N-CSR 1 sarreport0306.txt HOLDINGS FOR THE PERIOD ENDING MARCH 31, 2006 UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION OMB Number: 3235 -0570 Washington, D.C. 20549 Expires: September 30, 2007 Estimated average burden hours per response... 19.4 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-8032 BARON INVESTMENT FUNDS TRUST f/k/a BARON ASSET FUND -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 767 Fifth Avenue, 49th Floor New York, NY 10153 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Linda S. Martinson, Esq. c/o Baron Investment Funds Trust 767 Fifth Avenue,49th Floor New York, New York 10153 -------------------------------------------------------------------------------- (Name and Address of Agent for Service) Registrant's Telephone Number, including Area Code 212-583-2000 ----------------------------- Date of fiscal year end: September 30 --------------- Date of reporting period: March 31, 2006 -------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17CRF 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 5th Street, NW, Washington, D.C. 20549-6009. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2569 (01-05) Item 1. Baron Asset Fund Semi-Annual Report for the period ended March 31, 2006.
[registered castle logo] SEMI ANNUAL FINANCIAL REPORT MARCH 31, 2006 B A R O N F U N D S (r) DEAR BARON FUNDS SHAREHOLDER: BARON FUNDS STATEMENT OF NET ASSETS....3 Attached you will find unaudited financial statements for Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron iOpportunity Fund and Baron Fifth Avenue Growth Fund for STATEMENTS OF ASSETS the six month ended March 31, 2006. The Securities and Exchange Commission requires AND LIABILITIES........16 mutual funds to furnish these statements semi-annually to their shareholders. STATEMENTS OF OPERATIONS..17 We thank you for choosing to join us as fellow shareholders in Baron Funds. We will continue STATEMENTS OF CHANGES to work hard to justify your confidence. IN NET ASSETS..........18 NOTES TO FINANCIAL Sincerely, STATEMENTS.............19 /s/ Ronald Baron Ronald Baron CEO AND Chief Investment Officer May 25, 2006 /s/ Peggy Wong Peggy Wong Treasurer and CFO May 25, 2006 A description of the Funds' proxy voting policies and procedures is available without charge on the Funds' website, www.BaronFunds.com, or by calling 1-800-99-BARON and on the SEC's website at www.sec.gov. The Funds' most current proxy voting record, Form N-PX, is also available on the Funds' website, www.BaronFunds.com and on the SEC's website at www.sec.gov. TICKER SYMBOLS: The Funds file their 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 BARON ASSET FUND BARAX the SEC's website at www.sec.gov. The Funds' Forms N-Q may also be reviewed and copied at BARON GROWTH FUND BGRFX the SEC's Public Reference Room in Washington, DC; information on the operation of the BARON SMALL CAP FUND BSCFX SEC's Public Reference Room may be obtained by calling 800-SEC-0330. A copy of the Funds' BARON iOPPORTUNITY FUND BIOPX Form N-Q may also be obtained upon request by contacting Baron Funds at 1-800-992-2766. BARON FIFTH AVVENUE GROWTH FUND BFTHX --------------- 767 Fifth Avenue PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The investment return and principal NY, NY 10153 value of an investment will fluctuate; an investor's shares, when redeemed, may be worth 212.583.2100 more or less than their original cost. 1.800.99.BARON BaronFunds.com
BARON FUNDS -------------------------------------------------------------------------------- FUND EXPENSES (UNAUDITED) -------------------------------------------------------------------------------- As a shareholder of the Funds, you may incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include advisory fess, distribution and service (12b-1) fees and other Fund expenses. Due to the payment of Rule 12b-1 fees, long-term shareholders may indirectly pay more than the maximum permitted front-end sales charge. Transaction costs, as in the case of Baron iOpportunity Fund, may include redemption fees. The information on this page is intended to help you understand your ongoing costs of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. This Example is based on an investment of $1,000 invested on October 1, 2005 and held for six months ended March 31, 2006. ACTUAL EXPENSES The table below titled "Based on Actual Total Return" provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading titled "Expenses Paid During the Period". BASED ON ACTUAL TOTAL RETURN FOR THE SIX MONTHS ENDED MARCH 31, 2006*
BEGINNING ENDING ANNUALIZED EXPENSES ACTUAL TOTAL ACCOUNT VALUE ACCOUNT VALUE EXPENSE PAID DURING RETURN OCTOBER 1, 2005 MARCH 31, 2006 RATIOS THE PERIOD# ------------ --------------- -------------- ---------- ----------- BARON ASSET FUND 14.25% $1,000.00 $1,142.52 1.33% $7.10 BARON GROWTH FUND 14.79% 1,000.00 1,147.92 1.31% 7.02 BARON SMALL CAP FUND 15.36% 1,000.00 1,153.65 1.33% 7.14 BARON iOPPORTUNITY FUND 13.97% 1,000.00 1,139.74 1.48% 7.90 BARON FIFTH AVENUE GROWTH FUND 7.18% 1,000.00 1,071.80 1.40% 7.23
---------- * Assumes all reinvestment of dividends and capital gain distributions, if any. # Expenses are equal to each Fund's respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent Fiscal half-year, then divided by 365. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below titled "Based on Hypothetical Total Return" provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio 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 values and expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Funds and other funds. To do so, compare the 5% hypothetical example relating to the Funds with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that expenses shown in the table below are meant to highlight your ongoing costs and do not reflect any transactional costs, such as redemption fees, if any. Therefore, the table is useful in comparing ongoing costs only and will not help you determine your relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs would have been higher. BASED ON HYPOTHETICAL TOTAL RETURN FOR THE SIX MONTHS ENDED MARCH 31, 2006
HYPOTHETICAL BEGINNING ENDING ANNUALIZED EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE EXPENSE PAID DURING TOTAL RETURN OCTOBER 1, 2005 MARCH 31, 2006 RATIOS THE PERIOD# ------------ --------------- -------------- ---------- ----------- BARON ASSET FUND 5.00% $1,000.00 $1,018.30 1.33% $6.69 BARON GROWTH FUND 5.00% 1,000.00 1,018.40 1.31% 6.59 BARON SMALL CAP FUND 5.00% 1,000.00 1,018.30 1.33% 6.69 BARON iOPPORTUNITY FUND 5.00% 1,000.00 1,017.55 1.48% 7.44 BARON FIFTH AVENUE GROWTH FUND 5.00% 1,000.00 1,017.95 1.40% 7.04
---------- # Expenses are equal to each Fund's respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent Fiscal half-year, then divided by 365. 2 BARON ASSET FUND ------------------------------------------------------------------------------- STATEMENT OF NET ASSETS ------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value --------------------------------------------------------------------------------- COMMON STOCKS (98.34%) --------------------------------------------------------------------------------- ADVERTISING SERVICES (0.46%) 200,000 Getty Images, Inc.* $ 14,512,860 $ 14,976,000 APPAREL (1.95%) 1,050,000 Polo Ralph Lauren Corp., Cl A 22,642,344 63,640,500 BUSINESS SERVICES (11.19%) 1,400,000 Brown & Brown, Inc. 29,309,040 46,480,000 4,450,000 ChoicePoint, Inc.*# 51,369,900 199,137,500 1,225,000 Iron Mountain, Inc.* 33,816,735 49,906,500 1,150,000 Robert Half Intl., Inc. 1,202,006 44,401,500 600,000 SEI Investments Co. 22,537,033 24,318,000 ------------ ------------ 138,234,714 364,243,500 CONSULTING (1.80%) 1,300,000 Hewitt Associates, Inc.* 32,352,583 38,662,000 280,000 Moody's Corp. 7,256,123 20,008,800 ------------ ------------ 39,608,706 58,670,800 DISTRIBUTION (0.51%) 350,000 Fastenal Co. 13,929,932 16,569,000 EDUCATION (3.51%) 750,000 Apollo Group, Inc., Cl A* 7,352,076 39,382,500 1,275,000 DeVry, Inc.* 7,614,588 29,031,750 1,100,000 Education Mgmt. Corp.* 6,886,520 45,760,000 ------------ ------------ 21,853,184 114,174,250 ENERGY SERVICES (6.79%) 175,000 Arch Coal, Inc. 8,679,589 13,289,500 475,000 Helmerich & Payne, Inc. 31,767,218 33,164,500 500,000 SEACOR Holdings, Inc.* 14,322,278 39,600,000 200,000 Ultra Petroleum Corp.* 4,847,419 12,462,000 299,999 Valero Energy Corp. 10,642,371 17,933,940 2,400,000 XTO Energy, Inc. 18,213,449 104,568,000 ------------ ------------ 88,472,324 221,017,940 FINANCIAL SERVICES - ASSET MANAGEMENT (4.19%) 600,000 AllianceBernstein Holding L.P. (formerly Alliance Capital Management Holding L.P.) 28,433,769 39,750,000 900,000 Eaton Vance Corp. 19,627,578 24,642,000 850,000 Nuveen Investments, Inc., Cl A 28,950,826 40,927,500 400,000 T. Rowe Price Group, Inc. 21,584,167 31,284,000 ------------ ------------ 98,596,340 136,603,500 FINANCIAL SERVICES - BANKING (1.42%) 435,000 City National Corp. 31,635,225 33,403,650 350,000 Commerce Bancorp, Inc. 8,640,051 12,827,500 ------------ ------------ 40,275,276 46,231,150 FINANCIAL SERVICES - BROKERAGE AND EXCHANGES (8.93%) 9,300,000 Charles Schwab Corp. 23,212,923 160,053,000 255,000 Chicago Mercantile Exchange Holdings, Inc., Cl A 18,498,370 114,112,500 285,000 Jefferies Group, Inc. 16,056,950 16,672,500 ------------ ------------ 57,768,243 290,838,000 FINANCIAL SERVICES - INSURANCE (5.15%) 1,000,000 Arch Capital Group, Ltd.* $ 33,841,383 $ 57,740,000 850,000 Assurant, Inc. 28,107,970 41,862,500 1,350,000 Axis Capital Holdings, Ltd. 34,853,219 40,365,000 800,000 HCC Insurance Holdings, Inc. 24,964,109 27,840,000 ------------ ------------ 121,766,681 167,807,500 FINANCIAL SERVICES - MISCELLANEOUS (2.39%) 225,000 CapitalSource, Inc. 5,181,245 5,598,000 1,000,000 First Marblehead Corp. 36,557,795 43,250,000 125,000 The Student Loan Corp. 17,812,742 29,125,000 ------------ ------------ 59,551,782 77,973,000 GAMING SERVICES (0.75%) 700,000 Scientific Games Corp., Cl A* 20,327,603 24,591,000 HEALTHCARE FACILITIES (2.93%) 800,000 Community Health Systems, Inc.* 20,710,260 28,920,000 1,500,000 Manor Care, Inc. 32,956,389 66,525,000 ------------ ------------ 53,666,649 95,445,000 HEALTHCARE PRODUCTS (2.60%) 565,000 DENTSPLY International, Inc. 24,654,030 32,854,750 800,000 Henry Schein, Inc.* 22,796,151 38,288,000 200,000 Zimmer Holdings, Inc.* 6,087,903 13,520,000 ------------ ------------ 53,538,084 84,662,750 HEALTHCARE SERVICES (4.51%) 650,000 Advanced Medical Optics, Inc.* 29,014,150 30,316,000 250,000 Caremark Rx, Inc.* 5,389,305 12,295,000 525,000 Charles River Laboratories Intl., Inc.* 16,106,774 25,735,500 325,000 Covance, Inc.* 18,914,906 19,093,750 425,000 Fisher Scientific Intl., Inc.* 24,522,276 28,921,250 450,000 Stericycle, Inc.* 26,579,010 30,429,000 ------------ ------------ 120,526,421 146,790,500 HEALTHCARE SERVICES - INSURANCE (1.66%) 700,000 WellPoint, Inc.* 17,819,752 54,201,000 HOTELS AND LODGING (2.17%) 850,000 Choice Hotels Intl., Inc. 4,185,563 38,913,000 625,000 Four Seasons Hotels, Inc. 23,375,834 31,687,500 ------------ ------------ 27,561,397 70,600,500 MEDIA (0.00%) 5,174 Radio One, Inc., Cl A* 32,338 38,701 REAL ESTATE (2.70%) 600,000 CB Richard Ellis Group, Inc., Cl A* 20,815,726 48,420,000 141,844 Corrections Corp. of America* 1,419 6,411,349 525,000 The St. Joe Company 34,866,683 32,991,000 ------------ ------------ 55,683,828 87,822,349 REAL ESTATE - HOME BUILDING (2.58%) 270,000 M.D.C. Holdings, Inc. 16,769,775 17,363,700 40,000 NVR, Inc.* 13,394,243 29,558,000 1,075,000 Toll Brothers, Inc.* 21,751,848 37,227,250 ------------ ------------ 51,915,866 84,148,950 REAL ESTATE - REITS (3.82%) 314,000 Alexander's, Inc.*# 20,453,936 90,746,000 175,000 Forest City Enterprises, Inc., Cl A 7,309,363 8,251,250 250,000 SL Green Realty Corp. 21,214,463 25,375,000 ------------ ------------ 48,977,762 124,372,250
See Notes to Financial Statements. 3 BARON ASSET FUND -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) -------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value --------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) -------------------------------------------------------------------------------- RECREATION AND RESORTS (15.61%) 700,000 Boyd Gaming Corp. $ 30,904,281 $ 34,958,000 2,400,000 Kerzner Intl., Ltd.*# 77,808,281 186,768,000 3,000,000 Vail Resorts, Inc.*# 61,273,805 114,660,000 850,000 Wynn Resorts, Ltd.* 19,006,090 65,322,500 1,459,408 Wynn Resorts, Ltd.*@ 30,030,772 106,547,730 -------------- --------------- 219,023,229 508,256,230 RESTAURANTS (0.89%) 775,000 The Cheesecake Factory, Inc.* 16,382,931 29,023,750 RETAIL - CONSUMER STAPLES (1.84%) 900,000 Whole Foods Market, Inc. 25,563,386 59,796,000 RETAIL - SPECIALTY STORES (2.68%) 550,000 CarMax, Inc.* 14,518,495 17,974,000 500,000 O'Reilly Automotive, Inc.* 12,587,919 18,280,000 800,000 Tiffany & Co. 26,059,638 30,032,000 850,000 Urban Outfitters, Inc.* 23,595,170 20,859,000 -------------- --------------- 76,761,222 87,145,000 TRANSPORTATION (3.59%) 1,500,000 C. H. Robinson Worldwide, Inc. 27,854,391 73,635,000 500,000 Expeditors International of Washington, Inc. 24,492,142 43,195,000 -------------- --------------- 52,346,533 116,830,000 UTILITY SERVICES (1.72%) 2,250,000 Southern Union Co.* 28,662,596 55,867,500 -------------- --------------- TOTAL COMMON STOCKS 1,586,001,983 3,202,336,620 -------------- --------------- -------------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (0.29%) -------------------------------------------------------------------------------------- EDUCATION (0.01%) 105,264 Apollo International, Inc. S-A CV Pfd.*@# 2,000,016 400,000 HEALTHCARE SERVICES (0.28%) 5,849 Somerford Corp. S-A Conv. Pfd.*@ 9,090,399 9,090,397 -------------- --------------- TOTAL CONVERTIBLE PREFERRED STOCKS 11,090,415 9,490,397 -------------- --------------- Principal Amount Cost Value --------------------------------------------------------------------------------------- CORPORATE BONDS (0.07%) -------------------------------------------------------------------------------------- HEALTHCARE SERVICES $ 2,166,667 Somerford Corp. 8.50% Sub. Conv. Deb. due 04/23/2007@ $ 2,166,667 $ 2,166,667 -------------- --------------- SHORT TERM MONEY MARKET INSTRUMENTS (1.24%) 5,899,999 AIG Funding, Inc. 4.81% due 04/03/2006 5,899,999 5,899,999 14,500,000 Chesham Finance Ltd. 4.84% due 04/03/2006 14,500,000 14,500,000 5,714,737 Citigroup Funding, Inc. 4.75% due 04/03/2006 5,714,737 5,714,737 14,277,239 Koch Industries, Inc. 4.84% due 04/03/2006 14,277,239 14,277,239 -------------- --------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS 40,391,975 40,391,975 -------------- --------------- TOTAL INVESTMENTS (99.94%) $1,639,651,040 3,254,385,659 ============== CASH AND OTHER ASSETS LESS LIABILITIES (0.06%) 1,851,614 --------------- NET ASSETS (EQUIVALENT TO $61.54 PER SHARE BASED ON 52,909,173 SHARES OUTSTANDING) $ 3,256,237,273 ===============
--------------- % Represents percentage of net assets @ See Note 7 regarding restricted and fair valued securities. # See Note 9 regarding "affiliated investments." * Non-income producing securities See Notes to Financial Statements. 4 BARON ASSET FUND ------------------------------------------------------------------------------- TOP 10 HOLDINGS (AS A PERCENTAGE OF NET ASSETS) AS OF MARCH 31, 2006 -------------------------------------------------------- % OF NET BARON ASSET FUND ASSETS -------------------------------------------------------- ChoicePoint, Inc. 6.1% Kerzner Intl., Ltd. 5.7% Wynn Resorts, Ltd. 5.3% Charles Schwab Corp. 4.9% Vail Resorts, Inc. 3.5% Chicago Mercantile Exchange Holdings, Inc., Cl A 3.5% XTO Energy, Inc. 3.2% Alexander's, Inc. 2.8% C.H. Robinson Worldwide, Inc. 2.3% Manor Care, Inc. 2.1% ----- 39.4% ===== TOP TEN INDUSTRY GROUPS AS OF MARCH 31, 2006 (AS A PERCENTAGE OF NET ASSETS) [GRAPHIC] Cash and Cash Equivalents 1.3% Recreation and Resorts 15.6% Business Services 11.2% Financial Services - Brokerage and Exchanges 8.9% Energy Services 6.8% Financial Services - Insurance 5.1% Healthcare Services 4.9% Financial Services - Asset Management 4.2% Real Estate - REITs 3.8% Transportation 3.6% Education 3.5% Other 31.1% See Notes to Financial Statements. 5 BARON GROWTH FUND -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value ----------------------------------------------------------------------------------------------- COMMON STOCKS (91.77%) ----------------------------------------------------------------------------------------------- ADVERTISING SERVICES (0.56%) 100,000 Getty Images, Inc.* $ 1,681,600 $ 7,488,000 900,000 Harte-Hanks, Inc. 20,139,003 24,615,000 ------------- ------------- 21,820,603 32,103,000 APPAREL (1.78%) 1,450,000 Carter's, Inc.*# 39,178,712 97,860,500 100,000 Under Armour, Inc., Cl A* 1,935,659 3,240,000 ------------- ------------- 41,114,371 101,100,500 BUSINESS SERVICES (3.04%) 600,000 Brown & Brown, Inc. 9,830,329 19,920,000 1,592,000 ChoicePoint, Inc.* 35,519,748 71,242,000 1,325,000 CoPart, Inc.* 31,401,691 36,371,250 875,000 Gevity HR, Inc. 16,082,447 21,402,500 750,000 Macquarie Infrastructure Company Trust 25,421,833 24,375,000 ------------- ------------- 118,256,048 173,310,750 CHEMICAL (1.01%) 700,000 Senomyx, Inc.* 6,340,864 11,522,000 1,650,000 Symyx Technologies, Inc.* 26,885,343 45,771,000 ------------- ------------- 33,226,207 57,293,000 COMMUNICATIONS (2.00%) 1,100,000 Equinix, Inc.* 36,191,006 70,642,000 1,850,000 SBA Communications Corp., Cl A* 7,166,474 43,308,500 ------------- ------------- 43,357,480 113,950,500 CONSULTING (0.87%) 1,275,000 Hewitt Associates, Inc.* 31,214,731 37,918,500 600,000 LECG Corp.* 12,477,679 11,562,000 ------------- ------------- 43,692,410 49,480,500 CONSUMER SERVICES (0.13%) 200,000 Church & Dwight Co., Inc. 7,458,150 7,384,000 CONSUMER SERVICES (1.82%) 850,000 Chemed Corp. 31,341,103 50,439,000 1,183,000 Morningstar, Inc.* 25,529,492 52,962,910 ------------- ------------- 56,870,595 103,401,910 DISTRIBUTION (1.71%) 400,000 Beacon Roofing Supply, Inc.* 14,661,808 16,256,000 682,292 SCP Pool Corp. 25,746,119 32,006,318 692,000 Watsco, Inc. 46,356,186 49,166,600 ------------- ------------- 86,764,113 97,428,918 EDUCATION (5.17%) 3,700,000 DeVry, Inc.*# 62,024,338 84,249,000 2,500,000 Education Mgmt. Corp.* 58,705,529 104,000,000 700,000 Strayer Education, Inc. 57,859,739 71,582,000 1,150,000 Universal Technical Institute, Inc.* 31,350,206 34,615,000 ------------- ------------- 209,939,812 294,446,000 ENERGY SERVICES (6.45%) 1,000,000 Carbo Ceramics, Inc. 60,612,847 56,910,000 325,000 Core Laboratories N.V.* 15,061,203 15,453,750 3,700,000 Encore Acquisition Co.*# 64,684,811 114,700,000 750,000 EXCO Resources, Inc.* 9,812,500 9,397,500 1,100,000 FMC Technologies, Inc.* 25,188,996 56,342,000 300,000 Foundation Coal Holdings, Inc. 11,010,993 12,342,000 1,250,000 International Coal Group, Inc.* 12,883,418 12,175,000 25,000 Petrohawk Energy Corp.* 333,985 342,500 400,000 PHI, Inc.* (formerly Petroleum Helicopters, Inc.) 10,077,790 14,688,000 487,500 Range Resources Corp. 8,333,342 13,313,625 440,000 SEACOR Holdings, Inc.* 17,768,097 34,848,000 650,000 Whiting Petroleum Corp.* 22,550,925 26,643,500 ------------- ------------- 258,318,907 367,155,875 FINANCIAL SERVICES - ASSET MANAGEMENT (1.43%) 1,600,000 Cohen & Steers, Inc. $ 24,788,860 $ 39,200,000 650,000 Eaton Vance Corp. 11,290,146 17,797,000 260,000 GAMCO Investors, Inc., Cl A 3,811,537 10,387,000 290,000 Nuveen Investments, Inc., Cl A 7,748,686 13,963,500 ------------- ------------- 47,639,229 81,347,500 FINANCIAL SERVICES - BANKING (3.72%) 625,000 Cathay General Bancorp 22,783,925 23,525,000 850,000 Center Financial Corp.# 18,904,650 20,595,500 800,000 Central Pacific Financial Corp. 28,316,418 29,376,000 1,300,000 First Republic Bank 40,949,131 49,166,000 4,000,000 UCBH Holdings, Inc. 80,006,240 75,680,000 361,100 Western Alliance Bancorporation* 12,247,055 13,414,865 ------------- ------------- 203,207,419 211,757,365 FINANCIAL SERVICES - BROKERAGE & EXCHANGES (3.88%) 8,000 IntercontinentalExchange, Inc.* 208,000 552,400 1,750,000 International Securities Exchange, Inc., Cl A* 49,915,686 72,887,500 2,400,000 Jefferies Group, Inc. 73,517,475 140,400,000 325,000 Thomas Weisel Partners Group, Inc.* 5,352,129 7,117,500 ------------- ------------- 128,993,290 220,957,400 FINANCIAL SERVICES - INSURANCE (1.67%) 1,650,000 Arch Capital Group, Ltd.* 51,045,431 95,271,000 FINANCIAL SERVICES - MISCELLANEOUS (3.09%) 1,000,000 CheckFree Corp.* 18,042,917 50,500,000 2,000,000 First Marblehead Corp. 60,778,895 86,500,000 693,900 National Financial Partners Corp. 39,141,887 39,219,228 ------------- ------------- 117,963,699 176,219,228 FOOD AND AGRICULTURE (0.94%) 1,400,000 Ralcorp Hldgs., Inc.* 53,671,573 53,270,000 GAMING SERVICES (1.84%) 1,300,000 Scientific Games Corp., Cl A* 32,010,748 45,669,000 1,650,000 Shuffle Master, Inc.* 45,610,427 58,971,000 ------------- ------------- 77,621,175 104,640,000 GOVERNMENT SERVICES (0.60%) 622,100 Anteon Intl. Corp.* 17,539,117 33,941,776 HEALTHCARE FACILITIES (3.70%) 2,000,000 Community Health Systems, Inc.* 49,858,102 72,300,000 1,800,000 Manor Care, Inc. 33,815,991 79,830,000 1,650,000 United Surgical Partners Intl., Inc.* 23,181,527 58,426,500 ------------- ------------- 106,855,620 210,556,500 HEALTHCARE PRODUCTS (1.75%) 1,950,000 Depomed, Inc.* 11,124,661 12,733,500 2,000,000 Edwards Lifesciences Corp.* 59,602,586 87,000,000 ------------- ------------- 70,727,247 99,733,500 HEALTHCARE SERVICES (3.47%) 1,703,200 Charles River Laboratories Intl., Inc.* 52,306,788 83,490,864 800,000 Gen-Probe, Inc.* 33,725,299 44,096,000 160,000 IDEXX Laboratories, Inc.* 9,006,923 13,817,600 117,500 NightHawk Radiology Holdings, Inc.* 2,322,995 2,807,075 1,525,000 Odyssey HealthCare, Inc.* 17,605,293 26,245,250 1,100,000 PRA International* 25,870,873 27,269,000 ------------- ------------- 140,838,171 197,725,789 HEALTHCARE SERVICES - INSURANCE (3.61%) 3,800,000 AMERIGROUP Corp.*# 70,530,101 79,952,000 3,000,000 Centene Corp.*# 27,176,333 87,510,000 841,300 WellCare Health Plans, Inc.* 35,233,013 38,228,672 ------------- ------------- 132,939,447 205,690,672
See Notes to Financial Statements. 6 BARON GROWTH FUND ------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) ------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value -------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) -------------------------------------------------------------------------------------- HOTELS AND LODGING (2.41%) 1,000,000 Choice Hotels Intl., Inc. $ 5,706,996 $ 45,780,000 1,800,000 Four Seasons Hotels, Inc. 71,435,019 91,260,000 -------------- -------------- 77,142,015 137,040,000 MEDIA (0.74%) 480,000 Central European Media Enterprises Ltd.* 22,193,721 32,932,800 1,000,000 LIN TV Corp., Cl A* 20,939,430 9,000,000 13,826 Radio One, Inc., Cl A* 107,943 103,418 -------------- -------------- 43,241,094 42,036,218 MEDICAL EQUIPMENT (0.57%) 275,000 Intuitive Surgical, Inc.* 4,029,661 32,450,000 PRINTING AND PUBLISHING (0.21%) 550,000 ProQuest Co.* 15,078,662 11,764,500 REAL ESTATE (3.33%) 1,650,000 CB Richard Ellis Group, Inc., Cl A* 35,102,587 133,155,000 666,667 CBRE Realty Finance, Inc. 144A@ 10,000,005 10,000,005 899,600 CoStar Group, Inc.* 38,457,938 46,680,244 -------------- -------------- 83,560,530 189,835,249 REAL ESTATE - HOME BUILDING (0.89%) 300,000 Brookfield Homes Corp. 9,063,401 15,558,000 675,000 Hovnanian Enterprises, Inc., Cl A* 16,134,933 29,652,750 100,000 Meritage Homes Corp.* 5,927,275 5,496,000 -------------- -------------- 31,125,609 50,706,750 REAL ESTATE - REITS (0.90%) 75,000 Alexander's, Inc.* 5,683,588 21,675,000 2,429,800 Spirit Finance Corp. 28,350,595 29,643,560 -------------- -------------- 34,034,183 51,318,560 RECREATION AND RESORTS (10.79%) 1,800,000 Ameristar Casinos, Inc. 35,538,626 46,422,000 200,000 Boyd Gaming Corp. 5,345,491 9,988,000 1,500,000 Fontainebleau Resorts, LLC@ 15,000,000 15,000,000 500,000 Gaylord Entertainment Co.* 14,449,466 22,690,000 1,425,000 Isle of Capri Casinos, Inc.* 29,990,333 47,424,000 1,800,000 Kerzner Intl., Ltd.* 49,095,087 140,076,000 425,000 Life Time Fitness, Inc.* 14,694,761 19,911,250 575,000 Penn National Gaming, Inc.* 16,140,523 24,253,500 1,250,000 Six Flags, Inc.* 13,167,500 12,725,000 1,700,000 Station Casinos, Inc. 39,029,399 134,929,000 1,250,000 Vail Resorts, Inc.* 21,897,070 47,775,000 700,000 Wynn Resorts, Ltd. * 9,057,289 53,795,000 537,677 Wynn Resorts, Ltd. *@ 11,063,956 39,254,454 -------------- -------------- 274,469,501 614,243,204 RESTAURANTS (5.10%) 950,000 California Pizza Kitchen, Inc.* 24,386,635 30,827,500 91,193 Chipotle Mexican Grill, Inc.* 3,795,605 5,051,180 525,000 Panera Bread Co., Cl A* 16,333,742 39,469,500 650,000 Peet's Coffee & Tea, Inc.* 13,755,125 19,500,000 1,300,000 P.F. Chang's China Bistro, Inc.* 61,532,458 64,077,000 800,000 Red Robin Gourmet Burgers, Inc.* 45,540,090 37,760,000 2,500,000 The Cheesecake Factory, Inc.* 54,474,009 93,625,000 -------------- -------------- 219,817,664 290,310,180 RETAIL - SPECIALTY STORES (8.42%) 875,000 Blue Nile, Inc.*# 26,058,719 30,791,250 1,200,000 Cabela's, Inc., Cl A* 26,601,533 24,624,000 1,650,000 CarMax, Inc.* 34,948,928 53,922,000 2,500,000 Dick's Sporting Goods, Inc.* 86,074,246 99,175,000 1,350,000 DSW, Inc., Cl A* 33,112,042 42,282,000 935,000 Guitar Center, Inc.* 53,937,552 44,599,500 1,200,000 PETCO Animal Supplies, Inc.* 24,210,542 28,284,000 1,800,000 Select Comfort Corp.*# 38,016,795 71,190,000 625,000 Tractor Supply Co.* 24,758,679 41,462,500 1,000,000 United Auto Group, Inc. 38,250,866 43,000,000 -------------- -------------- 385,969,902 479,330,250 SOFTWARE (0.61%) 925,000 Kronos, Inc.* $ 24,581,949 $ 34,585,750 TRANSPORTATION (2.16%) 237,400 American Railcar Industries, Inc. 5,263,167 8,325,618 1,863,750 Genesee & Wyoming, Inc., Cl A* 28,652,530 57,179,850 550,000 Landstar System, Inc.* 13,610,267 24,266,000 1,050,000 UTI Worldwide, Inc. 24,275,698 33,180,000 -------------- -------------- 71,801,662 122,951,468 UTILITY SERVICES (1.40%) 1,500,000 ITC Holdings Corp. 40,425,620 39,375,000 1,627,498 Southern Union Co.* 19,474,278 40,410,775 -------------- -------------- 59,899,898 79,785,775 -------------- -------------- TOTAL COMMON STOCKS 3,394,612,444 5,224,523,587 -------------- -------------- -------------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (0.13%) -------------------------------------------------------------------------------------- PHARMACEUTICAL 750,000 Reliant Pharmaceuticals LLC Series D*@ 15,000,000 7,500,000 -------------- -------------- Principal Amount -------------------------------------------------------------------------------------- CORPORATE BONDS (1.52%) -------------------------------------------------------------------------------------- RECREATION AND RESORTS $26,000,000 Wynn Resorts 6.00% Sub. Conv. Deb. due 07/15/2015 25,461,601 86,580,000 -------------- -------------- -------------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (7.05%) -------------------------------------------------------------------------------------- 27,022,163 ANZ National Ltd. 4.71% due 04/12/2006 27,022,163 27,022,163 82,049,999 Chesham Finance Ltd. 4.84% due 04/03/2006 82,049,999 82,049,999 44,827,450 Compass Securitization Ltd. 4.78% due 04/25/2006 44,827,450 44,827,450 49,814,924 Dexia Delaware LLC 4.61% due 04/05/2006 49,814,924 49,814,924 13,170,219 General Electric Capital Corp. 4.68% due 04/17/2006 13,170,219 13,170,219 49,808,750 Norddeutsche Landesbank Luxembourg S.A. 4.61% due 04/05/2006 49,808,750 49,808,750 24,894,125 PB Finance, Inc. 4.64% due 04/05/2006 24,894,125 24,894,125 39,224,560 PB Finance, Inc. 4.60% due 04/05/2006 39,224,560 39,224,560 23,900,587 Prudential Financial Services 4.68% due 04/17/2006 23,900,587 23,900,587 34,967,674 SanPaolo IMI U.S. Financial Co. 4.75% due 04/03/2006 34,967,674 34,967,674 11,603,821 SanPaolo IMI U.S. Financial Co. 4.79% due 04/03/2006 11,603,821 11,603,821 -------------- -------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS 401,284,272 401,284,272 -------------- -------------- TOTAL INVESTMENTS (100.47%) $3,836,358,317 5,719,887,859 ============== LIABILITIES LESS CASH AND OTHER ASSETS (-0.47%) (26,826,665) -------------- NET ASSETS (EQUIVALENT TO $50.50 PER SHARE BASED ON 112,740,719 SHARES OUTSTANDING) $5,693,061,194 ==============
--------------- % Represents percentage of net assets @ See Note 7 regarding restricted and fair valued securities. # See Note 9 regarding "affiliated investments." * Non-income producing securities See Notes to Financial Statements. 7 BARON GROWTH FUND ------------------------------------------------------------------------------- TOP 10 HOLDINGS (AS A PERCENTAGE OF NET ASSETS) AS OF MARCH 31, 2006 -------------------------------------------------------------------------------- % OF NET BARON GROWTH FUND ASSETS -------------------------------------------------------------------------------- Wynn Resorts, Ltd. 3.2% Jefferies Group, Inc. 2.5% Kerzner Intl., Ltd. 2.5% Station Casinos, Inc. 2.4% CB Richard Ellis Group, Inc., Cl A 2.3% Encore Acquisition Co. 2.0% Education Mgmt. Corp. 1.8% Dick's Sporting Goods, Inc. 1.7% Carter's, Inc. 1.7% Arch Capital Group, Ltd. 1.7% ----- 21.8% ===== TOP TEN INDUSTRY GROUPS AS OF MARCH 31, 2006 (AS A PERCENTAGE OF NET ASSETS) [GRAPHIC] Cash and Cash Equivalents 6.6% Recreation and Resorts 12.3% Retail - Specialty Stores 8.4% Energy Services 6.5% Education 5.2% Restaurants 5.1% Financial Services - Brokerages and Exchanges 3.9% Financial Services - Banking 3.7% Healthcare Facilities 3.7% Healthcare Services - Insurance 3.6% Healthcare Services 3.5% Other 37.5% See Notes to Financial Statements. 8 BARON SMALL CAP FUND -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value ----------------------------------------------------------------------------------------- COMMON STOCKS (94.46%) ----------------------------------------------------------------------------------------- ADVERTISING SERVICES (1.26%) 725,000 R.H. Donnelley Corp.* $ 26,979,391 $ 42,216,750 APPAREL (1.62%) 650,000 Carter's, Inc.* 21,552,173 43,868,500 410,747 Crocs, Inc.* 9,558,091 10,330,287 ------------ ------------ 31,110,264 54,198,787 BUILDING MATERIALS (4.75%) 2,500,000 Eagle Materials, Inc., Cl B# 49,689,510 159,475,000 BUSINESS SERVICES (3.81%) 725,000 ChoicePoint, Inc.* 6,949,762 32,443,750 350,000 DealerTrack Holdings, Inc.* 6,578,325 7,458,500 400,000 DX Services plc^ 2,453,478 2,310,600 1,650,000 First Advantage Corp., Cl A* 34,451,876 39,897,000 504,984 Infocrossing, Inc.* 3,964,807 6,085,057 975,000 Iron Mountain, Inc.* 10,010,523 39,721,500 ------------ ------------ 64,408,771 127,916,407 COMMUNICATIONS (6.54%) 3,000,000 American Tower Corp., Cl A* 15,401,672 90,960,000 2,000,000 SBA Communications Corp., Cl A* 10,934,507 46,820,000 750,000 Time Warner Telecom, Inc., Cl A* 11,657,460 13,462,500 4,650,000 UbiquiTel, Inc.* 21,656,195 46,965,000 750,000 USA Mobility, Inc. 16,280,379 21,360,000 ------------ ------------ 75,930,213 219,567,500 CONSULTING (2.92%) 275,000 Corporate Executive Board Co. 4,596,432 27,747,500 1,650,000 LECG Corp.*# 32,939,131 31,795,500 1,800,000 Navigant Consulting, Inc.* 31,385,220 38,430,000 ----------- ------------ 68,920,783 97,973,000 CONSUMER PRODUCTS (2.27%) 2,000,000 Acco Brands Corp.* 48,493,311 44,400,000 1,625,000 DTS, Inc.*# 34,251,425 31,947,500 ------------ ------------ 82,744,736 76,347,500 DISTRIBUTION (1.73%) 750,000 Beacon Roofing Supply, Inc.* 29,259,678 30,480,000 590,319 SCP Pool Corp. 22,344,850 27,691,864 ------------ ------------ 51,604,528 58,171,864 EDUCATION (3.27%) 500,000 Apollo Group, Inc., Cl A* 4,269,664 26,255,000 444,000 Strayer Education, Inc. 37,452,157 45,403,440 1,267,700 Universal Technical Institute, Inc.* 37,885,631 38,157,770 ------------ ------------ 79,607,452 109,816,210 ENERGY SERVICES (3.15%) 2,080,000 Covanta Holding Corp. 31,716,533 34,673,600 1,850,000 International Coal Group, Inc.* 19,357,068 18,019,000 560,000 PHI, Inc.* (formerly Petroleum Helicopters, Inc.) 14,202,258 20,563,200 850,000 SunPower Corp., Cl A* 23,909,406 32,436,000 ------------ ------------ 89,185,265 105,691,800 FINANCIAL SERVICES - ASSET MANAGEMENT (0.30%) 250,000 GAMCO Investors, Inc., Cl A 4,356,166 9,987,500 FINANCIAL SERVICES - BANKING (0.31%) 1,500,000 Cash Systems, Inc.*# 10,062,346 10,425,000 FINANCIAL SERVICES - INSURANCE (0.67%) 200,000 Arch Capital Group, Ltd.* 5,515,966 11,548,000 625,000 SeaBright Insurance Holdings, Inc.* 10,101,260 10,887,500 ------------ ------------ 15,617,226 22,435,500 FINANCIAL SERVICES - MISCELLANEOUS (0.67%) 1,000,000 KKR Financial Corp. $ 24,543,895 $ 22,430,000 GOVERNMENT SERVICES (5.00%) 318,200 Anteon Intl. Corp.* 6,489,721 17,360,992 2,850,000 FLIR Systems, Inc.* 64,339,753 80,968,500 345,000 Identix, Inc.* 2,839,232 2,746,200 1,053,002 Mantech Intl. Corp., Cl A* 19,630,579 34,980,727 1,820,400 Viisage Technology, Inc.*# 32,449,850 31,875,204 ------------ ------------ 125,749,135 167,931,623 HEALTHCARE FACILITIES (4.48%) 1,353,700 American Retirement Corp.* 15,157,651 34,681,794 1,400,000 Brookdale Senior Living, Inc. 34,154,494 52,850,000 1,775,000 United Surgical Partners Intl., Inc.* 20,503,596 62,852,750 ------------ ------------ 69,815,741 150,384,544 HEALTHCARE SERVICES (1.53%) 475,000 Gen-Probe, Inc.* 21,507,724 26,182,000 150,000 NightHawk Radiology Holdings, Inc.* 2,919,761 3,583,500 875,000 PRA International* 20,587,790 21,691,250 ------------ ------------ 45,015,275 51,456,750 INDUSTRIAL SERVICES (1.03%) 1,000,000 United Rentals, Inc.* 29,677,855 34,500,000 LEISURE (1.55%) 1,550,000 MarineMax, Inc.*# 41,125,552 51,956,000 MACHINERY & ELECTRONICS (1.74%) 1,000,000 Flowserve Corp.* 31,808,128 58,340,000 MANUFACTURING (6.83%) 1,200,000 Actuant Corp., Cl A 47,335,363 73,464,000 500,000 HEICO Corp., Cl A 13,525,781 13,615,000 1,950,000 Hexcel Corp.* 38,731,755 42,841,500 1,191,435 Intermagnetics General Corp.* 23,134,050 29,845,447 1,095,000 Koppers Holdings, Inc.# 16,009,505 21,516,750 1,000,000 Measurement Specialties, Inc.*# 23,936,260 26,150,000 850,000 TransDigm Group, Inc.* 19,313,503 21,887,500 ------------ ------------ 181,986,217 229,320,197 MEDIA (1.57%) 1,250,000 CKX, Inc.* 14,102,674 16,337,500 1,350,000 Gray Television, Inc. 10,304,445 11,340,000 2,400,000 Radio One, Inc., Cl D* 27,663,129 17,904,000 380,000 Regal Entertainment Group, Cl A 4,528,833 7,147,800 ------------ ------------ 56,599,081 52,729,300 MEDICAL EQUIPMENT (4.27%) 2,200,000 Immucor, Inc.* 17,293,611 63,118,000 425,000 Intuitive Surgical, Inc.* 6,162,500 50,150,000 1,050,000 Kensey Nash Corp.*# 31,206,136 30,030,000 ------------ ------------ 54,662,247 143,298,000 PRINTING AND PUBLISHING (1.05%) 1,500,000 Interactive Data Corp. 22,596,629 35,250,000 REAL ESTATE (2.40%) 1,000,000 CB Richard Ellis Group, Inc., Cl A* 29,930,480 80,700,000 REAL ESTATE - HOME BUILDING (3.10%) 1,000,000 Brookfield Homes Corp. 19,500,761 51,860,000 6,000,000 Countrywide plc^ 35,065,455 52,197,000 ------------ ------------ 54,566,216 104,057,000 REAL ESTATE - REITS (1.16%) 3,200,000 Spirit Finance Corp. 37,953,168 39,040,000
See Notes to Financial Statements. 9 BARON SMALL CAP FUND ------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) ------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value --------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) --------------------------------------------------------------------------------------------- RECREATION AND RESORTS (8.58%) 1,400,000 Gaylord Entertainment Co.* $ 43,928,824 $ 63,532,000 2,430,000 Great Canadian Gaming Corp.*^ 34,433,834 26,010,477 2,688,829 Great Wolf Resorts, Inc.*# 51,449,754 31,163,528 550,000 Kerzner Intl., Ltd.* 13,662,714 42,801,000 1,401,700 Penn National Gaming, Inc.* 40,093,264 59,123,706 850,000 Wynn Resorts, Ltd.* 12,016,631 65,322,500 ------------- ------------- 195,585,021 287,953,211 RESTAURANTS (5.97%) 2,250,000 AFC Enterprises, Inc.# 36,931,249 31,275,000 300,000 Morton's Restaurant Group, Inc.* 5,298,400 5,214,000 350,000 Panera Bread Co., Cl A* 9,869,197 26,313,000 990,000 P.F. Chang's China Bistro, Inc.* 50,496,634 48,797,100 3,000,000 Texas Roadhouse, Inc., Cl A* 38,035,045 51,270,000 1,000,000 The Cheesecake Factory, Inc.* 21,235,694 37,450,000 ------------- ------------- 161,866,219 200,319,100 RETAIL - CONSUMER STAPLES (1.18%) 1,250,000 NuCO2, Inc.*# 30,876,487 39,675,000 RETAIL - SPECIALTY STORES (7.48%) 700,000 99 Cents Only Stores* 8,091,122 9,492,000 1,157,503 Casual Male Retail Group, Inc.*# 5,361,112 11,274,079 675,000 Design Within Reach, Inc.* 9,586,917 3,840,750 1,500,000 DSW, Inc., Cl A* 36,083,956 46,980,000 1,350,000 Fossil, Inc.* 27,933,660 25,083,000 550,000 Guitar Center, Inc* 26,861,244 26,235,000 2,800,000 Quiksilver, Inc.* 22,061,546 38,808,000 700,000 Tractor Supply Co.* 24,635,320 46,438,000 1,000,000 United Auto Group, Inc. 38,475,185 43,000,000 ------------- ------------- 199,090,062 251,150,829 TRANSPORTATION (2.27%) 400,000 American Commercial Lines, Inc.* 10,772,593 18,880,000 600,000 Grupo Aeroportuario Del Sureste SA de CV 17,867,166 20,028,000 1,400,000 JetBlue Airways Corp.* 17,977,169 15,008,000 2,400,000 WestJet Airlines, Ltd.*^ 21,305,466 22,277,760 ------------- ------------- 67,922,394 76,193,760 ------------- ------------- TOTAL COMMON STOCKS 2,111,586,453 3,170,908,132 ------------- -------------
Shares Cost Value ----------------------------------------------------------------------------------------- WARRANTS (0.23%) ----------------------------------------------------------------------------------------- BUSINESS SERVICES (0.03%) 222,575 Infocrossing, Inc. Warrants Exp 10/16/2008*@ $ 31,783 $ 932,589 RETAIL - SPECIALTY STORES (0.20%) 1,407,353 Casual Male Retail Group, Inc. Warrants Exp 04/26/2007*@# 2,117,151 6,202,368 100,000 Casual Male Retail Group, Inc. Warrants Exp 07/02/2010*@# 49,000 498,000 -------------- -------------- 2,166,151 6,700,368 -------------- -------------- TOTAL WARRANTS 2,197,934 7,632,957 -------------- -------------- Principal Amount ----------------------------------------------------------------------------------------- CORPORATE BONDS (0.19%) ----------------------------------------------------------------------------------------- PRINTING AND PUBLISHING $ 7,000,000 Penton Media, Inc. 10.375% Sr. Sub. NT due 06/15/2011 5,046,042 6,352,500 -------------- -------------- ----------------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (4.46%) ----------------------------------------------------------------------------------------- 29,999,999 AIG Funding, Inc. 4.81% due 04/03/2006 29,999,999 29,999,999 32,127,278 Citigroup Funding, Inc. 4.75% due 04/03/2006 32,127,278 32,127,278 7,856,830 Nationwide Building Society 4.84% due 04/03/2006 7,856,830 7,856,830 39,978,711 SanPaolo IMI U.S. Financial Co. 4.79% due 04/03/2006 39,978,711 39,978,711 39,963,056 SanPaolo IMI U.S. Financial Co. 4.75% due 04/03/2006 39,963,056 39,963,056 -------------- -------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS 149,925,874 149,925,874 -------------- -------------- TOTAL INVESTMENTS (99.34%) $2,268,756,303 3,334,819,463 ============== CASH AND OTHER ASSETS LESS LIABILITIES (0.66%) 22,023,295 -------------- NET ASSETS (EQUIVALENT TO $25.79 PER SHARE BASED ON 130,162,665 SHARES OUTSTANDING) $3,356,842,758 ==============
--------------- % Represents percentage of net assets @ See Note 7 regarding restricted and fair valued securities. # See Note 9 regarding "affiliated investments." ^ Foreign domiciled corporation * Non-income producing securities See Notes to Financial Statements. 10 BARON SMALL CAP FUND ------------------------------------------------------------------------------- TOP 10 HOLDINGS (AS A PERCENTAGE OF NET ASSETS) AS OF MARCH 31, 2006 ------------------------------------------------------------------------------- % OF NET BARON SMALL CAP FUND ASSETS -------------------------------------------------------------------------------- Eagle Materials, Inc., Cl B 4.7% American Tower Corp., Cl A 2.7% FLIR Systems, Inc. 2.4% CB Richard Ellis Group, Inc., Cl A 2.4% Actuant Corp., Cl A 2.2% Wynn Resorts, Ltd. 1.9% Gaylord Entertainment Co. 1.9% Immucor, Inc. 1.9% United Surgical Partners Intl., Inc. 1.9% Penn National Gaming, Inc. 1.8% ----- 23.8% ===== TOP TEN INDUSTRY GROUPS AS OF MARCH 31, 2006 (AS A PERCENTAGE OF NET ASSETS) [GRAPHIC] Cash and Cash Equivalents 5.1% Recreation and Resorts 8.6% Retail - Specialty Stores 7.7% Manufacturing 6.8% Communications 6.5% Restaurants 6.0% Government Services 5.0% Building Materials 4.8% Healthcare Facilities 4.5% Medical Equipment 4.3% Business Services 3.8% Other 36.9% See Notes to Financial Statements. 11 BARON iOPPORTUNITY FUND ------------------------------------------------------------------------------- STATEMENT OF NET ASSETS ------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value ---------------------------------------------------------------------------------- COMMON STOCKS (79.81%) ---------------------------------------------------------------------------------- ADVERTISING SERVICES (7.56%) 75,000 aQuantive, Inc.* $ 1,481,955 $ 1,765,500 105,000 Digitas, Inc.* 901,114 1,512,000 60,000 Getty Images, Inc.* 1,435,634 4,492,800 12,500 Google, Inc., Cl A* 1,782,468 4,875,000 ------------ ------------ 5,601,171 12,645,300 BUSINESS SERVICES (5.71%) 75,000 Ariba, Inc.* 460,432 733,500 50,000 ChoicePoint, Inc.* 1,469,626 2,237,500 110,000 DealerTrack Holdings, Inc.* 2,007,302 2,344,100 85,000 Monster Worldwide, Inc.* 781,497 4,238,100 ------------ ------------ 4,718,857 9,553,200 COMMUNICATIONS (20.21%) 100,000 American Tower Corp., Cl A* 272,000 3,032,000 125,000 Equinix, Inc.* 4,069,281 8,027,500 50,000 NeuStar, Inc., Cl A* 1,537,781 1,550,000 50,000 Research in Motion, Ltd.* 4,232,269 4,244,000 65,000 SBA Communications Corp., Cl A* 217,399 1,521,650 145,000 Sprint Nextel Corp. 3,628,348 3,746,800 600,000 Terremark Worldwide, Inc.* 3,526,311 5,100,000 100,000 Time Warner Telecom, Inc., Cl A* 1,719,382 1,795,000 250,000 UbiquiTel, Inc.* 1,504,139 2,525,000 75,000 VeriFone Holdings, Inc.* 1,624,150 2,271,750 ------------ ------------ 22,331,060 33,813,700 COMMUNICATIONS EQUIPMENT (1.81%) 60,000 QUALCOMM, Inc. 2,178,989 3,036,600 COMPUTER TECHNOLOGY (3.37%) 90,000 Apple Computer, Inc.* 5,425,199 5,644,800 CONSUMER SERVICES (6.17%) 110,000 eBay, Inc.* 2,437,697 4,296,600 75,000 IAC/InterActiveCorp 2,051,080 2,210,250 75,000 priceline.com, Inc.* 1,567,179 1,863,000 100,000 Travelzoo, Inc.* 1,895,738 1,958,000 ------------ ------------ 7,951,694 10,327,850 EDUCATION (0.78%) 25,000 Apollo Group, Inc., Cl A* 541,469 1,312,750 ENTERPRISE HARDWARE (5.98%) 150,000 Dell, Inc.* 4,260,994 4,464,000 150,000 Intel Corp. 3,604,989 2,902,500 50,000 Rackable Systems, Inc.* 1,323,641 2,642,500 ------------ ------------ 9,189,624 10,009,000 FINANCIAL SERVICES - BROKERAGE & EXCHANGES (11.98%) 350,000 Charles Schwab Corp. 3,888,938 6,023,500 10,000 Chicago Mercantile Exchange Holdings, Inc., Cl A 1,829,806 4,475,000 225,000 E*TRADE Financial Corp.* 1,447,748 6,070,500 60,000 optionsXpress Holdings, Inc. 872,754 1,744,800 125,000 TradeStation Group, Inc.* 1,198,792 1,727,500 ------------ ------------ 9,238,038 20,041,300 FINANCIAL SERVICES - INSURANCE (0.70%) 108,000 Admiral Group plc^ 1,189,310 1,178,302 GAMING SERVICES (1.05%) 50,000 Scientific Games Corp., Cl A* 1,745,240 1,756,500 LEISURE (2.46%) 120,000 Activision, Inc.* $ 1,653,134 $ 1,654,800 45,000 Electronic Arts, Inc.* 2,613,996 2,462,400 ------------- ------------- 4,267,130 4,117,200 MANUFACTURING (0.93%) 150,000 Flextronics Intl., Ltd.* 1,283,561 1,552,500 MEDIA (5.62%) 30,000 Central European Media Enterprises. Ltd.* 2,110,846 2,058,300 113,800 Comcast Corp., Cl A* 2,725,780 2,972,456 101,500 Time Warner, Inc. 1,480,641 1,704,185 83,000 Yahoo! Inc.* 1,163,652 2,677,580 ------------- ------------- 7,480,919 9,412,521 REAL ESTATE (2.97%) 32,500 CoStar Group, Inc.* 826,703 1,686,425 500,000 homestore, Inc.* 847,375 3,280,000 ------------- ------------- 1,674,078 4,966,425 RETAIL - SPECIALTY STORES (2.51%) 75,000 Best Buy Co., Inc. 3,425,600 4,194,750 ------------- ------------- TOTAL COMMON STOCKS 88,241,939 133,562,698 ------------- ------------- --------------------------------------------------------------------------------------- WARRANTS (0.00%) --------------------------------------------------------------------------------------- MEDIA 200,000 Loudeye Corp. Warrants Exp 12/23/2010*@ 0 0 ------------- ------------- Principal Amount --------------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (24.80%) --------------------------------------------------------------------------------------- $ 29,999,999 AIG Funding, Inc. 4.81% due 04/03/2006 29,999,999 29,999,999 7,999,999 Chesham Finance Ltd. 4.84% due 04/03/2006 7,999,999 7,999,999 3,498,614 Citigroup Funding, Inc. 4.75% due 04/03/2006 3,498,614 3,498,614 ------------- ------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS 41,498,612 41,498,612 ------------- ------------- TOTAL INVESTMENTS (104.61%) $ 129,740,551 175,061,310 ============= LIABILITIES LESS CASH AND OTHER ASSETS (-4.61%) (7,715,092) ------------- NET ASSETS (EQUIVALENT TO $10.44 PER SHARE BASED ON 16,023,754 SHARES OUTSTANDING) $ 167,346,218 =============
--------------- % Represents percentage of net assets * Non-income producing securities @ See Note 7 regarding restricted and fair valued securities ^ Foreign domiciled corporation See Notes to Financial Statements. 12 BARON iOPPORTUNITY FUND -------------------------------------------------------------------------------- TOP 10 HOLDINGS (AS A PERCENTAGE OF NET ASSETS) AS OF MARCH 31, 2006 -------------------------------------------------------------- % OF NET BARON iOPPORTUNITY FUND ASSETS -------------------------------------------------------------- Equinix, Inc. 4.8% E*TRADE Financial Corp. 3.6% Charles Schwab Corp. 3.6% Apple Computer, Inc. 3.4% Terremark Worldwide, Inc. 3.0% Google, Inc., Cl A 2.9% Getty Images, Inc. 2.7% Chicago Mercantile Exchange Holdings, Inc., Cl A 2.7% Dell, Inc. 2.7% eBay, Inc. 2.6% ----- 32.0% ===== TOP TEN INDUSTRY GROUPS AS OF MARCH 31, 2006 (AS A PERCENTAGE OF NET ASSETS) [GRAPHIC] Cash and Cash Equivalents 20.2% Communications 17.1% Financial Services - Brokerage and Exchanges 12.0% Business Services 8.8% Advertising Services 7.5% Consumer Services 6.2% Enterprise Hardware 6.0% Media 5.6% Computer Technology 3.4% Real Estate 3.0% Retail - Specialty Stores 2.5% Other 7.7% See Notes to Financial Statements. 13 BARON FIFTH AVENUE GROWTH FUND ------------------------------------------------------------------------------- STATEMENT OF NET ASSETS ------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
Shares Cost Value --------------------------------------------------------------------------------------- COMMON STOCKS (91.20%) --------------------------------------------------------------------------------------- ADVERTISING SERVICES (1.81%) 15,000 Getty Images, Inc.* $ 1,029,745 $ 1,123,200 4,000 Google, Inc., Cl A* 480,476 1,560,000 -------------- -------------- 1,510,221 2,683,200 BUSINESS SERVICES (3.19%) 65,000 Iron Mountain, Inc.* 2,044,769 2,648,100 50,000 Paychex, Inc. 1,910,879 2,083,000 -------------- -------------- 3,955,648 4,731,100 COMMUNICATIONS (5.05%) 50,000 American Tower Corp., Cl A* 881,483 1,516,000 40,000 Research in Motion, Ltd.* 3,368,657 3,395,200 100,000 Sprint Nextel Corp. 2,517,173 2,584,000 -------------- -------------- 6,767,313 7,495,200 COMMUNICATIONS EQUIPMENT (1.71%) 50,000 QUALCOMM, Inc. 1,999,343 2,530,500 COMPUTER TECHNOLOGY (2.11%) 50,000 Apple Computer, Inc.* 3,060,849 3,136,000 CONSULTING (1.69%) 35,000 Moody's Corp. 1,810,053 2,501,100 CONSUMER PRODUCTS (1.43%) 25,000 Nike, Inc., Cl B 2,109,692 2,127,500 CONSUMER SERVICES (2.21%) 65,000 eBay, Inc.* 2,684,709 2,538,900 25,000 IAC/InterActiveCorp 673,641 736,750 -------------- -------------- 3,358,350 3,275,650 ENERGY SERVICES (3.44%) 20,000 Arch Coal, Inc. 1,406,855 1,518,800 20,000 Kinder Morgan, Inc. 1,361,698 1,839,800 40,000 XTO Energy, Inc. 801,662 1,742,800 -------------- -------------- 3,570,215 5,101,400 FINANCIAL SERVICES - ASSET MANAGEMENT (5.81%) 35,000 AllianceBernstein Holding L.P. (formerly Alliance Capital Management Holding L.P.) 2,165,135 2,318,750 12,000 BlackRock, Inc., Cl A 1,670,063 1,680,000 15,000 Legg Mason, Inc. 1,810,391 1,879,950 35,000 T. Rowe Price Group, Inc. 2,183,728 2,737,350 -------------- -------------- 7,829,317 8,616,050 FINANCIAL SERVICES - BANKING (2.95%) 40,000 Golden West Financial Corp. 2,354,050 2,716,000 20,000 Zions Bancorporation 1,413,275 1,654,600 -------------- -------------- 3,767,325 4,370,600 FINANCIAL SERVICES - BROKERAGE & EXCHANGES (7.26%) 250,000 Charles Schwab Corp. 3,280,746 4,302,500 6,000 Chicago Mercantile Exchange Holdings, Inc., Cl A 1,499,604 2,685,000 140,000 E*TRADE Financial Corp.* 2,343,358 3,777,200 -------------- -------------- 7,123,708 10,764,700 FINANCIAL SERVICES - INSURANCE (2.70%) 8 Berkshire Hathaway, Inc., Cl A* 717,341 722,800 17,500 The Progressive Corp. 1,712,305 1,824,550 25,000 W. R. Berkley Corp. 914,495 1,451,500 -------------- -------------- 3,344,141 3,998,850 FINANCIAL SERVICES - MISCELLANEOUS (1.06%) 30,000 American Express Co. 1,499,955 1,576,500 HEALTHCARE PRODUCTS (2.28%) 50,000 Zimmer Holdings, Inc.* 3,433,431 3,380,000
HEALTHCARE SERVICES (1.70%) 30,000 Laboratory Corp. of America Holdings* $ 1,641,309 $ 1,754,400 15,000 Quest Diagnostics, Inc. 746,735 769,500 -------------- -------------- 2,388,044 2,523,900 HEALTHCARE SERVICES - INSURANCE (2.43%) 30,000 UnitedHealth Group, Inc. 1,050,414 1,675,800 25,000 WellPoint, Inc.* 1,414,500 1,935,750 -------------- -------------- 2,464,914 3,611,550 LEISURE (0.92%) 25,000 Electronic Arts, Inc.* 1,450,630 1,368,000 MEDIA (4.70%) 125,000 News Corp., Cl A 2,002,114 2,076,250 120,000 Walt Disney Co. 3,030,091 3,346,800 48,000 Yahoo! Inc.* 1,418,372 1,548,480 -------------- -------------- 6,450,577 6,971,530 PHARMACEUTICAL (1.06%) 10,000 Amgen, Inc.* 571,981 727,500 10,000 Genentech, Inc.* 584,504 845,100 -------------- -------------- 1,156,485 1,572,600 REAL ESTATE - HOME BUILDING (3.44%) 30,000 Lennar Corp. 1,872,500 1,811,400 95,000 Toll Brothers, Inc.* 3,198,377 3,289,850 -------------- -------------- 5,070,877 5,101,250 REAL ESTATE - REITS (4.23%) 10,000 AvalonBay Communities, Inc. 1,076,693 1,091,000 45,000 Kimco Realty Corp. 1,085,316 1,828,800 35,000 Vornado Realty Trust 2,469,932 3,360,000 -------------- -------------- 4,631,941 6,279,800 RECREATION AND RESORTS (8.71%) 30,000 Carnival Corp. 1,354,524 1,421,100 100,000 Las Vegas Sands Corp.* 4,114,073 5,666,000 45,000 MGM Mirage, Inc.* 1,318,197 1,939,050 40,000 Marriott International, Inc., Cl A 2,521,880 2,744,000 15,000 Wynn Resorts, Ltd.* 1,102,582 1,152,750 -------------- -------------- 10,411,256 12,922,900 RESTAURANTS (1.27%) 50,000 Starbucks Corp.* 1,246,530 1,882,000 RETAIL - CONSUMER STAPLES (10.23%) 35,000 Costco Wholesale Corp. 1,479,385 1,895,600 50,000 CVS Corp. 1,281,840 1,493,500 50,000 Target Corp. 2,444,865 2,600,500 50,000 Wal-Mart Stores, Inc. 2,477,315 2,362,000 35,000 Walgreen Co. 1,374,967 1,509,550 80,000 Whole Foods Market, Inc. 5,101,669 5,315,200 -------------- -------------- 14,160,041 15,176,350 RETAIL - SPECIALTY STORES (7.01%) 80,000 Bed Bath & Beyond, Inc.* 3,028,336 3,072,000 45,000 Best Buy Co., Inc. 1,777,598 2,516,850 60,000 Coach, Inc.* 1,420,744 2,074,800 15,000 Kohl's Corp.* 757,036 795,150 30,000 Lowe's Companies, Inc. 1,735,318 1,933,200 -------------- -------------- 8,719,032 10,392,000
See Notes to Financial Statements. 14 BARON FIFTH AVENUE GROWTH FUND -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) -------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED) Shares Cost Value ------------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) ------------------------------------------------------------------------------ TRANSPORTATION (0.80%) 15,000 United Parcel Service, Inc., Cl B $ 1,141,296 $ 1,190,700 ------------- ------------- TOTAL COMMON STOCKS 114,431,184 135,280,930 ------------- ------------- Principal Amount ------------------------------------------------------------------------------ SHORT TERM MONEY MARKET INSTRUMENTS (7.41%) ------------------------------------------------------------------------------ $ 10,999,999 AIG Funding, Inc. 4.81% due 04/03/2006 10,999,999 10,999,999 ------------- ------------- TOTAL INVESTMENTS (98.61%) $ 125,431,183 146,280,929 ============= CASH AND OTHER ASSETS LESS LIABILITIES (1.39%) 2,057,868 ------------- NET ASSETS (EQUIVALENT TO $12.39 PER SHARE BASED ON 11,976,429 SHARES OUTSTANDING) $ 148,338,797 ============= ---------- % Represents percentage of net assets * Non-income producing securities TOP 10 HOLDINGS (AS A PERCENTAGE OF NET ASSETS) AS OF MARCH 31, 2006 % OF NET BARON FIFTH AVENUE GROWTH FUND ASSETS -------------------------------------------------------------------------------- Las Vegas Sands Corp. 3.8% Whole Foods Market, Inc. 3.6% Charles Schwab Corp. 2.9% E*TRADE Financial Corp. 2.5% Research in Motion, Ltd. 2.3% Zimmer Holdings, Inc. 2.3% Varnado Realty Trust 2.3% Walt Disney Co. 2.3% Toll Brothers, Inc. 2.2% Apple Computer, Inc. 2.1% ----- 26.3% ===== TOP TEN INDUSTRY GROUPS AS OF MARCH 31, 2006 (AS A PERCENTAGE OF NET ASSETS) [GRAPHIC] Cash and Cash Equivalents 8.8% Retail - Consumer Staples 10.2% Recreation and Resorts 8.7% Financial Services - Brokerage & Exchanges 7.3% Retail - Specialty Stores 7.0% Financial Services - Asset Management 5.8% Communications 5.2% Media 4.7% Real Estate - REITs 4.2% Energy Services 3.4% Real Estate - Home Building 3.4% Other 31.3% See Notes to Financial Statements. 15 BARON FUNDS -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES -------------------------------------------------------------------------------- MARCH 31, 2006 (UNAUDITED)
BARON ASSET BARON GROWTH BARON SMALL CAP BARON iOPPORTUNITY BARON FIFTH AVENUE FUND FUND FUND FUND GROWTH FUND ------------ ------------ --------------- ------------------ ------------------ ASSETS: Investments in securities, at value Unaffiliated investments (Cost $1,426,745,102, $3,489,783,858, $1,870,301,835, $129,740,551, and $125,431,183, respectively) $2,662,674,159 $5,133,039,609 $2,819,560,534 $175,061,310 $146,280,929 "Affiliated" investments (Cost $212,905,938, $346,574,459, $398,454,468, $0 and $0, respectively) 591,711,500 586,848,250 515,258,929 0 0 Cash 14,291 272,973 4,832,188 86,188 549,024 Dividends and interest receivable 1,373,210 1,653,412 1,611,596 5,543 41,858 Receivable for securities sold 4,809,420 17,202,986 23,559,909 0 1,332,794 Receivable for shares sold 6,572,817 8,813,049 4,465,983 273,758 1,653,682 Prepaid expenses 45,506 80,100 46,665 2,565 2,204 -------------- -------------- -------------- ------------ ------------ 3,267,200,903 5,747,910,379 3,369,335,804 175,429,364 149,860,491 -------------- -------------- -------------- ------------ ------------ LIABILITIES: Payable for securities purchased 6,327,052 21,530,150 10,421,777 7,732,802 1,130,651 Payable for shares redeemed 4,289,802 32,906,271 1,722,825 257,321 327,273 Accrued expenses and other payables 346,776 412,764 348,444 93,023 63,770 -------------- -------------- -------------- ------------ ------------ 10,963,630 54,849,185 12,493,046 8,083,146 1,521,694 -------------- -------------- -------------- ------------ ------------ NET ASSETS $3,256,237,273 $5,693,061,194 $3,356,842,758 $167,346,218 $148,338,797 ============== ============== ============== ============ ============ NET ASSETS CONSIST OF: Capital paid-in $1,566,921,880 $3,667,504,246 $2,095,991,778 $185,157,707 $129,568,093 Accumulated net investment income (loss) (8,333,025) (15,640,563) (9,834,244) 25,607 109,345 Accumulated net realized gain (loss) 82,913,799 157,667,969 204,622,064 (63,157,855) (2,188,387) Net unrealized appreciation on investments 1,614,734,619 1,883,529,542 1,066,063,160 45,320,759 20,849,746 -------------- -------------- -------------- ------------ ------------ NET ASSETS $3,256,237,273 $5,693,061,194 $3,356,842,758 $167,346,218 $148,338,797 ============== ============== ============== ============ ============ SHARES OUTSTANDING ($.01 PAR VALUE; INDEFINITE SHARES AUTHORIZED) 52,909,173 112,740,719 130,162,665 16,023,754 11,976,429 ============== ============== ============== ============ ============ NET ASSET VALUE PER SHARE $ 61.54 $ 50.50 $ 25.79 $ 10.44 $ 12.39 ============== ============== ============== ============ ============
See Notes to Financial Statements. 16 BARON FUNDS -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED MARCH 31, 2006 (UNAUDITED)
BARON ASSET BARON GROWTH BARON SMALL CAP BARON iOPPORTUNITY BARON FIFTH AVENUE FUND FUND FUND FUND GROWTH FUND ------------ ------------ --------------- ------------------ ------------------ INVESTMENT INCOME: INCOME: Interest $ 1,428,709 $ 9,442,478 $ 2,905,654 $ 485,709 $ 276,131 Dividends -- unaffiliated investments 9,550,481 8,943,274 5,846,473 702,700 755,345 Dividends -- "affiliated" investments 0 68,000 1,147,000 0 0 ------------ ------------ ------------ ----------- ---------- Total income 10,979,190 18,453,752 9,899,127 1,188,409 1,031,476 ------------ ------------ ------------ ----------- ---------- EXPENSES: Investment advisory fees 14,505,653 25,957,421 14,817,950 784,882 658,665 Distribution fees 3,626,413 6,489,355 3,704,487 196,220 164,666 Shareholder servicing agent fees 370,765 426,125 302,140 67,160 23,192 Reports to shareholders 573,600 820,500 628,000 79,250 36,724 Professional fees 41,538 71,630 56,335 14,371 14,896 Registration and filing fees 80,840 126,365 90,221 8,236 15,364 Custodian fees 35,820 62,830 54,195 7,464 4,230 Trustee fees 33,184 60,585 34,840 1,866 1,561 Miscellaneous 44,402 79,504 45,203 3,353 2,833 ------------ ------------ ------------ ----------- ---------- Total expenses 19,312,215 34,094,315 19,733,371 1,162,802 922,131 ------------ ------------ ------------ ----------- ---------- Net investment income (loss) (8,333,025) (15,640,563) (9,834,244) 25,607 109,345 ------------ ------------ ------------ ----------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments sold -- unaffiliated investments 89,481,660 186,118,961 207,351,451 20,226,413 (634,848) Net realized gain on investments sold -- "affiliated" investments 1,537,847 2,054,651 13,636,265 0 0 Net change in unrealized appreciation of investments 315,748,362 560,687,991 227,017,073 251,237 8,798,823 ------------ ------------ ------------ ----------- ---------- Net gain on investments 406,767,869 748,861,603 448,004,789 20,477,650 8,163,975 ------------ ------------ ------------ ----------- ---------- Net increase in net assets resulting from operations $398,434,844 $733,221,040 $438,170,545 $20,503,257 $8,273,320 ============ ============ ============ =========== ==========
See Notes to Financial Statements. 17 BARON FUNDS -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
BARON SMALL BARON ASSET FUND BARON GROWTH FUND CAP FUND -------------------------- --------------------------- ---------------- SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, 2006 2005 2006 2005 2006 -------------- -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) ($8,333,025) ($21,856,855) ($15,640,563) ($32,047,627) ($9,834,244) Net realized gain (loss) on investments sold 91,019,507 144,194,513 188,173,612 248,696,604 220,987,716 Net change in unrealized appreciation of investments 315,748,362 395,149,197 560,687,991 397,124,402 227,017,073 -------------- -------------- -------------- -------------- -------------- Increase in net assets resulting from operations 398,434,844 517,486,855 733,221,040 613,773,379 438,170,545 -------------- -------------- -------------- -------------- -------------- DIVIDENDS TO SHAREHOLDERS FROM: Net realized gain on investments (136,438,779) (126,683,892) (222,904,672) 0 (89,572,056) -------------- -------------- -------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS: Proceeds from the sale of shares 407,586,202 640,133,068 485,096,406 1,971,578,477 405,666,443 Net asset value of shares issued in reinvestment of dividends 134,216,963 124,712,972 215,723,575 0 85,550,454 Cost of shares redeemed (235,003,782) (470,600,014) (523,224,018) (715,806,952) (311,545,238) -------------- -------------- -------------- -------------- -------------- Increase (decrease) in net assets derived from capital share transactions 306,799,383 294,246,026 177,595,963 1,255,771,525 179,671,659 Redemption fees 0 0 0 0 0 -------------- -------------- -------------- -------------- -------------- Net increase in net assets 568,795,448 685,048,989 687,912,331 1,869,544,904 528,270,148 -------------- -------------- -------------- -------------- -------------- NET ASSETS: Beginning of period 2,687,441,825 2,002,392,836 5,005,148,863 3,135,603,959 2,828,572,610 -------------- -------------- -------------- -------------- -------------- End of year period $3,256,237,273 $2,687,441,825 $5,693,061,194 $5,005,148,863 $3,356,842,758 ============== ============== ============== ============== ============== ACCUMULATED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD ($8,333,025) $ 0 ($15,640,563) $ 0 ($9,834,244) ============== ============== ============== ============== ============== SHARES: Shares sold 7,095,559 12,158,705 10,304,599 44,272,338 17,140,811 Shares issued in reinvestment of dividends 2,355,924 2,538,428 4,696,793 0 3,768,729 Shares redeemed (4,092,062) (8,959,543) (11,167,746) (15,932,537) (13,282,510) -------------- -------------- -------------- -------------- -------------- Net increase (decrease) 5,359,421 5,737,590 3,833,646 28,339,801 7,627,030 ============== ============== ============== ============== ============== BARON SMALL BARON FIFTH AVENUE CAP FUND BARON iOPPORTUNITY FUND GROWTH FUND -------------- ------------------------- ---------------------------- FOR THE FOR THE SIX MONTHS FOR THE SIX MONTHS YEAR YEAR ENDED ENDED YEAR ENDED ENDED ENDED SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, 2005 2006 2005 2006 2005 -------------- ------------ ------------- ------------ ------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) ($11,728,955) $ 25,607 ($1,482,347) $ 109,345 ($398,774) Net realized gain (loss) on investments sold 95,073,504 20,226,413 13,467,239 (634,848) (1,174,154) Net change in unrealized appreciation of investments 366,444,107 251,237 14,038,503 8,798,823 11,455,168 -------------- ------------ ------------ ------------ ------------ Increase in net assets resulting from operations 449,788,656 20,503,257 26,023,395 8,273,320 9,882,240 -------------- ------------ ------------ ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net realized gain on investments (53,166,236) 0 0 0 0 -------------- ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from the sale of shares 1,109,432,440 22,779,925 38,438,663 67,875,066 50,705,842 Net asset value of shares issued in reinvestment of dividends 51,062,420 0 0 0 0 Cost of shares redeemed (510,666,216) (21,627,430) (52,857,573) (24,346,683) (13,350,429) -------------- ------------ ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions 649,828,644 1,152,495 (14,418,910) 43,528,383 37,355,413 Redemption fees 0 12,079 142,107 0 0 -------------- ------------ ------------ ------------ ------------ Net increase in net assets 1,046,451,064 21,667,831 11,746,592 51,801,703 47,237,653 -------------- ------------ ------------ ------------ ------------ NET ASSETS: Beginning of period 1,782,121,546 145,678,387 133,931,795 96,537,094 49,299,441 -------------- ------------ ------------ ------------ ------------ End of year period $2,828,572,610 $167,346,218 $145,678,387 $148,338,797 $ 96,537,094 ============== ============ ============ ============ ============ ACCUMULATED NET INVESTMENT INCOME (LOSS) AT END OF PERIOD $ 0 $ 25,607 $ 0 $ 109,345 $ 0 ============== ============ ============ ============ ============ SHARES: Shares sold 50,454,999 2,323,726 4,515,672 5,627,964 4,605,887 Shares issued in reinvestment of dividends 2,476,351 0 0 0 0 Shares redeemed (23,327,448) (2,196,841) (6,280,733) (1,999,017) (1,243,955) -------------- ------------ ------------ ------------ ------------ Net increase (decrease) 29,603,902 126,885 (1,765,061) 3,628,947 3,361,932 ============== ============ ============ ============ ============
See Notes to Financial Statements. 18 BARON FUNDS ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) ------------------------------------------------------------------------------- (1) ORGANIZATION. Baron Investment Funds Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the"1940 Act"), as a diversified, open-end management investment company established as a Massachusetts business trust on February 19, 1987. The Trust currently offers five series (individually a "Fund" and collectively the "Funds"): Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron iOpportunity Fund, and Baron Fifth Avenue Growth Fund. Prior to October 22, 2004, the name of the Trust was Baron Asset Fund. The investment objectives of the Funds are as follows: Baron Asset Fund seeks capital appreciation through long-term investments in securities of small and medium sized companies with undervalued assets or favorable growth prospects. Baron Growth Fund seeks capital appreciation through long-term investments primarily in the securities of small growth companies. Baron Small Cap Fund seeks capital appreciation through investments primarily in securities of small companies. Baron iOpportunity Fund seeks capital appreciation through investments in growth businesses that benefit from technology advances. Baron Fifth Avenue Growth Fund seeks capital appreciation through investments primarily in the securities of larger growth companies. (2) SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of significant accounting policies followed by the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America. (A) SECURITY VALUATION. Portfolio securities traded on any national stock exchange are valued based on the last sale price. For securities traded on NASDAQ, the Funds use the NASDAQ Official Closing Price. Securities traded in foreign markets are valued using prices reported by local foreign markets and translated into U.S. dollars using the mean of the bid and offer prices of such currencies at the time the net asset value is determined. Where market quotations are not readily available, or in the Adviser's judgment, they do not accurately reflect fair value of a security, or an event occurs after the market close but before the Funds are priced that materially affects the value of a security, the securities will be valued by the Adviser using procedures established by the Board of Trustees. The Adviser has a fair valuation committee comprised of senior executives and members of the Board. Factors the committee uses include whether a current price is stale, there is recent news, the security is thinly traded, transactions are infrequent, or quotations are genuine. There can be no assurance, however, that a fair valuation used by the Funds on any given day will more accurately reflect the market value of an investment than the closing price of such investment in its market. Debt instruments having a remaining maturity greater than sixty days will be valued at the highest bid price from the dealer maintaining an active market in that security or on the basis of prices obtained from a pricing service approved by the Board of Trustees. Money market instruments held by the Funds with a remaining maturity of sixty days or less are valued at amortized cost, which approximates value. (B) FOREIGN CURRENCY TRANSLATIONS. Values of investments denominated in foreign currencies are translated into U.S. dollars using the mean of the bid and offer prices of such currencies at the time net asset value is determined. Purchases and sales of investments and dividend income are converted at the prevailing rate of exchange on the respective dates of such transactions. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. (C) SECURITIES TRANSACTIONS, INVESTMENT INCOME AND EXPENSE ALLOCATION. Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on an identified cost basis for financial reporting and federal income tax purposes. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis which includes the accretion of discounts and amortization of premiums. The Funds are charged for those expenses that are directly attributable to each Fund, such as advisory and custodian fees. Expenses that are not directly attributable to a Fund are typically allocated among the Funds in proportion to their respective net assets. (D) FEDERAL INCOME TAXES. Each Fund of the Trust is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and to distribute all of its taxable income, including net realized capital gains, if any, to its shareholders. No federal income tax provision is therefore required. (E) RESTRICTED SECURITIES. The Funds invest in securities which are restricted as to public sale in accordance with the Securities Act of 1933. Such assets are valued at fair value as determined in good faith by the Board of Trustees. (F) DISTRIBUTIONS. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. 19 BARON FUNDS ------------------------------------------------------------------------------- (G) SHORT-TERM TRADING FEE. Baron iOpportunity Fund imposes a 1% short-term trading fee on redemptions and exchanges of shares held for less than six months. The fee is retained by Baron iOpportunity for the benefit of the remaining shareholders to offset the administrative costs associated with processing redemptions and exchanges, offset the portfolio transaction costs and facilitate portfolio management. The fee is accounted for as an addition to paid in capital. (H) USE OF ESTIMATES. The preparation of financial statements in accordance 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 at the date of the financial statements, and the amounts of income and expenses during the period. Actual results could differ from those estimates. (I) COMMITMENTS AND CONTINGENCIES. In the normal course of business, the Funds may enter into contracts and agreements that contain a variety of representations and warranties, which provide general indemnification. The maximum exposure to the Funds under these agreements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. (3) PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities, other than short term securities, for the six months ended March 31, 2006 were as follows:
FUND PURCHASES SALES ---- ------------ ------------ Baron Asset Fund $379,602,021 $203,964,142 Baron Growth Fund $512,099,629 $501,648,723 Baron Small Cap Fund $648,359,786 $580,606,957 Baron iOpportunity Fund $ 57,909,438 $ 79,497,069 Baron Fifth Avenue Growth Fund $ 73,718,497 $ 37,173,663
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. (A) INVESTMENT ADVISORY FEES. BAMCO, Inc. (the "Adviser"), a wholly owned subsidiary of Baron Capital Group, Inc. ("BCG"), serves as investment adviser to the Funds. As compensation for services rendered, the Adviser receives a fee payable monthly from the assets of the Funds equal to 1% per annum of each Fund's average daily net asset value. For Baron iOpportunity Fund and Baron Fifth Avenue Growth Fund, the Adviser has contractually agreed to reduce its fee to the extent required to limit the operating expense to 1.50% and 1.40% of average daily net assets, respectively. (B) DISTRIBUTION FEES. Baron Capital, Inc. ("BCI"), a wholly owned subsidiary of BCG, is a registered broker-dealer and the distributor of the shares of the Funds pursuant to a distribution plan under Rule 12b-1 of the 1940 Act. The distribution plan authorizes the Funds to pay BCI a distribution fee equal on an annual basis to 0.25% of the Funds' average daily net assets. Brokerage transactions for the Funds may be effected by or through BCI. During the period October 1, 2005 to October 13, 2005, BCI earned gross brokerage commissions as follows: FUND COMMISSIONS ---- ----------- Baron Asset Fund $ 8,403 Baron Growth Fund 14,768 Baron Small Cap Fund 12,521 Baron iOpportunity Fund 886 Baron Fifth Avenue Growth Fund 985 On October 14, 2005, BCI ceased its broker-dealer business and the Funds have conducted no further trading with BCI since that date. (C) TRUSTEE FEES. Certain Trustees of the Trust may be deemed to be affiliated with or interested persons (as defined by the 1940 Act) of the Funds' Adviser or of BCI. None of the Trustees so affiliated received compensation for his or her services as a Trustee of the Trust. None of the Funds' officers received compensation from the Funds. (5) LINE OF CREDIT. The Funds have entered into a line of credit agreement with the custodian bank to be used for temporary purposes, primarily for financing redemptions. The agreement provides that Baron Asset Fund may borrow up to 5% of the value of its net assets. Baron Growth Fund, Baron Small Cap Fund, Baron iOpportunity Fund, and Baron Fifth Avenue Growth Fund may borrow up to 15% of each Fund's respective net assets. The aggregate outstanding principal amount of all loans to any of the Funds may not exceed $100,000,000. Interest is charged to each Fund, based on its borrowings, at a rate per annum equal to the Federal Funds Rate plus a margin of 1.00% to 2.00% depending on the duration of the loan. A commitment fee of 0.10% per annum is incurred on the unused portion of the line of credit and is allocated to the participating Funds. At March 31, 2006, there were no loans outstanding under the line of credit. (6) LITIGATION. An action is pending in the Southern District of New York brought by a shareholder of Baron Growth Fund and of Baron Small Cap Fund against these two Funds, their Trustees, the distributor, Baron Capital, Inc., and the adviser, BAMCO, Inc. The action alleges improper imposition of 12b-1 fees on Funds that were partially closed to new investors and seeks compensatory damages and to enjoin further 12b-1 fees. A motion to dismiss the complaint is currently pending. Neither the outcome nor the possible liability to these two Funds can be determined at this point. No amounts have been accrued in these financial statements with respect to the damages sought by this litigation. 20 BARON FUNDS ------------------------------------------------------------------------------- (7) RESTRICTED SECURITIES. At March 31, 2006, investments in securities included securities that are restricted and/or illiquid. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. At March 31, 2006, the Funds held investments in restricted and illiquid securities that were valued under approved methods by the Board, as follows:
BARON ASSET FUND ACQUISITION NAME OF ISSUER DATE VALUE -------------- ------------ ------------ COMMON STOCK Wynn Resorts, Ltd. 04/17/01 $106,547,730 CONVERTIBLE PREFERRED STOCK Apollo International, Inc., S-A CV Pfd. 07/21/99 400,000 Somerford Corp. S-A Conv. Pfd. 12/03/98 9,090,397 CORPORATE BONDS Somerford Corp. 8.50% Sub. Conv. Deb Due 04/23/2007 04/23/01 2,166,667 ------------ TOTAL RESTRICTED SECURITIES: (Cost $43,287,854) (3.63% of Net Assets) $118,204,794 ============
BARON GROWTH FUND ACQUISITION NAME OF ISSUER DATE VALUE -------------- ------------ ------------ COMMON STOCK CBRE Realty Finance, Inc. 144A 06/02/05 $ 10,000,005 Fontainebleau Resorts, LLC 10/05/05 15,000,000 Wynn Resorts, Ltd. 04/22/02 39,254,454 CONVERTIBLE PREFERRED STOCK Reliant Pharmaceuticals LLC Series D 10/28/03 7,500,000 ------------ TOTAL RESTRICTED SECURITIES: (Cost $51,063,961) (1.26% of Net Assets) $ 71,754,459 ============
BARON SMALL CAP FUND ACQUISITION NAME OF ISSUER DATE VALUE -------------- ------------ ------------ WARRANTS Casual Male Retail Group, Inc. Warrants Exp 04/26/2007 05/15/02 $ 6,202,368 Casual Male Retail Group, Inc. Warrants Exp 07/02/2010 07/03/03 498,000 Infocrossing, Inc. Warrants Exp 10/16/2008 10/16/03 932,589 ------------ TOTAL RESTRICTED SECURITIES: (Cost $2,197,934) (0.23% of Net Assets) $ 7,632,957 ============
BARON IOPPORTUNITY FUND ACQUISITION NAME OF ISSUER DATE VALUE -------------- ------------ ------------ WARRANTS Loudeye Corp. Warrants Exp 12/23/2010 12/22/04 $ 0 ------------ TOTAL RESTRICTED SECURITIES: (Cost $0) (0.00% of Net Assets) $ 0 ============
21 BARON FUNDS ------------------------------------------------------------------------------- (8) INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. As of March 31, 2006, the components of net assets on a tax basis were as follows:
BARON BARON ASSET BARON GROWTH BARON SMALL CAP BARON iOPPORTUNITY FIFTH AVENUE GROWTH FUND FUND FUND FUND FUND -------------- -------------- --------------- ------------------ ------------------- Cost of investments $1,641,651,027 $3,858,358,107 $2,269,017,754 $132,758,066 $125,507,345 ============== ============== ============== ============ ============ Gross tax unrealized appreciation 1,631,088,733 1,936,997,038 1,154,214,270 44,620,279 21,942,883 Gross tax unrealized depreciation (18,354,101) (75,467,286) (88,412,561) (2,317,035) (1,169,299) -------------- -------------- -------------- ------------ ------------ Net tax unrealized appreciation $1,612,734,632 $1,861,529,752 $1,065,801,709 $ 42,303,244 $ 20,773,584 ============== ============== ============== ============ ============
The tax character of distributions paid during the six month period ended March 31, 2006, and fiscal year ended September 30, 2005 was as follows:
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2006 SEPTEMBER 30, 2005 ----------------------- ----------------------- FUND LONG TERM LONG TERM ---- ORDINARY CAPITAL GAIN ORDINARY CAPITAL GAIN -------- ------------ -------- ------------ Baron Asset Fund $ -- $136,438,779 $ -- $126,683,892 Baron Growth Fund -- 222,904,672 -- -- Baron Small Cap Fund -- 89,572,056 -- 53,166,236 Baron iOpportunity Fund -- -- -- -- Baron Fifth Avenue Growth Fund -- -- -- --
(9) INVESTMENT IN "AFFILIATES"* DURING THE SIX MONTHS ENDED MARCH 31, 2006. BARON ASSET FUND
BALANCE OF GROSS GROSS SALES BALANCE OF SHARES HELD ON PURCHASES AND SHARES HELD ON VALUE NAME OF ISSUER SEP. 30, 2005 AND ADDITIONS REDUCTIONS MAR. 31, 2006 MAR. 31, 2006 ---------------------------------------------------------------------------------------------------------------------------- Alexander's, Inc. 314,000 314,000 $ 90,746,000 Apollo International, Inc. S-A CV Pfd. 105,264 105,264 400,000 ChoicePoint, Inc. 4,500,000 50,000 4,450,000 199,137,500 Kerzner Intl., Ltd. 2,400,000 2,400,000 186,768,000 Vail Resorts, Inc., Cl A 3,000,000 3,000,000 114,660,000 ------------ TOTAL INVESTMENT IN "AFFILIATES" (18.2% OF NET ASSETS) $591,711,500 ============ DIVIDEND INCOME NAME OF ISSUER OCT. 1-MAR. 31, 2006 ----------------------------------------------------------------- Alexander's, Inc. Apollo International, Inc. S-A CV Pfd. ChoicePoint, Inc. Kerzner Intl., Ltd. Vail Resorts, Inc., Cl A -- TOTAL INVESTMENT IN "AFFILIATES" (18.2% OF NET ASSETS) $0 ==
---------- * Affiliated investments, as defined in the Investment Company Act of 1940, are investments in which a Fund held 5% or more of the outstanding voting securities during the six months ended March 31, 2006. ------------------------------------------------------------------------------- 22 BARON FUNDS ------------------------------------------------------------------------------- (9) INVESTMENT IN "AFFILIATES"* DURING THE SIX MONTHS ENDED MARCH 31, 2006. (CONTINUED) BARON GROWTH FUND
BALANCE OF GROSS GROSS SALES BALANCE OF SHARES HELD ON PURCHASES AND SHARES HELD ON VALUE NAME OF ISSUER SEP. 30, 2005 AND ADDITIONS REDUCTIONS MAR. 31, 2006 MAR. 31, 2006 ---------------------------------------------------------------------------------------------------------------------------- AMERIGROUP, Corp. 3,800,000 3,800,000 $ 79,952,000 Blue Nile, Inc. 875,000 875,000 30,791,250 Carter's, Inc. 1,450,000 1,450,000 97,860,500 Centene Corp. 3,199,500 199,500 3,000,000 87,510,000 Center Financial Corp. 850,000 850,000 20,595,500 DeVry, Inc. 3,700,000 3,700,000 84,249,000 Encore Acquisition Co. 3,700,000 3,700,000 114,700,000 Select Comfort Corp. 1,800,000 1,800,000 71,190,000 ------------ TOTAL INVESTMENT IN "AFFILIATES" (10.3% OF NET ASSETS) $586,848,250 ============ DIVIDEND INCOME NAME OF ISSUER OCT. 1-MAR. 31, 2006 ----------------------------------------------------------------- AMERIGROUP, Corp. Blue Nile, Inc. Carter's, Inc. Centene Corp. Center Financial Corp. $68,000 DeVry, Inc. Encore Acquisition Co. Select Comfort Corp. ------- TOTAL INVESTMENT IN "AFFILIATES" (10.3% OF NET ASSETS) $68,000 =======
---------- * Affiliated investments, as defined in the Investment Company Act of 1940, are investments in which a Fund held 5% or more of the outstanding voting securities during the six months ended March 31, 2006. BARON SMALL CAP FUND
BALANCE OF GROSS GROSS SALES BALANCE OF SHARES HELD ON PURCHASES AND SHARES HELD ON NAME OF ISSUER SEP. 30, 2005 AND ADDITIONS REDUCTIONS MAR. 31, 2006 -------------------------------------------------------------------------------------------------------------------------------- AFC Enterprises, Inc. 1,850,000 400,000 2,250,000 Cash Systems, Inc. 1,500,000 1,500,000 Casual Male Retail Group, Inc. 1,157,503 1,157,503 Casual Male Retail Group, Inc., Warrants Exp 04/26/2007 1,407,353 1,407,353 Casual Male Retail Group, Inc., Warrants Exp 07/02/2010 100,000 100,000 Design Within Reach, Inc. 1,100,000 75,000 500,000 675,000 DTS, Inc. 1,625,000 1,625,000 Eagle Materials, Inc., Cl B + 1,000,000 2,000,000 500,000 2,500,000 Eagle Materials, Inc. 45,600 45,600 -- Great Wolf Resorts, Inc. 2,500,000 188,829 2,688,829 Immucor, Inc. 2,500,000 300,000 2,200,000 Infocrossing, Inc. 1,082,000 577,016 504,984 Infocrossing, Inc., Warrants Exp 10/16/2008 222,575 222,575 Kensey Nash Corp. 941,600 108,400 1,050,000 Koppers Holdings, Inc. -- 1,095,000 1,095,000 LECG Corp. 1,650,000 1,650,000 MarineMax, Inc. 1,500,000 50,000 1,550,000 Measurement Specialties, Inc. 1,100,000 100,000 1,000,000 NuCO2, Inc. 1,127,364 122,636 1,250,000 Viisage Technology, Inc. -- 1,820,400 1,820,400 TOTAL INVESTMENT IN "AFFILIATES" (15.3% OF NET ASSETS) DIVIDEND VALUE INCOME NAME OF ISSUER MAR. 31, 2006 OCT. 1-MAR. 31, 2006 ------------------------------------------------------------------------------------------------------ AFC Enterprises, Inc. $ 31,275,000 Cash Systems, Inc. 10,425,000 Casual Male Retail Group, Inc. 11,274,079 Casual Male Retail Group, Inc., Warrants Exp 04/26/2007 6,202,368 Casual Male Retail Group, Inc., Warrants Exp 07/02/2010 498,000 Design Within Reach, Inc. --** DTS, Inc. 31,947,500 Eagle Materials, Inc., Cl B + 159,475,000 $1,037,500 Eagle Materials, Inc. --** Great Wolf Resorts, Inc. 31,163,528 Immucor, Inc. --** Infocrossing, Inc. --** Infocrossing, Inc., Warrants Exp 10/16/2008 --** Kensey Nash Corp. 30,030,000 Koppers Holdings, Inc. 21,516,750 109,500 LECG Corp. 31,795,500 MarineMax, Inc. 51,956,000 Measurement Specialties, Inc. 26,150,000 NuCO2, Inc. 39,675,000 Viisage Technology, Inc. 31,875,204 ------------ ---------- TOTAL INVESTMENT IN "AFFILIATES" (15.3% OF NET ASSETS) $515,258,929 $1,147,000 ============ ==========
---------- + Received 2,000,000 shares from 3:1 stock split. * Affiliated investments, as defined in the Investment Company Act of 1940, are investments in which a Fund held 5% or more of the outstanding voting securities during the six months ended March 31, 2006. ** As of March 31, 2006, no longer an affiliate. 23 BARON FUNDS ------------------------------------------------------------------------------- (10) FINANCIAL HIGHLIGHTS BARON ASSET FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ----------------------------------------------------------------- MARCH 31, 2006 2005 2004 2003 2002 2001 2000 -------------- -------- -------- -------- -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 56.52 $ 47.89 $ 40.05 $ 35.65 $ 40.22 $ 63.35 $ 51.57 -------- -------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.16) (0.46) (0.43) (0.46) (0.55) (0.65) (0.76) Net realized and unrealized gains (losses) on investments 7.99 12.08 8.27 6.04 0.05 (17.87) 12.53 -------- -------- -------- -------- -------- -------- -------- TOTAL FROM INVESTMENT OPERATIONS 7.83 11.62 7.84 5.58 (0.50) (18.52) 11.77 -------- -------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from net realized gains (2.81) (2.99) 0.00 (1.18) (4.07) (4.61) 0.00 -------- -------- -------- -------- -------- -------- -------- TOTAL DISTRIBUTIONS (2.81) (2.99) 0.00 (1.18) (4.07) (4.61) 0.00 -------- -------- -------- -------- -------- -------- -------- Capital contribution 0.00 0.00 0.00 0.00 0.00 0.00 0.01 -------- -------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 61.54 $ 56.52 $ 47.89 $ 40.05 $ 35.65 $ 40.22 $ 63.35 ======== ======== ======== ======== ======== ======== ======== TOTAL RETURN 14.3%+ 25.2% 19.6% 16.1% (2.5%) (31.2%) 22.8%+ ======== ======== ======== ======== ======== ======== ======== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $3,256.2 $2,687.4 $2,002.4 $1,957.2 $2,055.2 $2,692.3 $4,917.4 Ratio of total expenses to average net assets 1.33%** 1.34% 1.34% 1.34% 1.35% 1.37% 1.36% Less: Ratio of interest expense to average net assets 0.00%** 0.00% 0.00% 0.00% (0.02%) (0.01%) (0.03%) -------- -------- -------- -------- -------- -------- -------- Ratio of operating expenses to average net assets 1.33%** 1.34% 1.34% 1.34% 1.33% 1.36% 1.33% ======== ======== ======== ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets (0.57%)** (0.91%) (0.90%) (1.14%) (1.16%) (1.14%) (1.09%) Portfolio turnover rate 7.13%+ 11.47% 19.57% 27.95% 6.01% 4.33% 2.51% YEAR ENDED SEPTEMBER 30, ------------------------------- 1999 1998 1997 -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 39.96 $ 47.43 $ 35.50 -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.30) 0.05 (0.14) Net realized and unrealized gains (losses) on investments 11.94 (7.52) 12.11 -------- -------- -------- TOTAL FROM INVESTMENT OPERATIONS 11.64 (7.47) 11.97 -------- -------- -------- LESS DISTRIBUTIONS Dividends from net investment income (0.04) 0.00 0.00 Distributions from net realized gains 0.00 0.00 (0.04) -------- -------- -------- TOTAL DISTRIBUTIONS (0.04) 0.00 (0.04) -------- -------- -------- Capital contribution 0.01 0.00 0.00 -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 51.57 $ 39.96 $ 47.43 ======== ======== ======== TOTAL RETURN 29.2%* (15.7%) 33.8% ======== ======== ======== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $5,863.1 $4,410.5 $3,224.5 Ratio of total expenses to average net assets 1.31% 1.32% 1.35% Less: Ratio of interest expense to average net assets 0.00% 0.00% 0.00% -------- -------- -------- Ratio of operating expenses to average net assets 1.31% 1.32% 1.35% ======== ======== ======== Ratio of net investment income (loss) to average net assets (0.57%) 0.11% (0.52%) Portfolio turnover rate 15.64% 23.43% 13.23%
---------- + Had the adviser not made the capital contribution, the Fund's performance would have been reduced by 0.02%. * Had the adviser not made the capital contribution, the Fund's performance would have been reduced by 0.03%. ** Annualized + Not annualized 24 BARON FUNDS ------------------------------------------------------------------------------- (10) FINANCIAL HIGHLIGHTS (CONTINUED) BARON GROWTH FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ------------------------------------------------------------- MARCH 31, 2006 2005 2004 2003 2002 2001 2000 -------------- -------- -------- -------- -------- ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 45.96 $ 38.92 $ 32.65 $ 26.96 $ 27.18 $32.26 $29.06 -------- -------- -------- -------- -------- ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.14) (0.29) (0.30) (0.25) (0.23) (0.22) (0.26) Net realized and unrealized gains (losses) on investments 6.73 7.33 6.57 5.94 1.65 (1.67) 5.34 -------- -------- -------- -------- -------- ------ ------ TOTAL FROM INVESTMENT OPERATIONS 6.59 7.04 6.27 5.69 1.42 (1.89) 5.08 -------- -------- -------- -------- -------- ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from net realized gains (2.05) 0.00 0.00 0.00 (1.64) (3.19) (1.88) -------- -------- -------- -------- -------- ------ ------ TOTAL DISTRIBUTIONS (2.05) 0.00 0.00 0.00 (1.64) (3.19) (1.88) -------- -------- -------- -------- -------- ------ ------ NET ASSET VALUE, END OF PERIOD $ 50.50 $ 45.96 $ 38.92 $ 32.65 $ 26.96 $27.18 $32.26 ======== ======== ======== ======== ======== ====== ====== TOTAL RETURN 14.8%+ 18.1% 19.2% 21.1% 5.0% (6.1%) 18.6% ======== ======== ======== ======== ======== ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $5,693.1 $5,005.1 $3,135.6 $2,185.4 $1,030.3 $512.3 $533.4 Ratio of total expenses to average net assets 1.31%** 1.31% 1.33% 1.36% 1.35% 1.36% 1.36% Less: Ratio of interest expense to average net assets 0.00%** 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -------- -------- -------- -------- -------- ------ ------ Ratio of operating expenses to average net assets 1.31%** 1.31% 1.33% 1.36% 1.35% 1.36% 1.36% ======== ======== ======== ======== ======== ====== ====== Ratio of net investment income (loss) to average net assets (0.60%)** (0.73%) (0.89%) (1.11%) (1.02%) (0.79%) (0.78%) Portfolio turnover rate 10.39%+ 15.50% 27.15% 32.63% 18.31% 34.94% 39.00% YEAR ENDED SEPTEMBER 30, ------------------------- 1999 1998 1997 ------ ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $20.32 $24.89 $18.40 ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.04) 0.06 0.06 Net realized and unrealized gains (losses) on investments 8.82 (4.56) 6.68 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 8.78 (4.50) 6.74 ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.04) (0.02) (0.09) Distributions from net realized gains 0.00 (0.05) (0.16) ------ ------ ------ TOTAL DISTRIBUTIONS (0.04) (0.07) (0.25) ------ ------ ------ NET ASSET VALUE, END OF PERIOD $29.06 $20.32 $24.89 ====== ====== ====== TOTAL RETURN 43.2% (18.1%) 37.1% ====== ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $439.4 $315.6 $390.8 Ratio of total expenses to average net assets 1.40% 1.43% 1.40% Less: Ratio of interest expense to average net assets (0.03%) (0.06%) 0.00% ------ ------ ------ Ratio of operating expenses to average net assets 1.37% 1.37% 1.40% ====== ====== ====== Ratio of net investment income (loss) to average net assets (0.20%) 0.21% 0.37% Portfolio turnover rate 53.36% 40.38% 25.17%
--------------- ** Annualized + Not annualized BARON SMALL CAP FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ----------------------------------------------------------- MARCH 31, 2006 2005 2004 2003 2002 2001 2000 -------------- -------- -------- -------- ------ ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 23.08 $ 19.18 $ 17.26 $ 13.73 $12.69 $16.05 $13.37 -------- -------- -------- -------- ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment loss (0.08) (0.10) (0.15) (0.11) (0.14) (0.11) (0.16) Net realized and unrealized gains (losses) on investments 3.53 4.55 2.07 4.02 1.18 (2.87) 2.84 -------- -------- -------- -------- ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 3.45 4.45 1.92 3.91 1.04 (2.98) 2.68 -------- -------- -------- -------- ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from net realized gains (0.74) (0.55) 0.00 (0.38) 0.00 (0.38) 0.00 -------- -------- -------- -------- ------ ------ ------ TOTAL DISTRIBUTIONS (0.74) (0.55) 0.00 (0.38) 0.00 (0.38) 0.00 -------- -------- -------- -------- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 25.79 $ 23.08 $ 19.18 $ 17.26 $13.73 $12.69 $16.05 ======== ======== ======== ======== ====== ====== ====== TOTAL RETURN 15.4%+ 23.6% 11.1% 29.2% 8.2% (18.8%) 20.0% ======== ======== ======== ======== ====== ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $3,356.8 $2,828.6 $1,782.1 $1,210.5 $719.1 $585.9 $879.5 Ratio of expenses to average net assets 1.33%** 1.33% 1.33% 1.36% 1.36% 1.35% 1.33% Ratio of net investment loss to average net assets (0.66%)** (0.48%) (0.88%) (0.87%) (0.97%) (0.68%) (0.90%) Portfolio turnover rate 20.17%+ 24.68% 32.92% 30.29% 55.07% 55.77% 53.18% YEAR ENDED SEPTEMBER 30, --------------- 1999 1998 ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 8.61 $10.00 ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment loss (0.10) (0.02) Net realized and unrealized gains (losses) on investments 4.86 (1.37) ------ ------ TOTAL FROM INVESTMENT OPERATIONS 4.76 (1.39) ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 Distributions from net realized gains 0.00 0.00 ------ ------ TOTAL DISTRIBUTIONS 0.00 0.00 ------ ------ NET ASSET VALUE, END OF PERIOD $13.37 $ 8.61 ====== ====== TOTAL RETURN 55.3% (13.9%) ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $715.7 $403.7 Ratio of expenses to average net assets 1.34% 1.39% Ratio of net investment loss to average net assets (0.99%) (0.20%) Portfolio turnover rate 42.69% 59.68%
---------- ** Annualized + Not annualized 25 BARON FUNDS ------------------------------------------------------------------------------- (10) FINANCIAL HIGHLIGHTS (CONTINUED) BARON iOPPORTUNITY FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ------------------------------------------------------ MARCH 31, 2006 2005 2004 2003 2002 2001 2000* -------------- ------ ------ ------ ------ ------- ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.16 $ 7.58 $ 6.48 $ 3.63 $ 4.09 $ 8.76 $10.00 ------ ------ ------ ------ ------ ------- ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.00+ (0.09) (0.10) (0.05) (0.06) (0.05) 0.03 Net realized and unrealized gains (losses) on investments 1.28 1.66 1.18 2.89 (0.40) (4.59) (1.28) ------ ------ ------ ------ ------ ------- ------ TOTAL FROM INVESTMENT OPERATIONS 1.28 1.57 1.08 2.84 (0.46) (4.64) (1.25) ------ ------ ------ ------ ------ ------- ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 (0.03) 0.00 Distributions from net realized gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ------ ------ ------ ------ ------ ------- ------ TOTAL DISTRIBUTIONS 0.00 0.00 0.00 0.00 0.00 (0.03) 0.00 ------ ------ ------ ------ ------ ------- ------ Redemption fees added to paid in capital 0.00+ 0.01 0.02 0.01 0.00+ 0.00+ 0.01 ------ ------ ------ ------ ------ ------- ------ NET ASSET VALUE, END OF PERIOD $10.44 $ 9.16 $ 7.58 $ 6.48 $ 3.63 $ 4.09 $ 8.76 ====== ====== ====== ====== ====== ======= ====== TOTAL RETURN 14.0%+ 20.8%^ 17.0%^ 78.5%^ (11.2%)^ (53.1%)^ (12.4%)^+ ====== ====== ====== ====== ====== ======= ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $167.3 $145.7 $133.9 $109.3 $ 57.5 $ 73.7 $188.2 Ratio of total expenses to average net assets 1.48%** 1.52% 1.56% 1.67% 1.65% 1.55% 1.53%** Less: Expense reimbursement by investment adviser 0.00%** (0.02%) (0.06%) (0.17%) (0.15%) (0.05%) (0.03%)** ------ ------ ------ ------ ------ ------- ------ Ratio of net expenses to average net assets 1.48%** 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%** ====== ====== ====== ====== ====== ======= ====== Ratio of net investment income (loss) to average net assets 0.03%** (1.01%) (1.25%) (1.18%) (1.20%) (0.75%) 0.46%** Portfolio turnover rate 42.70%+ 83.64% 86.35% 89.72% 96.41% 123.30% 31.47%+
---------- * For the period February 29, 2000 (Commencement of Operations) to September 30, 2000. ** Annualized. + Not annualized. + Less than $0.01 per share. ^ The total returns would have been lower had certain expenses not been reduced during the periods shown. BARON FIFTH AVENUE GROWTH FUND Selected data for a share of beneficial interest outstanding throughout each period:
YEAR ENDED SIX MONTHS SEPTEMBER 30, ENDED --------------- MARCH 31, 2006 2005 2004* -------------- ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $11.56 $ 9.89 $10.00 ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.01 (0.05) (0.02) Net realized and unrealized gains (losses) on investments 0.82 1.72 (0.09) ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.83 1.67 (0.11) ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 Distributions from net realized gains 0.00 0.00 0.00 ------ ------ ------ TOTAL DISTRIBUTIONS 0.00 0.00 0.00 ------ ------ ------ NET ASSET VALUE, END OF PERIOD $12.39 $11.56 $ 9.89 ====== ====== ====== TOTAL RETURN 7.2%+ 16.9%^ (1.1%)^+ ====== ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $148.3 $ 96.5 $ 49.3 Ratio of total expenses to average net assets 1.40%** 1.49% 1.67%** Less: Expense reimbursement by investment adviser 0.00%** (0.09%) (0.27%)** ------ ------ ------ Ratio of net expenses to average net assets 1.40%** 1.40% 1.40%** ====== ====== ====== Ratio of net investment income (loss) to average net assets 0.17%** (0.58%) (0.79%)** Portfolio turnover rate 31.50%+ 46.71% 7.58%+
---------- * For the period April 30, 2004 (commencement of operations) to September 30, 2004. ** Annualized. + Not annualized. ^ The total returns would have been lower had certain expenses not been reduced during the periods shown. 26 [LOGO BARON FUNDS(R)] MAR06 Item 2. Code of Ethics. Not applicable at this time. This item is appliacble to annual reports. Item 3. Audit Committee Financial Expert. Not applicable at this time. This item is appliacble to annual reports. Item 4. Principal Accountant Fees and Services. Not applicable at this time. This item is appliacble to annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable at this time. This item is appliacble to annual reports. Item 6. Schedule of Investments. Please see Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. NOT APPLICABLE. Item 8. Portfolio Managers of Closed-End Management Investment Companies. NOT APPLICIABLE. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. NOT APPLICABLE. Item 10. Submission of Matters to a Vote of Security Holders. NOT APPLICABLE> Item 11. Controls and Procedures. (a) The Registrant's principal executive officer and principal financial officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no significant changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. Item 12. Exhibits. a). Ex-99.COE Not applicable at this time. This item is appliacble to annual reports. b). Ex-99.CERT Certification pursuant to Item 10(b) of the Form N-CSR. 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. BARON INVESTMENT FUNDS TRUST By: /s/ Ronald Baron ------------------- Ronald Baron President and Chief Executive Officer Date: June 6, 2006 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/ Ronald Baron -------------------- Ronald Baron President and Chief Executive Officer Date: June 6, 2006 By: /s/ Peggy Wong -------------------- Peggy Wong Treasurer and Chief Financial Officer Date: June 6, 2006 A signed original of this written statement has been provided to Baron Investment Funds Trust and will be retained by Baron Investment Funds Trust and furnished to the Securities and Exchange Commission or its staff upon request.