Baird SmallCap Value Fund

OVERVIEW
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The SmallCap Value Portfolio invests in small-cap companies, typically defined as those with a market cap range of $100 million to $2.5 billion at time of purchase. The Portfolio seeks to own securities that the manager expects to exceed Wall Street expectations and that trade at a discount to our proprietary calculations of fair value. The Portfolio typically owns companies exhibiting high-quality characteristics including, but not limited to, strong balance sheets, high returns on equity, competitive advantages, high barriers to entry and above-average profit margins. To help control risks, the Portfolio is generally diversified among companies in a broad range of industries and economic sectors. Typically, no single holding in the Portfolio will exceed 5% of the Portfolio at cost or 8% of the Portfolio measured at market value.

The Net Expense Ratio is the Gross Expense Ratio minus any reimbursement from The advisor. The advisor has contractually agreed to waive its fees and/or reimburse expenses at least through April 30, 2016, to the extent necessary to ensure that the total operating expenses do not exceed 1.25% of the Investor Class's average daily net assets and 1.00% of the Institutional Class's average daily net assets. Investor class expense ratios include a 0.25% 12b-1 fee.

PERFORMANCE
Month-End Quarter-End
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Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The funds' current performance may be lower or higher than the performance data quoted.

The fund focuses on small-cap value-style stocks and therefore the performance of the fund may be more volatile than the performance of funds that focus on types of stocks that have a broader investment style. The fund may invest up to 15% of its total assets in U.S. dollar-denominated foreign securities and ADRs. Foreign investments involve additional risks such as currency rate fluctuations, the potential for political and economic instability, and different and sometimes less strict financial reporting standards and regulation. Stocks of companies with small market capitalizations involve a higher degree of risk than investments in the broad-based equities market. Small-cap stocks are often more volatile and less liquid than investments in larger companies, and are more likely to be adversely affected by poor economic or market conditions.

The Net Expense Ratio is the Gross Expense Ratio minus any reimbursement from the advisor. The advisor has contractually agreed to waive its fees and/or reimburse expenses at least through April 30, 2016, to the extent necessary to ensure that the total operating expenses do not exceed 1.25% of the Investor Class's average daily net assets and 1.00% of the Institutional Class's average daily net assets. Investor class expense ratios include a 0.25% 12b-1 fee.

The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecast growth values. Indices are unmanaged and are not available for direct investment.

MANAGEMENT