BARON INVESTMENT FUNDS TRUST (f/k/a BARON ASSET FUND), et al. – ‘485APOS’ on 12/13/04

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Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485APOS     Amendment No. 27 to Form N-1A for Baron Investment    73    336K 
                          Funds Trust                                            

Document Table of Contents

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               UNITED STATES                      OMB APPROVAL
           SECURITIES AND EXCHANGE COMMISSION     OMB Number:   3235 -0307
                      Washington, D.C. 20549         Expires:    August 31, 2007
                                                  Estimated average burden
                                                     hours per response...427.09

 FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                 [  ]    
Pre-Effective Amendment No. _____                                       [  ]    
Post-Effective Amendment No.    27                                              
---------               
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940         [  ]    
   Amendment No.    28                                              [  ]
---------                               
(Check appropriate box or boxes)

BARON INVESTMENT FUNDS TRUST f/k/a BARON ASSET FUND     
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

767 Fifth Avenue, 49th fl, New York, NY 10153     
--------------------------------------------------------------------------------
 (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code    212-583-2000              
                                                  ------------------------------

  Linda S. Martinson, Vice President and General Counsel
c/o Baron Investment Funds Trust, 767 Fifth Avenue, 49th fl, New York, NY 10153 
--------------------------------------------------------------------------------
(Name and Address of Agent for Service) 

Approximate Date of Proposed Public Offering                                    
                                            ------------------------------------

It is proposed that this filing will become effective (check appropriate box)   
[ ]   immediately upon filing pursuant to paragraph (b)                   
[ ]   on (date) pursuant to paragraph (b)                                 
[ ]   60 days after filing pursuant to paragraph (a)(1)                   
[ ]   on (date) pursuant to paragraph (a)(1)                              
[ ]   75 days after filing pursuant to paragraph (a)(2)                   
[ ]   on (date) pursuant to paragraph (a)(2) of rule 485.                 

If appropriate, check the following box:                                        

  [ ]   this post-effective amendment designates  a new  effective  date for a
previously filed post-effective amendment.                    

     Omit from the facing sheet  reference to the other Act if the  Registration
Statement  or  amendment  is filed  under  only  one of the  Acts.  Include  the
"Approximate  Date of Proposed Public  Offering" and "Title of Securities  Being
Registered"  only where securities are being registered under the Securities Act
of 1933.                                                                        

     Form N-1A is to be used by open-end management investment companies, except
insurance  company  separate  accounts and small business  investment  companies
licensed  under the United  States Small  Business  Administration,  to register
under the  Investment  Company Act of 1940 and to offer their  shares  under the
Securities  Act of 1933.  The  Commission  has  designed  Form  N-1A to  provide
investors  with  information  that will assist  them in making a decision  about
investing in an investment company eligible to use the Form. The Commission also
may use the  information  provided  on Form N-1A in its  regulatory,  disclosure
review, inspection, and policy making roles.                                    

    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.                    

     A  Registrant  is required to disclose  the  information  specified by Form
N-1A, and the Commission will make this information  public. A Registrant is not
required to respond to the  collection  of  information  contained  in Form N-1A
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. Sec. 3507.                        

SEC 2052 (09-04)                                                                

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                                                                 January  , 2005

P  R  O  S  P  E  C  T  U  S

 [registered logo]

 B A R O N
    F U N D S(r)

                              > BARON ASSET FUND

                               > BARON GROWTH FUND

                                  > BARON SMALL CAP FUND

                                     > BARON iOPPORTUNITY FUND

                                            > BARON FIFTH AVENUE GROWTH FUND

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BARON ASSET FUND                                                                
BARON GROWTH FUND*                                                              
BARON SMALL CAP FUND                                                            
BARON iOPPORTUNITY FUND                                                         
BARON FIFTH AVENUE GROWTH FUND                                                  
767 Fifth Avenue                                                                
New York, New York 10153                                                        
1-800-99-BARON                                                                  
212-583-2100                                                                    

This prospectus  contains  essential  information for anyone  investing in these
funds. Please read it carefully and keep it for reference.                      

As with all mutual  funds,  the fact that these shares are  registered  with the
Securities  and  Exchange  Commission  does not mean  that  the  Commission  has
approved or disapproved  them or determined  whether this prospectus is accurate
or complete. Anyone who tells you otherwise is committing a crime.              

April 2, 2004                                                                   
-------------                                                                   

*    Baron Growth Fund is closed to new  investors.  Please see page 19 for more
information.                                                          

                                                              PROSPECTUS o 1

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TABLE OF CONTENTS                                                               
--------------------------------------------------------------------------------

INFORMATION ABOUT        Investment Goals and Strategies.................3      

THE FUNDS                Performance.....................................6      

                   Fund Expenses...................................9

                   Financial Highlights...........................11

                   Other Investment Strategies....................15

                   Management of the Funds........................17

--------------------------------------------------------------------------------

INFORMATION              How Your Shares are Priced.....................19      

ABOUT YOUR               How to Purchase Shares.........................19      

INVESTMENT               How to Redeem Shares...........................22      

                   How to Exchange Shares.........................24

           Special Information about The Baron Funds
                     Website......................................24

                   Distributions and Taxes........................25

                   General Information............................26

--------------------------------------------------------------------------------

MORE INFORMATION         Back Cover                                             

2 o PROSPECTUS                                                                  

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INFORMATION ABOUT THE FUNDS                                                     

INVESTMENT GOALS AND STRATEGIES                                                 
What are the investment goals of the Funds?                                     

BARON ASSET FUND                    capital appreciation through long-term      
                              investments in securities of small and
                   medium sized companies with
                              undervalued assets or favorable growth
 prospects
BARON GROWTH FUND                   capital appreciation through long-term      
Closed to New Investors             investments primarily in the securities of  
              small growth companies
BARON SMALL CAP FUND                capital appreciation through investments    
                                  primarily in securities of small companies
BARON iOPPORTUNITY FUND             capital appreciation through investments    
                            in growth business that benefit from
           technology advances
BARON FIFTH AVENUE GROWTH FUND      capital appreciation through investments    
                             primarily in the securities of larger
        growth companies

WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE FUNDS?                           
In making investment decisions for the Funds, the Adviser seeks:                

1.   securities  that  the  Adviser  believes  have  favorable  price  to  value
     characteristics  based on the Adviser's  assessment of their  prospects for
future growth and profitability.                                      

2.   businesses  that the Adviser  believes are well managed,  have  significant
long term growth prospects and are attractively priced.               

Investment decisions are made by the Funds' investment adviser, BAMCO, Inc. (the
"Adviser").  The Adviser focuses on the long-term  fundamental  prospects of the
businesses in which it invests,  rather than on historical  operating results or
current  earnings  expectations.  The Adviser  seeks  investments  supported  by
long-term  demographic,   economic  and  societal   "mega-trends."  The  Adviser
thoroughly  researches  the companies in which the Funds  invest.  The Adviser's
research  process  includes  visits and  interviews  by the Adviser with company
managements,  their major competitors,  and, often, their customers. The Adviser
looks for the ability of a company to grow its business  substantially  within a
four  to five  year  period;  special  business  niches  that  create  unusually
favorable  business  opportunities;  sustainable  barriers to  competition;  and
strong management capabilities. The Adviser seeks to purchase these companies at
what it perceives are attractive  prices relative to projected future cash flows
and asset  values,  before  the  companies'  long-term  business  prospects  are
appreciated by other  investors.  There is no assurance that the Funds will meet
their  investment  goals. The Funds may take large positions in the companies in
which the  Adviser  has the  greatest  conviction.  The Funds  have a  long-term
outlook. The Funds are designed for long-term  investors,  not for investors who
intend to sell after a short period of time.                                    

                                                                  PROSPECTUS o 3

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BARON ASSET FUND invests  primarily  in common  stocks of small and medium sized
companies selected for their capital appreciation  potential.  The Adviser seeks
to purchase  securities  that the Adviser  expects could  increase in value 100%
within four years.                                                              

BARON GROWTH FUND invests primarily in common stocks of smaller growth companies
selected for their  capital  appreciation  potential.  A small sized  company is
defined as having a market  value of under $2.5  billion.  The Adviser  seeks to
purchase securities that the Adviser expects could increase in value 100% within
four years.                                                                     

BARON SMALL CAP FUND  invests  primarily  in common  stocks  selected  for their
capital  appreciation  potential.  At least 80% of the Fund's  total  assets are
invested in the securities of smaller  companies based on the market size of the
investment at the time of purchase. A small sized company is defined as having a
market value of under $2.5  billion.  The Adviser  seeks to purchase  securities
that the Adviser expects could increase in value 100% within four years.        

BARON  iOPPORTUNITY FUND invests primarily in common stocks of growth businesses
selected for their capital appreciation potential. The Fund seeks investments in
companies that the Adviser believes have growth opportunities,  that result from
the rapidly changing information technology environment, including the Internet.
The  Adviser  seeks to invest in both new  emerging  companies  and more  mature
"bricks and mortar"  businesses  which the Adviser  believes  have  significant,
sustainable,  growth opportunities.  These investments,  as with investments for
the other  Baron  Funds(r),  will be  purchased  at  prices  the  Adviser  deems
attractive based on the Adviser's projected cash flows and/or customer and asset
valuations  within a reasonable  time  period.  At least 80% of the Fund's total
assets are invested in securities of companies  that have  Internet-related  and
information technology  growth  opportunities.  The  Adviser  seeks to  purchase
securities  that the Adviser  expects  could  increase in value 100% within four
years.                                                                          

BARON FIFTH  AVENUE  GROWTH FUND invests  primarily  in common  stocks of growth
companies selected for their capital appreciation potential. At least 80% of the
Fund's total  assets are invested in the  securities  of larger  companies  with
market  values  of  greater  than $5  billion  based on the  market  size of the
investment  at the time of purchase.  The Adviser  seeks to purchase  securities
that the Adviser expects could increase in value 100% over five years.          

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?                                      

The  Funds  invest  primarily  in  common  stocks  but may also  invest in other
equity-type  securities  such as  convertible  bonds and  debentures,  preferred
stocks,  warrants and convertible preferred stocks.  Securities are selected for
their  capital   appreciation   potential,   and  investment  income  is  not  a
consideration.                                                                  

BARON ASSET FUND invests  primarily  in small and medium sized growth  companies
with market capitalizations at the time of investment of under $8 billion. BARON
GROWTH FUND and BARON SMALL CAP FUND invest  primarily in small sized  companies
with market values under $2.5 billion.  These Funds will not sell positions just
because their market values have increased. The Funds will add to positions in a
company even though its market capitalization has increased through appreciation
beyond the limits                                                               

4 o PROSPECTUS                                                                  

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stated,  if, in the  Adviser's  judgment,  the  company  is still an  attractive
investment.  BARON  iOPPORTUNITY  FUND  invests in  companies  of all sizes with
Internet and information  technology related growth  opportunities.  BARON FIFTH
AVENUE  GROWTH  FUND  invests  primarily  in the  securities  of  larger  growth
companies with market values of over $5 billion.                                

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?                         

GENERAL STOCK MARKET RISK  Investing in the stock market is risky because equity
securities fluctuate in value, often based on factors unrelated to the intrinsic
value of the issuer.  These issues may be due to political,  economic or general
market circumstances. Other factors may affect a single company or industry, but
not the broader market. Because securities' values fluctuate, when you sell your
investment  in a Fund you may  receive  more or less money  than you  originally
invested.                                                                       

SMALL AND MEDIUM SIZED  COMPANIES The Adviser  believes  there is more potential
for capital  appreciation in smaller  companies but there also may be more risk.
Securities of smaller  companies may not be well known to most investors and the
securities may be thinly  traded.  Smaller  company  securities may fluctuate in
price more widely than the stock market generally and they may be more difficult
to sell  during  market  downturns.  There is more  reliance  on the skills of a
company's  management and on their continued  tenure.  This investment  approach
requires a long-term  outlook and may require  shareholders  to assume more risk
and to have more  patience  than  investing in the  securities  of larger,  more
established companies.                                                          

LARGE POSITIONS Even though the Funds are  diversified,  the Funds may establish
significant  positions  in  companies  in which  the  Adviser  has the  greatest
conviction.  If the  stock  price  of one or  more  of  those  companies  should
decrease,  it would have a big impact on the Fund's net asset value. These large
positions may represent a significant part of a company's outstanding stock, and
sales by the Funds could adversely  affect stock prices.  The Fund's returns may
be more volatile than those of a less concentrated portfolio.                   

LONG TERM OUTLOOK AND PROJECTIONS The Funds are designed for long-term investors
who are willing to hold  investments for a substantial  period of time. The cash
flows  and  valuations  that  the  Adviser  projects  for a  company  may not be
achieved, which would negatively impact the stock market price of that company. 

INTERNET AND INFORMATION TECHNOLOGY  Internet-related and information technology
companies as well as companies  propelled  by new  technologies  may present the
risk of rapid  change  and  product  obsolescence  and  their  successes  may be
difficult to predict for the long term. Some  Internet-related  companies may be
newly formed and have limited operating history and experience. Internet-related
companies may also be adversely  affected by changes in  governmental  policies,
competitive  pressures,  and changing demand.  The securities of these companies
may also  experience  significant  price  movements  caused by  disproportionate
investor  optimism  or  pessimism  with  little  or no  basis  in the  company's
fundamentals or economic conditions.                                            

                                                                  PROSPECTUS o 5

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PERFORMANCE                                                                     

The  information  below  shows the Funds'  annual  returns  and their  long-term
performance. The information provides some indications of the risks of investing
in the Funds.  The bar  charts  show you how the  performance  for each Fund has
varied from year to year. The tables  compare the  performance of the Funds over
time to  relevant  indexes.  How the  Funds  have  performed  in the past is not
necessarily  an  indication  of how they will perform in the future.  The annual
report  contains  additional  performance  information  which is available  upon
request  without  charge by  writing  or calling  the Funds at the  address  and
telephone number set forth on the back of this  Prospectus.  Because BARON FIFTH
AVENUE GROWTH FUND is a new fund, it has no performance history.                

BARON ASSET FUND                                                                

Annual returns for periods ended 12/31 of each year                             

[bar graph]                                                                     

1994    1995    1996    1997    1998    1999    2000    2001    2002    2003    

7.4%    35.3%   22.0%   33.9%    4.3%   16.3%    0.4%   -10.1%  -20.0%   27.3%  

Best Quarter:  12/31/98:   26.6%                                                
Worst Quarter: 09/30/98:  -23.4%                                                

BARON GROWTH FUND                                                               

Annual returns for periods ended 12/31 of each year                             

[bar graph]                                                                     

1995    1996    1997    1998    1999    2000    2001    2002    2003            

52.5%   27.7%   31.1%   0.1%    44.7%   -4.6%   12.7%   -12.3%   31.7%          

Best Quarter:  12/31/99:   23.9%                                                
Worst Quarter: 09/30/98:  -22.1%                                                

6 o PROSPECTUS                                                                  

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BARON SMALL CAP FUND                                                            

Annual returns for periods ended 12/31 of each year                             

[bar graph]                                                                     

1998    1999    2000    2001    2002    2003                                    

2.2%    70.8%  -17.5%   5.2%    -9.7%   38.8%                                   

Best Quarter:  12/31/99:   34.6%                                                
Worst Quarter: 09/30/98:  -28.1%                                                

BARON iOPPORTUNITY FUND                                                         

Annual returns for periods ended 12/31 of each year                             

[bar graph]                                                                     

2001     2002     2003                                                          

-3.6%    -29.0%   73.8%                                                         

Best Quarter:  12/31/01:   43.3%                                                
Worst Quarter: 09/30/01:  -37.9%                                                

AVERAGE ANNUAL TOTAL RETURNS (For periods ended 12/31/03)                       

The following  table shows the Funds' average  annual returns  (before and after
taxes)  and the  change in value of a  broad-based  market  index  over  various
periods ended December 31, 2003. The index information is intended to permit you
to compare each Fund's performance to a broad measure of market performance. The
after-tax  returns  are  intended to show the impact of assumed  federal  income
taxes on an investment in a Fund. A Fund's "RETURN AFTER TAXES ON DISTRIBUTIONS"
shows  the  effect  of  taxable   distributions   (dividends  and  capital  gain
distributions),  but  assumes  that you still hold the Fund shares at the end of
the period and so do not have any  taxable  gain or loss on your  investment  in
shares of the Fund. A Fund's  "RETURN AFTER TAXES ON  DISTRIBUTIONS  AND SALE OF
FUND SHARES" shows the effect of both taxable distributions and any taxable gain
or loss  that  would  be  realized  if the Fund  shares  were  purchased  at the
beginning and sold at the end of the specified period.                          

After-tax returns are calculated using the highest  individual  federal marginal
income tax rate in effect at the time of each distribution and assumed sale, but
do not  include  the impact of state and local  taxes.  In some  instances,  the
"RETURN  AFTER TAXES ON  DISTRIBUTIONS  AND SALE OF                             

                                                                  PROSPECTUS o 7

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FUND SHARES" is greater than the "RETURN  BEFORE TAXES"  because you are assumed
to be able to use the capital  loss on the sale of Fund  shares to offset  other
taxable gains.                                                                  

Your actual  after-tax  returns  depend on your own tax situation and may differ
from  those  shown.  After-tax  returns  reflect  past tax  effects  and are not
predictive  of  future  tax  effects.  After-tax  returns  are not  relevant  to
investors  who hold their Fund shares in a  tax-deferred  account  (including  a
401(k) or IRA account), or to investors that are tax-exempt. No data is provided
for BARON FIFTH AVENUE GROWTH FUND because it is a new fund.                    

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------------------------------
                                                                                                        Since        
                                                                       1 year    5 years    10 years    Inception    
---------------------------------------------------------------------------------------------------------------------
                                                                                                                     
 BARON ASSET FUND                                                                                                    
---------------------------------------------------------------------------------------------------------------------
 Return before taxes                                                   27.34%      1.34%     10.21%       12.50%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions                                   27.34%      0.52%      9.67%       11.71%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions & sale of Fund shares             17.77%      0.92%      8.93%       11.04%     
---------------------------------------------------------------------------------------------------------------------
 Russell 2000 (reflects no deductions for fees, expenses or taxes)     47.25%      7.13%      9.47%        9.43%     
---------------------------------------------------------------------------------------------------------------------
 Russell 2500 (reflects no deductions for fees, expenses or taxes)     45.51%      9.40%     11.74%       11.36%     
---------------------------------------------------------------------------------------------------------------------
 S&P 500 (reflects no deductions for fees, expenses or taxes)          28.62%     -0.61%     11.04%       10.86%     
---------------------------------------------------------------------------------------------------------------------

 BARON GROWTH FUND                                                                                                   
---------------------------------------------------------------------------------------------------------------------
 Return before taxes                                                   31.75%     12.45%                  18.46%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions                                   31.75%     11.40%                  17.72%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions & sale of Fund shares             20.64%     10.43%                  16.42%     
---------------------------------------------------------------------------------------------------------------------
 Russell 2000 (reflects no deductions for fees, expenses or taxes)     47.25%      7.13%                  10.81%     
---------------------------------------------------------------------------------------------------------------------
 S&P 500 (reflects no deductions for fees, expenses or taxes)          28.62%     -0.61%                  12.18%     
---------------------------------------------------------------------------------------------------------------------

 BARON SMALL CAP FUND                                                                                                
---------------------------------------------------------------------------------------------------------------------
 Return before taxes                                                   38.82%     13.19%                  11.35%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions                                   38.82%     12.95%                  11.16%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions & sale of Fund shares             25.23%     11.47%                   9.92%     
---------------------------------------------------------------------------------------------------------------------
 Russell 2000 (reflects no deductions for fees, expenses or taxes)     47.25%      7.13%                   4.66%     
---------------------------------------------------------------------------------------------------------------------
 S&P 500 (relects no deductions for fees, expenses or taxes)           28.62%     -0.61%                   4.07%     
---------------------------------------------------------------------------------------------------------------------

 BARON iOPPORTUNITY FUND                                                                                             
---------------------------------------------------------------------------------------------------------------------
 Return before taxes                                                   73.80%                             -8.03%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions                                   73.80%                             -8.06%     
---------------------------------------------------------------------------------------------------------------------
 Return after taxes on distributions & sale of Fund shares             47.97%                             -6.71%     
---------------------------------------------------------------------------------------------------------------------
 Nasdaq Composite (reflects no deductions for fees, expenses or taxes) 50.01%                             -19.93%    
---------------------------------------------------------------------------------------------------------------------
 Morgan Stanley Internet Index (reflects no deductions for fees,                                                     
 expenses or taxes)                                                    64.14%                             -43.16%    
---------------------------------------------------------------------------------------------------------------------
 S&P 500 (reflects no deductions for fees, expenses or taxes)          26.62%                              -3.85%    
---------------------------------------------------------------------------------------------------------------------

8 o PROSPECTUS                                                                  

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The Russell 2000 is a widely  recognized  unmanaged index of smaller  companies.
The Russell 2500 is an unmanaged index of small to medium companies.  The Nasdaq
Composite  is an unmanaged  index that tracks the  performance  of  market-value
weighted common stocks listed on Nasdaq. The Morgan Stanley Internet Index is an
unmanaged index of actively traded, high market cap Internet stocks. The S&P 500
is an unmanaged  index that  measures the  performance  of larger cap  equities.
Market indices to compare the performance of BARON FIFTH AVENUE GROWTH FUND will
be the S&P 500 and the Russell 1000, both unmanaged indices of larger companies.
The  Funds  may also  compare  their  performance  to the  performance  of their
respective peer groups, as published by Morningstar and Lipper.                 

FUND EXPENSES                                                                   

The table below  describes  the fees and expenses  that you would pay if you buy
and hold shares of the Funds.                                                   

ANNUAL FUND OPERATING EXPENSES                                                  
(Expenses that are deducted from a Fund's assets)                               

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Total Annual      
                                                  Management    Distribution        Other            Expense     Fund Operating    
                                                  Fee           (12b-1) Fee         Expenses         Waivers     Expenses          
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   
 Baron Asset Fund                                  1.0%           0.25%              0.09%            0%          1.34%            
-----------------------------------------------------------------------------------------------------------------------------------
 Baron Growth Fund                                 1.0%           0.25%              0.11%            0%          1.36%            
-----------------------------------------------------------------------------------------------------------------------------------
 Baron Small Cap Fund                              1.0%           0.25%              0.11%            0%          1.36%            
-----------------------------------------------------------------------------------------------------------------------------------
 Baron iOpportunity Fund                           1.0%           0.25%              0.42%           (0.17%)      1.50%*           
-----------------------------------------------------------------------------------------------------------------------------------
 Baron Fifth Avenue Growth Fund                    1.0%           0.25%              0.25%**         (0.10%)      1.40%*           
-----------------------------------------------------------------------------------------------------------------------------------

*    The Adviser has contractually agreed to reimburse certain expenses of Baron
     iOpportunity  Fund and Baron Fifth  Avenue  Growth Fund so that their total
     operating  expenses  are  limited to 1.5% and 1.4% of average  net  assets,
     respectively.  For Baron Fifth Avenue  Growth Fund,  the Adviser has agreed
     that for so long as it is Adviser to Baron Fifth Avenue  Growth  Fund,  the
     initial expense reimbursement period is two years. The advisory contract is
renewable annually.                                                   
**   Other Expenses are based on estimated  amounts for the current fiscal year.

BARON iOPPORTUNITY FUND imposes a short-term trading fee of 1% on redemptions of
shares held for less than 6 months.                                             

                                                                  PROSPECTUS o 9

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EXAMPLE                                                                         

This  example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.  The example  assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those  periods.  The example  also  assumes  that your
investment  has a 5% return  each year and that the  Funds'  operating  expenses
remain the same.  Although  your actual  costs may be higher or lower,  based on
these assumptions your costs would be:                                          

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------
YEAR                                  1                3               5                10     
-----------------------------------------------------------------------------------------------
                                                                                               
BARON ASSET FUND                     $136            $425             $734            $1,613   
-----------------------------------------------------------------------------------------------
BARON GROWTH FUND                    $138            $431             $745            $1,635   
-----------------------------------------------------------------------------------------------
BARON SMALL CAP FUND                 $138            $431             $745            $1,635   
-----------------------------------------------------------------------------------------------
BARON iOPPORTUNITY FUND              $153            $510             $891            $1,962   
-----------------------------------------------------------------------------------------------
BARON FIFTH AVENUE GROWTH FUND*      $143            $454                                      
-----------------------------------------------------------------------------------------------

*    Because BARON FIFTH AVENUE  GROWTH FUND is a new fund "Other  Expenses" are
based on the operating expense limitation agreed to by the Adviser.   

There are additional charges if you have retirement accounts and wire transfers.
You also may purchase and redeem your shares  through  broker-dealers  or others
who may charge a commission or other  transaction fee for their  services.  (See
"How to Purchase Shares" and "How to Redeem Shares".)                           

The 12b-1 fee is paid to Baron Capital,  Inc. for shareholder  and  distribution
services.  Because  the fees are paid out of the  Funds'  assets  on an  ongoing
basis,  over time it will increase the cost of your  investment and may cost you
more than paying other types of sales charges.                                  

10 o PROSPECTUS                                                                 

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FINANCIAL HIGHLIGHTS                                                            

The financial  highlights  table is intended to help you  understand  the Funds'
financial  performance  for the  fiscal  years  indicated.  Certain  information
reflects financial results for a single Fund share. The "total return" shows how
much your investment in the Fund would have increased (or decreased) during each
period,  assuming you had  reinvested  all  dividends and  distributions.  These
financial highlights have been audited by PricewaterhouseCoopers LLP, the Funds'
independent   accountants,   whose  report,  along  with  the  Funds'  financial
statements,  is included in the annual report,  which is available upon request.
Because  BARON  FIFTH  AVENUE  GROWTH  FUND is a new fund,  it has no  financial
highlights to report.                                                           

BARON ASSET FUND                                                                

                                                        [Enlarge/Download Table]

Year Ended September 30                                                                                       
                                                    2003           2002         2001        2000         1999 
                                                 -------        -------      -------     -------      ------- 
                                                                                                              
Net Asset Value, Beginning of Year               $ 35.65        $ 40.22      $ 63.35     $ 51.57      $ 39.96 
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS                                                                             
Net Investment Loss                                (0.46)         (0.55)       (0.65)      (0.76)       (0.30)
Net Realized and Unrealized Gains (Losses)                                                                    
 on Investments                                     6.04           0.05       (17.87)      12.53        11.94 
--------------------------------------------------------------------------------------------------------------
Total from Investment Operations                    5.58          (0.50)      (18.52)      11.77        11.64 
--------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS                                                                                            
Dividends from Net Investment Income                0.00           0.00         0.00        0.00        (0.04)
Distributions from Net Realized Gains              (1.18)         (4.07)       (4.61)       0.00         0.00 
--------------------------------------------------------------------------------------------------------------
Total Distributions                                (1.18)         (4.07)       (4.61)       0.00        (0.04)
--------------------------------------------------------------------------------------------------------------
Capital Contribution                                0.00           0.00         0.00        0.01         0.01 
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                     $ 40.05        $ 35.65      $ 40.22     $ 63.35      $ 51.57 
==============================================================================================================
TOTAL RETURN                                       16.1%          (2.5%)      (31.2%)     22.8%#        29.2%*
--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA                                                                                      
Net Assets (in millions), End of Year            $1,957.2       $2,055.2     $2,692.3    $4,917.4     $5,863.1
Ratio of Total Expenses to Average Net Assets      1.34%          1.35%        1.37%       1.36%        1.31% 
Less: Ratio of Interest Expense to Average                                                                    
 Net Assets                                        0.00%         (0.02%)      (0.01%)     (0.03%)       0.00% 
--------------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net                                                                    
 Assets                                            1.34%          1.33%        1.36%       1.33%        1.31% 
==============================================================================================================
Ratio of Net Investment Loss to                                                                               
 Average Net Assets                               (1.14%)        (1.16%)      (1.14%)     (1.09%)      (0.57%)
Portfolio Turnover Rate                           27.95%          6.01%        4.33%       2.51%       15.64% 
--------------------------------------------------------------------------------------------------------------

#    Had the adviser  not made a capital  contribution,  the Fund's  performance
would have been reduced by 0.02%.                                     
*    Had the adviser  not made a capital  contribution,  the Fund's  performance
would have been reduced by 0.03%.                                     

                                                                 PROSPECTUS o 11

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BARON GROWTH FUND                                                               

                                                        [Enlarge/Download Table]

Year Ended September 30                                                                                       
                                                      2003         2002         2001        2000         1999 
                                                   -------      -------      -------     -------      ------- 
                                                                                                              
Net Asset Value, Beginning of Year                 $ 26.96      $ 27.18      $ 32.26     $ 29.06      $ 20.32 
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS                                                                             
Net Investment Loss                                  (0.25)       (0.23)       (0.22)      (0.26)       (0.04)
Net Realized and Unrealized Gains (Losses) on                                                                 
 Investments                                          5.94         1.65        (1.67)       5.34         8.82 
--------------------------------------------------------------------------------------------------------------
Total from Investment Operations                      5.69         1.42        (1.89)       5.08         8.78 
--------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS                                                                                            
Dividends from Net Investment Income                  0.00         0.00         0.00        0.00        (0.04)
Distributions from Net Realized Gains                 0.00        (1.64)       (3.19)      (1.88)        0.00 
--------------------------------------------------------------------------------------------------------------
Total Distributions                                   0.00        (1.64)       (3.19)      (1.88)       (0.04)
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                       $ 32.65      $ 26.96      $ 27.18     $ 32.26      $ 29.06 
==============================================================================================================
TOTAL RETURN                                         21.1%         5.0%        (6.1%)      18.6%        43.2% 
--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA                                                                                      
Net Assets (in millions), End of Year             $2,185.4      $1,030.3      $ 512.3     $ 533.4      $ 439.4
Ratio of Total Expenses to Average Net Assets        1.36%        1.35%        1.36%       1.36%        1.40% 
Less: Ratio of Interest Expense to Average                                                                    
 Net Assets                                          0.00%        0.00%        0.00%       0.00%       (0.03%)
--------------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net                                                                    
 Assets                                              1.36%        1.35%        1.36%       1.36%        1.37% 
==============================================================================================================
Ratio of Net Investment Loss to                                                                               
 Average Net Assets                                 (1.11%)      (1.02%)      (0.79%)     (0.78%)      (0.20%)
Portfolio Turnover Rate                             32.63%       18.31%       34.94%      39.00%       53.36% 
--------------------------------------------------------------------------------------------------------------

12 o PROSPECTUS                                                                 

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BARON SMALL CAP FUND                                                            

                                                        [Enlarge/Download Table]

Year Ended September 30                                                                                                 
                                                                2003         2002         2001        2000          1999
                                                              ------       ------       ------      ------        ------
                                                                                                                        
Net Asset Value, Beginning of Year                            $13.73       $12.69       $16.05      $13.37        $8.61 
------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS                                                                                       
Net Investment Loss                                            (0.11)       (0.14)       (0.11)      (0.16)       (0.10)
Net Realized and Unrealized Gains (Losses) on Investments       4.02         1.18        (2.87)       2.84         4.86 
------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations                                3.91         1.04        (2.98)       2.68         4.76 
------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS                                                                                                      
Dividends from Net Investment Income                            0.00         0.00         0.00        0.00         0.00 
Distributions from Net Realized Gains                          (0.38)        0.00        (0.38)       0.00         0.00 
------------------------------------------------------------------------------------------------------------------------
Total Distributions                                            (0.38)        0.00        (0.38)       0.00         0.00 
------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                                  $17.26       $13.73       $12.69      $16.05       $13.37 
========================================================================================================================
TOTAL RETURN                                                   29.2%         8.2%       (18.8%)      20.0%        55.3% 
------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA                                                                                                
Net Assets (in millions), End of Year                        $1,210.5      $719.1       $585.9      $879.5       $715.7 
Ratio of Total Expenses to Average Net Assets                  1.36%        1.36%        1.35%       1.33%        1.34% 
Ratio of Net Investment Loss to Average Net Assets            (0.87%)      (0.97%)      (0.68%)     (0.90%)      (0.99%)
Portfolio Turnover Rate                                       30.29%       55.07%       55.77%      53.18%       42.69% 
------------------------------------------------------------------------------------------------------------------------

                                                                 PROSPECTUS o 12

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BARON iOPPORTUNITY FUND                                                         

                                                        [Enlarge/Download Table]

Year Ended September 30                                                                                                            
                                                                    2003               2002            2001              2000^     
                                                                 -------             ------          ------           --------     
                                                                                                                                   
Net Asset Value, Beginning of Year                               $  3.63             $  4.09         $ 8.76           $ 10.00      
-----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS                                                                                                  
Net Investment Income (Loss)                                       (0.05)              (0.06)         (0.05)             0.03      
Net Realized and Unrealized Losses on Investments                   2.89               (0.40)         (4.59)            (1.28)     
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations                                    2.84               (0.46)         (4.64)            (1.25)     
-----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS                                                                                                                 
Dividends from Net Investment Income                                0.00                0.00          (0.03)             0.00      
Distributions from Net Realized Gains                               0.00                0.00           0.00              0.00      
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions                                                 0.00                0.00          (0.03)             0.00      
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees Added to Paid In Capital                            0.01                0.00*          0.00*             0.01      
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                                     $  6.48             $  3.63         $ 4.09            $ 8.76      
===================================================================================================================================
TOTAL RETURN +                                                     78.5%              (11.2%)        (53.1%)           (12.4%)     
-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA                                                                                                           
Net Assets (in millions), End of Year                            $109.3              $  57.5         $ 73.7            $ 188.2     
Ratio of Total Expenses to Average Net Assets                     1.67%                 1.65%          1.55%             1.53%*    
Less: Expense Reimbursement by Investment Adviser                (0.17%)               (0.15%)        (0.05%)           (0.03%)    
-----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets                       1.50%                 1.50%          1.50%             1.50%*    
===================================================================================================================================
Ratio of Net Investment Income (Loss) to Average Net Assets      (1.18%)               (1.20%)        (0.75%)            0.46%*    
Portfolio Turnover Rate                                          89.72%                96.41%         123.30%            31.47%    
-----------------------------------------------------------------------------------------------------------------------------------

^    For the Period February 29, 2000  (Commencement of Operations) to September
30, 2000.                                                             
*    Less than $.01 per share.                                                  
**   Annualized.                                                                
+    The total  returns  would have been  lower had  certain  expenses  not been
reduced during the periods shown.                                     

14 o PROSPECTUS                                                                 

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OTHER INVESTMENT STRATEGIES                                                     

WHAT ARE SOME OF THE OTHER INVESTMENTS THE FUNDS MAKE?                          

CASH POSITION   When the Adviser  determines that opportunities  for  profitable
investments  are  limited or that  adverse  market  conditions  exist,  all or a
portion of the Funds' assets may be invested in cash or cash equivalents such as
money market instruments, which include U.S. Government securities, certificates
of deposit,  short-term  investment  grade corporate bonds and other  short-term
debt instruments,  and repurchase agreements.  When a Fund's investments in cash
or similar investments increase,  its investment objectives may not be achieved.
BARON  ASSET FUND may borrow up to 5% of its net  assets  for  extraordinary  or
emergency  temporary  investment  purposes or to meet redemption  requests which
might otherwise require an untimely sale of portfolio  securities.  BARON GROWTH
FUND,  BARON SMALL CAP FUND,  BARON  iOPPORTUNITY  FUND and BARON  FIFTH  AVENUE
GROWTH FUND may borrow up to 30% of the value of their  respective total assets,
including  the  amount  borrowed,  as of the  time  the  borrowing  is made  for
temporary, emergency or other purposes.                                         

DEBT SECURITIES The Funds may invest in debt securities which may include notes,
bonds,  debentures and money market  instruments.  Debt securities  represent an
obligation  of the issuer to repay a loan of money to it,  often with  interest.
The debt  securities  in which the Funds may invest  include  rated and  unrated
securities and convertible instruments.  There is no minimum rating for the debt
securities  that  may be  purchased  for  those  Funds.  The  Funds  rely on the
Adviser's  assessment  of the  issuer's  securities  and do not use  independent
ratings organizations.                                                          

ILLIQUID     Securities BARON ASSET FUND may invest up to 10%, and BARON  GROWTH
FUND,  BARON SMALL CAP FUND,  BARON  iOPPORTUNITY  FUND and BARON  FIFTH  AVENUE
GROWTH FUND may invest up to 15%, of their  respective  net assets in securities
that are illiquid. An illiquid security is one that cannot be disposed of in the
ordinary course of business within seven days.                                  

SPECIAL SITUATIONS     The Funds may  invest in "special  situations." A special
situation  arises  when,  in the opinion of the  Adviser,  the  securities  of a
company will be recognized and appreciate in value due to a specific anticipated
development at that company.  Such developments  might include a new product,  a
management change, an acquisition or a technological advancement.               

FOREIGN SECURITIES  The Funds may invest without limitation in the securities of
foreign issuers in U.S.  denominated form known as American Depository Receipts.
They may also invest in foreign  denominated form (Global Depository Receipts or
European Depository Receipts), up to 10% of the respective total assets of BARON
ASSET  FUND,  BARON  GROWTH  FUND and BARON  SMALL CAP FUND and up to 25% of the
total assets of BARON iOPPORTUNITY FUND and BARON FIFTH AVENUE GROWTH FUND.     

OPTIONS AND DERIVATIVES   BARON ASSET FUND may write (sell) covered call options
or purchase  put options on equity  and/or debt  securities.  BARON GROWTH FUND,
BARON SMALL CAP FUND, BARON iOPPORTUNITY FUND and                               

                                                                 PROSPECTUS o 15

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BARON FIFTH AVENUE GROWTH FUND may sell put options and covered call options and
purchase put and call options on equity  and/or debt  securities.  A call option
gives  the  purchaser  of the  options  the  right to buy,  and  when  exercised
obligates the writer to sell, the underlying  security at the exercise  price. A
put  option  gives the  purchaser  of the  option  the  right to sell,  and when
exercised  obligates the writer to buy, the underlying  security at the exercise
price. The options may be listed or  over-the-counter.  The Funds may also enter
into equity swap agreements and other derivative investments.                   

OTHER STRATEGIES    The  Funds  have   additional   investment   strategies  and
restrictions that govern their activities.  For a list of these restrictions and
more  information  about  the  investment  strategies,  please  see the  section
"Investment  Goals,  Strategies  and  Risks"  in  the  Statement  of  Additional
Information. Those that are identified as "fundamental" may only be changed with
shareholder approval, while the others may be changed by the Board of Trustees. 

WHAT ARE SOME ADDITIONAL RISK FACTORS?                                          

OPTIONS AND  DERIVATIVES   Options may fail as hedging techniques in cases where
the price  movements of the securities  underlying the options do not follow the
price  movements  of the  portfolio  securities  subject to the hedge.  Gains on
investments  in  options  and  derivatives  depend on the  Adviser's  ability to
anticipate  correctly the direction of stock prices,  interest rates,  and other
economic factors.  Options may lose all their value in a relatively short period
of time. The dealer who takes the other side of a derivative  transaction  could
fail.  Where a liquid  secondary market does not exist, the Fund would likely be
unable to control losses by closing its position.                               

DEBT SECURITIES   Lower  rated  securities  may  have a  higher  yield,  and the
potential for a greater return than investment  grade  securities,  but may also
have more risk.  Lower rated  securities  are  generally  meant for  longer-term
investing and may be subject to certain risks with respect to the issuing entity
and to market fluctuations. See the Statement of Additional Information for more
information.  The Adviser will also evaluate the  securities  and the ability of
the issuers to pay interest and principal.  With lower rated debt securities,  a
Fund's ability to achieve its investment  objective may be more dependent on the
Adviser's  credit analysis than might be the case with higher rated  securities.
The market price and yield of lower rated securities are generally more volatile
than those of higher rated securities.  Factors  adversely  affecting the market
price and yield of these  securities will adversely  affect the Fund's net asset
value.  The trading market for these  securities may be less liquid than that of
higher rated  securities.  Companies  that issue lower rated  securities  may be
highly leveraged or may have unstable earnings, and consequently the risk of the
investment  in the  securities  of such  issuers may be greater than with higher
rated securities.                                                               

The interest bearing features of debt securities carry a promise of income flow,
but the price of the  securities  are inversely  affected by changes in interest
rates and are therefore  subject to the risk of market price  fluctuations.  The
market values of debt  securities  may also be affected by changes in the credit
ratings or financial condition of the issuers.                                  

16 o PROSPECTUS                                                                 

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FOREIGN SECURITIES Investments in foreign securities may have greater risks than
investments in domestic  securities and such risks may be unrelated to the price
of the security.  Such risks include  currency  exchange  risks, as the value of
local currency relates to the U.S.  dollar.  The value of a foreign security may
be worth less in U.S. Dollars even if the security increases in value in its own
country due to declines  in exchange  rates or changes in U.S. or foreign  laws.
Foreign   investments   are  also  subject  to  political  and  economic  risks,
particularly  in countries with unstable  governments,  different legal systems,
and limited  industries.  In some countries there may be the risk of governments
seizing  the  assets or  operations  of a  company.  Further,  there may be less
governmental   supervision  of  foreign  markets,   including   non-standardized
financial reporting and less publicly available  information.  There is also the
risk that the  foreign  securities  may be less  liquid,  there may be delays in
settlement  of  purchase  and sale  transactions,  and there may not be adequate
protection to ensure the other side will complete a transaction.                

CONVERTIBLE SECURITIES   Since  convertible  securities  combine the  investment
characteristics  of  both  bonds  and  common  stocks,  the  Funds'  convertible
securities  investments  absorb the market  risks of both stocks and bonds.  The
combination does,  however,  make the investment less sensitive to interest rate
changes than straight bonds of comparable  maturity and quality and usually less
volatile than common stocks.  Because of these factors,  convertible  securities
are likely to perform  differently than broadly-based  measures of the stock and
bond markets.                                                                   

BORROWINGS   To the extent a Fund  borrows, it must  maintain  continuous  asset
coverage of 300% of the amount  borrowed.  Such borrowing has special risks. Any
amount borrowed will be subject to interest costs that may or may not exceed the
appreciation of the securities purchased.                                       

ILLIQUID SECURITIES   The absence of a trading market could make it difficult to
ascertain a market value for illiquid positions.  A Fund's net asset value could
be adversely affected if there were no ready buyer at an acceptable price at the
time the Fund decided to sell.  Time-consuming  negotiations  and expenses could
occur in disposing of the shares.                                               

SPECIAL SITUATIONS   Investments  in special  situations  have the risk that the
anticipated  development  does  not  occur  or does  not  attract  the  expected
attention.                                                                      

MANAGEMENT OF THE FUNDS                                                         

The Board of Trustees  oversees the management of the Funds. A list of the Board
members and the Funds'  officers  may be found in the  Statement  of  Additional
Information. BAMCO, Inc., the Adviser, is located at 767 Fifth Avenue, New York,
New York 10153, and is responsible for portfolio management.  It is a subsidiary
of Baron Capital Group, Inc. ("BCG").  Baron Capital, Inc. ("Baron Capital"),  a
registered broker-dealer and the distributor of the shares of the Funds, is also
a subsidiary of BCG.                                                            

Ronald Baron is the founder, chief executive officer and chairman of the Adviser
and BCG (and its  subsidiaries)  and, with his family, is the principal owner of
BCG.  Morty Schaja is the president and chief  operating  officer of the Adviser
and BCG (and its subsidiaries) and has been with the Adviser and BCG since 1991.

                                                                 PROSPECTUS o 17

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Mr.  Baron has been the  portfolio  manager of BARON ASSET FUND and BARON GROWTH
FUND since their  inception.  He has managed  money for others since 1975. As of
July 23, 2003,  Andrew Peck is a  co-portfolio  manager of BARON ASSET FUND. Mr.
Peck is a Vice  President  of Baron  Funds and has  worked at Baron  Funds as an
analyst  since  February  of  1998.  Before  that he was an  analyst  at a large
brokerage firm.  Cliff  Greenberg has been the portfolio  manager of BARON SMALL
CAP FUND since its  inception.  Mr.  Greenberg  joined Baron Funds in January of
1997. He was a general partner and portfolio manager at HPB Associates, L.P., an
investment  partnership  from January  1990 until he joined  Baron Funds.  Mitch
Rubin  has been the  portfolio  manager  of BARON  iOPPORTUNITY  FUND  since its
inception  and he is also the  portfolio  manager of BARON FIFTH  AVENUE  GROWTH
FUND.  Mr.  Rubin has worked at Baron  Funds as an analyst for more than 8 years
and was an assistant portfolio manager of BARON GROWTH FUND for one year. Before
that he was an analyst at a large brokerage firm. Each of the portfolio managers
named  above may serve as  portfolio  managers or  analysts  for other  products
offered by affiliates  that could  conflict with their  responsibilities  to the
Funds for which they are portfolio managers.                                    

The Adviser also keeps the books of account of each Fund, and  calculates  daily
the income and net asset  value per share of each Fund.  For its  services,  the
Adviser  receives a fee payable monthly from the assets of each Fund equal to 1%
per annum of each Fund's respective average daily net asset value of BARON ASSET
FUND, BARON GROWTH FUND, BARON SMALL CAP FUND and BARON iOPPORTUNITY FUND. BARON
FIFTH AVENUE GROWTH FUND pays the Adviser 1% for assets under $1 billion,  0.95%
for assets  greater  than $1 billion but less than $2 billion,  0.90% for assets
over $2 billion but less than $3  billion,  0.85% for assets over $3 billion but
less than $4 billion, and 0.80% for assets greater than $4 billion.             

Brokerage  transactions  for the  Funds  in  exchange-listed  securities  or for
transactions  executed  through ECNs or  computer-based  trading  networks,  are
executed primarily by or through the Adviser's  affiliate,  Baron Capital,  when
consistent with trying to obtain the best execution for the Funds. Baron Capital
is a registered broker-dealer and a member of the NASD. Please see the Statement
of Additional Information for more information about trade executions.          

12b-1 PLAN                                                                      

The Funds have  adopted a plan  under  rule  12b-1 that  allows the Funds to pay
distribution fees for the sale and distribution of their shares and for services
provided to shareholders.  Because the fees are paid out of the Funds' assets on
an  on-going  basis,  over  time  these  fees  will  increase  the  cost of your
investment and may cost you more than paying other types of sales  charges.  The
12b-1 plan authorizes the Funds to pay Baron Capital, the Funds' distributor,  a
distribution  fee equal on an annual basis to 0.25% of each Fund's average daily
net assets.  See the  Statement of  Additional  Information  for a more detailed
listing of the expenses covered by the Distribution Plan. The Distributor or its
affiliates may enter into  arrangements  with third parties to sell the Funds to
their customers in programs and pay such third parties directly for charges that
exceed the amount of the 12b-1 fee.                                             

18 o PROSPECTUS                                                                 

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INFORMATION ABOUT YOUR INVESTMENT                                               

HOW YOUR SHARES ARE PRICED                                                      

The  purchase or sale price for your shares is the  particular  Fund's net asset
value  per  share  ("NAV"),  which is  generally  calculated  as of the close of
trading of the New York Stock Exchange  (usually 4:00 p.m. Eastern time) on each
day the Exchange is open.  Your  purchase or sale will be priced at the next NAV
calculated  after your order is accepted by the Baron Funds'  transfer agent. If
you purchase or sell shares through a brokerage  firm,  bank or other  financial
institution,  your  transaction  will receive the NAV next calculated  after the
financial  institution receives your order if it promptly transmits the order to
the Funds'  transfer agent.  The Funds have  agreements  with certain  financial
institutions  which  authorize  the financial  institutions  to accept orders or
designate  third parties to accept  orders on behalf of the Funds.  If you place
your order through these authorized  financial  institutions,  the order will be
considered  received when the authorized  party accepts the order.  Those orders
will be priced at the NAV next  computed  after  acceptance  of the order by the
authorized  institution or its agent.                                           

The Funds'  investments  are valued  based on the last sale price.  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 Fund is 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,  and the  committee
reports to the Board every quarter.  Factors the committee uses include  whether
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.  The Funds
may change  the time at which  orders  are  priced if the  Exchange  closes at a
different  time or an emergency  exists.  For securities  traded on NASDAQ,  the
Funds will use the NASDAQ Official Closing Price.                               

HOW TO PURCHASE SHARES                                                          

You may purchase  shares of the Funds  directly  without  paying a sales charge.
Special  applications  are  available  to open  individual  retirement  accounts
("IRAs"). The minimum initial investment is $2,000 per Fund unless you choose to
invest through the Baron InvestPlan (see page 21). At the sole discretion of the
Adviser,  the initial  investment  minimum may be waived for certain  investors.
There is no minimum for subsequent  purchases  except for purchases made through
the Funds' website (see page 24). The Funds may reject any proposed purchase. If
the Funds  identify  short term  traders,  the Funds will reject their  proposed
purchases.                                                                      

BARON GROWTH FUND closed to new  investors on September 12, 2003 to preserve the
Adviser's  ability to effectively  manage the Fund. This closing does not affect
other Baron Funds.  If you are already a shareholder  of Baron Growth Fund,  you
may continue to add to your investment in that Fund. In addition,  the Fund will
remain open to the following investors:                                         

o   financial advisers with existing clients in Baron Growth Fund               

o   clients of retirement plan providers or 529 plan providers                  

o   employees of the Adviser and their family members                           

THE FUND WILL BE CLOSED UNTIL FURTHER  NOTICE.  If you have any questions  about
whether  you are able to  purchase  shares of Baron  Growth  Fund,  please  call
1-800-99-BARON or e-mail us at info@BaronFunds.com.                             

                                                                 PROSPECTUS o 19

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At  present,  the Funds are  offered  and sold only to persons  residing  in the
United  States,  Puerto Rico,  Guam,  the U.S.  Virgin Islands or persons in the
United States military with appropriate  identifying documents.  Please call the
Funds' transfer agent at 1-800-442-3814, if you have any questions.             

ANTI-MONEY LAUNDERING REGULATIONS. As part of the Funds' legal responsibility to
fight the  funding  of  terrorism  and money  laundering  activities,  the Funds
require  a  detailed  verification  of  the  identity  of  a  shareholder,   and
individuals  with authority or control over accounts  opened by entities such as
corporations,  partnerships  or trusts.  When you open an account the Funds will
request  such  information  as  is  necessary  to  verify  your  identity  as  a
shareholder,  as well as the  identities of any  individuals  with  authority or
control  over  accounts  being  opened by entities.  The  information  requested
includes name, address, date of birth, and U.S. taxpayer  identification number.
Please  make  sure  to  provide  all  this  required   information.   Incomplete
information  will  delay  your  investment.  The  Funds  will not  process  your
investment  until all required  information has been provided.  You will receive
the NAV of the Fund(s) in which you are  investing on the date that all required
information  has been provided to the Funds'  transfer  agent.  Baron Funds will
hold your  investment  check until all required  information  has been received.
Investment  funds received by bank wire will also be held. If the application is
not  complete,  the Funds'  representatives  will attempt to collect any missing
information by contacting you directly.  If you purchase the Baron Funds through
a  broker/dealer  or other  financial  institution,  we will  attempt to get the
missing information from or through such entity.                                

If the  application is complete,  the Funds will process the investment and will
take steps to verify your identity. The Funds may request additional information
or documents,  if needed, to verify an identity. If the Funds cannot verify your
information,  the account will be closed and you will receive  proceeds based on
the next calculated NAV of the Fund(s) in which you invested.  If the Funds deem
it necessary, and upon written notice to you, the payment of redemption proceeds
to you may be suspended  to comply with the  anti-money  laundering  regulations
applicable to the Funds.  The Funds will share the identity of its  shareholders
with federal  regulators if required to do so by law and may report a failure to
verify a  shareholder's  identity with federal  authorities  in accordance  with
applicable law.                                                                 

You may invest or add to your account using any of the following methods:       

BY MAIL                                                                         

TO OPEN A NEW ACCOUNT send your signed  application form with your check payable
to BARON FUNDS(r) to:                                                           

Baron Funds(r)                  
P.O. Box 219946                 
Kansas City, MO 64121-9946      

PLEASE  MAKE SURE YOU  INDICATE  HOW MUCH MONEY YOU WANT  INVESTED IN EACH FUND.
Baron Growth Fund is currently  closed to new investors.  Checks must be payable
in U.S.  dollars and must be drawn on a U.S.  bank.  Third party checks,  credit
cards,  money orders,  travelers checks,  bearer securities and cash will not be
accepted.  For IRA                                                              

20 o PROSPECTUS                                                                 

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accounts, please specify the year for which the contribution is made. If no year
is specified it will be applied as a current year contribution.                 

WHEN ADDING TO YOUR ACCOUNT complete the additional  investment form provided at
the bottom of your  account  statement or purchase  confirmation.  If you do not
have that form,  write a note  indicating  in which  Baron  Fund the  investment
should go and the account number. Send it to the address above.                 

BY WIRE                                                                         

You can make your initial or additional  investments in the Funds by wire. To do
so: (1) contact the Funds' transfer agent, DST Systems,  Inc., at 1-800-442-3814
to obtain an account number. (2) Complete and sign the application form and mail
it to Baron Funds,  P.O. Box 219946,  Kansas City, MO  64121-9946.  (3) Instruct
your bank to wire funds to the United  Missouri Bank of Kansas City,  N.A.,  ABA
No. 1010-0069-5, Account No. 98-7037-101-4. (4) Be sure to specify the following
information in the wire: (a) Fund you are buying,  (b) your account number,  (c)
your name, and (d) your wire number.                                            

Please  be sure to  include  your  name  and  account  number.  The  Fund is not
responsible for delays in the wiring process.                                   

BY TELEPHONE                                                                    

Once  your  account  is open you may add to your  investment  by  telephone  and
exchange  among  the  Baron   Funds(r)  by  telephone,   speaking  with  a  live
representative,  or by our automated voice recognition system "BaronTel," if you
have  elected  that  option on the  application.  By  choosing  this  option you
authorize  Baron  Funds to draw on your  bank  account.  Please  note  that your
accounts  must be  identically  registered.  To add this option to your account,
call 1-800-442-3814 for the forms.                                              

BY INTERNET                                                                     

You may open a new  account  through  the  Baron  Funds(r)  website  by going to
www.BaronFunds.com  and clicking on "Individual Investor" and then "Open Account
Online."  For  important  information  about  Internet  purchases  see  "Special
Information  about Baron Funds Website" on page 24 of this  prospectus.  You may
add to an  existing  account  through  the Baron  Funds(r)  Website  by going to
www.BaronFunds.com  and clicking on "Individual Investor" then "My Account." You
must have  ACH/Banking  instructions  on your  account  in order to make  online
purchases.                                                                      

BARON INVESTPLAN                                                                

Baron  InvestPlan  is an automatic  investment  plan  offered by the Funds.  The
minimum initial investment is $500 with monthly  investments of as little as $50
automatically  invested  from  your  checking  account.  To  enroll in the Baron
InvestPlan,  complete the Enrollment Form (available by calling 1-800-99-BARON),
attach a voided check and mail them to Baron Funds(r),  P.O. Box 219946,  Kansas
City, MO 64121-9946.                                                            

                                                                 PROSPECTUS o 21

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THROUGH BROKER-DEALERS                                                          

You may purchase shares of the Funds through a broker-dealer  or other financial
institution  that may  charge a  transaction  fee.  If you  purchase  the shares
directly  from  the  Funds,  no  transaction  fee is  charged.  The  Funds  also
participate in no transaction fee programs with many national brokerage firms.  

POLICY REGARDING FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES              

The Funds  discourage  any person who is not a long term investor from investing
in any of the Funds. The Board of Trustees of the Funds has adopted policies and
procedures  to minimize  frequent  purchases and  redemptions  of Fund shares by
shareholders.  The Funds believe that frequent trading (which may include market
timing,  short  term  trading  or  excessive  trading)  of Fund  shares  has the
potential to adversely impact other  shareholders of the Funds. All of the Funds
make  investments for the long term, and have had relatively low turnover of the
portfolios.  See page 3 of this  prospectus  for  more  information  about  this
long-term approach.                                                             

The Adviser  believes that  frequent  trading of Fund shares causes risks to the
Funds and their  shareholders.  Frequent  trading  may  dilute the value of Fund
shares  held  by  long-term   shareholders,   trigger   gains  taxable  to  Fund
shareholders, increase brokerage and administrative costs and interfere with the
efficient  management  of the Funds.  It may  disrupt the  Adviser's  ability to
manage the Funds in accordance with their objectives.  This disadvantages  other
shareholders of the Funds and adds to Fund costs, as the Adviser may be required
to sell investments  prematurely to raise cash to meet  redemptions.  The impact
could be  particularly  severe for the  smaller  sized funds such as BARON FIFTH
AVENUE GROWTH FUND,  because the frequent  activity would have greater impact on
each remaining longer-term  shareholder.  The risk to long-term  shareholders of
BARON SMALL CAP, BARON ASSET FUND and BARON GROWTH FUND are  pronounced  because
these funds invest in smaller  capitalization  companies  that have  potentially
less liquidity,  therefore incurring greater trading-related  transaction costs.
BARON  iOPPORTUNITY  FUND  shareholders  could also be  negatively  affected  by
frequent  trading  if the  Adviser is forced to  re-balance  the  portfolio  and
thereby incur substantial expenses in doing so.                                 

If the Adviser reasonably believes that a person is not a long term investor, it
will  attempt to prohibit  that person from  investing  in the Funds.  The Funds
presume  that a person who trades in and then out of a Fund within six months or
less is not a long term investor, although the Funds will consider evidence that
rebuts that presumption. The Adviser will examine information that is reasonably
available to it at the time  (including  information  supplied by third parties)
and if it is able to identify a person whom the Adviser deems is not a long term
investor  it will  attempt to (i) bar the person from  returning  to the Fund or
(ii) reject the investment from the outset. Although the Adviser may not be able
to identify all persons who engage in frequent trading, it will make attempts to
minimize frequent trading activity in the Funds. BARON iOPPORTUNITY FUND imposes
a 1% short term trading fee (see page 23) to discourage frequent trading.       

Effective April 1, 2005, the Funds will not allow exchanges between Funds unless
the investor  has held the shares for at least six months.  The Funds will apply
these  policies in all  circumstances  except  where a third  party,  such as an
omnibus  account or other  intermediary,  is unable to process the policy due to
technical  reasons.  The Funds'  policies  and  procedures  may be  modified  or
terminated  at any time.  The Funds  continue to reserve the right to reject any
purchase or exchange request for any reason.                                    

HOW TO REDEEM SHARES                                                            

You may redeem your shares of the Funds by any of the methods  described  below.
If you are selling shares in an IRA account  please read the  information in the
IRA  kit.  Redemptions  will  not be  made  until  all of the  requirements  for
redemption are met. Redemptions are priced at the next NAV calculated after your
redemption  request is received in proper form. If you have  recently  purchased
shares your  redemption  request may not be sent to you until the purchase check
has cleared your bank, which generally occurs within fifteen calendar days.     

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BY MAIL                                                                         

Write  a  letter  that  includes  the  following  information:  the  name of the
registered  owner(s) of the account,  the name of the Fund, the number of shares
or dollar  amount to be  redeemed,  and the account  number.  The letter must be
signed  in  exactly  the same  way the  account  is  registered,  including  the
signature of each joint owner,  if applicable.  Mail the request to the transfer
agent at Baron Funds, P.O. Box 219946, Kansas City, MO 64121-9946.              

A medallion signature guarantee is required for redemptions of more than $50,000
in any quarter.  See the "Special Information About Redemptions" section on page
23.  Within  seven days after  receipt of a  redemption  request by the transfer
agent in proper form, the Fund will normally mail you the proceeds.             

BY TELEPHONE                                                                    

You are automatically granted the telephone redemption option when you open your
account unless you decline the option on your account  application or by calling
1-800-442-3814. Once made, your telephone request cannot be changed. There is no
minimum amount that you may redeem by telephone  from your account.  The maximum
amount that you may redeem by telephone in any quarter is $50,000 per Fund.  You
may receive the proceeds by any one of the following methods: (a) we will mail a
check to the address to which your account is  registered,  (b) we will transmit
the  proceeds by  electronic  funds  transfer to a  previously  designated  bank
account  (usually a two banking day process),  or (c) we will wire the proceeds 
to a  pre-authorized  bank account for a $10.00 fee which will be deducted  from
your redemption proceeds (usually a next banking day process).                  

The Funds have the right to refuse a  telephone  redemption  if they  believe it
advisable to do so. You will be responsible  for any fraudulent  telephone order
as long as the Funds and their  transfer  agent  use  reasonable  procedures  to
confirm that telephone instructions are genuine.                                

22 o PROSPECTUS                                                                 

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BY BROKER-DEALER                                                                

You may redeem  shares  through  broker-dealers  or other  institutions  who may
charge you a fee. The Funds may have special redemption  procedures with certain
broker-dealers.                                                                 

SHORT-TERM TRADING FEE                                                          

BARON  iOPPORTUNITY  FUND imposes a short-term  trading fee on  redemptions  and
exchanges  of  shares  held  for  less  than  six  months.  The fee is 1% of the
redemption value and is deducted from the redemption proceeds. The Fund uses the
"first-in,  first-out"  method to determine the holding period, so if you bought
shares on different days, the shares  purchased first will be redeemed first for
determining  whether  the fee  applies.  The fee is retained by the Fund for the
benefit  of the  remaining  shareholders  to  offset  the  administrative  costs
associated with processing redemptions and exchanges and to offset the portfolio
transaction costs and facilitate portfolio management.                          

The Fund will waive the fee for defined  contribution  plans. The Fund may waive
the fee on  redemptions  if the Fund  believes it is in the best interest of the
Fund.  Please check with your account  representative  before you purchase  your
shares to determine whether the fee waiver is applicable.                       

SPECIAL INFORMATION ABOUT REDEMPTIONS                                           

If the amount to be redeemed in any  quarter is greater  than  $50,000 per Fund,
all of the signatures on a redemption request must be medallion  guaranteed.  IF
YOU  HAVE  CHANGED  YOUR  ADDRESS  WITHIN  30 DAYS OF A  REDEMPTION  REQUEST,  A
MEDALLION  SIGNATURE  GUARANTEE  IS  REQUIRED  FOR ANY AMOUNT OF  REDEMPTION.  A
medallion  signature  guarantee helps protect you and the Funds from fraud.  You
can obtain a medallion  signature guarantee from most securities firms or banks,
but not from a notary public.                                                   

If you are redeeming  $50,000 or less per quarter per Fund,  and if proceeds are
sent to the address of record  (which has not been changed  within 30 days),  no
medallion  signature guarantee is required.  For joint accounts,  each signature
must be medallion  guaranteed.  Please call the transfer agent at 1-800-442-3814
if you are unsure of any of the  requirements.  Please  remember  that the Funds
will not redeem your shares until the original  letter of  instruction  with the
medallion  signature  guarantee in proper form has been received by the transfer
agent.                                                                          

The transfer agent may require other documentation from corporations,  trustees,
executors, and others who hold shares on behalf of someone else. If you have any
questions  concerning  the  requirements,  please  call  the  transfer  agent at
1-800-442-3814.  Redemptions  will  not be  made  until  all of the  conditions,
including receipt of all required documentation by the transfer agent, have been
satisfied.                                                                      

A redemption or exchange of Fund shares may generate a tax liability.           

                                                                 PROSPECTUS o 23

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If you redeem  more than  $250,000 or 1% of the net asset value of a Fund during
any 90-day period,  that Fund has the right to pay the redemption price,  either
totally or partially, by a distribution of portfolio securities instead of cash.

If your account falls below $2,000 because of withdrawals,  the Fund may ask you
to increase  your balance.  If it is still below $2,000 after 60 days,  the Fund
may close your account and send you the proceeds.                               

The Funds may suspend the normal  redemption  process if trading on the New York
Stock Exchange is suspended or if an emergency exists that reasonably  precludes
the valuation of the Funds' net assets or if the SEC permits such suspension.   

HOW TO EXCHANGE SHARES                                                          

You may  exchange  all or a portion  of your  investment  in one  Baron  Fund to
another.  Since  Baron  Growth  Fund is  closed  to new  investors,  you may not
exchange  into Baron  Growth Fund unless you are an existing  Baron  Growth Fund
shareholder.  You may exchange shares by mail,  telephone  (speaking with a live
representative  or using our automated voice recognition  system  "BaronTel") or
through the Baron Funds(r) website. You must not have opted out of the telephone
option to do an exchange online. Please see "Special Information about the Baron
Funds(r)  Website" below. Any new account  established  through an exchange will
have the same  privileges  as your  original  account and will be subject to the
same minimum investment requirements. There is currently no fee for an exchange.
Exchanges  will be  executed  on the  basis of the  relative  NAV of the  shares
exchanged. An exchange is considered a sale for federal income tax purposes, for
which you may realize a taxable gain or loss. Baron  iOpportunity Fund imposes a
short term trading fee on redemptions and exchanges of shares held less than six
months.  The Funds  reserve the right to cancel the  exchange  privilege  of any
investor who uses the exchange  privilege  excessively.  The Funds may change or
temporarily suspend the exchange privilege during unusual market conditions.    

OTHER FEES                                                                      

The Funds charge a fee of $5 per year,  with a maximum charge of $20, to provide
historical information for an account.  Please call the Funds' transfer agent at
1-800-442-3814 for additional information.                                      

SPECIAL INFORMATION ABOUT THE BARON FUNDS WEBSITE                               

The Baron Funds(r)  website,  www.BaronFunds.com,  allows you to check your Fund
account balance and historical  transactions  and make purchases or exchanges of
Fund  shares  or  exchange  into  other  Baron   Funds(r).   To  conduct  online
transactions   you  must  have   telephone   transaction   privileges  and  bank
instructions  with  respect to your  account.  Payment for the  purchase of Fund
shares through the website may be made only through a debit of your bank account
at a domestic bank that is a member of the Federal Reserve System.              

The Funds impose a limit of $25,000 per initial purchase transaction through the
website. Subsequent purchase transactions may be for up to $250,000. The minimum
initial                                                                         

24 o PROSPECTUS                                                                 

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investment is $2,000 per Fund. The minimum subsequent  investment for subsequent
purchases through the website is $10.                                           

Redemptions can not be processed via the website. However, shareholders have the
option to redeem by telephone (maximums apply) or via mail.                     

Please be aware that the Internet is an  unsecured,  unstable,  unregulated  and
unpredictable   environment.   Your  ability  to  use  the  Funds'  website  for
transactions is dependent on the Internet,  equipment,  software,  systems, data
and services provided by various vendors and third parties.  While the Funds and
their Distributor and Transfer Agent have established certain security measures,
they cannot assure that inquiries,  account information or trading activity will
be  completely  secure.  There  may  also  be  delays,   malfunctions  or  other
inconveniences  or times when the website is not available for Fund transactions
or other  purposes.  If this occurs,  you should consider using other methods to
purchase or exchange shares. The Funds, the Adviser,  their Distributor or their
Transfer  Agent are not  liable for any  delays,  malfunctions  or  unauthorized
interception or access to communications or account information.                

Neither the Funds,  their Transfer Agent,  Distributor or Adviser will be liable
for any loss, liability, cost or expense for following instructions communicated
through the Internet, including fraudulent or unauthorized instructions.        

DISCLOSURE OF PORTFOLIO HOLDINGS                                                

The Board has adopted  policies and procedures  governing the disclosure of each
Fund's portfolio  holdings.  More detailed  information about this policy can be
found in the Funds' statement of additional information.                        

QUARTERLY:  The Funds post on the Fund web site,  usually on the third  business
---------                                                                       
day after  quarter end, the total net assets for each Fund.  The Fund also posts
on the web site, usually 5 business days after the quarter end, the top ten long
positions for each Fund. In addition, the Funds post on the web site, usually on
the  15th  business  day  after  quarter  end,  all  long  securities  positions
representing  1% or greater of each  Fund's net assets and the cash  position at
the just-ended  quarter end. All of this information will remain on the web site
until the next quarter end's information is posted.                             

MONTHLY:  In  addition,  the Funds post on the Fund web site,  usually  the 10th
-------                                                                         
business day after month end, each Fund's ten largest long positions,  stated as
a percentage of net assets.  This  information will remain on the web site until
the next month end's information is posted.                                     

Other  information  that  may be of  interest  to  investors,  such as  industry
breakdowns and a historical analysis of security impact, may be available on the
Fund's web site.                                                                

The web site  address is  www.BaronFunds.com.  The direct  link to the holdings 
------------------          
information is http://www.baronfunds.com/default.asp?S=201178.  Information for 
----------------------------------------------    
each Fund can be acessed from this link.                                        

The Funds may release the  portfolio  information  to persons  earlier  than the
dates stated above only if the Chief Operating Officer, Chief Financial Officer,
General  Counsel or Chief  Compliance  Officer of the Fund  determines  that the
release of such information is in the best interest of the Fund's  shareholders,
that there is a legitimate business purpose, and the person agrees in writing to
maintain  the  confidentiality  of  the  information  and  not to  trade  on the
information.  More detailed information about these arrangements can be found in
the Funds' statement of additional information.                                 

If the  Funds  inadvertently  release  material  information  prior to the dates
stated above to any person,  and there was no agreement as described,  the Funds
will promptly post the information to the web site. A Fund may also release what
the Fund's executive officers reasonably deem to be immaterial information prior
to the above time table as the Fund deems appropriate.                          

No employee of the Adviser is allowed to accept compensation or consideration in
any  form  with  respect  to the  release  of the of  Fund  portfolio  holdings.
"Consideration"  includes  any  agreement  to maintain  assets in the Fund or in
other investment companies or accounts managed by the Adviser. Any exceptions to
any of the Funds' disclosure policies are reported to the Board.                

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DISTRIBUTIONS AND TAXES                                                         

Each Fund pays its  shareholders  dividends from its net  investment  income and
distributes any net realized  capital gains once each year.  Your  distributions
will be reinvested in the Fund unless you instruct the Fund otherwise. There are
no charges on reinvestments.  After every distribution,  the value of a share is
automatically  reduced  by the amount of the  distribution.  If you elect not to
reinvest and the postal or other delivery service is unable to deliver checks to
your address of record,  your  distribution  will be  reinvested  in  additional
shares at the NAV next  determined  after the check is returned to the Fund.  No
interest  will  accrue  on  amounts  represented  by  uncashed  distribution  or
redemption checks.                                                              

You are  subject  to  federal  income  tax on Fund  distributions,  unless  your
investment is in an IRA or other  tax-advantaged  account. The tax status of any
distribution  is the same  regardless  of how long you have invested in the Fund
and whether you reinvest  your  distributions  or take them in cash.  Income and
short-term  capital gain  distributions  are taxed at the ordinary  income rate.
Long-term capital gains  distributions are taxed generally as capital gains. The
tax  status  of the  annual  distribution  will be  detailed  in an  annual  tax
statement from the Fund.  Distributions declared by the Fund may also be subject
to state and local taxes. You should consult with your own tax adviser regarding
your personal tax situation.                                                    

If you do not  provide  the Fund with your valid  social  security  or  taxpayer
identification number, you will be subject to backup withholding for taxes.     

                                                                 PROSPECTUS o 25

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GENERAL INFORMATION                                                             

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT                                    

The Bank of New York, 100 Church Street, New York, NY 10286 is the custodian for
the Baron Funds' cash and securities. DST Systems, Inc. serves as transfer agent
and  dividend  disbursing  agent for the shares.  They are not  responsible  for
investment decisions for the Baron Funds(r).                                    

SHAREHOLDER INFORMATION                                                         

If you have  questions  about your account or  transactions  please  contact the
transfer agent, DST Systems,  Inc., P.O. Box 219946, Kansas City, MO 64121-9946,
or by telephone to 1-800-442-3814.                                              

If you have  questions  about  general  Fund  information  please call the Baron
Funds' office at 1-800-99-BARON or 212-583-2100.                                

As a Massachusetts business trust, annual shareholder meetings are not required.
The Funds send quarterly reports to shareholders.                               

PRIVACY NOTICE                                                                  

The  Baron  Funds  collect  nonpublic  personal  information  about you from the
following sources:                                                              

o    Information we receive from you on applications or other forms, and        

o    Information about your transactions with us, our affiliates, or others.    

"Nonpublic  personal  information"  is nonpublic  information  about you that we
obtain in connection with providing a financial product or service to you.      

We may share your name and address among  affiliates for purposes of sending you
information about products of ours that we believe may be of interest to you and
inform you of our upcoming investors' conference.                               

We do not disclose any  nonpublic  personal  information  about our customers to
anyone,   except  as  permitted  or  required  by  law.  Examples  of  permitted
disclosures  under the law include  sharing with  companies  that work for us to
provide  you  service,  such as a  transfer  agent or  mailing  house.  All such
companies act on our behalf, are contractually obligated to keep the information
that we provide to them  confidential,  and use the information  only to provide
the services that we have asked them to perform for you and us.                 

We restrict  access to nonpublic  information  about you to those  employees who
need to know that  information  to  provide  products  or  services  to you.  We
maintain physical, electronic, and procedural safeguards to guard your nonpublic
personal information.                                                           

This pledge is also available at all times on our Website  www.BaronFunds.com or
by calling 1-800-99BARON.                                                       

26 o PROSPECTUS                                                                 

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FOR MORE INFORMATION                                                            

Investors  who want more  information  about the Baron Funds(r) may  obtain  the
following documents free upon request at the numbers or address below.          

SHAREHOLDER REPORTS                                                             

Additional  information about the Funds'  investments is available in the Funds'
quarterly  reports to Shareholders.  In the Funds' annual report you will find a
discussion of the market conditions and investment strategies that significantly
affected the Funds' performance during the last fiscal year.                    

STATEMENT OF ADDITIONAL INFORMATION                                             

Additional  information  is  also  contained  in  the  Statement  of  Additional
Information dated April 2, 2004. A current  Statement of Additional  Information
is  on  file  with  the  Securities  and  Exchange  Commission  ("SEC")  and  is
incorporated   by  reference.   You  may  obtain  the  Statement  of  Additional
Information and the shareholder reports without charge by writing or calling the
Funds.                                                                          

TO OBTAIN INFORMATION                                                           

By telephone:     Call 1-800-99-BARON (1-800-992-2766)                          
By mail:          Write to:                                                     
BARON FUNDS(r)                              
767 Fifth Avenue                            
New York, NY 10153                          
By e-mail:        Send your request to:                                         
info@BaronFunds.com                         
On the Internet:  Text-only versions of Baron Funds(s) documents can be viewed  
              on-line or downloaded from:  http://www.BaronFunds.com  or
                                       -------------------------
          from the EDGAR database on the SEC's Internet site at:
http://www.sec.gov                          
------------------                          

OTHER                                                                           

You can also  obtain  copies by  visiting  the SEC's  Public  Reference  Room in
Washington,  D.C.  (phone  1-202-942-8090).  Copies of this  information  may be
obtained,   upon  payment  of  a  duplicating  fee,  by  electronic  request  at
publicinfo@sec.gov,  or by  writing  the  Public  Reference  Section of the SEC,
Washington, D.C. 20549-0102.                                                    

Ticker Symbols:   Baron Asset Fund                BARAX                         
Baron Growth Fund               BGRFX       
Baron Small Cap Fund            BSCFX       
Baron iOpportunity Fund         BIOPX       
Baron Fifth Avenue Growth Fund  BFTHX       

SEC file number: 811-5032                                                       

 [registered logo]

 B A R O N
    F U N D S(r)

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BARON ASSET FUND
 BARON GROWTH FUND
BARON SMALL CAP FUND
 BARON iOPPORTUNITY FUND
BARON FIFTH AVENUE GROWTH FUND

767 Fifth Avenue
New York, New York 10153
(800) 99-BARON
212-583-2100
------------------------

 STATEMENT OF ADDITIONAL INFORMATION
November 4, 2004

------------------------

          This Statement of Additional  Information ("SAI") is not a prospectus.
          The Fund's  Prospectus,  dated April 2, 2004, may be obtained  without
          charge by writing or calling the Funds at the  address  and  telephone
number above.                                               

 -----------------------

          No person has been  authorized to give any  information or to make any
          representations  other  than  those  contained  in this  SAI or in the
related Prospectus.                                         

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 TABLE OF CONTENTS

                       PAGE IN
                       STATEMENT
                        OF
                                            ADDITIONAL             PAGE IN
                                            INFORMATION           PROSPECTUS

FUND HISTORY AND CLASSIFICATION.............       3                            
Investment Goals, Strategies and Risks....       3                 3-5,15-17

MANAGEMENT THE FUNDS........................       10                    17     
Board of Trustees and Officers............                                  
Principal Holders of Shares...............                                  
Investment Adviser........................                                  

BROKERAGE...................................       18                           

DISTRIBUTOR.................................       20                           
Distribution Plan.........................       20                    18   
Code of Ethics............................       20                         

REDEMPTION AND PURCHASE OF SHARES...........       22                    19     

NET ASSET VALUE.............................       23                    18     

TAXES.......................................       23                    23     

ORGANIZATION AND CAPITALIZATION.............       24                           

OTHER INFORMATION...........................       24               Back Cover  
Calculations of Performance Data..........       24                         

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FUND HISTORY AND CLASSIFICATION                                                 
-------------------------------                                                 

EFFECTIVE  OCTOBER  22,  2004,  the name of BARON ASSET FUND (the "Trust")  was 
changed to BARON  INVESTMENT  FUNDS  TRUST.  The Trust is a  no-load,  open-end,
diversified  management  investment company originally organized and established
under the laws of the  Commonwealth of  Massachusetts  on February 19, 1987. The
Trust  is  structured  to be able to  issue  shares  in  multiple  series,  each
constituting a separate  portfolio with separate assets and liabilities from any
other series.  There are five series currently available  (individually a "Fund"
and collectively the "Funds"):  BARON ASSET FUND, started in June of 1987, BARON
GROWTH FUND (formerly  named Baron Growth & Income Fund),  started in January of
1995, BARON SMALL CAP FUND,  started in October 1997, BARON  iOPPORTUNITY  FUND,
started February 29, 2000, and BARON FIFTH AVENUE GROWTH FUND, started April 30,
2004.                                                                           

INVESTMENT GOALS, STRATEGIES AND RISKS                                          
--------------------------------------                                          

BARON ASSET FUND's investment  objective is to seek capital appreciation through
long-term  investments  in securities of small and medium sized  companies  with
undervalued  assets or  favorable  growth  prospects.  BARON ASSET FUND  invests
primarily in small and medium sized companies with market capitalizations at the
time of purchase of under $8 billion BARON GROWTH FUND's investment objective is
to seek capital  appreciation through long-term  investments  primarily in small
growth  companies.  BARON GROWTH FUND invests  primarily  in the  securities  of
smaller  companies with market  capitalizations  of up to $2.5 billion.  A small
sized company is defined as having a market value of under $2.5  billion.  BARON
SMALL CAP FUND's investment  objective is to seek capital  appreciation  through
investments  primarily in  securities of small  companies.  BARON SMALL CAP FUND
invests   primarily  in  the   securities  of  smaller   companies  with  market
capitalizations  of up to  $2.5  billion.  The  investment  objective  of  BARON
iOPPORTUNITY  FUND  is  capital   appreciation  through  investments  in  growth
businesses  that benefit  from  technology  advances.  BARON  iOPPORTUNITY  FUND
invests in  companies  of all sizes with  Internet  and  information  technology
related  growth  opportunities.  BARON FIFTH  AVENUE  GROWTH  FUND's  investment
objective  is  capital  appreciation   through  investments   primarily  in  the
securities of larger growth companies with market  capitalizations  in excess of
$5 billion.                                                                     

In addition to the principal investment strategies of the Funds described in the
Prospectus  on  pages 3 and 15,  the  Funds  may use the  additional  strategies
described below.  These investment  strategies are not fundamental  policies and
may be changed by the Fund's Board of Trustees.  Shareholders  would be notified
of any material changes. Some of the strategies discussed below are mentioned in
the Prospectus, but are explained in more detail here.                          

FOREIGN SECURITIES     BARON ASSET FUND, BARON GROWTH FUND and BARON SMALL CAP  
------------------                                                              
FUND may invest up to 10% and BARON  iOPPORTUNITY  FUND and BARON  FIFTH  AVENUE
GROWTH FUND may invest up to 25% of their  respective  total assets  directly in
the securities of foreign  issuers which are not publicly traded in the U.S. and
may also invest in foreign  securities in domestic  markets  through  depositary
receipts  or  listed  securities  without  regard  to  this  limitation.   These
securities  may involve  additional  risks not  associated  with  securities  of
domestic companies, including exchange rate fluctuations,  political or economic
instability,   the  imposition  of  exchange   controls,   or  expropriation  or
confiscatory  taxation.  Issuers of foreign securities are subject to different,
often less detailed, accounting,  reporting and disclosure requirements than are
domestic issuers.  The Funds may invest in securities commonly known as American
Depository  Receipts ("ADRs"),  and in European Depository Receipts ("EDRs") and
Global  Depository  Receipts  ("GDRs")  or  other  securities  convertible  into
securities of foreign issuers.  ADRs are  certificates  issued by a U.S. bank or
trust company and represent the right to receive  securities of a foreign issuer
deposited  in a domestic  bank or  foreign  branch of a United  States  bank and
traded on a U.S. exchange or in an  over-the-counter  market.  EDRs and GDRs are
receipts  issued in Europe  generally by a non-U.S.  bank or trust  company that
evidence ownership of non-U.S. or domestic securities. There are no fees imposed
on the purchase or sale of ADRs, EDRs or GDRs although the issuing bank or trust
company may impose fees on the purchase of dividends and the conversion of ADRs,
EDRs and GDRs into the  underlying  securities.  Investment  in ADRs has certain
advantages over direct investment in the underlying non-U.S.  securities,  since
(i) ADRs are U.S. dollar denominated  investments which are easily  transferable
and for which market  quotations  are readily  available  and (ii) issuers whose
securities are represented by ADRs are subject to the same auditing,  accounting
and financial  reporting  standards as domestic  issuers.  EDRs and GDRs are not
necessarily denominated in the currency                                         

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of the underlying  security.                                                    

REITs    The Funds may invest in the equity securities of real estate investment
-----                                                                           
trusts ("REITs"). A REIT is a corporation or business trust that invests in real
estate and  derives  its income  from  rents from or sales of real  property  or
interest on loans  secured by  mortgages on real  property.  The market value of
REITs may be affected by numerous factors,  including  decreases in the value of
real estate,  vacancies,  decreases in lease rates, defaults by lessees, changes
in the tax laws or by their  inability to qualify for the tax-free  pass-through
of their income.                                                                

LENDING      The Funds may lend their portfolio securities to institutions as a 
-------                                                                         
means of earning additional income. In lending their portfolio  securities,  the
Funds may incur delays in recovery of loaned  securities  or a loss of rights in
the  collateral.  To minimize  such  risks,  such loans will only be made if the
Funds deem the other party to be of good standing and determines that the income
justifies  the risk.  BARON  ASSET FUND will not lend more than 10% of its total
assets and BARON GROWTH FUND, BARON SMALL CAP FUND, BARON  iOPPORTUNITY FUND and
BARON FIFTH AVENUE  GROWTH FUND will not lend more than 25% of their  respective
total assets.                                                                   

MORTGAGE-BACKED SECURITIES    The Funds may invest in mortgage-backed securities
--------------------------                                                      
that are issued or guaranteed by U.S. government agencies or  instrumentalities,
such as the Government  National  Mortgage  Association and the Federal National
Mortgage  Association.  Mortgage-backed  securities represent direct or indirect
participation in, or are secured by and payable from,  mortgage loans secured by
real property.  These securities are subject to the risk that prepayments on the
underlying   mortgages   will  cause  the   principal   and   interest   on  the
mortgage-backed securities to be paid prior to their stated maturities. Mortgage
prepayments are more likely to accelerate during periods of declining  long-term
interest  rates.  If a  prepayment  occurs,  the  Funds  may have  unanticipated
proceeds  which it may then have to invest at a lower  interest rate, and may be
penalized by not having  participated  in a  comparable  security not subject to
prepayment.  The  Funds  do not  anticipate  investing  more  than  5% of  their
respective assets in such securities.                                           

WHEN-ISSUED SECURITIES     The Funds may invest  in debt and  equity  securities
-----------------------                                                         

purchased on a  when-issued  basis.  Although the payment and interest  terms of
when-issued securities are established at the time the purchaser enters into the
commitment,  the actual  payment  for and  delivery  of  when-issued  securities
generally  takes  place  within 45 days.  The Fund bears the risk that  interest
rates on debt  securities  at the time of  delivery  may be higher or lower than
those  contracted  for on the  when-issued  security.  Failure  of the issuer to
deliver the security  purchased on a  when-issued  basis may result in a loss or
missed  opportunity  to  make  an  alternative  investment.  The  Funds  do  not
anticipate investing more than 5% of their respective assets in such securities.

MEDIUM AND LOWER RATED CORPORATE DEBT SECURITIES     All of the Funds may invest
------------------------------------------------                                
in debt securities  that are rated in the medium to lowest rating  categories by
S&P and  Moody's,  some of which may be known as "junk  bonds." The Funds do not
anticipate   investing  more  than  35%  of  their  respective  assets  in  such
securities.                                                                     

The Funds  will rely on the  Adviser's  judgment,  analysis  and  experience  in
evaluating debt  securities.  The Adviser  believes that the difference  between
perceived risk and actual risk creates the  opportunity  for profit which can be
realized through thorough analysis. Ratings by S&P and Moody's evaluate only the
safety of principal and interest  payments,  not market value risk.  Because the
creditworthiness  of an issuer may change more rapidly than is able to be timely
reflected in changes in credit  ratings,  the Adviser  monitors  corporate  debt
securities of issuers held in the Funds' equity  portfolio.  The credit  ratings
assigned by a rating  agency to a security are not  considered by the Adviser in
selecting a security.  The Adviser examines the intrinsic value of a security in
light of market conditions and the underlying fundamental values. Because of the
nature of medium and lower rated corporate debt  securities,  achievement by the
Funds  of  their  respective   investment  objectives  when  investing  in  such
securities is dependent on the credit analysis of the Adviser. The Adviser could
be wrong in its analysis.  If the Funds  purchased  primarily  higher rated debt
securities, these risks would be substantially reduced.                         

A general  economic  downturn or a significant  increase in interest rates could
severely disrupt the market for medium and lower grade corporate debt securities
and adversely affect the market value of such securities. The ability of issuers
of medium and lower grade  corporate debt  securities to repay  principal and to
pay interest, to meet projected business                                        

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goals and to obtain additional  financing may be adversely  affected by economic
conditions.  Such consequences  could lead to an increased  incidence of default
for such  securities  and  adversely  affect  the  value of the  corporate  debt
securities  in a Fund's  portfolio.  The  secondary  market prices of medium and
lower grade  corporate debt  securities  are more sensitive to adverse  economic
changes  or  individual  corporate  developments  than  are  higher  rated  debt
securities. Adverse publicity and investor perceptions,  whether or not based on
rational analysis, and periods of economic uncertainty may also affect the value
and liquidity of medium and lower grade corporate debt securities, although such
factors also present  investment  opportunities when prices fall below intrinsic
values.  Yields on debt  securities  in the  portfolio  that are  interest  rate
sensitive can be expected to fluctuate over time.                               

To the extent that there is no established  market for some of the medium or low
grade corporate debt securities in which the Funds may invest, there may be thin
or no  trading  in such  securities  and the  ability  of the  Adviser  to value
accurately such securities may be adversely  affected.  Further,  it may be more
difficult for a Fund to sell  securities for which no established  market exists
as compared with  securities for which such a market does exist.  During periods
of reduced  market  liquidity  and in the  absence of readily  available  market
quotations for medium and lower grade corporate debt securities held in a Fund's
portfolio,  the  responsibility  of the Adviser to value that Fund's  securities
becomes more difficult and the Adviser's judgment may play a greater role in the
valuation of the Fund's  securities  due to a reduced  availability  of reliable
objective data.                                                                 

To the extent that a Fund purchases illiquid  securities or securities which are
restricted  as to  resale,  that Fund may  incur  additional  risks  and  costs.
Illiquid and restricted  securities may be  particularly  difficult to value and
their  disposition  may  require  greater  effort and  expense  than more liquid
securities.  A Fund may be  required  to  incur  costs  in  connection  with the
registration  of restricted  securities in order to dispose of such  securities,
although  pursuant  to Rule  144A  under  the  Securities  Act of  1933  certain
securities may be determined to be liquid pursuant to procedures  adopted by the
Board  of  Trustees  under  applicable  guidelines.  The  Funds  may  invest  in
securities of distressed  issuers when the intrinsic  values of such securities,
in the opinion of the Adviser, warrant such investment.                         

OTHER DEBT SECURITIES     The Funds may invest in  zero-coupon, step-coupon, and
---------------------                                                           
pay-in-kind  securities.  These  securities are debt securities that do not make
regular interest payments.  Zero-coupon and step-coupon securities are sold at a
deep discount to their face value;  pay-in-kind  securities pay interest through
the issuance of additional securities. The market value of these debt securities
generally  fluctuates  in  response  to changes in  interest  rates to a greater
degree than  interest-paying  securities  of  comparable  term and quality.  The
secondary  market value of corporate debt  securities  structured as zero coupon
securities  or  payment-in-kind  securities  may be more volatile in response to
changes in interest rates than debt securities  which pay interest  periodically
in cash. Because such securities do not pay current interest, but rather, income
is  accrued,  to the  extent  that a Fund does not have  available  cash to meet
distribution  requirements  with respect to such income, it could be required to
dispose of portfolio  securities that it otherwise  would not. Such  disposition
could be at a disadvantageous price. Investment in such securities also involves
certain tax considerations.                                                     

BARON GROWTH FUND, BARON SMALL CAP FUND, BARON iOPPORTUNITY FUND and BARON FIFTH
AVENUE  GROWTH  FUND  from  time to time  may  also  purchase  indebtedness  and
participations  therein,  both  secured and  unsecured,  of debtor  companies in
reorganization or financial restructuring.  Such indebtedness may be in the form
of loans,  notes,  bonds or debentures.  When the Funds purchase a participation
interest they assume the credit risk associated with the bank or other financial
intermediary  as well as the  credit  risk  associated  with the  issuer  of any
underlying debt  instrument.  The Funds may also purchase trade and other claims
against,  and other  unsecured  obligations  of,  such debtor  companies,  which
generally  represent  money due a supplier of goods or services to such company.
Some debt securities  purchased by the Funds may have very long maturities.  The
length of time remaining  until maturity is one factor the Adviser  considers in
purchasing a particular indebtedness. The purchase of indebtedness of a troubled
company always involves a risk as to the  creditworthiness of the issuer and the
possibility  that the  investment  may be lost.  The Adviser  believes  that the
difference  between  perceived risk and actual risk creates the  opportunity for
profit which can be realized through thorough analysis. There are no established
markets for some of this  indebtedness  and it is less liquid than more  heavily
traded  securities.  Indebtedness  of  the  debtor  company  to a bank  are  not
securities of the banks issuing or selling  them.  The Funds may purchase  loans
from national and state  chartered  banks as well as foreign ones. The Funds may
invest in senior  indebtedness  of the debtor  companies,  although  on occasion
subordinated indebtedness may also be acquired.                                 

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The Funds may also invest in distressed  first  mortgage  obligations  and other
debt secured by real property.  The Funds do not currently  anticipate investing
more than 5% of their respective assets in trade and other claims. The Funds may
enter into repurchase  agreements with certain banks or non-bank  dealers.  In a
repurchase  agreement the Fund buys a security at one price,  and at the time of
sale,  the seller agrees to repurchase  that security at a mutually  agreed upon
time and price.  Repurchase  agreements could involve certain risks in the event
of the failure of the seller to repurchase the  securities as agreed,  which may
cause a fund to suffer a loss, including loss of interest on or principal of the
security,  and costs  associated  with delay and  enforcement  of the repurchase
agreement.  Repurchase  agreements  with a duration  of more than seven days are
considered illiquid securities.                                                 

As a form of borrowing,  the Funds may engage in reverse  repurchase  agreements
with  certain  banks or non-bank  dealers,  where the Fund sells a security  and
simultaneously  agrees to buy it back later at a mutually  agreed upon price. To
the extent a Fund engages in reverse  repurchase  agreements  it will maintain a
segregated account  consisting of liquid assets or highly marketable  securities
to cover its obligations.  Reverse repurchase  agreements may expose the Fund to
greater fluctuations in the value of its assets.                                

SHORT SALES                                                                     
-----------                                                                     

BARON GROWTH FUND, BARON SMALL CAP FUND, BARON iOPPORTUNITY FUND and BARON FIFTH
AVENUE  GROWTH  FUND may sell  securities  short,  either as a hedge  against an
anticipated  decline in a stock price,  to reduce  portfolio  volatility,  or in
connection with special situations or arbitrage activities. A Fund may also sell
a  security  the Fund  owns or a  security  equivalent  in kind or  amount  to a
security  the Fund has a right to obtain (for  example,  a security  convertible
into the  security  sold  short  or a  security  the  adviser  believes  will be
deliverable  upon the  closing of a  transaction).  The Fund may also sell short
securities  when in the opinion of the Adviser the position is covered by owning
a security that has ownership rights to assets that include all of the assets of
the security shorted.  A Fund may sell a security that the Fund borrows and does
not own. To sell short,  the Fund must borrow the  security to deliver it to the
purchaser  and later buy that security in the market to return it to the lender.
The value of a security sold short could increase and the Fund would have to pay
more for the security than it has received from the purchaser in the short sale.
The Fund's risk of loss is theoretically  unlimited because there is no limit to
the cost of replacing the borrowed security, even in the case of a short that is
fully covered by long positions.  If the value of the securities increases,  the
Fund loses the opportunity to participate in the gain of the covered  positions.
A Fund may sell a security  short only on a fully  collateralized  basis,  which
requires that the Fund establish and maintain a segregated account.             

OPTIONS TRANSACTIONS AND SWAPS                                                  
------------------------------                                                  

BARON ASSET FUND may write  (sell)  covered call options or purchase put options
on equity and/or debt securities. BARON GROWTH FUND, BARON SMALL CAP FUND, BARON
iOPPORTUNITY  FUND and BARON FIFTH  AVENUE  GROWTH FUND may write (sell) put and
covered call  options and  purchase  put and call options on equity  and/or debt
securities.  The Funds may also enter into equity swap  transactions.  All calls
sold by the  Funds  must be  "covered"  (i.e.,  a Fund  must own the  underlying
securities) or must meet the asset segregation  requirements  described below as
long as the call is  outstanding.  Even  though a Fund will  receive  the option
premium to help protect it against loss, a call sold by a Fund exposes that Fund
during  the term of the  option  to  possible  loss of  opportunity  to  realize
appreciation  in the market price of the  underlying  security or instrument and
may require the Fund to hold a security or instrument  which it might  otherwise
have sold and a put exposes the Fund to theoretically unlimited liability as the
price of the security increases.                                                

A put option gives the purchaser of the option,  upon payment of a premium,  the
right to sell,  and the writer  the  obligation,  when  exercised,  to buy,  the
underlying  security,  at the exercise  price. A call option,  upon payment of a
premium,  gives the  purchaser of the option the right to buy, and the seller if
exercised,  the  obligation  to sell,  the  underlying  security at the exercise
price.  An American style put or call option may be exercised at any time during
a fixed period while a European  style put or call option may be exercised  only
upon expiration or during a fixed period prior thereto, and the Funds may engage
in either style option.  The Funds are authorized to engage in transactions with
respect to                                                                      

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exchange-listed  options,  over-the-counter  options  ("OTC  options") and other
derivative  investments.  Exchange-listed  options  are  issued  by a  regulated
intermediary such as the Options Clearing Corporation ("OCC"),  which guarantees
the  performance  of the  obligations  of  the  parties  to  such  options.  The
discussion  below uses the OCC as an example,  but is also  applicable  to other
financial intermediaries.                                                       

Rather than taking or making  delivery of the  underlying  security  through the
process of exercising the option,  listed options are usually closed by entering
into offsetting purchase or sale transactions that do not result in ownership of
the new option.  The Fund's  ability to close out its position as a purchaser or
seller of an OCC or  exchange-listed  put or call option is dependent,  in part,
upon the  liquidity of the option  market.  Among the  possible  reasons for the
absence of a liquid option market on an exchange are: (i)  insufficient  trading
interest in certain  options;  (ii)  restrictions on transactions  imposed by an
exchange;  (iii) trading halts,  suspensions or other restrictions  imposed with
respect to  particular  classes or series of  options or  underlying  securities
including  reaching  daily  price  limits;   (iv)  interruption  of  the  normal
operations of the OCC or an exchange;  (v)  inadequacy  of the  facilities of an
exchange or OCC to handle current trading  volume;  or (vi) a decision by one or
more exchanges to discontinue  the trading of options (or a particular  class or
series of options),  in which event the relevant  market for that option on that
exchange  would cease to exist,  although  outstanding  options on that exchange
would generally  continue to be exercisable in accordance with their terms.  The
hours of trading for listed options may not coincide with the hours during which
the  underlying  instruments  are traded.  To the extent that the option markets
close before the markets for the underlying  instruments,  significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the option markets.                                                          

OTC  options  are  purchased  from  or  sold to  securities  dealers,  financial
institutions  or  other  parties  ("Counterparties")  through  direct  bilateral
agreement with the Counterparty.  In contrast to exchange-listed  options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option are  negotiated by the parties.  The Funds expect  generally to enter
into OTC options that have cash  settlement  provisions,  although  they are not
required to do so.                                                              

Equity swap transactions are entered into with financial  institutions through a
direct agreement with the Counterparty,  generally an ISDA Master Agreement, the
specific terms of which are negotiated by the parties.  The Funds may use equity
swaps, or other derivative  instruments,  for hedging purposes against potential
adverse movements in security prices or for non-hedging purposes such as seeking
to  enhance  return.  The  Funds may be  required  to post  collateral  for such
transactions.                                                                   

There is no central  clearing  or unless the parties  provide  for it,  guaranty
function in an OTC option or derivative,  including  swaps. As a result,  if the
Counterparty fails to make or take delivery of the security, or other instrument
or fails to make a cash  settlement  payment due in accordance  with the option,
the Fund will lose any premium it paid for the option as well as any anticipated
benefit of the transaction. The Adviser must assess the creditworthiness of each
Counterparty to determine the likelihood that the terms of the OTC option or the
derivative will be satisfied.  The Funds will engage in OTC option  transactions
and derivatives only with previously approved  Counterparties.  The staff of the
SEC  currently  takes the position  that OTC options  purchased  by a fund,  and
portfolio securities  "covering" the amount of the fund's obligation pursuant to
an OTC  option  sold by it (the  cost of the  sell-back  plus  the  in-the-money
amount,  if any,) are  illiquid,  and are  subject  to a fund's  limitations  on
investments  in  illiquid  securities  unless  the Fund has the  legal  right to
terminate the option on not more than seven days notice and the counterparty has
a high credit quality rating.                                                   

USE OF SEGREGATED  AND OTHER  SPECIAL ACCOUNTS                                  
----------------------------------------------                                  

Many hedging  transactions,  in addition to other  requirements,  require that a
Fund segregate  liquid assets with its custodian to the extent Fund  obligations
are not otherwise  "covered"  through  ownership of the  underlying  security or
instrument.  In general, either the full amount of any obligation by the Fund to
pay or  deliver  securities  or  assets  must be  covered  at all  times  by the
securities  or  instruments  required  to  be  delivered,  or,  subject  to  any
regulatory  restrictions,  an amount of cash or liquid securities at least equal
to the current amount of the obligation  must be segregated  with the custodian.
The segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer  necessary to segregate  them. For
example, a call option written by a Fund will require that Fund to hold         

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the securities  subject to the call (or securities  convertible  into the needed
securities without  additional  consideration) or to segregate liquid securities
sufficient  to purchase  and deliver the  securities  if the call is  exercised.
Hedging  transactions  may be  covered  by  other  means  when  consistent  with
applicable regulatory policies.                                                 

INVESTMENT RESTRICTIONS                                                         
-----------------------                                                         

The Funds have  adopted  investment  restrictions,  described  below,  which are
fundamental policies of the Funds and may not be changed without the approval by
a majority of the Funds' shares or, less,  at least  two-thirds of a quorum of a
majority of the shares. Unless otherwise noted, all percentage  restrictions are
measured  as  of  the  time  of  the  investment  after  giving  effect  to  the
transaction.                                                                    

BARON ASSET FUND may not:                                                       

     1.   Issue  senior  securities  except  in  connection  with any  permitted
        borrowing where the Fund is deemed to have issued a senior security;
     2.   Borrow money except from banks for temporary purposes in an amount not
          exceeding  5% of the Fund's net  assets at the time the  borrowing  is
made;                                                       
     3.   Purchase  securities on margin except for short-term  credit necessary
for the clearance of portfolio transactions;                
     4.   Make short sales of securities,  maintain a short  position,  or write
put options;                                                
5.   Purchase or sell commodities or commodity contracts;             
     6.   Purchase or sell real estate or real estate  mortgage  loans or invest
          in the securities of real estate  companies unless such securities are
publicly traded;                                            
7.   Invest in oil, gas or mineral-related programs or leases;        
     8.   Invest  more  than 25% of the  value of its  total  assets  in any one
industry, except investments in U.S. government securities; 
     9.   Purchase  the  securities  of any  one  issuer  other  than  the  U.S.
          government or any of its agencies or instrumentalities, if immediately
          after  such  purchase  more than 5% of the value of the  Fund's  total
          assets  would be  invested  in such  issuer or the Fund would own more
          than 10% of the outstanding  voting securities of such issuer,  except
          that up to 25% of the value of the Fund's total assets may be invested
without regard to the 5% and 10% limitations;               
     10.  Invest  more  than 10% of the  value of the  Fund's  total  assets  in
          securities   which  are   restricted  or  illiquid  or  in  repurchase
agreements maturing or terminable in more than seven days;  
     11.  Invest in securities of other open end investment companies (except in
          connection with a merger,  consolidation or other  reorganization  and
          except for the purchase of shares of registered  open-end money market
          mutual funds if double  advisory fees are not  assessed),  invest more
          than 5% of the value of the Fund's total assets in more than 3% of the
          total outstanding  voting securities of another  investment company or
          more than 10% of the value of the Fund's  total  assets in  securities
issued by other investment companies;                       
     12.  Participate  on  a  joint,  or a  joint  and  several,  basis  in  any
securities trading account;                                 
13.  Underwrite securities of other issuers;                          
     14.  Make  loans to other  persons,  except  up to 10% of the  value of the
          Fund's total assets in loans of portfolio securities and except to the
          extent that the purchase of publicly  traded debt  securities  and the
          entry  into  repurchase  agreements  in  accordance  with  the  Fund's
investment objective and policies may be deemed to be loans;
     15.  Mortgage, pledge or hypothecate any portfolio securities owned or held
          by the Fund,  except as may be necessary in connection  with permitted
borrowing;                                                  
     16.  Invest more than 5% of its total assets in warrants to purchase common
stock;                                                      
     17.  Purchase  securities  of any  issuer  with a record of less than three
          years'   continuous   operation,   including   predecessors,    except
          obligations  issued  or  guaranteed  by  the  U.S.  Government  or its
          agencies  or  instrumentalities,  if such  purchase  would  cause  the
investments of the Fund in all such issuers to              

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exceed 5% of the value of the total assets of the Fund; or  
     18.  Purchase or retain any securities of an issuer any of whose  officers,
          directors,  trustees or  security  holders is an officer or Trustee of
          the Fund, or is a member, officer or Director of the Adviser, if after
          the purchase of the  securities of such issuer by the Fund one or more
          of such persons owns beneficially more than 1/2 of 1% of the shares or
          securities,  or both, all taken at market value,  of such issuer,  and
          such persons  owning more than 1/2 of 1% of such shares or  securities
          together own  beneficially  more than 5% of such shares or securities,
or both, all taken at market value.                         

BARON GROWTH FUND, BARON SMALL CAP FUND and BARON iOPPORTUNITY FUND may not:    

     1.   Issue senior  securities or borrow money or utilize leverage in excess
          of 25% of its net assets (plus 5% for  emergency  or other  short-term
purposes) from banks from time to time.                     
     2.   Except as described in the prospectus or SAI,  engage in  short-sales,
   purchase securities on margin or maintain a net short position.
     3.   Purchase or sell commodities or commodity contracts except for hedging
          purposes and in conformity with regulations of the Commodities Futures
          Trading  Commission  such  that the Fund  would  not be  considered  a
commodity pool.                                             
     4.   Purchase or sell oil and gas interests or real estate.  Debt or equity
          securities  issued by companies engaged in the oil, gas or real estate
          business are not  considered  oil or gas  interests or real estate for
          purposes of this  restriction.  First  mortgage loans and other direct
          obligations  secured by real estate are not considered real estate for
purposes of this restriction.                               
     5.   Invest  more  than 25% of the  value of its  total  assets  in any one
industry, except investments in U.S. government securities. 
     6.   Purchase  the  securities  of any  one  issuer  other  than  the  U.S.
          government or any of its agencies or instrumentalities, if immediately
          after  such  purchase  more than 5% of the value of the  Fund's  total
          assets  would be  invested  in such  issuer or the Fund would own more
          than 10% of the outstanding  voting securities of such issuer,  except
          that up to 25% of the value of the Fund's total assets may be invested
without regard to the 5% and 10% limitations.               
7.   Underwrite securities of other issuers.                          
     8.   Make loans,  except to the extent the purchase of debt  obligations of
          any type  (including  repurchase  agreements and corporate  commercial
          paper)  are  considered  loans  and  except  that  the  Fund  may lend
          portfolio   securities   to  qualified   institutional   investors  in
          compliance  with  requirements  established  from  time to time by the
          Securities and Exchange Commission and the securities  exchanges where
such securities are traded.                                 
     9.   Participate  on  a  joint,  or a  joint  and  several,  basis  in  any
securities trading account.                                 
     10.  Mortgage,  pledge or hypothecate  any of its assets,  except as may be
          necessary in connection with options,  loans of portfolio  securities,
or other permitted borrowings.                              
     11.  Purchase  securities  of any  issuer  with a record of less than three
          years'   continuous   operations,   including   predecessors,   except
          obligations  issued  or  guaranteed  by  the  U.S.  government  or its
          agencies  or  instrumentalities,  if such  purchase  would  cause  the
          investments  of the Fund in all such issuers to exceed 5% of the value
of the total assets of the Fund.                            
     12.  Invest  more  than  15%  of  its  assets  in  restricted  or  illiquid
          securities,  including  repurchase  agreements  maturing  in more than
seven days.                                                 

As a non-fundamental  policy,  BARON GROWTH FUND, BARON SMALL CAP FUND and BARON
iOPPORTUNITY FUND will not:                                                     

     1.   Purchase more than 3% of the outstanding  voting securities of another
          registered  investment  company  except in  connection  with a merger,
          consolidation or other reorganization or as otherwise permitted by the
1940 Act.                                                   

BARON FIFTH AVENUE GROWTH FUND may not:                                         

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     1.   Issue senior securities or borrow money in excess of amounts permitted
          by law (which  currently  requires asset coverage of 300%  immediately
          after such borrowing, subject to exceptions for borrowings of up to 5%
          for  short-term  purposes  and  in an  unlimited  amount  for  certain
redemptions).                                               
     2.   Purchase or sell commodities or commodity contracts in conformity with
          regulations of the Commodities  Futures  Trading  Commission such that
   the Fund would not be required to register as a commodity pool.
     3.   Purchase  or  sell  oil  and  gas  interests  or  real  estate.   Debt
          obligations or equity  securities  issued by companies  engaged in the
          oil,  gas or real  estate  business  or secured by oil and gas or real
          estate are not  considered  oil or gas  interests  or real  estate for
purposes of this restriction.                               
     4.   Underwrite  securities of other issuers  except insofar as the Fund is
the seller of such securities.                              
     5.   Make loans,  except to the extent the purchase of debt  obligations of
          any type (including  loan  participations,  repurchase  agreements and
          corporate  commercial  paper) are considered loans and except that the
          Fund may lend  portfolio  securities in compliance  with  requirements
          established   from  time  to  time  by  the  Securities  and  Exchange
Commission.                                                 
     6.   Mortgage,   pledge  or  hypothecate  any  of  its  assets,  except  in
          connection with borrowings,  loans of portfolio  securities,  or other
permitted transactions.                                     
     7.   Invest 25% or more of the value of its total assets in any  particular
industry.                                                   

As a non-fundamental policy, BARON FIFTH AVENUE GROWTH FUND will not invest more
than  15%  of  its  assets  in  restricted  or  illiquid  securities,  including
repurchase agreements maturing in more than seven days.                         

The Securities  and Exchange  Commission  currently  requires that the following
conditions be met whenever  portfolio  securities are loaned:  (1) the Fund must
receive at least 100% cash collateral  from the borrower;  (2) the borrower must
increase such collateral whenever the market value of the securities rises above
the level of such collateral; (3) the Fund must be able to terminate the loan at
any time; (4) the Fund must receive reasonable  interest on the loan, as well as
any dividends, interest or other distributions on the loaned securities, and any
increase in market value; (5) the Fund may pay only reasonable custodian fees in
connection  with the loan; and (6) while voting rights on the loaned  securities
may pass to the borrower, the Fund's trustees must terminate the loan and regain
the right to vote the  securities if a material  event  adversely  affecting the
investment occurs. These conditions may be subject to future modifications.     

TURNOVER RATE                                                                   

The adviser  expects that the average annual  turnover rate of the portfolios of
BARON ASSET FUND,  BARON GROWTH FUND and BARON FIFTH  AVENUE  GROWTH FUND should
not exceed 50% and of BARON  SMALL CAP FUND and BARON  iOPPORTUNITY  FUND should
not exceed 100%.  Since BARON FIFTH AVENUE  GROWTH FUND is a new fund, it has no
historical  information.  The  turnover  rate  fluctuates  depending  on  market
conditions.  The  turnover  rates for the  Funds  for the past two  years  ended
September 30 are:                                                               

FUND                               2003              2002     
-----                              ----              ----     

Baron Asset Fund                    28%                6%     
Baron Growth Fund                   33%               18%     
Baron Small Cap Fund                30%               55%     
Baron iOpportunity Fund             90%               96%     

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MANAGEMENT OF THE FUNDS                                                         
-----------------------                                                         

BOARD OF TRUSTEES AND OFFICERS                                                  
------------------------------                                                  

The Board of Trustees  oversees the management of the Funds. The following table
lists the Trustees  and  executive  officers of the Funds,  their date of birth,
current  positions  held  with  the  Funds,  length  of time  served,  principal
occupations during the past five years and other Trusteeships/Directorships held
outside the Fund complex.  Unless otherwise noted, the address of each executive
officer and Trustee is Baron Funds,  767 Fifth Avenue,  49th Floor, New York, NY
10153.  Trustees who are not deemed to be  "interested  persons" of the Funds as
defined in the 1940 Act are referred to as  "Disinterested  Trustees."  Trustees
who are  deemed to be  "interested  persons"  of the Funds  are  referred  to as
"Interested   Trustees."  All  Trustees  listed  below,  whether  Interested  or
Disinterested, serve as trustee for all five portfolios.                        

                                                        [Enlarge/Download Table]

INTERESTED TRUSTEES                                                                                           

NAME, ADDRESS &      POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)                  
DATE OF BIRTH        WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS               
-------------        --------------           ---------------------  --------------------------               
                                                                                                              
Ronald Baron *+      President, Chief         17 years               Chairman, CEO, and Director, Baron       
767 Fifth Avenue     Executive Officer,                              Capital, Inc. (1982-Present), Baron      
New York, NY 10153   Chief Investment                                Capital Management, Inc. (1983-Present), 
DOB: May 23, 1943    Officer, Trustee and                            Baron Capital Group, Inc. (1984-Present),
                     Portfolio Manager                               BAMCO, Inc. (1987-Present); Portfolio    
                                                                     Manager, Baron Asset Fund (1987-Present),
                                                                     Baron Growth Fund (1995-Present);        
                                                                     President (2004-Present), Chairman (1999-
                                                                     2004), CIO and Trustee (1987-Present),   
                                                                     Baron Investment Funds Trust; President  
                                                                     (2004-Present), Chairman (1997-2004), CIO
                                                                     and Trustee (1997-Present), Baron Funds  
                                                                     Trust; President (2004-Present), Chairman
                                                                     (2003-2004), CIO and Trustee (2003-      
                                                                     Present), Baron Select Funds.            


INTERESTED TRUSTEES                                                                                           
NAME, ADDRESS &      OTHER TRUSTEE/DIRECTORSHIPS                                                              
DATE OF BIRTH        HELD BY THE TRUSTEE                                                                      
-------------        -------------------                                                                      
                                                                                                              
Ronald Baron *+      None outside the Baron Funds                                                             
767 Fifth Avenue     Complex.                                                                                 
New York, NY 10153                                                                                            
DOB: May 23, 1943                                                                                             

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INTERESTED TRUSTEES                                                                                               

NAME, ADDRESS &         POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)                   
DATE OF BIRTH           WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS                
-------------           --------------           ---------------------  --------------------------                
                                                                                                                  

Linda S. Martinson*+    Vice President,          17 years               General Counsel, Vice President and       
767 Fifth Avenue        Secretary, General                              Secretary, Baron Capital, Inc. (1983-     
New York, NY 10153      Counsel and Trustee                             Present), BAMCO, Inc. (1987-Present),     
DOB: February 22, 1955                                                  Baron Capital Group, Inc. (1984-Present), 
                                                                        Baron Capital Management, Inc. (1983-     
                                                                        Present); Vice President, Secretary,      
                                                                        General Counsel and Trustee, Baron        
                                                                        Investment Funds Trust (1987-Present);    
                                                                        Vice President, Secretary, General Counsel
                                                                        and Trustee, Baron Capital Funds Trust    
                                                                        (1997-Present); Vice President, General   
                                                                        Counsel, Secretary and Trustee, Baron     
                                                                        Select Funds (2003-Present).              


DISINTERESTED TRUSTEES                                                                                            
NAME, ADDRESS &          OTHER TRUSTEE/DIRECTORSHIPS                                                              
DATE OF BIRTH            HELD BY THE TRUSTEE                                                                      
-------------            -------------------                                                                      
                                                                                                                  
Linda S. Martinson*+    None outside the Baron Funds                                                              
767 Fifth Avenue        Complex.                                                                                  
New York, NY 10153                                                                                                
DOB: February 22, 1955                                                                                            

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INTERESTED TRUSTEES                                                                                              

NAME, ADDRESS &        POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)                   
DATE OF BIRTH          WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS                
-------------          --------------           ---------------------  --------------------------                
                                                                                                                 
Morty Schaja*+         Executive Vice           8 years                President and Chief Operating Officer,    
767 Fifth Avenue       President, Chief                                Baron Capital, Inc. (1999-Present); Senior
New York, NY 10153     Operating Officer and                           Vice President and Chief Operating        
DOB: October 30, 1954  Trustee                                         Officer, Baron Capital, Inc. (1997-1999); 
                                                                       Managing Director, Vice President, Baron  
                                                                       Capital, Inc. (1991-1999); and Director,  
                                                                       Baron Capital Group, Inc., Baron Capital  
                                                                       Management, Inc., and BAMCO, Inc. (1997-  
                                                                       Present); Executive vice President (2004- 
                                                                       Present), President (1999-2004), COO      
                                                                       (1999-Present) and Trustee (1996-Present),
                                                                       Baron Investment Funds Trust; Executive   
                                                                       Vice President (2004-Present), President  
                                                                       (1999-2004), COO (1999-Present) and       
                                                                       Trustee (1997-Present) Baron Capital Funds
                                                                       Trust; Executive Vice President (2004-    
                                                                       Present), President, COO and Trustee      
                                                                       (2003-Present), Baron Select Funds.       


INTERESTED TRUSTEES                                                                                              
NAME, ADDRESS &        OTHER TRUSTEE/DIRECTORSHIPS                                                               
DATE OF BIRTH          HELD BY THE TRUSTEE                                                                       
-------------          -------------------                                                                       
                                                                                                                 
Morty Schaja*+         None outside the Baron Funds                                                              
767 Fifth Avenue       Complex.                                                                                  
New York, NY 10153                                                                                               
DOB: October 30, 1954                                                                                            

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DISINTERESTED TRUSTEES                                                                                     

NAME, ADDRESS &         POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)            
DATE OF BIRTH           WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS         
-------------           --------------           ---------------------  --------------------------         
                                                                                                           
Steven B. Dodge^**      Trustee                  Elected 10/22/04       CEO, Windover Development          
239 Summer Street                                                       Corporation (2004-Present) (private
Manchester, MA 01944                                                    real estate development company);  
DOB: July 12, 1945                                                      Founder and Chairman, American     
                                                                        Tower Corporation (1998-Present);  
                                                                        Founder, Chairman and CEO, American
                                                                        Radio Systems (1988-1998); Founder,
                                                                        Chairman and CEO, American         
                                                                        Cablesystems (1978-1988); Chairman 
                                                                        of Audit Committee, member of      
                                                                        executive and Special Independent  
                                                                        Committees, Sotheby's Holdings,    
                                                                        Inc. (2000-Present); Chairman of   
                                                                        Audit Committee, Nextel Partners,  
                                                                        Inc. (2000-Present).               


DISINTERESTED TRUSTEES                                                                                     
NAME, ADDRESS &         OTHER TRUSTEE/DIRECTORSHIPS                                                        
DATE OF BIRTH           HELD BY THE TRUSTEE                                                                
-------------           -------------------                                                                
                                                                                                           
Steven B. Dodge^**      Chairman of the Audit Committee,                                                   
239 Summer Street       Member os Executive and Special                                                    
Manchester, MA 01944    Independent                                                                        
DOB: July 12, 1945      Committees,                                                                        
                        Sotheby's Holdings, Inc. (2000-                                                    
                        Present);                                                                          
                        Chairman of Audit Committee,                                                       
                        Nextel Partners, Inc.                                                              
                        (2000-Present)                                                                     

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DISINTERESTED TRUSTEES                                                                                          

NAME, ADDRESS &              POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)            
DATE OF BIRTH                WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS         
-------------                --------------           ---------------------  --------------------------         
                                                                                                                
Norman S. Edelcup+^**        Trustee                  17 years               Senior Vice President and Director,
244 Atlantic Isles                                                           Florida Savings Bancorp (2001-     
Sunny Isles Beach, FL 33160                                                  Present); Mayor (October 2003-     
DOB: May 8, 1935                                                             Present), Commissioner, Sunny Isles
                                                                             Beach, Florida (2001-2003); Senior 
                                                                             Vice President, Item Processing of 
                                                                             America (1999-2000) (a subsidiary  
                                                                             of The Intercept Group); Chairman, 
                                                                             Item Processing of America (1989-  
                                                                             1999) (a financial institution     
                                                                             service bureau); Director, Valhi,  
                                                                             Inc. (1975-Present) (diversified   
                                                                             company); Director, Artistic       
                                                                             Greetings, Inc. (1985-1998);       
                                                                             Trustee (1987-Present), Baron      
                                                                             Investment Funds Trust; Trustee    
                                                                             (1997-Present), Baron Capital Funds
                                                                             Trust; Trustee (2003-Present) Baron
                                                                             Select Funds.                      

David I. Fuente^**           Trustee                  Elected 10/22/04       Director (1987-Present), Chairman  
701 Tern Point Circle                                                        (1987-2001) and CEO (1987-2000)    
Boca Raton, FL 33431                                                         Office Depot; Director, Ryder      
DOB: September 10, 1945                                                      Systems, Inc. (1998-Present);      
                                                                             Director, Dick's Sporting Goods,   
                                                                             Inc. (1993-Present).               


DISINTERESTED TRUSTEES                                                                                          
NAME, ADDRESS &              OTHER TRUSTEE/DIRECTORSHIPS                                                        
DATE OF BIRTH                HELD BY THE TRUSTEE                                                                
-------------                -------------------                                                                
                                                                                                                
Norman S. Edelcup+^**        Director, Florida Savings                                                          
244 Atlantic Isles           Bancorp (2001-Present);                                                            
Sunny Isles Beach, FL 33160  Director, Valhi, Inc. (1975-                                                       
DOB: May 8, 1935             Present) (diversified company).                                                    

David I. Fuente^**           Director (1987-Present) Office                                                     
701 Tern Point Circle        Depot; Director, Ryder System,                                                     
Boca Raton, FL 33431         Inc. (1998-Present); Director,                                                     
DOB: September 10, 1945      Dick's Sporting Goods, Inc.                                                        
                             (1993-Present).                                                                    

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DISINTERESTED TRUSTEES                                                                                      

NAME, ADDRESS &          POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)            
DATE OF BIRTH            WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS         
-------------            --------------           ---------------------  --------------------------         
                                                                                                            
Charles N. Mathewson^**  Chairman and Trustee     17 years; Elected as   Chairman Emeritus (October 2003-   
9295 Prototype Road                               Chairman 08/04         Present), Chairman, International  
Reno, NV 89521                                                           Game Technology, Inc. (1986-2003)  
DOB: June 12, 1928                                                       (manufacturer of microprocessor-   
                                                                         controlled gaming machines and     
                                                                         monitoring systems); Chairman,     
                                                                         American Gaming Association (1994- 
                                                                         2002); Chairman (2004-Present)     
                                                                         Trustee (1987-Present) Baron       
                                                                         Investment Funds Trust; Chairman   
                                                                         (2004-Present), Trustee (1997-     
                                                                         Present) Baron Capital Funds Trust;
                                                                         Chairman (2004-Present) Trustee    
                                                                         (2003-Present) Baron Select Funds. 

Harold W. Milner^**      Trustee                  17 years               Retired; President and CEO, Kahler 
2293 Morningstar Drive                                                   Realty Corporation (1985-1997)     
Park City, UT 84060                                                      (hotel ownership and management);  
DOB: November 11, 1934                                                   Trustee (1987-Present) Baron       
                                                                         Investment Funds Trust; Trustee    
                                                                         (1997-Present) Baron Capital Funds 
                                                                         Trust; Trustee (2003-Present) Baron
                                                                         Select Funds.                      


                                                                                                            
Charles N. Mathewson^**  None outside the Baron Funds                                                       
9295 Prototype Road      Complex.                                                                           
Reno, NV 89521                                                                                              
DOB: June 12, 1928                                                                                          

Harold W. Milner^**      None outside the Baron Funds                                                       
2293 Morningstar Drive   Complex.                                                                           
Park City, UT 84060                                                                                         
DOB: November 11, 1934                                                                                      

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DISINTERESTED TRUSTEES                                                                                                

NAME, ADDRESS &             POSITION(S) HELD                                  PRINCIPAL OCCUPATION(S)                 
DATE OF BIRTH               WITH THE FUNDS           LENGTH OF TIME SERVED    DURING THE PAST FIVE YEARS              
-------------               --------------           ---------------------    --------------------------              
                                                                                                                      
Raymond Noveck+ +^**        Trustee                  17 years                 Private Investor (1999-Present);        
31 Karen Road                                                                 President, The Medical Information      
Waban, MA 02168                                                               Line, Inc. (1997-1998) (health care     
DOB: May 4, 1943                                                              information); President, Strategic      
                                                                              Systems, Inc. (1990-1997) (health       
                                                                              care information); Director,            
                                                                              Horizon/CMS Healthcare Corporation      
                                                                              (1987-1997); Trustee (1987-Present)     
                                                                              Baron Investment Funds Trust;           
                                                                              Trustee (1997-Present) Baron            
                                                                              Capital Funds Trust; Trustee (2003-     
                                                                              Present) Baron Select Funds.            

David A. Silverman, MD^**   Trustee                  17 years                 Physician and Faculty, New York         
146 Central Park West                                                         University School of Medicine           
New York, NY 10024                                                            (1976-Present)Trustee (1987-            
DOB: March 14, 1950                                                           Present) Baron Investment Funds         
                                                                              Trust; Trustee (1997-Present) Baron     
                                                                              Capital Funds Trust; Trustee (2003-     
                                                                              Present) Baron Select Funds.            

OFFICERS OF THE FUNDS                                                                                                 
---------------------                                                                                                 


NAME, ADDRESS &            POSITION(S) HELD                                 PRINCIPAL OCCUPATION(S)                   
DATE OF BIRTH              WITH THE FUNDS           LENGTH OF TIME SERVED   DURING THE PAST FIVE YEARS                
-------------              --------------           ---------------------   --------------------------                
                                                                                                                      
Clifford Greenberg         Senior Vice President    8 years                 Senior Vice President, Baron Capital,     
767 Fifth Avenue           and Portfolio Manager                            Inc., Baron Capital Group, Inc., BAMCO,   
New York, NY 10153                                                          Inc., (2003-Present)(Vice President, 1997-
DOB: April 30, 1959                                                         2003), Portfolio Manager, Baron Small Cap 
                                                                            Fund (1997-Present); General Partner, HPB 
                                                                            Associates, LP (1984-1996) (investment    
                                                                            partnership).                             


DISINTERESTED TRUSTEES                                                                                                
NAME, ADDRESS &             OTHER TRUSTEE/DIRECTORSHIPS                                                               
DATE OF BIRTH               HELD BY THE TRUSTEE                                                                       
-------------               -------------------                                                                       
                                                                                                                      
Raymond Noveck+ +^**        None outside the Baron Funds                                                              
31 Karen Road               Complex.                                                                                  
Waban, MA 02168                                                                                                       
DOB: May 4, 1943                                                                                                      

David A. Silverman, MD^**   Director, New York Blood Center                                                           
146 Central Park West       (1999-Present).                                                                           
New York, NY 10024                                                                                                    
DOB: March 14, 1950                                                                                                   

Clifford Greenberg         None                                                                                       
767 Fifth Avenue                                                                                                      
New York, NY 10153                                                                                                    
DOB: April 30, 1959                                                                                                   

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NAME, ADDRESS &          POSITION(S) HELD                                PRINCIPAL OCCUPATION(S)                   
DATE OF BIRTH            WITH THE FUNDS           LENGTH OF TIME SERVED  DURING THE PAST FIVE YEARS                
-------------            --------------           ---------------------  --------------------------                
                                                                                                                   
Andrew Peck              Vice President and       2 years                Vice President and Co-Portfolio Manager,  
767 Fifth Avenue         Co-Portfolio Manager                            Baron Asset Fund (2003-Present), Analyst, 
New York, NY 10153                                                       Baron Capital, Inc. (1998-Present).       
DOB: March 25, 1969                                                                                                

Susan Robbins            Vice President           17 years               Senior Analyst, Vice President and        
767 Fifth Avenue                                                         Director, Baron Capital, Inc. (1982-      
New York, NY 10153                                                       Present), Baron Capital Management, Inc.  
DOB: October 19, 1954                                                    (1984-Present).                           

Mitchell J. Rubin        Vice President and       4 years                Vice President and Senior Analyst, Baron  
767 Fifth Avenue         Portfolio Manager                               Capital, Inc. (1997-Present), Portfolio   
New York, NY 10153                                                       Manager of Baron iOpportunity Fund (2000- 
DOB: September 22, 1966                                                  Present); Portfolio Manager of Baron Fifth
                                                                         Avenue Growth Fund (2004-Present).        

Peggy C. Wong            Treasurer and Chief      17 years               Treasurer and Chief Financial Officer,    
767 Fifth Avenue         Financial Officer                               Baron Capital, Inc., Baron Capital Group, 
New York, NY 10153                                                       Inc., BAMCO, Inc. and Baron Capital       
DOB: April 30, 1961                                                      Management, Inc. (1987-Present).          


NAME, ADDRESS &          OTHER TRUSTEE/DIRECTORSHIPS                                                               
DATE OF BIRTH            HELD BY THE TRUSTEE                                                                       
-------------            -------------------                                                                       
                                                                                                                   

Andrew Peck              None                                                                                      
767 Fifth Avenue                                                                                                   
New York, NY 10153                                                                                                 
DOB: March 25, 1969                                                                                                

Susan Robbins            None                                                                                      
767 Fifth Avenue                                                                                                   
New York, NY 10153                                                                                                 
DOB: October 19, 1954                                                                                              

Mitchell J. Rubin        None                                                                                      
767 Fifth Avenue                                                                                                   
New York, NY 10153                                                                                                 
DOB: September 22, 1966                                                                                            

Peggy C. Wong            None                                                                                      
767 Fifth Avenue                                                                                                   
New York, NY 10153                                                                                                 
DOB: April 30, 1961                                                                                                

------------------------------------------------------------------------------- 
*   Trustees deemed to be "interested persons" of the Fund as that term is      
   defined in the Investment Company Act of 1940 by reason of their employment
with the Funds' Adviser and Distributor.                                
+   Members of the Executive Committee, which is empowered to exercise all of   
  the powers, including the power to declare dividends, of the full Board of
Trustees when the full Board of Trustees is not in session.             
+   Members of the Audit Committee.                                             
^   Members of the Nominating Committee.                                        
**  Members of the Independent Committee.                                       

The Trustees of the Funds are  responsible  for the overall  supervision  of the
operation of the Portfolios and the Funds and perform  various duties imposed on
trustees  of  investment  companies  by  the  1940  Act  and  under  the  Funds'
Declaration  of Trust and By-laws.  Each  Trustee  listed above also serves as a
Trustee of Baron Capital Funds Trust and                                        

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Baron Select Funds, registered investment companies.                            

The Funds pay each  Trustee who is not an  interested  person of the Fund or the
Adviser (each a  "Disinterested"  Trustee)  annual  compensation  in addition to
reimbursement  of  out-of-pocket  expenses  in  connection  with  attendance  at
meetings of the Trustees.  Specifically,  each Disinterested  Trustee receives a
base  annual  compensation  of $5,000.  An  additional  $2,500 each paid to each
Disinterested  Trustee  for  attendance  in  person  at  the  quarterly  Trustee
Meetings;  $1,000 is paid per  quarterly  meeting,  if the  Trustee  attends  by
telephone.  The Interested  Trustees and Officers receive no direct remuneration
in such capacity from the Funds.                                                

The Board of Trustees has established four committees,  i.e.,  Audit,  Executive
Committee, Nominating and Independent.                                          

There are two members of the Audit Committee.  The Audit Committee recommends to
the  full  Board  the   engagement  or  discharge  of  the  Funds'   independent
accountants;  directs  investigations  into  matters  within  the  scope  of the
independent  accountants' duties;  reviews with the independent  accountants the
result  of  the  audit;   and  reviews  the   independence  of  the  independent
accountants.  Each member of the Audit Committee receives an aggregate of $2,500
in annual  compensation for serving on the Audit Committee.  The Audit Committee
met twice during the fiscal year ended September 30, 2003.                      

There are four members of the Executive Committee which is empowered to exercise
all of the powers,  including the power to declare dividends,  of the full Board
of Trustees  when the full Board of  Trustees is not in session.  Members of the
Executive Committee serve on the committee without compensation. There were four
meetings of the Executive  Committee  during the fiscal year ended September 30,
2003.                                                                           

There are three members of the Nominating  Committee.  The Nominating  Committee
recommends  to the full Board  those  persons to be  nominated  for  election as
Trustees by  shareholders  and selects and  proposes  nominees  for  election by
Trustees  between  shareholders'  meeting.  The  Nominating  Committee  does not
normally consider  candidates proposed by shareholders for election as Trustees.
Members of the Nominating  Committee serve without  compensation.  There were no
meetings of the Nominating  Committee during the fiscal year ended September 30,
2003.                                                                           

There are five members of the  Independent  Committee,  all of whom serve on the
committee without  compensation.  The committee  discusses various Fund matters,
including  the advisory  contract  and  distribution  plan.  Its members are all
Disinterested  Trustees of the Funds.  This  committee  met two times during the
fiscal year ended September 30, 2003.                                           

TRUSTEE OWNERSHIP OF FUND SHARES                                                

The following table shows the dollar range of shares  beneficially owned by each
Trustee as of December 31, 2003:                                                

                                                        [Enlarge/Download Table]

                                                                      AGGREGATE DOLLAR                                             
                                                                      RANGE OF EQUITY                                              
                                                                      SECURITIES IN ALL                                            
                                                                      REGISTERED INVESTMENT                                        
                                                                      COMPANIES OVERSEEN BY                                        
                              DOLLAR RANGE OF EQUITY                  TRUSTEE IN FAMILY OF                                         
NAME OF TRUSTEE               SECURITIES IN THE FUNDS                 INVESTMENT COMPANIES                                         
--------------------------------------------------------------------------------------------------------                           
                                                                                                                                   
Ronald Baron                 >$100,000                                >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
Linda S. Martinson           >$ 100,000                               >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
Morty Schaja                 >$100,000                                >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
Norman Edelcup               $50,000-$100,000                          $50,000-$100,000                                            
-----------------------------------------------------------------------------------------------------------------------------------

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Charles Mathewson            >$100,000                                >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
Harold Milner                >$100,000                                >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
Raymond Noveck               >$100,000                                >$100,000                                                    
-----------------------------------------------------------------------------------------------------------------------------------
David Silverman, MD          $10,001-$50,000                           $10,001-$50,000                                             
-----------------------------------------------------------------------------------------------------------------------------------

The  Disinterested  Trustees  do not  own any  securities  of the  Adviser,  the
Distributor  or any other  entity  controlling;  controlled  by or under  common
control with the Adviser or Distributor.                                        

TRUSTEE COMPENSATION TABLE                                                      
--------------------------                                                      

The Trustees of the Funds received the following compensation from the Funds for
the fiscal year ended September 30, 2003:                                       

                                                        [Enlarge/Download Table]

                                                                                                                       
=======================================================================================================================
                            Aggregate             Pension or                Estimated Annual         Total Compensation
                            Compensation          Retirement Benefits       Benefits Upon            From Fund and     
                            From the Funds        Accrued As Part of        Retirement               Fund Complex Paid 
Name                                              Funds Expenses                                     to Trustees       
-----------------------------------------------------------------------------------------------------------------------
Ronald Baron                    $0                     N/A                     N/A                      $0             
-----------------------------------------------------------------------------------------------------------------------
Linda S. Martinson              $0                     N/A                     N/A                      $0             
-----------------------------------------------------------------------------------------------------------------------
Morty Schaja                    $0                     N/A                     N/A                      $0             
-----------------------------------------------------------------------------------------------------------------------
Norman Edelcup               $16,250                   N/A                     N/A                   $16,250           
-----------------------------------------------------------------------------------------------------------------------
Charles Mathewson            $ 6,500                   N/A                     N/A                   $ 6,500           
-----------------------------------------------------------------------------------------------------------------------
Harold Milner                $13,750                   N/A                     N/A                   $13,750           
-----------------------------------------------------------------------------------------------------------------------
Raymond Noveck               $15,625                   N/A                     N/A                   $15,625           
-----------------------------------------------------------------------------------------------------------------------
David Silverman              $13,750                   N/A                     N/A                   $13,750           
-----------------------------------------------------------------------------------------------------------------------

PRINCIPAL HOLDERS OF SHARES                                                     
---------------------------                                                     

As of December 31, 2003, the following persons were known to the Funds to be the
record or beneficial owners of more than 5% of the outstanding securities of the
Funds:                                                                          

                                                        [Enlarge/Download Table]

                                                                                        
                                                                           BARON        
                                  BARON ASSET  BARON GROWTH   BARON SMALL  IOPPORTUNITY 
                                  FUND         FUND           CAP FUND     FUND         
                                  -----------  -------------  -----------  -------------

CHARLES SCHWAB & Co., Inc.        33.7%        21.8%          34.4%        53.4%        
NATIONAL FINANCIAL SERVICES CORP. 18.7%        29.2%          21.8%                     

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All  of  the  above  record  owners  are  brokerage  firms  or  other  financial
institutions that hold stock for the benefit of their respective  customers.  As
of December 31, 2003,  all of the officers and Trustees of Baron Asset Fund as a
group  beneficially  owned  directly or  indirectly  0.53% of BARON ASSET FUND's
outstanding shares, 0.14% of BARON GROWTH FUND's outstanding shares, 0.53% BARON
SMALL CAP FUND's  outstanding  shares,  and 2.54% of BARON  iOPPORTUNITY  FUND's
outstanding  shares.  Since BARON FIFTH AVENUE GROWTH FUND is a new fund, it has
no shareholder ownership information.                                           

INVESTMENT ADVISER                                                              
------------------                                                              

The investment  adviser to the Funds is BAMCO, Inc. (the "Adviser"),  a New York
corporation with its principal offices at 767 Fifth Avenue, New York, N.Y. 10153
and a subsidiary of Baron Capital Group, Inc.  ("BCG").  Mr. Ronald Baron is the
controlling  stockholder  of BCG and is BAMCO's chief  investment  officer.  Mr.
Baron has over 30 years of experience  as a Wall Street  analyst and has managed
money  for  others  for over 25 years.  He has been a  participant  in  Barron's
Roundtable  and has been a featured guest on Wall Street Week, CNN and CNBC/FNN.
Pursuant  to  separate  Advisory   Agreements  with  each  Fund  (the  "Advisory
Agreement"),  the Adviser furnishes continuous  investment advisory services and
management to each Fund,  including making the day-to-day  investment  decisions
and arranging  portfolio  transactions for the Funds subject to such policies as
the Trustees may determine.  For such services,  the Adviser  receives an annual
fee from Baron Asset Fund,  Baron  Growth  Fund,  Baron Small Cap Fund and Baron
iOpportunity Fund of 1% of the assets of the respective Fund. Baron Fifth Avenue
Growth  Fund pays the Adviser 1% for assets  under $1 billion,  0.95% for assets
greater  that $1 billion  but less than $2  billion,  0.90% for  assets  over $2
billion but less than $3 billion, 0.85% for assets over $3 billion but less than
$4 billion, and 0.80% for assets greater than $4 billion.                       

Baron Asset Fund incurred  advisory  expenses of $19,539,014  for the year ended
September  30, 2003;  $27,512,602  for the year ended  September  30, 2002;  and
$38,431,132  for the year ended  September 30, 2001.  Baron Growth Fund incurred
advisory  expenses  of  $15,244,302  for the  year  ended  September  30,  2003;
$8,605,814  for the year ended  September 30, 2002;  and $5,152,815 for the year
ended  September 30, 2001.  Baron Small Cap Fund incurred  advisory  expenses of
$8,973,514 for the year ended September 30, 2003;  $7,437,582 for the year ended
September 30, 2002; and $7,180,360 for the year ended September 30, 2001.  Baron
iOpportunity  Fund  incurred  advisory  expenses of $777,395  for the year ended
September  30,  2003;  $820,217  for the year  ended  September  30,  2002;  and
$1,182,833 for the year ended September 30, 2001. The Adviser has  contractually
agreed to limit the expense  ratio for Baron  iOpportunity  Fund to 1.5% and for
Baron Fifth Avenue  Growth Fund to 1.4%.  Baron Fifth Avenue  Growth Fund has no
operating history and incurred no expenses.                                     

Under the  Advisory  Agreements,  the  Adviser,  at its own  expense and without
reimbursement  from the Funds,  furnishes  office space and all necessary office
facilities,  equipment and executive  personnel for managing the Funds, and pays
the salaries and fees of all officers and Trustees who are interested persons of
the  Adviser.  The  Adviser  also uses a portion  of its  assets to pay all or a
portion of the charges of third party programs that make the shares of the Funds
available to their customers.                                                   

The Funds pay all operating and other  expenses not borne by the Adviser such as
audit,   external  accounting  and  legal  fees;  custodian  fees;  expenses  of
registering  and  qualifying  its  shares  with  federal  and  state  securities
commissions;  expenses in preparing  shareholder  reports and proxy solicitation
materials;  expenses  associated  with  each  Fund's  shares  such  as  dividend
disbursing,  transfer  agent and registrar  fees;  certain  insurance  expenses;
compensation  of Trustees who are not  interested  persons of the  Adviser;  and
other  miscellaneous  business  expenses.  The Funds  also pay the  expenses  of
offering the shares of each  respective  Fund,  including the  registration  and
filing fees,  legal and accounting fees and costs of printing the prospectus and
related documents. Each Fund also pays all taxes imposed on it and all brokerage
commissions and expenses incurred in connection with its portfolio transactions.

The  Adviser  utilizes  the  staffs  of BCG and  its  subsidiary  Baron  Capital
Management, Inc. ("BCM") to provide research.  Directors,  officers or employees
of the Adviser  and/or its  affiliates may also serve as officers or Trustees of
the Funds                                                                       

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or of other  funds  managed  by the  Adviser.  BCM is an  investment  adviser to
institutional  and  individual  accounts.  Clients  of BCM and the  other  Funds
managed by the Adviser have investment objectives which may or may not vary from
those of each other and of the Funds.  BCM and the Adviser invest assets in such
clients' accounts and in the accounts of principals and employees of BCM and its
affiliates in investments  substantially similar to, or the same as, those which
constitute the principal  investments of the Funds. When the same securities are
purchased for or sold by a Fund and any of such other accounts, it is the policy
of the  Adviser  and  BCM to  allocate  such  transactions  in a  manner  deemed
equitable  by the  Adviser.  All trading by  employees is subject to the Code of
Ethics of the Funds and the Adviser.  In certain  circumstances  the Adviser may
make investments for the Funds that conflict with investments being made by BCM.
The Adviser may also make investment  decisions for a Fund that are inconsistent
with the investment decisions for other funds it manages.                       

Each  Advisory  Agreement  provides that the Fund may use "Baron" as part of its
name for so long as the Adviser serves as investment  adviser to that Fund. Each
Fund  acknowledges that the word "Baron" in its name is derived from the name of
the entities  controlling,  directly and indirectly,  the Adviser,  which derive
their name from Ronald Baron;  that such name is the property of the Adviser and
its affiliated  companies for copyright  and/or other purposes;  and that if for
any reason the Adviser ceases to be that Fund's  investment  adviser,  that Fund
will promptly  take all steps  necessary to change its name to one that does not
include "Baron," absent the Adviser's written consent.                          

Each  Advisory  Agreement  provides  that the Adviser shall have no liability to
that Fund or its shareholders for any error of judgment or mistake of law or for
any loss  suffered  by that Fund on account of any action  taken in good  faith;
provided, that the Adviser shall not be protected against liabilities arising by
virtue of  willful  misfeasance,  bad  faith or gross  negligence,  or  reckless
disregard of the Adviser's obligations under the Advisory Agreement.            

The Advisory Agreements were approved by a majority of the Trustees, including a
majority of the  Trustees  who are not  "interested  persons" (as defined by the
Investment  Company  Act of 1940  ("1940 Act" )) for Baron Asset Fund on May 11,
1987, for Baron Growth Fund on October 21, 1994, and for Baron Small Cap Fund on
July 29, 1997. The Advisory Agreements must normally be approved annually by the
Trustees or a majority of the particular  Fund's shares and by a majority of the
Trustees who are not parties to the Advisory  Agreement or interested persons of
any such party. With respect to Baron Asset Fund, Baron Growth Fund, Baron Small
Cap Fund,  and Baron  iOpportunity  Fund such  approval  for 2002 was given at a
Board of Trustees  meeting held on April 29,  2003.  With respect to Baron Fifth
Avenue Growth Fund, the Advisory Agreement was approved on February 2, 2004, for
an initial term of two years.                                                   

Each Advisory  Agreement is terminable  without penalty by either the Fund (when
authorized by majority vote of either its outstanding shares or the Trustees) or
the  Adviser  on  60  days'  written  notice.   Each  Advisory  Agreement  shall
automatically terminate in the event of its "assignment" (as defined by the 1940
Act).                                                                           

In approving  the Advisory  Agreement  the Trustees  considered a broad scope of
information, including the following:                                           

o    confidence  in the  senior  personnel  of the  Adviser,  and the  Adviser's
resources ;                                                           
o    the Adviser's investment principles and process;                           
o    the quality of the services provided by the Adviser;                       
o    the  nature  o0f  the  services  provided  by the  Adviser,  including  the
extensive devotion to research efforts by the Adviser;                
o    the type of investing to be used for the Funds;                            
o    historical performance of the Funds;                                       
o    historical  performance of the Adviser as compared to similar funds managed
by other advisers over comparable periods;                            
o    the  advisory  fee rate  payable  to the  Adviser by the Funds and by other
     funds  managed by the Adviser,  and as compared to similar funds managed by
other advisers over comparable periods;                               
o    the total  expense  ratio of the Funds and as  compared  to  similar  funds
managed by other advisers over comparable periods;                    
o    the  total  compensation  paid  to  affiliates  of the  Adviser  for  other
services;                                                             
o    the  profitability  to the Adviser and its  affiliates  of the Funds and of
other Funds managed by the Adviser; and                               
o    the additional services provided by the Adviser.                           

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In addition,  the Trustees were offered the  opportunity to ask questions or ask
for  any  additional  information.  Based  on  their  evaluation  of  the  above
information,   the  Trustees,   including  all  of  the  Independent   Trustees,
unanimously  approved the Advisory Agreement,  determining that the compensation
under the Agreement is fair and reasonable in light of the services and expenses
and such other matters as the Trustees considered to be relevant in the exercise
of their reasonable  business judgment.  For Baron Fifth Avenue Growth Fund, the
Board  considered the history of the Adviser,  the record of Mr. Rubin,  and Mr.
Rubin's experience with larger capitalization companies.                        

SERVICE AGREEMENTS                                                              
------------------                                                              

The Funds have  agreements  with  various  service  providers  pursuant to which
administrative  services  such  as  record  keeping,  reporting  and  processing
services are provided to the Funds' shareholders.                               

BROKERAGE                                                                       
---------                                                                       

The Adviser is responsible for placing the portfolio  brokerage  business of the
Funds with the objective of obtaining the best net results for the Funds, taking
into account  prompt,  efficient and reliable  executions at a favorable  price.
Brokerage  transactions  for the  Funds  in  exchange-listed  securities  or for
transactions  executed  through  ECN's or  computer-based  trading  networks are
effected  chiefly by or through the Adviser's  affiliate,  Baron Capital,  Inc.,
when   consistent  with  this  objective  and  subject  to  the  conditions  and
limitations  of the 1940 Act.  Baron  Capital,  Inc.,  ("Baron  Capital"  or the
"Distributor")  a New York  corporation and a subsidiary of BCG,  located at 767
Fifth Avenue,  New York, N.Y. 10153, is a member of the National  Association of
Securities  Dealers,  Inc.,  but is not a  member  of any  securities  exchange.
Transactions  in securities that trade on NASDAQ or are otherwise not listed are
effected by broker/dealers  other than Baron Capital. The Funds do not deal with
Baron  Capital in any  portfolio  transaction  in which  Baron  Capital  acts as
principal.                                                                      

The Funds'  Board of Trustees has adopted  procedures  pursuant to Rule 17e-1 of
the 1940 Act which are reasonably  designed to provide that the commissions paid
to Baron  Capital are  reasonable  and fair compared to the  commission,  fee or
other  remuneration  received by other  brokers in  connection  with  comparable
transactions   involving  similar  securities  being  purchased  or  sold  on  a
securities  exchange  during a comparable  period of time.  The Board reviews no
less frequently than quarterly that all transactions  effected  pursuant to Rule
17e-1  during the  preceding  quarter  were  effected  in  compliance  with such
procedures.  The Funds and the Adviser  furnish such  reports and maintain  such
records as required by Rule 17e-1. Baron Fifth Avenue Growth Fund has no trading
history.                                                                        

                                                                [Download Table]

                         FOR THE FISCAL YEAR ENDED 09/30                        
                                                                                
                                             2003            2002        2001   
Total Commissions Paid                                                          
Baron Asset Fund                         $3,790,747       $2,191,414  $2,575,608
Baron Growth Fund                        $3,328,951       $1,392,589  $  544,313
Baron Small Cap Fund                     $1,901,366       $1,852,953  $1,556,111
Baron iOpportunity Fund                  $  410,612       $  358,979  $  420,264

Commissions Pd to BCI                                                           
Baron Asset Fund                         $1,679,723       $1,521,097  $1,777,685
Baron Growth Fund                        $1,660,501       $  745,934  $  322,640
Baron Small Cap Fund                     $  685,873       $  814,890  $  829,989
Baron iOpportunity Fund                  $  237,807       $  240,829  $  373,271

% of Aggregate Dollar Amount                                                    
of Commissions Pd to BCI                                                        
Baron Asset Fund                            44.31%           69.4%       69.0%  
Baron Growth Fund                           49.88%           53.6%       59.3%  
Baron Small Cap Fund                        36.07%           44.0%       53.3%  

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Baron iOpportunity Fund                     57.92%           67.1%       88.8%  

% of Aggregate  Dollar Amount                                                   
of Transactions involving                                                       
Payment of Commissions to BCI                                                   
Baron Asset Fund                            52.17%           66.6%       67.01% 
Baron Growth Fund                           69.16%           50.7%       58.61% 
Baron Small Cap Fund                        34.50%           42.2%       52.42% 
Baron iOpportunity Fund                     61.35%           62.1%       89.07% 

% of Total Transactions (Principal & Agency)                                    
Where BCI Acted as Broker                                                       
Baron Asset Fund                            51.62%           61.9%       56.25% 
Baron Growth Fund                           63.53%           43.6%       40.61% 
Baron Small Cap Fund                        33.01%           33.3%       34.15% 
Baron iOpportunity Fund                     59.41%           49.7%       57.13% 

Under the  Investment  Advisory  Agreements and as permitted by Section 28(e) of
the  Securities and Exchange Act of 1934, the Adviser may cause the Funds to pay
a  broker-dealer  which provides  brokerage and other services to the Adviser an
amount of  commission  for effecting a securities  transaction  for the Funds in
excess of the amount other broker-dealers would have charged for the transaction
if the  Adviser  determines  in  good  faith  that  the  greater  commission  is
consistent  with the Funds'  policies and is reasonable in relation to the value
of the brokerage  and other  services  provided by the  executing  broker-dealer
viewed in terms of either a  particular  transaction  or the  Adviser's  overall
responsibilities  to the Funds or to its other clients.  The term "brokerage and
other services" includes advice as to the value of securities,  the advisability
of investing in,  purchasing,  or selling  securities,  and the  availability of
securities or of purchasers or sellers of  securities;  furnishing  analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio  strategy and the  performance of accounts;  and effecting  securities
transactions and performing  functions  incidental thereto such as clearance and
settlement.  Such  research  and  information  may be used by the Adviser or its
affiliates to supplement the services it is required to perform  pursuant to the
Advisory  Agreement  in  serving  the Funds  and/or  other  advisory  clients of
affiliates.                                                                     

Broker-dealers may be willing to furnish statistical  research and other factual
information or services to the Adviser for no consideration other than brokerage
or  underwriting  commissions.  Research  provided  by  brokers  is used for the
benefit of all of the  Adviser's  or its  affiliates'  clients and not solely or
necessarily for the benefit of the Funds.  The Adviser's  investment  management
personnel  attempt to  evaluate  the  quality of  research  provided by brokers.
Results of this effort are sometimes used by the Adviser as a  consideration  in
the selection of brokers to execute portfolio transactions.                     

Baron  Capital  acts as broker for, in addition to the Funds,  other mutual fund
clients  of the  Adviser  and  accounts  of BCM,  and may also act as broker for
accounts of  principals  and  employees of Baron  Capital,  BCM and the Adviser.
Investment  decisions for the Funds for investment  accounts  managed by BCM and
BAMCO are made  independent  of each other in light of differing  considerations
for the various accounts. The same investment decision may, however, be made for
two or more of the Adviser's and/or BCM's accounts. In such event,  simultaneous
transactions are inevitable.  Purchases and sales are averaged as to price where
possible and allocated to account in a manner deemed equitable by the Adviser in
conjunction with BCM and Baron Capital.  This procedure could have a detrimental
effect  upon the price or value of the  security  for the Funds,  but may have a
beneficial effect.                                                              

The investment  advisory fee that the Funds pay to the Adviser is not reduced as
a consequence of the Adviser's  receipt of brokerage and research  services.  To
the extent the Funds'  portfolio  transactions are used to obtain such services,
the  brokerage  commissions  paid by the Funds  will  exceed  those  that  might
otherwise  be paid by an  amount  that  cannot  be  presently  determined.  Such
services  would by useful and of value to the Adviser in serving  both the Funds
and other clients and,  conversely,  such services  obtained by the placement of
brokerage  business of other  clients would by useful to the Adviser in carrying
out its obligations to the Funds.                                               

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DISTRIBUTOR                                                                     
-----------                                                                     

DISTRIBUTION OF SECURITIES                                                      
--------------------------                                                      

The Funds have a distribution  agreement  with Baron  Capital.  Baron Capital is
affiliated with the Adviser. The Distributor acts as the agent for the Funds for
the continuous  public offering of their shares on a best efforts basis pursuant
to  a   distribution   plan  adopted   under  Rule  12b-1  under  the  1940  Act
("Distribution Plan").                                                          

DISTRIBUTION PLAN                                                               
-----------------                                                               

The Distributor does not receive underwriting commissions,  but the Distribution
Plan  authorizes the Funds to pay the  Distributor a distribution or service fee
equal on an annual basis to 0.25% of the Funds'  average  daily net assets.  The
fee was reduced to 0.25% from 0.50% on July 12, 1993.  The  distribution  fee is
paid to the Distributor in connection with its activities or expenses  primarily
intended  to  result  in the sale of  shares,  including,  but not  limited  to,
compensation   to  registered   representatives   or  other   employees  of  the
Distributor;  compensation  to and expenses of employees of the  Distributor who
engage in or  support  the  distribution  of shares or who  service  shareholder
accounts; telephone expenses;  preparing,  printing and distributing promotional
and advertising  material;  preparing,  printing and distributing the Prospectus
and  reports  to other  than  current  shareholders;  compensation  for  certain
shareholder services;  and commissions and other fees to broker-dealers or other
persons  (excluding banks) who have introduced  investors to the Fund. The total
amount  of the  fee is  payable  to the  Distributor  regardless  of the  actual
expenses incurred, which may be more or less than the distribution fees received
by  the   Distributor.   The  Distributor  or  its  affiliates  may  enter  into
arrangements  with  third  parties to sell the Funds in  programs  that make the
Funds' shares available to their customers and pay such third parties amounts in
excess of the 12b-1  fee.  The Excess  amounts  typically  represent  savings of
expenses  the Funds  would  otherwise  incur in  performing  record  keeping and
transfer agency functions. The Adviser reimburses the Distributor for certain of
those excess charges.                                                           

The  expenses  listed  below are  payable  by the Funds and are not  treated  as
distribution  or  service  fees  under  the  Distribution  Plan  eve if they are
considered  to be primarily  intended to result in the sale of shares within the
meaning of Rule 12b-1:  (a) the costs of preparing,  printing or reproducing and
mailing  all  required  reports and  notices to  shareholders;  (b) the costs of
preparing,  printing or reproducing and mailing all proxy statements and proxies
(whether or not such proxy  materials  include any item  relating to or directed
toward the sale of shares); (c) the costs of preparing,  printing or reproducing
and mailing all prospectuses and statements of additional information to current
shareholders;  (d) all  external  legal  and  accounting  fees  relating  to the
preparation  of any  such  report,  prospectus,  and  proxy  materials;  (e) all
external  fees and expenses  relating to the  qualification  of the Funds and/or
their shares under the  securities or "Blue Sky" laws of any  jurisdiction;  (f)
all fees under the 1940 Act and the  Securities  Act of 1933,  including fees in
connection with any application for exemption relating to or directed toward the
sale of Shares; (g) all fees and assessments,  if any, of the Investment Company
Institute  or any  successor  organization,  whether or not its  activities  are
designed to provide  sales  assistance;  (h) all costs of preparing  and mailing
confirmations of shares sold or redeemed and reports of share balances;  (i) all
external costs of responding to telephone or mail inquiries of  shareholders  or
prospective  shareholders;  and (j) all other  external costs and expenses of an
administrative nature.                                                          

The Distribution Plan requires that while it is in effect the Distributor report
to the Trustees in writing, at least quarterly, the amounts of all expenditures,
the  identity of the payees and the purposes  for which such  expenditures  were
made for the preceding  fiscal quarter.  For the fiscal year ended September 30,
2003, BARON ASSET FUND paid  distribution  fees to the Distributor of $4,884,757
(an additional  $2,751,834 was absorbed by the Distributor and/or its affiliates
and not paid by the Fund  pursuant to the 0.25%  limitation);  BARON GROWTH FUND
paid   distribution  fees  to  the  Distributor  of  $3,811,078  (an  additional
$1,318,890 was absorbed by the Distributor and/or its affiliates and not paid by
the  Fund  pursuant  to  the  0.25%  limitation);  BARON  SMALL  CAP  FUND  paid
distribution  fees to the Distributor of $2,243,380 (an additional  $668,533 was
absorbed  by the  Distributor  and/or  its  affiliates  and not paid by the Fund
pursuant to the 0.25% limitation); and BARON iOPPORTUNITY FUND paid distribution
fees to the  Distributor of $194,349 (an additional  $49,310 was absorbed by the
Distributor and/or its affiliates and not paid by the Fund pursuant to the 0.25%
limitation). BARON                                                              

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FIFTH AVENUE GROWTH FUND has no history.                                        

COMPENSATION TABLE                                                              
------------------                                                              

The following  table discloses  compensation  received by Baron Capital from the
Funds for the fiscal year ended September 30, 2003:                             

                                                        [Enlarge/Download Table]

                                                                                                                     
==================================================================================================================== 
                                 Net Underwriting        Compensation on                                             
                                  Discounts and          Redemptions and           Brokerage               Other     
Series                             Commissions             Repurchases            Commissions          Compensation* 
---------------------------------------------------------------------------------------------------------------------
Baron Asset Fund                        $0                      $0                $1,679,723             $4,884,757  
---------------------------------------------------------------------------------------------------------------------
Baron Growth Fund                       $0                      $0                $1,660,501             $3,811,078  
---------------------------------------------------------------------------------------------------------------------
Baron Small Cap Fund                    $0                      $0                $  685,873             $2,243,380  
---------------------------------------------------------------------------------------------------------------------
Baron iOpportunity Fund                 $0                      $0                $  237,807             $  194,349  
---------------------------------------------------------------------------------------------------------------------

*   Fees received pursuant to Distribution Plan.                                

Trustees of the Funds who were not interested persons of the Funds had no direct
or indirect  financial interest in the operation of the Distribution Plan or any
agreement thereunder. All the interested Trustees had such an interest.         

The  Distribution  Plan has  been  approved  by the  Funds'  Board of  Trustees,
including a majority of the Trustees who are not interested persons of the Funds
and who have no direct or indirect  financial  interest in the  operation of the
Distribution  Plan  or in any  agreements  related  thereto.  In  approving  the
Distribution  Plan, the Trustees  considered various factors and determined that
there is a reasonable  likelihood that the Plan will benefit the Funds and their
shareholders. The anticipated benefits include the following: (i) the likelihood
of attracting  and retaining  investments  in the Funds and (ii) the  consequent
reduced  expense  ratios due to economies of scale,  ability to purchase  larger
blocks of  securities,  resulting in decreased  expenses,  and  minimization  of
adverse effects from forced sales of portfolio securities to meet redemptions.  

Baron Capital is authorized  to make payments to authorized  dealers,  banks and
other  financial  institutions  who have rendered  distribution  assistance  and
ongoing shareholder support services, shareholder servicing assistance or record
keeping.  Certain  states may require  that any such person be  registered  as a
dealer with such state. The Funds may execute  portfolio  transactions  with and
purchase  securities  issued by depository  institutions  that receive  payments
under the  Distribution  Plan. No  preference  will be shown in the selection of
investments for the instruments of such depository  institutions.  Baron Capital
may also retain part of the  distribution  fee as compensation  for its services
and expenses in connection with the distribution of shares.  If the Distribution
Plan is  terminated,  the Funds will owe no payments to Baron Capital other than
any portion of the  distribution  fee  accrued  through  the  effective  date of
termination but then unpaid.                                                    

Unless  terminated  in accordance  with its terms,  the  Distribution  Plan will
continue in effect until,  and from year to year thereafter if, such continuance
is  specifically  approved  at least  annually by the Funds'  Trustees  and by a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect  financial  interest in the operation of the  Distribution
Plan or in any  agreements  related  thereto,  such  votes  cast in  person at a
meeting called for the purpose of such vote.                                    

The Distribution Plan may be terminated at any time by the vote of a majority of
the members of the Funds'  Board of Trustees who are not  interested  persons of
the Funds and have no direct or indirect  financial interest in the operation of
the Distribution  Plan or in any agreements  related thereto or by the vote of a
majority of the outstanding shares. The                                         

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Distribution  Plan may not be  amended  to  increase  materially  the  amount of
payments  to be made  without  the  approval  of the  Funds'  shareholders.  All
material  amendments  must  be  approved  by a vote of the  Trustees  and of the
Trustees  who are not  interested  persons  of the  Funds  and have no direct or
indirect  financial interest in the operation of the Distribution Plan or in any
agreements  related  thereto,  such votes cast in person at a meeting called for
the purpose of such vote.                                                       

CODE OF ETHICS                                                                  
--------------                                                                  

The Funds, the Adviser and the Distributor have adopted a written code of ethics
pursuant  to Rule 17j-1 under the  Investment  Company  Act.  The code of ethics
allows employees,  subject to the code, to invest in securities including, under
certain circumstances, securities held by the Funds.                            

CUSTODIAN,  TRANSFER  AGENT  AND DIVIDEND  AGENT                                
------------------------------------------------                                

The Bank of New York, 100 Church Street,  New York, NY, is the custodian for the
Funds' cash and securities.  DST Systems, Inc., 330 West 9th Street,  Poindexter
1, Kansas  City,  MO 64105,  is the transfer  agent and  dividend  agent for the
Funds' shares.  Neither  institution assists in or is responsible for investment
decisions involving assets of the Funds.                                        

REDEMPTION OF SHARES                                                            
--------------------                                                            

The Funds expect to make all redemptions in cash, but have reserved the right to
make payment, in whole or in part, in portfolio securities. Payment will be made
other than all in cash if the Funds' Board of Trustees  determines that economic
conditions  exist  which  would make  payment  wholly in cash  detrimental  to a
particular fund's best interests.  Portfolio securities to be so distributed, if
any,  would be selected in the  discretion  of the Funds'  Board of Trustees and
priced as  described  under  "Determining  Your Share  Price"  herein and in the
Prospectus.                                                                     

BARON  iOPPORTUNITY  FUND imposes a short-term  trading fee on  redemptions  and
exchanges  of its  shares  held for  less  than 6  months.  The fee is 1% of the
redemption value and is deducted from the redemption proceeds. The Fund uses the
"first-in,  first-out"  method to determine the holding period, so if you bought
shares on different days, the shares  purchased first will be redeemed first for
determining  whether  the fee  applies.  The fee is retained by the Fund for the
benefit  of the  remaining  shareholders  to  offset  the  administrative  costs
associated with processing  redemptions and to offset the portfolio transactions
and  facilitate  portfolio  management.  The  Fund  waives  the fee for  defined
contribution  plans and may waive the fee for other  redemptions if it is in the
best interest of the Fund                                                       

NET  ASSET VALUE                                                                
----------------                                                                

As more fully set forth in the Prospectus under  "Determining Your Share Price,"
the net asset  value per  share of each  Fund is  determined  as of the close of
regular  trading  of the New York  Stock  Exchange  (usually  4:00 p.m.  Eastern
Standard  Time) on each day that the Exchange is open.  The Exchange is open all
week days that are not holidays,  which it announces  annually.  The most recent
announcement  states it will not be open on New Year's Day,  Martin Luther King,
Jr.'s Day, Presidents' Day, Good Friday,  Memorial Day,  Independence Day, Labor
Day, Thanksgiving and Christmas.                                                

Securities  traded on more than one national  securities  exchange are valued at
the last sale  price of the day as of which such  value is being  determined  as
reflected at the close of the exchange  which is the  principal  market for such
securities.                                                                     

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U.S. Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments having a
greater  remaining  maturity  will be  valued  at the bid  price  from a  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.                       

TAXES                                                                           
-----                                                                           

Each Fund  intends to qualify  every year as a  "regulated  investment  company"
under  Subchapter  M  of  the  Internal  Revenue  Code  of  1986  (the  "Code").
Qualification  as a regulated  investment  company relieves the Funds of Federal
income  taxes on the  portion of their net  investment  income and net  realized
capital  gains  distributed  to  shareholders.  The Funds  intend to  distribute
virtually all of their net investment  income and net realized  capital gains at
least annually to their respective shareholders.                                

A  non-deductible  4% excise tax will be imposed on a Fund to the extent that it
does not distribute  (including  declaration of certain dividends),  during each
calendar year, (i) 98% of its ordinary  income for such calendar year,  (ii) 98%
of its capital  gain net income (the excess of short and long term  capital gain
over short and long term capital loss) for each one-year  period ending  October
31  and  (iii)  certain  other  amounts  not   distributed  in  previous  years.
Shareholders  will be taxed during each calendar year on the full amount of such
dividends  distributed  (including  certain declared dividends not actually paid
until the next calendar year).                                                  

For Federal income tax purposes,  distributions  paid from net investment income
and from any net realized  short-term  capital gains are taxable to shareholders
as  ordinary  income,   whether  received  in  cash  or  in  additional  shares.
Distributions  paid from net  capital  gains are  taxable as  long-term  capital
gains,  whether  received  in  cash  or  shares  and  regardless  of how  long a
shareholder has held the shares, and are not eligible for the dividends received
deduction.   Distributions  of  investment  income  (but  not  distributions  of
short-term or long-term capital gains) received by shareholders will qualify for
the 70% dividends  received  deduction  available to  corporations to the extent
designated by the Fund in a notice to each  shareholder.  Unless all of a Fund's
gross income constitutes dividends from domestic corporations qualifying for the
dividends  received  deduction,  a portion of the  distributions  of  investment
income to those holders of that Fund which are corporations will not qualify for
the 70%  dividends  received  deduction.  The dividends  received  deduction for
corporate  holders may be further  reduced if the shares  with  respect to which
dividends are received are treated as  debt-financed or deemed to have been held
for less than forty-six (46) days.                                              

The Funds will send written notices to shareholders regarding the Federal income
tax status of all  distributions  made  during  each  calendar  year as ordinary
income or capital gain and the amount qualifying for the 70% dividends  received
deduction.                                                                      

The foregoing  relates to Federal  income  taxation.  Distributions  may also be
subject to state and local taxes.  The Funds are  organized  as a  Massachusetts
business trust.  Under current law, so long as the Funds qualify for the Federal
income tax  treatment  described  above,  it is  believed  that they will not be
liable for any income or franchise tax imposed by Massachusetts.                

Investors are urged to consult their own tax advisers  regarding the application
of Federal, state and local tax laws.                                           

ORGANIZATION AND CAPITALIZATION                                                 
-------------------------------                                                 

GENERAL                                                                         
-------                                                                         

BARON INVESTMENT FUNDS TRUST (formerly known as BARON ASSET FUND) is an open-end
investment company organized as a series fund and established under the business
trust law of The Commonwealth of Massachusetts. The five series                 

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currently  available  are BARON ASSET FUND,  BARON GROWTH FUND,  BARON SMALL CAP
FUND, BARON iOPPORTUNITY FUND and BARON FIFTH AVENUE GROWTH FUND. Shares entitle
their  holders  to one vote  per  share on all  matters  submitted  to a vote of
shareholders.  The Trust's Declaration of Trust provides that no matters need be
submitted  to  shareholders  except as required  by the 1940 Act.  Consequently,
matters  such as  mergers,  acquisitions  and  sales of assets  may not  require
shareholder  approval.  In the election of Trustees,  shares have non-cumulative
voting  rights,  which means that holders of more than 50% of the shares  voting
for the  election of Trustees  can elect all  Trustees  and, in such event,  the
holders of the remaining  shares voting for the election of Trustees will not be
able to elect any person or persons as Trustees.  Shares have no  preemptive  or
subscription rights, and are transferable.                                      

SHAREHOLDER AND TRUSTEE LIABILITY                                               
---------------------------------                                               

Under  Massachusetts  law,  shareholders of a Massachusetts  business trust may,
under  certain  circumstances,  be held  personally  liable as partners  for the
obligations  of  the  trust.  The  Declaration  of  Trust  contains  an  express
disclaimer of  shareholder  liability for acts or obligations of the Fund or any
series  thereof.  Notice  of such  disclaimer  will  normally  be  given in each
agreement,  obligation  or  instrument  entered into or executed by the Funds or
Trustees.  The Declaration of Trust provides for  indemnification  by a Fund for
any loss  suffered by a  shareholder  as a result of an obligation of that Fund.
The Declaration of Trust also provides that a Fund shall,  upon request,  assume
the defense of any claim made against any  shareholder  for an act or obligation
of that Fund and satisfy any judgment  thereon.  Thus, the risk of a shareholder
incurring  financial  loss on account  or  shareholder  liability  is limited to
circumstances  in which the Fund itself would be unable to meet its obligations.
The Trustees believe that, in view of the above, the risk of personal  liability
of shareholders is remote.                                                      

The  Declaration of Trust further  provides that the Trustees will not be liable
for  errors  of  judgment  or  mistakes  of  fact  or law,  but  nothing  in the
Declaration  of trust  protects a trustee  against  liability to which he or she
would otherwise be subject by reason of willful  misfeasance,  bad faith,  gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.                                                                     

OTHER INFORMATION                                                               
-----------------                                                               

INDEPENDENT ACCOUNTANTS                                                         
-----------------------                                                         

PricewaterhouseCoopers  LLP,  1177 Avenue of the  Americas,  New York,  New York
10036, has been selected as independent accountants of the Funds.               

DISCLOSURE POLICY                                                               
-----------------                                                               

Information  regarding the Funds' policies regarding the disclosure of portfolio
information is contained in the  prospectus.  Disclosures are made on the Funds'
web site,  www.baronfunds.com.  The  Fund's  disclosure  policy is  designed  to
address the  interests of  shareholders  of the Funds,  which,  the Board feels,
minimizes any potential  conflicts.  The Funds' Chief Compliance Officer reports
to the Board every quarter on these, and other, matters.                        

The  Funds  disclose  portfolio  holdings  in  connection  with  the  day-to-day
operations  and management of the Funds,  including to the Funds'  custodian and
auditors. Portfolio holdings may also be disclosed to other service providers to
the Funds, including pricing services, portfolio management and trading systems,
and proxy voting  systems.  In these  situations,  the Fund,  the Adviser or the
Distributor have entered into agreements with the service providers whereby they
agree to keep the information  confidential,  and to refrain from trading on the
basis of the information.  When engaged in purchasing and selling securities for
each Fund  through  brokers and dealers or other  trading  platforms,  the Funds
disclose certain information about one or more of the securities  positions they

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own. The Funds do not have separate non-disclosure agreements with each of these
trading entities,  but the Funds would immediately cease doing business with any
entity the Adviser believes is misusing the information.                        

CALCULATIONS OF PERFORMANCE DATA                                                
--------------------------------                                                

Advertisements  and other  sales  literature  for the Funds may refer to average
annual total return and actual  return.  Average annual total return is computed
by finding the average  annual  compounded  rates of return over a given  period
that would equate a  hypothetical  initial  investment to the ending  redeemable
value thereof, as follows:                                                      
n         
P(1+T)  = ERV         
Where:           P  = a hypothetical initial payment of $1,000        
T  = average annual total return    
n                                   
= number of years             
                     ERV = ending redeemable value at the end of the period of a
                          hypothetical $1,000 investment made at the beginning
of the period             

Actual return is computed by measuring  the  percentage  change  between the net
asset value of a hypothetical  $1,000 investment in the Fund at the beginning of
a period and the net asset value of that investment at the end of a period.  The
performance data used in advertisements  does not give effect to a 2% contingent
deferred sales charge that is no longer applicable.                             

After-tax  returns are included in the table below to show the impact of assumed
federal income taxes on an investment in the Funds. A Fund's total return "after
taxes on distributions" shows the effect of taxable  distributions,  but not any
taxable  gain or loss,  on an  investment  in shares of the Fund for a specified
period of time. A Fund's total return  "after taxes on  distributions  and sale"
shows the effect of both  taxable  distributions  and any  taxable  gain or loss
realized  by the  shareholder  upon  the  sale  of fund  shares  at the end of a
specified period.  To determine these figures,  all income,  short-term  capital
gain distributions, and long-term capital gain distributions are assumed to have
been  taxed at the  highest  marginal  individualized  federal  tax rate then in
effect.   Those  maximum  tax  rates  are  applied  to  distributions  prior  to
reinvestment and the after-tax portion is assumed to have been reinvested in the
Fund. State and local taxes are ignored.  Actual  after-tax  returns depend on a
shareholder's  tax situation and may differ from those shown.  After-tax returns
reflect past tax effects only and are not predictive of future tax effects.     

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Average  Annual Total  Return  (After  Taxes on  Distributions  ) is computed as
follows:                                                                        
             n
ATV  = P (1+T)  
D         

Where:   P  = a hypothetical initial payment of $1,000            
               T  = average annual total return (after taxes on distriubtions)
n  =                                            
number of years                       
              ATV  = ending redeemable value of a hypothetical $1,000 investment
D                                             
                made at the beginning of the period, at the end of the
                     period (or fractional portion thereof), after taxes on fund
           distributions but not after taxes on redemptions.

Average  Annual Total  Return  (After  Taxes on  Distributions  and Sale of Fund
Shares) is computed as follows:                                                 
 n
ATV   = P (1+T)               
DR                      

Where:      P  = a hypothetical initial payment of $1,000               
              T  = average annual total return (after taxes on distributions
and redemption)                       
n                                               
= number of years                         
             ATV   = ending redeemable value of a hypothetical $1,000 investment
DR                                              
                made at the beginning of the period, at the end of the
                     period (or fractional portion thereof), after taxes on fund
distributions and redemption.         

All  performance  calculations  assume  that  dividends  and  distributions  are
reinvested  at the net asset  value on the  appropriate  reinvestment  dates and
include all recurring fees.                                                     

Computed in the manner described  above,  the  performance,  as of September 30,
2003,  for BARON ASSET FUND,  BARON GROWTH FUND,  BARON SMALL CAP FUND and BARON
iOPPORTUNITY  FUND has been:   BARON FIFTH AVENUE                               
GROWTH FUND has no performance history.                                         

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                                                        [Enlarge/Download Table]

                                                                                                                                  
                                   Average  |   Average               |   Average               |   Average                       
                                   Annual   |   Annual     Cumulative |   Annual    Cumulative  |   Annual         Cumulative     
                                   1 YR     |   5 YR        5 YR      |   10 YR       10 YR     |   Since          Since          
                                            |                         |                         |   Inception      Inception      
                                 ------------------------------------------------------------------------------------------------ 
BARON ASSET FUND                            |                         |                         |                                 
                                            |                         |                         |                                 
Return before taxes                16.11%   |    4.33%      23.61%    |    9.21%     141.43%    |    12.08%         542.10%       
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions                      15.36%   |    3.48%      18.67%    |    8.54%     127.04%    |    11.28%         471.42%       
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions & sale of Fund                |                         |                         |                                 
shares                             10.91%   |    3.52%      18.90%    |    7.93%     114.50%    |    10.64%         420.15%       
                                            |                         |                         |                                 
Russell 2000 (reflects no                   |                         |                         |                                 
deductions for fees expenses                |                         |                         |                                 
or taxes)                          36.50%   |    7.46%      43.32%    |    8.28%     121.46%    |     8.67%         288.02%       
                                            |                         |                         |                                 
Russell 2500 (reflects no                   |                         |                         |                                 
deductions for fees expenses                |                         |                         |                                 
or taxes)                          35.59%   |    9.96%      60.78%    |   10.44%     169.91%    |    10.63%          418.74%      
--------------------------------------------|-------------------------|-------------------------|-------------------------------- 
BARON GROWTH FUND                           |                         |                         |                                 
                                            |                         |                         |                                 
Return before taxes                21.11%   |   15.21%     102.98%    |                         |    17.93%           323.33%     
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions                      21.11%   |   14.13%      93.60%    |                         |    17.16%           299.85%     
                                            |                         |                         |                                 
Return afer taxes on                        |                         |                         |                                 
distributions & sale of Fund                |                         |                         |                                 
shares                             13.72%   |   12.94%      83.75%    |                         |    15.91%           263.96%     
                                            |                         |                         |                                 
Russell 2000 (reflects no                   |                         |                         |                                 
deductions for fees expenses                |                         |                         |                                 
or taxes)                          36.50%   |    7.46%      43.32%    |                         |     9.42%           119.88%     
--------------------------------------------------------------------------------------------------------------------------------- 
                                            |                         |                         |                                 
BARON SMALL CAP FUND                        |                         |                         |                                 
                                            |                         |                         |                                 
Return before taxes                 29.20%  |   16.16%      111.50%   |                         |    10.51%             82.10%    
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions                       28.50%  |   15.92%      109.27%   |                         |    10.31%             80.18%    
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions & sale of Fund                |                         |                         |                                 
shares                              19.30%  |   14.14%       93.76%   |                         |     9.13%             68.92%    
                                            |                         |                         |                                 
Russell 2000 (reflects no                   |                         |                         |                                 
deductions for fees expenses                |                         |                         |                                 
or taxes)                           36.50%  |    7.46%       43.32%   |                         |     2.51%             16.06%    
--------------------------------------------|-------------------------|-------------------------|-------------------------------- 

                                      -31-                                                                                        

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                                   Average  |   Average               |   Average               |   Average                       
                                   Annual   |   Annual     Cumulative |   Annual    Cumulative  |   Annual         Cumulative     
                                   1 YR     |   5 YR        5 YR      |   10 YR       10 YR     |   Since          Since          
                                            |                         |                         |   Inception      Inception      
                                 ------------------------------------------------------------------------------------------------ 
BARON iOPPORTUNITY FUND                     |                         |                         |                                 
                                            |                         |                         |                                 
Return before taxes                 78.51%  |                         |                         |   -11.31%            -34.97%    
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions                       78.51%  |                         |                         |   -11.35%            -35.06%    
                                            |                         |                         |                                 
Return after taxes on                       |                         |                         |                                 
distributions & sale of Fund                |                         |                         |                                 
shares                              51.03%  |                         |                         |   - 9.39%            -29.78%    
                                            |                         |                         |                                 
Nasdaq Composite (reflects                  |                         |                         |                                 
no deductions for fees                      |                         |                         |                                 
expenses or taxes)                  52.46%  |                         |                         |   -23.64%            -61.95%    
                                            |                         |                         |                                 
Morgan Stanley Internet                     |                         |                         |                                 
Index (reflects no deductions               |                         |                         |                                 
for fees expenses or taxes)        108.95%  |                         |                         |   -46.68%            -89.50%    
----------------------------------------------------------------------------------------------------------------------------------

Performance   results   represent  past  performance  and  are  not  necessarily
representative  of future  results.  Investment  return and principal value will
fluctuate so that shares may be worth more or less than their original cost when
redeemed.                                                                       

In addition to advertising  average  annual and actual return data,  comparative
performance  information  may be used in advertising  materials about the Funds,
including data and other information from Lipper Analytical  Services,  Inc., DA
Investment Technologies, Morningstar Inc., Money, Forbes, SEI, Ibbotson, No Load
Investor,  Growth Fund Guide,  Fortune,  Barron's,  The New York Times, The Wall
Street  Journal,  Changing Times,  Medical  Economics,  Business Week,  Consumer
Digest, Dick Davis Digest,  Dickenson's  Retirement Letter, Equity Fund Outlook,
Executive Wealth Advisor,  Financial World,  Investor's  Daily,  Time,  Personal
Finance, Investment Advisor, SmartMoney,  Rukeyser,  Kiplinger's, NAPFA News, US
News,  Bottomline,  Investors Business Daily,  Bloomberg Radio, CNBC, USA Today,
1998 Mutual  Fund  Report,  Mutual  Fund  Magazine,  The  Street.com,  Bloomberg
Personal,   Worth,  Washington  Business  Journal,   Investment  News,  Hispanic
Magazine,  Institutional Investor,  Rolling Stone Magazine,  Microsoft Investor,
Individual Investor,  SmartMoney Interactive, Art & Auction, Dow Jones Newswire,
Dow Jones News, The Boston Globe,  Standard & Poor's Advisor Insight, CBS Market
Watch,  Morningstar.Net,  On Wall Street,  Los Angeles Times,  Standard & Poor's
Outlook,  Bloomberg Online, Fund Action,  Funds Net Insight,  Boston Herald, Dow
Jones Investment Advisor, Annuity.Net.com, Morningstar Fund Investor, Associated
Press,   Bloomberg  Business  News,  Standard  &  Poor's  Personal  Wealth,  The
Washington Post, The Daily Telegraph (UK), NewsDay, New York Post, Miami Herald,
Yahoo  Finance,  Arizona  Republic,  Mutual Fund Market News,  Chicago  Tribune,
Investor Force,  Pensions and  Investments St. Paul Pioneer Press,  Deseret News
Publishing,  Dallas Morning News, PSI Daily, Financial Planning Investment News,
Newark Star Ledger, Reuters, Time - European Edition,  Registered Representative
Magazine,  The Daily Deal,  Baltimore Sun and Crain's NY Business.  The Fund may
also  use  comparative  performance  data  from  indexes  such as the Dow  Jones
Industrial  Average,  Standard & Poor's 400, 500, Small Cap 600, 1500, or Midcap
400,  Value  Line  Index,  Wilshire  4,  500,  5000,  or Small  Cap,  NASDAQ/OTC
Composite,  New York  Stock  Exchange,  Morgan  Stanley  Internet  Index and the
Russell 1000, 2000, 2500, 3000, 2000 Growth, 2000 Value, or Midcap. With respect
to the rating services, the Fund may use performance  information that ranks the
Fund in any of the following  categories:  all funds,  aggressive  growth funds,
value funds,  mid-cap funds,  small-cap funds,  large-cap  funds,  growth funds,
equity income funds, and any combination of the above listed categories.        

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FINANCIAL STATEMENTS                                                            
--------------------                                                            

The Funds' financial  statements for the year ended September 30, 2003 appearing
in  the  2003  Annual  Report  to   Shareholders   and  the  report  thereon  of
PricewaterhouseCoopers  LLP,  independent  accountants,  appearing therein,  are
incorporated by reference in this Statement of Additional Information.          

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BARON INVESTMENT FUNDS TRUST                                                    

 PART C. OTHER INFORMATION

Item 23.  EXHIBITS                                                              
--------                                                    

a.   Declaration of Trust dated February 19, 1987.*         
b.   By-laws dated February 19, 1987.*                      
          c.   Specimen  Share  Certificates  representing  shares of beneficial
interest of $.01 par value.*                      
          d.   (1)  Investment  Advisory Agreement  between Baron Asset Fund and
BAMCO, Inc.*                            
               (2)  Investment  Advisory Agreement between Baron Growth Fund and
BAMCO, Inc.*                            
               (3)  Investment  Advisory  Agreement between Baron Small Cap Fund
and BAMCO, Inc.*                        
               (4)  Investment  Advisory  Agreement  between Baron  iOpportunity
Fund and BAMCO, Inc.*                   
               (5)  Investment  Advisory  Agreement  between  Baron Fifth Avenue
Fund and BAMCO, Inc.                    
e.   Distribution Agreement with Baron Capital, Inc.*       
f.   Inapplicable.                                          
g.   (1) Custodian Agreement with The Bank of New York.*    
(2)  Fee Schedule for Exhibit 8(a).*              
h.   Inapplicable.                                          
          i.   Opinion and  consent of counsel as to  legality  of shares  being
registered (filed with Rule 24f-2 Notice).*       
j.   Consent of Independent Certified Public Accountants.^  
k.   Inapplicable.                                          
          l.   Letter agreement  between the Registrant and the Purchaser of the
Initial Shares.*                                  
m.   Distribution Plan pursuant to Rule 12b-1.*             
n.   Rule 18f-3Plan.*                                       
o.   Inapplicable.                                          
p.   Code of Ethics.                                        

*    Previously filed.                                                

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Item 24.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT         
 -------------------------------------------------------------

The  following   diagram   indicates  the  persons  under  common  control  with
Registrant, all of which are incorporated in New York.                          

Ronald Baron                                                          

controls :     Baron Capital Group, Inc.          

which owns 100% of:     Baron Capital, Inc.                         
BAMCO, Inc.         
          Baron Capital Management, Inc.

Baron Capital,  Inc. serves as distributor of  Registrant's  shares and performs
brokerage  services for Registrant.  BAMCO, Inc. serves as investment adviser to
Registrant.  Baron Capital Management, Inc. is an affiliated investment adviser.
All of the above  corporate  entities file  consolidated  financial  statements.
Ronald Baron, Chairman and CEO of Registrant,  is the controlling shareholder of
Baron  Capital  Group,  Inc.  and  serves as  Chairman  and CEO of all the above
entities.                                                                       

Item 25.  INDEMNIFICATION                                                       
---------------                                             

Article IV of Registrant's Declaration of Trust states as follows:              

  Section  4.1. No Personal  Liability  of  Shareholders,  Trustees,  Etc.
  ------------------------------------------------------------------------
     No shareholder shall be subject to any personal liability whatsoever to any
     Person in  connection  with  Trust  Property  or the acts,  obligations  or
     affairs of the Trust. No Trustee,  officer,  employee or agent of the Trust
     shall be subject to any personal liability  whatsoever to any Person, other
     than to the Trust of its shareholders, in connection with Trust Property of
     the affairs of the Trust,  save only that arising  from bad faith,  willful
     misfeasance,  gross  negligence  or reckless  disregard  of his duties with
     respect to such Person; and all such Persons shall look solely to the Trust
     Property, or to the Property of one or more specific series of the Trust if
     the claim  arises from the conduct of such  Trustee,  officer,  employee or
     agent with respect to only such Series,  for  satisfaction of claims of any
     nature  arising  in  connection  with  the  affairs  of the  Trust.  If any
     shareholder,  Trustee, officer,  employee, or agent, as such, of the Trust,
     is made a party to any suit or proceeding to enforce any such  liability of
     the  Trust,  he shall  not,  on account  thereof,  be held to any  personal
     liability.  The Trust shall  indemnify and hold each  shareholder  harmless
     from and against all claims and liabilities,  to which such shareholder may
     become  subject by reason of his being or having  been a  shareholder,  and
     shall  reimburse such  shareholder  out of the Trust Property for all legal
     and other expenses  reasonably  incurred by him in connection with any such
     claim or  liability.  Indemnification  and  reimbursement  required  by the
     preceding  sentence  shall be made  only out of  assets  of the one of more
     Series  whose shares were held by said  shareholder  at the time the act or
     event  occurred  which gave rise to the claim  against or liability of said
     shareholder. The rights accruing to a shareholder under this Section 4.1 be
     lawfully  entitled,  nor shall anything herein contained restrict the right
     of the Trust to  indemnify or reimburse a  shareholder  in any  appropriate
situation even though not specifically provided herein.               

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Section 4.2. Non-Liability of Trustees, Etc.                          
-------------------------------------------                           
     No Trustee,  officer, employee or agent of the Trust shall be liable to the
     Trust, its shareholders, or to any shareholder, Trustee, officer, employee,
     or agent  thereof  for any  action or  failure  to act  (including  without
     limitation the failure to compel in any way any former or acting Trustee to
     redress  any  breach  of  trust)  except  for his own  bad  faith,  willful
     misfeasance,  gross negligence or reckless disregard of the duties involved
in the conduct of his office.                                         

Section 4.3. Mandatory Indemnification.                               
--------------------------------------                                
     (a)  Subject to the exceptions and  limitations  contained in paragraph (b)
below:                                                      

          (i) every  person  who is, or has been,  a Trustee  or  officer of the
          Trust  shall be  indemnified  by the Trust,  or by one or more  Series
          thereof if the claim  arises from his or her conduct  with  respect to
          only such Series to the fullest  extent  permitted  by law against all
          liability and against all expenses  reasonably incurred or paid by him
          in connection with any claim,  action,  suit or proceeding in which he
          becomes  involved  as a party or  otherwise  by virtue of his being or
          having been a Trustee or officer and against  amounts paid or incurred
by him in the settlement thereof;                           

          (ii) the words "claim,"  "action," "suit," or "proceeding" shall apply
          to all claims,  actions,  suits or proceedings  (civil,  criminal,  or
          other,  including  appeals),  actual  or  threatened;  and  the  words
          "liability"  and  "expenses"   shall  include,   without   limitation,
          attorneys' fees, costs, judgments, amounts paid in settlement,  fines,
penalties and other liabilities.                            

     (b)  No  indemnification  shall  be  provided  hereunder  to a  Trustee  or
officer:                                                    

               (i) against any liability to the Trust or a Series thereof or the
               shareholders by reason of willful  misfeasance,  bad faith, gross
               negligence  or reckless  disregard of the duties  involved in the
conduct of his office;                            

               (ii) with  respect  to any  matter as to which he shall have been
               finally  adjudicated  not the  have  acted  in good  faith in the
               reasonable belief that his action was in the best interest of the
Trust or a Series thereof;                        

               (iii) in the  event of a  settlement  or  other  disposition  not
               involving a final  adjudication as provided in paragraph  (b)(ii)
               resulting in a payment by a Trustee or officer,  unless there has
               been a determination  that such Trustee or officer did not engage
               in willful  misfeasance,  bad faith, gross negligence or reckless
            disregard of the duties involved in the conduct of his office:

               (A)  by the court or other body approving the settlement or other
disposition; or                         

               (B)  based upon a review of readily  available  facts (as opposed
                    to a full  trial-type  inquiry) by (x) vote of a majority of
                    the Non- interested  Trustees acting on the matter (provided
                    that a  majority  of the  Non-interested  Trustees  then  in
                    office  act  on  the  matter)  or  (y)  written  opinion  of
independent legal counsel.              

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     (c)  The rights of  indemnification  herein provided may be insured against
          by policies  maintained by the Trust,  shall be  severable,  shall not
          affect any other  rights to which any  Trustee  or officer  may now or
          hereafter be entitled, shall continue as to a person who has ceased to
          be such  Trustee  or  officer  and shall  inure to the  benefit of the
          heirs, executors, administrators and assigns of such a person. Nothing
          contained herein shall affect any rights to  indemnification  to which
          personnel  of the  Trust  other  than  Trustees  and  officers  may be
entitled by contract or otherwise under law.                

     (d)  Expenses of preparation  and  presentation  of a defense to any claim,
          action, suit or proceeding of the character described in paragraph (a)
          of this  Section 4.3 may be advanced by the Trust or a Series  thereof
          prior to final  disposition  thereof upon receipt of an undertaking by
          or on behalf of the recipient to repay such amount if it is ultimately
          determined  that he is not  entitled  to  indemnification  under  this
Section 4.3, provided that either:                          

               (i) such  undertaking  is secured by a surety  bond or some other
               appropriate  security provided by the recipient,  or the Trust or
               Series thereof shall be insured against losses arising out of any
such advances; or                                 

               (ii) a  majority  of the  Non-interested  Trustees  acting on the
               matter (provided that a majority of the  Non-interested  Trustees
               act on the matter) or an  independent  legal counsel in a written
               opinion shall determine, based upon a review of readily available
               facts (as opposed to a full  trial-type  inquiry),  that there is
               reason to believe  that the  recipient  ultimately  will be found
entitled to indemnification.                      

As used in this Section 4.3, a "Non-interested Trustee" is one who is not (i) an
"Interested  Person" of the Trust  (including  anyone who has been exempted from
being  an  "Interested  Person"  by  any  rule,   regulation  or  order  of  the
Commission), or (ii) involved in the claim, action, suit or proceeding.         

Item 26. BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER                    
---------------------------------------------------           

The  business  and  other   connections  of  BAMCO,  Inc.  is  summarized  under
"Management  of  the  Fund"  in  the  Prospectus  constituting  Part  A  of  the
Registration Statement, which summary is incorporated herein by reference.      

The business and other  connections of the officers and directors of BAMCO, Inc.
is  currently  listed in the  investment  adviser  registration  on Form ADV for
BAMCO, Inc. (File No. 801-29080) and is incorporated herein by reference.       

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Item 27. PRINCIPAL UNDERWRITERS                                                 
----------------------                                        

(a)  Baron Capital Funds Trust                                        
Baron Select Funds                                          

(b)                                                                   

(1)                      (2)                  (3)                 
           POSITIONS AND         POSITIONS AND
NAME AND PRINCIPAL          OFFICES WITH          OFFICES WITH                  
BUSINESS ADDRESS            UNDERWRITER           REGISTRANT                    
---------------------       -------------------   ------------------------      

Ronald Baron                Director,             Trustee,                      
767 Fifth Avenue            Chairman, CEO         President, CEO, CIO           
New York, N.Y. 10153       and CIO               and Portfolio Manager        

Susan Robbins               Director, Vice        Vice President and            
767 Fifth Avenue            President and Senior  Senior Analyst                
New York, N.Y. 10153        Analyst                                             

Morty Schaja                Director, President   Trustee, Executive Vice       
767 Fifth Avenue            and COO               President and COO             
New York, N.Y. 10153                                                            

Clifford Greenberg          Director and Senior   Senior Vice President         
767 Fifth Avenue            Vice President        and Portfolio Manager         
New York, N.Y. 10153                                                            

Peggy Wong                  Vice President        Treasurer and CFO             
767 Fifth Avenue            Treasurer and CFO                                   
New York, N.Y. 10153                                                            

Mitchell J. Rubin           Vice President and    Portfolio Manager             
767 Fifth Avenue            Senior Analyst                                      
New York, N.Y. 10153                                                            

Linda S. Martinson          Secretary, Vice       Trustee, Vice                 
767 Fifth Avenue            President and         President,General Counsel and 
New York, N.Y. 10153        General Counsel       Secretary                     

David Kaplan                Vice President        None                          
767 Fifth Avenue                                                                
New York, N.Y. 10153                                                            

David Schneider             Vice President        None                          
767 Fifth Avenue                                                                
New York, N.Y. 10153                                                            

Matt Kelly                  Vice President        None                          
767 Fifth Avenue                                                                
New York, N.Y. 10153                                                            

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Andrew Peck                 Vice President        Co-Portfolio Manager          
767 Fifth Avenue                                                                
New York, N.Y. 10153                                                            

(c) Inapplicable.                                                       

Item 28. LOCATION OF ACCOUNTS AND RECORDS                                       
--------------------------------                              

Certain accounts, books and other documents required to be maintained by Section
31 (a)  of  the  Investment  Company  Act of  1940  and  the  Rules  promulgated
thereunder  are  maintained at the offices of the  Registrant,  BAMCO,  Inc. and
Baron Capital,  Inc., 767 Fifth Avenue, New York, NY 10153.  Records relating to
the duties of the  Registrant's  transfer  agent are  maintained by DST Systems,
Inc.,  330 West 9th  Street,  Poindexter  1,  Kansas  City,  MO 64105 and of the
Registrant's  custodian  are  maintained  by The Bank of New  York,  100  Church
Street, New York, N.Y. 10286.                                                   

Item 29. MANAGEMENT SERVICES                                                    
-------------------                                           

Inapplicable.                                                                   

Item 30. UNDERTAKINGS                                                           
------------                                                  

Insofar as  indemnification  for liability  arising under the  Securities Act of
1933 may be  permitted  to Trustees,  officers  and  controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a Trustee,  officer or  controlling  person of the  Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
Trustee,  officer or controlling  person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.                                                                     

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  SIGNATURES
  ----------

Pursuant to the  requirement  of the  Securities  Act of 1933 and the Investment
Company Act of 1940, the Fund  (certifies  that it meets all of the  requirement
for  effectiveness  of this  registration  statement under rule 485(b) under the
Securities Act and) has duly caused this post-effective  amendment No. 27 to the
registration  statement  to be signed on its  behalf  by the  undersigned,  duly
authorized,  in the City of New York,  and the State of New York on the   th day
of January, 2005.                                                               

                    BARON INVESTMENT FUNDS TRUST

            By: /s/ Ronald Baron
                ----------------
                                       Ronald Baron, President and CEO

Pursuant to the requirements of the Securities Act of 1933, this  post-effective
amendment  No. 28 to the  registration  statement  has been signed  below by the
following persons in the capacities and on the dates indicated.                 

SIGNATURES                     TITLE                           DATE             
----------                     -----                           ----             

/s/ Ronald Baron               President, CEO                  January  , 2005  
----------------               & Trustee                                        
Ronald Baron                                                            

/*s/ Raymond Noveck            Trustee                         January  , 2005  
------------------                                                              
Raymond Noveck                                                        

/s/ Linda S. Martinson         Secretary, General Counsel      January  , 2005  
---------------------          Vice President & Trustee                         
Linda S. Martinson                                                      

/s/ Peggy Wong                 Treasurer (Principal            January  , 2005  
-------------                  Financial & Accounting                           
Peggy Wong                 Officer)                                     

/*s/ Norman S. Edelcup         Trustee                         January  , 2005  
---------------------                                                           
Norman S. Edelcup                                                     

/*s/ Charles N. Mathewson      Chairman & Trustee              January  , 2005  
-------------------------                                                       
Charles N. Mathewson                                                  

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/*s/ Harold Milner             Trustee                         January  , 2005  
------------------                                                              
Harold Milner                                                         

/*s/ David A. Silverman        Trustee                         January  , 2005  
-----------------------                                                         
David A. Silverman                                                    

/s/ Morty Schaja               Executive Vice President,       January  , 2005  
----------------               Chief Operating                                  
Morty Schaja               Officer and Trustee                          

*By: /s/ Linda S. Martinson                                                     
-----------------------                                                 
Linda S. Martinson                                            
    Attorney-in-fact pursuant to a power of attorney previously filed.

Dated:  January  , 2005                                                         

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘485APOS’ Filing		Date		First		Last			Other Filings
		8/31/07		1
		4/1/05		24
Filed on:		12/13/04
		11/4/04		32
		10/22/04		34					DEF 14A
		4/30/04		34
		4/2/04		3		32
		2/2/04		53
		12/31/03		9		52
		9/30/03		50		65			24F-2NT,  497,  N-CSR,  NSAR-B
		9/12/03		21
		7/23/03		20
		4/29/03		53
		9/30/02		52					24F-2NT,  N-30D,  NSAR-B
		9/30/01		52					24F-2NT,  N-30D,  NSAR-B
		9/30/00		16					24F-2NT,  N-30D,  NSAR-B,  NSAR-B/A
		2/29/00		16		34
		7/29/97		53
		10/21/94		53
		7/12/93		56
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