BARON INVESTMENT FUNDS TRUST N-CSR Certified annual shareholder report (management investment company)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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, General Counsel

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: September 30, 2012

          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)

Baron Asset Fund	Baron Funds®
Baron Growth Fund
Baron Small Cap Fund
Baron Opportunity Fund
Baron Fifth Avenue Growth Fund
September 30, 2012	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
Report of Independent Registered Public Accounting Firm	42
Tax Information	42
Fund Expenses	43
Disclosure Regarding the Approval of the Investment Advisory Agreements for each of the Series by the Board of Trustees	44
Management of the Funds	45

DEAR BARON FUNDS SHAREHOLDER: In this report you will find audited 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 fiscal year ended September 30, 2012. 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	Linda S. Martinson	Peggy Wong
Chief Executive Officer and	Chairman, President and	Treasurer and
Chief Investment Officer	Chief Operating Officer	Chief Financial Officer
November 27, 2012	November 27, 2012	November 27, 2012
This 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, Baron Emerging Markets Fund, Baron Energy and Resources Fund and Baron Global Advantage 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, write or go to www.baronfunds.com 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 the Funds, unless accompanied or preceded by the Funds’ current prospectus.

 Baron Asset Fund (Unaudited) September 30, 2012 

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

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2012

	One Year			Three Years			Five Years			Ten Years			Since Inception (June 12, 1987)
Baron Asset Fund — Retail Shares1, 2		24.65	%		12.40	%		0.69	%		9.14	%		10.76	%
Baron Asset Fund — Institutional Shares1, 2, 4		24.99	%		12.70	%		0.86	%		9.24	%		10.80	%
Russell Midcap Growth Index1		26.69	%		14.73	%		2.54	%		11.11	%		9.18	%3
S&P 500 Index1		30.20	%		13.20	%		1.05	%		8.01	%		8.82	%

1	The indexes are unmanaged. The Russell MidcapTM Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results.
2	Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower.
3	For the period June 30, 1987 to September 30, 2012.
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.

2

 September 30, 2012 (Unaudited) Baron Asset Fund 

TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2012
	Percent of
	Net Assets
Equinix, Inc.	4.1%
Gartner, Inc.	4.0%
SBA Communications Corp.	3.9%
IDEXX Laboratories, Inc.	3.8%
Verisk Analytics, Inc.	3.4%
Arch Capital Group Ltd.	3.4%
Fastenal Co.	3.0%
Ralph Lauren Corp.	2.9%
Mettler-Toledo International, Inc.	2.7%
Discovery Communications, Inc.	2.7%
	33.9%
SECTOR BREAKDOWN AS OF SEPTEMBER 30, 2012† (as a percentage of net assets)
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended September 30, 2012, Baron Asset Fund‡ gained 24.65%, while the Russell Midcap Growth Index gained 26.69% and the S&P 500 Index gained 30.20%. Baron Asset Fund invests primarily in medium-sized growth companies for the long term, using a value-oriented purchase discipline.1 The Fund purchases companies that we believe have sustainable competitive advantages, strong financial characteristics, exceptional management, and operate in industries with favorable growth characteristics.

The U.S. equity markets posted strong gains over the last 12 months. These gains were achieved despite heightened concerns over the European debt crisis and China’s economic slowdown, which caused market volatility and a temporary pullback in the U.S. markets during the spring and summer. Oil prices also experienced sharp declines in the June quarter. Many individual businesses performed well through this period, as the U.S. economy slowly improved and interest rates remained low. Even the U.S. housing market, a significant part of the economy, appeared to have bottomed out.

The Fund’s investments in the Information Technology (IT), Consumer Discretionary, and Health Care sectors were the largest contributors to performance. Investments in these sectors can be broadly characterized as operating in attractive growth markets, having unique assets or brands that provide competitive advantages, with recurring revenue streams and positive operating leverage. In Health Care particularly, the companies in which we have invested are meeting our country’s critical need to reduce costs and improving efficiency in our health care system.

IT holding Equinix, Inc. was the leading contributor to Fund performance for the 12-month period. Equinix is a network-neutral operator of state-of-the-art data centers across North America, Europe, and Asia-Pacific. During the period, Equinix experienced healthy pricing and demand trends, announced its first share buyback in November, and began considering converting to a real estate investment trust (REIT) in February—a move its Board approved this past September. The possibility of a REIT conversion has probably had the largest impact on Equinix’s share price. REITs typically trade at significantly higher multiples, and investors have revalued Equinix’s shares higher to close that gap. In addition, the growth of wireless data and Internet traffic create a more appealing demand picture for data center operators than for many slower growing, more cyclical REIT businesses. The second largest contributor to portfolio returns was Telecommunication Services holding SBA Communications, Inc., another company whose shares significantly appreciated due to its planned REIT conversion.

The Fund purchased Netflix, Inc., the global leader in online TV and movie content streaming at the end of January. For the period held, it was the largest detractor from Fund performance. Shares came under pressure this year as U.S. subscriber additions slowed, competition heated up, and Netflix’s international expansion strategy raised concerns with some investors. The price dropped 25% in one day of trading in July as a result of these developments. We re-evaluated our assessment of the company’s long-term growth prospects and competitive positioning and exited the position.

We continue to believe that current stock market valuations remain compelling. In our view, U.S. interest rates remain near historically low levels, and the fixed income markets offer limited inflation-adjusted returns. We believe the Fund is well positioned to benefit from a market that rewards high-quality companies with predictable and fast-growing earnings streams. We expect 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.

†	Industry sector group levels are provided by 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 classified by the Adviser. All GICS data is provided “as is” with no warranties.
‡	Performance information reflects results of the Retail Shares.
1	Prior to February 15, 2007, the Fund’s strategy was to invest primarily in small- and mid-sized growth companies.

3

 Baron Growth Fund (Unaudited) September 30, 2012 

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

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2012

	One Year			Three Years			Five Years			Ten Years			Since Inception (December 31, 1994)
Baron Growth Fund — Retail Shares1, 2		28.12	%		14.90	%		2.65	%		9.74	%		13.07	%
Baron Growth Fund — Institutional Shares1, 2, 3		28.45	%		15.21	%		2.83	%		9.83	%		13.13	%
Russell 2000 Growth Index1		31.18	%		14.19	%		2.96	%		10.55	%		6.32	%
S&P 500 Index1		30.20	%		13.20	%		1.05	%		8.01	%		8.66	%

1	The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results.
2	Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower.
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.

4

 September 30, 2012 (Unaudited) Baron Growth Fund 

TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2012
	Percent of
	Net Assets
Dick’s Sporting Goods, Inc.	3.7%
Arch Capital Group Ltd.	3.0%
ITC Holdings Corp.	2.9%
ANSYS, Inc.	2.8%
LKQ Corp.	2.7%
FactSet Research Systems, Inc.	2.7%
Under Armour, Inc.	2.5%
Genesee & Wyoming, Inc.	2.3%
Gartner, Inc.	2.3%
Community Health Systems, Inc.	2.2%
	27.1%
SECTOR BREAKDOWN AS OF SEPTEMBER 30, 2012† (as a percentage of net assets)
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended September 30, 2012, Baron Growth Fund‡ gained 28.12%, while the Russell 2000 Growth Index gained 31.18% and the S&P 500 Index gained 30.20%. Baron Growth Fund invests primarily in small-sized U.S. growth companies for the long term. Through independent research, we utilize an investment approach that we believe allows us to look at a business’ fundamental characteristics and beyond the current market

environment. We invest based on the potential profitability of a business at what we believe are attractive valuations.

The U.S. equity markets posted strong gains over the last 12 months. These gains were achieved despite heightened concerns over the European debt crisis and China’s economic slowdown. Oil prices also experienced sharp declines in the June quarter. The U.S. housing market appears to have bottomed out. We expect a U.S. housing recovery to have a number of important spillover effects on both consumer confidence and the broader economy. Other encouraging news came in September, when the Federal Reserve announced its intention to purchase $40 billion of mortgage debt per month and to keep interest rates low.

The Fund’s investments in the Consumer Discretionary, Information Technology, and Health Care sectors were the strongest contributors to performance, while the Fund’s investments in the Consumer Staples sector slightly detracted.

Within Health Care, leading Medicaid HMO AMERIGROUP Corp. was the largest contributor to Fund performance in the period. The Fund first purchased AMERIGROUP in November 2002 because we believed managed care programs could produce better health outcomes with greater cost efficiency. Over the past 10 years, AMERIGROUP’s revenue grew from $1 billion to $6 billion. On July 9th, WellPoint, Inc. bid $4.9 billion in cash, or $92 per share, for AMERIGROUP, a 43% premium to the prior day’s close. We exited our position on this news.

The Fund’s investments in the Information Technology and Consumer Discretionary sectors have substantial recurring revenue streams, organic growth opportunities, pricing power, and positive operating leverage. Data centers such as Equinix, Inc. combine the stability of traditional real estate with the fast growth of Internet traffic and wireless data. Tower operator, SBA Communications, Inc., another portfolio holding, has similar characteristics. Both stocks appreciated significantly over the period as a result of their planned real estate investment trust (REIT) conversions. In lodging and leisure, supply growth is significantly below long-term averages, so we have seen increases in occupancy and pricing during the recovery.

Snack food manufacturer and distributor Diamond Foods, Inc. was the largest detractor from Fund performance in the period. Diamond Foods’ shares declined significantly in November of last year when questions arose concerning payments made to walnut farmers. It was initially charged, and later confirmed, that these payments were not properly accounted for. As a result, Diamond Foods’ pending acquisition of Pringles was first delayed and subsequently canceled. As these events unfolded, we exited our position. Two other stocks, DeVry, Inc. and CARBO Ceramics, Inc., also detracted from performance during the period. Together, these three positions account for the majority of the Fund’s underperformance during the period.

The Fund continues to invest in a portfolio of businesses that have significantly better financial characteristics than the benchmark index against which it is compared. These businesses have significantly higher growth rates, operating profit margins, net margins, EBITDA margins, return on invested capital, return on equity, return on assets, and lower standard deviations of earnings growth.

†	Industry sector group levels are provided by 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 classified by the Adviser. All GICS data is provided “as is” with no warranties.
‡	Performance information reflects results of the Retail Shares.

5

 Baron Small Cap Fund (Unaudited) September 30, 2012 

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

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2012

	One Year			Three Years			Five Years			Ten Years			Since Inception (September 30, 1997)
Baron Small Cap Fund — Retail Shares1, 2		28.09	%		14.12	%		2.32	%		9.91	%		8.97	%
Baron Small Cap Fund — Institutional Shares1, 2, 3		28.41	%		14.41	%		2.49	%		10.00	%		9.03	%
Russell 2000 Growth Index1		31.18	%		14.19	%		2.96	%		10.55	%		3.42	%
S&P 500 Index1		30.20	%		13.20	%		1.05	%		8.01	%		4.70	%

1	The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results.
2	Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower.
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.

6

 September 30, 2012 (Unaudited) Baron Small Cap Fund 

TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2012
	Percent of
	Net Assets
Equinix, Inc.	4.3%
SBA Communications Corp.	4.1%
TransDigm Group, Inc.	3.4%
Penn National Gaming, Inc.	3.1%
Liberty Media Corp.	3.1%
Gartner, Inc.	2.5%
The Ultimate Software Group, Inc.	2.0%
Waste Connections, Inc.	1.8%
Intuitive Surgical, Inc.	1.8%
Brookdale Senior Living, Inc.	1.7%
	27.8%
SECTOR BREAKDOWN AS OF SEPTEMBER 30, 2012† (as a percentage of net assets)
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended September 30, 2012, Baron Small Cap Fund‡ gained 28.09%, while the Russell 2000 Growth Index gained 31.18% and the S&P 500 Index gained 30.20%. Baron Small Cap Fund invests primarily in small-cap growth companies for the long term. The Fund invests 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 future value.

The U.S. equity markets posted strong gains over the last 12 months. These gains were achieved despite heightened concerns over the European debt crisis and China’s economic slowdown. Oil prices also experienced sharp declines in the June quarter. Many individual businesses performed well through this period, as the U.S. economy slowly improved, interest rates remained low, the unemployment rate in the U.S. declined, consumer confidence ticked up, and housing began to recover. Many economic reports are encouraging, which indicates the economic malaise might improve, yet uncertainty about the “fiscal cliff” and the Presidential election constrained corporate investment and consumer spending. The Federal Reserve announced QE3 and extended its asset purchases indefinitely until the economic recovery strengthens. In the minds of many, this creates support for equity prices.

The Fund’s investments in the Information Technology (IT), Consumer Discretionary, and Industrials sectors were the strongest contributors to performance.

IT holding Equinix, Inc. was the leading contributor to Fund performance for the 12-month period. Equinix is a network-neutral operator of state-of-the-art data centers across North America, Europe, and Asia-Pacific. Equinix experienced healthy pricing and demand trends, announced its first share buyback in November, and began considering converting to a real estate investment trust (REIT) in February, a move its Board approved this past September. The possibility of a REIT conversion has probably had the largest impact on Equinix’s share price. REITs typically trade at significantly higher multiples, and investors have revalued Equinix’s shares higher to close that gap. In addition, the growth of wireless data and Internet traffic create a more appealing demand picture for data center operators than for many slower growing, more cyclical REIT businesses.

Polypore International, Inc. was the largest detractor to Fund performance for the period. Polypore is a leading producer of microporous membranes that are used in batteries, and in industrial and health care applications including dialysis. Below-expectation sales of electric vehicles hurt Polypore’s lithium-ion separator sales during the period. However, our research indicates that while the market for electric vehicles has been slow to grow, all major manufacturers are committed to selling these types of vehicles. We continue to be positive on the future for electric drive vehicles.

Baron Small Cap Fund’s investments fall into three categories: classic growth stocks, fallen angels, and special situations. The Fund intends to continue to invest predominantly in classic 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.

†	Industry sector group levels are provided by 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 classified by the Adviser. All GICS data is provided “as is” with no warranties.
‡	Performance information reflects results of the Retail Shares.

7

 Baron Opportunity Fund (Unaudited)  September 30, 2012 

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON OPPORTUNITY FUND (RETAIL SHARES)
IN RELATION TO THE RUSSELL MIDCAP GROWTH INDEX AND THE S&P 500 INDEX

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2012

	One Year			Three Years			Five Years			Ten Years			Since Inception (February 29, 2000)
Baron Opportunity Fund — Retail Shares1, 2		21.67	%		13.74	%		3.71	%		15.70	%		3.63	%
Baron Opportunity Fund — Institutional Shares1, 2, 3		22.00	%		14.04	%		3.90	%		15.81	%		3.71	%
Russell Midcap Growth Index1		26.69	%		14.73	%		2.54	%		11.11	%		0.84	%
S&P 500 Index1		30.20	%		13.20	%		1.05	%		8.01	%		2.32	%

1	The indexes are unmanaged. The Russell MidcapTM Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results.
2	Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Adviser has reimbursed certain Fund expenses and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower.
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.

8

 September 30, 2012 (Unaudited)  Baron Opportunity Fund 

TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2012
	Percent of
	Net Assets
Equinix, Inc.	4.1%
SBA Communications Corp.	4.0%
ANSYS, Inc.	3.1%
RealPage, Inc.	3.0%
Gartner, Inc.	2.9%
Liberty Media Corp.	2.7%
Polypore International, Inc.	2.6%
Verisk Analytics, Inc.	2.6%
Rackspace Hosting, Inc.	2.5%
Discovery Communications, Inc.	2.5%
	30.0%
SECTOR BREAKDOWN AS OF SEPTEMBER 30, 2012† (as a percentage of net assets)
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended September 30, 2012, Baron Opportunity Fund‡ gained 21.67%, while the Russell Midcap Growth Index gained 26.69% and the S&P 500 Index gained 30.20%. Baron Opportunity Fund primarily invests in U.S. mid-cap growth companies that we believe are driving or benefiting from innovation, through development of pioneering, transformative, or technologically advanced products and services. The U.S. equity markets posted strong gains over the last 12 months. Coordinated central bank actions on both sides of the Atlantic spurred

investors to focus on attractive equity valuations in the context of historically low U.S. and global interest rates. The Federal Reserve announced QE3, an intention to purchase $40 billion of mortgage debt per month, in order to facilitate U.S. growth and employment. For its part, the European Central Bank pledged to buy the sovereign debt of troubled European economies, particularly Spain, if each government agreed to meet certain conditions. Moreover, the U.S. housing recovery continued to pick up steam, with important spillover effects on consumer confidence and the broader economy.

There is significant growth taking place all around us. It just isn’t reflected in GDP or industry growth figures, which suffer from being averages, pulled down by the slow-growers and decliners. In building our portfolios, we ignore the averages and hone in on those secular growth themes capable of driving strong multi-year growth regardless of the ups and downs of the economic cycle. On a trailing five-year basis, our portfolio companies have averaged a little over 16% revenue growth, about double the pace of the companies in the Russell Midcap Growth Index. We expect our portfolio companies to exhibit similar growth going forward.

The Fund’s investments in the Information Technology (IT) sector delivered most of the contribution to Fund performance for the period. Fund performance was also positively impacted by participation in IPOs, which contributed 2.47% to the Fund’s 12-month returns. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and/or secondary offerings will be the same in the future.

IT holding Equinix, Inc. was the leading contributor to Fund performance for the 12-month period. Equinix is a network-neutral operator of state-of-the-art data centers across North America, Europe, and Asia-Pacific. Equinix experienced healthy pricing and demand trends, announced its first share buyback in November, and began considering converting to a real estate investment trust (REIT) in February, a move its Board approved this past September. The possibility of a REIT conversion has probably had the largest impact on Equinix’s share price. REITs typically trade at significantly higher multiples, and investors have revalued Equinix’s shares higher to close that gap. In addition, the growth of wireless data and Internet traffic create a more appealing demand picture for data center operators than for many slower growing, more cyclical REIT businesses.

Polypore International, Inc. was the largest detractor to Fund performance for the period. Polypore is a leading producer of microporous membranes that are used in batteries, and in industrial and health care applications including dialysis. Below-expectation sales of electric vehicles hurt Polypore’s lithium-ion separator sales during the period. However, our research indicates that while the market for electric vehicles has been slow to grow, all major manufacturers are committed to selling these types of vehicles. We continue to be positive on the future for electric drive vehicles.

We remain focused on finding unique businesses across different segments of the economy that we believe offer long-term secular growth, sustainable competitive advantages, high-quality management teams, and attractive stock prices. We believe that investment returns for stocks are driven by earnings growth, and therefore direct our research towards understanding the drivers of business profit and projecting future profit growth as accurately as we can.

†	Industry sector group levels are provided by 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 classified by the Adviser. All GICS data is provided “as is” with no warranties.
‡	Performance information reflects results of the Retail Shares.

9

 Baron Fifth Avenue Growth Fund (Unaudited)  September 30, 2012 

COMPARISON OF THE CHANGE IN VALUE OF $10,000 INVESTMENT IN BARON FIFTH AVENUE GROWTH FUND (RETAIL SHARES)
IN RELATION TO THE S&P 500 INDEX AND THE RUSSELL 1000 GROWTH INDEX

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2012

	One Year			Three Years			Five Years			Since Inception (April 30, 2004)
Baron Fifth Avenue Growth Fund — Retail Shares1, 2		31.74	%		11.31	%		0.37	%		4.41	%
Baron Fifth Avenue Growth Fund — Institutional Shares1, 2, 3		32.11	%		11.57	%		0.53	%		4.51	%
S&P 500 Index1		30.20	%		13.20	%		1.05	%		5.32	%
Russell 1000 Growth Index1		29.19	%		14.73	%		3.24	%		5.89	%

1	The indexes are unmanaged. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies and the Russell 1000® Growth Index of large-sized U.S. companies that are classified as growth. The indexes and the Fund are with dividends, which positively impact the performance results.
2	Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Adviser has reimbursed certain Fund expenses and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower.
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.

10

 September 30, 2012 (Unaudited)  Baron Fifth Avenue Growth Fund 

TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2012
	Percent of
	Net Assets
Apple, Inc.	8.5%
Google, Inc.	5.7%
Amazon.com, Inc.	5.0%
Equinix, Inc.	4.1%
Visa, Inc.	3.7%
CME Group, Inc.	3.6%
Monsanto Co.	3.4%
Brookfield Asset Management, Inc.	3.4%
Illumina, Inc.	3.3%
Liberty Media Corp.	3.2%
	43.9%
SECTOR BREAKDOWN AS OF SEPTEMBER 30, 2012† (as a percentage of net assets)
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended September 30, 2012, Baron Fifth Avenue Growth Fund‡ gained 31.74%, while the S&P 500 Index gained 30.20% and the Russell 1000 Growth Index gained 29.19%. Alex Umansky became the Fund’s new portfolio manager on November 1, 2011. He has revamped the portfolio while adhering to Baron’s investment philosophy and process. We focus on identifying and investing in unique companies with sustainable competitive

advantages that we believe have the ability to redeploy capital at high rates of return. The Fund’s portfolio is constructed on a bottom-up basis, with the quality of ideas and conviction level being the most important determinants of the size of each investment. When we develop high conviction in a particular business, we expect it to have a meaningful weight in the portfolio. We expect top 10 holdings to be in the range of 35% to 45% of the Fund. The Fund’s sector weightings are incidental to portfolio construction, and exposure to any sector is a result of our stock selection.

The U.S. equity markets posted strong gains over the last 12 months. These gains were achieved despite heightened concerns over the European debt crisis and China’s economic slowdown. Oil prices also experienced sharp declines in the June quarter. Many individual businesses performed well through this period, as the U.S. economy slowly improved and interest rates remained low. Encouraging news came in September, when the Federal Reserve announced its intention to purchase $40 billion of mortgage debt per month and to keep interest rates low.

The Fund’s investments in the Information Technology (IT), Consumer Discretionary, and Industrials sectors were the strongest contributors to performance. There were no sectors that detracted from Fund performance for the period.

Apple, Inc., a market-leading innovator, was the leading contributor to Fund performance in the period. Revenues and earnings grew significantly and Apple’s shares hit an all-time high of $702.10 on September 19, driven by the launch of the iPhone 5 on September 21.

IT holding Equinix, Inc., a network-neutral operator of data centers, was the second leading contributor to Fund performance. Equinix experienced healthy pricing and demand trends, announced its first share buyback in November, and began considering converting to a real estate investment trust (REIT) in February, a move its Board approved this past September. The possibility of a REIT conversion has probably had the largest impact on Equinix’s share price. REITs typically trade at significantly higher multiples, and investors have revalued Equinix’s shares higher to close that gap.

Molycorp Inc., owner of the largest rare earth deposits outside of China, was the largest detractor from Fund performance. Rare earths are the 17 metals (or chemical elements), which are necessary for many of today’s new technologies such as hybrid/electric vehicles and turbines. Ninety-seven percent of these elements are located in China, where the government has been reducing export quotas to ensure adequate domestic supply. We underestimated the effect the global economic slowdown would have on rare earth demand and prices. Based on these developments, we exited our position.

The Fund seeks to manage risk by focusing on business risk (competition, management, regulations), valuation risk (purchase price at what we believe provides a large enough margin of safety), financial risk (leverage and capital structure), and analysis risk (our assumptions). Our objective is not to predict how markets may perform in a given year. Instead, we aim to create a portfolio of unique companies with different end markets because, in our experience, this is the best way to manage market risk over time.

†	Industry sector group levels are provided by 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 classified by the Adviser. All GICS data is provided “as is” with no warranties.
‡	Performance information reflects results of the Retail Shares.

11

 Baron Asset Fund  September 30, 2012 

STATEMENT OF NET ASSETS

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (97.72%)
Consumer Discretionary (24.89%)
	Apparel, Accessories & Luxury Goods (4.11%)
325,000	Fossil, Inc.1	$	26,556,203	$	27,527,500
425,000	Ralph Lauren Corp.		7,872,679		64,272,750
			34,428,882		91,800,250
	Automotive Retail (0.95%)
750,000	CarMax, Inc.1		14,772,082		21,225,000
	Broadcasting (3.30%)
1,000,000	Discovery Communications, Inc., Cl A1		26,436,248		59,630,000
135,000	Liberty Media Corp., Cl A1		10,649,939		14,062,950
			37,086,187		73,692,950
	Casinos & Gaming (2.46%)
475,000	Wynn Resorts Ltd.		1,577,883		54,834,000
	Education Services (0.33%)
325,000	DeVry, Inc.		546,016		7,397,000
	Hotels, Resorts & Cruise Lines (2.86%)
800,000	Choice Hotels International, Inc.		3,917,852		25,592,000
950,000	Hyatt Hotels Corp., Cl A1		27,999,257		38,142,500
			31,917,109		63,734,500
	Internet Retail (3.79%)
1,102,295	HomeAway, Inc.1		29,580,281		25,848,818
95,000	priceline.com, Inc.1		15,427,152		58,779,350
			45,007,433		84,628,168
	Leisure Facilities (2.58%)
1,000,000	Vail Resorts, Inc.		19,491,425		57,650,000
	Specialty Stores (4.51%)
800,000	Dick’s Sporting Goods, Inc.		21,892,096		41,480,000
500,000	Tiffany & Co.		15,543,940		30,940,000
285,000	Tractor Supply Co.		18,855,913		28,183,650
			56,291,949		100,603,650
Total Consumer Discretionary			241,118,966		555,565,518
Energy (5.49%)
	Oil & Gas Drilling (1.23%)
575,000	Helmerich & Payne, Inc.		17,283,720		27,375,750
	Oil & Gas Equipment & Services (2.08%)
235,000	Core Laboratories N.V.2		16,127,180		28,547,800
225,000	Oil States International, Inc.1		15,532,494		17,878,500
			31,659,674		46,426,300
	Oil & Gas Exploration & Production (2.18%)
264,500	Concho Resources, Inc.1		11,663,100		25,061,375
500,000	Whiting Petroleum Corp.1		16,936,666		23,690,000
			28,599,766		48,751,375
Total Energy			77,543,160		122,553,425
Financials (12.90%)
	Asset Management & Custody Banks (1.41%)
375,000	Eaton Vance Corp.		6,710,440		10,860,000
325,000	T. Rowe Price Group, Inc.		7,848,785		20,572,500
			14,559,225		31,432,500
	Investment Banking & Brokerage (2.15%)
3,750,000	The Charles Schwab Corp.		5,193,364		47,962,500

Shares			Cost		Value
Common Stocks (continued)
Financials (continued)
	Office REITs (1.92%)
100,000	Alexander’s, Inc.4	$	4,948,507	$	42,749,000
	Property & Casualty Insurance (3.36%)
1,800,000	Arch Capital Group Ltd.1,2		19,762,437		75,024,000
	Real Estate Services (1.77%)
2,150,000	CBRE Group, Inc., Cl A1		29,247,253		39,581,500
	Regional Banks (0.69%)
450,000	First Republic Bank		11,878,902		15,507,000
	Specialized Finance (1.60%)
1,000,000	MSCI, Inc.1		29,310,561		35,790,000
Total Financials			114,900,249		288,046,500
Health Care (14.56%)
	Health Care Distributors (1.24%)
350,000	Henry Schein, Inc.1		9,382,832		27,744,500
	Health Care Equipment (5.49%)
860,000	IDEXX Laboratories, Inc.1		33,855,475		85,441,000
75,000	Intuitive Surgical, Inc.1		10,179,705		37,172,250
			44,035,180		122,613,250
	Health Care Technology (1.48%)
425,000	Cerner Corp.1		20,277,843		32,899,250
	Life Sciences Tools & Services (4.19%)
700,000	Illumina, Inc.1		30,936,268		33,740,000
350,000	Mettler-Toledo International, Inc.1		23,777,639		59,759,000
			54,713,907		93,499,000
	Pharmaceuticals (2.16%)
415,000	Perrigo Co.		32,939,584		48,210,550
Total Health Care			161,349,346		324,966,550
Industrials (15.81%)
	Air Freight & Logistics (1.31%)
500,000	C.H. Robinson Worldwide, Inc.		9,138,251		29,275,000
	Diversified Support Services (0.44%)
508,873	Ritchie Bros.Auctioneers, Inc.2		11,647,311		9,785,628
	Electrical Components & Equipment (1.55%)
315,000	Roper Industries, Inc.		27,132,157		34,615,350
	Environmental & Facilities Services (1.72%)
425,000	Stericycle, Inc.1		12,054,212		38,471,000
	Industrial Machinery (1.48%)
900,000	Colfax Corp.1		28,585,762		33,003,000
	Research & Consulting Services (6.32%)
175,000	IHS, Inc., Cl A1		16,776,265		17,036,250
1,600,000	Nielsen Holdings N.V.1,2		40,612,243		47,968,000
1,600,000	Verisk Analytics, Inc., Cl A1		42,492,692		76,176,000
			99,881,200		141,180,250
	Trading Companies & Distributors (2.99%)
1,550,000	Fastenal Co.		28,686,798		66,634,500
Total Industrials			217,125,691		352,964,728

12 See Notes to Financial Statements.

 September 30, 2012  Baron Asset Fund 

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (continued)
Information Technology (18.84%)
	Application Software (5.80%)
800,000	ANSYS, Inc.1	$	26,291,690	$	58,720,000
525,000	FactSet Research Systems, Inc.		28,837,256		50,620,500
550,000	Splunk, Inc.1		16,126,466		20,196,000
			71,255,412		129,536,500
	Data Processing & Outsourced Services (1.46%)
725,000	FleetCor Technologies, Inc.1		26,676,932		32,480,000
	Internet Software & Services (2.02%)
250,000	LinkedIn Corp., Cl A1		16,334,647		30,100,000
225,000	Rackspace Hosting, Inc.1		10,003,387		14,870,250
			26,338,034		44,970,250
	IT Consulting & Other Services (8.13%)
445,000	Equinix, Inc.1,4		34,821,001		91,692,250
1,950,000	Gartner, Inc.1		43,568,196		89,875,500
			78,389,197		181,567,750
	Systems Software (1.43%)
650,000	MICROS Systems, Inc.1		31,951,081		31,928,000
Total Information Technology			234,610,656		420,482,500
Materials (1.29%)
	Industrial Gases (1.29%)
350,000	Airgas, Inc.		23,451,908		28,805,000
Telecommunication Services (3.94%)
	Wireless Telecommunication Services (3.94%)
1,400,000	SBA Communications Corp., Cl A1		45,258,201		88,060,000
Total Common Stocks			1,115,358,177		2,181,444,221
Private Equity Investments (1.46%)
Consumer Discretionary (0.40%)
	Hotels, Resorts & Cruise Lines (0.40%)
5,200,000	Kerzner International Holdings Ltd., Cl A1,2,3,4,6		52,000,000		8,944,000
Financials (1.06%)
	Asset Management & Custody Banks (1.06%)
7,056,223	Windy City Investments Holdings, L.L.C.1,3,4,6		34,581,904		23,708,908
Total Private Equity Investments			86,581,904		32,652,908

Principal
Amount			Cost			Value
Short Term Investments (1.27%)
$28,268,278	Repurchase Agreement with
	Fixed Income Clearing Corp.,
	dated 9/28/2012, 0.01% due
	10/1/2012; Proceeds at
	maturity - $28,268,301; (Fully			��
	collateralized by $28,200,000
	U.S. Treasury Note, 1.75%
	due 5/15/2022;
	Market value - $28,834,500)5	$	28,268,278		$	28,268,278
Total Investments (100.45%)		$	1,230,208,359			2,242,365,407
Liabilities Less Cash and Other Assets (-0.45%)						(10,035,953	)
Net Assets					$	2,232,329,454
Retail Shares (Equivalent to $52.03 per share
based on 35,470,011 shares outstanding)					$	1,845,659,948
Institutional Shares (Equivalent to $52.55
per share based on 7,357,842 shares
outstanding)					$	386,669,506

%	Represents percentage of net assets.
1	Non-income producing securities.
2	Foreign corporation.
3	At September 30, 2012, the market value of restricted and fair valued securities amounted to $32,652,908 or 1.46% 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.
6	Level 3 security. See Note 7 regarding Fair Value Measurements.
	All securities are Level 1, unless otherwise noted.

See Notes to Financial Statements. 13

 Baron Growth Fund  September 30, 2012 

STATEMENT OF NET ASSETS

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (96.06%)
Consumer Discretionary (22.20%)
	Apparel Retail (0.57%)
1,464,900	Cia. Hering SA (Brazil)2	$	21,638,953	$	33,116,965
	Apparel, Accessories & Luxury Goods (2.54%)
2,650,000	Under Armour, Inc., Cl A1		42,798,596		147,949,500
	Automotive Retail (0.39%)
750,000	Penske Automotive Group, Inc.		13,032,060		22,567,500
	Casinos & Gaming (2.59%)
2,000,000	Ameristar Casinos, Inc.4		37,023,539		35,600,000
2,669,200	Penn National Gaming, Inc.1		75,092,649		115,042,520
			112,116,188		150,642,520
	Distributors (2.67%)
8,400,000	LKQ Corp.1		55,029,388		155,400,000
	Education Services (1.59%)
3,275,000	DeVry, Inc.4		53,578,543		74,539,000
282,426	Strayer Education, Inc.		18,872,932		18,174,113
			72,451,475		92,713,113
	Home Improvement Retail (1.03%)
1,180,000	Lumber Liquidators Holdings, Inc.1		27,982,186		59,802,400
	Hotels, Resorts & Cruise Lines (2.06%)
3,007,500	Choice Hotels International, Inc.4		74,341,448		96,209,925
1,258,504	Interval Leisure Group, Inc.		22,148,090		23,823,481
			96,489,538		120,033,406
	Internet Retail (0.10%)
150,000	Blue Nile, Inc.1		3,719,156		5,563,500
	Leisure Facilities (2.26%)
2,005,750	Vail Resorts, Inc.4		56,368,636		115,631,487
1,333,700	Whistler Blackcomb Holdings, Inc. (Canada) 2		15,242,539		15,669,042
			71,611,175		131,300,529
	Publishing (1.34%)
1,250,000	Morningstar, Inc.		27,384,748		78,300,000
	Restaurants (1.32%)
450,000	Panera Bread Co., Cl A1		15,602,751		76,900,500
	Specialty Stores (3.74%)
4,200,000	Dick’s Sporting Goods, Inc.		71,202,267		217,770,000
Total Consumer Discretionary			631,058,481		1,292,059,933
Consumer Staples (4.75%)
	Food Distributors (2.04%)
2,032,844	United Natural Foods, Inc.1		86,173,290		118,819,732
	Household Products (1.39%)
1,500,000	Church & Dwight Co., Inc.		27,340,828		80,985,000
	Packaged Foods & Meats (1.32%)
500,000	Dole Food Company, Inc.1		5,824,595		7,015,000
1,325,000	TreeHouse Foods, Inc.1		52,766,413		69,562,500
			58,591,008		76,577,500
Total Consumer Staples			172,105,126		276,382,232

Shares			Cost		Value
Common Stocks (continued)
Energy (6.19%)
	Coal & Consumable Fuels (0.11%)
1,150,000	Ceres, Inc.1	$	14,950,000	$	6,532,000
	Oil & Gas Drilling (0.74%)
900,000	Helmerich & Payne, Inc.		20,239,977		42,849,000
	Oil & Gas Equipment & Services (3.60%)
694,500	CARBO Ceramics, Inc.		45,852,022		43,697,940
800,000	Core Laboratories N.V.2		19,051,024		97,184,000
825,000	SEACOR Holdings, Inc.1		53,205,863		68,772,000
			118,108,909		209,653,940
	Oil & Gas Exploration & Production (0.68%)
500,000	Denbury Resources, Inc.1		2,806,886		8,080,000
247,191	Oasis Petroleum, Inc.1		3,460,674		7,284,719
450,000	SM Energy Co.		15,049,961		24,349,500
			21,317,521		39,714,219
	Oil & Gas Storage & Transportation (1.06%)
1,228,082	Targa Resources Corp.		37,352,560		61,821,648
Total Energy			211,968,967		360,570,807
Financials (15.25%)
	Asset Management & Custody Banks (3.90%)
1,994,899	The Carlyle Group LP		43,767,989		52,346,150
2,016,034	Cohen & Steers, Inc.		55,133,349		59,714,927
1,450,000	Eaton Vance Corp.		25,648,439		41,992,000
1,199,681	Financial Engines, Inc.1		18,866,956		28,588,398
610,000	Manning & Napier, Inc.		7,338,907		7,435,900
903,253	Oaktree Capital Group, LLC		37,686,392		37,033,373
			188,442,032		227,110,748
	Diversified REITs (0.33%)
712,000	American Assets Trust, Inc.		14,309,605		19,074,480
	Investment Banking & Brokerage (0.17%)
700,000	Jefferies Group, Inc.		6,723,959		9,583,000
	Life & Health Insurance (1.13%)
2,300,000	Primerica, Inc.		50,679,918		65,872,000
	Office REITs (2.34%)
135,000	Alexander’s, Inc.5		28,435,048		57,711,150
3,400,000	Douglas Emmett, Inc.		47,518,561		78,438,000
			75,953,609		136,149,150
	Property & Casualty Insurance (3.01%)
4,200,000	Arch Capital Group Ltd.1,2		41,487,457		175,056,000
	Real Estate Services (0.36%)
497,568	Zillow, Inc., Cl A1		13,879,991		20,987,418
	Residential REITs (0.47%)
625,000	American Campus Communities, Inc.		17,129,104		27,425,000
	Specialized Finance (2.15%)
3,500,000	MSCI, Inc.1		75,747,280		125,265,000
	Specialized REITs (1.39%)
775,000	Alexandria Real Estate Equities, Inc.5		29,669,521		56,978,000
900,000	LaSalle Hotel Properties		20,685,153		24,021,000
			50,354,674		80,999,000
Total Financials			534,707,629		887,521,796

14 See Notes to Financial Statements.

 September 30, 2012   Baron Growth Fund

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (continued)
Health Care (9.19%)
	Health Care Equipment (2.46%)
500,000	Edwards Lifesciences Corp.1	$	6,708,289	$	53,685,000
900,000	IDEXX Laboratories, Inc.1		28,558,026		89,415,000
			35,266,315		143,100,000
	Health Care Facilities (2.40%)
300,000	Brookdale Senior Living, Inc.1		5,976,500		6,966,000
4,400,000	Community Health Systems, Inc.1		87,741,084		128,216,000
225,000	VCA Antech, Inc.1		4,667,365		4,439,250
			98,384,949		139,621,250
	Health Care Services (0.12%)
150,000	IPC The Hospitalist Co., Inc.1		3,121,417		6,855,000
	Health Care Supplies (0.13%)
175,000	Neogen Corp.1		3,887,774		7,472,500
	Health Care Technology (0.08%)
50,000	athenahealth, Inc.1		2,445,038		4,588,500
	Life Sciences Tools & Services (2.77%)
575,000	Mettler-Toledo International, Inc.1		29,177,373		98,175,500
880,943	TECHNE Corp.		46,631,249		63,375,039
			75,808,622		161,550,539
	Pharmaceuticals (1.23%)
3,037,400	CFR Pharmaceuticals SA,144A, ADR2,6		70,243,684		71,713,014
Total Health Care			289,157,799		534,900,803
Industrials (12.72%)
	Diversified Support Services (1.90%)
4,000,000	Copart, Inc.1		49,463,498		110,920,000
	Electrical Components & Equipment (1.33%)
3,380,000	Generac Holdings, Inc.1		29,374,310		77,368,200
	Environmental & Facilities Services (0.45%)
1,000,000	Tetra Tech, Inc.1		20,855,699		26,260,000
	Industrial Machinery (4.05%)
2,315,480	Colfax Corp.1		53,608,386		84,908,652
850,000	The Middleby Corp.1		74,456,718		98,294,000
400,000	Valmont Industries, Inc.		32,589,034		52,600,000
			160,654,138		235,802,652
	Railroads (2.30%)
2,000,000	Genesee & Wyoming, Inc., Cl A1		32,221,169		133,720,000
	Research & Consulting Services (0.87%)
375,000	IHS, Inc., Cl A1		15,320,116		36,506,250
600,000	Mistras Group, Inc.1		7,563,468		13,920,000
			22,883,584		50,426,250
	Trading Companies & Distributors (1.44%)
2,500,000	Air Lease Corp.1		59,847,177		51,000,000
485,000	MSC Industrial Direct Co., Inc. Cl A		17,282,737		32,718,100
			77,129,914		83,718,100
	Trucking (0.38%)
475,000	Landstar System, Inc.		11,073,375		22,458,000
Total Industrials			403,655,687		740,673,202

Shares			Cost		Value
Common Stocks (continued)
Information Technology (21.52%)
	Application Software (10.15%)
2,000,000	Advent Software, Inc.1	$	41,747,215	$	49,140,000
2,200,000	ANSYS, Inc.1		53,447,672		161,480,000
825,000	Concur Technologies, Inc.1		18,214,873		60,827,250
1,600,000	FactSet Research Systems, Inc.		80,624,740		154,272,000
500,000	Guidewire Software, Inc.1		13,062,157		15,525,000
1,600,000	Pegasystems, Inc.		49,240,202		46,464,000
1,125,000	RealPage, Inc.1		27,700,372		25,425,000
3,087,713	SS&C Technologies Holdings, Inc.1		52,369,849		77,841,245
			336,407,080		590,974,495
	Electronic Equipment & Instruments (0.60%)
650,000	FEI Company		24,367,636		34,775,000
	Internet Software & Services (1.63%)
999,653	CoStar Group, Inc.1		44,116,616		81,511,706
728,366	LivePerson, Inc.1		10,597,891		13,190,708
			54,714,507		94,702,414
	IT Consulting & Other Services (6.30%)
5,608,007	Booz Allen Hamilton Holding Corp.		78,341,564		77,670,897
325,000	Equinix, Inc.1,5		9,364,597		66,966,250
2,850,000	Gartner, Inc.1		45,787,107		131,356,500
1,525,000	MAXIMUS, Inc.		58,567,377		91,073,000
			192,060,645		367,066,647
	Semiconductor Equipment (1.42%)
1,615,769	Cymer, Inc.1,4		80,921,954		82,501,165
	Systems Software (1.42%)
3,975,000	TOTVS SA (Brazil)2		54,339,175		82,568,627
Total Information Technology			742,810,997		1,252,588,348
Materials (0.57%)
	Construction Materials (0.22%)
898,903	CaesarStone Sdot-Yam Ltd.1,2		10,091,500		12,674,532
	Fertilizers & Agricultural Chemicals (0.35%)
1,476,518	Agrinos AS (Mexico)1,2		11,031,310		11,597,918
425,000	Intrepid Potash, Inc.1		12,327,019		9,129,000
			23,358,329		20,726,918
Total Materials			33,449,829		33,401,450
Telecommunication Services (0.76%)
	Wireless Telecommunication Services (0.76%)
700,000	SBA Communications Corp., Cl A1		2,584,866		44,030,000
Utilities (2.91%)
	Electric Utilities (2.91%)
2,245,000	ITC Holdings Corp.		69,683,650		169,677,100
Total Common Stocks			3,091,183,031		5,591,805,671

See Notes to Financial Statements. 15

 Baron Growth Fund  September 30, 2012 

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Private Equity Investments (0.82%)
Consumer Discretionary (0.22%)
	Hotels, Resorts & Cruise Lines (0.22%)
7,400,000	Kerzner International Holdings Ltd., Cl A1,2,3,5,7	$	74,000,000	$	12,728,000
Financials (0.14%)
	Asset Management & Custody Banks (0.14%)
2,375,173	Windy City Investments Holdings, L.L.C.1,3,5,7		8,630,998		7,980,583
Health Care (0.09%)
	Health Care Technology (0.09%)
828,286	Castlight Health, Inc.1,3,5,7		4,999,998		4,999,998
Utilities (0.37%)
	Independent Power Producers & Energy Traders (0.37%)
4,811,674	Better Place, Inc., Series C Preferred1,2,3,5,7		21,845,000		21,845,000
Total Private Equity Investments			109,475,996		47,553,581
Principal
Amount
Short Term Investments (3.73%)
$217,095,122	Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2012, 0.01% due 10/1/2012; Proceeds at maturity - $217,095,303; (Fully collateralized by $212,815,000 U.S. Treasury Note, 1.25% due 4/30/2019; Market value - $218,135,375 and $3,135,000 U.S. Treasury Note, 2.00% due 11/15/2021; Market value - $3,301,697)6		217,095,122		217,095,122
Total Investments (100.61%)		$	3,417,754,149		5,856,454,374
Liabilities Less Cash and Other Assets (-0.61%)					(35,682,281	)
Net Assets				$	5,820,772,093
Retail Shares (Equivalent to $58.19 per share based on 70,002,569 shares outstanding)				$	4,073,520,668
Institutional Shares (Equivalent to $58.70 per share based on 29,764,909 shares outstanding)				$	1,747,251,425

%	Represents percentage of net assets.
1	Non-income producing securities.
2	Foreign corporation.
3	At September 30, 2012, the market value of restricted and fair valued securities amounted to $47,553,581 or 0.82% 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.
ADR	American Depositary Receipt.
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 September 30, 2012, the market value of Rule 144A securities amounted to $71,713,014 or 1.23% of net assets.
	All securities are Level 1, unless otherwise noted.

16 See Notes to Financial Statements.

 September 30, 2012   Baron Small Cap Fund

STATEMENT OF NET ASSETS

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (96.66%)
Consumer Discretionary (22.37%)
	Advertising (0.78%)
2,000,000	National CineMedia, Inc.	$	33,889,974	$	32,740,000
	Apparel, Accessories & Luxury Goods (4.09%)
750,000	Fossil, Inc.1		18,631,305		63,525,000
2,800,000	Iconix Brand Group, Inc.1		42,475,669		51,072,000
6,500,000	Quiksilver, Inc.1		21,245,177		21,580,000
1,500,000	Tumi Holdings, Inc.1		29,373,217		35,310,000
			111,725,368		171,487,000
	Broadcasting (3.10%)
1,250,000	Liberty Media Corp., Cl A1		18,535,651		130,212,500
	Casinos & Gaming (4.11%)
3,064,000	Penn National Gaming, Inc.1		79,972,017		132,058,400
350,000	Wynn Resorts Ltd.		3,263,528		40,404,000
			83,235,545		172,462,400
	Education Services (0.46%)
300,000	Strayer Education, Inc.		25,970,513		19,305,000
	Footwear (0.66%)
1,700,000	Crocs, Inc.1		30,966,021		27,557,000
	Home Improvement Retail (1.39%)
1,150,000	Lumber Liquidators Holdings, Inc.1		24,079,432		58,282,000
	Homefurnishing Retail (0.84%)
1,250,000	Mattress Firm Holding Corp.1		30,943,654		35,187,500
	Hotels, Resorts & Cruise Lines (0.59%)
17,028,000	Mandarin Oriental Int’l Ltd. (Singapore)2		34,275,510		24,605,460
	Internet Retail (1.61%)
2,000,000	HomeAway, Inc.1		48,464,917		46,900,000
3,035,227	Vitacost.com, Inc.1,4		28,626,533		20,578,839
			77,091,450		67,478,839
	Movies & Entertainment (1.44%)
1,500,000	The Madison Square Garden Co., Cl A1		38,878,075		60,405,000
	Restaurants (3.30%)
800,000	BJ’s Restaurants, Inc.1		33,281,173		36,280,000
1,600,000	Bravo Brio Restaurant Group, Inc.1,4		24,392,669		23,280,000
1,650,000	The Cheesecake Factory, Inc.		39,429,178		58,987,500
2,500,000	Krispy Kreme Doughnuts, Inc.1		17,646,134		19,825,000
			114,749,154		138,372,500
Total Consumer Discretionary			624,340,347		938,095,199
Consumer Staples (2.29%)
	Food Distributors (2.29%)
1,750,000	The Chefs’ Warehouse, Inc.1,4		26,761,792		28,665,000
1,150,000	United Natural Foods, Inc.1		47,593,385		67,217,500
Total Consumer Staples			74,355,177		95,882,500
Energy (7.30%)
	Oil & Gas Equipment & Services (3.16%)
500,000	C&J Energy Services, Inc.1		12,906,658		9,950,000
500,000	CARBO Ceramics, Inc.		34,457,138		31,460,000
450,000	Core Laboratories N.V.2		17,021,125		54,666,000
1,500,000	Forum Energy Technologies, Inc.1		30,927,213		36,480,000
			95,312,134		132,556,000

Shares			Cost		Value
Common Stocks (continued)
Energy (continued)
	Oil & Gas Exploration & Production (1.34%)
5,627,689	Halcon Resources Corp.1	$	45,393,681	$	41,250,960
500,000	Oasis Petroleum, Inc.1		7,000,000		14,735,000
			52,393,681		55,985,960
	Oil & Gas Storage & Transportation (2.80%)
260,000	Golar LNG Ltd.2		8,067,189		10,033,400
1,500,000	Golar LNG Partners L.P.2		36,895,962		48,060,000
901,330	Susser Petroleum Partners LP1,4		20,030,798		21,622,907
750,000	Targa Resources Corp.		17,965,719		37,755,000
			82,959,668		117,471,307
Total Energy			230,665,483		306,013,267
Financials (5.54%)
	Asset Management & Custody Banks (0.94%)
1,650,000	Financial Engines, Inc.1		25,939,078		39,319,500
	Office REITs (1.43%)
750,000	SL Green Realty Corp.		17,178,705		60,052,500
	Real Estate Services (0.66%)
1,500,000	CBRE Group, Inc., Cl A1		7,261,912		27,615,000
	Specialized Finance (0.96%)
1,126,513	MSCI, Inc.1		25,427,990		40,317,900
	Specialized REITs (1.55%)
2,000,000	Chesapeake Lodging Trust4		35,285,655		39,740,000
950,000	LaSalle Hotel Properties		21,642,722		25,355,500
			56,928,377		65,095,500
Total Financials			132,736,062		232,400,400
Health Care (9.50%)
	Health Care Equipment (4.81%)
670,922	IDEXX Laboratories, Inc.1		21,699,129		66,656,101
1,250,000	Insulet Corp.1		22,662,247		26,975,000
150,000	Intuitive Surgical, Inc.1		2,175,000		74,344,500
1,400,000	Masimo Corp.1		30,320,821		33,852,000
			76,857,197		201,827,601
	Health Care Facilities (2.53%)
2,985,000	Brookdale Senior Living, Inc.1		53,151,499		69,311,700
1,750,000	Emeritus Corp.1		50,131,389		36,645,000
			103,282,888		105,956,700
	Health Care Supplies (0.40%)
1,200,000	Endologix, Inc.1		15,625,234		16,584,000
	Life Sciences Tools & Services (1.76%)
300,000	Covance, Inc.1		10,515,514		14,007,000
350,000	Mettler-Toledo International, Inc.1		20,860,002		59,759,000
			31,375,516		73,766,000
Total Health Care			227,140,835		398,134,301

See Notes to Financial Statements. 17

 Baron Small Cap Fund  September 30, 2012 

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (continued)
Industrials (20.08%)
	Aerospace & Defense (4.28%)
3,000,000	The KEYW Holding Corp.1,4	$	34,301,184	$	37,500,000
1,000,000	TransDigm Group, Inc.1		23,025,486		141,870,000
			57,326,670		179,370,000
	Air Freight & Logistics (0.35%)
1,200,000	XPO Logistics, Inc.1,4		19,164,182		14,688,000
	Construction & Farm Machinery & Heavy Trucks (0.11%)
1,000,000	Accuride Corp.1		14,427,690		4,660,000
	Diversified Support Services (0.80%)
1,750,000	Ritchie Bros. Auctioneers, Inc.2		32,711,666		33,652,500
	Electrical Components & Equipment (3.04%)
1,000,000	Acuity Brands, Inc.		54,396,209		63,290,000
1,350,000	Polypore International, Inc.1		50,296,058		47,722,500
650,000	Thermon Group Holdings, Inc.1		14,556,940		16,243,500
			119,249,207		127,256,000
	Environmental & Facilities Services (3.26%)
1,250,000	Clean Harbors, Inc.1		32,305,284		61,062,500
2,500,000	Waste Connections, Inc.		44,418,371		75,625,000
			76,723,655		136,687,500
	Human Resource & Employment Services (0.48%)
1,000,000	On Assignment, Inc.1		17,397,767		19,920,000
	Industrial Machinery (3.65%)
1,022,540	Blount International, Inc.1		13,424,434		13,456,626
800,000	Graco, Inc.		18,336,909		40,224,000
750,000	Nordson Corp.		22,985,459		43,965,000
1,800,000	Rexnord Corp.1		33,586,204		32,796,000
529,983	Tennant Co.		19,452,795		22,693,872
			107,785,801		153,135,498
	Office Services & Supplies (0.41%)
1,300,000	Interface, Inc.		17,528,280		17,173,000
	Railroads (1.29%)
809,050	Genesee & Wyoming, Inc., Cl A1		22,253,549		54,093,083
	Research & Consulting Services (1.56%)
1,335,772	Acacia Research Corp.1		47,646,622		36,613,511
1,250,000	Mistras Group, Inc.1		14,680,295		29,000,000
			62,326,917		65,613,511
	Trading Companies & Distributors (0.85%)
1,750,000	Air Lease Corp.1		42,316,017		35,700,000
Total Industrials			589,211,401		841,949,092
Information Technology (23.41%)
	Application Software (6.98%)
1,300,000	ACI Worldwide, Inc.1		48,157,496		54,938,000
1,750,000	Advent Software, Inc.1		31,149,679		42,997,500
1,250,000	Guidewire Software, Inc.1		31,971,364		38,812,500
2,750,000	RealPage, Inc.1		56,541,933		62,150,000
500,000	Synchronoss Technologies, Inc.1		15,138,475		11,450,000
804,700	The Ultimate Software Group, Inc.1		23,895,824		82,159,870
			206,854,771		292,507,870

Shares			Cost		Value
Common Stocks (continued)
Information Technology (continued)
	Data Processing & Outsourced Services (2.15%)
1,000,000	FleetCor Technologies, Inc.1	$	25,103,189	$	44,800,000
650,000	Wright Express Corp.1		30,423,456		45,318,000
			55,526,645		90,118,000
	Electronic Components (1.01%)
1,000,000	Rogers Corp.1,4		43,765,303		42,360,000
	Electronic Equipment & Instruments (4.63%)
1,700,000	Cognex Corp.		57,746,835		58,786,000
625,000	Coherent, Inc.1		30,351,577		28,662,500
1,150,000	FEI Company		47,367,864		61,525,000
1,000,000	FLIR Systems, Inc.		5,859,777		19,975,000
1,000,000	National Instruments Corp.		18,830,478		25,170,000
			160,156,531		194,118,500
	Electronic Manufacturing Services (0.44%)
1,750,000	Mercury Computer Systems, Inc.1,4		32,185,131		18,585,000
	Internet Software & Services (0.72%)
1,000,000	Bazaarvoice, Inc.1		16,072,402		15,150,000
1,204,321	Velti plc1,2		18,660,603		10,080,167
2,545,455	Viggle, Inc.1,3,4,6		13,000,000		4,734,546
			47,733,005		29,964,713
	IT Consulting & Other Services (6.77%)
875,000	Equinix, Inc.1,5		55,025,037		180,293,750
2,250,000	Gartner, Inc.1		41,942,703		103,702,500
			96,967,740		283,996,250
	Semiconductor Equipment (0.49%)
400,000	Cymer, Inc.1		22,287,893		20,424,000
	Systems Software (0.22%)
400,000	Infoblox, Inc.1		7,582,664		9,300,000
Total Information Technology			673,059,683		981,374,333
Materials (1.45%)
	Diversified Metals & Mining (1.45%)
4,000,000	Globe Specialty Metals, Inc.4		46,608,066		60,880,000
Telecommunication Services (4.32%)
	Wireless Telecommunication Services (4.32%)
3,899,000	Sarana Menara Nusantara Tbk PT (Indonesia)1,2,6		8,209,097		8,107,638
2,750,000	SBA Communications Corp., Cl A1		26,849,041		172,975,000
Total Telecommunication Services			35,058,138		181,082,638
Utilities (0.40%)
	Electric Utilities (0.40%)
225,000	ITC Holdings Corp.		9,427,959		17,005,500
Total Common Stocks			2,642,603,151		4,052,817,230

18 See Notes to Financial Statements.

 September 30, 2012   Baron Small Cap Fund

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Private Equity Investments (0.26%)
Consumer Discretionary (0.26%)
	Hotels, Resorts & Cruise Lines (0.14%)
3,500,000	Kerzner International Holdings Ltd., Cl A1,2,3,5,7	$	35,000,000	$	6,020,000
	Movies & Entertainment (0.12%)
1,250,000	SFX Holding Corporation1,3,5,7		5,000,000		5,000,000
Total Private Equity Investments			40,000,000		11,020,000
Warrants (0.02%)
Consumer Discretionary (0.01%)
	Internet Retail (0.01%)
242,589	Vitacost.com, Inc. Warrants, Exp 2/16/20151,3,4,6		30,234		363,884
Information Technology (0.01%)
	Internet Software & Services (0.01%)
545,455	Viggle, Inc. Warrants, Callable, Exp 4/27/20151,3,4,6		0		0
2,000,000	Viggle, Inc. Warrants, Non-callable, Exp 8/22/20141,3,4,6		0		180,000
Total Information Technology			0		180,000
Total Warrants			30,234		543,884
Principal
Amount
Short Term Investments (2.83%)
$118,671,258	Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2012, 0.01% due 10/1/2012; Proceeds at maturity - $118,671,357; (Fully collateralized by $69,865,000 U.S. Treasury Note, 2.00% - due 11/15/2021; Market value $73,579,932 and $46,425,000 U.S. Treasury Note, 1.75% due 5/15/2022; Market value $47,469,563)6		118,671,258		118,671,258
Total Investments (99.77%)		$	2,801,304,643		4,183,052,372
Cash and Other Assets Less Liabilities (0.23%)					9,771,002
Net Assets				$	4,192,823,374
Retail Shares (Equivalent to $26.14 per share based on 117,919,337 shares outstanding)				$	3,081,832,626
Institutional Shares (Equivalent to $26.36 per share based on 42,150,879 shares outstanding)				$	1,110,990,748

%	Represents percentage of net assets.
1	Non-income producing securities.
2	Foreign corporation.
3	At September 30, 2012, the market value of restricted and fair valued securities amounted to $16,298,430 or 0.39% 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.
	All securities are Level 1, unless otherwise noted.

See Notes to Financial Statements. 19

 Baron Opportunity Fund  September 30, 2012 

STATEMENT OF NET ASSETS

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (95.08%)
Consumer Discretionary (20.11%)
	Apparel, Accessories & Luxury Goods (4.00%)
65,500	Fossil, Inc.1	$	4,970,688	$	5,547,850
80,500	lululemon athletica, inc.1		4,057,057		5,952,170
182,350	Tumi Holdings, Inc.1		3,748,841		4,292,519
			12,776,586		15,792,539
	Automobile Manufacturers (1.03%)
138,500	Tesla Motors, Inc.1		4,284,024		4,055,280
	Automotive Retail (1.40%)
195,370	CarMax, Inc.1		5,268,030		5,528,971
	Broadcasting (5.15%)
174,300	Discovery Communications, Inc., Series C1		6,677,021		9,767,772
101,400	Liberty Media Corp., Cl A1		6,480,876		10,562,838
			13,157,897		20,330,610
	Hotels, Resorts & Cruise Lines (1.20%)
81,500	Starwood Hotels & Resorts Worldwide, Inc.		4,758,708		4,723,740
	Internet Retail (7.33%)
135,500	Blue Nile, Inc.1		4,707,526		5,025,695
338,222	HomeAway, Inc.1		8,104,812		7,931,306
13,136	priceline.com, Inc.1		3,529,550		8,127,637
252,900	Shutterfly, Inc.1		7,043,709		7,870,248
			23,385,597		28,954,886
Total Consumer Discretionary			63,630,842		79,386,026
Energy (7.81%)
	Oil & Gas Equipment & Services (4.21%)
111,668	CARBO Ceramics, Inc.		8,745,771		7,026,151
120,570	Oil States International, Inc.1		8,605,378		9,580,492
			17,351,149		16,606,643
	Oil & Gas Exploration & Production (1.45%)
194,881	Oasis Petroleum, Inc.1		3,674,466		5,743,143
	Oil & Gas Storage & Transportation (2.15%)
220,260	Golar LNG Ltd.2		8,157,798		8,499,833
Total Energy			29,183,413		30,849,619
Financials (2.54%)
	Real Estate Services (1.47%)
315,000	CBRE Group, Inc., Cl A1		5,980,394		5,799,150
	Specialized Finance (1.07%)
118,100	MSCI, Inc.1		2,716,500		4,226,799
Total Financials			8,696,894		10,025,949

Shares			Cost		Value
Common Stocks (continued)
Health Care (9.44%)
	Health Care Equipment (5.03%)
38,000	Edwards Lifesciences Corp.1	$	3,291,428	$	4,080,060
12,600	Intuitive Surgical, Inc.1		3,889,511		6,244,938
393,344	Masimo Corp.1		9,589,420		9,511,058
			16,770,359		19,836,056
	Health Care Technology (2.03%)
42,128	athenahealth, Inc.1		2,233,458		3,866,086
53,597	Cerner Corp.1		3,440,265		4,148,944
			5,673,723		8,015,030
	Life Sciences Tools & Services (2.38%)
195,000	Illumina, Inc.1		8,384,441		9,399,000
Total Health Care			30,828,523		37,250,086
Industrials (7.96%)
	Electrical Components & Equipment (2.59%)
289,368	Polypore International, Inc.1		11,080,531		10,229,159
	Environmental & Facilities Services (1.04%)
156,500	Tetra Tech, Inc.1		3,377,195		4,109,690
	Research & Consulting Services (4.33%)
72,000	IHS, Inc., Cl A1		6,967,679		7,009,200
212,000	Verisk Analytics, Inc., Cl A1		10,105,015		10,093,320
			17,072,694		17,102,520
Total Industrials			31,530,420		31,441,369
Information Technology (40.20%)
	Application Software (13.18%)
166,150	ANSYS, Inc.1		6,482,776		12,195,410
61,000	Citrix Systems, Inc.1		4,497,952		4,670,770
43,300	FactSet Research Systems, Inc.		2,864,164		4,174,986
263,620	Guidewire Software, Inc.1		6,869,235		8,185,401
519,610	RealPage, Inc.1		10,149,978		11,743,186
46,500	salesforce.com, inc.1		5,628,192		7,100,085
107,856	Splunk, Inc.1		3,198,752		3,960,472
			39,691,049		52,030,310
	Internet Software & Services (10.26%)
512,700	Bazaarvoice, Inc.1		7,231,521		7,767,405
81,000	CoStar Group, Inc.1		3,379,779		6,604,740
159,500	Liquidity Services, Inc.1		7,077,859		8,008,495
245,000	LivePerson, Inc.1		2,748,322		4,436,950
149,500	Rackspace Hosting, Inc.1		6,260,143		9,880,455
454,500	Velti plc1,2		4,100,637		3,804,165
			30,798,261		40,502,210
	IT Consulting & Other Services (8.42%)
303,600	Acxiom Corp.1		4,454,209		5,546,772
78,000	Equinix, Inc.1,4		2,477,614		16,071,900
252,644	Gartner, Inc.1		4,793,425		11,644,362
			11,725,248		33,263,034

20 See Notes to Financial Statements.

 September 30, 2012   Baron Opportunity Fund

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (continued)
Information Technology (continued)
	Semiconductor Equipment (1.02%)
79,000	Cymer, Inc.1	$	4,528,199	$	4,033,740
	Semiconductors (1.44%)
55,926	Mellanox Technologies Ltd.1,2		2,151,744		5,678,167
	Systems Software (5.88%)
111,000	Check Point Software Technologies Ltd.1,2		5,290,627		5,345,760
207,500	Infoblox, Inc.1		3,975,830		4,824,375
162,500	MICROS Systems, Inc.1		8,071,159		7,982,000
89,000	Red Hat, Inc.1		4,813,468		5,067,660
			22,151,084		23,219,795
Total Information Technology			111,045,585		158,727,256
Materials (3.00%)
	Fertilizers & Agricultural Chemicals (1.43%)
718,202	Agrinos AS (Mexico)1,2		5,190,410		5,641,413
	Specialty Chemicals (1.57%)
94,900	Cytec Industries, Inc.		6,085,671		6,217,848
Total Materials			11,276,081		11,859,261
Telecommunication Services (4.02%)
	Wireless Telecommunication Services (4.02%)
252,500	SBA Communications Corp., Cl A1		5,712,022		15,882,250
Total Common Stocks			291,903,780		375,421,816
Private Equity Investments (1.01%)
Health Care (0.38%)
	Health Care Technology (0.38%)
248,486	Castlight Health, Inc.1,3,4,6		1,500,001		1,500,001
Utilities (0.63%)
	Independent Power Producers & Energy Traders (0.63%)
550,661	Better Place, Inc., Series C Preferred1,2,3,4,6		2,500,001		2,500,001
Total Private Equity Investments			4,000,002		4,000,002

Principal Amount			Cost		Value
Short Term Investments (3.84%)
$ 15,152,549	Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2012, 0.01% due 10/1/2012; Proceeds at maturity - $15,152,562; (Fully collateralized by $15,080,000 U.S. Treasury Note, 1.25% due 4/30/2019; Market value - $15,457,000)5	$	15,152,549	$	15,152,549
Total Investments (99.93%)		$	311,056,331		394,574,367
Cash and Other Assets Less Liabilities (0.07%)					290,984
Net Assets				$	394,865,351
Retail Shares (Equivalent to $15.61 per share based on 21,293,269 shares outstanding)				$	332,426,172
Institutional Shares (Equivalent to $15.75 per share based on 3,964,131 shares outstanding)				$	62,439,179

%	Represents percentage of net assets.
1	Non-income producing securities.
2	Foreign corporation.
3	At September 30, 2012, the market value of restricted and fair valued securities amounted to $4,000,002 or 1.01% 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.
	All securities are Level 1, unless otherwise noted.

See Notes to Financial Statements. 21

 Baron Fifth Avenue Growth Fund  September 30, 2012 

STATEMENT OF NET ASSETS

   SEPTEMBER 30, 2012

Shares			Cost		Value
Common Stocks (96.05%)
Consumer Discretionary (19.65%)
	Advertising (1.51%)
15,781	Omnicom Group, Inc.	$	687,262	$	813,668
	Broadcasting (3.20%)
16,519	Liberty Media Corp., Cl A1		1,033,750		1,720,784
	Casinos & Gaming (2.60%)
12,092	Wynn Resorts Ltd.		1,490,450		1,395,901
	Education Services (1.93%)
62,082	New Oriental Education &
	Technology Group, ADR2		1,493,338		1,034,907
	Internet Retail (7.61%)
10,594	Amazon.com, Inc.1		1,589,650		2,694,266
2,258	priceline.com, Inc.1		1,222,171		1,397,092
			2,811,821		4,091,358
	Restaurants (2.80%)
22,693	YUM! Brands, Inc.		1,230,967		1,505,454
Total Consumer Discretionary			8,747,588		10,562,072
Consumer Staples (3.29%)
	Hypermarkets & Super Centers (1.51%)
8,121	Costco Wholesale Corp.		463,230		813,115
	Packaged Foods & Meats (1.78%)
13,027	Mead Johnson Nutrition Co.		930,782		954,619
Total Consumer Staples			1,394,012		1,767,734
Energy (2.01%)
	Oil & Gas Storage & Transportation (2.01%)
27,992	Golar LNG Ltd.2		1,144,147		1,080,211
Financials (11.91%)
	Asset Management & Custody Banks (1.50%)
61,405	Cetip SA - Mercados Organizados (Brazil)2		847,778		805,709
	Diversified Banks (1.57%)
20,990	ICICI Bank Limited, ADR2		729,245		842,539
	Diversified Real Estate Activities (3.35%)
52,246	Brookfield Asset Management, Inc., Cl A2		1,561,279		1,803,009
	Specialized Finance (5.49%)
169,236	BM&FBOVESPA SA (Brazil)2		896,612		1,022,637
33,613	CME Group, Inc.		1,730,651		1,926,025
			2,627,263		2,948,662
Total Financials			5,765,565		6,399,919
Health Care (5.67%)
	Health Care Equipment (2.40%)
2,604	Intuitive Surgical, Inc.1		802,968		1,290,620
	Life Sciences Tools & Services (3.27%)
36,445	Illumina, Inc.1		1,358,423		1,756,649
Total Health Care			2,161,391		3,047,269

Shares			Cost		Value
Common Stocks (continued)
Industrials (5.69%)
	Aerospace & Defense (1.17%)
3,849	Precision Castparts Corp.	$	611,550	$	628,696
	Research & Consulting Services (2.25%)
25,402	Verisk Analytics, Inc., Cl A1		965,542		1,209,389
	Trading Companies & Distributors (2.27%)
28,461	Fastenal Co.		631,611		1,223,538
Total Industrials			2,208,703		3,061,623
Information Technology (42.11%)
	Application Software (3.11%)
15,833	Citrix Systems, Inc.1		967,443		1,212,333
3,020	salesforce.com, inc.1		350,713		461,124
			1,318,156		1,673,457
	Communications Equipment (2.78%)
23,913	QUALCOMM, Inc.		1,411,633		1,494,323
	Computer Hardware (8.49%)
6,839	Apple, Inc.		1,620,002		4,563,391
	Data Processing & Outsourced Services (6.48%)
3,310	MasterCard, Inc., Cl A		984,938		1,494,399
14,815	Visa, Inc., Cl A		1,294,253		1,989,358
			2,279,191		3,483,757
	Internet Software & Services (14.04%)
7,364	Baidu, Inc., ADR1,2		884,670		860,262
11,056	eBay, Inc.1		538,198		535,221
26,057	Facebook, Inc., Cl A1		773,718		564,134
4,093	Google, Inc., Cl A1		1,829,106		3,088,169
5,533	LinkedIn Corp., Cl A1		412,104		666,173
49,805	Millennial Media, Inc.1		647,465		714,702
16,902	Rackspace Hosting, Inc.1		725,513		1,117,053
			5,810,774		7,545,714
	IT Consulting & Other Services (4.12%)
10,738	Equinix, Inc.1,4		886,625		2,212,565
	Semiconductor Equipment (1.51%)
15,118	ASML Holding N.V.2		858,202		811,535
	Systems Software (1.58%)
14,935	Red Hat, Inc.1		725,139		850,399
Total Information Technology			14,909,722		22,635,141
Materials (5.72%)
	Diversified Chemicals (2.28%)
14,546	BASF SE (Germany)2		998,480		1,227,152
	Fertilizers & Agricultural Chemicals (3.44%)
20,294	Monsanto Co.		1,487,881		1,847,160
Total Materials			2,486,361		3,074,312
Total Common Stocks			38,817,489		51,628,281

22 See Notes to Financial Statements.

 September 30, 2012   Baron Fifth Avenue Growth Fund

STATEMENT OF NET ASSETS (Continued)

   SEPTEMBER 30, 2012

Shares			Cost		Value
Private Equity Investments (0.71%)
Utilities (0.71%)
	Independent Power Producers & Energy Traders (0.71%)
83,700	Better Place, Inc., Series C Preferred1,2,3,4,6	$	379,998	$	379,998
Principal
Amount
Short Term Investments (3.65%)
$1,961,394	Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2012, 0.01% due 10/1/2012; Proceeds at maturity - $1,961,396; (Fully collateralized by $1,955,000 U.S. Treasury Note, 1.25% due 4/30/2019; Market value - $2,003,875)5		1,961,394		1,961,394
Total Investments (100.41%)		$	41,158,881		53,969,673
Liabilities Less Cash and Other Assets (-0.41%)					(219,759	)
Net Assets				$	53,749,914
Retail Shares (Equivalent to $11.83 per share based on 2,945,407 shares outstanding)				$	34,851,868
Institutional Shares (Equivalent to $11.89 per share based on 1,589,120 shares outstanding)				$	18,898,046

%	Represents percentage of net assets.
1	Non-income producing securities.
2	Foreign corporation.
3	At September 30, 2012, the market value of restricted and fair valued securities amounted to $379,998 or 0.71% of net assets. This security is not 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.
ADR	American Depositary Receipt.
	All securities are Level 1, unless otherwise noted.

See Notes to Financial Statements. 23

 Baron Funds  September 30, 2012 

STATEMENTS OF ASSETS AND LIABILITIES

   SEPTEMBER 30, 2012

												Baron				Baron Fifth
	Baron Asset				Baron Growth			Baron Small				Opportunity				Avenue Growth
	Fund				Fund			Cap Fund				Fund				Fund
Assets:
Investments in securities, at value*
Unaffiliated investments		$	2,242,365,407		��	$	5,451,972,797		$	3,869,874,196			$	394,574,367			$	53,969,673
“Affiliated” investments			—				404,481,577			313,178,176				—				—
Total investments in securities, at value			2,242,365,407				5,856,454,374			4,183,052,372				394,574,367				53,969,673
Foreign currency, at value†			—				—			—				30				1
Cash			—				—			—				—				17,383
Receivable for securities sold			2,407,495				346,565			11,571,784				8,459,322				—
Receivable for shares sold			764,957				2,996,205			4,954,388				932,897				1,085,468
Dividends and interest receivable			643,024				1,795,318			1,158,159				118				24,902
Prepaid expenses			15,795				43,028			27,416				2,117				267
			2,246,196,678				5,861,635,490			4,200,764,119				403,968,851				55,097,694
Liabilities:
Payable for securities purchased			12,095,487				—			1,907,461				8,695,445				1,256,781
Payable for shares redeemed			1,446,778				40,222,847			5,618,528				311,282				34,233
Investment advisory fees payable (Note 4)			617				994			231				576				865
Distribution fees payable (Note 4)			35				583			30				674				863
Accrued expenses and other payables			324,307				638,973			414,495				95,523				55,038
			13,867,224				40,863,397			7,940,745				9,103,500				1,347,780
Net Assets		$	2,232,329,454			$	5,820,772,093		$	4,192,823,374			$	394,865,351			$	53,749,914
Net Assets consist of:
Paid-in capital		$	1,069,739,490			$	2,862,443,530		$	2,713,097,070			$	313,376,169			$	44,082,931
Undistributed (accumulated) net investment income (loss)			(4,519,568	)			28,443,178			(23,706,589	)			(2,894,955	)			(151,635	)
Undistributed (accumulated) net realized gain (loss) on investments and foreign currency transactions			154,952,484				491,185,160			121,685,164				866,099				(2,991,990	)
Net unrealized appreciation on investments and foreign currency translations			1,012,157,048				2,438,700,225			1,381,747,729				83,518,038				12,810,608
Net Assets		$	2,232,329,454			$	5,820,772,093		$	4,192,823,374			$	394,865,351			$	53,749,914
Retail Shares:
Net Assets		$	1,845,659,948			$	4,073,520,668		$	3,081,832,626			$	332,426,172			$	34,851,868
Shares Outstanding ($0.01 par value; indefinite shares authorized)			35,470,011				70,002,569			117,919,337				21,293,269				2,945,407
Net Asset Value Per Share		$	52.03			$	58.19		$	26.14			$	15.61			$	11.83
Institutional Shares:
Net Assets		$	386,669,506			$	1,747,251,425		$	1,110,990,748			$	62,439,179			$	18,898,046
Shares Outstanding ($0.01 par value; indefinite shares authorized)			7,357,842				29,764,909			42,150,879				3,964,131				1,589,120
Net Asset Value Per Share		$	52.55			$	58.70		$	26.36			$	15.75			$	11.89
*Investments in securities, at cost:
Unaffiliated investments		$	1,230,208,359			$	3,115,520,029		$	2,477,153,096			$	311,056,331			$	41,158,881
“Affiliated” investments			—				302,234,120			324,151,547				—				—
Total investments in securities, at cost		$	1,230,208,359			$	3,417,754,149		$	2,801,304,643			$	311,056,331			$	41,158,881
†Foreign currency, at cost:		$	—			$	—		$	—			$	30			$	1

24 See Notes to Financial Statements.

 September 30, 2012  Baron Funds 

STATEMENTS OF OPERATIONS

   FOR THE YEAR ENDED SEPTEMBER 30, 2012

													Baron				Baron Fifth
	Baron Asset				Baron Growth				Baron Small				Opportunity				Avenue Growth
	Fund				Fund				Cap Fund				Fund				Fund
Investment income:
Income:
Dividends — unaffiliated investments		$	24,504,456			$	64,943,820			$	18,691,987			$	524,885			$	458,414
Dividends — “affiliated” investments			—				39,408,434				2,770,000				—				—
Interest			4,149				11,331				16,462				1,231				93
Securities lending income			—				92,766				27,985				249,098				—
Foreign taxes withheld on dividends			(113,775	)			(716,011	)			(206,172	)			(4,183	)			(10,159	)
Total income			24,394,830				103,740,340				21,300,262				771,031				448,348
Expenses:
Investment advisory fees (Note 4)			23,082,755				59,460,511				39,365,204				3,363,704				402,787
Distribution fees — Retail Shares (Note 4)			4,870,235				10,866,563				7,820,581				721,410				73,374
Shareholder servicing agent fees and expenses — Retail Shares			611,190				827,700				514,955				138,758				32,157
Shareholder servicing agent fees and expenses — Institutional Shares			30,591				102,667				73,769				15,357				10,182
Reports to shareholders			704,200				1,811,700				1,037,800				142,700				4,669
Custodian and fund accounting fees			102,133				473,657				192,884				41,775				33,603
Trustee fees and expenses			78,180				204,055				130,880				11,318				801
Registration and filing fees			75,240				121,480				114,960				42,260				26,560
Professional fees			45,289				146,844				78,495				42,144				35,739
Insurance expense			43,594				106,343				66,787				5,456				633
Administration fees			26,511				26,511				26,511				26,511				26,510
Line of credit fees			22,010				58,081				39,292				3,276				477
Miscellaneous expenses			1,384				1,744				1,223				1,482				1,483
Total operating expenses			29,693,312				74,207,856				49,463,341				4,556,151				648,975
Reimbursement of expenses by Adviser — Retail Shares (Note 4)			—				—				—				—				(73,855	)
Reimbursement of expenses by Adviser — Institutional Shares (Note 4)			—				—				—				—				(31,828	)
Net expenses			29,693,312				74,207,856				49,463,341				4,556,151				543,292
Net investment income (loss)			(5,298,482	)			29,532,484				(28,163,079	)			(3,785,120	)			(94,944	)
Realized and unrealized gain (loss) on investments:
Net realized gain on investments sold — unaffiliated investments			171,302,435				467,191,692				142,340,621				3,391,014				135,187
Net realized gain (loss) on investments sold — “affiliated” investments			—				29,654,807				(22,099,559	)			—				—
Net realized gain (loss) on foreign currency transactions			—				(541,602	)			12,461				(31,335	)			(56,691	)
Net change in unrealized appreciation (depreciation) of:
Investments			339,828,168				910,752,858				842,563,579				64,111,018				10,249,019
Foreign currency translations			—				208,388				2				2				(184	)
Net gain on investments			511,130,603				1,407,266,143				962,817,104				67,470,699				10,327,331
Net increase in net assets resulting from operations		$	505,832,121			$	1,436,798,627			$	934,654,025			$	63,685,579			$	10,232,387

See Notes to Financial Statements. 25

 Baron Funds  September 30, 2012 

STATEMENTS OF CHANGES IN NET ASSETS

	Baron Asset Fund								Baron Growth Fund								Baron Small Cap Fund
	For the Year				For the Year				For the Year				For the Year				For the Year				For the Year
	Ended				Ended				Ended				Ended				Ended				Ended
	September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
	2012				2011				2012				2011				2012				2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)		$	(5,298,482	)		$	(10,768,505	)		$	29,532,484			$	(32,694,899	)		$	(28,163,079	)		$	(23,502,406	)
Net realized gain			171,302,435				344,184,684				496,304,897				732,722,363				120,253,523				303,026,886
Net change in unrealized appreciation			339,828,168				(240,884,984	)			910,961,246				(423,488,699	)			842,563,581				(303,776,962	)
Increase (decrease) in net assets resulting from operations			505,832,121				92,531,195				1,436,798,627				276,538,765				934,654,025				(24,252,482	)
Distributions to shareholders from:
Net realized gain on investments — Retail Shares			(295,295,363	)			(36,608,080	)			(70,607,923	)			—				(62,711,476	)			—
Net realized gain on investments — Institutional Shares			(44,957,997	)			(4,102,537	)			(22,801,280	)			—				(11,933,831	)			—
Decrease in net assets from distributions to shareholders			(340,253,360	)			(40,710,617	)			(93,409,203	)			—				(74,645,307	)			—
Capital share transactions:
Proceeds from the sale of shares — Retail Shares			109,530,493				206,407,108				566,465,559				783,256,081				489,661,271				834,198,906
Proceeds from the sale of shares — Institutional Shares			150,113,893				158,035,997				487,130,832				750,443,066				596,291,795				417,020,031
Net asset value of shares issued in reinvestment of distributions — Retail Shares			287,463,007				35,501,226				68,478,826				—				60,742,912				—
Net asset value of shares issued in reinvestment of distributions — Institutional Shares			43,162,313				3,978,079				20,899,104				—				10,446,810				—
Cost of shares redeemed — Retail Shares			(614,965,623	)			(800,573,643	)			(1,667,071,120	)			(1,812,333,634	)			(1,011,177,996	)			(1,037,488,928	)
Cost of shares redeemed — Institutional Shares			(122,336,233	)			(108,385,325	)			(371,034,342	)			(197,066,002	)			(173,712,082	)			(121,981,124	)
Increase (decrease) in net assets derived from capital share transactions			(147,032,150	)			(505,036,558	)			(895,131,141	)			(475,700,489	)			(27,747,290	)			91,748,885
Net increase (decrease) in net assets			18,546,611				(453,215,980	)			448,258,283				(199,161,724	)			832,261,428				67,496,403
Net Assets:
Beginning of year			2,213,782,843				2,666,998,823				5,372,513,810				5,571,675,534				3,360,561,946				3,293,065,543
End of year		$	2,232,329,454			$	2,213,782,843			$	5,820,772,093			$	5,372,513,810			$	4,192,823,374			$	3,360,561,946
Undistributed (accumulated) net investment income (loss) at end of year		$	(4,519,568	)		$	(233,663	)		$	28,443,178			$	(258,885	)		$	(23,706,589	)		$	—
Capital share transactions — Retail Shares
Shares sold			2,199,461				3,687,700				10,646,693				15,087,977				20,068,255				34,224,681
Shares issued in reinvestment of distributions			6,436,700				647,714				1,393,262				—				2,742,754				—
Shares redeemed			(12,448,237	)			(14,257,555	)			(31,051,472	)			(35,222,598	)			(41,265,891	)			(42,912,694	)
Net decrease			(3,812,076	)			(9,922,141	)			(19,011,517	)			(20,134,621	)			(18,454,882	)			(8,688,013	)
Capital share transactions — Institutional Shares
Shares sold			2,999,141				2,782,061				9,003,458				14,556,325				23,973,944				17,262,870
Shares issued in reinvestment of distributions			959,162				72,290				422,375				—				467,976				—
Shares redeemed			(2,460,749	)			(1,905,740	)			(6,819,618	)			(3,770,758	)			(7,033,105	)			(4,971,165	)
Net increase			1,497,554				948,611				2,606,215				10,785,567				17,408,815				12,291,705

26 See Notes to Financial Statements.

 September 30, 2012  Baron Funds 

STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Baron Opportunity Fund								Baron Fifth Avenue Growth Fund
	For the Year				For the Year				For the Year				For the Year
	Ended				Ended				Ended				Ended
	September 30,				September 30,				September 30,				September 30,
	2012				2011				2012				2011
Increase (Decrease) in Net Assets:
Operations:
Net investment loss		$	(3,785,120	)		$	(3,140,264	)		$	(94,944	)		$	(188,697	)
Net realized gain			3,359,679				30,640,922				78,496				3,699,728
Net change in unrealized appreciation			64,111,020				(28,903,584	)			10,248,835				(3,964,878	)
Increase (decrease) in net assets resulting from operations			63,685,579				(1,402,926	)			10,232,387				(453,847	)
Capital share transactions:
Proceeds from the sale of shares — Retail Shares			113,195,896				99,843,614				11,074,077				3,050,164
Proceeds from the sale of shares — Institutional Shares			30,456,183				25,978,090				14,217,880				289,391
Cost of shares redeemed — Retail Shares			(76,098,866	)			(73,176,427	)			(6,965,740	)			(8,346,674	)
Cost of shares redeemed — Institutional Shares			(12,263,787	)			(15,328,420	)			(8,416,478	)			(299,679	)
Increase (decrease) in net assets derived from capital share transactions			55,289,426				37,316,857				9,909,739				(5,306,798	)
Increase (decrease) in net assets			118,975,005				35,913,931				20,142,126				(5,760,645	)
Net Assets:
Beginning of year			275,890,346				239,976,415				33,607,788				39,368,433
End of year		$	394,865,351			$	275,890,346			$	53,749,914			$	33,607,788
Accumulated net investment loss at end of year		$	(2,894,955	)		$	—			$	(151,635	)		$	—
Capital share transactions — Retail Shares
Shares sold			7,818,334				6,935,681				975,308				298,692
Shares redeemed			(5,266,282	)			(5,004,246	)			(638,620	)			(833,767	)
Net increase (decrease)			2,552,052				1,931,435				336,688				(535,075	)
Capital share transactions — Institutional Shares
Shares sold			2,058,518				1,795,441				1,226,617				29,991
Shares redeemed			(840,607	)			(1,044,429	)			(769,582	)			(29,170	)
Net increase			1,217,911				751,012				457,035				821

See Notes to Financial Statements. 27

 Baron Funds  September 30, 2012 

NOTES TO FINANCIAL STATEMENTS

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. Each Fund’s 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 with market capitalization between $1 billion and $15 billion 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 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 the regular trading session (usually 4 p.m. E.T.) on the New York Stock Exchange (“NYSE”) on any day on which the NYSE is open. 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 BAMCO, Inc.’s (the “Adviser”) 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 60 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 60 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 markets and 4 p.m. E.T. will, in its judgment, materially affect the value of some or all of the Funds’ non-U.S. 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 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) 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.

c) 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. The Funds may invest in foreign securities and foreign currency transactions that may involve risks not associated with domestic investments as a result of the level of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability, among others.

Pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are generally treated as ordinary income for U.S. federal income tax purposes.

28

 September 30, 2012  Baron Funds 

NOTES TO FINANCIAL STATEMENTS (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 September 30, 2012, the Funds did not have any securities on loan.

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 102% 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. None of the Funds will be subject to federal or state income taxes to the extent that they qualify as regulated investment companies and all of their income is distributed.

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.

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, reclassification of distributions, partnership basis adjustments, income from passive foreign investment corporations 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 year ended September 30, 2012 were as follows:

Fund	Purchases	Sales
Baron Asset Fund	$296,661,944	$771,702,601
Baron Growth Fund	795,156,219	1,746,728,942
Baron Small Cap Fund	1,055,538,340	1,107,784,572
Baron Opportunity Fund	337,131,531	287,298,961
Baron Fifth Avenue Growth Fund	43,601,143	34,926,295

4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

a) Investment Advisory Fees. 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, to the extent required to limit the net operating expense ratio (excluding portfolio transaction costs, interest, dividend 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 year ended September 30, 2012, there were no loans outstanding under the line of credit.

29

 Baron Funds  September 30, 2012 

NOTES TO FINANCIAL STATEMENTS (Continued)

6. RESTRICTED SECURITIES

At September 30, 2012, 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 September 30, 2012, 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
	Acquisition
Name of Issuer	Date(s)		Value
Private Equity Investments
Kerzner International Holdings Ltd., Cl A		9/27/2006	$	8,944,000
Windy City Investments Holdings, L.L.C.		11/13/2007-1/27/2011		23,708,908
Total Restricted Securities:
(Cost $86,581,904)† (1.46% of Net Assets)			$	32,652,908
	Baron Growth Fund
	Acquisition
Name of Issuer	Date(s)		Value
Private Equity Investments
Better Place, Inc., Series C Preferred		12/1/2011	$	21,845,000
Castlight Health, Inc.		4/26/2012		4,999,998
Kerzner International Holdings Ltd., Cl A		9/27/2006		12,728,000
Windy City Investments Holdings, L.L.C.		11/13/2007-1/27/2011		7,980,583
Total Restricted Securities:
(Cost $109,475,996)† (0.82% of Net Assets)			$	47,553,581
	Baron Small Cap Fund
	Acquisition
Name of Issuer	Date(s)		Value
Common Stocks
Viggle, Inc.		8/25/2011, 4/27/2012	$	4,734,546
Private Equity Investments
Kerzner International Holdings Ltd., Cl A		9/27/2006		6,020,000
SFX Holding Corporation		6/6/2012		5,000,000
Warrants
Viggle, Inc. Warrants, Callable, Exp 4/27/2015		4/27/2012		0
Viggle, Inc. Warrants, Non-callable, Exp 8/22/2014		8/25/2011		180,000
Vitacost.com, Inc. Warrants, Exp 2/16/2015		2/17/2012		363,884
Total Restricted Securities:
(Cost $53,030,234)† (0.39% of Net Assets)			$	16,298,430
	Baron Opportunity Fund
	Acquisition
Name of Issuer	Date		Value
Private Equity Investments
Better Place, Inc., Series C Preferred		12/1/2011	$	2,500,001
Castlight Health, Inc.		4/26/2012		1,500,001
Total Restricted Securities:
(Cost $4,000,002)† (1.01% of Net Assets)			$	4,000,002
	Baron Fifth Avenue Growth Fund
	Acquisition
Name of Issuer	Date		Value
Private Equity Investments
Better Place, Inc., Series C Preferred
(Cost $379,998) (0.71% of Net Assets)		12/1/2011	$	379,998

† See Statements of Net Assets for cost of individual securities.

30

 September 30, 2012  Baron Funds 

NOTES TO FINANCIAL STATEMENTS (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 Funds have procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available or which may not be reliably priced. Under these procedures, the Funds primarily employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. The Funds may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed.

The following is a summary of the inputs used as of September 30, 2012 in valuing the Funds’ investments carried at fair value:

	Baron Asset Fund
	Quoted Prices in		Other
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Common Stocks†	$	2,181,444,221	$	—	$	—	$	2,181,444,221
Private Equity Investments†		—		—		32,652,908		32,652,908
Short Term Investments		—		28,268,278		—		28,268,278
Total Investments	$	2,181,444,221	$	28,268,278	$	32,652,908	$	2,242,365,407

Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on September 30, 2012. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the year ended September 30, 2012.

	Baron Growth Fund
	Quoted Prices in		Other
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Common Stocks†	$	5,520,092,657	$	71,713,014	$	—	$	5,591,805,671
Private Equity Investments†		—		—		47,553,581		47,553,581
Short Term Investments		—		217,095,122		—		217,095,122
Total Investments	$	5,520,092,657	$	288,808,136	$	47,553,581	$	5,856,454,374

Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on September 30, 2012. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the year ended September 30, 2012.

† See Statements of Net Assets for additional detailed categorizations.

31

 Baron Funds  September 30, 2012 

NOTES TO FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

	Baron Small Cap Fund
	Quoted Prices in		Other
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Common Stocks†	$	4,039,975,046	$	12,842,184	$	—	$	4,052,817,230
Private Equity Investments		—		—		11,020,000		11,020,000
Warrants†		—		543,884		—		543,884
Short Term Investments		—		118,671,258		—		118,671,258
Total Investments	$	4,039,975,046	$	132,057,326	$	11,020,000	$	4,183,052,372

The fair value of Level 2 investments at September 30, 2011 was $230,021,063. $24,605,460 was transferred out of Level 2 into Level 1 at September 30, 2012 as a result of no longer adjusting closing prices for certain securities (as described in Note 2a), due to significant market movements between the time at which the Fund valued its securities and the earlier closing of foreign markets. $8,107,638 was transferred out of Level 1 into Level 2 at September 30, 2012 due to a decrease in market activity (e.g. frequency of trades), which resulted in a decrease in available market inputs to determine prices. The fair value of Level 3 investments at September 30, 2011 was $11,995,000. $4,914,546 was transferred out of Level 3 into Level 2 at September 30, 2012 due to a change in pricing methodology. It is the Fund’s policy to recognize transfers in and transfers out at the fair value as of the end of the period.

	Baron Opportunity Fund
	Quoted Prices in		Other
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Common Stocks†	$	375,421,816	$	—	$	—	$	375,421,816
Private Equity Investments†		—		—		4,000,002		4,000,002
Short Term Investments		—		15,152,549		—		15,152,549
Total Investments	$	375,421,816	$	15,152,549	$	4,000,002	$	394,574,367

Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on September 30, 2012. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the year ended September 30, 2012.

	Baron Fifth Avenue Growth Fund
	Quoted Prices in		Other
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Common Stocks†	$	51,628,281	$	—	$	—	$	51,628,281
Private Equity Investments		—		—		379,998		379,998
Short Term Investments		—		1,961,394		—		1,961,394
Total Investments	$	51,628,281	$	1,961,394	$	379,998	$	53,969,673

Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on September 30, 2012. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the year ended September 30, 2012.

† 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
																			Change in Net
																			Unrealized
																			Appreciation
																			(Depreciation)
					Net		Net Change in												from Investments
	Balance as of		Accrued		Realized		Unrealized						Transfers		Transfers		Balance as of		still held at
Investments in	September 30,		Premiums/		Gain		Appreciation						Into		Out of		September 30,		September 30,
Securities	2011		Discounts		(Loss)		(Depreciation)		Purchases		Sales		Level 3		Level 3		2012		2012
Private Equity Investments
Consumer
Discretionary	$	2,964,000	$	—	$	—	$	5,980,000	$	—	$	—	$	—	$	—	$	8,944,000		$	5,980,000
Financials		21,090,138		—		—		2,618,770		—		—		—		—		23,708,908			2,618,770
Total	$	24,054,138	$	—	$	—	$	8,598,770	$	—	$	—	$	—	$	—	$	32,652,908		$	8,598,770

32

 September 30, 2012  Baron Funds 

NOTES TO FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

	Baron Growth Fund
																					Change in Net
																					Unrealized
																					Appreciation
		��																			(Depreciation)
					Net		Net Change in														from Investments
	Balance as of		Accrued		Realized		Unrealized							Transfers		Transfers			Balance as of		still held at
Investments in	September 30,		Premiums/		Gain		Appreciation							Into		Out of			September 30,		September 30,
Securities	2011		Discounts		(Loss)		(Depreciation)			Purchases		Sales		Level 3		Level 3			2012		2012
Private Equity Investments
Consumer
Discretionary	$	4,218,000	$	—	$	—	$	8,510,000		$	—	$	—	$	—	$	—		$	12,728,000		$	8,510,000
Financials		7,099,087		—		—		881,496			—		—		—		—			7,980,583			881,496
Health Care		—		—		—		—			4,999,998		—		—		—			4,999,998			—
Utilities		—		—		—		—			21,845,000		—		—		—			21,845,000			—
Total	$	11,317,087	$	—	$	—	$	9,391,496		$	26,844,998	$	—	$	—	$	—		$	47,553,581		$	9,391,496
	Baron Small Cap Fund
																					Change in Net
																					Unrealized
																					Appreciation
																					(Depreciation)
					Net		Net Change in														from Investments
	Balance as of		Accrued		Realized		Unrealized							Transfers		Transfers			Balance as of		still held at
Investments in	September 30,		Premiums/		Gain		Appreciation							Into		Out of			September 30,		September 30,
Securities	2011		Discounts		(Loss)		(Depreciation)			Purchases		Sales		Level 3		Level 3			2012		2012
Common Stocks
Information
Technology	$	9,960,000	$	—	$	—	$	(8,225,454	)	$	3,000,000	$	—	$	—	$	(4,734,546	)	$	—		$	(8,225,454	)
Private Equity Investments
Consumer
Discretionary		1,995,000		—		—		4,025,000			5,000,000		—		—		—			11,020,000			4,025,000
Warrants
Information
Technology		40,000		—		—		140,000			—		—		—		(180,000	)		—			140,000
Total	$	11,995,000	$	—	$	—	$	(4,060,454	)	$	8,000,000	$	—	$	—	$	(4,914,546	)	$	11,020,000		$	(4,060,454	)
	Baron Opportunity Fund
																					Change in Net
																					Unrealized
																					Appreciation
																					(Depreciation)
					Net		Net Change in														from Investments
	Balance as of		Accrued		Realized		Unrealized							Transfers		Transfers			Balance as of		still held at
Investments in	September 30,		Premiums/		Gain		Appreciation							Into		Out of			September 30,		September 30,
Securities	2011		Discounts		(Loss)		(Depreciation)			Purchases		Sales		Level 3		Level 3			2012		2012
Private Equity Investments
Health Care	$	—	$	—	$	—	$	—		$	1,500,001	$	—	$	—	$	—		$	1,500,001		$	—
Utilities		—		—		—		—			2,500,001		—		—		—			2,500,001			—
Total	$	—	$	—	$	—	$	—		$	4,000,002	$	—	$	—	$	—		$	4,000,002		$	—

33

 Baron Funds  September 30, 2012 

NOTES TO FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

	Baron Fifth Avenue Growth Fund
																			Change in Net
																			Unrealized
																			Appreciation
																			(Depreciation)
					Net		Net Change in												from Investments
	Balance as of		Accrued		Realized		Unrealized						Transfers		Transfers		Balance as of		still held at
Investments in	September 30,		Premiums/		Gain		Appreciation						Into		Out of		September 30,		September 30,
Securities	2011		Discounts		(Loss)		(Depreciation)		Purchases		Sales		Level 3		Level 3		2012		2012
Private Equity Investments
Utilities	$	—	$	—	$	—	$	—	$	379,998	$	—	$	—	$	—	$	379,998		$	—
Total	$	—	$	—	$	—	$	—	$	379,998	$	—	$	—	$	—	$	379,998		$	—

Significant unobservable valuation inputs developed by the Adviser for material Level 3 investments as of September 30, 2012 were as follows:

Baron Asset Fund

Sector	Company	Fair Value as of September 30, 2012	Valuation Technique	Unobservable Inputs	Weighted Average used on September 30, 2012	Range used on September 30, 2012
Private Equity Investments: Financials	Windy City Investments Holdings, L.L.C.	$23,708,908	Combination of Market Comparables and Option Pricing methods	Estimated volatility of the returns of the enterprise value(1)	10.29%	10.29%
				Discount for lack of marketability	2.47%	2.47%
				EV/Run Rate EBITDA Multiple(2)	10.07x	7.4x to 10.8x
				Adjustment to the EBITDA Multiple due to leverage(2)	10.6%	10.6%
				Change in the composite equity index of comparable companies	-0.13%	-2.27% to 0.18%

(1)	The volatility was derived using the historical returns of the publicly traded debt of Nuveen Investments, Inc. and the historical returns of the equity of comparable public companies.
(2)	The multiple was derived as a simple average of the multiples of comparable companies. The derived EBITDA multiple was increased by 10.6% to 10.07x. This increase adjusts for leverage, as Nuveen Investments, Inc. is more levered than its comparable companies.

A significant change in the EV/EBITDA multiple ratio may result in a directionally similar significant change in the fair value measurement, while a significant change in the discount for lack of marketability and equity index of comparable companies may not result in a materially higher or lower fair value measurement.

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 net investment loss, foreign currency gains and losses, reclassification of distributions, partnership basis adjustments, income from passive foreign investment corporations and wash sale losses deferred. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences.

For the year ended September 30, 2012, the Funds recorded the following permanent reclassifications to reflect tax character. Reclassifications between income, gains and paid-in capital relate primarily to the tax treatment of net investment loss, foreign currency gains and losses, reclassification of distributions and partnership basis adjustments. Results of operations and net assets were not affected by these reclassifications.

	Undistributed
	(Accumulated)				Undistributed
	Net Investment				(Accumulated) Net			Paid-In
Fund	Income (Loss)				Realized Gain (Loss)			Capital
Baron Asset Fund		$	1,012,577			$	10		$	(1,012,587	)
Baron Growth Fund			(830,421	)			1,991,677			(1,161,256	)
Baron Small Cap Fund			4,456,490				3,871,957			(8,328,447	)
Baron Opportunity Fund			890,165				183,853			(1,074,018	)
Baron Fifth Avenue Growth Fund			(56,691	)			56,691			—

34

 September 30, 2012  Baron Funds 

NOTES TO FINANCIAL STATEMENTS (Continued)

8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS (Continued)

As of September 30, 2012, the components of net assets on a tax basis were as follows:

							Baron			Baron			Baron Fifth
	Baron Asset			Baron Growth			Small Cap			Opportunity			Avenue Growth
	Fund			Fund			Fund			Fund			Fund
Cost of investments	$	1,230,341,586		$	3,422,091,546		$	2,806,442,965		$	312,192,441		$	41,241,317
Gross tax unrealized appreciation		1,071,702,271			2,552,486,268			1,540,192,548			87,677,650			13,753,413
Gross tax unrealized depreciation		(59,678,450	)		(118,123,440	)		(163,583,141	)		(5,295,724	)		(1,025,057	)
Net tax unrealized appreciation		1,012,023,821			2,434,362,828			1,376,609,407			82,381,926			12,728,356
Net tax unrealized currency appreciation (depreciation)		—			—			—			2			(184	)
Undistributed net investment income		—			28,443,178			—			—			—
Undistributed net realized gain		155,085,711			495,522,557			126,823,486			2,002,209			—
Qualified late year ordinary/capital losses		(4,519,568	)		—			(23,706,589	)		(2,894,955	)		(1,193,852	)
Capital loss carryforwards		—			—			—			—			(1,867,337	)
Paid-in capital		1,069,739,490			2,862,443,530			2,713,097,070			313,376,169			44,082,931
Net Assets	$	2,232,329,454		$	5,820,772,093		$	4,192,823,374		$	394,865,351		$	53,749,914

As of September 30, 2012, the Funds had capital loss carryforwards expiring as follows:

					Baron		Baron		Baron Fifth
	Baron Asset		Baron Growth		Small Cap		Opportunity		Avenue Growth
	Fund		Fund		Fund		Fund		Fund
September 30, 2018	$	—	$	—	$	—	$	—	$	1,867,337
Capital loss carryforward utilized during the year ended September 30, 2012	$	—	$	—	$	—	$	2,393,917	$	1,133,992

The tax character of distributions paid during the fiscal years ended September 30, 2012 and September 30, 2011 was as follows:

	Year Ended				Year Ended
	September 30, 2012				September 30, 2011
			Long Term				Long Term
Fund	Ordinary1		Capital Gain		Ordinary1		Capital Gain
Baron Asset Fund	$	—	$	340,253,360	$	—	$	40,710,617
Baron Growth Fund		—		93,409,203		—		—
Baron Small Cap Fund		—		74,645,307		—		—
Baron Opportunity Fund		—		—		—		—
Baron Fifth Avenue Growth Fund		—		—		—		—

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 September 30, 2012, the Funds did not have any uncertain tax benefits that require recognition, derecognition or disclosure. The Funds’ federal, state and local income and federal excise tax returns for which the applicable statutes of limitations have not expired (current and prior three years) 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.

35

 Baron Funds  September 30, 2012 

NOTES TO FINANCIAL STATEMENTS (Continued)

9. TRANSACTIONS IN “AFFILIATED” COMPANIES¹

BARON GROWTH FUND

Name of Issuer	Value at September 30, 2011		Purchase Cost		Sales Proceeds		Net Change in Unrealized Appreciation (Depreciation)			Realized Gains/(Losses)			Dividend Income		Shares Held at September 30, 2012	Value at September 30, 2012
“Affiliated” Company as of September 30, 2012:
Ameristar Casinos, Inc.	$	2,407,500	$	34,371,603	$	—	$	(1,179,103	)	$	—		$	565,102	2,000,000	$	35,600,000
Choice Hotels International, Inc.		89,382,900		—		—		6,827,025			—			33,533,625	3,007,500		96,209,925
Cymer, Inc.		—		80,921,954		—		1,579,211			—			—	1,615,769		82,501,165
DeVry, Inc.		133,980,000		1,496,125		8,317,406		(52,314,670	)		(305,049	)		1,083,750	3,275,000		74,539,000
Vail Resorts, Inc.		72,018,292		4,459,000		—		39,154,195			—			1,338,881	2,005,750		115,631,487
	$	297,788,692	$	121,248,682	$	8,317,406	$	(5,933,342	)	$	(305,049	)	$	36,521,358		$	404,481,577
No Longer an “Affiliated” Company as of September 30, 2012:
Blue Nile, Inc.	$	35,280,000	$	—	$	26,741,314	$	(549,567	)	$	(2,425,619	)	$	—	150,000	$	5,563,500
Peet’s Coffee & Tea, Inc.		44,512,000		—		56,688,421		(25,949,227	)		38,125,648			—	—		—
Strayer Education, Inc.		51,752,250		14,656,080		45,146,799		2,652,755			(5,740,173	)		2,887,076	282,426		18,174,113
	$	131,544,250	$	14,656,080	$	128,576,534	$	(23,846,039	)	$	29,959,856		$	2,887,076		$	23,737,613

BARON SMALL CAP FUND

Name of Issuer	Value at September 30, 2011		Purchase Cost		Sales Proceeds		Net Change in Unrealized Appreciation (Depreciation)			Realized Gains/(Losses)			Dividend Income		Shares Held at September 30, 2012	Value at September 30, 2012
“Affiliated” Company as of September 30, 2012:
Bravo Brio Restaurant Group, Inc.	$	27,101,585	$	1,961,155	$	2,640,997	$	(3,176,844	)	$	35,101		$	—	1,600,000	$	23,280,000
The Chefs’ Warehouse, Inc.		14,700,000		6,708,444		—		7,256,556			—			—	1,750,000		28,665,000
Chesapeake Lodging Trust		24,140,000		—		—		15,600,000			—			1,720,000	2,000,000		39,740,000
Globe Specialty Metals, Inc.		58,080,000		—		—		2,800,000			—			1,050,000	4,000,000		60,880,000
The KEYW Holding Corp.		16,957,350		6,555,421		—		13,987,229			—			—	3,000,000		37,500,000
Mercury Computer Systems, Inc.		20,125,000		—		—		(1,540,000	)		—			—	1,750,000		18,585,000
Rogers Corp.		39,130,000		—		—		3,230,000			—			—	1,000,000		42,360,000
Susser Petroleum Partners LP		—		20,030,798		—		1,592,109			—			—	901,330		21,622,907
Viggle, Inc.2		9,960,000		3,000,000		—		(8,225,454	)		—			—	2,545,455		4,734,546
Viggle, Inc., Warrants, Callable, Exp 4/27/20152		—		—		—		—			—			—	545,455		—
Viggle, Inc., Warrants, Non-callable, Exp 8/22/20142		40,000		—		—		140,000			—			—	2,000,000		180,000
Vitacost.com, Inc.		11,067,000		4,999,998		—		4,511,841			—			—	3,035,227		20,578,839
Vitacost.com, Inc. Restricted3		—		4,999,998		4,999,998		—			—			—	—		—
Vitacost.com, Inc. Warrants, Exp 2/16/2015		—		30,234		—		333,650			—			—	242,589		363,884
XPO Logistics, Inc.		—		19,164,182		—		(4,476,182	)		—			—	1,200,000		14,688,000
	$	221,300,935	$	67,450,230	$	7,640,995	$	32,032,905		$	35,101		$	2,770,000		$	313,178,176
No Longer an “Affiliated” Company as of September 30, 2012:
Great Wolf Resorts, Inc.	$	7,833,600	$	—	$	21,203,284	$	47,178,902		$	(33,809,218	)	$	—	—	$	—
Iconix Brand Group, Inc.		61,620,000		—		21,356,879		9,585,702			1,223,177			—	2,800,000		51,072,000
Lumber Liquidators Holdings, Inc.		21,517,500		—		12,686,538		43,228,526			6,222,512			—	1,150,000		58,282,000
Mistras Group, Inc.		28,974,000		—		9,244,184		5,041,315			4,228,869			—	1,250,000		29,000,000
	$	119,945,100	$	—	$	64,490,885	$	105,034,445		$	(22,134,660	)	$	—		$	138,354,000

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 year ended September 30, 2012.

²   Adjusted for reverse 1-for-2 stock split.

³   The restriction was removed during the year ended September 30, 2012.

36

 Baron Funds  September 30, 2012 

FINANCIAL HIGHLIGHTS

BARON ASSET FUND

Selected data for a share outstanding throughout each year:

RETAIL SHARES	Year Ended September 30,
	2012			2011			2010			2009			2008			2007			2006			2005			2004			2003
Net asset value, beginning of year	$	49.00		$	49.27		$	43.62		$	52.12		$	66.57		$	60.08		$	56.52		$	47.89		$	40.05		$	35.65
Income (loss) from investment operations:
Net investment loss		(0.14	)1		(0.23	)1		(0.28	)1		(0.20	)1		(0.29	)1		(0.10	)1		(0.27	)		(0.46	)		(0.43	)		(0.46	)
Net realized and unrealized gain (loss) on investments		10.94			0.73			5.93			(5.68	)		(12.08	)		11.27			6.64			12.08			8.27			6.04
Total from investment operations		10.80			0.50			5.65			(5.88	)		(12.37	)		11.17			6.37			11.62			7.84			5.58
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
Net realized gain on investments		(7.77	)		(0.77	)		0.00			(2.62	)		(2.08	)		(4.68	)		(2.81	)		(2.99	)		0.00			(1.18	)
Total distributions		(7.77	)		(0.77	)		0.00			(2.62	)		(2.08	)		(4.68	)		(2.81	)		(2.99	)		0.00			(1.18	)
Net asset value, end of year	$	52.03		$	49.00		$	49.27		$	43.62		$	52.12		$	66.57		$	60.08		$	56.52		$	47.89		$	40.05
Total return		24.65	%		0.85	%		12.95	%		(9.88	)%		(19.14	)%		19.56	%		11.54	%		25.21	%		19.58	%		16.11	%
Ratios/Supplemental data:
Net assets (in millions), end of year	$	1,845.6		$	1,924.9		$	2,424.2		$	2,652.6		$	3,311.8		$	4,468.0		$	3,365.6		$	2,687.4		$	2,002.4		$	1,957.2
Ratio of operating expenses to average net assets		1.33	%		1.33	%		1.32	%		1.36	%2		1.33	%2		1.34	%2		1.33	%		1.34	%		1.34	%		1.34	%
Ratio of net investment loss to average net assets		(0.28	)%		(0.41	)%		(0.61	)%		(0.54	)%		(0.49	)%		(0.17	)%		(0.49	)%		(0.91	)%		(0.90	)%		(1.14	)%
Portfolio turnover rate		13.11	%		23.89	%		13.04	%		14.67	%		16.02	%		13.39	%		21.87	%		11.47	%		19.57	%		27.95	%
INSTITUTIONAL SHARES	Year Ended September 30,
	2012			2011			2010			20093
Net asset value, beginning of year	$	49.30		$	49.43		$	43.65		$	37.38
Income (loss) from investment operations:
Net investment income (loss)		0.01	1		(0.10	)1		(0.15	)1		(0.05	)1
Net realized and unrealized gain on investments		11.01			0.74			5.93			6.32
Total from investment operations		11.02			0.64			5.78			6.27
Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00
Net realized gain on investments		(7.77	)		(0.77	)		0.00			0.00
Total distributions		(7.77	)		(0.77	)		0.00			0.00
Net asset value, end of year	$	52.55		$	49.30		$	49.43		$	43.65
Total return		24.99	%		1.14	%		13.24	%		16.77	%4
Ratios/Supplemental data:
Net assets (in millions), end of year	$	386.7		$	288.9		$	242.8		$	82.3
Ratio of operating expenses to average net assets		1.06	%		1.06	%		1.06	%		1.16	%5
Ratio of net investment income (loss) to average net assets		0.02	%		(0.18	)%		(0.33	)%		(0.39	)%5
Portfolio turnover rate		13.11	%		23.89	%		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

  September 30, 2012 Baron Funds

FINANCIAL HIGHLIGHTS

BARON GROWTH FUND
Selected data for a share outstanding throughout each year:

RETAIL SHARES	Year Ended September 30,
	2012			2011			2010			2009			2008			2007			2006			2005			2004			2003
Net asset value, beginning of year	$	46.18		$	44.37		$	39.00		$	41.69		$	54.55		$	47.23		$	45.96		$	38.92		$	32.65		$	26.96
Income (loss) from investment operations:
Net investment income (loss)		0.20	1		(0.29	)1		(0.34	)1		(0.18	)1		(0.28	)1		(0.25	)1		(0.29	)		(0.29	)		(0.30	)		(0.25	)
Net realized and unrealized gain (loss) on investments		12.64			2.10			5.71			(2.47	)		(10.07	)		10.11			3.61			7.33			6.57			5.94
Total from investment operations		12.84			1.81			5.37			(2.65	)		(10.35	)		9.86			3.32			7.04			6.27			5.69
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
Net realized gain on investments		(0.83	)		0.00			0.00			(0.04	)		(2.51	)		(2.54	)		(2.05	)		0.00			0.00			0.00
Total distributions		(0.83	)		0.00			0.00			(0.04	)		(2.51	)		(2.54	)		(2.05	)		0.00			0.00			0.00
Net asset value, end of year	$	58.19		$	46.18		$	44.37		$	39.00		$	41.69		$	54.55		$	47.23		$	45.96		$	38.92		$	32.65
Total return		28.12	%		4.08	%		13.77	%		(6.34	)%		(19.78	)%		21.41	%		7.36	%		18.09	%		19.20	%		21.11	%
Ratios/Supplemental data:
Net assets (in millions), end of year	$	4,073.5		$	4,110.8		$	4,842.8		$	5,034.5		$	5,615.0		$	7,075.9		$	5,315.8		$	5,005.1		$	3,135.6		$	2,185.4
Ratio of operating expenses to average net assets		1.32	%		1.32	%		1.32	%		1.35	%2		1.32	%2		1.31	%2		1.31	%		1.31	%		1.33	%		1.36	%
Ratio of net investment income (loss) to average net assets		0.38	%		(0.56	)%		(0.80	)%		(0.56	)%		(0.59	)%		(0.49	)%		(0.61	)%		(0.73	)%		(0.89	)%		(1.11	)%
Portfolio turnover rate		13.70	%		13.51	%		16.12	%		26.65	%		25.97	%		21.37	%		21.27	%		15.50	%		27.15	%		32.63	%
INSTITUTIONAL SHARES	Year Ended September 30,
	2012			2011			2010			20093
Net asset value, beginning of year	$	46.46		$	44.52		$	39.03		$	33.71
Income (loss) from investment operations:
Net investment income (loss)		0.45	1		(0.17	)1		(0.22	)1		(0.04	)1
Net realized and unrealized gain on investments		12.62			2.11			5.71			5.36
Total from investment operations		13.07			1.94			5.49			5.32
Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00
Net realized gain on investments		(0.83	)		0.00			0.00			0.00
Total distributions		(0.83	)		0.00			0.00			0.00
Net asset value, end of year	$	58.70		$	46.46		$	44.52		$	39.03
Total return		28.45	%		4.36	%		14.07	%		15.78	%4
Ratios/Supplemental data:
Net assets (in millions), end of year	$	1,747.3		$	1,261.8		$	728.9		$	238.7
Ratio of operating expenses to average net assets		1.06	%		1.06	%		1.06	%		1.13	%5
Ratio of net investment income (loss) to average net assets		0.83	%		(0.33	)%		(0.53	)%		(0.29	)%5
Portfolio turnover rate		13.70	%		13.51	%		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.

  Baron Funds September 30, 2012

FINANCIAL HIGHLIGHTS

BARON SMALL CAP FUND
Selected data for a share outstanding throughout each year:

RETAIL SHARES	Year Ended September 30,
	2012			2011			2010			2009			2008			2007			2006			2005			2004			2003
Net asset value, beginning of year	$	20.84		$	20.90		$	17.96		$	18.70		$	25.47		$	23.59		$	23.08		$	19.18		$	17.26		$	13.73
Income (loss) from investment operations:
Net investment loss		(0.19	)1		(0.15	)1		(0.06	)1		(0.13	)1		(0.09	)1		(0.02	)1		(0.18	)		(0.10	)		(0.15	)		(0.11	)
Net realized and unrealized gain (loss) on investments		5.96			0.09	2		3.00			(0.61	)		(5.01	)		4.96			1.43			4.55			2.07			4.02
Total from investment operations		5.77			(0.06	)		2.94			(0.74	)		(5.10	)		4.94			1.25			4.45			1.92			3.91
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
Net realized gain on investments		(0.47	)		0.00			0.00			(0.00	)3		(1.67	)		(3.06	)		(0.74	)		(0.55	)		0.00			(0.38	)
Total distributions		(0.47	)		0.00			0.00			(0.00	)		(1.67	)		(3.06	)		(0.74	)		(0.55	)		0.00			(0.38	)
Net asset value, end of year	$	26.14		$	20.84		$	20.90		$	17.96		$	18.70		$	25.47		$	23.59		$	23.08		$	19.18		$	17.26
Total return		28.09	%		(0.29	)%		16.37	%		(3.95	)%		(21.44	)%		22.54	%		5.52	%		23.56	%		11.12	%		29.20	%
Ratios/Supplemental data:
Net assets (in millions), end of year	$	3,081.8		$	2,842.0		$	3,032.0		$	2,719.4		$	2,871.6		$	3,522.4		$	2,921.7		$	2,828.6		$	1,782.1		$	1,210.5
Ratio of operating expenses to average net assets		1.31	%		1.31	%		1.31	%		1.34	%4		1.32	%4		1.31	%4		1.33	%		1.33	%		1.33	%		1.36	%
Ratio of net investment loss to average net assets		(0.76	)%		(0.63	)%		(0.30	)%		(0.86	)%		(0.42	)%		(0.09	)%		(0.73	)%		(0.48	)%		(0.88	)%		(0.87	)%
Portfolio turnover rate		28.02	%		32.81	%		27.22	%		35.83	%		41.52	%		36.51	%		39.99	%		24.68	%		32.92	%		30.29	%
INSTITUTIONAL SHARES	Year Ended September 30,
	2012			2011			2010			20095
Net asset value, beginning of year	$	20.96		$	20.97		$	17.97		$	15.52
Income (loss) from investment operations:
Net investment loss		(0.13	)1		(0.10	)1		(0.03	)1		(0.04	)1
Net realized and unrealized gain on investments		6.00			0.09	2		3.03			2.49
Total from investment operations		5.87			(0.01	)		3.00			2.45
Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00
Net realized gain on investments		(0.47	)		0.00			0.00			0.00
Total distributions		(0.47	)		0.00			0.00			0.00
Net asset value, end of year	$	26.36		$	20.96		$	20.97		$	17.97
Total return		28.41	%		(0.05	)%		16.69	%		15.79	%6
Ratios/Supplemental data:
Net assets (in millions), end of year	$	1,111.0		$	518.6		$	261.1		$	89.4
Ratio of operating expenses to average net assets		1.05	%		1.06	%		1.06	%		1.16	%7
Ratio of net investment loss to average net assets		(0.53	)%		(0.42	)%		(0.15	)%		(0.75	)%7
Portfolio turnover rate		28.02	%		32.81	%		27.22	%		35.83	%

1	Based on average shares outstanding.
2	The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of Fund shares in relation to fluctuating market values of investments of the Fund.
3	Less than $0.01 per share.
4	Benefit of expense reduction rounds to less than 0.01%
5	For the period May 29, 2009 (commencement of operations) to September 30, 2009.
6	Not Annualized.
7	Annualized.

See Notes to Financial Statements. 39

 September 30, 2012  Baron Funds 

FINANCIAL HIGHLIGHTS

BARON OPPORTUNITY FUND
Selected data for a share outstanding throughout each year:

RETAIL SHARES	Year Ended September 30,
	2012			2011			2010			2009				2008			2007			2006			2005			2004			2003
Net asset value, beginning of year	$	12.83		$	12.76		$	10.61		$	9.90			$	13.01		$	10.05		$	9.16		$	7.58		$	6.48		$	3.63
Income (loss) from investment operations:													��
Net investment loss		(0.17	)1		(0.16	)1		(0.13	)1		(0.08	)1			(0.09	)1		(0.07	)1		(0.03	)		(0.09	)		(0.10	)		(0.05	)
Net realized and unrealized gain (loss) on investments		2.95			0.23			2.28			0.79				(3.02	)		3.03			0.92			1.66			1.18			2.89
Total from investment operations		2.78			0.07			2.15			0.71				(3.11	)		2.96			0.89			1.57			1.08			2.84
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
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
Total distributions		0.00			0.00			0.00			0.00				0.00			0.00			0.00			0.00			0.00			0.00
Redemption fees added to paid-in capital		0.00			0.00			0.00	2		0.00	2			0.00	2		0.00	2		0.00	2		0.01			0.02			0.01
Net asset value, end of year	$	15.61		$	12.83		$	12.76		$	10.61			$	9.90		$	13.01		$	10.05		$	9.16		$	7.58		$	6.48
Total return		21.67	%		0.55	%		20.26	%		7.17	%			(23.90	)%		29.45	%4		9.72	%		20.84	%4		16.98	%4		78.51	%4
Ratios/Supplemental data:
Net assets (in millions), end of year	$	332.4		$	240.4		$	214.4		$	142.7			$	154.4		$	198.0		$	145.4		$	145.7		$	133.9		$	109.3
Ratio of operating expenses to average net assets		1.39	%		1.41	%		1.44	%		1.50	%			1.42	%		1.43	%		1.45	%		1.52	%		1.56	%		1.67	%
Less: Reimbursement of expenses by Adviser and/or offsets		0.00	%		0.00	%		0.00	%		0.00	%6			0.00	%6		(0.01	)%		0.00	%		(0.02	)%		(0.06	)%		(0.17	)%
Ratio of net operating expenses to average net assets		1.39	%		1.41	%		1.44	%		1.50	%			1.42	%		1.42	%		1.45	%		1.50	%		1.50	%		1.50	%
Ratio of net investment loss to average net assets		(1.16	)%		(1.11	)%		(1.08	)%		(1.00	)%			(0.79	)%		(0.61	)%		(0.26	)%		(1.01	)%		(1.25	)%		(1.18	)%
Portfolio turnover rate		88.56	%		65.43	%		76.44	%		68.09	%			61.44	%		46.20	%		67.25	%		83.64	%		86.35	%		89.72	%
	Year Ended September 30,
INSTITUTIONAL SHARES	2012			2011			2010			20097
Net asset value, beginning of year	$	12.91		$	12.80		$	10.62		$	8.88
Income (loss) from investment operations:
Net investment loss		(0.13	)1		(0.12	)1		(0.10	)1		(0.02	)1
Net realized and unrealized gain on investments		2.97			0.23			2.28			1.76
Total from investment operations		2.84			0.11			2.18			1.74
Less distributions to shareholders from:
Net investment income		0.00			0.00			0.00			0.00
Net realized gain on investments		0.00			0.00			0.00			0.00
Total distributions		0.00			0.00			0.00			0.00
Redemption fees added to paid-in capital		0.00			0.00			0.00	2		0.00
Net asset value, end of year	$	15.75		$	12.91		$	12.80		$	10.62
Total return		22.00	%		0.86	%		20.53	%		19.59	%3,4
Ratios/Supplemental data:
Net assets (in millions), end of year	$	62.5		$	35.5		$	25.5		$	10.9
Ratio of operating expenses to average net assets		1.13	%		1.14	%		1.18	%		1.37	%5
Less: Reimbursement of expenses by Adviser and/or offsets		0.00	%		0.00	%		0.00	%		(0.12	)%5
Ratio of net operating expenses to average net assets		1.13	%		1.14	%		1.18	%		1.25	%5
Ratio of net investment loss to average net assets		(0.90	)%		(0.84	)%		(0.83	)%		(0.74	)%5
Portfolio turnover rate		88.56	%		65.43	%		76.44	%		68.09	%

1	Based on average shares outstanding.	5	Annualized.
2	Less than $0.01 per share.	6	Benefit of expense reduction rounds to less than 0.01%.
3	Not Annualized.	7	For the period May 29, 2009 (commencement of operations) to September 30, 2009.
4	The total returns would have been lower had certain expenses not been reduced during the period shown.

40 See Notes to Financial Statements.

 Baron Funds  September 30, 2012 

FINANCIAL HIGHLIGHTS

BARON FIFTH AVENUE GROWTH FUND

Selected data for a share outstanding throughout each year:

RETAIL SHARES	Year Ended September 30,
	2012			2011			2010			2009			2008			2007			2006			2005			20041
Net asset value, beginning of year	$	8.98		$	9.21		$	8.60		$	10.38		$	14.12		$	12.22		$	11.56		$	9.89		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.03	)2		(0.06	)2		(0.03	)2		0.03	2		0.00	2,3		(0.01	)2		(0.02	)		(0.05	)		(0.02	)
Net realized and unrealized gain (loss) on investments		2.88			(0.17	)		0.66			(1.03	)		(2.62	)		1.91			0.68			1.72			(0.09	)
Total from investment operations		2.85			(0.23	)		0.63			(1.00	)		(2.62	)		1.90			0.66			1.67			(0.11	)
Less distributions to shareholders from:
Net investment income		0.00			0.00			(0.02	)		(0.01	)		0.00			0.00			0.00			0.00			0.00
Net realized gain on investments		0.00			0.00			0.00			(0.77	)		(1.12	)		0.00			0.00			0.00			0.00
Total distributions		0.00			0.00			(0.02	)		(0.78	)		(1.12	)		0.00			0.00			0.00			0.00
Net asset value, end of year	$	11.83		$	8.98		$	9.21		$	8.60		$	10.38		$	14.12		$	12.22		$	11.56		$	9.89
Total return		31.74	%4		(2.50	)%4		7.38	%4		(7.75	)%4		(19.96	)%4		15.55	%		5.71	%		16.89	%4		(1.10	)%4,5
Ratios/Supplemental data:
Net assets (in millions), end of year	$	34.8		$	23.4		$	29.0		$	32.8		$	58.2		$	110.2		$	123.3		$	96.5		$	49.3
Ratio of operating expenses to average net assets		1.55	%		1.59	%		1.62	%		1.69	%		1.47	%		1.36	%		1.39	%		1.49	%		1.67	%6
Less: Reimbursement of expenses by Adviser and/or offsets		(0.25	)%		(0.29	)%		(0.25	)%		(0.29	)%		(0.07	)%		0.00	%7		0.00	%		(0.09	)%		(0.27	)%6
Ratio of net operating expenses to average net assets		1.30	%		1.30	%		1.37	%		1.40	%		1.40	%		1.36	%		1.39	%		1.40	%		1.40	%6
Ratio of net investment income (loss) to average net assets		(0.30	)%		(0.55	)%		(0.32	)%		0.40	%		(0.01	)%		(0.08	)%		(0.16	)%		(0.58	)%		(0.79	)%6
Portfolio turnover rate		79.07	%		75.36	%		57.67	%		39.61	%		39.59	%		28.75	%		105.77	%		46.71	%		7.58	%5

INSTITUTIONAL SHARES	Year Ended September 30,
	2012			2011			2010			20098
Net asset value, beginning of year	$	9.00		$	9.21		$	8.61		$	7.54
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)2		(0.03	)2		(0.01	)2		0.02	2
Net realized and unrealized gain (loss) on investments		2.90			(0.18	)		0.66			1.05
Total from investment operations		2.89			(0.21	)		0.65			1.07
Less distributions to shareholders from:
Net investment income		0.00			0.00			(0.05	)		0.00
Net realized gain on investments		0.00			0.00			0.00			0.00
Total distributions		0.00			0.00			(0.05	)		0.00
Net asset value, end of year	$	11.89		$	9.00		$	9.21		$	8.61
Total return		32.11	%4		(2.28	)%4		7.59	%4		14.19	%4,5
Ratios/Supplemental data:
Net assets (in millions), end of year	$	18.9		$	10.2		$	10.4		$	9.5
Ratio of operating expenses to average net assets		1.26	%		1.31	%		1.35	%		1.61	%6
Less: Reimbursement of expenses by Adviser and/or offsets		(0.21	)%		(0.26	)%		(0.24	)%		(0.46	)%6
Ratio of net operating expenses to average net assets		1.05	%		1.05	%		1.11	%		1.15	%6
Ratio of net investment income (loss) to average net assets		(0.05	)%		(0.30	)%		(0.07	)%		0.58	%6
Portfolio turnover rate		79.07	%		75.36	%		57.67	%		39.61	%

1	For the period April 30, 2004 (commencement of operations) to September 30, 2004.	5	Not Annualized.
2	Based on average shares outstanding.	6	Annualized.
3	Less than $0.01 per share.	7	Benefit of expense reduction rounds to less than 0.01%.
4	The total returns would have been lower had certain expenses not been reduced during the period shown.	8	For the period May 29, 2009 (commencement of operations) to September 30, 2009.

See Notes to Financial Statements. 41

 Baron Funds  September 30, 2012 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees of

Baron Investment Funds Trust

In our opinion, the accompanying statements of assets and liabilities, including the statements of net assets, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund and Baron Fifth Avenue Growth Fund (five of the portfolios constituting Baron Investment Funds Trust, hereafter referred to as the “Funds”) at September 30, 2012, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2012 by correspondence with the custodian, brokers, portfolio companies, and application of alternative procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

November 27, 2012

TAX INFORMATION (Unaudited)

The federal tax status of distributions paid by the Funds during the year ended September 30, 2012 are listed below.

During the fiscal year ended September 30, 2012, the Funds’ distributions to shareholders included:

	Ordinary		Long-Term
Fund	Income		Capital Gains1
Baron Asset Fund	$	—	$	340,253,360
Baron Growth Fund		—		93,409,203
Baron Small Cap Fund		—		74,645,307
Baron Opportunity Fund		—		—
Baron Fifth Avenue Growth Fund		—		—

1	Long-term capital gains are subject to a maximum allowable rate of 15% for individuals pursuant to The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
The information and distributions reported may differ from the information and distributions taxable to the shareholders for the calendar year ended December 31, 2012. The information necessary to complete your income tax return for the calendar year ended December 31, 2012 will be listed on the Form 1099-DIV, which will be mailed to you in January 2013.

42

 September 30, 2012  Baron Funds 

FUND EXPENSES (Unaudited)

As a shareholder of the Funds, you may incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include advisory 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 April 1, 2012 and held for the six months ended September 30, 2012.

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 SEPTEMBER 30, 2012¹

	Actual			Beginning		Ending			Annualized			Expenses
	Total			Account Value		Account Value			Expense			Paid During
	Return			April 1, 2012		September 30, 2012			Ratio			the Period2
Baron Asset Fund- Retail Shares		(0.40	)%	$	1,000.00	$	996.00			1.32	%	$	6.59
Baron Asset Fund- Institutional Shares		(0.25	)%	$	1,000.00	$	997.50			1.05	%	$	5.24
Baron Growth Fund- Retail Shares		4.64	%	$	1,000.00	$	1,046.40			1.31	%	$	6.70
Baron Growth Fund- Institutional Shares		4.78	%	$	1,000.00	$	1,047.80			1.05	%	$	5.38
Baron Small Cap Fund- Retail Shares		0.59	%	$	1,000.00	$	1,005.90			1.31	%	$	6.57
Baron Small Cap Fund- Institutional Shares		0.70	%	$	1,000.00	$	1,007.00			1.05	%	$	5.27
Baron Opportunity Fund- Retail Shares		(1.51	)%	$	1,000.00	$	984.90			1.38	%	$	6.85
Baron Opportunity Fund- Institutional Shares		(1.44	)%	$	1,000.00	$	985.60			1.11	%	$	5.51
Baron Fifth Avenue Growth Fund- Retail Shares		(1.91	)%	$	1,000.00	$	980.90	3		1.30	%4	$	6.44
Baron Fifth Avenue Growth Fund- Institutional Shares		(1.74	)%	$	1,000.00	$	982.60	3		1.05	%4	$	5.20

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 SEPTEMBER 30, 2012

	Hypothetical			Beginning		Ending			Annualized			Expenses
	Annualized			Account Value		Account Value			Expense			Paid During
	Total Return			April 1, 2012		September 30, 2012			Ratio			the Period2
Baron Asset Fund- Retail Shares		5.00	%	$	1,000.00	$	1,018.40			1.32	%	$	6.66
Baron Asset Fund- Institutional Shares		5.00	%	$	1,000.00	$	1,019.75			1.05	%	$	5.30
Baron Growth Fund- Retail Shares		5.00	%	$	1,000.00	$	1,018.45			1.31	%	$	6.61
Baron Growth Fund- Institutional Shares		5.00	%	$	1,000.00	$	1,019.75			1.05	%	$	5.30
Baron Small Cap Fund- Retail Shares		5.00	%	$	1,000.00	$	1,018.45			1.31	%	$	6.61
Baron Small Cap Fund- Institutional Shares		5.00	%	$	1,000.00	$	1,019.75			1.05	%	$	5.30
Baron Opportunity Fund- Retail Shares		5.00	%	$	1,000.00	$	1,018.10			1.38	%	$	6.96
Baron Opportunity Fund- Institutional Shares		5.00	%	$	1,000.00	$	1,019.45			1.11	%	$	5.60
Baron Fifth Avenue Growth Fund- Retail Shares		5.00	%	$	1,000.00	$	1,018.50	3		1.30	%4	$	6.56
Baron Fifth Avenue Growth Fund- Institutional Shares		5.00	%	$	1,000.00	$	1,019.75	3		1.05	%4	$	5.30

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 366.
3	Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived.
4	Annualized expense ratios are adjusted to reflect fee waiver.

43

 Baron Funds  September 30, 2012 

DISCLOSURE REGARDING THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS FOR BARON ASSET FUND, BARON GROWTH FUND, BARON SMALL CAP FUND, BARON OPPORTUNITY FUND AND BARON FIFTH AVENUE GROWTH FUND, BY THE BOARD OF TRUSTEES (Unaudited)

The Board of Trustees (the “Board”) of Baron Investment Funds Trust (the “Trust”) met on May 8, 2012 to discuss the selection of BAMCO, Inc. (the “Adviser”) as the investment adviser and the approval of the investment advisory agreements for Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund and Baron Fifth Avenue Growth Fund, (each a “Fund” and collectively, the “Funds”). The members of the Board who are not affiliated with the Trust (the “Independent Trustees”) met in a separate session to discuss and consider the renewal of the advisory agreement for the Funds. An independent consultant provided reports to the Board and attended the Board meeting. The Trustees received a substantial amount of information from the Adviser and from the consultant, and were advised by independent counsel. Based on its evaluation of this and other information, the Board, including a majority of the Independent Trustees, approved the continuation of the advisory agreements for the Funds for an additional one-year period.

In reaching its determination, the Board considered various factors that it deemed relevant, including the factors listed below.

1. NATURE, EXTENT AND QUALITY OF SERVICES

As part of their consideration of the nature, extent and quality of services provided by the Adviser, the Independent Trustees relied on the information they received at the Board meeting, as well as on the information they had considered in past years. In particular, the Board considered the following:

• Its confidence in the Adviser’s senior personnel, portfolio management, the financial condition of the Adviser and its affiliates and the Adviser’s available resources;

• The nature, quality and the level of long-term performance of the services provided by the Adviser, including: intensive devotion to research, selection of broker/dealers for Fund portfolio transactions, relationships with and supervision of third party service providers, such as the Funds’ custodian and transfer agent, the quality of shareholder reports, the ability to monitor adherence to investment guidelines and restrictions, the legal, accounting and compliance services provided to the Funds and the support services provided to the Board;

• The Adviser’s investment principles and processes and the historical performance of the Funds as compared to similar funds managed by other advisers and other funds managed by the Adviser over comparable periods;

• The total expense ratio of the Funds and comparisons to similar funds managed by other advisers over comparable periods;

• The costs of portfolio management, including the types of investments made for the Funds, the personnel and systems necessary for implementation of investment strategies, and the pre-tax profits realized by the Adviser and its affiliates from their relationship with the Funds; and

• Any additional services provided by the Adviser.

The Board concluded that the nature, extent and quality of the services provided by the Adviser to each Fund were appropriate and that each Fund was likely to continue to benefit from those services provided under the relevant advisory agreement with the Adviser.

2. INVESTMENT PERFORMANCE OF THE FUNDS AND THE ADVISER

As part of its consideration of the investment performance of the Funds and the Adviser, the Board took into account the analyses performed by and discussed with the independent consultant. The Board considered for each Fund, among other information, the independent consultant’s comparisons of the expense ratio and contractual advisory fee with those of peer group funds. The Board also considered the independent consultant’s risk-adjusted performance comparisons with comparable funds and comparisons of each Fund’s annualized total return over one-, three-, five- and ten-year periods, where applicable, against peer group funds and performance of peer group funds’ averages. After considering all the information, the Board concluded that the Adviser continued to invest in accordance with its long-standing principles and that each Fund’s more recent relative performance was consistent with expectations for the Adviser’s investment style under recent market conditions. The Board noted the Funds’ absolute performance in the most recent one-year period and the risk-adjusted performance comparisons. The Board also concluded that the Funds and their shareholders had benefited over the longterm from the Adviser’s investment management of the Funds.

3. COSTS OF SERVICES PROVIDED AND PROFITS TO BE REALIZED BY THE ADVISER

The Board was provided with information from the Adviser and the independent consultant regarding the fees charged by the Adviser as compared to the fees charged by comparable funds. This information compared various fees and expenses, as well as the total expense ratios, of the Funds against the same fees, expenses and total expense ratios of other funds of similar size, character and investment strategies. The total expense ratio of each Fund was generally competitive with the total expense ratios of the funds against which they were compared.

The Board considered comparisons of the advisory fees charged and services provided by the Adviser and its investment adviser affiliate to the Funds, subadvised accounts and separately managed accounts. The Board considered that, while the advisory fees for the other clients are the same as, or lower than, the fees for the Funds, the Adviser or its affiliate performs significantly fewer services for those clients compared with those provided by the Adviser to the Funds.

The Board also considered the costs of portfolio management, including the types of investments made for the Funds, the personnel and systems necessary to implement investment strategies and the pre-tax profits realized by the Adviser and its affiliates from their relationship with each Fund. The Board also considered benefits that accrue to the Adviser and its affiliates from their relationship with the Funds.

4. ECONOMIES OF SCALE AND BENEFITS TO INVESTORS

The Board considered the extent to which each Fund’s management fees reflected economies of scale for the benefit of Fund shareholders, noting the recent period of declining assets and appreciating that economies of scale analysis is predicated on increasing assets. The Board considered that, except for Baron Fifth Avenue Growth Fund, the Funds’ fee schedules do not have break points. The Board considered that the small- and mid-cap investment strategies require more attention by the Adviser than a strategy that involves large-cap equities, particularly as the size of the assets under management increases. The Board considered that the Adviser was continuing to grow and upgrade its staff and invest in its business even during this recent period of declining assets and reduced revenues. The Board reiterated its intention to continue to scrutinize the extent of economies of scale, asset growth and the Adviser’s plans to reinvest further to support the Funds. The Board concluded that the management fee for each Fund was reasonable in light of the services provided as discussed at the meeting, including the Adviser’s investments in resources to support the Funds.

After due consideration of the above-enumerated factors and other factors, the Board, including a majority of the Independent Trustees, concluded that approval of each Fund’s investment advisory agreement was in the best interests of the respective Fund and its shareholders.

44

 September 30, 2012  Baron Funds 

MANAGEMENT OF THE FUNDS

Board of Trustees and Officers.

The Board of Trustee’s (the “Board”) role in management of the Trust is oversight. As is the case with virtually all investment companies (as distinguished from operating companies), service providers to the Trust, primarily the Adviser and its affiliates, have responsibility for the day-to-day management of the Funds, which includes responsibility for risk management (including management of investment performance and investment risk, valuation risk, issuer and counterparty credit risk, compliance risk and operational risk). As part of its oversight, the Board, acting at its scheduled meetings, or the Chairman, acting between Board meetings, regularly interacts with and receives reports from senior personnel of service providers, including the Adviser’s Chief Investment Officer, the Trust’s and the Adviser’s Chief Compliance Officer and portfolio management personnel. The Board’s Audit Committee (which consists of two trustees who are not affiliated with the Adviser (“Independent Trustees”)) meets regularly with the Trust’s independent registered public accounting firm and the Trust’s Chief Financial Officer. The Board also receives periodic presentations from senior personnel of the Adviser or its affiliates regarding risk management generally, as well as periodic presentations regarding specific operational, compliance or investment areas, such as business continuity, anti-money laundering, personal trading, valuation, credit, investment research and securities lending. The Board has adopted policies and procedures designed to address certain risks to the Funds. In addition, the Adviser and other service providers to the Funds have adopted a variety of policies, procedures and controls designed to address particular risks to the Funds. However, it is not possible to eliminate all of the risks applicable to the Funds. The Board also receives reports from counsel to the Trust or counsel to the Adviser and the Board’s own independent legal counsel regarding regulatory compliance and governance matters. The Board’s oversight role does not make the Board a guarantor of the Trust’s investments or activities.

The 1940 Act requires that at least 40% of a Fund’s trustees not be “interested persons” (as defined in the 1940 Act) of the Fund, and to rely on certain exemptive rules under the 1940 Act, a majority of a Fund’s trustees must not be interested persons of the fund. For certain important matters, such as the approval of investment advisory agreements or transactions with affiliates, the 1940 Act or the rules thereunder require the approval of a majority of the Trustees who are Independent Trustees. Currently, six of the Trustees are not interested persons of the Trust (as such, the Trustees are not affiliated with the Adviser). The Chairman of the Board, Linda Martinson, is an interested person of the Trust (“Interested Trustee”), and the Independent Trustees have designated two lead Independent Trustees who chair meetings or executive sessions of the Independent Trustees, review and comment on Board meeting agendas, represent the views of the Independent Trustees to management and facilitate communication among the Independent Trustees and their independent legal counsel. The Board has determined that its leadership structure, in which the Independent Trustees have designated two lead Independent Trustees to function as described above is appropriate in light of the services that the Adviser and its affiliates provide to the Trust and potential conflicts of interest that could arise from these relationships.

Trustees of the Trust, together with information as to their positions with the Trust, principal occupations and other board memberships and affiliations for the past five years, are shown below. Each Trustee serves as Trustee of a Fund until its termination; until the Trustee’s retirement, resignation or death; or as otherwise specified in the Trust’s organizational documents. Unless otherwise noted, the address of each Executive Officer and Trustee is Baron Investment Funds Trust, 767 Fifth Avenue, 49th Floor, New York, NY 10153. All Trustees listed below, whether Interested or Independent, serve as Trustees for the Trust. Additional information about the Trustees and Officers of the Trust can be found in the Trust’s Statement of Additional Information (the “SAI”) which may be obtained without charge by writing or calling 1-800-99Baron. The SAI is also available on the Baron Funds^® website, www.BaronFunds.com.

				Number of
				Portfolios
				in Fund
				Complex		Other
	Position(s) Held	Length of	Principal Occupation(s)	Overseen		Trustee/Directorships
Name, Address & Age	With the Funds	Time Served	During the Past Five Years	by Trustee		Held by the Trustee
Interested Trustees
Ronald Baron(1),(2)	Chief Executive	25 years	Director, Chairman, CEO and CIO: the Firm* (2003-		12	None
767 Fifth Avenue	Officer, Chief		Present); President (2004-02/07), Chairman (1999-
New York, NY 10153	Investment		2004), and Trustee (1987-Present): Baron Investment
Age: 69	Officer, Trustee		Funds Trust; President (2004-02/07), Chairman
	and Portfolio		(2003-2004), and Trustee (2003-Present): Baron
	Manager		Select Funds; Portfolio Manager: Baron USA Partners
			Fund, Ltd. (2003-Present); President: the Firm*
			(03/06-06/07); Portfolio Manager: Baron Managed
			Funds plc (2005-2009); President (2004-02/07),
			Chairman (1997-2004), and Trustee (1997-06/07):
			Baron Capital Funds Trust.
Linda S. Martinson(1),(2)	Chairman,	25 years	Director: the Firm* (2003-Present); Secretary: the		12	None
767 Fifth Avenue	President, Chief		Firm* (2003-04/08); President: the Firm* (02/07-
New York, NY 10153	Operating Officer		Present); Chief Operating Officer: the Firm (05/06-
Age: 57	and Trustee		present); General Counsel and Vice President: the
			Firm* (2003-2007); Chairman (10/10-Present);
			President (02/07-Present), Trustee (1987-Present),
			Secretary (2003-10/08): Baron Investment Funds
			Trust; Chairman (10/10-Present); President (02/07-
			Present), Trustee (2003-Present): Baron Select Funds;
			Director: Baron USA Partners Fund, Ltd. (2006-
			Present); Director: Baron Managed Funds plc (2005-
			2009); President (02/07-06/07) Trustee (1998-
			06/07): Baron Capital Funds Trust.

45

 Baron Funds  September 30, 2012 

MANAGEMENT OF THE FUNDS (Unaudited) (Continued)

				Number of
				Portfolios
				in Fund
				Complex		Other
	Position(s) Held	Length of	Principal Occupation(s)	Overseen		Trustee/Directorships
Name, Address & Age	With the Funds	Time Served	During the Past Five Years	by Trustee		Held by the Trustee
Independent Trustees
Norman S. Edelcup(3),(4),(5)	Trustee	25 years	Director: Marquis Bank (2007-Present); Director:		12	Director: Marquis Bank
City of Sunny Isles Beach			CompX International, Inc. (diversified manufacturer			(2007-Present); Director:
18070 Collins Avenue			of engineered components) (2006-Present); Mayor			CompX International, Inc.
Sunny Isles Beach, FL 33160			(2003-Present), Commissioner (2001-2003): Sunny			(diversified manufacturer
Age: 77			Isles Beach, Florida; Director (2001-2006), Senior			of engineered components)
			Vice President (2001-2004): Florida Savings Bank;			(2006-Present);
			Director: Valhi, Inc. (diversified company) (1975-			Director: Valhi, Inc.
			Present); Trustee: Baron Investment Funds Trust			(diversified company)
			(1987-Present), Baron Capital Funds Trust (1997-			(1975-Present).
			06/07), Baron Select Funds (2003-Present).
Charles N. Mathewson(4),(5)	Trustee	25 years	Director: Grill Concepts, Inc. (December		12	Director: Grill Concepts, Inc.
9295 Prototype Drive			2009-Present); Chairman Emeritus (October			(December 2009-Present).
Reno, NV 89521			2003-Present), Chairman (1986-2003): International
Age: 84			Game Technology, Inc. (manufacturer of
			microprocessor controlled gaming machines and
			monitoring systems); Chairman: Baron Capital Funds
			Trust (2004-06/07), Baron Investment Funds Trust,
			Baron Select Funds (2004-10/10); Trustee:
			Baron Investment Funds Trust (1987-Present),
			Baron Capital Funds Trust (1997-06/07),
			Baron Select Funds (2003-Present).
Harold W. Milner(4),(5)	Trustee	25 years	Retired; Trustee: Baron Investment Funds Trust		12	Chairman: Lighting
2293 Morningstar Drive			(1987-Present), Baron Capital Funds Trust (1997-			Protection Systems, LLC
Park City, UT 84060			06/07), Baron Select Funds (2003-Present);			(10/06-Present); Director:
Age: 77			Chairman: Lighting Protection Systems, LLC (10/06-			CompleteXRM (2009-
			Present); Director: CompleteXRM (2009-Present).			Present).
Raymond Noveck(3),(4),(5)	Trustee	25 years	Private Investor (1999-Present); Trustee: Baron		12	None
31 Karen Road			Investment Funds Trust (1987-Present), Baron
Waban, MA 02168			Capital Funds Trust (1997-06/07), Baron Select
Age: 69			Funds (2003-Present).
David A. Silverman, MD(4),(5)	Trustee	25 years	Physician and Faculty: New York University School of		12	Director: New York Blood
146 Central Park West			Medicine (1976-Present); Trustee: Baron Investment			Center (1999-Present).
New York, NY 10024			Funds Trust (1987-Present), Baron Capital Funds
Age: 62			Trust (1997-06/07), Baron Select Funds (2003-
			Present).
Alex Yemenidjian(4),(5)	Trustee	6 years	Chairman and CEO: Tropicana Las Vegas (gaming)		12	Chairman and CEO:
1925 Century Park East			(2009-Present); Chairman and CEO: Armenco			Tropicana Las Vegas
Suite 1975			Holdings, LLC (investment company) (2005-Present);			(gaming) (2009-Present);
Los Angeles, CA 90067			Director: Guess?, Inc. (retail) (2005-Present);			Chairman and CEO:
Age: 56			Director: Regal Entertainment Group (entertainment			Armenco Holdings, LLC
			company) (2005-Present); Director: USC Marshall			(investment company)
			School of Business Board of Leaders (2005-Present);			(2005-Present); Director:
			Co-chair: Imagine the Arts Campaign, California			Guess?, Inc. (retail)
			State University-Northridge (2005-Present); Trustee:			(2005-Present); Director:
			American Film Institute (2000-2007); Chairman and			Regal Entertainment Group
			CEO: Metro-Goldwyn-Mayer, Inc. (1999-2005);			(entertainment company)
			Director: The Lincy Foundation (1989-2011);			(2005-Present); Director:
			Chairman: The United Armenian Fund (1989-			USC Marshall School of
			2011); Director and member of Executive			Business Board of Leaders
			Committee: MGM MIRAGE, Inc. (1989-2005);			(2005-Present); Co-chair:
			Trustee: Baron Investment Funds Trust (01/06-			Imagine the Arts Campaign,
			Present), Baron Capital Funds Trust (12/06-06/07),			California State University-
			Baron Select Funds (12/06-Present).			Northridge (2005-Present).

46

 September 30, 2012  Baron Funds 

MANAGEMENT OF THE FUNDS (Unaudited) (Continued)

				Number of
				Portfolios
				in Fund
				Complex	Other
	Position(s) Held	Length of	Principal Occupation(s)	Overseen	Trustee/Directorships
Name, Address & Age	With the Funds	Time Served	During the Past Five Years	by Trustee	Held by the Trustee
Additional Officers of the Funds
Clifford Greenberg	Senior Vice	15 years	Director and Senior Vice President: the Firm* (2003-		None
767 Fifth Avenue	President and		Present); Vice President: Baron Capital, Inc. (1997-
New York, NY 10153	Portfolio Manager		2003); Portfolio Manager: Baron Small Cap Fund
Age: 53			(1997-Present).
Gretta J. Heaney	Vice President and	9 years	Vice President and Chief Compliance Officer: the		None
767 Fifth Avenue	Chief Compliance		Firm* (2003-Present), Baron Investment Funds Trust,
New York, NY 10153	Officer		Baron Select Funds (2004-Present), Baron USA
Age: 52			Partners Fund, Ltd (2006-Present), Baron Managed
			Funds plc (2005-2009), Baron Capital Funds Trust
			(2003-06/07).
Patrick M. Patalino	Vice President,	5 years	Vice President and General Counsel: the Firm*, Baron		None
767 Fifth Avenue	General Counsel		Investment Funds Trust, Baron Select Funds, (08/07-
New York, NY 10153	and Secretary		Present); Baron USA Partners Fund, Ltd. (08/07-
Age: 44			Present); Secretary: the Firm* (04/08-Present);
			Secretary: Baron Investment Funds Trust, Baron
			Select Funds (10/08-Present); Managing Director
			and Chief Operating Officer: Legal and Compliance
			Division, Morgan Stanley (01/06-06/07); Director of
			Regulatory Matters: Credit Suisse Securities (USA)
			(04/04-01/06); Counsel to Vice Chairman: Credit
			Suisse Securities (USA) (09/02-04/04).
Andrew Peck	Senior Vice	9 years	Portfolio Manager: Baron Asset Fund (01/08-		None
767 Fifth Avenue	President and		Present); Vice President: BAMCO, Inc. (2003-
New York, NY 10153	Portfolio Manager		Present); Vice President: Baron Investment Funds
Age: 43			Trust (2003-Present); Vice President, Research
			Analyst: Baron Capital, Inc. (1998-2003);
			Co-Portfolio Manager: Baron Asset Fund (2003-
			01/08); Co-Portfolio Manager (mid cap accounts):
			Baron Capital Management, Inc. (04/06-Present).
Susan Robbins	Vice President	18 years	Director, Vice President and Senior Analyst: the		None
767 Fifth Avenue			Firm* (2003-Present); Vice President: Baron
New York, NY 10153			Investment Funds Trust (1994-Present), Baron Select
Age: 57			Funds (2003-Present), Baron Capital Funds Trust
			(1998-06/07).
Peggy C. Wong	Treasurer and	25 years	Chief Financial Officer and Treasurer: the Firm*		None
767 Fifth Avenue	Chief Financial		(2003-Present), Baron Investment Funds Trust
New York, NY 10153	Officer		(1987-Present), Baron Select Funds (2003-Present),
Age: 51			Baron USA Partners Fund, Ltd. (1993-Present), Baron
			Managed Funds plc. (2005-2009), Baron Capital
			Funds Trust (1998-06/07).

*	The Firm (Baron Capital Group, Inc. (“BCG”) with its subsidiaries BCI, Baron Capital Management, Inc. (“BCM”) and BAMCO).
(1)	Trustees deemed to be “Interested Trustees” of the Funds, as that term is defined in the 1940 Act by reason of their employment with the Funds’Adviser and Distributor.
(2)	Members of the Executive Committee, which is empowered to exercise all of the powers, including the power to declare dividends, of the full Board when the full Board is not in session.
(3)	Members of the Audit Committee.
(4)	Members of the Nominating Committee.
(5)	Members of the Independent Committee.

47

SEP 12

Item 2. Code of Ethics.
          The Registrant has adopted a Code of Ethics for Principal Executive and Senior Financial Officers (the “Code”). Upon request, the Registrant will provide a copy of the Code to any person without charge. To obtain a copy of the Code, please send your request to info@Baronfunds.com or call 1-800-99BARON (1-800-992-2766).

Item 3. Audit Committee Financial Expert.
          The Registrant’s Board of Trustees has determined that the Registrant has two audit committee financial experts serving on its Audit Committee, Norman S. Edelcup and Raymond Noveck. Both Mr. Edelcup and Mr. Noveck are “independent” for purposes of Item 3(a)(2) of Form N-CSR.

Item 4. Principal Accountant Fees and Services.
          The following table shows the fees paid to PricewaterhouseCoopers, LLP, the Registrant’s principal accounting firm during the fiscal years ended September 30, 2012 and September 30, 2011:

(a)	Audit Fees: for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements:
		2012	2011
	Baron Investment Funds Trust	$216,833	$195,000
(b)	Audit-Related Fees: for assurance and related services that are reasonably related to the performance of the audit and are not included as Audit Fees:
		2012	2011
	Baron Investment Funds Trust	$0	$0
(c)	Tax Fees: for professional services rendered for tax compliance, tax advice and tax planning:
		2012	2011
	Baron Investment Funds Trust	$48,000	$46,750
The Tax Fees represent services provided in connection with the preparation of tax returns and year-end distribution review.
(d)	All Other Fees: for products and services provided by such accounting firm that are not included in (a), (b) or (c) above:
		2012	2011
	Baron Investment Funds Trust	$0	$0

e)   Audit Committee Pre-Approval Policies and Procedures: (i) Pursuant to paragraph (c)(7) of Rule 2-01 of Regulation S-X and to its charter, the Audit Committee shall pre-approve all audit and non-audit services provided by the independent auditors and in connection therewith to review and evaluate the qualifications, independence and performance of the Fund’s independent auditors; (ii) 100% of the services described in each of items 4(b) through 4(d) were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f)   Not Applicable.

(g)   The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the last two fiscal years is as follows:

2012:   $49,000

2011:   $45,000

(h) Not Applicable.
Item 5.	Audit Committee of Listed Registrants.
	The Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee are Norman S. Edelcup and Raymond Noveck.
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:	December 4, 2012

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:	December 4, 2012
By:	/s/ Peggy Wong
	Peggy Wong
	Treasurer and Chief Financial Officer
Date:	December 4, 2012