BAIRD FUNDS, INC.

                                 INVESTOR CLASS



                   DISTRIBUTION AND SHAREHOLDER SERVICING PLAN



         The following Distribution and Shareholder Servicing Plan (the "Plan")

has been adopted pursuant to Rule 12b-1 under the Investment Company Act of

1940, as amended (the "Act"), by Baird Funds, Inc. (the "Corporation"), a

Wisconsin corporation, on behalf of the Investor Class of each of the Baird

Aggregate Bond Fund, Baird Short-Term Bond Fund, Baird Intermediate Bond Fund,

Baird Core Bond Fund, Baird Intermediate Municipal Bond Fund and Baird Horizon

Growth Fund (each, a "Fund"), each Fund being a series of the Corporation. The

Plan has been approved by a majority of the Corporation's Board of Directors,

including a majority of the directors who are not interested persons of the

Corporation and who have no direct or indirect financial interest in the

operation of the Plan or in any Rule 12b-1 related agreement (as defined below)

(the "Disinterested Directors"), cast in person at a meeting called for the

purpose of voting on such plan.



         In approving the Plan, the Board of Directors determined that the Plan

would be prudent and in the best interests of each Fund and its shareholders.

Such approval by the Board of Directors included a determination, in the

exercise of its reasonable business judgment and in light of its fiduciary

duties, that there is a reasonable likelihood that the Plan will benefit each

Fund and its shareholders.



         The provisions of the Plan are as follows:



1.       PAYMENTS BY CORPORATION



                  (a) The Corporation, on behalf of each Fund, will pay Robert

         W. Baird & Co. Incorporated (the "Distributor"), as principal

         underwriter of the Fund's shares, a distribution and shareholder

         servicing fee of 0.25% of the average daily net assets of the Fund in

         connection with the promotion and distribution of Fund shares and the

         provision of personal services to shareholders, including, but not

         necessarily limited to, advertising, compensation to underwriters,

         dealers and seller personnel, the printing and mailing of prospectuses

         to other than current Fund shareholders, and the printing and mailing

         of sales literature. The Distributor may pay all or a portion of these

         fees to any registered securities dealer, financial institution or any

         other person (the "Recipient") who renders assistance in distributing

         or promoting the sale of shares, or who provides certain shareholder

         services, pursuant to a written agreement (the "Rule 12b-1 Related

         Agreement"), forms of which are attached hereto as Appendices A to F.

         Payment of these fees shall be made monthly promptly following the

         close of the month.



2.       RULE 12B-1 RELATED AGREEMENTS



                  (a) No Rule 12b-1 Related Agreement shall be entered into and

         no payments shall be made pursuant to any Rule 12b-1 Related Agreement,

         unless such Rule 12b-1 Related Agreement is in writing and has been

         delivered to and approved by a vote of a majority of the Corporation's

         Board of Directors, and of the Disinterested Directors, cast in person

         at a meeting called for the purpose of voting on such Rule 12b-1

         Related Agreement. The forms of Rule 12b-1 Related Agreements attached

         hereto as Appendices A to F have been approved by the Corporation's

         Board of Directors as specified above.



                  (b) Any Rule 12b-1 Related Agreement shall describe the

         services to be performed by the Recipient and shall specify the amount

         of, or the method for determining, the compensation to the Recipient.



                  (c) No Rule 12b-1 Related Agreement may be entered into unless

         it provides (i) that it may be terminated with respect to a Fund at any

         time, without the payment of any penalty, by vote of a majority of the

         shareholders of such Fund, or by vote of a majority of the

         Disinterested Directors, on not more than 60 days' written notice to

         the other party to the Rule 12b-1 Related Agreement, and (ii) that it

         shall automatically terminate in the event of its assignment.



                  (d) Any Rule 12b-1 Related Agreement shall continue in effect

         for a period of more than one year from the date of its execution only

         if such continuance is specifically approved at least annually by a

         vote of a majority of the Board of Directors, and of the Disinterested

         Directors, cast in person at a meeting called for the purpose of voting

         on such Rule 12b-1 Related Agreement.



3.       QUARTERLY REPORTS



                  The Distributor shall provide to the Board of Directors, and

         the Directors shall review, at least quarterly, a written report of all

         amounts expended pursuant to the Plan. This report shall include the

         identity of the Recipient of each payment and the purpose for which the

         amounts were expended and such other information as the Board of

         Directors may reasonably request.



4.       EFFECTIVE DATE AND DURATION OF THE PLAN



                  The Plan shall become effective immediately upon approval by

         the vote of a majority of the Board of Directors, and of the

         Disinterested Directors, cast in person at a meeting called for the

         purpose of voting on the approval of the Plan. The Plan shall continue

         with respect to each Fund from year to year after the first year,

         provided that such continuance is approved at least annually by a vote

         of a majority of the Board of Directors, and of the Disinterested

         Directors, cast in person at a meeting called for the purpose of voting

         on such continuance. The Plan may be terminated with respect to each

         Fund at any time by a majority vote of shareholders of such Fund, or by

         vote of a majority of the Disinterested Directors.



5.       SELECTION OF DISINTERESTED DIRECTORS



                  During the period in which the Plan is effective, the

         selection and nomination of those Directors who are Disinterested

         Directors of the Corporation shall be committed to the discretion of

         the Disinterested Directors.



6.       AMENDMENTS



                  All material amendments of the Plan shall be in writing and

         shall be approved by a vote of a majority of the Board of Directors,

         and of the Disinterested Directors, cast in person at a meeting called

         for the purpose of voting on such amendment. In addition, the Plan may

         not be amended to increase materially the amount to be expended by a

         Fund hereunder without the approval by a majority vote of shareholders

         of each Fund affected thereby.



7.       RECORDKEEPING



                  The Corporation shall preserve copies of the Plan, any Rule

         12b-1 Related Agreement and all reports made pursuant to Section 3 for

         a period of not less than six years from the date of this Plan, any

         such Rule 12b-1 Related Agreement or such reports, as the case may be,

         the first two years in an easily accessible place.



MW422032_1.DOC











                                   APPENDIX A

                          RULE 12B-1 RELATED AGREEMENT



Robert W. Baird & Co. Incorporated

777 East Wisconsin Avenue

Milwaukee, Wisconsin  53202







                                     [DATE]



[Recipient's Name and Address]







Ladies and Gentlemen:



         This letter will confirm our understanding and agreement with respect

to payments to be made to you pursuant to a Distribution and Shareholder

Servicing Plan (the "Plan") adopted by Baird Funds, Inc. (the "Corporation"), on

behalf of the Investor Class of the Baird Short-Term Bond Fund (the "Fund"), a

series of the Corporation, pursuant to Rule 12b-1 under the Investment Company

Act of 1940, as amended (the "Act"). The Plan and this related agreement (the

"Rule 12b-1 Related Agreement") have been approved by a majority of the Board of

Directors of the Corporation, including a majority of the Board of Directors who

are not "interested persons" of the Corporation, as defined in the Act, and who

have no direct or indirect financial interest in the operation of the Plan or in

this or any other Rule 12b-1 Related Agreement (the "Disinterested Directors"),

cast in person at a meeting called for the purpose of voting thereon. Such

approval included a determination by the Board of Directors that, in the

exercise of its reasonable business judgment and in light of its fiduciary

duties, there is a reasonable likelihood that the Plan will benefit the Fund's

shareholders.



         1. To the extent you provide distribution and marketing services in the

promotion of the Fund's shares, including furnishing services and assistance to

your customers who invest in and own shares, including, but not limited to,

answering routine inquiries regarding the Fund and assisting in changing account

designations and addresses, we shall pay you a fee of 0.25% of the average daily

net assets of the Fund (computed on an annual basis) which are owned of record

by your firm as nominee for your customers or which are owned by those customers

of your firm whose records, as maintained by the Corporation or its agent,

designate your firm as the customer's dealer or service provider of record. We

reserve the right to increase, decrease or discontinue the fee at any time in

our sole discretion upon written notice to you.



         You agree that all activities conducted under this Rule 12b-1 Related

Agreement will be conducted in accordance with the Plan, as well as all

applicable state and federal laws, including the Act, the Securities Exchange

Act of 1934, the Securities Act of 1933 and any applicable rules of the NASD.



         We shall make the determination of the net asset value, which

determination shall be made in the manner specified in the Fund's current

Prospectus, and pay to you, on the basis of such determination, the fee

specified above, to the extent permitted under the Plan. No such fee will be

paid to you with respect to shares purchased by you and redeemed or repurchased

by the Fund, its agent or us within seven business days after the date of our

confirmation of such purchase. In addition, no such fee will be paid to you with

respect to any of your customers if the amount of such fee based upon the value

of such customers' shares will be less than $25.00. Payment of such fee shall be

made promptly after the close of each month for which such fee is payable.

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