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Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
BARON ASSET FUND
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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contained in this form are not required to respond unless
the form displays a currently valid OMB control number.
SEC 1913 (04-04)
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously.Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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September 2004
PROXY STATEMENT
[REGISTERED LOGO]
B A R O N
F U N D S
> Baron Asset Fund
> Baron Growth Fund
> Baron Small Cap Fund
> Baron iOpportunity Fund
> Baron Fifth Avenue Growth Fund
Enclosed is a Proxy Statement and Proxy Voting Card for shareholders of our
Funds. We are asking you to vote on the following items:
1. ELECT TRUSTEES. All current trustees are standing for election. In addition
there are two new trustee nominees. If all the candidates are elected, we
will have 3 interested trustees and seven - or 70% -non-interested,
independent trustees. This will be a first step in our aim to have at least
75% of the trustees be independent.
2. NAME CHANGE. The name Baron Asset Fund is currently shared by one of our
funds and the legal trust which has 5 series funds, which has led to
confusion. We are proposing to change the name of the trust to Baron
Investment Funds Trust.
3. CHANGE IN INVESTMENT RESTRICTIONS. The Baron Asset Fund series has
different investment restrictions than Baron Growth Fund, Baron Small Cap
Fund and Baron iOpportunity Fund. We would like all these series to have
the same fundamental investment restrictions.
Please read the enclosed Proxy Statement carefully and please cast your votes,
either electronically or by marking the proxy card and mailing it to us. Every
vote is important to us.
Thank you.
BARON ASSET FUND
BARON GROWTH FUND
BARON SMALL CAP FUND
BARON iOPPORTUNITY FUND
BARON FIFTH AVENUE GROWTH FUND
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Notice of Special Meeting of Shareholders
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To Our Shareholders:
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron iOpportunity
Fund and Baron Fifth Avenue Growth Fund, (each a "Fund", collectively "Funds")
each of which is a separate series of Baron Asset Fund, a Massachusetts business
trust (the "Trust"), will be held at Avery Fisher Hall, Lincoln Center, 10
Lincoln Center Plaza, New York, NY 10023 on October 22, 2004 at 1:00 p.m.
eastern time.
The shareholders of all five Funds will be asked to consider and vote
together as a single class on the following proposal, which is described in the
accompanying proxy statement:
(1) Election of ten members of the Board of Trustees of for the Trust.
The shareholders of all five Funds of the Trust will be asked to consider
and vote together as a single class on the following proposal, which is
described in the accompanying proxy statement:
(2) Change the name of the Trust to Baron Investment Funds Trust
The shareholders of the Baron Asset Fund series will be asked to consider
and vote on the additional following proposal, which is described in the
accompanying proxy statement:
(3) To eliminate the fundamental investment restrictions of the Fund
and replace them with an updated set of fundamental restrictions.
The shareholders of each Fund will be asked to consider and vote separately
on the following proposal, which is described in the accompanying proxy
statement:
(4) To transact such other business as may properly come before the
Special Meeting of Shareholders or any adjournment thereof.
Only holders of record of shares of common stock of the Fund at the close
of business on September 8, 2004, are entitled to vote at the Meeting and at any
adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve a proposal is not obtained at the Meeting, the persons named
on the proxy card as proxies may propose one
-1-
or more adjournments of the Meeting, in accordance with applicable law, to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Fund's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment those proxies which they are entitled to vote in favor
of the proposal and will vote against any such adjournment those proxies to be
voted against the proposal.
By order of the Board of Trustees,
/s/ Linda S. Martinson
----------------------
Linda S. Martinson
Secretary
September 1, 2004
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<page>
IMPORTANT
Your vote is important and, as a shareholder, you are asked to be at the Meeting
either in person or by proxy. We urge you to vote by proxy in case you may not
be able to attend in person since you can always revoke your proxy at the
meeting. You can do this by:
1. Completing, signing, dating and promptly returning the enclosed
proxy card using the enclosed postage prepaid envelope;
2. Calling the toll-free number on your proxy card; or
3. Voting at the web site: www.proxyvote.com.
YOUR PROMPT VOTING BY PROXY MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER
SOLICITATIONS TO ENSURE A QUORUM AT THE MEETING. VOTING BY PROXY WILL NOT
PREVENT YOU FROM PERSONALLY VOTING YOUR SHARES AT THE MEETING AND YOU MAY REVOKE
YOUR PROXY BY ADVISING THE SECRETARY OF THE TRUST IN WRITING (BY SUBSEQUENT
PROXY OR THROUGH THE WEB SITE) OR BY TELEPHONE OF SUCH REVOCATION AT ANY TIME
BEFORE THE MEETING.
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BARON ASSET FUND
BARON GROWTH FUND
BARON SMALL CAP FUND
BARON iOPPORTUNITY FUND
BARON FIFTH AVENUE GROWTH FUND
767 Fifth Avenue, 49th Floor
New York, NY 10153
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PROXY STATEMENT
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General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of Baron Asset Fund (the
"Trust"), on behalf of its series, BARON ASSET FUND, BARON GROWTH FUND, BARON
SMALL CAP FUND, BARON iOPPORTUNITY FUND and BARON FIFTH AVENUE GROWTH FUND. This
proxy statement is for use at Special Meeting of Shareholders (the "Meeting"),
to be held at Avery Fisher Hall, Lincoln Center, 10 Lincoln Center Plaza, New
York, NY 10023 on October 22, 2004 at 1:00 p.m., eastern time, and at any and
all adjournments thereof.
This Proxy Statement, the Notice of Special Meeting, the Question & Answer
Statement, and the proxy cards are first being mailed to shareholders on or
about September 15, 2004, or as soon as practicable thereafter. Any shareholder
giving a proxy has the power to revoke it in person at the Meeting, by mail
(addressed to the Secretary at the principal office of the Funds, 767 Fifth
Avenue, 49th floor, New York, NY 10153), by visiting www.proxyvote.com, by
-----------------
calling the toll-free number on your proxy card, by executing a superseding
proxy, or by submitting a notice of revocation to the Funds. All properly
executed proxies received in time for the Meeting will be voted as specified in
the Proxy Statement.
A majority of the outstanding shares must be present in person or by proxy to
constitute a quorum for the transaction of business. If the necessary quorum to
transact business or the vote required to approve the proposal is not obtained
at the Meeting, the persons named as proxies on the proxy card may propose one
or more adjournments of the Meeting, in accordance with applicable law, to
permit the further solicitation of proxies. Any such adjournment would require
the affirmative vote of a majority of the shares voting on the adjournment. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the proposal, and will vote against
any such adjournment those proxies to be voted against the proposal. For
purposes of determining the presence of a quorum for the Meeting, abstentions
will be treated as shares that are present but which have not been voted.
Brokers and other nominees may not be eligible to vote on certain matters,
shares that are not beneficially owned by them and as to which they have not
received voting instructions; these "broker non votes" will be disregarded for
quorum and voting purposes on such matters. SHAREHOLDERS ARE URGED TO FORWARD
THEIR VOTING INSTRUCTIONS PROMPTLY.
The Annual Financial Report for the Funds of the Trust for the year ended
September 30, 2003, was mailed to shareholders the last week in November, 2003.
The unaudited Semi-Annual Financial Report for the Funds of the Trust was mailed
to shareholders in May of 2004. The reports are available on the website of the
Securities and Exchange Commission, www.sec.gov under the name Baron Asset Fund.
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Copies are also available free of charge by calling 1.800.992.2766.
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PROPOSALS
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SUMMARY
The following table summarizes the proposals being submitted by the Board
of Trustees for action at the October 22, 2004 Special Meeting of Shareholders
(the "Meeting").
Proposals Funds Affected
1. Elect ten Board members Baron Asset Fund series
Baron Growth Fund series
Baron Small Cap Fund series
Baron iOpportunity Fund series
Baron Fifth Avenue Growth Fund series
2. Change name of Trust Baron Asset Fund series
Baron Growth Fund series
Baron Small Cap Fund series
Baron iOpportunity Fund series
Baron Fifth Avenue Growth Fund series
3. Change investment restrictions Baron Asset Fund series
Trustees will be elected by plurality vote, with the few nominees receiving
the most votes being elected. The change in the name of the Trust requires the
affirmative vote by a majority of the shares present and voting on the proposal,
and the change in investment restrictions of the Baron Asset Fund series
requires the affirmative vote of the lesser of: (a) 67% of the Baron Asset Fund
series' shares present at the Meeting if a majority of such shares are present
in person or by proxy or (b) more than 50% of the outstanding shares of the
Baron Asset Fund series' shares.
Holders of record of the shares of the Funds at the close of business on
September 8, 2004, (the "Record Date") will be entitled to one vote per share
for each Fund on all business relevant to that Fund to be conducted at the
Meeting.
PROPOSAL 1 asks shareholders of all five Funds to elect ten Board members to the
Board of Trustees. It is intended that the enclosed proxy will be voted for the
nominees listed below unless such authority has been withheld in the proxy.
Except for Mr. Dodge and Mr. Fuente, all nominees named below are currently
Trustees and have served in that capacity for many years as indicated below. Mr.
Dodge and Mr. Fuente are nominated to fill vacancies. Each of the current
Trustees oversees the five Funds of the Trust.
The Board of Trustees has established four committees, i.e., Audit,
Executive Committee, Nominating and Independent. There are two members of the
Audit Committee, Norman S. Edelcup, and Raymond Noveck, both Non-Interested
Trustees. The Board has determined that they have at least one independent Audit
Committee financial expert. The Audit Committee recommends to the full Board the
engagement or discharge of the Funds' independent accountants; directs
investigations into matters within the scope of the independent accountants'
duties; reviews with the independent accountants the results of the audits; and
reviews the independence of the independent accountants. Each member of the
-5-
Audit Committee receives an aggregate of $2,500 in annual compensation for
serving on the Audit Committee. The Audit Committee met twice during the fiscal
year ended September 30, 2003.
There are three members of the Executive Committee which is empowered to
exercise all of the powers, including the power to declare dividends, of the
full Board of Trustees when the full Board of Trustees is not in session. The
members of the Executive Committee are Ronald Baron, Morty Schaja and Linda S.
Martinson, all of whom serve on the committee without compensation. Mr. Baron,
Mr. Schaja and Ms. Martinson are Interested Trustees. There were four meetings
of the Executive Committee during the fiscal year ended September 30, 2003.
There are three members of the Nominating Committee, Norman S. Edelcup,
Harold W. Milner and Raymond Noveck, all who are Non-Interested Trustees and who
serve without compensation. The Nominating Committee does not have a formal
charter. There were no meetings of the Nominating Committee during the fiscal
year ended September 30, 2003.
The Nominating Committee recommends to the full Board those persons to be
nominated for election as Trustees by shareholders and selects and proposes
nominees for election by Trustees between shareholders' meetings. The Nominating
Committee does not normally consider candidates proposed by shareholders for
election as Trustees. It does not consider trustee candidates recommended by
security holders because the Board believes that the Committee itself can more
efficiently find qualified candidates for consideration. The Committee gathers a
list of prospective candidates. The Committee generally requires that any
candidate be highly experienced, knowledgeable individual with experience either
in the industry or as directors or senior executives of public companies. The
Committee does consider candidates recommended by current Trustees, including
Interested Trustees. The Committee meets privately with all candidates,
questions references, and gathers background information some of which may be
from independent sources. The Committee then meets to consider the potential
nominees and votes to make a nomination. Mr. Dodge and Mr. Fuente were
recommended to the Committee by Ronald Baron, the Trust's president, the
Adviser's chief executive officer and an Interested Trustee, and were approved
by the Nominating Committee.
There are five members of the Independent Committee, all of whom serve on
the Committee without compensation. The members of the Independent Committee are
Norman S. Edelcup, Charles N. Mathewson, Harold W. Milner, Raymond Noveck and
Dr. David A. Silverman, all who are Non- Interested Trustees. The Committee
discusses various Fund matters, including the advisory contract and distribution
plan. Its members are all Disinterested Trustees of the Funds. This Committee
met two times during the fiscal year ended September 30, 2003.
Fund shareholders who wish to send communications to the Board may do so by
sending e-mail to trustees@BaronFunds.com, which e-mail will be promptly
forwarded to each Board member. However, the Secretary reserves the right not to
forward to the Trustees any abusive, threatening or otherwise inappropriate
materials.
-6-
1. NOMINEES FOR BOARDS OF TRUSTEES
NUMBER OF
PORTFOLIOS IN OTHER
TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY TRUSTEE
NAME, ADDRESS & AGE WITH FUNDS TIME SERVED DURING PAST FIVE YEARS TRUSTEE OR NOMINEE
- ------------------- ----------- -------------- ----------------------- ------------- ----------------
INTERESTED:
Ronald Baron President, The term of Chairman, CEO, and All None outside the
767 Fifth Avenue, 49th fl CEO, Chief service is until Director, Baron Capital, (7) Baron Funds
New York, NY 10153 Investment cessation; the Inc. (1982-Present), Baron Complex.
Age: 61 Officer, length of time Capital Management, Inc.
Trustee and served for the (1983-Present), Baron
Portfolio Trust is 16 years. Capital Group, Inc. (1984-
Manager Present), BAMCO, Inc.
(1987-Present); Portfolio
Manager, Baron Asset Fund
(1987-Present); Portfolio
Manager, Baron Growth
Fund (1995-Present);
President (2004-Present),
Chairman (1999-2004), CIO
and Trustee (1987-Present),
the Trust; President (2004-
Present), Chairman (1997-
2004), CIO and Trustee
(1997-Present), Baron
Capital Funds Trust;
President (2004-Present),
Chairman (2003-2004), CIO
and Trustee (2003-Present),
Baron Select Funds.
Linda S. Martinson Vice The term of General Counsel, Vice All None outside the
767 Fifth Avenue, 49th fl President, service is until President and Secretary, (7) Baron Funds
New York, NY 10153 Secretary, cessation; the Baron Capital, Inc. (1983- Complex.
Age: 49 General length of time Present), BAMCO, Inc.
Counsel and served for the (1987-Present), Baron
Trustee Trust is 16 years. Capital Group, Inc. (1984-
Present), Baron Capital
Management, Inc. (1983-
Present); Vice President,
Secretary, General Counsel
and Trustee, the Trust
(1987-Present); Vice
President, Secretary,
General Counsel and
Trustee, Baron Capital
Funds Trust (1997-Present);
Vice President, General
Counsel, Secretary and
Trustee, Baron Select Funds
(2003-Present) .
-7-
NUMBER OF
PORTFOLIOS IN OTHER
TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY TRUSTEE
NAME, ADDRESS & AGE WITH FUNDS TIME SERVED DURING PAST FIVE YEARS TRUSTEE OR NOMINEE
- ------------------- ----------- -------------- ----------------------- ------------- ----------------
INTERESTED:
Morty Schaja Senior The term of President and Chief All None outside the
767 Fifth Avenue, 49th fl Executive service is until Operating Officer, Baron (7) Baron Funds
New York, NY 10153 Vice cessation; the Capital, Inc. (1999-Present); Complex.
Age: 49 President, length of time Senior Vice President and
Chief served for the Chief Operating Officer,
Operating Trust is 6 years. Baron Capital, Inc. (1997-
Officer and 1999); Managing Director,
Trustee Vice President, Baron
Capital, Inc. (1991-1999);
and Director, Baron Capital
Group, Inc., Baron Capital
Management, Inc., and
BAMCO, Inc. (1997-
Present); Executive Vice
President (2004-Present),
President (1999-2004) COO
(1999-Present), and Trustee
(1996-Present), Baron Asset
Fund; Executive Vice
President (2004-Present),
President (1999-2004) COO
(1999-Present), and Trustee
(1997-Present), Baron
Capital Funds Trust;
Executive Vice President
(2004-Present), President
(1999-2004), COO(1999-
Present) and Trustee (2003-
Present) Baron Select
Funds.
-8-
NUMBER OF
PORTFOLIOS IN OTHER
TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY TRUSTEE
NAME, ADDRESS & AGE WITH FUNDS TIME SERVED DURING PAST FIVE YEARS TRUSTEE OR NOMINEE
- ------------------- ----------- -------------- ----------------------- ------------- ----------------
NON-INTERESTED:
Norman S. Edelcup Trustee The term of Senior Vice President and All Director, Florida
244 Atlantic Isles service is until Director, Florida Savings (7) Savings Bancorp
Sunny Isles Beach, FL cessation; the Bancorp (2001-Present); (2001-Present);
33160 length of time Mayor (October 2003- Director, Valhi,
Age: 69 served for the Present), Commissioner, Inc. (1975-
Trust is 16 years. Sunny Isles Beach, Florida Present).
(2001-2003); Senior Vice
President, Item Processing
of America (1999-2000) (a
subsidiary of The Intercept
Group); Chairman, Item
Processing of America
(1989-1999) (a financial
institution service bureau);
Director, Valhi, Inc. (1975-
Present) (diversified
company); Director, Artistic
Greetings, Inc. (1985-
1998); Trustee (1987-
Present), Baron Asset Fund;
Trustee (1997-Present),
Baron Capital Funds Trust;
Trustee (2003-Present),
Baron Select Funds.
Charles N. Mathewson Trustee Term of service is Chairman Emeritus All None outside the
9295 Prototype Road until cessation; (October 2003-Present), (7) Baron Funds
Reno, NV 89521 the length of time Chairman, International Complex.
Age: 76 served for the Game Technology, Inc.
Trust is 16 years. (1986-2003) (manufacturer
of microprocessor-
controlled gaming machines
and monitoring
systems);Chairman,
American Gaming
Association (1994-2002);
Trustee (1987-Present),
Baron Asset Fund; Trustee
(1997-Present), Baron
Capital Funds Trust;
Trustee (2003-Present),
Baron Select Funds.
-9-
NUMBER OF
PORTFOLIOS IN OTHER
TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY TRUSTEE
NAME, ADDRESS & AGE WITH FUNDS TIME SERVED DURING PAST FIVE YEARS TRUSTEE OR NOMINEE
- ------------------- ----------- -------------- ----------------------- ------------- ----------------
NON-INTERESTED:
Harold W. Milner Trustee Term of service is Retired; President and CEO, All None outside the
2293 Morningstar Drive until cessation; Kahler Realty Corporation (7) Baron Funds
Park City, UT 84060 the length of time (1985-1997) (hotel Complex.
Age: 69 served for the ownership and
Trust is 16 years. management); Trustee
(1987-Present), Baron Asset
Fund; Trustee (1997-
Present), Baron Capital
Funds Trust; Trustee (2003-
Present), Baron Select
Funds.
Raymond Noveck Trustee Term of service is Private Investor (1999- All None outside the
31 Karen Road until cessation; Present); President, The (7) Baron Funds
Waban, MA 02168 the length of time Medical Information Line, Complex.
Age: 61 served for the Inc. (1997-1998) (health
Trust is 16 years. care information);
President, Strategic
Systems, Inc. (1990-1997)
(health care information);
Director, Horizon/CMS
Healthcare Corporation
(1987-1997); Trustee
(1987-Present), Baron Asset
Fund; Trustee (1997-
Present), Baron Capital
Funds Trust; Trustee (2003-
Present), Baron Select
Funds.
David A. Silverman, MD Trustee Term of service is Physician and Faculty, New All None outside the
146 Central Park West until cessation; York University School of (7) Baron Funds
New York, NY 10024 the length of time Medicine (1976-Present); Complex.
Age: 54 served for the Trustee (1987-Present),
Trust is 16 years. Baron Asset Fund; Trustee
(1997-Present), Baron
Capital Funds Trust;
Trustee (2003-Present),
Baron Select Funds.
-10-
NUMBER OF
PORTFOLIOS IN OTHER
TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY TRUSTEE
NAME, ADDRESS & AGE WITH FUNDS TIME SERVED DURING PAST FIVE YEARS TRUSTEE OR NOMINEE
- ------------------- ----------- -------------- ----------------------- ------------- ----------------
NON-INTERESTED:
Steven B. Dodge Nominee Term of service is CEO, Windover N/A Chairman of the
239 Summer Street until cessation. Development Corporation (0) Audit
Manchester, MA 01944 (2004-Present) (private real Committee,
Age: 60 estate development Member of
company); Founder and Executive and
Chairman, American Tower Special
Corporation (1998-Present); Independent
Founder, Chairman and Committees,
CEO, American Radio Sotheby's
Systems (1988-1998); Holdings, Inc.
Founder, Chairman and (2000-Present);
CEO, American Chairman of
Cablesystems (1978-1988); Audit
Chairman of the Audit Committee,
Committee, Member of Nextel Partners,
Executive and Special Inc. (2000-
Independent Committees, Present).
Sotheby's Holdings, Inc.
(2000-Present); Chairman of
Audit Committee, Nextel
Partners, Inc. (2000-Present).
David I. Fuente Nominee Term of service is Director, (1987-Present), N/A Director, (1987-
701 Tern Point Circle until cessation. Chairman, (1987-2001), and (0) Present),
Boca Raton, FL 33431 CEO (1987-2000) Office Chairman,
Age: 58 Depot; Director, Ryder (1987-2001),
System, Inc. (1998-Present); and CEO (1987-
Director, Dick's Sporting 2000) Office
Goods, Inc. (1993-Present). Depot; Director,
Ryder System,
Inc. (1998-
Present);
Director, Dick's
Sporting Goods,
Inc. (1993-
Present).
-11-
The following table shows the dollar range of shares beneficially owned by each
Trustee as of July 31, 2004:
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AGGREGATE DOLLAR
RANGE OF
EQUITY SECURITIES IN
ALL
REGISTERED
INVESTMENT
COMPANIES OVERSEEN
BY
TRUSTEE IN FAMILY OF
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY INVESTMENT
OR NOMINEE SECURITIES IN THE FUNDS COMPANIES
- -----------------------------------------------------------------------------------------------------------------------------------
BARON BARON BARON BARON BARON
ASSET GROWTH SMALL CAP IOPPORTUNITY FIFTH AVE
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED:
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald Baron >$100,000 $50,000- >$100,000 >$100,000 >$100,000 >$100,000
$100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Linda S. Martinson $10,001- $50,000- $50,000- $10,001- >$100,000
$50,000 $100,000 $100,000 $0 $50,000
- -----------------------------------------------------------------------------------------------------------------------------------
Morty Schaja >$100,00 >$100,00 >$100,00 >$100,00 >$100,000 >$100,000
- -----------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED:
- -----------------------------------------------------------------------------------------------------------------------------------
Norman Edelcup $50,000- $10,001- $10,001- $1-$10,000 $1-$10,000 >$100,000
$100,000 $50,000 $50,000
- -----------------------------------------------------------------------------------------------------------------------------------
Charles Mathewson $10,001- $10,001- $0 $0
$50,000 $50,000 >$100,000 >$100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Harold Milner >$100,000 $50,000- $10,001- $10,001-$50,000 $10,001- >$100,000
$100,000 $50,000 $50,000
- -----------------------------------------------------------------------------------------------------------------------------------
Raymond Noveck >$100,000 $10,001- $10,001- $0 $10,001- >$100,000
$50,000 $50,000 $50,000
- -----------------------------------------------------------------------------------------------------------------------------------
David Silverman, MD $10,001- $0 $0 $0 $0 $10,001-$50,000
$50,000
- -----------------------------------------------------------------------------------------------------------------------------------
Steven B. Dodge $0 $0 $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
David I. Fuente $0 $0 $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
-12-
The officers of the Trust received compensation from the Trust for the fiscal
year ended September 30, 2003. The Trustees of the Funds received the following
compensation from the Funds for the fiscal year ended September 30, 2003:
- -----------------------------------------------------------------------------------------------------------------------------------
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM FUND AND
COMPENSATION ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX
NAME FROM THE FUNDS FUNDS EXPENSES RETIREMENT PAID TO TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED:
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald Baron $0 N/A N/A $0
- -----------------------------------------------------------------------------------------------------------------------------------
Linda S. Martinson $0 N/A N/A $0
- -----------------------------------------------------------------------------------------------------------------------------------
Morty Schaja $0 N/A N/A $0
- -----------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED:
- -----------------------------------------------------------------------------------------------------------------------------------
Norman Edelcup $16,250 N/A N/A $16,250
- -----------------------------------------------------------------------------------------------------------------------------------
Charles Mathewson $ 6,250 N/A N/A $ 6,250
- -----------------------------------------------------------------------------------------------------------------------------------
Harold Milner $13,750 N/A N/A $13,750
- -----------------------------------------------------------------------------------------------------------------------------------
Raymond Noveck $15,625 N/A N/A $15,625
- -----------------------------------------------------------------------------------------------------------------------------------
David Silverman $13,750 N/A N/A $13,750
- -----------------------------------------------------------------------------------------------------------------------------------
Steven B. Dodge N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
David I. Fuente N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
BOARD OF TRUSTEES RECOMMENDATION
The Board of Trustees of the Trust recommends that each nominee listed
above be elected to serve as a trustee until he or she ceases to be a trustee
(including upon election of a successor at a meeting of shareholders.)
REQUIRED VOTE
Election of individual Trustees requires an affirmative vote of a plurality
of all shares voting, provided that at least a majority of the outstanding
shares is represented at the Meeting in person or by proxy. THE BOARD OF
TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF EACH
NOMINEE.
PROPOSAL 2 asks shareholders of Baron Asset Fund, Baron Growth Fund, Baron
Small Cap Fund, Baron iOpportunity Fund and Baron Fifth Avenue Growth Fund to
change the name of the Trust from Baron Asset Fund to Baron Investment Funds
Trust.
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BOARD OF TRUSTEES RECOMMENDATION
The Board of Trustees of the Trust recommend that the name of the Trust be
changed. Having the same name for both the Trust and one of its series has
caused confusion. The simplest solution would be to rename the Trust.
REQUIRED VOTE
Approval of Proposal 2 requires the affirmative vote of a majority of the
shares of the Trust present and voting on the matter. THE BOARD OF TRUSTEES
RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THIS PROPOSAL 2.
PROPOSAL 3 asks shareholders of the Baron Asset Fund series to eliminate certain
of its fundamental investment restrictions and replace them with new
restrictions. The new restrictions would be the same restrictions that Baron
Growth Fund, Baron Small Cap Fund and Baron iOpportunity Fund have. The proposed
new restrictions are as follows:
Baron Asset Fund may not:
1. Issue senior securities or borrow money or utilize leverage in
excess of 25% of its net assets (plus 5% for emergency or other
short-term purposes) from banks from time to time.
2. Except as described in the prospectus or SAI, engage in
short-sales, purchase securities on margin or maintain a net
short position.
3. Purchase or sell commodities or commodity contracts except for
hedging purposes and in conformity with regulations of the
Commodities Futures Trading Commission such that the Fund would
not be considered a commodity pool.
4. Purchase or sell oil and gas interests or real estate. Debt or
equity securities issued by companies engaged in the oil, gas or
real estate business are not considered oil or gas interests or
real estate for purposes of this restriction. First mortgage
loans and other direct obligations secured by real estate are not
considered real estate for purposes of this restriction.
5. Make loans, except to the extent the purchase of debt obligations
of any type (including repurchase agreements and corporate
commercial paper) are considered loans and except that the Fund
may lend portfolio securities to qualified institutional
investors in compliance with requirements established from time
to time by the Securities and Exchange Commission and the
securities exchanges where such securities are traded.
6. Invest more than 15% of its assets in restricted or illiquid
securities, including repurchase agreements maturing in more than
seven days.
These restrictions would replace the following existing restrictions:
Baron Asset Fund may not:
1. Issue senior securities except in connection with any permitted
borrowing where the Fund is deemed to have issued a senior
security;
2. Borrow money except from banks for temporary purposes in an
amount not exceeding 5% of the Fund's net assets at the time the
borrowing is made;
3. Purchase securities on margin except for short-term credit
necessary for the clearance of portfolio transactions;
4. Make short sales of securities, maintain a short position, or
write put options;
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5. Purchase or sell commodities or commodity contracts;
6. Purchase or sell real estate or real estate mortgage loans or
invest in the securities of real estate companies unless such
securities are publicly traded;
7. Invest in oil, gas or mineral-related programs or leases;
8. Invest more than 10% of the value of the Fund's total assets in
securities which are restricted or illiquid or in repurchase
agreements maturing or terminable in more than seven days;
9. Invest in securities of other open end investment companies
(except in connection with a merger, consolidation or other
reorganization and except for the purchase of shares of
registered open-end money market mutual funds if double advisory
fees are not assessed), invest more than 5% of the value of the
Fund's total assets in more than 3% of the total outstanding
voting securities of another investment company or more than 10%
of the value of the Fund's total assets in securities issued by
other investment companies;
10. Make loans to other persons, except up to 10% of the value of the
Fund's total assets in loans of portfolio securities and except
to the extent that the purchase of publicly traded debt
securities and the entry into repurchase agreements in accordance
with the Fund's investment objective and policies may be deemed
to be loans;
11. Mortgage, pledge or hypothecate any portfolio securities owned or
held by the Fund, except as may be necessary in connection with
permitted borrowing;
12. Invest more than 5% of its total assets in warrants to purchase
common stock;
13. Purchase securities of any issuer with a record of less than
three years' continuous operation, including predecessors, except
obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, if such purchase would cause the
investments of the Fund in all such issuers to exceed 5% of the
value of the total assets of the Fund; or
14. Purchase or retain any securities of an issuer any of whose
officers, directors, trustees or security holders is an officer
or Trustee of the Fund, or is a member, officer or Director of
the Adviser, if after the purchase of the securities of such
issuer by the Fund one or more of such persons owns beneficially
more than 1/2 of 1% of the shares or securities, or both, all
taken at market value, of such issuer, and such persons owning
more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities, or both,
all taken at market value.
BOARD OF TRUSTEES RECOMMENDATION
The Board of Trustees of the Trust recommend the elimination of the existing
investment restrictions and the adoption of the new investment restrictions. The
Board believes that the new restrictions are reasonable and fair and that many
of the old restrictions are outdated. The Board believes that this change will
allow the Adviser more ability to better manage the portfolio. The Board does
not believe that the changes will materially increase the risks in connection
with, the Fund.
EXPLANATION OF PROPOSED CHANGES AND RISK FACTORS:
PROPOSED ITEM 1 is similar to the existing restriction #1, except that is would
allow the Fund to borrow up to 30% of its net assets. The Fund is currently
allowed to borrow up to 5% of its net assets for temporary purposes. To the
extent the Fund borrows, it must maintain continuous asset coverage of 300% of
the amount borrowed. Such borrowing has special risks. Any amount borrowed will
be subject to interest costs that may or may not exceed the appreciation of the
securities purchased.
PROPOSED ITEM 2 allows the Fund to utilize margin or short sales, if and as
disclosed in the prospectus.
-15-
Currently the Fund is not authorized to utilize margin or maintain a short
position. The change will allow the Fund to take advantage of perceived market
conditions, but BAMCO, Inc., the adviser to the Fund (the "Adviser"), does not
believe this would be a significant part of the investment program. The risks
associated with margin transactions are the same as in item 1 above. The Fund
has to borrow the security it wishes to sell short. The market value of the
security sold short may increase and the Fund would lose money because it will
have to pay a higher price to repurchase the borrowed stock when it closes its
short position. The loss of value on a short sale is theoretically unlimited if
the Fund is unable to close out a short position at an acceptable price or time.
PROPOSED ITEM 3 allows the Fund to engage in commodities transactions for
hedging purposes only. Currently the Fund cannot engage in commodities
transactions for any purpose. The Adviser does not believe that this would be a
significant part of the Fund's investment program, but would like the ability to
utilize appropriate hedging techniques should market conditions warrant. The
hedging technique may be not be successful and the market conditions could
change, resulting in the hedge reducing the value of the portfolio.
PROPOSED ITEM 4 is similar to the existing restrictions 6 and 7. The language is
different but the restriction is the same, namely that the Fund may not invest
directly in real estate or oil and gas ventures, but it can purchase securities
of companies engaged in those businesses.
PROPOSED ITEM 5 would allow the Fund to loan its portfolio securities to
qualified institutional investors in accordance with then-current Securities and
Exchange Commission requirements. Currently the Fund is allowed to loan up to
10% of its portfolio securities. The Adviser does not believe this would be a
significant part of the Fund's investment program. Historically the Fund has not
engaged in stock loan.
PROPOSED ITEM 6 would increase the percentage of the Fund's assets that could be
invested in restricted or illiquid securities to 15% from 10%. The Adviser
believes that the additional 5% gives it more flexibility in managing the
portfolio and gives it additional investment opportunities. There is also
additional risk. The absence of a trading market could make it difficult to
ascertain a market value for illiquid positions. The Fund's net asset value
could be adversely affected if there were no ready buyer at an acceptable price
at the time the Fund decided to sell. Time consuming negotiations and expenses
could occur in disposing of the shares.
In addition to the revisions described above, existing items 4, 9, 12 and 14
would be eliminated. The reasons are described below.
ITEM 4 prohibits the Fund from engaging in short sales and writing put options.
The short sales are addressed in new item 2. The Fund is currently authorized to
engage in other types of options transactions (it may write covered call options
and purchase put options), but the Adviser would like the ability to, like the
other Baron funds, write put options and purchase call options where consistent
with the prospectus and where market conditions warrant. A put option gives the
purchaser of the option the right to sell, and when exercised obligates the
writer to buy, the underlying security at the exercise price. A call option
gives the purchaser of the option the right to buy, and when exercised obligates
the writer to buy, the underlying security at the exercise price. Options may
fail as hedging techniques in cases where the price movements of the securities
underlying the options do not follow the price movements of the portfolio
securities subject to the hedge. Gains on investments in options and derivatives
depend on the Adviser's ability to anticipate correctly the direction of stock
prices, interest rates, and other economic factors. Options may lose all their
value in a relatively short period of time.
ITEM 9 prohibits the Fund from investing in other investment companies. The
Adviser believes that this
-16-
should not be a fundamental restriction but should be governed by what the
prospectus allows the Fund to do. The Fund has never had significant investments
in other investment companies and the Adviser has no present intention of
changing that policy.
ITEM 12 prohibits the Fund from investing more than 5% of its total assets in
warrants to purchase common stock. The Adviser believes that this should not be
a fundamental restriction, but should be governed by what the prospectus allows
the Fund to do. From time-to-time the Fund has owned warrants, but it is not a
significant part of the management of the portfolio.
ITEM 14 prohibits the Fund from owning securities of an issuer whose officers,
directors, etc. are officers, directors, etc. of the Fund where such persons own
certain percentages of the issuer's securities. The Adviser believes the Fund
should not be restricted from owning shares of an issuer because an officer or
director also owns shares. The restriction was originally adopted because
securities laws at the time required it, but those restrictions are no longer
required and the Adviser believes this should not remain a fundamental policy of
the Fund.
REQUIRED VOTE
Approval of Proposal 3 requires the affirmative vote of the lesser of: (a)
67% of the Baron Asset Fund series' shares present at the Meeting if a majority
of such shares are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Baron Asset Fund series' shares. It is intended that
the enclosed proxy will be voted for the twelve new investment restrictions
proposed unless authority is withheld in the proxy. If there are not enough
votes to pass any particular restriction, the existing restriction will remain
in effect. The Board of Trustees recommends that the shareholders of the Fund
vote in favor of this proposal 3.
ADDITIONAL INFORMATION
The name and address of the Investment Adviser is BAMCO, Inc., 767 Fifth
Avenue, 49th Floor, New York, New York, 10153. The cost of preparing, printing
and mailing the proxy, notice and Proxy Statement and all other costs incurred
in connection with the solicitation of proxies, including any additional
solicitation made by letter, telephone or other means, will be paid by the
Funds, proportionately.
The name and address of the principal underwriter and distributor is Baron
Capital, Inc., 767 Fifth Avenue, 49th Floor, New York, New York, 10153.
It is expected that the solicitation of proxies will be primarily by mail.
Shareholder Communications Corporation has been engaged to assist in the
solicitation of proxies. To the extent that votes are not received, the proxy
solicitation firm may contact shareholders by telephone. Shareholders may
authorize the proxy solicitation firm to execute proxies on their behalf, by
telephone or through the internet. Proxies that are obtained by telephone
authorization will be recorded in accordance with procedures that are reasonably
designed to ensure that the identity of the shareholder casting the vote and the
voting instructions of the shareholder are accurately determined.
When soliciting telephonic proxies, the representative is required to ask
for each shareholder's full name, address, social security or tax identification
number, and the number of shares owned to confirm that the shareholder has
received the Proxy Statement and proxy card in the mail. If the information is
consistent, the proxy solicitor will explain the voting process and the
proposals and ask for the shareholder's voting instructions. The proxy solicitor
will not recommend to the shareholder how to vote,
-17-
other than to read any recommendations set forth in the Proxy Statement. The
proxy solicitation firm will confirm the voting instructions to the shareholder
promptly by letter or mailgram.
Shareholders who want to vote by electronic proxy rather than mailing back
the proxy card, may do so by accessing www.proxyvote.com. or calling the
toll-free number referenced on the proxy card. The shareholder will be prompted
to provide his or her control number that appears on the proxy card. If the
information is correctly entered, the shareholder will be provided with
instructions, and the opportunity to enter votes. Confirmation of telephone
voting instructions are done immediately over the phone, while the shareholder
will be sent electronic confirmation of the voting instructions by e-mail.
Proxies may also be voted by filling out the proxy card sent with the Proxy
Statement and returning it to the Fund. For replacement proxy cards or
additional information, please call the Fund at 1- 800-992-2766. Any proxy given
by a shareholder, whether in writing or by telephone, is revocable. Shareholders
may attend the meeting in person.
There is only one class of shares for each Fund, and each share is entitled
to one vote. There is no cumulative voting. At the close of business on
September 8, 2004, the record date for determination of shareholders entitled to
notice and to vote at the Meeting, the number of outstanding shares of
beneficial interest for each of the Funds is as follows:
NAME OF FUND SHARES OUTSTANDING
------------ ------------------
Baron Asset Fund
Baron Growth Fund
Baron Small Cap Fund
Baron iOpportunity Fund
Baron Fifth Avenue Growth Fund
As of September 8, 2004, the record date, the following chart lists those
shareholders who beneficially owned as much as 5% of the outstanding shares of
capital stock of each Fund, and also shows the aggregate holdings of persons
affiliated with the Funds and the Adviser:
AFFILIATED PERSONS'
AGGREGATE
NAME OF FUND NAME OF 5% OWNER OWNERSHIP PERCENTAGE OWNERSHIP PERCENTAGE
- ------------ ---------------- --------------------- ---------------------
Baron Asset Fund
Baron Growth Fund
Baron Small
Cap Fund
-18-
AFFILIATED PERSONS'
AGGREGATE
NAME OF FUND NAME OF 5% OWNER OWNERSHIP PERCENTAGE OWNERSHIP PERCENTAGE
- ------------ ---------------- --------------------- ---------------------
Baron iOpportunity Fund
Baron Fifth Avenue
Growth Fund
-19-
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any other business to be brought before the
Special Meeting. Should any other matters requiring a shareholder vote arise, it
is the intention that proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
Shareholders who do not expect to be present at the Special Meeting are
urged to sign and date the enclosed proxy card and promptly return it in the
enclosed envelope which is addressed for your convenience and needs no postage
if mailed in the Untied States or vote by toll-free telephone call or at the
web-site. To avoid the expense of further solicitation, please vote promptly.
By order of the Board of Trustees
/s/ Linda S. Martinson
----------------------
Linda S. Martinson
Secretary
-20-
BARON ASSET FUND
BARON GROWTH FUND
BARON SMALL CAP FUND
BARON iOPPORTUNITY FUND
BARON FIFTH AVENUE GROWTH FUND
This proxy is solicited on behalf of the Trustees
The undersigned hereby appoints Ronald Baron, Chairman and CEO and Morty Schaja,
Senior Vice President and Chief Operating Officer and each of them, attorneys
and proxies of the undersigned, with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of BARON ASSET FUND, BARON GROWTH FUND, BARON SMALL CAP FUND, BARON iOPPORTUNITY
FUND and BARON FIFTH AVENUE GROWTH FUND (the "Funds") which the undersigned is
entitled to vote at a Special Meeting of Shareholders of the Fund to be held at
Avery Fisher Hall, Lincoln Center, 10 Lincoln Center Plaza, New York, NY 10023
on October 22, 2004 at 1:00 p.m. eastern time, and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and Proxy Statement and hereby instructs said attorneys and proxies
to vote said shares as indicated herein, in their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting.
Either of the proxies present and acting at the Meeting in person or by
substitute shall have and may exercise all of the power and authority of said
proxies hereunder. The undersigned hereby revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. If no direction is made as to any Proposal, this proxy
will be voted FOR the Proposal. Please refer to the Proxy Statement for a
discussion of each of the Proposals.
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PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE
- -------------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the Fund.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, the signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
1) Election of ten members of the Board of Trustees for the Trust (Baron Asset
Fund, Baron Growth Fund, Baron Small Cap Fund, Baron iOpportunity Fund and
Baron Fifth Avenue Growth Fund):
NOMINEES:
INTERESTED TRUSTEES [ ] Vote FOR all Nominees (except as
Ronald Baron indicated)
Linda S. Martinson
Morty Schaja [ ] Vote WITHHELD from all Nominees
NON-INTERESTED TRUSTEES Instructions: To withhold authority to
Norman S. Edelcup vote FOR any nominee(s), write the
Charles N. Mathewson name(s) below:
Harold W. Milner ________________________________
Raymond Noveck ________________________________
David Silverman, MD ________________________________
Steven B. Dodge ________________________________
David I. Fuente ________________________________
2) To change the name of the For Against Withhold
Trust, from Baron Asset Fund, [ ] [ ] [ ]
to Baron Investment Funds
Trust.
3) To eliminate the fundamental [ ] FOR(except as indicated)
investment restrictions of the
Baron Asset Fund series and [ ] WITHHELD
replace the restrictions with INSTRUSTIONS: To withold
new restrictions. ONLY authority to vote FOR any
SHAREHOLDERS OF THE BARON restriction(s), write the
ASSET FUND SERIES MAY VOTE number of the restriction
FOR THIS ITEM. below:
___________________________
___________________________
___________________________
___________________________
4) To transact such other business For Against Withhold
as may properly come before [ ] [ ] [ ]
the Meeting or any adjournment
thereof.
Please be sure to sign and date this Proxy. Date:__________________
______________________________ _________________________________
Shareholder sign here Co-owner sign here
[ ] Mark box at left, if comments or address
changes have been noted on the
reverse side of this card.
DETACH CARD