BIFT -- BAF, BGF, BSMF, BOF, BFAF

N-CSRS 1 dncsrs.htm BIFT -- BAF, BGF, BSMF, BOF, BFAF BIFT -- BAF, BGF, BSMF, BOF, BFAF


OMB APPROVAL
OMB Number:		3235 - 0570
Expires:		January 31, 2014
Estimated average burden
hours per response . . .		20.6

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES


Investment Company Act file number: 811-5032

BARON INVESTMENT FUNDS TRUST f/k/a

BARON ASSET FUND

(Exact name of registrant as specified in charter)


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

Patrick M. Patalino, Esq.

c/o Baron Investment Funds Trust

767 Fifth Avenue, 49th Floor

New York, NY 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, 2011

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. 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507.

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 (5-07)

Item 1. Reports to Stockholders.

Baron Investment Funds Trust Semi-Annual Report for the period ended March 31, 2011.

Baron Asset Fund

Baron Growth Fund

Baron Small Cap Fund

Baron Opportunity Fund

Baron Fifth Avenue Growth Fund

March 31, 2011

Baron Funds^®

Semi-Annual Financial Report


Baron Asset Fund
*Ticker Symbols:*
Retail Shares: BARAX
Institutional Shares: BARIX
Performance			2
Top Ten Holdings			3
Sector Breakdown			3
Management’s Discussion of Fund Performance			3
Baron Growth Fund
*Ticker Symbols:*
Retail Shares: BGRFX
Institutional Shares: BGRIX
Performance			4
Top Ten Holdings			5
Sector Breakdown			5
Management’s Discussion of Fund Performance			5
Baron Small Cap Fund
*Ticker Symbols:*
Retail Shares: BSCFX
Institutional Shares: BSFIX
Performance			6
Top Ten Holdings			7
Sector Breakdown			7
Management’s Discussion of Fund Performance			7
Baron Opportunity Fund
*Ticker Symbols:*
Retail Shares: BIOPX
Institutional Shares: BIOIX
Performance			8
Top Ten Holdings			9
Sector Breakdown			9
Management’s Discussion of Fund Performance			9
Baron Fifth Avenue Growth Fund
*Ticker Symbols:*
Retail Shares: BFTHX
Institutional Shares: BFTIX
Performance			10
Top Ten Holdings			11
Sector Breakdown			11
Management’s Discussion of Fund Performance			11
Financial Statements
Statements of Net Assets			12
Statements of Assets and Liabilities			24
Statements of Operations			25
Statements of Changes in Net Assets			26
Notes to Financial Statements			28
Financial Highlights			37
Fund Expenses			42

DEAR BARON FUNDS SHAREHOLDER:

In this report you will find unaudited financial statements for Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund and Baron Fifth Avenue Growth Fund (the “Funds”) for the six months ended March 31, 2011. The Securities and Exchange Commission (the “SEC”) requires mutual funds to furnish these statements semi-annually to their shareholders. We hope you find these statements informative and useful.

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,

Ronald Baron

Chief Executive Officer and

Chief Investment Officer

May 20, 2011

Linda S. Martinson

Chairman, President and

Chief Operating Officer

May 20, 2011

Peggy Wong

Treasurer and

Chief Financial Officer

May 20, 2011

This Semi-Annual Financial Report is for the Baron Investment Funds Trust, which currently has five series: Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund and Baron Fifth Avenue Growth Fund. If you are interested in the Baron Select Funds, which contains the Baron Partners Fund, Baron Focused Growth Fund, Baron International Growth Fund, Baron Real Estate Fund and Baron Emerging Markets Fund series, please visit the Funds’ website at www.BaronFunds.com or contact us at 1-800-99BARON.

A description of the Funds’ proxy voting policies and procedures is available without charge on the Funds’ website, www.BaronFunds.com, or by calling 1-800-99BARON and on the SEC’s website at www.sec.gov. The Funds’ most current proxy voting record, Form N-PX, is also available on the Funds’ website and on the SEC’s website.

The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC; information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-202-551-8090. A copy of the Funds’ Forms N-Q may also be obtained upon request by calling 1-800-99BARON. Schedules of portfolio holdings current to the most recent quarter are also available on the Funds’ website.

Some of the comments are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as “estimate,” “may,” “expect,” “should,” “could,” “believe,” “plan” and other similar terms. We cannot promise future returns and our opinions are a reflection of our best judgment at the time this report is compiled.

The views expressed in this report reflect those of the BAMCO, Inc. (“BAMCO” or the “Adviser”) only through the end of the period stated in this report. The views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time without notice based on market and other conditions.

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. For more complete information about Baron Funds, including charges and expenses, call or write for a prospectus. Read it carefully before you invest or send money. This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of Baron Funds, unless accompanied or preceded by the Funds’ current prospectus.

LOGO

767 Fifth Avenue

NY, NY 10153

212-583-2100


Baron Asset Fund		March 31, 2011


Baron Asset Fund

*Ticker Symbols:*
Retail Shares: BARAX
Institutional Shares: BARIX
Performance			2
Top Ten Holdings			3
Sector Breakdown			3
Management’s Discussion of Fund Performance			3

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON ASSET FUND^† IN RELATION TO THE RUSSELL MIDCAP GROWTH INDEX AND THE S&P 500 INDEX

LOGO

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MARCH 31, 2011


	Six Months*		One Year		Three Years		Five Years		Ten Years		Since Inception (June 12, 1987)
Baron Asset Fund — Retail Shares^1,2		21.64%		22.09%		4.68%		3.17%		7.20%		11.32%
Baron Asset Fund — Institutional Shares^1,2,4		21.81%		22.43%		4.84%		3.26%		7.25%		11.34%
Russell Midcap Growth Index¹		22.96%		26.60%		7.63%		4.93%		6.94%		9.61%	³
S&P 500 Index¹		17.31%		15.65%		2.35%		2.62%		3.29%		8.87%

*	Not annualized.

The Russell Midcap Growth Index and the S&P 500 Index are unmanaged indexes. The Russell Midcap Growth Index measures the performance of mid-sized companies that are classified as growth. The S&P 500 Index measures the performance of larger cap equities in the stock market in general. The indexes and the Baron Asset Fund are with dividends, which positively impact the performance results.

²	Past performance is not predictive of future performance. The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares.

³	For the period June 30, 1987 to March 31, 2011.

⁴	Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to May 29, 2009 did not reflect this fee, the returns would be higher.

†	Performance information reflects results of the Retail Shares.

LOGO

1.800.99.BARON

www.BaronFunds.com


March 31, 2011		Baron Asset Fund

TOP TEN HOLDINGS AS OF MARCH 31, 2011


Baron Asset Fund	% of Net Assets
Gartner, Inc.		4.0%
Charles Schwab Corp.		3.6%
IDEXX Laboratories, Inc.		3.4%
Polo Ralph Lauren Corp.		3.2%
FactSet Research Systems, Inc.		3.2%
Vail Resorts, Inc.		3.0%
Fastenal Co.		3.0%
C. H. Robinson Worldwide, Inc.		2.7%
DeVry, Inc.		2.5%
Mettler-Toledo International, Inc.		2.3%
		30.9%

SECTOR BREAKDOWN AS OF MARCH 31, 2011²

(as a percentage of net assets)

LOGO

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

For the six-month period ended March 31, 2011, Baron Asset Fund (Retail Shares) gained 21.64%, the Russell Midcap Growth Index gained 22.96% and the S&P 500 Index was up 17.31%.

Baron Asset Fund invests primarily in medium-sized growth companies for the long term while using value-oriented purchase and sell disciplines.¹ The Fund purchases companies that the Adviser believes have sustainable competitive advantages and strong financial characteristics, operating in industries with favorable macroeconomic trends led by strong management.

The economy has demonstrated steady improvement over the past six months as evidenced by growing corporate profits. Certain risks remain, including continuing high unemployment, depressed home prices, budget deficits and the threat of inflation. New risks have surfaced as well, stemming from the disaster in Japan and civil unrest that has engulfed the Middle East and North Africa. Nonetheless, investors showed increasing confidence throughout the period as they continued to focus on corporate profits, increased market stability, improved credit quality and the Federal Reserve’s attention to providing increased liquidity.

One area the Fund continues to favor is the information services businesses, a term we use to describe companies spanning several industry sectors. These include companies that possess proprietary information-related assets, which are generally sold through annual subscriptions to customers in areas including investment management, insurance, and information technology.

Gartner, Inc., the leading independent provider of research and analysis on the information technology industry, was the single largest contributor to Fund performance in the period. The company has continued to generate record bookings in its research business. We expect the company to show continued sales momentum throughout 2011 and beyond as it adds to its sales force, raises prices, and leverages its global sales network to distribute research from recent acquisitions of AMR and Burton.

Equinix, Inc., a network neutral operator of state-of-the-art data centers across North America, Europe and Asia-Pacific, was the leading detractor from Fund performance in the period. The company’s shares experienced a sharp sell-off last Fall following disclosure that it would miss revenue expectations while making pricing concessions to certain large customers. We continue to believe Equinix represents significant growth potential over the long term.

The Adviser expects to continue to invest in companies that, in our opinion, are undervalued relative to their long-term growth prospects and have the ability to sustain superior levels of profitability. We intend to continue to identify superior quality companies through independent research efforts. We expect the Fund will remain diversified not only by industry and investment theme, but also by external factors we believe could affect company performance.

¹	Prior to February 15, 2007, the Fund’s strategy was also to invest primarily in small- and mid-sized growth companies.

Industry sector levels are derived from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties.


Baron Growth Fund		March 31, 2011


Baron Growth Fund

*Ticker Symbols:*
Retail Shares: BGRFX
Institutional Shares: BGRIX
Performance			4
Top Ten Holdings			5
Sector Breakdown			5
Management’s Discussion of Fund Performance			5

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON GROWTH FUND^† IN RELATION TO THE RUSSELL 2000 GROWTH INDEX AND THE S&P 500 INDEX

LOGO

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MARCH 31, 2011


	Six Months*		One Year		Three Years		Five Years		Ten Years		Since Inception (December 31, 1994)
Baron Growth Fund — Retail Shares^1,2		26.28%		27.23%		7.29%		4.15%		9.92%		13.98%
Baron Growth Fund — Institutional Shares^1,2,3		26.44%		27.55%		7.46%		4.25%		9.97%		14.01%
Russell 2000 Growth Index¹		27.93%		31.04%		10.16%		4.34%		6.44%		6.84%
S&P 500 Index¹		17.31%		15.65%		2.35%		2.62%		3.29%		8.72%

*	Not annualized.

The Russell 2000 Growth Index and S&P 500 Index are unmanaged indexes. The Russell 2000 Growth Index measures the performance of 2,000 small U.S. companies classified as growth. The S&P 500 Index measures the performance of larger cap equities in the stock market in general. These indexes and the Baron Growth Fund are with dividends, which positively impact the performance results.

²	Past performance is not predictive of future performance. The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares.

³	Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to May 29, 2009 did not reflect this fee, the returns would be higher.

†	Performance information reflects results of the Retail Shares.

LOGO

1.800.99 BARON

www.BaronFunds.com


March 31, 2011		Baron Growth Fund

TOP TEN HOLDINGS AS OF MARCH 31, 2011


Baron Growth Fund	% of Net Assets
Edwards Lifesciences Corp.		3.3%
Dick's Sporting Goods, Inc.		2.9%
DeVry, Inc.		2.9%
Molycorp, Inc.		2.5%
Mettler-Toledo International, Inc.		2.5%
FactSet Research Systems, Inc.		2.5%
AMERIGROUP Corp.		2.3%
ITC Holdings Corp.		2.3%
MSCI, Inc., Cl A		2.3%
Community Health Systems, Inc.		2.1%
		25.6%

SECTOR BREAKDOWN AS OF MARCH 31, 2011¹

(as a percentage of net assets)

LOGO

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Baron Growth Fund (Retail Shares) gained 26.28% for the six months ended March 31, 2011, while the Russell 2000 Growth Index gained 27.93% and the S&P 500 Index gained 17.31%.

Baron Growth Fund is a long-term investor primarily in small-sized growth companies. The Adviser, through its independent research of companies, utilizes an investment approach that it believes allows it to look beyond the current market environment and invest based upon the potential profitability of a business, and therefore its value in the future.

Molycorp, Inc., the leading producer of rare earths outside of China, was the largest contributor to Fund performance during the period. Stricter environmental standards, higher taxes, and increased vigilance on illegal mining could increase the supply/demand gap in the near term. Molycorp says it has already “sold-out” of its 2011 production. To supply growing demand, Molycorp plans to double its potential capacity from 20,000 tons to 40,000 tons by 2014.

Strayer Education, Inc., an education services holding company, was the Fund’s leading detractor from performance in the period. Strayer’s shares declined principally on regulatory uncertainty, possible Pell-grant cuts and heightened competition for quality students. We are confident that management will adapt its model as necessary and thrive again. In our view, Strayer retains its long-term growth potential.

We believe that our investment process, with its focus on research and long-term investing, will enable the Fund to take advantage of opportunities as they arise throughout the economic recovery. We intend to continue to invest in small businesses that we believe have the potential to grow substantially in the years ahead. We expect the Fund will remain diversified not only by industry and investment theme, but also by external factors we believe could affect company performance.


Baron Small Cap Fund		March 31, 2011


Baron Small Cap Fund

*Ticker Symbols:*
Retail Shares: BSCFX
Institutional Shares: BSFIX
Performance			6
Top Ten Holdings			7
Sector Breakdown			7
Management’s Discussion of Fund Performance			7

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON SMALL CAP FUND^† IN RELATION TO THE RUSSELL 2000 GROWTH INDEX AND THE S&P 500 INDEX

LOGO

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MARCH 31, 2011


	Six Months*		One Year		Three Years		Five Years		Ten Years		Since Inception (September 30, 1997)
Baron Small Cap Fund — Retail Shares^1,2		25.22%		28.92%		8.34%		4.27%		10.13%		9.85%
Baron Small Cap Fund — Institutional Shares^1,2,3		25.37%		29.25%		8.51%		4.36%		10.18%		9.89%
Russell 2000 Growth Index¹		27.93%		31.04%		10.16%		4.34%		6.44%		3.70%
S&P 500 Index¹		17.31%		15.65%		2.35%		2.62%		3.29%		4.34%

*	Not annualized.

The Russell 2000 Growth Index and S&P 500 Index are unmanaged indexes. The Russell 2000 Growth Index measures the performance of 2,000 small U.S. companies classified as growth. The S&P 500 Index measures the performance of larger cap equities in the stock market in general. These indexes and the Baron Small Cap Fund are with dividends, which positively impact the performance results.

²	Past performance is not predictive of future performance. The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares.

³	Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to May 29, 2009 did not reflect this fee, the returns would be higher.

†	Performance information reflects results of the Retail Shares.

LOGO

1.800.99 BARON

www.BaronFunds.com


March 31, 2011		Baron Small Cap Fund

TOP TEN HOLDINGS AS OF MARCH 31, 2011


Baron Small Cap Fund	% of Net Assets
Penn National Gaming, Inc.		2.7%
TransDigm Group, Inc.		2.7%
Liberty Media Corp.		2.6%
SBA Communications Corp., Cl. A		2.6%
Brookdale Senior Living, Inc.		2.4%
Gartner, Inc.		2.2%
Waste Connections, Inc.		2.0%
Mettler-Toledo International, Inc.		2.0%
Fossil, Inc.		2.0%
Clean Harbors, Inc.		2.0%
		23.2%

SECTOR BREAKDOWN AS OF MARCH 31, 2011¹

(as a percentage of net assets)

LOGO

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Baron Small Cap Fund (Retail Shares) performed well for the six months ended March 31, 2011. The Fund gained 25.22%, compared to 27.93% for the Russell 2000 Growth Index and 17.31% for the S&P 500 Index.

Baron Small Cap Fund invests primarily in small-cap growth companies. The Fund is a long-term investor in what we believe are well-run small-cap growth businesses that can be purchased

at prices that represent a significant discount to our assessment of true value.

The equity markets have now retraced much of the ground they lost since the end of 2008. We believe that the first stage of the market recovery was led by outsized performance in more speculative, leveraged companies. We believe that the market is now beginning to reward higher-quality companies that have the ability to generate sustainable earnings growth over an extended economic cycle.

When the market has increased as it has over the past six months, we look for fallen angels and special situations. This past quarter we found two unique businesses — one is a turnaround of a shoe retailer, and the other is a diversified manufacturer and supplier of commercial vehicle components that came out of bankruptcy late last year.

Energy-related stock prices rose during the period along with commodity prices, outperforming the broader market. As a consequence of the recent events in North Africa, the Middle East, and Japan, more attention is being put on U.S. domestic energy policy, exploration, and development. We believe these recent developments will benefit our energy-related investments over the long term.

We expect multiples to expand as investors move back into equities and M&A activity returns to more normal levels. 2011 is off to a positive start and we are committed to keeping the Fund well positioned by investing in special small-cap companies that can thrive in this environment.

Brookdale Senior Living, Inc., the owner and operator of 550 senior living communities throughout the U.S., was the leading contributor to Fund performance during the period. Pent-up demand, a stabilizing economy and little new supply supported improving fundamentals. Through the remainder of the year, we see continued slow and steady improvements in rate, occupancy and margins. We expect Brookdale to become an increasingly active acquirer.

Baron Small Cap’s investments fall into three categories: Growth Stocks, Fallen Angels and Special Situations. The Fund intends to continue to invest in “Growth Stocks” that we believe have significant long-term growth prospects and can be purchased at what we believe are attractive prices because their prospects have not yet been appreciated by investors. “Fallen Angels” are companies that we believe have strong long-term franchises but have disappointed investors with short-term results, creating what we believe is a buying opportunity. “Special Situations” include spin-offs and recapitalizations, where lack of investor awareness creates opportunities to purchase what we believe are strong businesses at attractive prices.


Baron Opportunity Fund		March 31, 2011


Baron Opportunity Fund

*Ticker Symbols:*
Retail Shares: BIOPX
Institutional Shares: BIOIX
Performance			8
Top Ten Holdings			9
Sector Breakdown			9
Management’s Discussion of Fund Performance			9

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON OPPORTUNITY FUND^† IN RELATION TO THE RUSSELL MIDCAP GROWTH INDEX, THE NASDAQ COMPOSITE INDEX, AND THE S&P 500 INDEX

LOGO

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MARCH 31, 2011


	Six Months*		One Year		Three Years		Five Years		Ten Years		Since Inception (February 29, 2000)
Baron Opportunity Fund — Retail Shares^1,2		21.24%		28.28%		11.63%		8.18%		12.46%		4.05%
Baron Opportunity Fund — Institutional Shares^1,2,3		21.48%		28.62%		11.83%		8.29%		12.52%		4.10%
Russell Midcap Growth Index¹		22.96%		26.60%		7.63%		4.93%		6.94%		0.61%
NASDAQ Composite Index¹		17.41%		15.98%		6.86%		3.52%		4.22%		–4.62%
S&P 500 Index¹		17.31%		15.65%		2.35%		2.62%		3.29%		1.57%

*	Not annualized.

The Russell Midcap Growth Index has replaced the NASDAQ Composite Index as the primary broad-based index for the Fund because the Adviser believes that the Russell Midcap Growth Index is more representative of the Fund’s investment strategy. The NASDAQ Composite Index remains in the table above for comparison purposes. The Russell Midcap Growth Index, the NASDAQ Composite Index and the S&P 500 Index are unmanaged indexes. The Russell Midcap Growth Index measures the performance of mid-sized companies that are classified as growth. The NASDAQ Composite Index tracks the performance of market-value weighted common stocks listed on NASDAQ. The S&P 500 Index measures the performance of larger cap equities in the stock market in general. The NASDAQ Composite Index is without dividends. The S&P 500 Index, the Russell Midcap Growth Index and the Baron Opportunity Fund are with dividends, which positively impact the performance results.

²	Past performance is not predictive of future performance. The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares.

³	Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to May 29, 2009 did not reflect this fee, the returns would be higher.

†	Performance information reflects results of the Retail Shares.

LOGO

1.800.99.BARON

www.BaronFunds.com


March 31, 2011		Baron Opportunity Fund

TOP TEN HOLDINGS AS OF MARCH 31, 2011


Baron Opportunity Fund	% of Net Assets
Gartner, Inc.		3.9%
Equinix, Inc.		3.7%
SBA Communications Corp., Cl A		3.6%
NII Holdings, Inc.		3.5%
CARBO Ceramics, Inc.		2.9%
Apple, Inc.		2.8%
MSCI, Inc., Cl A		2.6%
Polypore International, Inc.		2.5%
ANSYS, Inc.		2.5%
Polycom, Inc.		2.5%
		30.5%

SECTOR BREAKDOWN AS OF MARCH 31, 2011¹

(as a percentage of net assets)

LOGO

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Baron Opportunity Fund (Retail Shares) performed well for the six months ended March 31, 2011. The Fund gained 21.24%, compared to 22.96% for the Russell Midcap Growth Index and 17.31% for the S&P 500 Index.

Baron Opportunity Fund, like the other Baron Funds, utilizes value purchase disciplines while investing in growth companies that the Adviser believes are driving or benefiting from innovation through development of pioneering, transformative or technologically advanced products and services.

In the current environment, two innovative industries that appear particularly attractive are wireless data services and health care. We believe growth in wireless data services is coming from the increasing usage of smartphones and other advanced data devices. The appeal of these devices and the need for increased bandwidth has created opportunities for innovation that we believe will continue to benefit this industry.

In health care, we have invested in companies that are saving lives, saving money, and changing the way medical professionals care for patients. Real-time diagnostics, for example, is having a profound and positive impact on health care. In one major U.S. hospital, blood transfusions dropped dramatically since it started using a device that fits on a patient’s fingertip. This small device uses light technology and provides doctors and nurses vital statistics about a patient’s blood without needles or lab tests.

Today many large technology and health care companies are struggling for growth because they cut R & D spending during the downturn and stopped innovating. Many of these companies are sitting on large hoards of cash, and have been forced to make expensive acquisitions to keep pace with the competition and find growth. This dynamic has been a big benefit to the innovative companies and their investors, and we believe it will continue going forward.

CARBO Ceramics, Inc., the world’s largest supplier of ceramic proppant, used to enhance production from oil and gas wells, was the leading contributor to Fund performance in the period. We continue to see growing demand for fracturing as more wells drilled in North America are employing this technology. We think CARBO is expanding its product offering in a way that brings significant incremental earnings potential, and we continue to like the stock.

Equinix, Inc., a network neutral operator of state-of-the-art data centers across North America, Europe and Asia-Pacific, was the leading detractor from Fund performance in the period. The company’s shares experienced a sharp sell-off in the Fall following disclosure that it would miss revenue expectations while making pricing concessions to certain large customers. We continue to believe Equinix represents significant growth potential over the long term.

We believe that our investment process, with its focus on research and long-term investing, will enable the Fund to continue taking advantage of opportunities as they arise throughout the economic recovery. We expect to continue to invest in high-growth businesses of all market capitalizations in any sector or industry that we believe will benefit from innovations and advances in technology.


Baron Fifth Avenue Growth Fund		March 31, 2011


Baron Fifth Avenue Growth Fund

*Ticker Symbols:*
Retail Shares: BFTHX
Institutional Shares: BFTIX
Performance			10
Top Ten Holdings			11
Sector Breakdown			11
Management’s Discussion of Fund Performance			11

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON FIFTH AVENUE GROWTH FUND^† IN RELATION TO THE S&P 500 INDEX

LOGO

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MARCH 31, 2011


	Six Months*		One Year		Three Years		Five Years		Since Inception (April 30, 2004)
Baron Fifth Avenue Growth Fund — Retail Shares^1,2		13.03%		9.29%		0.59%		0.42%		3.46%
Baron Fifth Avenue Growth Fund — Institutional Shares^1,2,3		13.25%		9.62%		0.75%		0.52%		3.54%
S&P 500 Index¹		17.31%		15.65%		2.35%		2.62%		4.75%

*	Not annualized.

¹	The S&P 500 Index is an unmanaged index. The S&P 500 Index measures the performance of larger cap equities in the stock market in general. The index and the Baron Fifth Avenue Growth Fund are with dividends, which positively impact the performance results.

²	Past performance is not predictive of future performance. The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions, or redemption of Fund shares.

³	Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to May 29, 2009 did not reflect this fee, the returns would be higher.

†	Performance information reflects results of the Retail Shares.

LOGO

1.800.99 BARON

www.BaronFunds.com


March 31, 2011		Baron Fifth Avenue Growth Fund

TOP TEN HOLDINGS AS OF MARCH 31, 2011


Baron Fifth Avenue Growth Fund	% of Net Assets
Halliburton Co.		3.6%
Occidental Petroleum Corp.		3.6%
Apple, Inc.		3.5%
Potash Corp. of Saskatchewan, Inc.		3.4%
FedEx Corp.		3.3%
Ford Motor Co.		3.3%
Intuitive Surgical, Inc.		3.3%
Liberty Media Corp.		3.2%
American Tower Corp., Cl A		3.0%
Carnival Corp.		2.9%
		33.1%

SECTOR BREAKDOWN AS OF MARCH 31, 2011¹

(as a percentage of net assets)

LOGO

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Baron Fifth Avenue Growth Fund (Retail Shares) gained 13.03% for the six months ended March 31, 2011, underperforming the S&P 500 Index, which gained 17.31%.

Baron Fifth Avenue Growth Fund focuses on the long-term fundamental prospects of the businesses in which it invests. This contrasts with other investors’ focus on historical operating results or current earnings expectations. The Adviser believes that historical results and the outlook for near-term earnings are often not indicative of superior longer-term prospects that can be identified through research efforts.

Energy-related stock prices rose during the period, outperforming the broader market. As a consequence of Middle East unrest, and Japan’s nuclear disaster, more attention is being put on U.S. domestic energy policy, exploration, and development. Various countries are also reconsidering their nuclear programs. We believe these recent developments will benefit our energy-related investments over the long term.

Improvement in the economy and the new health care legislation, in our opinion, is making the Health Care sector increasingly attractive. We invest in medical device companies that develop and sell innovative products used in a variety of medical and surgical procedures that make surgery less invasive, shorten hospitalizations, and generate cost savings. If the economy continues to improve, we expect utilization trends to accelerate.

Last quarter we observed a pullback in some consumer-oriented and transportation-related stocks based on what we believe to be a short-term reaction to rising oil prices. We continue to find unique large-cap businesses that we believe are poised for significant growth over a multi-year time horizon. We believe the portfolio is well positioned for the current economic and stock market environment.

Haliburton Co. was the leading contributor to Fund performance in the period. The company is the leader in providing technology and services for the development of unconventional oil and gas resources. It also has strong positions in deepwater exploration and development and operates in over 80 countries. Despite poor weather in a number of key markets and political unrest in the Middle East, which had a negative impact on first-quarter earnings, the combination of higher oil prices and better-than-expected rig activity drove shares higher.

Equinix, Inc., a network neutral operator of state-of-the-art data centers across North America, Europe and Asia-Pacific, was the leading detractor from Fund performance in the period. The company’s shares experienced a sharp sell-off in the Fall following disclosure that it would miss revenue expectations while making pricing concessions to certain large customers. We continue to believe Equinix represents significant growth potential over the long term.

The Adviser invests in what we believe are some of the best companies in America. The Fund is positioned, in our view, in blue-chip, best-of-breed growth companies with a strong emphasis on quality to reduce risk. We believe the key to long-term stock appreciation is consistent earnings growth. We invest in those companies that are market share leaders who dominate their industry, companies with strong franchises and a strong brand name, avoiding fads and other short-term, unsustainable trends. We target companies that are the low-cost operators in their industry with, in our view, high barriers to entry. We also try to invest in growth companies that are positioned in industries that are themselves growing as opposed to industries that are stagnant or structurally challenged.


Baron Asset Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (97.45%)
	Consumer Discretionary (24.26%)
		Advertising (1.27%)
	1,025,000	Lamar Advertising Co., Cl A¹	$	53,133,779	$	37,863,500

		Apparel Retail (1.00%)
	1,000,000	Urban Outfitters, Inc.¹		17,391,964		29,830,000

		Apparel, Accessories & Luxury Goods (3.22%)
	775,000	Polo Ralph Lauren Corp., Cl A		14,925,404		95,828,750

		Auto Parts & Equipment (0.71%)
	75,000	BorgWarner, Inc.¹		4,227,642		5,976,750
	500,000	Gentex Corp.		14,728,771		15,125,000

				18,956,413		21,101,750

		Automotive Retail (0.54%)
	500,000	CarMax, Inc.¹		5,701,415		16,050,000

		Broadcasting (1.48%)
	1,100,000	Discovery Communications, Inc., Cl A¹		29,767,574		43,890,000

		Casinos & Gaming (2.14%)
	500,000	Wynn Resorts, Ltd.		1,660,930		63,625,000

		Education Services (2.50%)
	1,350,000	DeVry, Inc.		10,721,692		74,344,500

		Hotels, Resorts & Cruise Lines (2.34%)
	850,000	Choice Hotels International, Inc.		4,185,563		33,022,500
	850,000	Hyatt Hotels Corp., Cl A¹		24,084,647		36,584,000

				28,270,210		69,606,500

		Household Appliances (0.58%)
	225,000	Stanley Black & Decker, Inc.		13,421,708		17,235,000

		Internet Retail (1.88%)
	110,000	priceline.com, Inc.¹		17,910,917		55,708,400

		Leisure Facilities (2.95%)
	1,799,200	Vail Resorts, Inc.¹		35,613,087		87,728,992

		Specialty Stores (3.65%)
	1,250,000	Dick’s Sporting Goods, Inc.¹		35,113,986		49,975,000
	950,000	Tiffany & Co.		30,239,344		58,368,000

				65,353,330		108,343,000

	Total Consumer Discretionary			312,828,423		721,155,392


	Energy (10.24%)
		Oil & Gas Drilling (1.79%)
	775,000	Helmerich & Payne, Inc.		23,964,498		53,234,750

		Oil & Gas Equipment & Services (2.29%)
	440,000	Core Laboratories N.V.²		30,622,516		44,954,800
	250,000	SEACOR Holdings, Inc.¹		7,030,773		23,115,000

				37,653,289		68,069,800

		Oil & Gas Exploration & Production (4.52%)
	489,500	Concho Resources, Inc.¹		22,879,901		52,523,350
	360,000	SM Energy Co.		21,209,164		26,708,400
	750,000	Whiting Petroleum Corp.¹		26,220,923		55,087,500

				70,309,988		134,319,250

		Oil & Gas Storage & Transportation (1.64%)
	1,700,000	Southern Union Co.		20,450,150		48,654,000

	Total Energy			152,377,925		304,277,800


Shares			Cost		Value
	Common Stocks (continued)
	Financials (15.43%)
		Asset Management & Custody Banks (3.17%)
	1,175,000	Eaton Vance Corp.	$	25,858,501	$	37,882,000
	850,000	T. Rowe Price Group, Inc.		23,450,029		56,457,000

				49,308,530		94,339,000

		Insurance Brokers (0.54%)
	625,000	Brown & Brown, Inc.		11,088,023		16,125,000

		Investment Banking & Brokerage (3.64%)
	6,000,000	Charles Schwab Corp.		11,701,340		108,180,000

		Office REITs (1.83%)
	133,500	Alexander’s, Inc.⁴		7,221,750		54,327,825

		Real Estate Services (1.17%)
	1,300,000	CB Richard Ellis Group, Inc., Cl A¹		14,831,561		34,710,000

		Regional Banks (0.47%)
	450,000	First Republic Bank¹		11,878,902		13,909,500

		Reinsurance (2.09%)
	625,000	Arch Capital Group, Ltd.^1,2		20,620,935		61,993,750

		Specialized Finance (2.52%)
	90,000	CME Group, Inc., Cl A		6,209,144		27,139,500
	1,300,000	MSCI, Inc., Cl A¹		39,123,416		47,866,000

				45,332,560		75,005,500

	Total Financials			171,983,601		458,590,575


	Health Care (12.79%)
		Health Care Distributors (1.42%)
	600,000	Henry Schein, Inc.¹		16,675,146		42,102,000

		Health Care Equipment (4.33%)
	1,300,000	IDEXX Laboratories, Inc.¹		53,002,192		100,386,000
	85,000	Intuitive Surgical, Inc.¹		12,819,285		28,344,100

				65,821,477		128,730,100

		Health Care Facilities (2.05%)
	600,000	Brookdale Senior Living, Inc.¹		15,940,319		16,800,000
	1,100,000	Community Health Systems, Inc.¹		30,985,486		43,989,000

				46,925,805		60,789,000

		Health Care Supplies (0.50%)
	225,000	Gen-Probe, Inc.^1,4		9,743,640		14,928,750

		Health Care Technology (0.65%)
	175,000	Cerner Corp.¹		15,678,453		19,460,000

		Life Sciences Tools & Services (3.21%)
	325,000	Life Technologies Corp.¹		16,407,788		17,036,500
	400,000	Mettler-Toledo International, Inc.¹		26,298,876		68,800,000
	175,000	Thermo Fisher Scientific, Inc.¹		4,853,514		9,721,250

				47,560,178		95,557,750

		Pharmaceuticals (0.63%)
	235,000	Perrigo Co.		17,121,784		18,687,200

	Total Health Care			219,526,483		380,254,800


	Industrials (15.55%)
		Air Freight & Logistics (4.52%)
	1,100,000	C. H. Robinson Worldwide, Inc.		20,241,548		81,543,000
	1,050,000	Expeditors International of Washington, Inc.		26,285,873		52,647,000

				46,527,421		134,190,000


12		See Notes to Financial Statements.


March 31, 2011		Baron Asset Fund

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (continued)
	Industrials (continued)
		Diversified Support Services (1.47%)
	1,550,000	Ritchie Bros. Auctioneers, Inc.²	$	38,130,924	$	43,632,500

		Electrical Components & Equipment (0.51%)
	175,000	Roper Industries, Inc.		14,045,821		15,130,500

		Environmental & Facilities Services (2.16%)
	725,000	Stericycle, Inc.¹		21,068,310		64,285,750

		Human Resource & Employment Services (0.88%)
	850,000	Robert Half International, Inc.		776,403		26,010,000

		Research & Consulting Services (3.07%)
	50,000	Dun & Bradstreet Corp.		3,708,791		4,012,000
	1,400,000	Nielsen Holdings NV^1,2		34,671,114		38,234,000
	1,500,000	Verisk Analytics, Inc., Cl A¹		39,224,920		49,140,000

				77,604,825		91,386,000

		Trading Companies & Distributors (2.94%)
	1,350,000	Fastenal Co.		53,631,828		87,520,500

	Total Industrials			251,785,532		462,155,250


	Information Technology (14.56%)
		Application Software (5.49%)
	800,000	ANSYS, Inc.¹		26,291,691		43,352,000
	350,000	Citrix Systems, Inc.¹		13,746,569		25,711,000
	900,000	FactSet Research Systems, Inc.		52,246,929		94,257,000

				92,285,189		163,320,000

		Communications Equipment (1.05%)
	600,000	Polycom, Inc.¹		24,637,221		31,110,000

		Data Processing & Outsourced Services (0.58%)
	150,000	FleetCor Technologies, Inc.¹		4,856,202		4,899,000
	600,000	Western Union Co.		11,184,906		12,462,000

				16,041,108		17,361,000

		Electronic Equipment & Instruments (0.93%)
	800,000	FLIR Systems, Inc.		17,739,772		27,688,000

		Internet Software & Services (0.09%)
	50,000	WebMD Health Corp., Cl A¹		2,665,125		2,671,000

		IT Consulting & Other Services (6.18%)
	700,000	Equinix, Inc.^1,4		56,983,955		63,770,000
	2,875,000	Gartner, Inc.¹		68,065,780		119,801,250

				125,049,735		183,571,250

		Systems Software (0.24%)
	375,000	TOTVS SA (Brazil)²		6,655,067		7,200,717

	Total Information Technology			285,073,217		432,921,967


	Materials (0.95%)
		Diversified Metals & Mining (0.45%)
	225,000	Molycorp, Inc.¹		11,522,309		13,504,500

		Specialty Chemicals (0.50%)
	300,000	Rockwood Holdings, Inc.¹		14,132,562		14,766,000

	Total Materials			25,654,871		28,270,500


Shares		Cost		Value
Common Stocks (continued)
Telecommunication Services (3.67%)
	Wireless Telecommunication Services (3.67%)
1,025,000	NII Holdings, Inc.¹	$	39,262,199	$	42,711,750
1,675,000	SBA Communications Corp., Cl A¹		55,336,595		66,464,000

Total Telecommunication Services			94,598,794		109,175,750

Total Common Stocks			1,513,828,846		2,896,802,034


Private Equity Investments (1.26%)
Consumer Discretionary (0.35%)
	Hotels, Resorts & Cruise Lines (0.35%)
5,200,000	Kerzner International Holdings, Ltd., Cl A^1,2,3,4,6		52,000,000		10,400,000


Financials (0.91%)
	Asset Management & Custody Banks (0.91%)
6,532,691	Windy City Investments Holdings LLC^1,3,4,6		33,639,547		25,085,533
523,532	Windy City Investments Holdings LLC^1,3,4,6		942,357		1,910,891

Total Financials			34,581,904		26,996,424

Total Private Equity Investments			86,581,904		37,396,424


Principal Amount
Short Term Investments (0.90%)
$26,780,086	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $26,780,094; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $28,122,675)⁵		26,780,086		26,780,086

Total Investments (99.61%)		$	1,627,190,836		2,960,978,544

Cash and Other Assets Less Liabilities (0.39%)					11,673,116

Net Assets				$	2,972,651,660

Retail Shares (Equivalent to $59.11 per share based on 44,491,071 shares outstanding)				$	2,629,692,538

Institutional Shares (Equivalent to $59.38 per share based on 5,775,270 shares outstanding)				$	342,959,122

%	Represents percentage of net assets.

¹	Non-income producing securities.

²	Foreign corporation.

³	At March 31, 2011, the market value of restricted and fair valued securities amounted to $37,396,424 or 1.26% of net assets. None of these securities are deemed liquid. See Note 6 regarding Restricted Securities.

⁴	The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

⁵	Level 2 security. See Note 7 regarding Fair Value Measurements.

⁶	Level 3 security. See Note 7 regarding Fair Value Measurements.


See Notes to Financial Statements.		13


Baron Growth Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (96.58%)
	Consumer Discretionary (22.47%)
		Apparel Retail (0.39%)
	1,464,900	Companhia Hering SA (Brazil)²	$	21,638,953	$	26,917,588

		Apparel, Accessories & Luxury Goods (1.43%)
	1,450,000	Under Armour, Inc., Cl A¹		47,233,672		98,672,500

		Automotive Retail (0.34%)
	200,000	CarMax, Inc.¹		1,895,337		6,420,000
	850,000	Penske Automotive Group, Inc.¹		14,931,776		17,017,000

				16,827,113		23,437,000

		Casinos & Gaming (1.45%)
	2,700,000	Penn National Gaming, Inc.¹		75,975,993		100,062,000

		Distributors (1.52%)
	4,350,000	LKQ Corp.¹		57,463,126		104,835,000

		Education Services (5.82%)
	4,667,005	Anhanguera Educacional Participacoes SA (Brazil)²		61,955,342		114,284,666
	3,625,000	DeVry, Inc.⁴		60,704,873		199,628,750
	675,000	Strayer Education, Inc.⁴		55,103,824		88,080,750

				177,764,039		401,994,166

		Home Improvement Retail (0.37%)
	1,032,729	Lumber Liquidators Holdings, Inc.¹		25,756,399		25,807,897

		Hotels, Resorts & Cruise Lines (1.69%)
	3,000,000	Choice Hotels International, Inc.⁴		74,119,736		116,550,000

		Internet Retail (0.78%)
	1,000,000	Blue Nile, Inc.^1,4		32,886,089		53,990,000

		Leisure Facilities (1.42%)
	1,900,000	Vail Resorts, Inc.^1,4		51,691,238		92,644,000
	430,600	Whistler Blackcomb Holdings, Inc. (Canada)²		5,253,307		5,218,721

				56,944,545		97,862,721

		Publishing (2.28%)
	2,154,552	Morningstar, Inc.		62,871,270		125,782,746
	3,350,000	The New York Times Co., Cl A¹		32,346,583		31,724,500

				95,217,853		157,507,246

		Restaurants (2.08%)
	825,000	Panera Bread Co., Cl A¹		32,060,440		104,775,000
	800,000	Peet’s Coffee & Tea, Inc.^1,4		18,562,773		38,472,000

				50,623,213		143,247,000

		Specialty Stores (2.90%)
	5,000,000	Dick’s Sporting Goods, Inc.¹		86,074,246		199,900,000

	Total Consumer Discretionary			818,524,977		1,550,783,118


	Consumer Staples (5.26%)
		Food Distributors (0.50%)
	768,401	United Natural Foods, Inc.¹		30,490,705		34,439,733

		Household Products (0.92%)
	800,000	Church & Dwight Co., Inc.		29,177,096		63,472,000

		Packaged Foods & Meats (3.84%)
	1,064,823	Diamond Foods, Inc.		38,931,996		59,417,123
	4,000,000	Dole Food Co., Inc.¹		48,959,106		54,520,000
	1,107,649	Ralcorp Holdings, Inc.¹		40,376,485		75,796,421
	200,000	Seneca Foods Corp., Cl A¹		4,400,000		5,974,000
	1,225,000	TreeHouse Foods, Inc.¹		47,319,599		69,665,750

				179,987,186		265,373,294

	Total Consumer Staples			239,654,987		363,285,027


Shares			Cost		Value
	Common Stocks (continued)
	Energy (12.49%)
		Oil & Gas Drilling (1.00%)
	1,000,000	Helmerich & Payne, Inc.	$	22,564,231	$	68,690,000

		Oil & Gas Equipment & Services (5.19%)
	875,764	CARBO Ceramics, Inc.		59,006,928		123,587,816
	1,388,272	Core Laboratories N.V.²		43,036,240		141,839,750
	1,000,000	SEACOR Holdings, Inc. ¹		69,798,678		92,460,000

				171,841,846		357,887,566

		Oil & Gas Exploration & Production (4.38%)
	1,600,000	Brigham Exploration Co.¹		24,210,346		59,488,000
	700,000	Concho Resources, Inc.¹		20,053,293		75,110,000
	2,000,000	Denbury Resources, Inc.¹		11,237,573		48,800,000
	247,191	Oasis Petroleum, Inc.¹		3,460,674		7,816,180
	1,500,000	SM Energy Co.		52,961,473		111,285,000

				111,923,359		302,499,180

		Oil & Gas Storage & Transportation (1.92%)
	3,600,000	Southern Union Co.		48,544,865		103,032,000
	814,751	Targa Resources Corp.		22,236,065		29,526,576

				70,780,930		132,558,576

	Total Energy			377,110,366		861,635,322


	Financials (10.72%)
		Asset Management & Custody Banks (1.29%)
	500,000	Cohen & Steers, Inc.		6,508,018		14,840,000
	1,500,000	Eaton Vance Corp.		26,667,458		48,360,000
	925,000	Financial Engines, Inc.¹		13,840,204		25,493,000

				47,015,680		88,693,000

		Consumer Finance (0.49%)
	450,000	Green Dot Corp., Cl A¹		24,088,302		19,309,500
	1,385,188	NetSpend Holdings, Inc.¹		16,889,173		14,572,178

				40,977,475		33,881,678

		Diversified REITs (0.14%)
	470,000	American Assets Trust, Inc.		9,735,710		9,996,900

		Investment Banking & Brokerage (0.36%)
	1,000,000	Jefferies Group, Inc.		9,859,745		24,940,000

		Life & Health Insurance (0.78%)
	2,100,000	Primerica, Inc.		46,453,115		53,571,000

		Office REITs (1.72%)
	135,500	Alexander’s, Inc.⁵		28,639,990		55,141,725
	3,400,000	Douglas Emmett, Inc.		47,518,561		63,750,000

				76,158,551		118,891,725

		Regional Banks (0.36%)
	1,250,000	SJB Escrow Corp., Cl A, 144A^1,5,6		25,000,000		24,750,000

		Reinsurance (2.01%)
	1,400,000	Arch Capital Group, Ltd.^1,2		41,487,457		138,866,000

		Residential REITs (0.29%)
	600,000	American Campus Communities, Inc.		16,235,192		19,800,000

		Specialized Finance (2.25%)
	4,222,433	MSCI, Inc., Cl A¹		96,041,636		155,469,983

		Specialized REITs (1.03%)
	775,000	Alexandria Real Estate Equities, Inc.⁵		29,669,521		60,426,750
	400,000	LaSalle Hotel Properties		8,565,042		10,800,000

				38,234,563		71,226,750

	Total Financials			447,199,124		740,087,036


14		See Notes to Financial Statements.


March 31, 2011		Baron Growth Fund

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (continued)
	Health Care (15.10%)
		Health Care Equipment (4.56%)
	2,600,000	Edwards Lifesciences Corp.¹	$	36,868,520	$	226,200,000
	1,150,000	IDEXX Laboratories, Inc.¹		38,825,384		88,803,000

				75,693,904		315,003,000

		Health Care Facilities (2.58%)
	3,625,000	Community Health Systems, Inc.¹		71,473,442		144,963,750
	1,300,000	VCA Antech, Inc.¹		34,889,375		32,734,000

				106,362,817		177,697,750

		Health Care Services (0.66%)
	600,000	Chemed Corp.		21,302,479		39,966,000
	125,000	IPC The Hospitalist Co., Inc.¹		2,062,500		5,676,250

				23,364,979		45,642,250

		Health Care Supplies (1.26%)
	1,200,000	Gen-Probe, Inc.^1,5		49,959,009		79,620,000
	175,000	Neogen Corp.¹		3,887,774		7,241,500

				53,846,783		86,861,500

		Health Care Technology (0.30%)
	1,000,000	Allscripts Healthcare Solutions, Inc.¹		16,782,598		20,990,000

		Life Sciences Tools & Services (3.41%)
	1,000,000	Mettler-Toledo International, Inc.¹		58,852,435		172,000,000
	880,943	Techne Corp.		46,631,249		63,075,519

				105,483,684		235,075,519

		Managed Health Care (2.33%)
	2,500,000	AMERIGROUP Corp.^1,4		42,959,676		160,625,000

	Total Health Care			424,494,441		1,041,895,019


	Industrials (11.24%)
		Construction & Engineering (1.20%)
	3,000,000	AECOM Technology Corp.¹		65,871,334		83,190,000

		Diversified Support Services (2.49%)
	2,075,000	Copart, Inc.¹		51,478,764		89,909,750
	2,900,000	Ritchie Bros. Auctioneers, Inc.²		66,712,065		81,635,000

				118,190,829		171,544,750

		Electrical Components & Equipment (0.95%)
	3,243,578	Generac Holdings, Inc.¹		43,195,908		65,812,198

		Environmental & Facilities Services (1.02%)
	2,850,000	Tetra Tech, Inc.¹		71,178,894		70,366,500

		Industrial Machinery (1.56%)
	704,000	Middleby Corp.¹		62,120,615		65,626,880
	400,000	Valmont Industries, Inc.		32,589,034		41,748,000

				94,709,649		107,374,880

		Railroads (1.69%)
	2,000,000	Genesee & Wyoming, Inc., Cl A¹		32,221,169		116,400,000

		Research & Consulting Services (1.52%)
	939,811	CoStar Group, Inc.¹		40,526,096		58,907,353
	400,000	IHS, Inc., Cl A¹		16,387,387		35,500,000
	600,000	Mistras Group, Inc.¹		7,563,468		10,326,000

				64,476,951		104,733,353

		Trading Companies & Distributors (0.50%)
	500,000	MSC Industrial Direct Co., Inc., Cl A		17,821,237		34,235,000


Shares			Cost		Value
	Common Stocks (continued)
	Industrials (continued)
		Trucking (0.31%)
	475,000	Landstar System, Inc.	$	11,073,375	$	21,698,000

	Total Industrials			518,739,346		775,354,681


	Information Technology (13.65%)
		Application Software (7.58%)
	1,400,000	Advent Software, Inc.¹		26,532,888		40,138,000
	2,250,000	ANSYS, Inc.¹		54,764,730		121,927,500
	183,452	Blackboard, Inc.¹		6,927,498		6,648,300
	1,000,000	Concur Technologies, Inc.¹		22,319,863		55,450,000
	1,635,000	FactSet Research Systems, Inc.		82,436,633		171,233,550
	1,550,000	Pegasystems, Inc.		47,512,692		58,807,000
	535,038	RealPage, Inc.¹		13,417,979		14,836,604
	2,423,656	SS&C Technologies Holdings, Inc.¹		40,675,932		49,491,056
	140,107	Synchronoss Technologies, Inc.¹		4,625,396		4,868,718

				299,213,611		523,400,728

		Internet Software & Services (1.16%)
	1,500,000	WebMD Health Corp., Cl A¹		44,434,390		80,130,000

		IT Consulting & Other Services (3.68%)
	372,572	Booz Allen Hamilton Holding Corp.¹		6,504,476		6,710,021
	925,000	Equinix, Inc.^1,5		29,378,111		84,267,500
	3,000,000	Gartner, Inc.¹		49,076,692		125,010,000
	465,734	MAXIMUS, Inc.		34,793,690		37,803,629

				119,752,969		253,791,150

		Systems Software (1.23%)
	4,418,000	TOTVS SA (Brazil)²		60,197,679		84,834,043

	Total Information Technology			523,598,649		942,155,921


	Materials (2.85%)
		Diversified Metals & Mining (2.55%)
	2,929,426	Molycorp, Inc.¹		76,925,262		175,824,149

		Fertilizers & Agricultural Chemicals (0.30%)
	601,920	Intrepid Potash, Inc.¹		19,321,732		20,958,854

	Total Materials			96,246,994		196,783,003


	Telecommunication Services (0.52%)
		Wireless Telecommunication Services (0.52%)
	900,000	SBA Communications Corp., Cl A¹		3,361,183		35,712,000


	Utilities (2.28%)
		Electric Utilities (2.28%)
	2,250,000	ITC Holdings Corp.		69,934,399		157,275,000

	Total Common Stocks			3,518,864,466		6,664,966,127


	Private Equity Investments (0.35%)
	Consumer Discretionary (0.22%)
		Hotels, Resorts & Cruise Lines (0.22%)
	7,400,000	Kerzner International Holdings, Ltd., Cl A^1,2,3,5,7		74,000,000		14,800,000


See Notes to Financial Statements.		15


Baron Growth Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares		Cost		Value
Private Equity Investments (continued)
Financials (0.13%)
	Asset Management & Custody Banks (0.13%)
176,224	Windy City Investments Holdings LLC^1,3,5,7	$	317,203	$	643,217
2,198,950	Windy City Investments Holdings LLC^1,3,5,7		8,313,795		8,443,967

Total Financials			8,630,998		9,087,184

Total Private Equity Investments			82,630,998		23,887,184


Warrants (0.01%)
Financials (0.01%)
	Regional Banks (0.01%)
75,000	SJB Escrow Corp. Warrants, Exp 02/16/2017^1,5,6		0		489,187


Principal Amount
Short Term Investments (2.71%)
$186,957,745	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $186,957,797; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $184,559,550 and U.S. Treasury Note, 1.875% due 06/30/2015; Market value - $11,748,450)⁶		186,957,745		186,957,745

Total Investments (99.65%)		$	3,788,453,209		6,876,300,243

Cash and Other Assets Less Liabilities (0.35%)					24,234,376

Net Assets				$	6,900,534,619

Retail Shares (Equivalent to $56.03 per share based on 99,891,741 shares outstanding)				$	5,596,701,625

Institutional Shares (Equivalent to $56.29 per share based on 23,162,844 shares outstanding)				$	1,303,832,994

%	Represents percentage of net assets.

¹	Non-income producing securities.

²	Foreign corporation.

³	At March 31, 2011, the market value of restricted and fair valued securities amounted to $23,887,184 or 0.35% of net assets. None of these securities are deemed liquid. See Note 6 regarding Restricted Securities.

⁴	See Note 9 regarding “Affiliated” companies.

⁵	The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

⁶	Level 2 security. See Note 7 regarding Fair Value Measurements.

⁷	Level 3 security. See Note 7 regarding Fair Value Measurements.

^144A

Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. At March 31, 2011, the market value of Rule 144A securities amounted to $24,750,000 or 0.36% of net assets.


16		See Notes to Financial Statements.


March 31, 2011		Baron Small Cap Fund

STATEMENT OF NET ASSETS (UNAUDITED)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (96.09%)
	Consumer Discretionary (22.77%)
		Advertising (3.18%)
	1,000,000	Arbitron, Inc.	$	38,365,381	$	40,030,000
	1,225,000	Lamar Advertising Co., Cl A¹		32,190,708		45,251,500
	2,650,000	National CineMedia, Inc.		55,570,049		49,475,500

				126,126,138		134,757,000

		Apparel Retail (0.87%)
	500,000	Rue21, Inc.¹		14,319,347		14,400,000
	750,000	Urban Outfitters, Inc.¹		10,990,211		22,372,500

				25,309,558		36,772,500

		Apparel, Accessories & Luxury Goods (3.97%)
	900,000	Fossil, Inc.¹		24,044,725		84,285,000
	3,900,000	Iconix Brand Group, Inc.^1,4,5		62,609,371		83,772,000

				86,654,096		168,057,000

		Auto Parts & Equipment (0.62%)
	617,200	Tenneco, Inc.¹		25,137,939		26,200,140

		Casinos & Gaming (4.39%)
	3,100,000	Penn National Gaming, Inc.¹		81,039,972		114,886,000
	750,000	WMS Industries, Inc.¹		29,989,478		26,512,500
	350,000	Wynn Resorts, Ltd.		3,263,528		44,537,500

				114,292,978		185,936,000

		Computer & Electronics Retail (0.47%)
	1,500,000	hhgregg, Inc.¹		25,839,828		20,085,000

		Education Services (1.25%)
	250,000	Capella Education Co.¹		8,668,802		12,447,500
	308,808	Strayer Education, Inc.		27,539,086		40,296,356

				36,207,888		52,743,856

		Footwear (0.53%)
	1,250,000	CROCS, Inc.¹		22,107,582		22,300,000

		Home Improvement Retail (0.80%)
	1,350,000	Lumber Liquidators Holdings, Inc.¹		29,402,333		33,736,500

		Hotels, Resorts & Cruise Lines (1.14%)
	3,060,000	Great Wolf Resorts, Inc.^1,4		55,012,502		6,456,600
	20,000,000	Mandarin Oriental International, Ltd. (Singapore)²		40,047,095		41,800,000

				95,059,597		48,256,600

		Internet Retail (0.19%)
	2,325,000	Vitacost.com, Inc.^1,3,4,8		23,626,535		7,951,500

		Movies & Entertainment (3.25%)
	1,500,000	Liberty Media Corp.¹		24,179,193		110,505,000
	1,000,000	Madison Square Garden, Inc., Cl A¹		25,134,389		26,990,000

				49,313,582		137,495,000

		Restaurants (2.11%)
	1,750,000	Bravo Brio Restaurant Group, Inc.^1,4		27,508,913		30,957,500
	950,000	Cheesecake Factory, Inc.¹		18,719,871		28,585,500
	1,750,000	Texas Roadhouse, Inc., Cl A		18,706,316		29,732,500

				64,935,100		89,275,500

	Total Consumer Discretionary			724,013,154		963,566,596


	Consumer Staples (0.67%)
		Food Distributors (0.37%)
	350,000	United Natural Foods, Inc.¹		12,770,088		15,687,000

		Soft Drinks (0.30%)
	1,037,000	Primo Water Corp.^1,4		13,922,993		12,703,250

	Total Consumer Staples			26,693,081		28,390,250


Shares			Cost		Value
	Common Stocks (continued)
	Energy (9.37%)
		Oil & Gas Equipment & Services (3.12%)
	500,000	CARBO Ceramics, Inc.	$	34,457,138	$	70,560,000
	600,000	Core Laboratories N.V.²		23,095,109		61,302,000

				57,552,247		131,862,000

		Oil & Gas Exploration & Production (4.94%)
	2,000,000	Brigham Exploration Co.¹		21,988,814		74,360,000
	700,000	Concho Resources, Inc.¹		19,625,308		75,110,000
	900,000	GeoResources, Inc.¹		15,304,693		28,143,000
	1,000,000	Oasis Petroleum, Inc.¹		14,212,944		31,620,000

				71,131,759		209,233,000

		Oil & Gas Storage & Transportation (1.31%)
	1,016,118	PAA Natural Gas Storage LP^3,8		21,532,500		23,441,842
	201,995	PAA Natural Gas Storage LP		4,349,046		4,754,962
	750,000	Targa Resources Corp.		17,965,719		27,180,000

				43,847,265		55,376,804

	Total Energy			172,531,271		396,471,804


	Financials (8.38%)
		Asset Management & Custody Banks (1.04%)
	1,600,000	Financial Engines, Inc.¹		24,999,594		44,096,000

		Consumer Finance (0.51%)
	500,000	Green Dot Corp., Cl A¹		25,279,603		21,455,000

		Office REITs (2.49%)
	1,350,000	Corporate Office Properties Trust		47,245,258		48,789,000
	750,000	SL Green Realty Corp.		17,178,705		56,400,000

				64,423,963		105,189,000

		Real Estate Services (1.01%)
	1,600,000	CB Richard Ellis Group, Inc., Cl A¹		7,842,478		42,720,000

		Regional Banks (0.58%)
	1,250,000	SJB Escrow Corp., Cl A, 144A^1,5,8		25,000,000		24,750,000

		Residential REITs (0.56%)
	2,000,000	Campus Crest Communities, Inc.⁴		25,137,765		23,660,000

		Specialized Finance (0.98%)
	1,126,513	MSCI, Inc., Cl A¹		25,427,990		41,478,209

		Specialized REITs (1.21%)
	2,000,000	Chesapeake Lodging Trust⁴		35,285,655		34,820,000
	750,000	Pebblebrook Hotel Trust		14,262,778		16,612,500

				49,548,433		51,432,500

	Total Financials			247,659,826		354,780,709


	Health Care (11.53%)
		Health Care Equipment (3.63%)
	700,000	IDEXX Laboratories, Inc.¹		22,713,021		54,054,000
	150,000	Intuitive Surgical, Inc.¹		2,175,000		50,019,000
	1,500,000	Masimo Corp.		33,862,646		49,650,000

				58,750,667		153,723,000

		Health Care Facilities (3.40%)
	3,550,000	Brookdale Senior Living, Inc.¹		68,396,819		99,400,000
	1,750,000	Emeritus Corp.¹		50,131,389		44,555,000

				118,528,208		143,955,000

		Health Care Supplies (1.18%)
	750,000	Gen-Probe, Inc.^1,5		31,517,368		49,762,500


See Notes to Financial Statements.		17


Baron Small Cap Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (continued)
	Health Care (continued)
		Life Sciences Tools & Services (3.32%)
	600,000	Covance, Inc.¹	$	21,774,270	$	32,832,000
	1,164,916	Luminex Corp.¹		19,283,188		21,853,824
	500,000	Mettler-Toledo International, Inc.¹		31,248,358		86,000,000

				72,305,816		140,685,824

	Total Health Care			281,102,059		488,126,324


	Industrials (19.78%)
		Aerospace & Defense (3.25%)
	2,000,000	KEYW Holding Corp.^1,4		23,283,711		24,560,000
	1,350,000	TransDigm Group, Inc.¹		35,096,586		113,170,500

				58,380,297		137,730,500

		Building Products (0.43%)
	559,100	Trex Co., Inc.¹		15,259,090		18,237,842

		Construction & Farm Machinery & Heavy Trucks (1.30%)
	1,750,000	Accuride Corp.¹		25,842,449		24,307,500
	450,000	Wabtec Corp.		13,589,577		30,523,500

				39,432,026		54,831,000

		Diversified Support Services (1.33%)
	2,000,000	Ritchie Bros. Auctioneers, Inc.²		37,985,919		56,300,000

		Electrical Components & Equipment (1.36%)
	1,000,000	Polypore International, Inc.¹		34,229,960		57,580,000

		Environmental & Facilities Services (5.41%)
	850,000	Clean Harbors, Inc.¹		44,961,979		83,861,000
	2,000,000	Covanta Holding Corp.		29,064,108		34,160,000
	1,000,000	Tetra Tech, Inc.¹		25,773,708		24,690,000
	3,000,000	Waste Connections, Inc.		54,338,355		86,370,000

				154,138,150		229,081,000

		Human Resource & Employment Services (0.98%)
	750,000	Towers Watson & Co., Cl A		29,383,852		41,595,000

		Industrial Machinery (2.95%)
	1,100,000	Graco, Inc.		25,662,211		50,039,000
	650,000	Nordson Corp.		42,812,852		74,789,000

				68,475,063		124,828,000

		Railroads (1.24%)
	900,000	Genesee & Wyoming, Inc., Cl A¹		23,192,198		52,380,000

		Research & Consulting Services (1.53%)
	1,250,000	Huron Consulting Group, Inc.^1,4		40,540,236		34,612,500
	1,750,000	Mistras Group, Inc.^1,4		20,709,995		30,117,500

				61,250,231		64,730,000

	Total Industrials			521,726,786		837,293,342


	Information Technology (15.11%)
		Application Software (3.33%)
	1,200,000	Advent Software, Inc.¹		16,654,197		34,404,000
	2,000,000	RealPage, Inc.¹		39,823,030		55,460,000
	282,100	Synchronoss Technologies, Inc.¹		9,489,553		9,802,975
	700,000	Ultimate Software Group, Inc.¹		17,611,028		41,125,000

				83,577,808		140,791,975


Shares			Cost		Value
	Common Stocks (continued)
	Information Technology (continued)
		Data Processing & Outsourced Services (0.83%)
	1,000,000	FleetCor Technologies, Inc.¹	$	25,103,188	$	32,660,000
	50,000	Wright Express Corp.¹		2,239,329		2,592,000

				27,342,517		35,252,000
		Electronic Components (0.75%)
	701,000	Rogers Corp.¹		30,677,256		31,587,060

		Electronic Equipment & Instruments (2.39%)
	1,500,000	FLIR Systems, Inc.		10,094,186		51,915,000
	1,500,000	National Instruments Corp.		29,401,075		49,155,000

				39,495,261		101,070,000

		Electronic Manufacturing Services (0.60%)
	1,200,000	Mercury Computer Systems, Inc.¹		21,896,957		25,392,000

		Internet Software & Services (0.46%)
	1,000,000	AOL, Inc.¹		23,050,041		19,530,000

		IT Consulting & Other Services (4.96%)
	875,000	Equinix, Inc.^1,5		55,025,037		79,712,500
	2,250,000	Gartner, Inc.¹		41,942,702		93,757,500
	1,250,000	Telvent GIT SA (Spain)^1,2		40,609,861		36,387,500

				137,577,600		209,857,500

		Semiconductor Equipment (0.49%)
	750,000	Rubicon Technology, Inc.^1,6		9,965,838		20,760,000

		Semiconductors (0.72%)
	800,000	Power Integrations, Inc.		29,237,460		30,664,000

		Technology Distributors (0.58%)
	350,000	Anixter International, Inc.¹		16,167,504		24,461,500

	Total Information Technology			418,988,242		639,366,035


	Materials (4.31%)
		Construction Materials (0.43%)
	600,000	Eagle Materials, Inc.		10,395,269		18,156,000

		Diversified Metals & Mining (1.88%)
	3,500,000	Globe Specialty Metals, Inc.		36,717,668		79,660,000

		Specialty Chemicals (2.00%)
	1,500,000	Kraton Performance Polymers, Inc.¹		41,079,391		57,375,000
	1,000,000	Nalco Holding Co.		17,014,844		27,310,000

				58,094,235		84,685,000

	Total Materials			105,207,172		182,501,000


	Telecommunication Services (3.80%)
		Wireless Telecommunication Services (3.80%)
	1,000,000	American Tower Corp., Cl A¹		3,440,020		51,820,000
	2,750,000	SBA Communications Corp., Cl A¹		26,849,041		109,120,000

	Total Telecommunication Services			30,289,061		160,940,000


	Utilities (0.37%)

		Electric Utilities (0.37%)
	225,000	ITC Holdings Corp.		9,427,959		15,727,500

	Total Common Stocks			2,537,638,611		4,067,163,560


18		See Notes to Financial Statements.


March 31, 2011		Baron Small Cap Fund

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares		Cost		Value
Private Equity Investments (0.17%)
Consumer Discretionary (0.17%)
	Hotels, Resorts & Cruise Lines (0.17%)
3,500,000	Kerzner International Holdings, Ltd., Cl A^1,2,3,5,9	$	35,000,000	$	7,000,000

Warrants (0.01%)

Financials (0.01%)
	Regional Banks (0.01%)
75,000	SJB Escrow Corp.^1,5,8		0		489,188


Principal Amount
Short Term Investments (3.81%)
$147,367,970	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $147,368,011; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $17,154,113 and U.S. Treasury Note, 2.625% due 11/15/2020; Market value - $137,582,550)⁸		147,367,970		147,367,970
14,000,000	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $14,000,004; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $14,703,525)^7,8		14,000,000		14,000,000

Total Short Term Investments			161,367,970		161,367,970

Total Investments (100.08%)		$	2,734,006,581		4,236,020,718

Liabilities Less Cash and Other Assets (-0.08%)					(3,577,872	)

Net Assets				$	4,232,442,846

Retail Shares (Equivalent to $26.17 per share based on 140,785,444 shares outstanding)				$	3,685,012,145

Institutional Shares (Equivalent to $26.29 per share based on 20,821,059 shares outstanding)				$	547,430,701

%	Represents percentage of net assets.

¹	Non-income producing securities.

²	Foreign corporation.

³	At March 31, 2011, the market value of restricted and fair valued securities amounted to $38,393,342 or 0.91% of net assets. None of these securities are deemed liquid. See Note 6 regarding Restricted Securities.

⁴	See Note 9 regarding “Affiliated” companies.

⁵	The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

⁶	All or a portion of this security is on loan. The value of all securities loaned at March 31, 2011 amounted to $13,840,000, which is 0.33% of net assets. See Note 2d regarding Securities Lending.

⁷	Represents security purchased with the cash collateral received for security on loan.

⁸	Level 2 security. See Note 7 regarding Fair Value Measurements.

⁹	Level 3 security. See Note 7 regarding Fair Value Measurements.

^144A


See Notes to Financial Statements.		19


Baron Opportunity Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (96.00%)
	Consumer Discretionary (15.56%)
		Advertising (3.24%)
	175,500	Lamar Advertising Co., Cl A¹	$	5,581,388	$	6,482,970
	198,500	National CineMedia, Inc.		3,524,779		3,705,995

				9,106,167		10,188,965

		Auto Parts & Equipment (1.02%)
	105,500	Gentex Corp.		3,032,498		3,191,375

		Automotive Retail (1.01%)
	98,500	CarMax, Inc.¹		2,467,463		3,161,850

		Broadcasting (1.97%)
	175,500	Discovery Communications, Inc., Series C¹		6,514,899		6,179,355

		Casinos & Gaming (0.99%)
	88,000	WMS Industries, Inc.¹		3,353,035		3,110,800

		Internet Retail (5.39%)
	29,500	Amazon.com, Inc.¹		3,048,952		5,313,835
	85,100	Blue Nile, Inc.¹		3,704,608		4,594,549
	11,000	priceline.com, Inc.¹		2,142,513		5,570,840
	425,000	Vitacost.com, Inc.^1,3,5		4,243,836		1,453,500

				13,139,909		16,932,724

		Movies & Entertainment (1.94%)
	82,500	Liberty Media Corp.¹		3,979,823		6,077,775

	Total Consumer Discretionary			41,593,794		48,842,844


	Energy (6.69%)
		Oil & Gas Equipment & Services (4.90%)
	64,000	CARBO Ceramics, Inc.		4,387,341		9,031,680
	350,000	RigNet, Inc.¹		4,200,000		6,363,000

				8,587,341		15,394,680

		Oil & Gas Exploration & Production (1.79%)
	177,500	Oasis Petroleum, Inc.¹		2,650,115		5,612,550

	Total Energy			11,237,456		21,007,230


	Financials (8.01%)
		Asset Management & Custody Banks (1.05%)
	120,000	Financial Engines, Inc.¹		1,567,980		3,307,200

		Consumer Finance (1.97%)
	64,746	Green Dot Corp., Cl A¹		3,218,476		2,778,251
	323,000	NetSpend Holdings, Inc.¹		3,885,645		3,397,960

				7,104,121		6,176,211

		Diversified Real Estate Activities (1.01%)
	98,000	Brookfield Asset Management, Inc., Cl A²		2,806,491		3,181,080

		Investment Banking & Brokerage (1.41%)
	245,000	Charles Schwab Corp.		3,614,887		4,417,350

		Specialized Finance (2.57%)
	219,100	MSCI, Inc., Cl A¹		5,788,659		8,067,262

	Total Financials			20,882,138		25,149,103


	Health Care (9.96%)
		Health Care Equipment (3.92%)
	13,500	Intuitive Surgical, Inc.¹		3,532,053		4,501,710
	235,500	Masimo Corp.		6,173,492		7,795,050

				9,705,545		12,296,760

		Health Care Services (1.16%)
	44,500	HMS Holdings Corp.¹		2,315,560		3,642,325

		Health Care Supplies (0.84%)
	40,000	Gen-Probe, Inc.^1,4		1,985,224		2,654,000

		Health Care Technology (2.04%)
	305,000	Allscripts Healthcare Solutions, Inc.¹		5,273,019		6,401,950


Shares			Cost		Value
	Common Stocks (continued)
	Health Care (continued)
		Life Sciences Tools & Services (2.00%)
	44,000	Illumina, Inc.¹	$	1,758,168	$	3,083,080
	169,610	Luminex Corp.¹		2,841,892		3,181,884

				4,600,060		6,264,964

	Total Health Care			23,879,408		31,259,999

	Industrials (7.52%)
		Electrical Components & Equipment (2.52%)
	137,500	Polypore International, Inc.¹		4,462,895		7,917,250

		Environmental & Facilities Services (1.87%)
	237,500	Tetra Tech, Inc.¹		5,380,115		5,863,875

		Research & Consulting Services (3.13%)
	92,886	CoStar Group, Inc.¹		3,485,390		5,822,094
	45,000	IHS, Inc., Cl A¹		1,812,898		3,993,750

				5,298,288		9,815,844

	Total Industrials			15,141,298		23,596,969

	Information Technology (39.76%)
		Application Software (14.04%)
	144,010	ANSYS, Inc.¹		4,813,005		7,803,902
	57,000	BroadSoft, Inc.¹		1,254,000		2,718,330
	50,000	Citrix Systems, Inc.¹		1,673,926		3,673,000
	44,000	FactSet Research Systems, Inc.		2,649,117		4,608,120
	66,000	Informatica Corp.¹		1,633,852		3,447,180
	167,265	Pegasystems, Inc.		4,853,502		6,346,034
	256,610	RealPage, Inc.¹		5,491,014		7,115,796
	15,000	Salesforce.com, Inc.¹		1,800,868		2,003,700
	82,000	SuccessFactors, Inc.¹		1,685,328		3,205,380
	90,655	Synchronoss Technologies, Inc.¹		3,050,435		3,150,261

				28,905,047		44,071,703

		Communications Equipment (4.36%)
	150,500	Polycom, Inc.¹		6,205,799		7,803,425
	66,000	QUALCOMM, Inc.		2,472,314		3,618,780
	60,500	Riverbed Technology, Inc.¹		808,999		2,277,825

				9,487,112		13,700,030

		Computer Hardware (2.83%)
	25,500	Apple, Inc.¹		2,547,251		8,885,475

		Home Entertainment Software (1.24%)
	355,000	Activision Blizzard, Inc.		3,211,032		3,894,350

		Internet Software & Services (7.21%)
	270,500	AOL, Inc.¹		6,375,549		5,282,865
	8,150	Google, Inc., Cl A¹		4,829,491		4,777,612
	140,000	LivePerson, Inc.¹		1,483,223		1,769,600
	570,241	TechTarget, Inc.¹		2,559,167		5,080,847
	107,500	WebMD Health Corp., Cl A¹		3,503,624		5,742,650

				18,751,054		22,653,574

		IT Consulting & Other Services (7.63%)
	126,500	Equinix, Inc.^1,4		6,861,352		11,524,150
	298,144	Gartner, Inc.¹		6,163,336		12,423,660

				13,024,688		23,947,810

		Systems Software (2.45%)
	235,000	TOTVS SA (Brazil)²		2,170,536		4,512,449
	39,000	VMware, Inc., Cl A¹		3,134,264		3,180,060

				5,304,800		7,692,509

	Total Information Technology			81,230,984		124,845,451


20		See Notes to Financial Statements.


March 31, 2011		Baron Opportunity Fund

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Shares		Cost		Value
Common Stocks (continued)
Materials (1.43%)
	Diversified Metals & Mining (1.43%)
75,000	Molycorp, Inc.¹	$	3,750,000	$	4,501,500


Telecommunication Services (7.07%)
	Wireless Telecommunication Services (7.07%)
264,000	NII Holdings, Inc.¹		11,749,585		11,000,880
282,000	SBA Communications Corp., Cl A¹		6,401,980		11,189,760

Total Telecommunication Services			18,151,565		22,190,640

Total Common Stocks			215,866,643		301,393,736


Principal Amount
Short Term Investments (4.00%)
$ 12,555,053	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $12,555,056; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $13,182,825)⁵		12,555,053		12,555,053

Total Investments (100.00%)		$	228,421,696		313,948,789

Cash And Other Assets Less Liabilities (0.00%)					12,187

Net Assets				$	313,960,976

Retail Shares (Equivalent to $15.47 per share based on 17,123,203 shares outstanding)				$	264,969,989

Institutional Shares (Equivalent to $15.55 per share based on 3,150,622 shares outstanding)				$	48,990,987

%	Represents percentage of net assets.

¹	Non-income producing securities.

²	Foreign corporation.

³	At March 31, 2011, the market value of restricted and fair valued securities amounted to $1,453,500 or 0.46% of net assets. None of these securities are deemed liquid. See Note 6 regarding Restricted Securities.

⁴	The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

⁵	Level 2 security. See Note 7 regarding Fair Value Measurements.


See Notes to Financial Statements.		21


Baron Fifth Avenue Growth Fund		March 31, 2011

STATEMENT OF NET ASSETS (UNAUDITED)

MARCH 31, 2011


Shares			Cost		Value
	Common Stocks (99.24%)
	Consumer Discretionary (30.01%)
		Auto Parts & Equipment (1.67%)
	8,300	BorgWarner, Inc.¹	$	507,407	$	661,427

		Automobile Manufacturers (3.29%)
	87,500	Ford Motor Co.¹		1,142,158		1,304,625

		Broadcasting (1.54%)
	15,300	Discovery Communications, Inc., Cl A¹		483,843		610,470

		Casinos & Gaming (2.08%)
	6,500	Wynn Resorts, Ltd.		790,105		827,125

		General Merchandise Stores (0.75%)
	6,000	Target Corp.		223,394		300,060

		Home Improvement Retail (2.10%)
	22,500	Home Depot, Inc.		688,825		833,850

		Hotels, Resorts & Cruise Lines (8.36%)
	30,000	Carnival Corp.²		1,137,266		1,150,800
	18,100	Hyatt Hotels Corp., Cl A¹		480,441		779,024
	13,500	Starwood Hotels & Resorts Worldwide, Inc.		809,302		784,620
	19,000	Wyndham Worldwide Corp.		577,123		604,390

				3,004,132		3,318,834

		Household Appliances (2.01%)
	10,400	Stanley Black & Decker, Inc.		790,951		796,640

		Internet Retail (2.68%)
	5,900	Amazon.com, Inc.¹		558,005		1,062,767

		Movies & Entertainment (4.52%)
	17,400	Liberty Media Corp.¹		789,329		1,281,858
	11,000	Viacom, Inc.		374,518		511,720

				1,163,847		1,793,578

		Restaurants (1.01%)
	5,300	McDonald’s Corp.		302,639		403,277

	Total Consumer Discretionary			9,655,306		11,912,653


	Consumer Staples (1.05%)
		Hypermarkets & Super Centers (1.05%)
	5,700	Costco Wholesale Corp.		259,220		417,924


	Energy (10.03%)
		Integrated Oil & Gas (3.58%)
	13,600	Occidental Petroleum Corp.		1,062,802		1,421,064

		Oil & Gas Equipment & Services (3.64%)
	29,000	Halliburton Co.		946,210		1,445,360

		Oil & Gas Exploration & Production (2.81%)
	8,500	Apache Corp.		1,029,744		1,112,820

	Total Energy			3,038,756		3,979,244


	Financials (10.67%)
		Consumer Finance (1.59%)
	14,000	American Express Co.		246,807		632,800

		Diversified Banks (2.48%)
	31,000	Wells Fargo & Company		829,979		982,700

		Diversified Real Estate Activities (2.04%)
	25,000	Brookfield Asset Management, Inc., Cl A²		794,158		811,500

		Investment Banking & Brokerage (1.00%)
	2,500	Goldman Sachs Group, Inc.		317,499		396,175

		Other Diversified Financial Services (2.61%)
	22,500	JPMorgan Chase & Co.		723,333		1,037,250

		Property & Casualty Insurance (0.95%)
	3	Berkshire Hathaway, Inc., Cl A¹		224,597		375,900

	Total Financials			3,136,373		4,236,325


Shares			Cost		Value
	Common Stocks (continued)
	Health Care (7.60%)
		Health Care Distributors (1.99%)
	10,000	McKesson Corp.	$	690,377	$	790,500

		Health Care Equipment (3.28%)
	3,900	Intuitive Surgical, Inc.¹		1,027,675		1,300,494

		Health Care Services (1.54%)
	11,000	Express Scripts, Inc.¹		496,455		611,710

		Life Sciences Tools & Services (0.79%)
	6,000	Life Technologies Corp.¹		297,181		314,520

	Total Health Care			2,511,688		3,017,224


	Industrials (17.95%)
		Air Freight & Logistics (3.30%)
	14,000	FedEx Corp.		1,123,413		1,309,700

		Environmental & Facilities Services (1.59%)
	21,000	Republic Services, Inc.		377,505		630,840

		Industrial Conglomerates (4.28%)
	10,500	3M Co.		868,665		981,750
	16,000	Tyco International, Ltd.²		729,967		716,320

				1,598,632		1,698,070

		Industrial Machinery (2.62%)
	20,000	Danaher Corp.		1,015,533		1,038,000

		Railroads (1.92%)
	14,000	Kansas City Southern¹		746,562		762,300

		Research & Consulting Services (1.51%)
	22,000	Nielsen Holdings NV^1,2		540,224		600,820

		Trading Companies & Distributors (2.73%)
	16,700	Fastenal Co.		618,899		1,082,661

	Total Industrials			6,020,768		7,122,391


	Information Technology (13.02%)
		Application Software (2.64%)
	8,500	ANSYS, Inc.¹		467,096		460,615
	8,000	Citrix Systems, Inc.¹		317,016		587,680

				784,112		1,048,295

		Communications Equipment (1.83%)
	14,000	Polycom, Inc.¹		575,861		725,900

		Computer Hardware (3.51%)
	4,000	Apple, Inc.¹		159,843		1,393,800

		Internet Software & Services (2.51%)
	1,700	Google, Inc., Cl A¹		446,222		996,557

		IT Consulting & Other Services (2.53%)
	11,000	Equinix, Inc.^1,3		805,487		1,002,100

	Total Information Technology			2,771,525		5,166,652


	Materials (3.42%)
		Fertilizers & Agricultural Chemicals (3.42%)
	23,000	Potash Corp. of Saskatchewan, Inc.²		1,324,696		1,355,390


	Telecommunication Services (5.49%)
		Wireless Telecommunication Services (5.49%)
	22,700	American Tower Corp., Cl A¹		385,492		1,176,314
	24,100	NII Holdings, Inc.¹		729,381		1,004,247

	Total Telecommunication Services			1,114,873		2,180,561

	Total Common Stocks			29,833,205		39,388,364


22		See Notes to Financial Statements.


March 31, 2011		Baron Fifth Avenue Growth Fund

STATEMENT OF NET ASSETS (UNAUDITED) (Continued)

MARCH 31, 2011


Principal Amount		Cost		Value
Short Term Investments (1.03%)
$ 409,150	Repurchase Agreement with Fixed Income Clearing Corp., dated 03/31/2011, 0.01% due 04/01/2011; Proceeds at maturity - $409,150; (Fully collateralized by U.S. Treasury Note, 3.50% due 05/15/2020; Market value - $431,550)⁴	$	409,150	$	409,150

Total Investments (100.27%)		$	30,242,355		39,797,514

Liabilities Less Cash and Other Assets (-0.27%)					(106,477	)

Net Assets				$	39,691,037

Retail Shares (Equivalent to $10.41 per share based on 2,680,731 shares outstanding)				$	27,917,808

Institutional Shares (Equivalent to $10.43 per share based on 1,128,842 shares outstanding)				$	11,773,229

%	Represents percentage of net assets.

¹	Non-income producing securities.

²	Foreign corporation.

³	The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

⁴	Level 2 security. See Note 7 regarding Fair Value Measurements.


See Notes to Financial Statements.		23


Baron Funds		March 31, 2011

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

MARCH 31, 2011


	Baron Asset Fund			Baron Growth Fund			Baron Small Cap Fund			Baron Opportunity Fund			Baron Fifth Avenue Growth Fund
Assets:
Investments in securities, at cost
Unaffiliated investments	$	1,627,190,836		$	3,452,425,000		$	2,406,368,905		$	228,421,696		$	30,242,355
“Affiliated” investments		—			336,028,209			327,637,676			—			—
Foreign currency, at cost		—			—			—			1,071,929			—

Investments in securities, at value
Unaffiliated investments	$	2,960,978,544		$	6,126,309,743		$	3,946,409,868		$	313,948,789		$	39,797,514
“Affiliated” investments		—			749,990,500			289,610,850			—			—
Foreign currency, at value		—			—			—			1,094,963			—
Cash		—			—			497,696			—			—
Receivable for securities sold		29,357,588			38,644,832			13,674,468			—			364,425
Receivable for shares sold		1,585,444			8,465,790			6,973,919			619,189			50
Dividends and interest receivable		1,258,597			3,051,342			2,581,797			118,705			16,978
Prepaid expenses		44,044			97,566			59,408			4,448			605

		2,993,224,217			6,926,559,773			4,259,808,006			315,786,094			40,179,572

Liabilities:
Payable for securities purchased		13,104,274			12,880,439			7,885,949			1,696,759			247,258
Payable for shares redeemed		7,262,654			12,899,643			5,306,485			78,337			189,721
Payable for collateral on loaned securities		—			—			14,000,000			—			—
Distribution fees payable (Note 4)		964			212			271			995			74
Investment advisory fees payable (Note 4)		329			945			102			399			615
Accrued expenses and other payables		204,336			243,915			172,353			48,628			50,867

		20,572,557			26,025,154			27,365,160			1,825,118			488,535

Net Assets	$	2,972,651,660		$	6,900,534,619		$	4,232,442,846		$	313,960,976		$	39,691,037

Net Assets consist of:
Paid-in capital	$	1,520,783,581		$	4,153,215,187		$	2,781,665,891		$	244,870,955		$	35,106,263
Accumulated net investment loss		(886,163	)		(11,800,163	)		(8,118,431	)		(1,430,606	)		(86,045	)
Accumulated net realized gain (loss) on investments and foreign currency transactions		118,877,680			(328,747,546	)		(43,118,751	)		(15,030,570	)		(4,884,340	)
Net unrealized appreciation of investments and foreign currency translations		1,333,876,562			3,087,867,141			1,502,014,137			85,551,197			9,555,159

Net Assets	$	2,972,651,660		$	6,900,534,619		$	4,232,442,846		$	313,960,976		$	39,691,037

Retail Shares:
Net Assets	$	2,629,692,538		$	5,596,701,625		$	3,685,012,145		$	264,969,989		$	27,917,808

Shares Outstanding ($0.01 par value; indefinite shares authorized)		44,491,071			99,891,741			140,785,444			17,123,203			2,680,731

Net Asset Value Per Share	$	59.11		$	56.03		$	26.17		$	15.47		$	10.41

Institutional Shares:
Net Assets	$	342,959,122		$	1,303,832,994		$	547,430,701		$	48,990,987		$	11,773,229

Shares Outstanding ($0.01 par value; indefinite shares authorized)		5,775,270			23,162,844			20,821,059			3,150,622			1,128,842

Net Asset Value Per Share	$	59.38		$	56.29		$	26.29		$	15.55		$	10.43


24		See Notes to Financial Statements.


March 31, 2011		Baron Funds

STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS ENDED MARCH 31, 2011


	Baron Asset Fund			Baron Growth Fund			Baron Small Cap Fund			Baron Opportunity Fund			Baron Fifth Avenue Growth Fund
Investment income:
Income:
Dividends — unaffiliated investments	$	17,874,382		$	28,396,938		$	13,233,290		$	541,667		$	158,200
Dividends — “affiliated” investments		—			2,895,000			1,174,855			—			—
Interest		2,641			11,473			13,038			1,345			85
Securities lending income		—			—			1,627,226			—			—
Foreign taxes withheld on dividends		(69,285	)		(238,226	)		(90,900	)		(9,881	)		(759	)

Total income		17,807,738			31,065,185			15,957,509			533,131			157,526

Expenses:
Investment advisory fees (Note 4)		14,371,170			31,053,553			18,763,409			1,404,301			178,486
Distribution fees — Retail Shares (Note 4)		3,221,433			6,483,284			4,198,926			303,783			35,337
Shareholder servicing agent fees and expenses — Retail Shares		370,165			543,725			279,100			69,335			16,655
Shareholder servicing agent fees and expenses — Institutional Shares		13,353			31,690			18,805			5,713			4,758
Reports to shareholders		461,250			921,000			461,000			69,600			4,800
Custodian fees		67,526			255,685			114,615			18,463			12,928
Registration and filing fees		66,040			127,280			88,400			31,300			19,102
Professional fees		37,660			46,040			44,355			20,245			15,467
Trustee fees and expenses		29,705			66,610			39,225			2,785			301
Insurance expense		27,480			55,770			31,675			2,056			370
Line of credit fees		13,445			28,938			21,645			2,156			74
Administration fees		13,211			13,229			13,239			13,242			13,239
Miscellaneous expenses		1,324			660			1,313			1,295			474

Total operating expenses		18,693,762			39,627,464			24,075,707			1,944,274			301,991
Reimbursement of expenses by Adviser — Retail Shares (Note 4)		—			—			—			—			(42,901	)
Reimbursement of expenses by Adviser — Institutional Shares (Note 4)		—			—			—			—			(15,519	)

Net expenses		18,693,762			39,627,464			24,075,707			1,944,274			243,571

Net investment loss		(886,024	)		(8,562,279	)		(8,118,198	)		(1,411,143	)		(86,045	)

Realized and unrealized gain (loss) on investments:
Net realized gain on investments sold — unaffiliated investments		139,658,931			315,693,922			196,079,455			18,263,795			1,942,565
Net realized gain (loss) on investments sold — “affiliated” investments		—			4,944,098			(7,093,396	)		—			—
Net realized gain (loss) on foreign currency transactions		(238,564	)		(336,119	)		46,888			(30,087	)		—
Net change in unrealized appreciation (depreciation) of:
Investments		420,573,200			1,136,585,346			659,053,027			37,213,290			3,028,508
Foreign currency translations		89,498			54,117			—			27,305			—

Net gain on investments		560,083,065			1,456,941,364			848,085,974			55,474,303			4,971,073

Net increase in net assets resulting from operations	$	559,197,041		$	1,448,379,085		$	839,967,776		$	54,063,160		$	4,885,028


See Notes to Financial Statements.		25


Baron Funds		March 31, 2011

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)


	Baron Asset Fund						Baron Growth Fund						Baron Small Cap Fund
	For the Six Months Ended March 31, 2011			For the Year Ended September 30, 2010			For the Six Months Ended March 31, 2011			For the Year Ended September 30, 2010			For the Six Months Ended March 31, 2011			For the Year Ended September 30, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment loss	$	(886,024	)	$	(16,233,373	)	$	(8,562,279	)	$	(42,659,922	)	$	(8,118,198	)	$	(9,032,335	)
Net realized gain		139,420,367			136,058,815			320,301,901			304,297,845			189,032,947			64,475,450
Net change in unrealized appreciation		420,662,698			210,617,413			1,136,639,463			444,421,437			659,053,027			404,476,969

Increase in net assets resulting from operations		559,197,041			330,442,855			1,448,379,085			706,059,360			839,967,776			459,920,084

Distributions to shareholders from:
Net investment income — Retail Shares		—			—			—			—			—			—
Net investment income — Institutional Shares		—			—			—			—			—			—
Net realized gain on investments — Retail Shares		(36,608,080	)		—			—			—			—			—
Net realized gain on investments — Institutional Shares		(4,102,537	)		—			—			—			—			—

Decrease in net assets from distributions to shareholders		(40,710,617	)		—			—			—			—			—

Capital share transactions:
Proceeds from the sale of shares — Retail Shares		117,693,722			224,265,797			452,186,929			746,354,955			425,437,626			679,023,936
Proceeds from the sale of shares — Institutional Shares		73,713,736			168,923,207			418,423,710			563,438,929			245,738,054			189,233,455
Net asset value of shares issued in reinvestment of distributions — Retail Shares		35,501,226			—			—			—			—			—
Net asset value of shares issued in reinvestment of distributions — Institutional Shares		3,978,079			—			—			—			—			—
Cost of shares redeemed — Retail Shares		(412,980,531	)		(761,692,547	)		(907,668,266	)		(1,585,246,632	)		(525,904,859	)		(799,844,198	)
Cost of shares redeemed — Institutional Shares		(30,739,819	)		(29,831,857	)		(82,462,373	)		(132,155,594	)		(45,861,294	)		(44,072,065	)

Increase (decrease) in net assets derived from capital share transactions		(212,833,587	)		(398,335,400	)		(119,520,000	)		(407,608,342	)		99,409,527			24,341,128

Increase (decrease) in net assets		305,652,837			(67,892,545	)		1,328,859,085			298,451,018			939,377,303			484,261,212

Net Assets:
Beginning of period		2,666,998,823			2,734,891,368			5,571,675,534			5,273,224,516			3,293,065,543			2,808,804,331

End of period	$	2,972,651,660		$	2,666,998,823		$	6,900,534,619		$	5,571,675,534		$	4,232,442,846		$	3,293,065,543

Accumulated net investment loss at end of period	$	(886,163	)	$	(139	)	$	(11,800,163	)	$	(3,237,884	)	$	(8,118,431	)	$	(233	)

Capital share transactions — Retail Shares
Shares sold		2,133,972			4,780,268			8,905,733			17,750,705			17,881,934			34,762,177
Shares issued in reinvestment of distributions		647,714			—			—			—			—			—
Shares redeemed		(7,494,843	)		(16,383,474	)		(18,162,699	)		(37,689,809	)		(22,158,722	)		(41,102,342	)

Net decrease		(4,713,157	)		(11,603,206	)		(9,256,966	)		(19,939,104	)		(4,276,788	)		(6,340,165	)

Capital share transactions — Institutional Shares
Shares sold		1,345,544			3,667,754			8,379,412			13,377,072			10,273,986			9,732,391
Shares issued in reinvestment of distributions		72,289			—			—			—			—			—
Shares redeemed		(554,240	)		(640,409	)		(1,589,695	)		(3,120,094	)		(1,903,286	)		(2,254,943	)

Net increase		863,593			3,027,345			6,789,717			10,256,978			8,370,700			7,477,448


26		See Notes to Financial Statements.


March 31, 2011		Baron Funds

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (Continued)


	Baron Opportunity Fund						Baron Fifth Avenue Growth Fund
	For the Six Months Ended March 31, 2011			For the Year Ended September 30, 2010			For the Six Months Ended March 31, 2011			For the Year Ended September 30, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment loss	$	(1,411,143	)	$	(1,993,908	)	$	(86,045	)	$	(111,553	)
Net realized gain		18,233,708			22,385,513			1,942,565			1,433,374
Net change in unrealized appreciation		37,240,595			14,971,347			3,028,508			1,583,629

Increase in net assets resulting from operations		54,063,160			35,362,952			4,885,028			2,905,450

Distributions to shareholders from:
Net investment income — Retail Shares		—			—			—			(80,564	)
Net investment income — Institutional Shares		—			—			—			(56,411	)
Net realized gain on investments — Retail Shares		—			—			—			—
Net realized gain on investments — Institutional Shares		—			—			—			—

Decrease in net assets from distributions to shareholders		—			—			—			(136,975	)

Capital share transactions:
Proceeds from the sale of shares — Retail Shares		43,080,428			78,995,110			1,083,324			4,189,500
Proceeds from the sale of shares — Institutional Shares		17,463,789			12,959,240			256,786			200,163
Net asset value of shares issued in reinvestment of distributions — Retail Shares		—			—			—			78,269
Net asset value of shares issued in reinvestment of distributions — Institutional Shares		—			—			—			56,029
Cost of shares redeemed — Retail Shares		(39,439,219	)		(39,337,833	)		(5,602,855	)		(10,183,753	)
Cost of shares redeemed — Institutional Shares		(1,183,597	)		(1,642,355	)		(299,679	)		(62,551	)

Increase (decrease) in net assets derived from capital share transactions		19,921,401			50,974,162			(4,562,424	)		(5,722,343	)
Redemption fees		—			16,915			—			—

Increase (decrease) in net assets		73,984,561			86,354,029			322,604			(2,953,868	)

Net Assets:
Beginning of period		239,976,415			153,622,386			39,368,433			42,322,301

End of period	$	313,960,976		$	239,976,415		$	39,691,037		$	39,368,433

Accumulated net investment loss at end of period	$	(1,430,606	)	$	(19,463	)	$	(86,045	)	$	—

Capital share transactions — Retail Shares
Shares sold		3,036,600			6,745,648			107,419			469,269
Shares issued in reinvestment of distributions		—			—			—			9,017
Shares redeemed		(2,723,179	)		(3,379,698	)		(570,482	)		(1,146,786	)

Net increase (decrease)		313,421			3,365,950			(463,063	)		(668,500	)

Capital share transactions — Institutional Shares
Shares sold		1,234,932			1,109,542			26,748			22,877
Shares issued in reinvestment of distributions		—			—			—			6,463
Shares redeemed		(79,518	)		(142,959	)		(29,170	)		(6,922	)

Net increase (decrease)		1,155,414			966,583			(2,422	)		22,418


See Notes to Financial Statements.		27


Baron Funds		March 31, 2011

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION

Baron Investment Funds Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company established as a Massachusetts business trust on February 19, 1987. The Trust currently offers five series (individually a “Fund” and collectively the “Funds”): Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund and Baron Fifth Avenue Growth Fund.

Each Fund offers two classes of shares, Retail Shares and Institutional Shares, which differ only in their ongoing fees, expenses and eligibility requirements. Retail Shares are offered to all investors. Institutional Shares are for investments in the amount of $1 million or more per Fund. Institutional Shares are intended for certain financial intermediaries that offer shares of Baron Funds through fee based platforms, retirement platforms or other platforms. Each class of shares has equal rights to earnings and assets except that each class bears different expenses for distribution and shareholder servicing. Investment income, realized and unrealized gains or losses on investments and foreign currency, and expenses other than those attributable to a specific class are allocated to each class based on its relative net assets. Each class of shares has exclusive voting rights with respect to matters that affect just that class.

The investment objectives of the Funds are as follows:

Baron Asset Fund seeks capital appreciation through long-term investments primarily in securities of medium-sized companies with undervalued assets or favorable growth prospects.

Baron Growth Fund seeks capital appreciation through long-term investments primarily in securities of small-sized growth companies.

Baron Small Cap Fund seeks capital appreciation through investments primarily in securities of small-sized growth companies.

Baron Opportunity Fund seeks capital appreciation through investments primarily in growth companies that benefit from technology advances.

Baron Fifth Avenue Growth Fund seeks capital appreciation through investments primarily in securities of large-sized growth companies.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP 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. Events occurring subsequent to the date of the Statements of Assets and Liabilities and through the date of the issuance of the financial statements have been evaluated for adjustment to or disclosure in the financial statements.

a) Security Valuation. The Funds’ share prices or net asset values are calculated as of the close of regular session trading (usually 4 p.m. E.T.) on the New York Stock Exchange (“NYSE”) on any day on which the NYSE is open for trading. 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, or, if in the Adviser’s judgment, they do not accurately reflect the fair value of a security, or an event occurs after the market close but before the Funds are priced that materially affects the value of a security, the securities will be valued by the Adviser using policies and procedures approved by the Board of Trustees (the “Board”). The Adviser has a Fair Valuation Committee (the “Committee”) comprised of senior executives and the Committee reports to the Board every quarter. Factors the Committee considers when valuing a security include whether a current price is stale, there is recent news, the security is thinly traded, transactions are infrequent or quotations are genuine. There can be no guarantee, however, that a fair valuation used by the Funds on any given day will more accurately reflect the market value of an investment than the closing price of such investment in its market. Debt instruments having a remaining maturity greater than sixty days will be valued on the basis of prices obtained from a pricing service approved by the Board or at the mean of the bid and ask prices from the dealer maintaining an active market in that security. Money market instruments held by the Funds with a remaining maturity of sixty days or less are valued at amortized cost, which approximates fair value.

Non-U.S. equity securities are valued on the basis of their most recent closing market prices and translated into U.S. dollars at 4 p.m. E.T., except under the circumstances described below. Most foreign markets close before 4 p.m. E.T. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as fifteen hours old at 4 p.m. E.T. If the Adviser determines that developments between the close of the foreign market and 4 p.m. E.T. will, in its judgment, materially affect the value of some or all of the Funds’ securities, the Adviser will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. E.T. In deciding whether to make these adjustments, the Adviser reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in


March 31, 2011		Baron Funds

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

U.S. markets that represent non-U.S. securities and baskets of non-U.S. securities. The Adviser may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open. The Adviser uses outside pricing services to provide it with closing market prices and information used for adjusting those prices. The Adviser cannot predict how often it will use closing prices or how often it will adjust those prices. As a means of evaluating its fair value process, the Adviser routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. Other mutual funds may adjust the prices of their securities by different amounts.

b) Foreign Currency Translations. Values of assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the price of such currencies at the time the net asset value is determined. Purchases and sales of investments and dividend income are converted at the prevailing rate of exchange on the respective dates of such transactions. Net realized gain (loss) on foreign currency transactions include gain (loss) arising from the fluctuation in the exchange rates between trade and settlement dates on security transactions and currency gain (loss) between the accrual and payment dates on dividends and foreign withholding taxes. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currency transactions.

c) Securities Transactions, Investment Income and Expense Allocation. Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on an identified cost basis for financial reporting and federal income tax purposes. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis which includes the accretion of discounts and amortization of premiums. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. Distributions received from certain investments held by the Funds may be comprised of dividends, realized gains and returns of capital. The Funds originally estimate the expected classification of such payments. The amounts may subsequently be reclassified upon receipt of information from the issuer. The Funds are charged for those expenses of the Trust that are directly attributable to each Fund, such as advisory and custodian fees. Expenses that are not directly attributable to a Fund are typically allocated among the Funds in proportion to their respective net assets.

d) Securities Lending. The Funds may lend securities to certain brokers. Upon such loans, the Funds receive collateral which is maintained by the custodian. The Funds earn interest on such collateral and earn income in the form of negotiated lenders’ fees, both of which are included in securities lending income in the Statements of Operations. Securities loaned are required to be secured at all times by collateral equal to at least 102% of the market value of the securities loaned. Risks may arise upon entering into securities lending to the extent that the value of the collateral is less than the value of the securities loaned due to the changes in the value of collateral or the loaned securities. The Funds may receive collateral in the form of cash or other eligible securities, such as a letter of credit issued by a U.S. bank or securities issued or guaranteed by the U.S. government. Securities purchased with cash collateral are subject to the risks inherent in investing in these securities.

At March 31, 2011, Baron Small Cap Fund had securities on loan with a value of $13,840,000 and held $14,000,000 of short-term investments as collateral for these loans. For the six months ended March 31, 2011, Baron Small Cap Fund had securities lending income of $1,627,226 which is included in the Statements of Operations.

e) Repurchase Agreements. The Funds may invest in repurchase agreements, which are short-term investments whereby the Funds acquire ownership of a debt security and the seller agrees to repurchase the security at a future date at a specified price. When entering into repurchase agreements, it is the Funds’ policy that their custodian or a third party custodian take possession of the underlying collateral securities, the market value of which, at all times, equals at least 105% of the principal amount of the repurchase transaction. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Funds may be delayed or limited.

f) Federal and Foreign Income Taxes. The Trust treats each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually.

The Funds may be subject to foreign taxes on income and gains on investments that are accrued based upon the Funds’ understanding of the tax rules and regulations that exist in the countries in which the Funds invest. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable.

g) Restricted Securities. The Funds may invest in securities which are restricted as to public sale in accordance with the Securities Act of 1933. Such assets are valued by the Adviser pursuant to policies and procedures approved by the Board.


Baron Funds		March 31, 2011

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

h) Distributions to Shareholders. Income and capital gain distributions to shareholders are determined in accordance with income tax regulations which may differ from GAAP. These differences are primarily due to differing treatments for net investment loss, foreign currency gains and losses, partnership basis adjustments and wash sale losses deferred.

i) Commitments and Contingencies. In the normal course of business, the Funds may enter into contracts and agreements that contain a variety of representations and warranties, which provide general indemnification. The maximum exposure to the Funds under these agreements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.

j) Cash and Cash Equivalents. The Funds consider all short term liquid investments with a maturity of three months or less when purchased to be cash equivalents.

3. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities, other than short term securities, for the six months ended March 31, 2011 were as follows:


Fund	Purchases		Sales
Baron Asset Fund	$	305,186,366	$	558,298,394
Baron Growth Fund		396,731,263		721,319,120
Baron Small Cap Fund		633,461,220		583,754,839
Baron Opportunity Fund		89,943,143		70,429,406
Baron Fifth Avenue Growth Fund		15,107,018		19,186,822

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 Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund and Baron Opportunity Fund equal to 1% per annum of the average daily net assets of the respective Funds. The Adviser receives a fee payable monthly from Baron Fifth Avenue Growth Fund equal to 0.90% per annum for daily net assets under $1 billion, 0.85% per annum for daily net assets greater than $1 billion but less than $2 billion and 0.80% per annum for daily net assets greater than $2 billion. For Baron Opportunity Fund and Baron Fifth Avenue Growth Fund, the Adviser has contractually agreed to reduce its fee, until January 28, 2012, to the extent required to limit the net operating expense ratio (excluding portfolio transaction costs, interest and extraordinary expenses) to 1.50% and 1.30% of average daily net assets of the Retail Shares, and 1.25% and 1.05% of average daily net assets of the Institutional Shares, respectively.

b) Distribution Fees. Baron Capital, Inc. (“BCI”), a wholly owned subsidiary of BCG, is a registered broker-dealer and the distributor of the Retail Shares 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 payable monthly equal to 0.25% per annum of the Retail Shares’ average daily net assets of the respective Funds.

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 in that capacity.

d) Fund Accounting and Administration Fees. The Funds have entered into an agreement with State Street Bank and Trust Company (the “Custodian”) to perform accounting and certain administrative services. The Custodian is compensated for fund accounting services based on a percentage of the Funds’ net assets, subject to certain minimums plus fixed annual fees for the administrative services.

5. LINE OF CREDIT

The Funds participate in a committed line of credit agreement with the Custodian to be used for temporary purposes, primarily for financing redemptions. Each Fund may borrow up to the lesser of $100 million or the maximum amount each Fund may borrow under the 1940 Act, the limitations included in each Fund’s prospectus, or any limit or restriction under any law or regulation to which each Fund is subject or any agreement to which each Fund is a party; provided that the aggregate outstanding principal amount of all loans to any of the Funds may not exceed $100 million. Interest is charged to each Fund, based on its borrowings, at a rate per annum equal to the higher of the Federal Funds Rate or the Overnight Libor Rate plus a margin of 1.00%. A commitment fee of 0.12% per annum is incurred on the unused portion of the line of credit and is allocated to the participating Funds. During the six months ended March 31, 2011, there were no loans outstanding under the line of credit.


March 31, 2011		Baron Funds

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. RESTRICTED SECURITIES

At March 31, 2011, investments in securities included securities that are restricted and/or illiquid. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale and are valued pursuant to the policies and procedures for fair value pricing approved by the Board. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Funds may receive more or less than this valuation in an actual sale and that difference could be material. At March 31, 2011, the Funds held investments in restricted and/or illiquid securities that were valued pursuant to policies and procedures for fair value pricing as follows:


	Baron Asset Fund
Name of Issuer	Acquisition Date		Value
Private Equity Investments
Kerzner International Holdings, Ltd., Cl A		09/27/06	$	10,400,000
Windy City Investments Holdings LLC		11/13/07		25,085,533
Windy City Investments Holdings LLC		01/27/11		1,910,891

Total Restricted Securities:
(Cost $86,581,904) (1.26% of Net Assets)			$	37,396,424

	Baron Growth Fund
Name of Issuer	Acquisition Date		Value
Private Equity Investments
Kerzner International Holdings, Ltd., Cl A		09/27/06	$	14,800,000
Windy City Investments Holdings LLC		11/13/07		8,443,967
Windy City Investments Holdings LLC		01/27/11		643,217

Total Restricted Securities:
(Cost $82,630,998) (0.35% of Net Assets)			$	23,887,184

	Baron Small Cap Fund
Name of Issuer	Acquisition Date		Value
Common Stocks
PAA Natural Gas Storage LP		02/08/11	$	23,441,842
Vitacost.com, Inc.		09/23/09		7,951,500
Private Equity Investments
Kerzner International Holdings, Ltd., Cl A		09/27/06		7,000,000

Total Restricted Securities:
(Cost $80,159,035) (0.91% of Net Assets)			$	38,393,342

	Baron Opportunity Fund
Name of Issuer	Acquisition Date		Value
Common Stocks
Vitacost.com, Inc.		09/23/09	$	1,453,500

Total Restricted Securities:
(Cost $4,243,836) (0.46% of Net Assets)			$	1,453,500


Baron Funds		March 31, 2011

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. FAIR VALUE MEASUREMENTS

Fair value is defined by GAAP as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. GAAP provides a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Funds. Unobservable inputs are inputs that reflect the Funds’ own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.

•

Level 1 — quoted prices in active markets for identical assets or liabilities;

•

Level 2 — prices determined using other significant inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.);

•

Level 3 — prices determined using significant unobservable inputs when quoted prices or observable inputs are unavailable such as when there is little or no market activity for an asset or liability (unobservable inputs reflect each Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, non-U.S. securities, whose markets close hours before the Funds value their holdings, may require revised valuations due to significant movement in the U.S. markets. Since these values are not obtained from quoted prices in an active market such securities are reflected as Level 2.

The following is a summary of the inputs used as of March 31, 2011 in valuing the Funds’ investments carried at fair value:


	Baron Asset Fund
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common Stocks^†	$	2,896,802,034	$	—	$	—	$	2,896,802,034
Private Equity Investments^†		—		—		37,396,424		37,396,424
Short Term Investments		—		26,780,086		—		26,780,086

Total Investments	$	2,896,802,034	$	26,780,086	$	37,396,424	$	2,960,978,544

	Baron Growth Fund
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common Stocks^†	$	6,640,216,127	$	24,750,000	$	—	$	6,664,966,127
Private Equity Investments^†		—		—		23,887,184		23,887,184
Warrants		—		489,187		—		489,187
Short Term Investments		—		186,957,745		—		186,957,745

Total Investments	$	6,640,216,127	$	212,196,932	$	23,887,184	$	6,876,300,243

†	See Statements of Net Assets for additional detailed categorizations.


March 31, 2011		Baron Funds

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)


	Baron Small Cap Fund
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common Stocks^†	$	4,011,020,218	$	56,143,342	$	—	$	4,067,163,560
Private Equity Investments^†		—		—		7,000,000		7,000,000
Warrants		—		489,188		—		489,188
Short Term Investments		—		161,367,970		—		161,367,970

Total Investments	$	4,011,020,218	$	218,000,500	$	7,000,000	$	4,236,020,718

	Baron Opportunity Fund
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common Stocks^†	$	299,940,236	$	1,453,500	$	—	$	301,393,736
Short Term Investments		—		12,555,053		—		12,555,053

Total Investments	$	299,940,236	$	14,008,553	$	—	$	313,948,789

	Baron Fifth Avenue Growth Fund
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common Stocks^†	$	39,388,364	$	—	$	—	$	39,388,364
Short Term Investments		—		409,150		—		409,150

Total Investments	$	39,388,364	$	409,150	$	—	$	39,797,514

†	See Statements of Net Assets for additional detailed categorizations.

The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:


	Baron Asset Fund
Investments in Securities	Balance as of September 30, 2010		Accrued Premiums/ Discounts		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Purchases		Sales		Transfers Into Level 3		Transfers Out of Level 3		Balance as of March 31, 2011		Change in Net Unrealized Appreciation (Depreciation) from Investments still held at March 31, 2011
Private Equity Investments
Consumer Discretionary	$	15,600,000	$	—	$	—	$	(5,200,000	)	$	—	$	—	$	—	$	—	$	10,400,000	$	(5,200,000	)
Financials		21,280,013		—		—		3,095,217			2,621,194		—		—		—		26,996,424		3,095,217

Total	$	36,880,013	$	—	$	—	$	(2,104,783	)		2,621,194	$	—	$	—	$	—	$	37,396,424	$	(2,104,783	)


Baron Funds		March 31, 2011

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)


	Baron Growth Fund
Investments in Securities	Balance as of September 30, 2010		Accrued Premiums/ Discounts		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Purchases		Sales		Transfers Into Level 3		Transfers Out of Level 3		Balance as of March 31, 2011		Change in Net Unrealized Appreciation (Depreciation) from Investments still held at March 31, 2011
Private Equity Investments
Consumer Discretionary	$	22,200,000	$	—	$	—	$	(7,400,000	)	$	—	$	—	$	—	$	—	$	14,800,000	$	(7,400,000	)
Financials		7,163,000		—		—		1,041,872			882,312		—		—		—		9,087,184		1,041,872

Total	$	29,363,000	$	—	$	—	$	(6,358,128	)	$	882,312	$	—	$	—	$	—	$	23,887,184	$	(6,358,128	)

	Baron Small Cap Fund
Investments in Securities	Balance as of September 30, 2010		Accrued Premiums/ Discounts		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Purchases		Sales		Transfers Into Level 3		Transfers Out of Level 3		Balance as of March 31, 2011		Change in Net Unrealized Appreciation (Depreciation) from Investments still held at March 31, 2011
Private Equity Investments
Consumer Discretionary	$	10,500,000	$	—	$	—	$	(3,500,000	)	$	—	$	—	$	—	$	—	$	7,000,000	$	(3,500,000	)

8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS

Federal income tax regulations differ from GAAP. Therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and net realized gain for financial reporting purposes. Net investment income (loss) and net realized and unrealized gain (loss) differ for financial statement and tax purposes due to differing treatments of wash sale losses deferred, foreign currency gains and losses, partnership basis adjustments, and net investment loss. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences.

As of March 31, 2011, the components of net assets on a tax basis were substantially as follows:


	Baron Asset Fund			Baron Growth Fund			Baron Small Cap Fund			Baron Opportunity Fund			Baron Fifth Avenue Growth Fund
Cost of investments	$	1,627,190,836		$	3,788,453,209		$	2,734,006,581		$	228,421,696		$	30,242,355

Gross tax unrealized appreciation		1,399,300,854			3,158,316,575			1,638,674,380			91,740,491			9,599,969
Gross tax unrealized depreciation		(65,424,292	)		(70,449,434	)		(136,660,243	)		(6,189,294	)		(44,810	)

Net tax unrealized appreciation		1,333,876,562			3,087,867,141			1,502,014,137			85,551,197			9,555,159
Accumulated net investment loss		(886,163	)		(11,800,163	)		(8,118,431	)		(1,430,606	)		(86,045	)
Accumulated net realized gain (loss)		118,877,680			(328,747,546	)		(43,118,751	)		(15,030,570	)		(4,884,340	)
Paid-in capital		1,520,783,581			4,153,215,187			2,781,665,891			244,870,955			35,106,263

Net Assets	$	2,972,651,660		$	6,900,534,619		$	4,232,442,846		$	313,960,976		$	39,691,037


March 31, 2011		Baron Funds

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS (Continued)

As of September 30, 2010, the Funds had capital loss carryforwards expiring as follows:


	Baron Asset Fund		Baron Growth Fund		Baron Small Cap Fund		Baron Opportunity Fund		Baron Fifth Avenue Growth Fund
September 30, 2011	$	—	$	—	$	—	$	19,968,339	$	—
September 30, 2017		—		343,959,998		64,973,001		11,961,799		924,163
September 30, 2018		—		294,810,141		159,601,005		—		5,738,465

	$	—	$	638,770,139	$	224,574,006	$	31,930,138	$	6,662,628

The tax character of distributions paid during the six months ended March 31, 2011 and the fiscal year ended September 30, 2010 was as follows:


	Six Months Ended March 31, 2011				Year Ended September 30, 2010
Fund	Ordinary¹		Long Term Capital Gain		Ordinary¹		Long Term Capital Gain
Baron Asset Fund	$	—	$	40,710,617	$	—	$	—
Baron Growth Fund		—		—		—		—
Baron Small Cap Fund		—		—		—		—
Baron Opportunity Fund		—		—		—		—
Baron Fifth Avenue Growth Fund		—		—		136,975		—

¹	For tax purposes, short-term capital gains are considered ordinary income distributions.

The Funds follow the provisions of the FASB Codification Section 740 (“ASC Section 740”) “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in tax positions taken or expected to be taken on a tax return. ASC Section 740 sets forth a threshold for financial statement recognition, measurement and disclosure of tax positions taken or expected to be taken on a tax return. The Funds are required to recognize the tax effects of certain tax positions under a “more likely than not” standard, that based on their technical merits, have more than 50 percent likelihood of being sustained upon examination. Management has analyzed the tax positions taken on the Funds’ federal income tax returns for all open years (current and prior three years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. At March 31, 2011, the Funds did not have any unrecognized tax benefits. The Funds’ federal, state and local income and federal excise tax returns for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted. The Act modernizes several of the federal income and excise tax provisions related to regulated investment companies, and with certain exceptions, is effective for taxable years beginning after December 22, 2010. New capital losses may now be carried forward indefinitely. Rules in effect prior to December 22, 2010 limited the carryforward period to eight years. Post-enactment capital loss carryforwards must be fully used before capital loss carryforwards generated prior to the enactment of the Act. As a result of this ordering rule, pre-enactment capital loss carryforwards may have an increased likelihood to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than all short-term as under previous rules.


Baron Funds		March 31, 2011

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. TRANSACTIONS IN “AFFILIATED” COMPANIES¹

BARON ASSET FUND


Name of Issuer	Balance of Shares Held on September 30, 2010		Gross Purchases and Additions		Gross Sales and Reductions		Balance of Shares Held on March 31, 2011		Fair Value March 31, 2011		Dividend Income October 1, 2010 to March 31, 2011
Vail Resorts, Inc.²		1,799,200		—		—		1,799,200	$	—	$	—

Total investments in “affiliated” companies (0.00% of Net Assets)									$	—	$	—

BARON GROWTH FUND


Name of Issuer	Balance of Shares Held on September 30, 2010		Gross Purchases and Additions		Gross Sales and Reductions		Balance of Shares Held on March 31, 2011		Fair Value March 31, 2011		Dividend Income October 1, 2010 to March 31, 2011
AMERIGROUP Corp.		2,625,000		—		125,000		2,500,000	$	160,625,000	$	—
Blue Nile, Inc.		1,105,000		—		105,000		1,000,000		53,990,000		—
Choice Hotels International, Inc.		3,000,000		—		—		3,000,000		116,550,000		1,110,000
DeVry, Inc.		3,625,000		—		—		3,625,000		199,628,750		435,000
Peet’s Coffee & Tea, Inc.		800,000		—		—		800,000		38,472,000		—
Strayer Education, Inc.		675,000		—		—		675,000		88,080,750		1,350,000
Vail Resorts, Inc.		1,900,000		—		—		1,900,000		92,644,000		—

Total investments in “affiliated” companies (10.87% of Net Assets)									$	749,990,500	$	2,895,000

BARON SMALL CAP FUND


Name of Issuer	Balance of Shares Held on September 30, 2010		Gross Purchases and Additions		Gross Sales and Reductions		Balance of Shares Held on March 31, 2011		Fair Value March 31, 2011		Dividend Income October 1, 2010 to March 31, 2011
Bravo Brio Restaurant Group, Inc.		—		1,750,000		—		1,750,000	$	30,957,500	$	—
Campus Crest Communities, Inc.		—		2,000,000		—		2,000,000		23,660,000		254,000
Chesapeake Lodging Trust		901,862		1,274,200		176,062		2,000,000		34,820,000		920,855
Coresite Realty Corp.		1,051,974		157,762		1,209,736		—		—		—
Great Wolf Resorts, Inc.		3,060,000		—		—		3,060,000		6,456,600		—
Huron Consulting Group, Inc.		1,250,000		—		—		1,250,000		34,612,500		—
Iconix Brand Group, Inc.		3,900,000		—		—		3,900,000		83,772,000		—
KEYW Holding Corp.		—		2,000,000		—		2,000,000		24,560,000		—
Mistras Group, Inc.		1,750,000		—		—		1,750,000		30,117,500		—
Orion Marine Group, Inc.		1,400,000		—		1,400,000		—		—		—
Prime Water Corp.		—		1,037,000		—		1,037,000		12,703,250		—
Vitacost.com, Inc.		2,325,000		—		—		2,325,000		7,951,500		—

Total investments in “affiliated” companies (6.84% of Net Assets)									$	289,610,850	$	1,174,855

¹	An “Affiliated” Company, as defined in the 1940 Act, is a company in which a Fund held 5% or more of the company’s outstanding voting securities at any time during the six month ended March 31, 2011.

²	As of March 31, 2011, no longer an affiliate.


March 31, 2011		Baron Funds

FINANCIAL HIGHLIGHTS (UNAUDITED)

BARON ASSET FUND

Selected data for a share outstanding throughout each period:


	RETAIL SHARES																														INSTITUTIONAL SHARES
	Six Months Ended March 31, 2011			Year Ended September 30,																											Six Months Ended March 31, 2011			Year Ended September 30,
	Six Months Ended March 31, 2011			2010			2009			2008			2007			2006			2005			2004			2003			2002			Six Months Ended March 31, 2011			2010			2009³

Net asset value, beginning of period	$	49.27		$	43.62		$	52.12		$	66.57		$	60.08		$	56.52		$	47.89		$	40.05		$	35.65		$	40.22		$	49.43		$	43.65		$	37.38


Income (loss) from investment operations:
Net investment income (loss)		(0.02	)¹		(0.28	)¹		(0.20	)¹		(0.29	)¹		(0.10	)¹		(0.27	)		(0.46	)		(0.43	)		(0.46	)		(0.55	)		0.05	¹		(0.15	)¹		(0.05	)¹
Net realized and unrealized gain (loss) on investments		10.63			5.93			(5.68	)		(12.08	)		11.27			6.64			12.08			8.27			6.04			0.05			10.67			5.93			6.32

Total from investment operations		10.61			5.65			(5.88	)		(12.37	)		11.17			6.37			11.62			7.84			5.58			(0.50	)		10.72			5.78			6.27


Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
Net realized gain on investments		(0.77	)		0.00			(2.62	)		(2.08	)		(4.68	)		(2.81	)		(2.99	)		0.00			(1.18	)		(4.07	)		(0.77	)		0.00			0.00

Total distributions		(0.77	)		0.00			(2.62	)		(2.08	)		(4.68	)		(2.81	)		(2.99	)		0.00			(1.18	)		(4.07	)		(0.77	)		0.00			0.00


Net asset value, end of period	$	59.11		$	49.27		$	43.62		$	52.12		$	66.57		$	60.08		$	56.52		$	47.89		$	40.05		$	35.65		$	59.38		$	49.43		$	43.65

Total return		21.64	%⁴		12.95	%		(9.88	)%		(19.14	)%		19.56	%		11.54	%		25.21	%		19.58	%		16.11	%		(2.54	)%		21.81	%⁴		13.24	%		16.77	%⁴


Ratios/ Supplemental data:
Net assets (in millions), end of period	$	2,629.7		$	2,424.2		$	2,652.6		$	3,311.8		$	4,468.0		$	3,365.6		$	2,687.4		$	2,002.4		$	1,957.2		$	2,055.2		$	343.0		$	242.8		$	82.3

Ratio of total expenses to average net assets		1.33	%⁵		1.32	%		1.36	%²		1.33	%²		1.34	%²		1.33	%		1.34	%		1.34	%		1.34	%		1.35	%		1.06	%⁵		1.06	%		1.16	%⁵
Less: Ratio of interest expense to average net assets		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		(0.02	)%		0.00	%		0.00	%		0.00	%

Ratio of operating expenses to average net assets		1.33	%⁵		1.32	%		1.36	%		1.33	%		1.34	%		1.33	%		1.34	%		1.34	%		1.34	%		1.33	%		1.06	%⁵		1.06	%		1.16	%⁵

Ratio of net investment income (loss) to average net assets		(0.09	)%⁵		(0.61	)%		(0.54	)%		(0.49	)%		(0.17	)%		(0.49	)%		(0.91	)%		(0.90	)%		(1.14	)%		(1.16	)%		0.17	%⁵		(0.33	)%		(0.39	)%⁵

Portfolio turnover rate		10.79	%⁴		13.04	%		14.67	%		16.02	%		13.39	%		21.87	%		11.47	%		19.57	%		27.95	%		6.01	%		10.79	%⁴		13.04	%		14.67	%

¹	Based on average shares outstanding.

²	Benefit of expense reduction rounds to less than 0.01%.

³	For the period May 29, 2009 (Commencement of Operations) to September 30, 2009.

⁴	Not Annualized.

⁵	Annualized.


See Notes to Financial Statements.		37


Baron Funds		March 31, 2011

FINANCIAL HIGHLIGHTS (UNAUDITED) (Continued)

BARON GROWTH FUND

Selected data for a share outstanding throughout each period:


	RETAIL SHARES																														INSTITUTIONAL SHARES
	Six Months Ended March 31, 2011			Year Ended September 30,																											Six Months Ended March 31, 2011			Year Ended September 30,
	Six Months Ended March 31, 2011			2010			2009			2008			2007			2006			2005			2004			2003			2002			Six Months Ended March 31, 2011			2010			2009³

Net asset value, beginning of period	$	44.37		$	39.00		$	41.69		$	54.55		$	47.23		$	45.96		$	38.92		$	32.65		$	26.96		$	27.18		$	44.52		$	39.03		$	33.71


Income (loss) from investment operations:
Net investment loss		(0.08	)¹		(0.34	)¹		(0.18	)¹		(0.28	)¹		(0.25	)¹		(0.29	)		(0.29	)		(0.30	)		(0.25	)		(0.23	)		(0.02	)¹		(0.22	)¹		(0.04	)¹
Net realized and unrealized gain (loss) on investments		11.74			5.71			(2.47	)		(10.07	)		10.11			3.61			7.33			6.57			5.94			1.65			11.79			5.71			5.36

Total from investment operations		11.66			5.37			(2.65	)		(10.35	)		9.86			3.32			7.04			6.27			5.69			1.42			11.77			5.49			5.32


Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
Net realized gain on investments		0.00			0.00			(0.04	)		(2.51	)		(2.54	)		(2.05	)		0.00			0.00			0.00			(1.64	)		0.00			0.00			0.00

Total distributions		0.00			0.00			(0.04	)		(2.51	)		(2.54	)		(2.05	)		0.00			0.00			0.00			(1.64	)		0.00			0.00			0.00


Net asset value, end of period	$	56.03		$	44.37		$	39.00		$	41.69		$	54.55		$	47.23		$	45.96		$	38.92		$	32.65		$	26.96		$	56.29		$	44.52		$	39.03

Total return		26.28	%⁴		13.77	%		(6.34	)%		(19.78	)%		21.41	%		7.36	%		18.09	%		19.20	%		21.11	%		5.02	%		26.44	%⁴		14.07	%		15.78	%⁴


Ratios/Supplemental data:
Net assets (in millions), end of period	$	5,596.7		$	4,842.8		$	5,034.5		$	5,615.0		$	7,075.9		$	5,315.8		$	5,005.1		$	3,135.6		$	2,185.4		$	1,030.3		$	1,303.8		$	728.9		$	238.7

Ratio of operating expenses to average net assets		1.32	%⁵		1.32	%		1.35	%²		1.32	%²		1.31	%²		1.31	%		1.31	%		1.33	%		1.36	%		1.35	%		1.06	%⁵		1.06	%		1.13	%⁵

Ratio of net investment loss to average net assets		(0.32	)%⁵		(0.80	)%		(0.56	)%		(0.59	)%		(0.49	)%		(0.61	)%		(0.73	)%		(0.89	)%		(1.11	)%		(1.02	)%		(0.07	)%⁵		(0.53	)%		(0.29	)%⁵

Portfolio turnover rate		6.55	%⁴		16.12	%		26.65	%		25.97	%		21.37	%		21.27	%		15.50	%		27.15	%		32.63	%		18.31	%		6.55	%⁴		16.12	%		26.65	%

¹	Based on average shares outstanding.

²	Benefit of expense reduction rounds to less than 0.01%.

³	For the period May 29, 2009 (Commencement of Operations) to September 30, 2009.

⁴	Not Annualized.

⁵	Annualized.


38		See Notes to Financial Statements.


March 31, 2011		Baron Funds

FINANCIAL HIGHLIGHTS (UNAUDITED) (Continued)

BARON SMALL CAP FUND

Selected data for a share outstanding throughout each period:


	RETAIL SHARES																														INSTITUTIONAL SHARES
	Six Months Ended March 31, 2011			Year Ended September 30,																											Six Months Ended March 31, 2011			Year Ended September 30,
	Six Months Ended March 31, 2011			2010			2009			2008			2007			2006			2005			2004			2003			2002			Six Months Ended March 31, 2011			2010			2009⁴

Net asset value, beginning of period	$	20.90		$	17.96		$	18.70		$	25.47		$	23.59		$	23.08		$	19.18		$	17.26		$	13.73		$	12.69		$	20.97		$	17.97		$	15.52


Income (loss) from investment operations:
Net investment loss		(0.05	)¹		(0.06	)¹		(0.13	)¹		(0.09	)¹		(0.02	)¹		(0.18	)		(0.10	)		(0.15	)		(0.11	)		(0.14	)		(0.03	)¹		(0.03	)¹		(0.04	)¹
Net realized and unrealized gain (loss) on investments		5.32			3.00			(0.61	)		(5.01	)		4.96			1.43			4.55			2.07			4.02			1.18			5.35			3.03			2.49

Total from investment operations		5.27			2.94			(0.74	)		(5.10	)		4.94			1.25			4.45			1.92			3.91			1.04			5.32			3.00			2.45


Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
Net realized gain on investments		0.00			0.00			(0.00	)²		(1.67	)		(3.06	)		(0.74	)		(0.55	)		0.00			(0.38	)		0.00			0.00			0.00			0.00

Total distributions		0.00			0.00			(0.00	)		(1.67	)		(3.06	)		(0.74	)		(0.55	)		0.00			(0.38	)		0.00			0.00			0.00			0.00


Net asset value, end of period	$	26.17		$	20.90		$	17.96		$	18.70		$	25.47		$	23.59		$	23.08		$	19.18		$	17.26		$	13.73		$	26.29		$	20.97		$	17.97

Total return		25.22	%⁵		16.37	%		(3.95	)%		(21.44	)%		22.54	%		5.52	%		23.56	%		11.12	%		29.20	%		8.20	%		25.37	%		16.69	%		15.79	%⁵


Ratios/Supplemental data:
Net assets (in millions), end of period	$	3,685.0		$	3,032.0		$	2,719.4		$	2,871.6		$	3,522.4		$	2,921.7		$	2,828.6		$	1,782.1		$	1,210.5		$	719.1		$	547.4		$	261.1		$	89.4

Ratio of operating expenses to average net assets		1.31	%⁶		1.31	%		1.34	%³		1.32	%³		1.31	%³		1.33	%		1.33	%		1.33	%		1.36	%		1.36	%		1.06	%⁶		1.06	%		1.16	%⁶

Ratio of net investment loss to average net assets		(0.45	)%⁶		(0.30	)%		(0.86	)%		(0.42	)%		(0.09	)%		(0.73	)%		(0.48	)%		(0.88	)%		(0.87	)%		(0.97	)%		(0.25	)%⁶		(0.15	)%		(0.75	)%⁶

Portfolio turnover rate		16.12	%⁵		27.22	%		35.83	%		41.52	%		36.51	%		39.99	%		24.68	%		32.92	%		30.29	%		55.07	%		16.12	%⁵		27.22	%		35.83	%

¹	Based on average shares outstanding.

²	Less than $0.01 per share.

³	Benefit of expense reduction rounds to less than 0.01%.

⁴	For the period May 29, 2009 (Commencement of Operations) to September 30, 2009.

⁵	Not Annualized.

⁶	Annualized.


See Notes to Financial Statements.		39


Baron Funds		March 31, 2011

FINANCIAL HIGHLIGHTS (UNAUDITED) (Continued)

BARON OPPORTUNITY FUND

Selected data for a share outstanding throughout each period:


	RETAIL SHARES																														INSTITUTIONAL SHARES
	Six Months Ended March 31, 2011			Year Ended September 30,																											Six Months Ended March 31, 2011			Year Ended September 30,
	Six Months Ended March 31, 2011			2010			2009			2008			2007			2006			2005			2004			2003			2002			Six Months Ended March 31, 2011			2010			2009⁷

Net asset value, beginning of period	$	12.76		$	10.61		$	9.90		$	13.01		$	10.05		$	9.16		$	7.58		$	6.48		$	3.63		$	4.09		$	12.80		$	10.62		$	8.88


Income (loss) from investment operations:
Net investment loss		(0.07	)¹		(0.13	)¹		(0.08	)¹		(0.09	)¹		(0.07	)¹		(0.03	)		(0.09	)		(0.10	)		(0.05	)		(0.06	)		(0.05	)¹		(0.10	)¹		(0.02	)¹
Net realized and unrealized gain (loss) on investments		2.78			2.28			0.79			(3.02	)		3.03			0.92			1.66			1.18			2.89			(0.40	)		2.80			2.28			1.76

Total from investment operations		2.71			2.15			0.71			(3.11	)		2.96			0.89			1.57			1.08			2.84			(0.46	)		2.75			2.18			1.74


Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
Net realized gain on investments		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Total distributions		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Redemption fees added to capital paid in		0.00			0.00	²		0.00	²		0.00	²		0.00	²		0.00	²		0.01			0.02			0.01			0.00	²		0.00			0.00	²		0.00

Net asset value, end of period	$	15.47		$	12.76		$	10.61		$	9.90		$	13.01		$	10.05		$	9.16		$	7.58		$	6.48		$	3.63		$	15.55		$	12.80		$	10.62

Total return		21.24	%⁴		20.26	%		7.17	%		(23.90	)%		29.45	%³		9.72	%		20.84	%³		16.98	%³		78.51	%³		(11.25	)%³		21.48	%⁴		20.53	%		19.59	%^3,4


Ratios/Supplemental data:
Net assets (in millions), end of period	$	265.0		$	214.4		$	142.7		$	154.4		$	198.0		$	145.4		$	145.7		$	133.9		$	109.3		$	57.5		$	49.0		$	25.5		$	10.9

Ratio of operating expenses to average net assets		1.42	%⁶		1.44	%		1.50	%		1.42	%		1.43	%		1.45	%		1.52	%		1.56	%		1.67	%		1.65	%		1.15	%⁶		1.18	%		1.37	%⁶
Less: Reimbursement of expenses by Adviser and/or offsets		0.00	%		0.00	%		0.00	%⁵		0.00	%⁵		(0.01	)%		0.00	%		(0.02	)%		(0.06	)%		(0.17	)%		(0.15	)%		0.00	%		0.00	%		(0.12	)%⁶

Ratio of net expenses to average net assets		1.42	%⁶		1.44	%		1.50	%		1.42	%		1.42	%		1.45	%		1.50	%		1.50	%		1.50	%		1.50	%		1.15	%⁶		1.18	%		1.25	%⁶

Ratio of net investment loss to average net assets		(1.04	)%⁶		(1.08	)%		(1.00	)%		(0.79	)%		(0.61	)%		(0.26	)%		(1.01	)%		(1.25	)%		(1.18	)%		(1.20	)%		(0.76	)%⁶		(0.83	)%		(0.74	)%⁶

Portfolio turnover rate		26.51	%⁴		76.44	%		68.09	%		61.44	%		46.20	%		67.25	%		83.64	%		86.35	%		89.72	%		96.41	%		26.51	%⁴		76.44	%		68.09	%

¹	Based on average shares outstanding.

²	Less than $0.01 per share.

³	The total returns would have been lower had certain expenses not been reduced during the periods shown.

⁴	Not Annualized.

⁵	Benefit of expense reduction rounds to less than 0.01%.

⁶	Annualized.

⁷	For the period May 29, 2009 (Commencement of Operations) to September 30, 2009.


40		See Notes to Financial Statements.


March 31, 2011		Baron Funds

FINANCIAL HIGHLIGHTS (UNAUDITED) (Continued)

BARON FIFTH AVENUE GROWTH FUND

Selected data for a share outstanding throughout each period:


	RETAIL SHARES																								INSTITUTIONAL SHARES
	Six Months Ended March 31, 2011			Year Ended September 30,																					Six Months Ended March 31, 2011			Year Ended September 30,
	Six Months Ended March 31, 2011			2010			2009			2008			2007			2006			2005			2004¹			Six Months Ended March 31, 2011			2010			2009⁸

Net asset value, beginning of period	$	9.21		$	8.60		$	10.38		$	14.12		$	12.22		$	11.56		$	9.89		$	10.00		$	9.21		$	8.61		$	7.54


Income (loss) from investment operations:
Net investment income (loss)		(0.03	)²		(0.03	)²		0.03	²		0.00	^2,3		(0.01	)²		(0.02	)		(0.05	)		(0.02	)		(0.01	)²		(0.01	)²		0.02	²
Net realized and unrealized gain (loss) on investments		1.23			0.66			(1.03	)		(2.62	)		1.91			0.68			1.72			(0.09	)		1.23			0.66			1.05

Total from investment operations		1.20			0.63			(1.00	)		(2.62	)		1.90			0.66			1.67			(0.11	)		1.22			0.65			1.07


Less distributions to shareholders from:
Net investment income		0.00			(0.02	)		(0.01	)		0.00			0.00			0.00			0.00			0.00			0.00			(0.05	)		0.00
Net realized gain on investments		0.00			0.00			(0.77	)		(1.12	)		0.00			0.00			0.00			0.00			0.00			0.00			0.00

Total distributions		0.00			(0.02	)		(0.78	)		(1.12	)		0.00			0.00			0.00			0.00			0.00			(0.05	)		0.00


Net asset value, end of period	$	10.41		$	9.21		$	8.60		$	10.38		$	14.12		$	12.22		$	11.56		$	9.89		$	10.43		$	9.21		$	8.61

Total return		13.03	%^4,5		7.38	%⁴		(7.75	)%⁴		(19.96	)%⁴		15.55	%		5.71	%		16.89	%⁴		(1.10	)%^4,5		13.25	%^4,5		7.59	%⁴		14.19	%^4,5


Ratios/Supplemental data:
Net assets (in millions), end of period	$	27.9		$	29.0		$	32.8		$	58.2		$	110.2		$	123.3		$	96.5		$	49.3		$	11.8		$	10.4		$	9.5

Ratio of operating expenses to average net assets		1.60	%⁷		1.62	%		1.69	%		1.47	%		1.36	%		1.39	%		1.49	%		1.67	%⁷		1.32	%⁷		1.35	%		1.61	%⁷
Less: Reimbursement of expenses by Adviser and/or offsets		(0.30	)%⁷		(0.25	)%		(0.29	)%		(0.07	)%		0.00	%⁶		0.00	%		(0.09	)%		(0.27	)%⁷		(0.27	)%⁷		(0.24	)%		(0.46	)%⁷

Ratio of net expenses to average net assets		1.30	%⁷		1.37	%		1.40	%		1.40	%		1.36	%		1.39	%		1.40	%		1.40	%⁷		1.05	%⁷		1.11	%		1.15	%⁷

Ratio of net investment income (loss) to average net assets		(0.51	)%⁷		(0.32	)%		0.40	%		(0.01	)%		(0.08	)%		(0.16	)%		(0.58	)%		(0.79	)%⁷		(0.25	)⁷		(0.07	)%		0.58	%⁷

Portfolio turnover rate		39.09	%⁵		57.67	%		39.61	%		39.59	%		28.75	%		105.77	%		46.71	%		7.58	%⁵		39.09	%⁵		57.67	%		39.61	%

¹	For the period April 30, 2004 (Commencement of Operations) to September 30, 2004.

²	Based on average shares outstanding.

³	Less than $0.01 per share.

⁴	The total returns would have been lower had certain expenses not been reduced during the periods shown.

⁵	Not Annualized.

⁶	Benefit of expense reduction rounds to less than 0.01%.

⁷	Annualized.

⁸	For the period May 29, 2009 (Commencement of Operations) to September 30, 2009.


See Notes to Financial Statements.		41


Baron Funds		March 31, 2011

FUND EXPENSES (UNAUDITED)

As a shareholder of the Funds, you may incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include advisory fees, distribution and service (12b-1) fees and other Fund expenses. Due to the payment of Rule 12b-1 fees, long-term shareholders may indirectly pay more than the maximum permitted front-end sales charge. The information on this page is intended to help you understand your ongoing costs of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The information in the following table is based on an investment of $1,000 invested on October 1, 2010 and held for the six months ended March 31, 2011.

ACTUAL EXPENSES

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading titled “Expenses Paid During the Period”.

BASED ON ACTUAL TOTAL RETURN FOR THE SIX MONTHS ENDED MARCH 31, 2011¹


	Actual Total Return		Beginning Account Value October 1, 2010		Ending Account Value March 31, 2011		Annualized Expense Ratio		Expenses Paid During the Period²
Baron Asset Fund — Retail Shares		21.64%	$	1,000.00	$	1,216.40		1.33%	$	7.35
Baron Asset Fund — Institutional Shares		21.81%	$	1,000.00	$	1,218.10		1.06%	$	5.86
Baron Growth Fund — Retail Shares		26.28%	$	1,000.00	$	1,262.80		1.32%	$	7.45
Baron Growth Fund — Institutional Shares		26.44%	$	1,000.00	$	1,264.40		1.06%	$	5.98
Baron Small Cap Fund — Retail Shares		25.22%	$	1,000.00	$	1,252.20		1.31%	$	7.36
Baron Small Cap Fund — Institutional Shares		25.37%	$	1,000.00	$	1,253.70		1.06%	$	5.96
Baron Opportunity Fund — Retail Shares		21.24%	$	1,000.00	$	1,212.40		1.42%	$	7.83
Baron Opportunity Fund — Institutional Shares		21.48%	$	1,000.00	$	1,214.80		1.15%	$	6.35
Baron Fifth Avenue Growth Fund — Retail Shares		13.03%	$	1,000.00	$	1,130.30		1.30%	$	6.90
Baron Fifth Avenue Growth Fund — Institutional Shares		13.25%	$	1,000.00	$	1,132.50		1.05%	$	5.58

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account values and expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Funds and other funds. To do so, compare the 5% hypothetical example relating to the Funds with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table below are meant to highlight your ongoing costs and do not reflect any transactional costs, such as redemption fees, if any. Therefore, the table is useful in comparing ongoing costs only and will not help you determine your relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs would have been higher.

BASED ON HYPOTHETICAL TOTAL RETURN FOR THE SIX MONTHS ENDED MARCH 31, 2010


	Hypothetical Annualized Total Return		Beginning Account Value October 1, 2010		Ending Account Value March 31, 2011		Annualized Expense Ratio		Expenses Paid During the Period²
Baron Asset Fund — Retail Shares		5.00%	$	1,000.00	$	1,018.30		1.33%	$	6.69
Baron Asset Fund — Institutional Shares		5.00%	$	1,000.00	$	1,019.65		1.06%	$	5.34
Baron Growth Fund — Retail Shares		5.00%	$	1,000.00	$	1,018.35		1.32%	$	6.64
Baron Growth Fund — Institutional Shares		5.00%	$	1,000.00	$	1,019.65		1.06%	$	5.34
Baron Small Cap Fund — Retail Shares		5.00%	$	1,000.00	$	1,018.40		1.31%	$	6.59
Baron Small Cap Fund — Institutional Shares		5.00%	$	1,000.00	$	1,019.65		1.06%	$	5.34
Baron Opportunity Fund — Retail Shares		5.00%	$	1,000.00	$	1,017.85		1.42%	$	7.14
Baron Opportunity Estate Fund — Institutional Shares		5.00%	$	1,000.00	$	1,019.20		1.15%	$	5.79
Baron Fifth Avenue Growth Fund — Retail Shares		5.00%	$	1,000.00	$	1,018.45		1.30%	$	6.54
Baron Fifth Avenue Growth Fund — Institutional Shares		5.00%	$	1,000.00	$	1,019.70		1.05%	$	5.29

¹	Assumes reinvestment of all dividends and capital gain distributions, if any.

²	Expenses are equal to each Share Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

LOGO

767 Fifth Avenue, 49^th Fl.

New York, NY 10153

1.800.99.BARON

212-583-2000

www.BaronFunds.com

LOGO

MAR11

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Schedule of Investments.

Included herein under Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11. Controls and Procedures.

(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Not applicable.

(a) (2) Certification of each of the principal executive officers and principal financial officers of the Registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as a part of EX-99.CERT.

(b) Certification of each of the principal executive officers and principal financial officers of the Registrant as required by Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as a part of EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


BARON INVESTMENT FUNDS TRUST

By:		/s/ Ronald Baron
		Ronald Baron
		Chief Executive Officer

Date: May 23, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ Ronald Baron
		Ronald Baron
		Chief Executive Officer

Date: May 23, 2011

By:		/s/ Peggy Wong
		Peggy Wong
		Treasurer and Chief Financial Officer

Date: May 23, 2011