-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UaX8hrU8SE5CN4xzEpXpapVgh2n3rI8fxRnvpxciCBnX4+aGLzCBrBzXfWrGcHfl cl9IXdzz13B/J1qzqUu6XA== 0001017918-04-000059.txt : 20040608 0001017918-04-000059.hdr.sgml : 20040608 20040608171845 ACCESSION NUMBER: 0001017918-04-000059 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040608 EFFECTIVENESS DATE: 20040608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARON ASSET FUND CENTRAL INDEX KEY: 0000810902 IRS NUMBER: 136891420 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05032 FILM NUMBER: 04854381 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: 24TH FL CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2125832000 MAIL ADDRESS: STREET 1: 767 FIFTH AVE STREET 2: 24TH FL CITY: NEW YORK STATE: NY ZIP: 10153 N-CSR 1 ncsr0304.txt SEMI-ANNUAL REPORT FOR BARON ASSET FUND FOR THE PERIOD ENDED MARCH 31, 2004 UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION OMB Number: 3235 -0570 Washington, D.C. 20549 Expires: October 31, 2006 Estimated average burden hours per response... FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-8032 BARON ASSET FUND - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 767 Fifth Avenue, 49th Floor New York, NY 10153 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Linda S. Martinson, Esq. c/o Baron Asset Fund 767 Fifth Avenue,49th Floor New York, New York 10153 - -------------------------------------------------------------------------------- (Name and Address of Agent for Service) Registrant's Telephone Number, including Area Code 212-583-2000 ----------------------------- Date of fiscal year end: September 30 --------------- Date of reporting period: March 31, 2004 -------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17CRF 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 5th Street, NW, Washington, D.C. 20549-6009. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2569 (3-03) Item 1. Baron Asset Fund Semi-Annual Report for the period ended March 31, 2004. [Registered Castle Design] B A R O N F U N D S - -------------------------------------------------------------------------------- BARON FUNDS - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS.......................................................2 STATEMENTS OF ASSETS AND LIABILITIES.............................................................9 STATEMENTS OF OPERATIONS.................................................................10 STATEMENTS OF CHANGES IN NET ASSETS..............................................................11 NOTES TO FINANCIAL STATEMENTS.................................................................12 767 Fifth Avenue NY, NY 10153 212.583.2100 1.800.99.BARON BaronFunds.com SEMI-ANNUAL FINANCIAL REPORT MARCH 31, 2004 DEAR BARON FUNDS SHAREHOLDER: Attached you will find unaudited financial statements for Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund and Baron iOpportunity Fund for the six months ended March 31, 2004. The Securities and Exchange Commission requires mutual funds to furnish these statements semi-annually to their shareholders. We thank you for choosing to join us as fellow shareholders in Baron Funds. We will continue to work hard to justify your confidence. Sincerely, /s/ Ronald Baron Ronald Baron Chairman and Portfolio Manager May 25, 2004 /s/ Peggy Wong Peggy Wong Treasurer and CFO May 25, 2004 A description of the Funds' proxy voting policies and procedures is available without charge on the Funds' website, www.BaronFunds.com, or by calling 1-800- 99-BARON and on the SEC's website at www.sec.gov. - --------------- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The investment return and principal value of an investment will fluctuate; an investor's shares, when redeemed, may be worth more or less than their original cost. BARON ASSET FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Cost Value - ------------------------------------------------------------------------------- COMMON STOCKS (99.35%) - ------------------------------------------------------------------------------- BUSINESS SERVICES (11.93%) 5,225,006 ChoicePoint, Inc.*# $ 62,010,767 $198,706,978 300,000 Iron Mountain, Inc.* 11,049,990 13,389,000 1,200,000 Robert Half Intl., Inc.* 1,278,954 28,344,000 ---------- ----------- 74,339,711 240,439,978 CONSULTING (1.43%) 900,000 Hewitt Associates, Inc.* 21,821,609 28,809,000 CONSUMER SERVICES (1.26%) 600,000 Weight Watchers Intl., Inc.* 19,367,418 25,362,000 EDUCATION (12.05%) 2,100,000 Apollo Group, Inc., Cl A* 21,534,468 180,831,000 1,000,000 DeVry, Inc.* 2,392,707 30,150,000 1,000,000 Education Mgmt. Corp.* 3,794,300 31,830,000 ---------- ----------- 27,721,475 242,811,000 ENERGY SERVICES (4.02%) 500,000 Seacor Holdings, Inc. (formerly Seacor Smit, Inc.)* 14,322,278 20,540,000 2,400,000 XTO Energy, Inc. 27,970,775 60,576,000 ---------- ----------- 42,293,053 81,116,000 FINANCIAL (14.12%) 1,000,000 Arch Capital Group, Ltd.* 33,841,383 42,030,000 1,100,000 Axis Capital Holdings, Ltd. 27,875,719 32,505,000 225,000 Brown & Brown, Inc. 7,450,945 8,721,000 9,585,000 Charles Schwab Corp. 24,235,640 111,281,850 320,000 Chicago Mercantile Exchange Holdings, Inc. 23,540,404 30,956,800 125,000 Commerce Bancorp, Inc. 8,074,933 8,235,000 125,000 Eaton Vance Corp. 4,662,665 4,765,000 465,000 H&R Block, Inc. 20,254,680 23,728,950 140,000 Moody's Corp. 7,256,123 9,912,000 80,000 The Student Loan Corp. 11,122,330 12,400,800 ---------- ----------- 168,314,822 284,536,400 GAMING SERVICES (0.36%) 160,000 International Game Technology 3,460,055 7,193,600 Healthcare Facilities (2.49%) 1,420,000 Manor Care, Inc. 28,588,528 50,111,800 Healthcare Products (2.93%) 550,000 DENTSPLY International, Inc. 23,750,799 24,381,500 280,000 Henry Schein, Inc.* 15,505,902 19,997,600 200,000 Zimmer Holdings, Inc.* 6,087,903 14,756,000 ---------- ---------- 45,344,604 59,135,100 HEALTHCARE SERVICES (4.59%) 600,000 Anthem, Inc.* 33,488,049 54,384,000 500,000 Caremark Rx, Inc.* 10,835,443 16,625,000 500,000 Charles River Laboratories Intl., Inc.* 14,951,698 21,425,000 ---------- ---------- 59,275,190 92,434,000 HOME BUILDING (2.01%) 64,000 NVR, Inc.* 22,534,495 29,440,000 245,000 Toll Brothers, Inc.* 9,815,187 11,130,350 ---------- ---------- 32,349,682 40,570,350
Shares Cost Value - --------------------------------------------------------------------------- HOTELS AND LODGING (3.27%) 800,000 Choice Hotels Intl., Inc. $ 8,329,220 $ 35,792,000 400,000 Extended Stay America, Inc. 5,570,936 7,748,000 420,000 Four Seasons Hotels, Inc. 10,827,903 22,302,000 ------------ ------------ 24,728,059 65,842,000 LEISURE (0.16%) 60,000 Electronic Arts, Inc.* 1,527,570 3,237,600 MEDIA (6.30%) 540,000 Cox Radio, Inc., Cl A* 3,310,296 11,502,000 350,000 Netflix, Inc.* 11,340,318 11,942,000 260,000 Radio One, Inc., Cl A* 2,068,065 4,830,800 500,000 Radio One, Inc., Cl D* 3,360,585 9,250,000 1,157,500 Saga Comm., Inc., Cl A*# 5,082,958 21,587,375 360,000 Univision Comm., Inc., Cl A* 2,737,466 11,883,600 2,000,000 XM Satellite Radio Holdings, Inc., Cl A* 45,809,613 56,000,000 ------------ ------------ 73,709,301 126,995,775 REAL ESTATE SERVICES (2.75%) 315,000 Alexander's, Inc.*# 20,542,256 50,400,000 141,844 Corrections Corp. of America* 1,418 5,049,647 ------------ ------------ 20,543,674 55,449,647 RECREATION AND RESORTS (12.35%) 2,400,000 Kerzner Intl., Ltd.*# 77,808,281 106,440,000 3,300,000 Vail Resorts, Inc.*# 68,275,449 52,008,000 1,200,000 Wynn Resorts, Ltd.* 16,541,988 42,000,000 1,459,408 Wynn Resorts, Ltd.*@ 30,030,772 48,525,316 ------------ ------------ 192,656,490 248,973,316 RESTAURANTS (2.77%) 750,000 Krispy Kreme Doughnuts, Inc.* 24,605,840 25,755,000 650,000 The Cheesecake Factory, Inc.* 20,823,946 29,984,500 ------------ ------------ 45,429,786 55,739,500 RETAIL (11.16%) 1,750,000 99 Cents Only Stores* 48,828,921 42,735,000 800,000 CarMax, Inc.* 26,236,657 23,360,000 1,525,000 Dollar Tree Stores, Inc.* 10,291,768 47,107,250 800,000 Ethan Allen Interiors, Inc. 22,610,641 33,008,000 1,200,000 Polo Ralph Lauren Corp., ClA 24,177,495 41,136,000 500,000 Whole Foods Market, Inc. 24,184,425 37,475,000 ------------ ------------ 156,329,907 224,821,250 TRANSPORTATION (1.52%) 740,000 C. H. Robinson Worldwide, Inc. 27,409,683 30,710,000 UTILITY SERVICES (1.88%) 2,000,000 Southern Union Co.* 27,564,041 37,900,000 ------------- ------------- TOTAL COMMON STOCKS 1,092,774,658 2,002,188,316 ------------- -------------
See Notes to Financial Statements. 2 BARON ASSET FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Cost Value - -------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (0.49%) - -------------------------------------------------------------------------------- EDUCATION (0.04%) 105,264 Apollo International, Inc. S-A CV Pfd.*@# $ 2,000,016 $ 849,996 HEALTHCARE SERVICES (0.45%) 5,753 Somerford Corp. S-A Conv. Pfd.* @ 9,000,000 8,999,993 ------------ ------------ TOTAL CONVERTIBLE PREFERRED STOCKS 11,000,016 9,849,989 ------------ ------------ - -------------------------------------------------------------------------------- WARRANTS (0.08%) - -------------------------------------------------------------------------------- REAL ESTATE SERVICES 70,922 Corrections Corporation of America Warrants Exp 09/29/2005*@ 0 1,524,823 ------------ ------------
Principal Amount Cost Value - -------------------------------------------------------------------------------- CORPORATE BONDS (0.15%) - -------------------------------------------------------------------------------- HEALTHCARE SERVICES $ 3,000,000 Somerford Corp. 8.50% Sub. Conv. Deb. due 04/23/2006@ $ 3,000,000 $ 3,000,000 ------------- -------------- - -------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (1.51%) - -------------------------------------------------------------------------------- 30,500,000 Exxon Asset Management Co. 0.75% due 04/01/2004 30,500,000 30,500,000 --------------- -------------- TOTAL INVESTMENTS (101.58%) $ 1,137,274,674 2,047,063,128 =============== LIABILITIES LESS CASH AND OTHER ASSETS (-1.58%) (31,841,684) -------------- NET ASSETS (EQUIVALENT TO $47.20 PER SHARE BASED ON 42,696,348 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $2,015,221,444 ==============
- --------------- % Represents percentage of net assets @ Restricted securities # Issuers that may be deemed to be "affiliated" * Non-income producing securities See Notes to Financial Statements. 3 BARON GROWTH FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Cost Value - -------------------------------------------------------------------------------- COMMON STOCKS (93.01%) - -------------------------------------------------------------------------------- ADVERTISING SERVICES (0.99%) 360,000 Getty Images, Inc.* $ 7,890,498 $19,432,800 375,000 Harte-Hanks, Inc. 6,046,351 8,782,500 ---------- ---------- 13,936,849 28,215,300 APPAREL (0.65%) 650,000 Carter's, Inc.* 16,866,843 18,583,500 BUSINESS SERVICES (4.27%) 211,000 Administaff, Inc.* 2,395,554 3,677,730 1,600,000 ChoicePoint, Inc.* 35,852,211 60,848,000 200,000 Equinix, Inc.* 5,816,035 7,242,200 900,000 Fair Isaac Corp. 21,715,107 32,472,000 600,000 Gevity HR, Inc. 13,070,024 17,520,000 ---------- ---------- 78,848,931 121,759,930 CHEMICAL (1.83%) 1,820,000 Symyx Technologies, Inc.*# 31,287,266 52,124,800 COMMUNICATIONS (1.72%) 3,000,000 American Tower Corp., Cl A* 13,344,607 34,050,000 800,000 Crown Castle Intl., Corp.* 3,043,909 10,104,000 1,275,000 SBA Communications Corp.* 4,916,952 4,947,000 ---------- ---------- 21,305,468 49,101,000 CONSULTING (1.24%) 800,000 Hewitt Associates, Inc.* 18,618,001 25,608,000 500,000 LECG Corp.* 10,876,743 9,725,000 ---------- ---------- 29,494,744 35,333,000 EDUCATION (7.61%) 700,000 DeVry, Inc.* 9,001,169 21,105,000 600,000 Education Mgmt. Corp.* 3,562,780 19,098,000 500,000 Strayer Education, Inc. 38,170,282 58,485,000 1,000,000 Universal Technical Institute, Inc.* 26,593,385 40,050,000 900,000 University of Phoenix Online* 15,586,843 78,318,000 ---------- ---------- 92,914,459 217,056,000 ENERGY SERVICES (3.63%) 700,000 Encore Acquisition Co.* 14,402,966 19,390,000 900,000 FMC Technologies, Inc.* 19,422,550 24,327,000 200,000 Hornbeck Offshore Services, Inc. 2,678,785 2,640,000 1,275,000 Premcor, Inc.* 28,186,806 39,486,750 430,000 Seacor Holdings, Inc. (formerly Seacor Smit, Inc.)* 17,331,488 17,664,400 ---------- ---------- 82,022,595 103,508,150 FINANCIAL (11.14%) 270,000 Affiliated Managers Group, Inc.* 15,017,859 14,736,600 1,650,000 Arch Capital Group, Ltd.*# 51,045,431 69,349,500 350,000 BlackRock, Inc., Cl A 7,036,572 21,409,500 300,000 Brown & Brown, Inc. 9,830,330 11,628,000 325,000 CapitalSource, Inc.* 5,478,272 7,296,250 1,000,000 CheckFree Corp.* 18,042,917 29,460,000 600,000 Chicago Mercantile Exchange Holdings, Inc. 38,776,983 58,044,000 500,000 eSpeed, Inc. Cl A* 9,964,946 10,480,000 1,200,000 First Marblehead Corp.* 35,148,268 35,340,000 299,000 Gabelli Asset Mgmt., Inc., Cl A 4,438,566 12,043,720 1,160,000 Jefferies Group, Inc. 24,577,884 40,982,800 250,000 Nuveen Investments, Inc. 6,761,103 6,965,000 ----------- ----------- 226,119,131 317,735,370
Shares Cost Value - ---------------------------------------------------------------------------- FOOD AND AGRICULTURE (0.32%) 300,000 Ralcorp Hldgs., Inc.* $ 7,406,244 $ 9,129,000 GOVERNMENT SERVICES (1.01%) 1,000,000 Anteon Intl., Corp.* 29,568,160 28,890,000 HEALTHCARE FACILITIES (3.53%) 1,800,000 Manor Care, Inc. 33,815,991 63,522,000 1,100,000 United Surgical Partners Intl., Inc.* 23,181,527 37,334,000 ----------- ----------- 56,997,518 100,856,000 HEALTHCARE PRODUCTS (3.07%) 600,000 DepoMed, Inc.* 4,293,237 4,698,000 1,560,000 Edwards Lifesciences Corp.* 44,772,205 49,842,000 500,000 Flamel Technologies S.A.* 13,537,016 12,960,500 380,000 INAMED Corp.* 17,467,474 20,246,400 ----------- ----------- 80,069,932 87,746,900 HEALTHCARE SERVICES (8.27%) 1,900,000 AMERIGROUP Corp.*# 70,530,101 86,830,000 1,600,000 Centene Corp.*# 30,065,539 48,944,000 1,625,000 Charles River Laboratories Intl., Inc.* 48,377,172 69,631,250 250,000 First Health Group Corp.* 4,931,861 5,465,000 150,000 Inveresk Research Group, Inc.* 3,000,000 4,263,000 1,100,000 Odyssey Healthcare, Inc.* 15,263,468 20,735,000 ----------- ----------- 172,168,141 235,868,250 HOME BUILDING (1.57%) 150,000 Brookfield Homes Corp. 1,401,059 5,263,500 920,000 Hovnanian Enterprises, Inc.* 24,312,503 39,698,000 ---------- ---------- 25,713,562 44,961,500 HOTELS AND LODGING (4.94%) 800,000 Choice Hotels Intl., Inc. 9,354,699 35,792,000 2,000,000 Extended Stay America, Inc. 24,867,406 38,740,000 1,250,000 Four Seasons Hotels, Inc. 37,489,147 66,375,000 ----------- ---------- 71,711,252 140,907,000 MEDIA (7.00%) 550,000 Citadel Broadcasting Corp.* 10,462,224 9,597,500 900,000 Cumulus Media, Inc.* 16,327,094 17,991,000 500,000 Entravision Comm. Corp., Cl A* 2,952,986 4,485,000 1,300,000 Gray Television, Inc. 10,725,000 19,006,000 2,300,000 LIN TV Corp., Cl A* 51,323,725 54,763,000 1,650,000 Netflix, Inc.* 52,704,467 56,298,000 250,000 Radio One, Inc., Cl A* 2,371,787 4,645,000 980,000 Radio One, Inc., Cl D* 11,388,696 18,130,000 800,000 Saga Comm., Inc., Cl A* 7,404,392 14,920,000 ----------- ----------- 165,660,371 199,835,500 MEDICAL EQUIPMENT (0.96%) 280,000 Intuitive Surgical, Inc.* 4,110,797 4,760,000 1,000,000 Viasys Healthcare, Inc.* 19,540,935 22,620,000 ----------- ---------- 23,651,732 27,380,000 PRINTING AND PUBLISHING (0.69%) 525,000 Information Holdings, Inc.* 10,699,116 10,825,500 300,000 ProQuest Co.* 7,976,847 8,751,000 ----------- ---------- 18,675,963 19,576,500
See Notes to Financial Statements. 4 BARON GROWTH FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Cost Value - -------------------------------------------------------------------------------- COMMON STOCKS (continued) - -------------------------------------------------------------------------------- REAL ESTATE SERVICES (0.73%) 75,000 Alexander's, Inc.* $ 5,683,588 $12,000,000 165,000 LNR Property Corp. 5,804,426 8,832,450 ----------- ----------- 11,488,014 20,832,450 RECREATION AND RESORTS (9.88%) 800,000 Isle of Capri Casinos, Inc.* 17,664,605 20,112,000 1,800,000 Kerzner Intl., Ltd.*# 49,095,087 79,830,000 1,760,000 Station Casinos, Inc. 40,877,216 77,739,200 1,250,000 Vail Resorts, Inc.* 21,897,070 19,700,000 537,677 Wynn Resorts, Ltd. *@ 11,063,956 17,877,760 1,900,000 Wynn Resorts, Ltd. * 25,775,919 66,500,000 ----------- ----------- 166,373,853 281,758,960 RESTAURANTS (7.79%) 1,600,000 Krispy Kreme Doughnuts, Inc.* 45,625,274 54,944,000 675,000 Panera Bread Co., Cl A* 22,368,531 26,271,000 425,000 Peet's Coffee & Tea, Inc.* 7,758,493 9,052,500 950,000 P.F. Chang's China Bistro, Inc.* 45,168,760 47,794,500 1,825,000 The Cheesecake Factory, Inc.* 59,281,874 84,187,250 ----------- ----------- 180,202,932 222,249,250 RETAIL (6.22%) 2,550,000 99 Cents Only Stores* 75,874,074 62,271,000 350,000 Chico's FAS, Inc.* 3,012,565 16,240,000 600,000 Dollar Tree Stores, Inc.* 7,884,538 18,534,000 550,000 Ethan Allen Interiors, Inc. 14,286,910 22,693,000 900,000 Petco Animal Supplies, Inc.* 17,449,210 25,362,000 1,175,000 Select Comfort Corp.* 31,881,309 32,418,250 ----------- ----------- 150,388,606 177,518,250 SOFTWARE (1.96%) 500,000 Kronos, Inc.* 7,446,852 16,265,000 1,400,000 The Reynolds & Reynolds Co. 39,048,143 39,774,000 ----------- ----------- 46,494,995 56,039,000 TRANSPORTATION (0.89%) 1,000,000 JetBlue Airways Corp.* 17,362,494 25,290,000 UTILITY SERVICES (0.97%) 1,460,000 Southern Union Co.* 19,158,693 27,667,000 WHOLESALE TRADE (0.13%) 140,000 Libbey, Inc. 3,741,580 3,630,200 ------------- ------------- TOTAL COMMON STOCKS 1,839,630,328 2,653,552,810 ------------- -------------
Shares Cost Value - -------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (0.53%) - -------------------------------------------------------------------------------- PHARMACEUTICAL 750,000 Reliant Pharmaceuticals LLC Series D @ $ 15,000,000 $ 15,000,000 ------------ ------------ Principal Amount - -------------------------------------------------------------------------------- CORPORATE BONDS (1.60%) - -------------------------------------------------------------------------------- RECREATION AND RESORTS $ 26,000,000 Wynn Resorts 6.00% Sub. Conv. Deb. due 07/15/2015 25,381,304 45,500,000 ------------ ------------ - -------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (4.33%) - -------------------------------------------------------------------------------- 99,997,917 Exxon Asset Mgmt. Co. 0.75% due 04/01/2004 99,997,917 99,997,917 23,652,083 Household Finance Corp. 0.75% due 04/01/2004 23,652,083 23,652,083 ------------ -------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS 123,650,000 123,650,000 ------------- -------------- TOTAL INVESTMENTS (99.47%) $2,003,661,632 2,837,702,810 ============== ============== CASH AND OTHER ASSETS LESS LIABILITIES (0.53%) 15,193,852 -------------- NET ASSETS (EQUIVALENT TO $38.02 PER SHARE BASED ON SHARES OF 75,028,962 BENEFICIAL INTEREST OUTSTANDING) $2,852,896,662 ==============
- --------------- % Represents percentage of net assets @ Restricted securities * Non-income producing securities # Issuers that may be deemed to be "affiliated" See Notes to Financial Statements. 5 BARON SMALL CAP FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS (93.25%) - -------------------------------------------------------------------------------- ADVERTISING SERVICES (1.56%) 550,000 R.H. Donnelley Corp.* $ 25,685,000 BUILDING MATERIALS (0.83%) 234,000 Eagle Materials, Inc., Cl B 13,665,600 BUSINESS SERVICES (4.58%) 2,500,000 Ariba, Inc.* 7,050,000 725,000 ChoicePoint, Inc.* 27,571,750 635,929 Infocrossing, Inc.* 8,661,353 241,000 Infocrossing, Inc.*@ 3,118,299 650,000 Iron Mountain, Inc.* 29,009,500 ------------ 75,410,902 COMMUNICATIONS (6.76%) 5,316,600 Alamosa Hldgs, Inc.*# 31,048,944 3,350,000 American Tower Corp.* 38,022,500 550,000 Arch Wireless, Inc., CL A* 17,748,500 225,000 Metrocall Holdings, Inc.* 15,675,750 2,500,000 UbiquiTel, Inc.* 8,822,500 ------------ 111,318,194 CONSULTING (3.40%) 275,000 Corporate Executive Board Co.* 12,925,000 700,000 Kroll, Inc.* 18,795,000 1,250,000 LECG Corp.*# 24,312,500 ------------ 56,032,500 CONSUMER PRODUCTS (4.54%) 1,250,000 Digital Theater Systems, Inc.*# 32,037,500 500,000 Equity Marketing, Inc.*# 7,450,000 950,000 NBTY, Inc.* 35,321,000 ------------ 74,808,500 CONSUMER SERVICES (1.03%) 400,000 Weight Watchers Intl., Inc.* 16,908,000 EDUCATION (14.60%) 425,000 Apollo Group, Inc., Cl A* 36,596,750 2,250,000 Career Education Corp.* 127,440,000 744,199 SkillSoft PLC* 9,600,167 250,000 Strayer Education, Inc. 29,242,500 725,000 Universal Technical Institute, Inc.* 29,036,250 100,000 University of Phoenix Online* 8,702,000 ------------ 240,617,667 ENERGY SERVICES (0.38%) 500,000 Energy Savings Income Fund 6,333,000 FINANCIAL (3.48%) 225,000 Arch Capital Group, Ltd.* 9,456,750 500,000 CapitalSource, Inc.* 11,225,000 250,000 Gabelli Asset Mgmt., Inc., Cl A 10,070,000 1,500,000 Interactive Data Corp.* 26,670,000 ------------ 57,421,750 GOVERNMENT SERVICES (4.58%) 1,029,000 Anteon Intl., Corp.* 29,727,810 838,853 Drexler Technology Corp.*# 11,492,286 900,000 FLIR Systems, Inc.* 34,308,000 ------------ 75,528,096 HEALTH CARE FACILITIES (2.32%) 1,125,000 United Surgical Partners Intl., Inc.* 38,182,500 HEALTH CARE PRODUCTS (2.16%) 625,000 INAMED Corp.* 33,300,000 50,000 Kinetic Concepts, Inc.* 2,242,500 ------------ 35,542,500 HEALTH CARE SERVICES (3.45%) 1,200,000 NeighborCare, Inc.* 29,100,000 750,000 Odyssey Healthcare, Inc.* 14,137,500 650,000 Rotech Healthcare, Inc.* 13,617,500 ------------ 56,855,000
Shares Value - --------------------------------------------------------------------------- HOME BUILDING (1.11%) 380,000 Brookfield Homes Corp. $ 13,334,200 474,000 Champion Enterprises, Inc.* 5,024,400 ------------ 18,358,600 MANUFACTURING (0.71%) 300,000 Actuant Corp., Cl A* 11,769,000 MEDIA (6.80%) 900,000 AMC Entertainment, Inc.* 13,815,000 500,000 Citadel Broadcasting Corp.* 8,725,000 450,000 Cumulus Media, Inc.* 8,995,500 1,350,000 Gray Television, Inc. 19,737,000 575,000 LIN TV Corp., Cl A* 13,690,750 1,600,000 Radio One, Inc., Cl D* 29,600,000 360,000 Regal Entertainment Group, Cl A 7,912,800 325,000 Westwood One, Inc.* 9,571,250 ------------ 112,047,300 MEDICAL EQUIPMENT (2.23%) 1,325,000 Immucor, Inc.*# 24,009,000 750,000 Intuitive Surgical, Inc.* 12,750,000 ------------ 36,759,000 PHARMACEUTICAL (0.36%) 275,000 Noven Pharmaceuticals, Inc. 5,904,250 PRINTING AND PUBLISHING (3.35%) 500,000 Bowne & Co., Inc. 8,550,000 600,000 Information Holdings, Inc.* 12,372,000 850,000 ProQuest Co.* 24,794,500 315,000 R.R. Donnelley & Sons Co. 9,528,750 ------------ 55,245,250 REAL ESTATE SERVICES (1.06%) 325,000 LNR Property Corp. 17,397,250 RECREATION AND RESORTS (5.22%) 1,000,000 Gaylord Entertainment 30,900,000 550,000 Kerzner Intl., Ltd.* 24,392,500 500,000 The Sports Club Co., Inc.* 925,000 850,000 Wynn Resorts, Ltd. * 29,750,000 ------------ 85,967,500 RESTAURANTS (5.12%) 1,750,000 CKE Restaurants, Inc.* 17,325,000 750,000 Krispy Kreme Doughnuts, Inc.* 25,755,000 350,000 Panera Bread Co., Cl A* 13,622,000 600,000 The Cheesecake Factory, Inc.* 27,678,000 ------------ 84,380,000 RETAIL (9.56%) 1,475,000 99 Cents Only Stores* 36,019,500 545,000 Aeropostale, Inc.* 19,761,700 750,000 Casual Male Retail Group, Inc.*@# 7,755,000 350,000 Dollar Tree Stores, Inc.* 10,811,500 695,000 Hot Topic, Inc.* 18,382,750 766,700 Kenneth Cole Productions, Inc., Cl A 26,144,470 325,000 Petco Animal Supplies, Inc.* 9,158,500 1,215,000 Quiksilver, Inc.* 26,547,750 600,000 Restoration Hardware, Inc.* 2,982,000 ------------ 157,563,170 TRANSPORTATION (4.06%) 750,000 JetBlue Airways Corp.* 18,967,500 750,000 SkyWest, Inc. 14,430,000 1,680,000 Westjet Airlines, Ltd* 33,520,536 ------------ 66,918,036 ------------ TOTAL COMMON STOCKS (Cost $974,544,480) 1,536,618,565 -------------
See Notes to Financial Statements. 6 BARON SMALL CAP FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Value - -------------------------------------------------------------------------------- WARRANTS (0.54%) - -------------------------------------------------------------------------------- BUSINESS SERVICES (0.08%) 222,575 Infocrossing, Inc. Warrants Exp 10/16/2008*@ $ 1,282,032 RETAIL (0.46%) 1,407,353 Casual Male Retail Group, Inc. Warrants Exp 04/26/2007*@# 7,046,780 100,000 Casual Male Retail Group, Inc. Warrants Exp 07/02/2010*@# 558,000 ------------ 7,604,780 ------------ TOTAL WARRANTS (Cost $2,197,934) 8,886,812 ------------
Principal Amount Value - -------------------------------------------------------------------------------- CORPORATE BONDS (0.32%) - -------------------------------------------------------------------------------- PRINTING AND PUBLISHING $ 7,000,000 Penton Media, Inc. 10.375% Sr. Sub. NT due 06/15/2011 (Cost $4,669,158) 5,180,000 ------------ - -------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (5.67%) - -------------------------------------------------------------------------------- 49,998,958 Exxon Asset Management Co. 0.75% due 04/01/2004 49,998,958 43,501,041 Household Finance Corp. 0.75% due 04/01/2004 43,501,041 -------------- TOTAL SHORT TERM MONEY MARKET INSTRUMENTS (COST $93,499,999) 93,499,999 -------------- TOTAL INVESTMENTS (99.78%) (COST $1,074,911,572) 1,644,185,376 CASH AND OTHER ASSETS LESS LIABILITIES (0.22%) 3,674,533 -------------- NET ASSETS (EQUIVALENT TO $19.90 PER SHARE BASED ON 82,788,530 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $1,647,859,909 ==============
- --------------- % Represents percentage of net assets @ Restricted securities # Issuers that may be deemed to be "affiliated" * Non-income producing securities See Notes to Financial Statements. 7 BARON iOPPORTUNITY FUND - -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS (94.50%) - -------------------------------------------------------------------------------- ADVERTISING SERVICES (7.10%) 75,000 Ask Jeeves, Inc.* $ 2,679,750 150,000 Digitas, Inc.* 1,543,500 85,000 Getty Images, Inc.* 4,588,300 85,500 Modem Media, Inc., CL A* 555,750 5,000 NetRatings, Inc.* 55,250 ------------ 9,422,550 BUSINESS SERVICES (14.68%) 100,000 Ariba, Inc.* 282,000 50,000 ChoicePoint, Inc.* 1,901,500 135,000 Equinix, Inc.* 4,888,485 300,000 FreeMarkets, Inc.* 2,469,000 200,000 Harris Interactive, Inc.* 1,686,000 49,000 Infocrossing, Inc.*@ 634,011 65,000 InfoSpace, Inc.* 2,526,550 105,000 Intraware, Inc.* 173,250 130,000 Monster Worldwide, Inc.* 3,406,000 250,000 Stamps.com, Inc.* 1,497,500 ------------ 19,464,296 CABLE (2.89%) 58,000 Comcast Corp., Cl A* 1,617,040 70,000 Cox Comm., Inc.* 2,212,000 ------------ 3,829,040 COMMUNICATIONS (6.27%) 170,000 Alamosa Holdings, Inc.* 992,800 200,000 American Tower Corp.* 2,270,000 25,000 Research in Motion, Ltd.* 2,332,750 700,000 SBA Communications Corp.* 2,716,000 ------------ 8,311,550 CONSUMER PRODUCTS (1.72%) 75,000 Marvel Enterprises, Inc.* 1,439,250 95,000 Tivo, Inc.* 844,550 ------------ 2,283,800 CONSUMER SERVICES (7.47%) 25,000 InterActiveCorp* 789,750 125,000 lastminute.com PLC* 2,381,250 125,000 priceline.com, Inc.* 3,370,000 200,000 Time Warner, Inc.* 3,372,000 ------------ 9,913,000 EDUCATION (8.80%) 80,000 Career Education Corp.* 4,531,200 250,000 SkillSoft PLC* 3,225,000 45,000 University of Phoenix Online* 3,915,900 ------------ 11,672,100 ENTERPRISE HARDWARE (4.94%) 75,000 Dell, Inc.* 2,521,500 75,000 Intel Corp. 2,040,000 70,000 SanDisk Corp.* 1,985,900 ------------ 6,547,400 FINANCIAL (9.85%) 100,000 Ameritrade Holding Corp.* 1,540,000 150,000 Charles Schwab Corp. 1,741,500 60,000 CheckFree Corp.* 1,767,600 350,000 E*TRADE Group, Inc.* 4,672,500 400,000 E-LOAN, Inc.* 1,244,000 100,000 eSpeed, Inc., Cl A* 2,096,000 ------------ 13,061,600
Shares Value - -------------------------------------------------------------------------------- GAMING SERVICES (3.72%) 50,000 GTECH Holdings Corp. $ 2,957,000 44,000 International Game Technology 1,978,240 ------------ 4,935,240 HEALTH CARE SERVICES (1.17%) 175,000 WebMD Corp.* 1,555,750 HOTELS AND LODGING (0.67%) 46,550 LodgeNet Entertainment Corp.* 884,450 LEISURE (5.32%) 100,000 Electronic Arts, Inc.* 5,396,000 325,000 EMI Group PLC 1,664,260 ------------ 7,060,260 MANUFACTURING (2.92%) 225,000 Flextronics Intl., Ltd.* 3,874,500 MEDIA (5.81%) 228,342 iVillage, Inc.* 1,570,993 80,000 Netflix, Inc.* 2,729,600 70,000 Yahoo! Inc.* 3,401,300 ------------ 7,701,893 REAL ESTATE SERVICES (4.00%) 75,000 CoStar Group, Inc.* 2,766,750 600,000 Homestore, Inc.* 2,538,000 ------------ 5,304,750 RETAIL (5.79%) 100,000 drugstore.com, Inc.* 538,000 60,000 eBay, Inc.* 4,159,800 65,000 Provide Commerce, Inc.* 1,478,750 300,000 Varsity Group, Inc.* 1,500,000 ------------ 7,676,550 SOFTWARE (1.38%) 80,000 Red Hat, Inc.* 1,828,800 ------------ TOTAL COMMON STOCKS (Cost $79,917,201) 125,327,529 ------------ Principal Amount - -------------------------------------------------------------------------------- CORPORATE BONDS (0.55%) - -------------------------------------------------------------------------------- COMMUNICATIONS $ 750,000 SBA Comm., Corp. 10.25% Sr. NT due 02/01/2009 (Cost $454,779) 735,000 ------------ - -------------------------------------------------------------------------------- SHORT TERM MONEY MARKET INSTRUMENTS (4.28%) - -------------------------------------------------------------------------------- 5,670,000 Exxon Asset Management Co. 0.75% due 04/01/2004 (Cost $5,670,000) 5,670,000 ------------ TOTAL INVESTMENTS (99.33%) (COST $86,041,980) 131,732,529 CASH AND OTHER ASSETS LESS LIABILITIES (0.67%) 892,438 ------------ NET ASSETS (EQUIVALENT TO $8.04 PER SHARE BASED ON 16,505,212 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $132,624,967 ============
- --------------- % Represents percentage of net assets * Non-income producing securities @ Restricted securities See Notes to Financial Statements. 8 BARON FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- March 31, 2004 (Unaudited)
BARON ASSET BARON GROWTH BARON SMALL CAP BARON iOPPORTUNITY FUND FUND FUND FUND ---- ---- ---- ---- ASSETS: Investments in securities, at value Unaffiliated issuers (Cost $901,554,947, $1,771,638,208, $940,914,948 and $86,041,980, respectively) $1,617,070,779 $2,500,624,510 $1,498,475,366 $ 131,732,529 "Affiliated" issuers (Cost $235,719,727, $232,023,424, $133,996,624, and $0, respectively) 429,992,349 337,078,300 145,710,010 0 Cash 460,369 3,826,225 500,293 6,636 Dividends and interest receivable 623,323 513,610 264,060 24,279 Receivable for securities sold 11,891,713 8,639,607 5,471,626 749,896 Receivable for shares sold 849,170 28,983,192 4,045,731 190,596 Prepaid expenses 73,840 0 0 0 -------------- -------------- -------------- ------------- 2,060,961,543 2,879,665,444 1,654,467,086 132,703,936 -------------- -------------- -------------- ------------- LIABILITIES: Payable for securities purchased 8,787,073 24,627,878 5,895,471 0 Payable for shares redeemed 36,858,181 1,947,110 535,577 66,269 Accrued expenses and other payables 94,845 193,794 176,129 12,700 -------------- -------------- -------------- ------------- 45,740,099 26,768,782 6,607,177 78,969 -------------- -------------- -------------- ------------- NET ASSETS $2,015,221,444 $2,852,896,662 $1,647,859,909 $ 132,624,967 ============== ============== ============== ============= NET ASSETS CONSIST OF: Capital paid-in $1,026,855,622 $2,072,017,448 $1,071,562,667 $ 189,035,610 Accumulated net investment loss (10,770,216) (12,512,259) (8,116,119) (775,050) Accumulated net realized gain (loss) 89,347,584 (40,649,705) 15,139,557 (101,326,142) Net unrealized appreciation on investments 909,788,454 834,041,178 569,273,804 45,690,549 -------------- -------------- -------------- ------------- NET ASSETS $2,015,221,444 $2,852,896,662 $1,647,859,909 $ 132,624,967 ============== ============== ============== ============= SHARES OF BENEFICIAL INTEREST OUTSTANDING ($.01 PAR VALUE; INDEFINITE SHARES AUTHORIZED) 42,696,348 75,028,962 82,788,530 16,505,212 ============== ============== ============== ============= NET ASSET VALUE PER SHARE $ 47.20 $ 38.02 $ 19.90 $ 8.04 ============== ============== ============== =============
See Notes to Financial Statements. 9 BARON FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
BARON ASSET BARON GROWTH BARON SMALL CAP BARON iOPPORTUNITY FUND FUND FUND FUND ---- ---- ---- ---- INVESTMENT INCOME: INCOME: Interest $ 301,646 $ 1,668,171 $ 1,023,749 $ 104,485 Dividends -- unaffiliated issuers 2,481,535 2,735,664 603,028 37,408 Dividends -- "affiliated" issuers 0 0 0 0 ------------ ------------ ------------ ----------- Total income 2,783,181 4,403,835 1,626,777 141,893 ------------ ------------ ------------ ----------- EXPENSES: Investment advisory fees 10,049,120 12,745,104 7,299,861 611,296 Distribution fees 2,512,280 3,186,276 1,824,966 152,824 Shareholder servicing agent fees 387,050 338,360 251,570 78,683 Reports to shareholders 403,000 425,000 233,000 106,477 Professional fees 25,700 25,680 20,835 11,500 Registration and filing fees 70,550 64,300 35,270 11,868 Custodian fees 32,674 42,370 26,191 6,322 Trustee fees 15,008 19,065 10,953 927 Miscellaneous 58,015 69,939 40,250 3,783 ------------ ------------ ------------ ----------- Total expenses 13,553,397 16,916,094 9,742,896 983,680 Less: Expense reimbursement by investment adviser 0 0 0 (66,737) ------------ ------------ ------------ ----------- Net expenses 13,553,397 16,916,094 9,742,896 916,943 ------------ ------------ ------------ ----------- Net investment loss (10,770,216) (12,512,259) (8,116,119) (775,050) ------------ ------------ ------------ ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments sold in unaffiliated issuers 126,520,483 51,989,847 30,190,804 11,219,580 Net realized gain (loss) on investments sold in "affiliated" issuers (17,414,928) 389,866 2,692,430 0 Change in net unrealized appreciation of investments 230,003,051 338,059,073 174,626,381 14,931,916 ------------ ------------ ------------ ----------- Net gain on investments 339,108,606 390,438,786 207,509,615 26,151,496 ------------ ------------ ------------ ----------- Net increase in net assets resulting from operations $328,338,390 $377,926,527 $199,393,496 $25,376,446 ============ ============ ============ ===========
See Notes to Financial Statements. 10 BARON FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) - --------------------------------------------------------------------------------
BARON SMALL BARON ASSET FUND BARON GROWTH FUND CAP FUND -------------------------------- ------------------------------------------------- SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, 2004 2003 2004 2003 2004 -------------- -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (10,770,216) $ (22,327,537) $ (12,512,259) $ (16,914,599) $ (8,116,119) Net realized gain (loss) on investments sold 109,105,555 27,349,273 52,379,713 (54,183,199) 32,883,234 Net change in unrealized appreciation on investments 230,003,051 293,259,030 338,059,073 411,381,268 174,626,381 -------------- -------------- -------------- -------------- -------------- Increase in net assets resulting from operations 328,338,390 298,280,766 377,926,527 340,283,470 199,393,496 -------------- -------------- -------------- -------------- -------------- DIVIDENDS TO SHAREHOLDERS FROM: Net realized gain on investments 0 (67,413,267) 0 0 0 -------------- -------------- -------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS: Proceeds from the sale of shares 158,439,791 330,807,954 617,728,479 1,209,913,568 419,365,602 Net asset value of shares issued in reinvestment of dividends 0 65,673,995 0 0 0 Cost of shares redeemed (428,732,815) (725,356,209) (328,161,183) (395,080,937) (181,442,821) -------------- -------------- -------------- -------------- -------------- Increase (decrease) in net assets derived from capital share transactions (270,293,024) (328,874,260) 289,567,296 814,832,631 237,922,781 Redemption fees 0 0 0 0 0 -------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets 58,045,366 (98,006,761) 667,493,823 1,155,116,101 437,316,277 NET ASSETS: Beginning of period 1,957,176,078 2,055,182,839 2,185,402,839 1,030,286,738 1,210,543,632 -------------- -------------- -------------- -------------- -------------- End of period $2,015,221,444 $1,957,176,078 $2,852,896,662 $2,185,402,839 $1,647,859,909 ============== ============== ============== ============== ============== ACCUMULATED NET INVESTMENT LOSS AT END OF PERIOD $ (10,770,216) $ 0 $ (12,512,259) $ 0 $ (8,116,119) ============== ============== ============== ============== ============== SHARES OF BENEFICIAL INTEREST: Shares sold 3,572,806 9,320,231 17,300,967 42,266,286 22,232,541 Shares issued in reinvestment of dividends 0 1,871,542 0 0 0 Shares redeemed (9,740,521) (19,969,210) (9,206,873) (13,543,070) (9,593,043) -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) (6,167,715) (8,777,437) 8,094,094 28,723,216 12,639,498 ============== ============== ============== ============== ============== BARON SMALL CAP FUND BARON iOPPORTUNITY FUND -------------- ---------------------------- FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30, MARCH 31, SEPTEMBER 30, 2003 2004 2003 -------------- ------------ ------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (7,850,954) $ (775,050) $ (920,809) Net realized gain (loss) on investments sold (16,627,696) 11,219,580 5,663,483 Net change in unrealized appreciation on investments 275,662,596 14,931,916 38,669,554 -------------- ------------ ------------ Increase in net assets resulting from operations 251,183,946 25,376,446 43,412,228 -------------- ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net realized gain on investments (20,581,254) 0 0 -------------- ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from the sale of shares 485,593,319 18,017,247 33,610,767 Net asset value of shares issued in reinvestment of dividends 19,966,951 0 0 Cost of shares redeemed (244,749,792) (20,124,068) (25,290,252) -------------- ------------ ------------ Increase (decrease) in net assets derived from capital share transactions 260,810,478 (2,106,821) 8,320,515 Redemption fees 0 51,021 123,431 -------------- ------------ ------------ Net increase (decrease) in net assets 491,413,170 23,320,646 51,856,174 NET ASSETS: Beginning of period 719,130,462 109,304,321 57,448,147 -------------- ------------ ------------ End of period $1,210,543,632 $132,624,967 $109,304,321 ============== ============ ============ ACCUMULATED NET INVESTMENT LOSS AT END OF PERIOD $ 0 $ (775,050) $ 0 ============== ============ ============ SHARES OF BENEFICIAL INTEREST: Shares sold 33,000,295 2,427,495 6,406,971 Shares issued in reinvestment of dividends 1,453,200 0 0 Shares redeemed (16,674,262) (2,801,656) (5,337,540) -------------- ------------ ------------ Net increase (decrease) 17,779,233 (374,161) 1,069,431 ============== ============ ============
See Notes to Financial Statements. 11 BARON FUNDS - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) - -------------------------------------------------------------------------------- (1) ORGANIZATION. Baron Asset Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end management investment company established as a Massachusetts business trust on February 19, 1987. The Trust currently offers four series (individually a "Fund" and collectively the "Funds"): Baron Asset Fund, started in June of 1987, Baron Growth Fund, started in January of 1995, Baron Small Cap Fund, started in October of 1997, and Baron iOpportunity Fund, started in February of 2000. The investment objectives of the Funds are as follows: Baron Asset Fund seeks capital appreciation through long-term investments in securities of small and medium sized companies with undervalued assets or favorable growth prospects. Baron Growth Fund seeks capital appreciation through long-term investments primarily in the securities of small growth companies. Baron Small Cap Fund seeks capital appreciation through investments primarily in securities of small companies. Baron iOpportunity Fund seeks capital appreciation through investments in growth business that benefit from technology advances. (2) SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of significant accounting policies followed by the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America. (a) SECURITY VALUATION. Portfolio securities traded on any national stock exchange are valued based on the last sale price. For securities traded on NASDAQ, the Funds use the NASDAQ Official Closing Price. Where market quotations are not readily available, securities are valued based on fair value as determined by the Adviser, using procedures established by the Board of Trustees. Debt instruments having a remaining maturity greater than sixty days will be valued at the highest bid price from the dealer maintaining an active market in that security or on the basis of prices obtained from a pricing service approved by the Board of Trustees. Money market instruments held by the Funds with a remaining maturity of sixty days or less are valued at amortized cost, which approximates value. (b) SECURITIES TRANSACTIONS, INVESTMENT INCOME AND EXPENSE ALLOCATION. Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on an identified cost basis for financial reporting and federal income tax purposes. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Common expenses of the Funds are allocated on a basis deemed fair and equitable by the Trustees, usually on the basis of average net assets. Direct expenses are charged to each Fund on a specific identification basis. (c) FEDERAL INCOME TAXES. Each Fund of the Trust is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and to distribute all of its taxable income, including net realized capital gains, if any, to its shareholders. No federal income tax provision is therefore required. (d) RESTRICTED SECURITIES. The Funds invest in securities which are restricted as to public sale in accordance with the Securities Act of 1933. Such assets are valued at fair value as determined in good faith by the Board of Trustees. (e) DISTRIBUTIONS. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. (f) SHORT-TERM TRADING FEE. Baron iOpportunity Fund imposes a 1% short-term trading fee on redemptions and exchanges of shares held for less than six months. The fee is retained by Baron iOpportunity for the benefit of the remaining shareholders to offset the administrative costs associated with processing redemptions and exchanges, offset the portfolio transaction costs and facilitate portfolio management. The fee is accounted for as an addition to paid in capital. (g) USE OF ESTIMATES. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the amounts of income and expenses during the period. Actual results could differ from those estimates. 12 BARON FUNDS - -------------------------------------------------------------------------------- (3) PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities, other than short term securities, for the six months ended March 31, 2004 were as follows:
FUND PURCHASES SALES - ---- --------- ----- Baron Asset Fund $177,261,137 $388,668,073 Baron Growth Fund $639,366,659 $215,921,476 Baron Small Cap Fund $418,039,472 $197,017,779 Baron iOpportunity Fund $ 52,505,888 $ 49,507,946
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. (a) INVESTMENT ADVISORY FEES. BAMCO, Inc. (the "Adviser"), a wholly owned subsidiary of Baron Capital Group, Inc. ("BCG"), serves as investment adviser to the Funds. As compensation for services rendered, the Adviser receives a fee payable monthly from the assets of the Funds equal to 1% per annum of each Fund's average daily net asset value. For Baron iOpportunity Fund, the Adviser has contractually agreed to reduce its fee to the extent required to limit the operating expense to 1.50% of average net assets. (b) DISTRIBUTION FEES. Baron Capital, Inc. ("BCI"), a wholly owned subsidiary of BCG, is a registered broker-dealer and the distributor of the shares of the Funds pursuant to a distribution plan under Rule 12b-1 of the 1940 Act. The distribution plan authorizes the Funds to pay BCI a distribution fee equal on an annual basis to 0.25% of the Funds' average daily net assets. Brokerage transactions for the Funds may be effected by or through BCI. During the six months ended March 31, 2004, BCI earned gross brokerage commissions as follows:
FUND COMMISSIONS - ---- ----------- Baron Asset Fund $657,342 Baron Growth Fund $765,189 Baron Small Cap Fund $598,102 Baron iOpportunity Fund $167,179
(c) TRUSTEE FEES. Certain Trustees of the Trust may be deemed to be affiliated with or interested persons (as defined by the 1940 Act) of the Funds' Adviser or of BCI. None of the Trustees so affiliated received compensation for his or her services as a Trustee of the Trust. None of the Funds' officers received compensation from the Funds. (5) LINE OF CREDIT. The Funds have entered into a line of credit agreement with the custodian bank to be used for temporary purposes, primarily for financing redemptions. The agreement provides that Baron Asset Fund may borrow up to 5% of the value of its net assets. Baron Growth Fund, Baron Small Cap Fund and BaroniOpportunity Fund may borrow up to 15% of each Fund's respective net assets. The aggregate outstanding principal amount of all loans to any of the Funds may not exceed $100,000,000. Interest is charged to each Fund, based on its borrowings, at a rate per annum equal to the Federal Funds Rate plus a margin of 1.00% to 2.00% depending on the duration of the loan. A commitment fee of 0.10% per annum is incurred on the unused portion of the line of credit and is allocated to the participating Funds. At March 31, 2004, there were no loans outstanding under the line of credit. 13 BARON FUNDS - -------------------------------------------------------------------------------- (6) RESTRICTED SECURITIES. A summary of the restricted securities held at March 31, 2004 follows:
BARON ASSET FUND ACQUISITION NAME OF ISSUER DATE VALUE - -------------- ---- ----- COMMON STOCK Wynn Resorts, Ltd. 04/17/01 $48,525,316 CONVERTIBLE PREFERRED STOCK Apollo International, Inc., S-A CV Pfd. 07/21/99 849,996 Somerford Corp. S-A Conv. Pfd. 12/03/98 8,999,993 CORPORATE BONDS Somerford Corp. 8.50% Sub. Conv. Deb Due 04/23/2006 04/23/01 3,000,000 WARRANTS Corrections Corporation of America Warrants Exp 09/2005 09/29/00 1,524,823 ----------- TOTAL RESTRICTED SECURITIES: (Cost $44,030,788) (3.12% of Net Assets) $62,900,128 =========== BARON GROWTH FUND ACQUISITION NAME OF ISSUER DATE VALUE - -------------- ---- ----- COMMON STOCK Wynn Resorts, Ltd. 04/22/02 $17,877,760 CONVERTIBLE PREFERRED STOCK Reliant Pharmaceuticals LLC Series D 10/28/03 15,000,000 ----------- TOTAL RESTRICTED SECURITIES: (COST $26,063,956) (1.15% OF NET ASSETS) $32,877,760 =========== BARON SMALL CAP FUND ACQUISITION NAME OF ISSUER DATE VALUE - -------------- ---- ----- COMMON STOCK Casual Male Retail Group, Inc. 05/15/02 $ 7,755,000 Infocrossing, Inc. 03/24/04 3,118,299 WARRANTS Casual Male Retail Group, Inc. Warrants Exp 04/26/2007 05/15/02 7,046,780 Casual Male Retail Group, Inc. Warrants Exp 07/02/2010 07/03/03 558,000 Infocrossing, Inc. Warrants Exp 10/16/2008 10/16/03 1,282,032 ----------- TOTAL RESTRICTED SECURITIES: (COST $7,915,855) (1.20% OF NET ASSETS) $19,760,111 =========== BARON iOPPORTUNITY FUND ACQUISITION NAME OF ISSUER DATE VALUE - -------------- ---- ----- COMMON STOCK Infocrossing, Inc. (Cost $514,500) (0.48% of Net Assets) 03/24/04 $ 634,011 ===========
14 BARON FUNDS - -------------------------------------------------------------------------------- (7) INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS. As of March 31, 2004, the components of net assets on a tax basis were as follows:
BARON ASSET BARON GROWTH BARON SMALL CAP BARON IOPPORTUNITY FUND FUND FUND FUND ---- ---- ---- ---- Cost of investments $1,137,401,239 $2,005,956,366 $1,075,811,775 $ 90,088,959 ============== ============== ============== ============= Gross tax unrealized appreciation 945,870,229 858,738,068 592,100,367 44,480,028 Gross tax unrealized depreciation (36,208,340) (26,991,624) (23,726,766) (2,836,458) -------------- -------------- -------------- ------------- Net tax unrealized appreciation $ 909,661,889 $ 831,746,444 $ 568,373,601 $ 41,643,570 ============== ============== ============== ============= Under current law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. These deferrals can be used to offset future capital gains at September 30, 2004. The Funds also had capital loss carryforwards. Capital loss carryforward expiring as follows: 2009 -- -- -- (23,974,628) 2010 -- (3,371,187) -- (63,691,646) 2011 (19,631,406) (58,001,961) (1,650,452) (21,811,904) -------------- -------------- -------------- ------------- $ (19,631,406) $ (61,373,148) $ (1,650,452) $(109,478,178) ============== ============== ============== ============= Undistributed long term capital gain $ -- $ -- $ -- $ -- ============== ============== ============== ============= Post October loss deferral $ -- $ (29,235,718) $ (15,106,400) $ -- ============== ============== ============== ============= Net investment loss and realized and unrealized gains and losses differ for financial statement and tax purposes due to differing treatments of wash sale losses deferred, losses realized subsequent to October 31 on the sale of securities and net operating losses.
15 BARON FUNDS - -------------------------------------------------------------------------------- (8) INVESTMENT IN "AFFILIATES"* DURING THE SIX MONTHS ENDED MARCH 31, 2004. BARON ASSET FUND
Balance of Gross Gross Sales Balance of Shares Held on Purchases and Shares Held on Value Name of Issuer Sep. 30, 2003 and Additions Reductions Mar. 31, 2004 Mar. 31, 2004 ------------------------------------------------------------------------------------------------------------------------ Alexander's, Inc. 315,000 315,000 $ 50,400,000 Apollo International, Inc. S-A CV Pfd. 105,264 105,264 849,996 ChoicePoint, Inc. 5,360,000 134,994 5,225,006 198,706,978 Kerzner Intl., Ltd. 2,400,000 2,400,000 106,440,000 Saga Comm., Inc., Cl A 2,400,000 1,242,500 1,157,500 21,587,375 Vail Resorts, Inc. 6,685,000 3,385,000 3,300,000 52,008,000 ------------ $429,992,349 ============ Dividend Income Name of Issuer Oct. 1-Mar. 31, 2004 ------------------------------------------------------------- Alexander's, Inc. Apollo International, Inc. S-A CV Pfd. ChoicePoint, Inc. Kerzner Intl., Ltd. Saga Comm., Inc., Cl A Vail Resorts, Inc. -- $0 ==
- ------------------------------------------------------------------------------- BARON GROWTH FUND
Balance of Gross Gross Sales Balance of Dividend Shares Held on Purchases and Shares Held on Value Income Name of Issuer Sep. 30, 2003 and Additions Reductions Mar. 31, 2004 Mar. 31, 2004 Oct. 1-Mar. 31, 2004 - ---------------------------------------------------------------------------------------------------------------------------------- AMERIGROUP, Corp. 950,000 950,000 1,900,000 $ 86,830,000 Arch Capital Group, Ltd. 1,550,000 150,000 50,000 1,650,000 69,349,500 Centene Corp. 1,500,000 100,000 1,600,000 48,944,000 Kerzner Intl., Ltd. 1,450,000 350,000 1,800,000 79,830,000 Symyx Technologies, Inc. 1,681,000 144,000 5,000 1,820,000 52,124,800 ------------ -- $337,078,300 $0 ============ ==
- ------------------------------------------------------------------------------- BARON SMALL CAP FUND
Dividend Balance of Gross Gross Sales Balance of Income Shares Held on Purchases and Shares Held on Value Oct. 1-Mar. Name of Issuer Sep. 30, 2003 and Additions Reductions Mar. 31, 2004 Mar. 31, 2004 31, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Alamosa Hldgs, Inc. 0 5,316,600 5,316,600 $ 31,048,944 Casual Male Retail Group, Inc. 1,400,000 650,000 750,000 7,755,000 Casual Male Retail Group, Inc., Warrants Exp 04/26/2007 1,407,353 1,407,353 7,046,780 Casual Male Retail Group, Inc., Warrants Exp 07/02/2010 100,000 100,000 558,000 Digital Theater Systems, Inc. 675,000 575,000 1,250,000 32,037,500 Drexler Technology Corp. 575,000 263,853 838,853 11,492,286 Equity Marketing, Inc. 500,000 500,000 7,450,000 Immucor, Inc.+ 822,700 525,000 22,700 1,325,000 24,009,000 LECG Corp. 0 1,250,000 1,250,000 24,312,500 ------------ -- $145,710,010 $0 ============ ==
- --------------- * Affiliated issuers, as defined in the Investment Company Act of 1940, are issuers in which a Fund held 5% or more of the outstanding voting securities. + Received 400,000 shares from 3:2 stock split. 16 BARON FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (9) FINANCIAL HIGHLIGHTS BARON ASSET FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ----------------------------------------------------------------- MARCH 31, 2004 2003 2002 2001 2000 1999 1998 -------------- -------- -------- -------- -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 40.05 $ 35.65 $ 40.22 $ 63.35 $ 51.57 $ 39.96 $ 47.43 -------- -------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.25) (0.46) (0.55) (0.65) (0.76) (0.30) 0.05 Net realized and unrealized gains (losses) on investments 7.40 6.04 0.05 (17.87) 12.53 11.94 (7.52) -------- -------- -------- -------- -------- -------- -------- TOTAL FROM INVESTMENT OPERATIONS 7.15 5.58 (0.50) (18.52) 11.77 11.64 (7.47) -------- -------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 (0.04) 0.00 Distributions from net realized gains 0.00 (1.18) (4.07) (4.61) 0.00 0.00 0.00 -------- -------- -------- -------- -------- -------- -------- TOTAL DISTRIBUTIONS 0.00 (1.18) (4.07) (4.61) 0.00 (0.04) 0.00 -------- -------- -------- -------- -------- -------- -------- Capital contribution 0.00 0.00 0.00 0.00 0.01 0.01 0.00 -------- -------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 47.20 $ 40.05 $ 35.65 $ 40.22 $ 63.35 $ 51.57 $ 39.96 ======== ======== ======== ======== ======== ======== ======== TOTAL RETURN 17.9% 16.1% (2.5%) (31.2%) 22.8%+ 29.2%* (15.7%) -------- -------- -------- -------- -------- -------- -------- RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $2,015.2 $1,957.2 $2,055.2 $2,692.3 $4,917.4 $5,863.1 $4,410.5 Ratio of total expenses to average net assets 1.35%** 1.34% 1.35% 1.37% 1.36% 1.31% 1.32% Less: Ratio of interest expense to average net assets 0.00%** 0.00% (0.02%) (0.01%) (0.03%) 0.00% 0.00% -------- -------- -------- -------- -------- -------- -------- Ratio of operating expenses to average net assets 1.35%** 1.34% 1.33% 1.36% 1.33% 1.31% 1.32% ======== ======== ======== ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets (1.07%)** (1.14%) (1.16%) (1.14%) (1.09%) (0.57%) 0.11% Portfolio turnover rate 9.06% 27.95% 6.01% 4.33% 2.51% 15.64% 23.43% Year Ended September 30, ----------------------------- 1997 1996 1995 -------- -------- ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 35.50 $ 29.30 $22.82 -------- -------- ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.14) (0.06) (0.09) Net realized and unrealized gains (losses) on investments 12.11 6.29 7.23 -------- -------- ------ TOTAL FROM INVESTMENT OPERATIONS 11.97 6.23 7.14 -------- -------- ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 Distributions from net realized gains (0.04) (0.03) (0.66) -------- -------- ------ TOTAL DISTRIBUTIONS (0.04) (0.03) (0.66) -------- -------- ------ Capital contribution 0.00 0.00 0.00 -------- -------- ------ NET ASSET VALUE, END OF PERIOD $ 47.43 $ 35.50 $29.30 ======== ======== ====== TOTAL RETURN 33.8% 21.3% 32.3% -------- -------- ------ RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $3,224.5 $1,166.1 $290.0 Ratio of total expenses to average net assets 1.35% 1.40% 1.44% Less: Ratio of interest expense to average net assets 0.00% 0.00% 0.00% -------- -------- ------ Ratio of operating expenses to average net assets 1.35% 1.40% 1.44% ======== ======== ====== Ratio of net investment income (loss) to average net assets (0.52%) (0.29%) (0.55%) Portfolio turnover rate 13.23% 19.34% 35.15%
- --------------- ** Annualized. + Had the adviser not made the capital contribution, the Fund's performance would have been reduced by 0.02%. * Had the adviser not made the capital contribution, the Fund's performance would have been reduced by 0.03%. 17 BARON FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (9) FINANCIAL HIGHLIGHTS (continued) BARON GROWTH FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ------------------------------------------------------------------- MARCH 31, 2004 2003 2002 2001 2000 1999 1998 1997 -------------- -------- -------- ------ ------ ------ ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 32.65 $ 26.96 $ 27.18 $32.26 $29.06 $20.32 $24.89 $18.40 -------- -------- -------- ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.17) (0.25) (0.23) (0.22) (0.26) (0.04) 0.06 0.06 Net realized and unrealized gains (losses) on investments 5.54 5.94 1.65 (1.67) 5.34 8.82 (4.56) 6.68 -------- -------- -------- ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 5.37 5.69 1.42 (1.89) 5.08 8.78 (4.50) 6.74 -------- -------- -------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 (0.04) (0.02) (0.09) Distributions from net realized gains 0.00 0.00 (1.64) (3.19) (1.88) 0.00 (0.05) (0.16) -------- -------- -------- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS 0.00 0.00 (1.64) (3.19) (1.88) (0.04) (0.07) (0.25) -------- -------- -------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 38.02 $ 32.65 $ 26.96 $27.18 $32.26 $29.06 $20.32 $24.89 ======== ======== ======== ====== ====== ====== ====== ====== TOTAL RETURN 16.4% 21.1% 5.0% (6.1%) 18.6% 43.2% (18.1%) 37.1% -------- -------- -------- ------ ------ ------ ------ ------ RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $2,852.9 $2,185.4 $1,030.3 $512.3 $533.4 $439.4 $315.6 $390.8 Ratio of total expenses to average net assets 1.32%** 1.36% 1.35% 1.36% 1.36% 1.40% 1.43% 1.40% Less: Ratio of interest expense to average net assets 0.00%** 0.00% 0.00% 0.00% 0.00% (0.03%) (0.06%) 0.00% -------- -------- -------- ------ ------ ------ ------ ------ Ratio of operating expenses to average net assets 1.32%** 1.36% 1.35% 1.36% 1.36% 1.37% 1.37% 1.40% ======== ======== ======== ====== ====== ====== ====== ====== Ratio of net investment income (loss) to average net assets (0.98%)** (1.11%) (1.02%) (0.79%) (0.78%) (0.20%) 0.21% 0.37% Portfolio turnover rate 9.31% 32.63% 18.31% 34.94% 39.00% 53.36% 40.38% 25.17% YEAR ENDED SEPTEMBER 30, --------------- 1996 1995* ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $14.77 $10.00 ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.11 0.04 Net realized and unrealized gains (losses) on investments 3.66 4.73 ------ ------ TOTAL FROM INVESTMENT OPERATIONS 3.77 4.77 ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.04) 0.00 Distributions from net realized gains (0.10) 0.00 ------ ------ TOTAL DISTRIBUTIONS (0.14) 0.00 ------ ------ NET ASSET VALUE, END OF PERIOD $18.40 $14.77 ====== ====== TOTAL RETURN 25.8% 47.7% ------ ------ RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $207.2 $ 28.6 Ratio of total expenses to average net assets 1.54% 1.99%** Less: Ratio of interest expense to average net assets 0.00% 0.00% ------ ------ Ratio of operating expenses to average net assets 1.54% 1.99%** ====== ====== Ratio of net investment income (loss) to average net assets 1.20% 1.13%** Portfolio turnover rate 40.27% 40.56%
- --------------- * For the period January 3, 1995 (Commencement of Operations) to September 30, 1995. ** Annualized. The Fund's custodian's offset of custody fees amounted to less than $0.01 per share in 1996 and 1995. The expense offset amounts are included in expense data above. 18 BARON FUNDS - ------------------------------------------------------------------------------- (9) FINANCIAL HIGHLIGHTS (continued) BARON SMALL CAP FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ------------------------------------------------------- MARCH 31, 2004 2003 2002 2001 2000 1999 1998 -------------- -------- ------ ------ ------ ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 17.26 $ 13.73 $12.69 $16.05 $13.37 $ 8.61 $10.00 -------- -------- ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment loss (0.10) (0.11) (0.14) (0.11) (0.16) (0.10) (0.02) Net realized and unrealized gains (losses) on investments 2.74 4.02 1.18 (2.87) 2.84 4.86 (1.37) -------- -------- ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.64 3.91 1.04 (2.98) 2.68 4.76 (1.39) -------- -------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from net realized gains 0.00 (0.38) 0.00 (0.38) 0.00 0.00 0.00 -------- -------- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS 0.00 (0.38) 0.00 (0.38) 0.00 0.00 0.00 -------- -------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 19.90 $ 17.26 $13.73 $12.69 $16.05 $13.37 $ 8.61 ======== ======== ====== ====== ====== ====== ====== TOTAL RETURN 15.3% 29.2% 8.2% (18.8%) 20.0% 55.3% (13.9%) -------- -------- ------ ------ ------ ------ ------ RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $1,647.9 $1,210.5 $719.1 $585.9 $879.5 $715.7 $403.7 Ratio of total expenses to average net assets 1.33%** 1.36% 1.36% 1.35% 1.33% 1.34% 1.39% Ratio of net investment loss to average net assets (1.11%)** (0.87%) (0.97%) (0.68%) (0.90%) (0.99%) (0.20% Portfolio turnover rate 14.48% 30.29% 55.07% 55.77% 53.18% 42.69% 59.68%
BARON iOPPORTUNITY FUND Selected data for a share of beneficial interest outstanding throughout each period:
SIX MONTHS YEAR ENDED SEPTEMBER 30, ENDED ----------------------------------- MARCH 31, 2004 2003 2002 2001 2000* -------------- ------ ------ ------- ------ NET ASSET VALUE, BEGINNING OF PERIOD $ 6.48 $ 3.63 $ 4.09 $ 8.76 $10.00 ------ ------ ------ ------- ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.05) (0.05) (0.06) (0.05) 0.03 Net realized and unrealized gains (losses) on investments 1.61 2.89 (0.40) (4.59) (1.28) ------ ------ ------ ------- ------ TOTAL FROM INVESTMENT OPERATIONS 1.56 2.84 (0.46) (4.64) (1.25) ------ ------ ------ ------- ------ LESS DISTRIBUTIONS Dividends from net investment income 0.00 0.00 0.00 (0.03) 0.00 Distributions from net realized gains 0.00 0.00 0.00 0.00 0.00 ------ ------ ------ ------- ------ TOTAL DISTRIBUTIONS 0.00 0.00 0.00 (0.03) 0.00 ------ ------ ------ ------- ------ Redemption fees added to paid in capital 0.00+ 0.01 0.00+ 0.00+ 0.01 ------ ------ ------ ------- ------ NET ASSET VALUE, END OF PERIOD $ 8.04 $ 6.48 $ 3.63 $ 4.09 $ 8.76 ====== ====== ====== ======= ====== TOTAL RETURN ^ 24.1% 78.5% (11.2%) (53.1%) (12.4%) ------ ------ ------ ------- ------ RATIOS/SUPPLEMENTAL DATA Net assets (in millions), end of period $132.6 $109.3 $ 57.5 $ 73.7 $188.2 Ratio of total expenses to average net assets 1.61%** 1.67% 1.65% 1.55% 1.53%** Less: Expense reimbursement by investment adviser (0.11%)** (0.17%) (0.15%) (0.05%) (0.03%)*** ------ ------ ------ ------- ------ Ratio of net expenses to average net assets 1.50%** 1.50% 1.50% 1.50% 1.50%** ====== ====== ====== ======= ====== Ratio of net investment income (loss) to average net assets (1.27%)** (1.18%) (1.20%) (0.75%) 0.46%** Portfolio turnover rate 45.43% 89.72% 96.41% 123.30% 31.47%
- --------------- * For the period February 29, 2000 (Commencement of Operations) to September 30, 2000. ** Annualized. + Less than $0.01 per share. ^ The total returns would have been lower had certain expenses not been reduced during the periods shown. 19 [Registered Logo] B A R O N F U N D S c/o UMB Fund Services, Inc. 803 West Michigan Avenue Suite A Milwaukee, WI 53233-2301 Item 2. Code of Ethics. Not applicable at this time. This item is applicable to annual reports. Item 3. Audit Committee Financial Expert. Not applicable at this time. This item is applicable to annual reports. Item 4. Principal Accountant Fees and Services. Not applicable at this time. This item is applicable to annual reports. Item 5. Audit Committee of Listed Registrants. The members of the Fund's Audit Committee are Norman Edelcup and Raymond Noveck, both "idependent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. Item 6. [Reserved]. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. NOT APPLICABLE. Item 8. [Reserved]. Item 9. Controls and Procedures. The Registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report on Form N-CSR, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the investment company in the reports that it files or submits under the Securities Exchange Act to 1934 is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules and forms. At the date of filing this N-CSR, the Registrant's principal executive office and principal financial officer are aware of no significant changes in the Registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10. Exhibits. a). Ex-99.CERT Certification required by Item 10(b) of Form N-CSR. b). Ex-99.906 CERT Certification pursuant to Section 906 of the Sarbanes Oxley Act. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BARON ASSET FUND By: /s/ Ronald Baron ------------------- Ronald Baron Chairman and Chief Executive Officer Date: June 8, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald Baron -------------------- Ronald Baron Chairman and Chief Executive Officer Date: June 8, 2004 By: /s/ Peggy Wong -------------------- Peggy Wong Treasurer and Chief Financial Officer Date: June 8, 2004 A signed original of this written statement has been provided to Baron Asset Fund and will be retained by Baron Asset and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 2 ex-99cert.txt CERTIFICATION I, PEGGY WONG, certify that: 1. I have reviewed this report on Form N-CSR of Baron Asset Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and; c) Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrant's most recent fiscal half year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants's internal control over financial reporting; and; 5. The registrant's other certifying officer(s) and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information and; b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 8, 2004 /s/Peggy Wong ---------------------------------------- Peggy Wong Treasurer and Chief Financial Officer I, RON BARON, certify that: 1. I have reviewed this report on Form N-CSR of Baron Asset Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and; c) Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrant's most recent fiscal half year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants's internal control over financial reporting; and; 5. The registrant's other certifying officer(s) and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information and; b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 8, 2004 /s/Ronald Baron ---------------------------------------- Ronald Baron Chairman and Chief Executive Officer EX-99 3 section906-cert.txt 906 CERTIFICATION CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT The undersigned hereby certifies, to the best of his knowledge, that: 1. The Form N-CSR of BARON ASSET FUND (the "Issuer") and its separate series for the period ended March 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. By: /s/ Ronald Baron Date: June 8, 2004 ------------------------------------- Ronald Baron Chairman and Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT The undersigned hereby certifies, to the best of his knowledge, that: 1. The Form N-CSR of BARON ASSET FUND (the "Issuer") and its separate series for the period ended March 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. By: /s/ Peggy Wong Date: June 8, 2004 -------------------------------------- Peggy Wong Treasurer and Chief Financial Officer A signed original of this written statement has been provided to Baron Asset Fund and will be retained by Baron Asset Fund and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----