Amount is less than $0.01.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 21

Baird Funds, Inc.

Financial Highlights

	Baird MidCap Fund – Institutional Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	9.33		$	11.12		$	10.91		$	9.72		$	7.66		$	9.11
Income from investment operations:
Net investment loss		(0.00	)(2)		(0.02	)(1)		(0.02	)(1)		(0.04	)(1)		(0.07	)		(0.07	)(1)
Net realized and unrealized
gains (losses) on investments		1.24			0.46			0.63			1.25			2.13			(1.38	)
Total from investment operations		1.24			0.44			0.61			1.21			2.06			(1.45	)
Less distributions:
Distributions from net realized gains		—			(2.23	)		(0.40	)		(0.02	)		—			—
Net asset value, end of period	$	10.57		$	9.33		$	11.12		$	10.91		$	9.72		$	7.66
Total return		13.29	%(3)		3.93	%		5.56	%		12.44	%		26.89	%		(15.92	)%
Supplemental data and ratios:
Net assets, end of period	$	35,102,331		$	32,057,214		$	85,670,669		$	86,476,869		$	28,629,656		$	20,864,264
Ratio of expenses to average net assets		0.85	%(4)		0.85	%		0.85	%		0.85	%		1.20	%		1.25	%
Ratio of expenses to average
net assets (before waivers)		1.13	%(4)		1.01	%		0.98	%		1.05	%		1.20	%		1.39	%
Ratio of net investment loss
to average net assets		(0.09	)%(4)		(0.17	)%		(0.21	)%		(0.43	)%		(0.81	)%		(0.84	)%
Ratio of net investment loss
to average net assets (before waivers)		(0.37	)%(4)		(0.33	)%		(0.34	)%		(0.63	)%		(0.81	)%		(0.98	)%
Portfolio turnover rate(5)		35.2	%(3)		78.6	%		77.4	%		77.9	%		81.8	%		55.4	%

(1)	Calculated using average shares outstanding during the period.
(2)	Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to consideration of adjustments for permanent book to tax differences.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 22

Baird Funds, Inc.

Financial Highlights

	Baird MidCap Fund – Investor Class
	Six Months
	Ended
	June 30, 2007			Year Ended December 31,
	(Unaudited)			2006			2005			2004			2003			2002
Per Share Data:
Net asset value, beginning of period	$	9.17		$	10.99		$	10.82		$	9.65		$	7.63		$	9.09
Income from investment operations:
Net investment loss		(0.02	)(2)		(0.04	)		(0.05	)(1)		(0.07	)(1)		(0.09	)		(0.09	)(1)
Net realized and unrealized
gains (losses) on investments		1.22			0.45			0.62			1.26			2.11			(1.37	)
Total from investment operations		1.20			0.41			0.57			1.19			2.02			(1.46	)
Less distributions:
Distributions from net realized gains		—			(2.23	)		(0.40	)		(0.02	)		—			—
Net asset value, end of period	$	10.37		$	9.17		$	10.99		$	10.82		$	9.65		$	7.63
Total return		13.09	%(3)		3.73	%		5.24	%		12.32	%		26.47	%		(16.06	)%
Supplemental data and ratios:
Net assets, end of period	$	4,915,884		$	5,023,621		$	4,506,947		$	3,944,857		$	959,209		$	801,703
Ratio of expenses to average net assets		1.10	%(4)		1.10	%		1.10	%		1.10	%		1.45	%		1.50	%
Ratio of expenses to average
net assets (before waivers)		1.38	%(4)		1.26	%		1.23	%		1.30	%		1.45	%		1.64	%
Ratio of net investment loss
to average net assets		(0.34	)%(4)		(0.42	)%		(0.46	)%		(0.68	)%		(1.06	)%		(1.09	)%
Ratio of net investment loss
to average net assets (before waivers)		(0.62	)%(4)		(0.58	)%		(0.59	)%		(0.88	)%		(1.06	)%		(1.23	)%
Portfolio turnover rate(5)		35.2	%(3)		78.6	%		77.4	%		77.9	%		81.8	%		55.4	%

(1)	Calculated using average shares outstanding during the period.
(2)	Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to consideration of adjustments for permanent book to tax differences.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 23

Baird Funds, Inc.

Financial Highlights

	Baird SmallCap Fund – Institutional Class
	Six Months
	Ended			Year Ended			Year Ended			June 30, 2004(1)
	June 30, 2007			December 31,			December 31,			through
	(Unaudited)			2006			2005			December 31, 2004
Per Share Data:
Net asset value, beginning of period	$	12.03		$	11.20		$	10.84		$	10.00
Income from investment operations:
Net investment loss(2)		(0.02	)		(0.05	)		(0.06	)		(0.03	)
Net realized and unrealized
gains on investments		0.19			0.96			0.42			0.87
Total from investment operations		0.17			0.91			0.36			0.84
Less distributions:
Distributions from net realized gains		—			(0.08	)		—			—
Net asset value, end of period	$	12.20		$	12.03		$	11.20		$	10.84
Total return		1.41	%(3)		8.13	%		3.32	%		8.40	%(3)
Supplemental data and ratios:
Net assets, end of period	$	34,545,151		$	64,008,514		$	45,010,093		$	17,331,262
Ratio of expenses to average net assets		0.95	%(4)		0.95	%		0.95	%		0.95	%(4)
Ratio of expenses to average
net assets (before waivers)		1.29	%(4)		1.23	%		1.31	%		1.89	%(4)
Ratio of net investment loss
to average net assets		(0.28	)%(4)		(0.46	)%		(0.57	)%		(0.65	)%(4)
Ratio of net investment loss
to average net assets (before waivers)		(0.62	)%(4)		(0.74	)%		(0.93	)%		(1.59	)%(4)
Portfolio turnover rate(5)		47.8	%(3)		52.8	%		56.4	%		34.7	%(3)

(1)	Commencement of operations.
(2)	Calculated using average shares outstanding during the period.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 24

Baird Funds, Inc.

Financial Highlights

	Baird SmallCap Fund – Investor Class
	Six Months
	Ended			Year Ended			Year Ended			June 30, 2004(1)
	June 30, 2007			December 31,			December 31,			through
	(Unaudited)			2006			2005			December 31, 2004
Per Share Data:
Net asset value, beginning of period	$	11.96		$	11.16		$	10.83		$	10.00
Income from investment operations:
Net investment loss(2)		(0.03	)		(0.08	)		(0.09	)		(0.05	)
Net realized and unrealized
gains on investments		0.22			0.96			0.42			0.88
Total from investment operations		0.19			0.88			0.33			0.83
Less distributions:
Distributions from net realized gains		—			(0.08	)		—			—
Net asset value, end of period	$	12.15		$	11.96		$	11.16		$	10.83
Total return		1.50	%(3)		7.89	%		3.05	%		8.30	%(3)
Supplemental data and ratios:
Net assets, end of period	$	332,407		$	7,703,660		$	2,363,567		$	68,184
Ratio of expenses to average net assets		1.20	%(4)		1.20	%		1.20	%		1.20	%(4)
Ratio of expenses to average
net assets (before waivers)		1.54	%(4)		1.48	%		1.56	%		2.14	%(4)
Ratio of net investment loss
to average net assets		(0.53	)%(4)		(0.71	)%		(0.82	)%		(0.90	)%(4)
Ratio of net investment loss
to average net assets (before waivers)		(0.87	)%(4)		(0.99	)%		(1.18	)%		(1.84	)%(4)
Portfolio turnover rate(5)		47.8	%(3)		52.8	%		56.4	%		34.7	%(3)

(1)	Commencement of operations.
(2)	Calculated using average shares outstanding during the period.
(3)	Not annualized.
(4)	Annualized.
(5)	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

The accompanying notes are an integral part of these financial statements.

Page 25

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

1. ORGANIZATION

Baird Funds, Inc. (the “Corporation”) was incorporated on June 9, 2000 as a Wisconsin corporation and is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”).  The accompanying financial statements include the Baird LargeCap Fund, the Baird MidCap Fund and the Baird SmallCap Fund (each a “Fund” and collectively the “Funds”), three of the eight portfolios comprising the Corporation.  Pursuant to the 1940 Act, the Funds are “diversified” series of the Corporation.  The investment advisor to the Funds is Robert W. Baird & Co. Incorporated (“Baird” or the “Advisor”).

The Baird LargeCap Fund commenced operations with the sale of both Institutional and Investor Class Shares on September 29, 2000. The Baird MidCap Fund commenced operations with the sale of both Institutional and Investor Class Shares on December 29, 2000. The Baird SmallCap Fund commenced operations with the sale of both Institutional and Investor Class Shares on June 30, 2004. The Institutional Class Shares are not subject to a distribution and service (12b-1) fee, while the Investor Class Shares are subject to a distribution and service (12b-1) fee up to 0.25%.

The Baird LargeCap Fund seeks long-term growth of capital through investments in equity securities of large-capitalization companies.  Dividend income is a secondary consideration.

The Baird MidCap Fund seeks long-term growth of capital through investments in equity securities of mid-capitalization companies.

The Baird SmallCap Fund seeks long-term growth of capital through investments in equity securities of small-capitalization companies.

On June 30, 2007, one shareholder related to the Advisor held 46% of the Baird LargeCap Fund and 37% of the Baird SmallCap Fund.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements.  These policies are in conformity with accounting principles generally accepted in the United States of America.

a) Investment Valuation– Common stocks that are listed on a securities exchange (other than NASDAQ) are valued at the last quoted sales price.  Securities traded on NASDAQ are valued at the NASDAQ Official Closing Price.  Price information on listed stocks is taken from the exchange where the security is primarily traded.  Securities that were not traded on the valuation date, as well as stocks that are not listed on an exchange, including NASDAQ, are valued at the average of the current bid and asked price.  Because market quotations for most debt securities are not readily available, debt securities are stated at fair value as furnished by an independent pricing service, which uses valuation methods such as matrix pricing and other analytical pricing models, as well as  market transactions and dealer quotations.  Debt securities purchased with a remaining maturity of 60 days or less are valued at acquisition cost plus or minus any amortized discount or premium.  Investments in mutual funds are valued at their stated net asset value.

Page 26

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES (cont.)

	Other assets and securities for which no quotations are readily available are valued at fair value as determined in good faith by the Advisor in accordance with procedures approved by the Corporation’s Board of Directors.  In accordance with such procedures, the Advisor may use broker quotes or, if the broker quotes are unavailable or deemed to be unreliable, fair value will be determined by a valuation committee of the Advisor.  In determining fair value, the valuation committee takes into account all relevant factors and available information.  Consequently, the price of the security used by a Fund to calculate its NAV may differ from quoted or published prices for the same security.  Fair value pricing involves subjective judgments and there is no single standard for determining a security’s fair value.  As a result, different mutual funds could reasonably arrive at a different fair value for the same security.  It is possible that the fair value determined for a security is materially different from the value that could be realized upon the sale of that security or from the values that other mutual funds may determine.
	In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  Management has determined that SFAS No. 157 will have no material impact on the Funds’ financial statements.
b)	Foreign Securities– Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and the U.S. government.  These risks include revaluation of currencies and future adverse political and economic developments.  Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. government.  Occasionally, events that affect those values and exchange rates may occur after the close of the exchange on which such securities are traded.  If such events materially affect the value of a Fund’s securities, these securities may be valued at their fair value pursuant to procedures adopted by the Board of Directors.
c)	Federal Income Taxes– The Funds intend to continue to qualify as regulated investment companies as provided in subchapter M of the Internal Revenue Code and to distribute substantially all of their taxable income to their shareholders in a manner which results in no tax cost to the Funds.  Therefore, no federal income or excise tax provision is recorded.
	Effective June 29, 2007, the Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48),“Accounting for Uncertainty in Income Taxes,” a clarification of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. Management has determined that FIN 48 had no material impact on the Funds’ financial statements.
d)	Distributions to Shareholders– Dividends from net investment income are declared and paid annually.  Distributions of net realized gains, if any, are declared and paid at least annually.

Page 27

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

2.     SIGNIFICANT ACCOUNTING POLICIES (cont.)

e)	Allocation of Income and Expenses– Each Fund is charged for those expenses directly attributable to it.  Expenses directly attributable to a class of shares, such as Rule 12b-1 distribution fees, are charged to that class of shares.  Income, expenses, and realized and unrealized gains and losses are allocated to the classes based on their respective net assets.  Expenses that are not directly attributable to a Fund are allocated among the Funds in the series in proportion to their assets.
f)	Use of Estimates– The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
g)	Other– Investment and shareholder transactions are recorded on trade date.  The Funds determine the gain or loss realized from investment transactions by comparing the original cost of the security lot sold with the net sales proceeds.  Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis.  Accounting principles generally accepted in the United States require that permanent financial reporting and tax differences be reclassified in the capital accounts.
h)	Guarantees and Indemnifications– In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses.  The Funds’ maximum exposure under these arrangements is unknown and this would involve future claims against the Funds that have not yet occurred.  Based on experience, the Funds would expect the risk of loss to be remote.

3. CAPITAL SHARE TRANSACTIONS

The following table summarizes the capital share transactions of each Fund for the past two fiscal periods:

BAIRD LARGECAP FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		605,740		$	5,240,468		Shares sold		7,111		$	61,579
Shares redeemed		(647,058	)		(5,633,317	)	Shares redeemed		(26,966	)		(237,670	)
Net decrease		(41,318	)	$	(392,849	)	Net decrease		(19,855	)	$	(176,091	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		3,217,096					Beginning of period		128,018
End of period		3,175,778					End of period		108,163

Page 28

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3.     CAPITAL SHARE TRANSACTIONS (cont.)

	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		1,011,084		$	8,494,502		Shares sold		48,746		$	406,282
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		12,995			110,843		reinvestment of dividends		138			1,171
Shares redeemed		(1,094,378	)		(9,118,187	)	Shares redeemed		(210,595	)		(1,740,411	)
Net decrease		(70,299	)	$	(512,842	)	Net decrease		(161,711	)	$	(1,332,958	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		3,287,395					Beginning of period		289,729
End of period		3,217,096					End of period		128,018

BAIRD MIDCAP FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		334,244		$	3,258,875		Shares sold		238,285		$	2,284,893
Shares redeemed		(448,361	)		(4,388,443	)	Shares redeemed		(312,283	)		(2,949,322	)
Net decrease		(114,117	)	$	(1,129,568	)	Net decrease		(73,998	)	$	(664,429	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		3,436,591					Beginning of period		548,110
End of period		3,322,474					End of period		474,112
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		2,109,560		$	24,906,207		Shares sold		250,734		$	2,863,915
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		625,975			5,870,101		reinvestment of dividends		107,988			990,249
Shares redeemed		(7,000,989	)		(77,918,215	)	Shares redeemed		(220,539	)		(2,423,321	)
Net decrease		(4,265,454	)	$	(47,141,907	)	Net increase		138,183		$	1,430,843
Shares Outstanding:							Shares Outstanding:
Beginning of period		7,702,045					Beginning of period		409,927
End of period		3,436,591					End of period		548,110

Page 29

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

3.     CAPITAL SHARE TRANSACTIONS (cont.)

BAIRD SMALLCAP FUND

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2007
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		635,006		$	7,488,091		Shares sold		129,076		$	1,517,169
Shares redeemed		(3,123,756	)		(36,748,544	)	Shares redeemed		(746,047	)		(8,842,093	)
Net decrease		(2,488,750	)	$	(29,260,453	)	Net decrease		(616,971	)	$	(7,324,924	)
Shares Outstanding:							Shares Outstanding:
Beginning of period		5,319,537					Beginning of period		644,338
End of period		2,830,787					End of period		27,367
	Year Ended							Year Ended
	December 31, 2006							December 31, 2006
Institutional Class Shares	Shares			Amount			Investor Class Shares	Shares			Amount
Shares sold		2,601,055		$	30,531,287		Shares sold		501,916		$	5,847,915
Shares issued to							Shares issued to
shareholders in							shareholders in
reinvestment of dividends		30,717			369,831		reinvestment of dividends		4,238			50,684
Shares redeemed		(1,330,621	)		(15,510,501	)	Shares redeemed		(73,644	)		(853,693	)
Net increase		1,301,151		$	15,390,617		Net increase		432,510		$	5,044,906
Shares Outstanding:							Shares Outstanding:
Beginning of period		4,018,386					Beginning of period		211,828
End of period		5,319,537					End of period		644,338

4. INVESTMENT TRANSACTIONS AND INCOME TAX INFORMATION

During the six months ended June 30, 2007, purchases and sales of investment securities (excluding short-term investments) were as follows:

	Baird	Baird	Baird
	LargeCap Fund	MidCap Fund	SmallCap Fund
Purchases:	$11,465,908	$11,116,290	$24,297,885
Sales:	$11,438,851	$14,230,275	$56,464,689

Page 30

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

4. INVESTMENT TRANSACTIONS AND INCOME TAX INFORMATION (cont.)

At December 31, 2006, accumulated earnings/losses on a tax basis were as follows:

	LargeCap			MidCap			SmallCap
	Fund			Fund			Fund
Cost of Investments	$	26,810,528		$	34,871,277		$	73,693,370
Gross unrealized appreciation	$	3,834,888		$	8,153,894		$	9,953,396
Gross unrealized depreciation		(591,998	)		(1,740,551	)		(3,222,596	)
Net unrealized appreciation	$	3,242,890		$	6,413,343		$	6,730,800
Undistributed ordinary income	$	203		$	—		$	221,455
Undistributed long-term capital gain		—			219,611			12
Total distributable earnings	$	203		$	219,611		$	221,467
Other accumulated losses	$	(2,701,484	)	$	—		$	(71,754	)
Total accumulated earnings	$	541,609		$	6,632,954		$	6,880,513

Undistributed income or net realized gains for financial statement purposes may differ from amounts recognized for federal income tax purposes due to differences in the recognition and characterization of income, expense and capital gain items.

Under the current tax law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year.  For the year ended December 31, 2006, the Baird SmallCap Fund elected to defer capital losses occurring between November 1, 2006 and December 31, 2006 in the amount of $71,754.

At December 31, 2006, the Baird LargeCap Fund had accumulated net realized capital loss carryovers of $1,167,011 that expire in 2012 and $1,534,473 that expire in 2011.  To the extent the Funds realize future net capital gains, taxable distributions to shareholders will be offset by any unused capital loss carryovers.  During the year ended December 31, 2006, the Baird LargeCap Fund utilized $3,842,197 in capital loss carryovers from previous years.  During the year ended December 31, 2006, the Baird SmallCap Fund utilized $545,967 in capital loss carryovers from previous years.

During the six months ended June 30, 2007, the Funds have not made any capital gain distributions or income dividends.

During the year ended December 31, 2006, the Funds paid the following dividends:

	Ordinary Income Dividends		Net Long-Term Capital Gains
Baird LargeCap Fund	$	112,074		—
Baird MidCap Fund		355,507	$	6,588,280
Baird SmallCap Fund		—		475,855

Page 31

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

5. INVESTMENT ADVISORY AND OTHER AGREEMENTS

The Funds have entered into an Investment Advisory Agreement with Baird for the provision of investment advisory services. Pursuant to the Investment Advisory Agreement, the Advisor is entitled to receive a fee, calculated daily and payable monthly, at the annual rate of 0.65% for the Baird LargeCap Fund, 0.75% for the Baird MidCap Fund and 0.85% for the Baird SmallCap Fund as applied to the respective Fund’s average daily net assets.  Certain officers of the Advisor are also officers of the Funds.

For the six months ended June 30, 2007 and through April 30, 2008, the Advisor has contractually agreed to waive its investment advisory fee and/or reimburse the Funds’ operating expenses (exclusive of brokerage, taxes, and extraordinary expenses) to the extent necessary to ensure that each Fund’s annual operating expenses do not exceed the following percentages of average daily net assets:

	Institutional Class Shares	Investor Class Shares
Baird LargeCap Fund	0.75%	1.00%
Baird MidCap Fund	0.85%	1.10%
Baird SmallCap Fund	0.95%	1.20%

To the extent that the Advisor reimburses or absorbs fees and expenses, it may seek payment of such amounts for three years after the year in which expenses were reimbursed or absorbed.  A Fund will make no such payment, however, if its total annual operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.

	Six Months
	Ended		Fiscal Period Ended December 31,
	June 30,
	2007		2006		2005		2004
Reimbursed / Absorbed Expenses Subject
to Recovery by Advisor Until:	2010		2009		2008		2007
Baird LargeCap Fund	$	51,784	$	98,794	$	109,024	$	114,127
Baird MidCap Fund	$	53,043	$	117,213	$	129,774	$	116,179
Baird SmallCap Fund	$	91,219	$	168,361	$	104,335	$	72,320

U.S. Bancorp Fund Services, LLC serves as transfer agent, administrator, and accounting services agent for the Funds.  U.S. Bank, N.A. serves as custodian for the Funds.

Robert W. Baird & Co. Incorporated (the “Distributor”) is the sole distributor of the Funds pursuant to a distribution agreement.

No commissions were earned by the Distributor for services rendered as a registered broker-dealer in securities transactions for the Baird LargeCap Fund, Baird MidCap Fund and Baird SmallCap Fund for the six months ended June 30, 2007.

Page 32

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

6. SECURITIES LENDING

Each Fund may lend up to one-third of its total assets (including such loans) to borrowers under terms of participation in a securities lending program administered by U.S. Bancorp Asset Management, an affiliate of the Funds’ custodian, transfer agent and administrator.  The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the market value of any loaned securities at the time of the loan, plus accrued interest.

The Funds receive compensation in the form of fees and earn interest on the cash collateral.  The amount of fees depends on a number of factors including the type of security, length of the loan and credit standing of the borrower.  Each Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period.  Each Fund has the right under the terms of the securities lending agreement to recover the securities from the borrower on demand.

As of June 30, 2007, the Baird LargeCap, Baird MidCap and Baird SmallCap Funds had loaned securities that were collateralized by cash equivalents.  The cash collateral is invested by the custodian with the approval of the Advisor.  Although the cash collateral is generally invested in readily marketable, high quality, short-term obligations, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending.  A Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although this risk is mitigated by the collateral and by contract with the securities lending agent.

As of June 30, 2007, the market value of the securities on loan and payable on collateral due to broker were as follows:

	Market Value of		Payable on Collateral
	Securities on Loan		due to Broker
Baird LargeCap Fund	$	9,679,534	$	10,095,119
Baird MidCap Fund		18,616,479		19,361,586
Baird SmallCap Fund		—		—

Individual reinvested cash collateral jointly pooled with collateral received by other Baird Funds as of June 30, 2007 is as follows:

	LargeCap		MidCap		SmallCap		Other
	Fund		Fund		Fund		Baird Funds		Total
Cantor Fitzgerald
Repurchase Agreement(1)	$	1,598,894	$	3,066,543	$	—	$	45,334,563	$	50,000,000
CS First Boston
Repurchase Agreement(2)		1,119,226		2,146,580		—		31,734,194		35,000,000
Morgan Stanley
Repurchase Agreement(3)		1,023,291		1,962,588		—		29,014,121		32,000,000
Bear Stearns
Repurchase Agreement(4)		799,447		1,533,271		—		22,667,282		25,000,000
Fenway Funding LLC
Discount Commercial Paper		511,646		981,294		—		14,507,060		16,000,000

Page 33

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

6. SECURITIES LENDING (cont.)

	LargeCap		MidCap		SmallCap		Other
	Fund		Fund		Fund		Baird Funds		Total
Duke Funding LLC
Discount Commercial Paper		447,691		858,632		—		12,693,677		14,000,000
Antalis Funding
Discount Commercial Paper		421,149		807,727		—		11,941,124		13,170,000
Rams Funding LLC
Discount Commercial Paper		351,757		674,639		—		9,973,604		11,000,000
Valcour Bay Capital Co. LLC
Discount Commercial Paper		351,757		674,639		—		9,973,604		11,000,000
KKR Atlantic Funding Trust
Discount Commercial Paper		319,778		613,309		—		9,066,913		10,000,000
Laguna Discount Commercial Paper		319,778		613,309		—		9,066,913		10,000,000
Lehman Brothers
Repurchase Agreement(5)		319,778		613,309		—		9,066,913		10,000,000
Ocala Funding LLC
Discount Commercial Paper		319,778		613,309		—		9,066,913		10,000,000
Sashsen Funding
Discount Commercial Paper		319,778		613,309		—		9,066,913		10,000,000
Concord Minutemen
Capital Company Interest
Bearing Commercial Paper		287,802		551,978		—		8,160,220		9,000,000
Morgan Stanley
Repurchase Agreement(6)		255,823		490,647		—		7,253,530		8,000,000
Park Granada LLC
Discount Commercial Paper		223,845		429,316		—		6,346,839		7,000,000
Thornburg Mortgage Capital
Discount Commercial Paper		223,845		429,316		—		6,346,839		7,000,000
Concord Minutemen
Capital Company Interest
Bearing Commercial Paper		159,889		306,654		—		4,533,457		5,000,000
Laguna ABS Ltd.
Discount Commercial Paper		159,889		306,654		—		4,533,457		5,000,000
KKR Atlantic Funding Trust
Discount Commercial Paper		127,912		245,323		—		3,626,765		4,000,000

Page 34

Baird Funds, Inc.

Notes to the Financial Statements       June 30, 2007 (Unaudited)

6. SECURITIES LENDING (cont.)

	LargeCap		MidCap		SmallCap		Other
	Fund		Fund		Fund		Baird Funds		Total
Morgan Stanley
Repurchase Agreement(7)		127,912		245,323		—		3,626,765		4,000,000
Rams Funding LLC
Discount Commercial Paper		127,912		245,323		—		3,626,765		4,000,000
Valcour Bay Capital Co. LLC
Discount Commercial Paper		127,912		245,323		—		3,626,765		4,000,000
Merrill Lynch Premier
Institutional Fund		34,579		66,320		—		980,444		1,081,343
Federated Prime
Obligations Fund		14,051		26,951		—		398,438		439,440
	$	10,095,119	$	19,361,586	$	—	$	286,234,078	$	315,690,783

(1)	(Dated 06/29/07), 5.36%, Due 07/02/07 (Repurchase Proceeds $50,029,370), (Collateralized by Mortgage Backed Securities)
(2)	(Dated 06/29/07), 5.425%, Due 07/02/07 (Repurchase Proceeds $35,020,808), (Collateralized by Agency Mortgage Backed Securities)
(3)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $32,019,077), (Collateralized by Mortgage Backed Securities)
(4)	(Dated 06/29/07), 5.50%, Due 07/02/07 (Repurchase Proceeds $25,015,068), (Collateralized by Mortgage Backed Securities)
(5)	(Dated 06/29/07), 5.49%, Due 07/02/07 (Repurchase Proceeds $10,006,016), (Collateralized by Corporate Bonds)
(6)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $8,004,769), (Collateralized by Mortgage Backed Securities)
(7)	(Dated 06/29/07), 5.44%, Due 07/02/07 (Repurchase Proceeds $4,002,385), (Collateralized by Mortgage Backed Securities)

7. LINE OF CREDIT

The Corporation maintains an uncommitted, senior secured line of credit (“LOC”) with U.S. Bank, N.A. (the “Bank”) to provide the Funds a temporary liquidity source to meet unanticipated redemptions.  Under the terms of the LOC, borrowings for each Fund are limited to one-third of the total assets (including the amount borrowed) of the respective Fund, or as otherwise indicated within the Funds’ agreement with the Bank.  The Bank charges interest at the Bank’s Prime Rate less 1% (weighted average rate of 7.25% for the first six months of 2007).  For the six months ended June 30, 2007, the Baird LargeCap Fund, Baird MidCap Fund and Baird SmallCap Fund incurred $954, $155, and $226 in interest charges, respectively, on average daily loan balances of $26,182, $1,961 and $6,215, respectively.

8. DISTRIBUTION AND SHAREHOLDER SERVICE PLAN

The Funds have adopted a distribution and shareholder service plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act.  The Plan allows the Funds to compensate the Distributor for the costs incurred in distributing the Funds’ Investor Class Shares, including amounts paid to brokers or dealers, at an annual rate not to exceed 0.25% of the average daily net assets of the Funds’ Investor Class Shares.  The Baird LargeCap Fund, Baird MidCap Fund and Baird SmallCap Fund incurred $1,316, $5,672 and $5,978, respectively, in fees pursuant to the Plan during the six months ended June 30, 2007.

Page 35

Additional Information

Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling toll free, 1-866-44BAIRD, or by accessing the Funds’ website at www.bairdfunds.com; and by accessing the SEC’s website at www.sec.gov.

Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling toll free, 1-866-44BAIRD, or by accessing the Funds’ website at www.bairdfunds.com; and by accessing the SEC’s website at www.sec.gov.

Portfolio Holdings Disclosure

The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Funds’ Forms N-Q are available on the SEC website at 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 Public Reference Room may be obtained by calling 1-800-732-0330.  The Funds’ Forms N-Q may also be obtained by calling toll-free 1-866-44BAIRD.

Page 36

(This Page Intentionally Left Blank.)

Baird Funds, Inc.

c/o U.S. Bancorp Fund Services, LLC

P.O. Box 701

Milwaukee, WI 53201-0701

1-866-44BAIRD

Board of Directors

G. Frederick Kasten, Jr. (Chairman)

John W. Feldt

George C. Kaiser

Frederick P. Stratton, Jr.

Investment Advisor and Distributor

Robert W. Baird & Co. Incorporated

777 East Wisconsin Avenue

Milwaukee, WI 53202

Administrator and Transfer Agent

U.S. Bancorp Fund Services, LLC

P.O. Box 701

615 East Michigan Street

Milwaukee, WI 53202

Custodian

U.S. Bank, N.A.

1555 N. RiverCenter Drive, Suite 302

Milwaukee, WI 53212

Legal Counsel

Godfrey & Kahn, S.C.

780 North Water Street

Milwaukee, WI 53202

Independent Registered Public Accounting Firm

Grant Thornton LLP

175 West Jackson Boulevard, 13th Floor

Chicago, IL 60604

Item 2. Code of Ethics.

Not applicable - only required for annual reports on Form N-CSR.

Item 3. Audit Committee Financial Expert.

Not applicable - only required for annual reports on Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Not applicable - only required for annual reports on Form N-CSR.

Item 5. Audit Committee of Listed Registrants.

Not applicable because the Registrant is not a "listed issuer" within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934.

Item 6. Schedule of Investments.

The Schedules of Investments are included as part of the semi-annual reports to shareholders filed under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable because the Registrant is not a closed-end management investment company.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable because the Registrant is not a closed-end management investment company.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable because 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 directors.

Item 11. Controls and Procedures.

(a)   The Registrant’s management, with the participation of its principal executive and principal financial officers, has evaluated the effectiveness of the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)), as of a date within 90 days prior to the filing date of this Form N-CSR.  Based on such evaluation, the Registrant's principal executive and principal financial officers have concluded that the design and operation of the Registrant's disclosure controls and procedures are effective in providing reasonable assurance that the information required to be disclosed on Form N-CSR is recorded, processed, summarized and reported within the applicable time period.

(b)   There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal 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.

(a)   (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable to semi-annual reports.

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable because the Registrant is not a closed-end management investment company.

(b)   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Furnished herewith.

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.

BAIRD FUNDS, INC.

By:  /s/Mary Ellen Stanek

        Mary Ellen Stanek, President

Date:  August 28, 2007

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.

By:  /s/Mary Ellen Stanek

        Mary Ellen Stanek, President

Date:  August 28, 2007

By:  /s/Leonard M. Rush

        Leonard M. Rush, Treasurer

Date:  August 28, 2007