Summary

• The Russell 2000 Index posted a 0.89% total return for the quarter, while the Baird Equity Opportunity Fund underperformed, generating a net return of -11.39%.
• Sector moves during Q1 were a headwind to portfolio results given the Baird Equity Opportunity Fund's smaller exposure to energy and materials and larger stakes in software and related shares.
• The iShares Semiconductor ETF outperformed the iShares Expanded Tech-Software Sector ETF by over 33% as a powerful overhang emerged that AI will render most software companies obsolete.
• NCR Voyix was pummeled despite building evidence that the turnaround is entering a more prosperous phase, with the stock finishing the quarter down 38% despite a fortified management team and balance sheet.
• While the Baird Equity Opportunity Fund's recent results may call the strategy into question, the team’s long-term track record emboldens the fund to not choose the quick fix of chasing momentum at any price.

Fellow shareholders,

Equities struggled for traction during the first quarter, challenged by the war in Iran, concerns over the direction of monetary policy, and, to a lesser extent, uncertainty over how the uptake of Artificial Intelligence (AI) could negatively impact prominent elements

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