BARON CAPITAL FUNDS TRUST, N-1A, 1997-11-21

BARON CAPITAL FUNDS TRUST
N-1A, 1997-11-21

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File No. 33-
File No. 811-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. __ [ ]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X ]
Amendment No. __ [ ]

BARON CAPITAL FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)

767 Fifth Avenue
New York, New York 10153
(Address of Principal Executive Offices)(zip code)

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

Linda S. Martinson
BARON ASSET FUNDS TRUST
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: On effective date

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

Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended, Registrant is registering an indefinite number of
shares of beneficial interest, $0.01 par value, of securities of
the Fund, now existing or hereafter established, under the
Securities Act of 1933.

BARON CAPITAL FUNDS TRUST
CROSS-REFERENCE SHEET

Items Required by Form N-1A

PART A

Caption in
Item No. Item Caption Prospectus

1. Cover Page COVER PAGE
2. Synopsis FUND EXPENSES
3. Condensed Financial
Information
4. General Description of INVESTMENT OBJECTIVE
Registrant AND PHILOSOPHY;
INVESTMENT POLICIES
AND RISKS;
DISTRIBUTION PLAN;
INVESTMENT
PERFORMANCE; GENERAL
INFORMATION
5. Management of the Fund MANAGEMENT OF THE
FUNDS; INVESTMENT
OBJECTIVES AND
PHILOSOPHY; INVESTMENT
POLICIES AND RISKS;
FUND EXPENSES
6. Capital Stock and DIVIDENDS AND
Other Securities DISTRIBUTIONS; TAXES;
GENERAL INFORMATION
7. Purchase of Securities PURCHASES AND
Being Offered REDEMPTIONS;
DETERMINING YOUR SHARE
PRICE; DISTRIBUTION
PLAN; GENERAL
INFORMATION
8. Redemption or PURCHASES AND
Repurchase REDEMPTIONS;
DETERMINING YOUR SHARE
PRICE; GENERAL
INFORMATION
9. Pending Legal NOT APPLICABLE
Proceedings

PART B
Caption in Statement
Item No. Item Caption of Additional
Information

10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information NOT APPLICABLE
and History
13. Investment Objectives INVESTMENT OBJECTIVES
and Policies AND POLICIES
14. Management of the MANAGEMENT OF THE
Registrant FUNDS
15. Control Persons and MANAGEMENT OF THE
Principal Holders of FUNDS
Securities
19. Purchase, Redemption MANAGEMENT OF THE
and Pricing of FUNDS; ; NET ASSET
Securities Being VALUE
Offered
20. Tax Status NOT APPLICABLE
21. Underwriters MANAGEMENT OF THE FUNDS
22. Calculation of CALCULATION OF
Performance Data PERFORMANCE DATA
23. Financial Statements

P R O S P E C T U S
BARON CAPITAL FUNDS TRUST
Insurance Shares
BARON CAPITAL ASSET FUND

767 Fifth Avenue, New York, New York 10153
1-800-99-BARON 212-583-2100

Baron Capital Funds Trust (the "Trust") is an open-end, diversified
management investment company, commonly referred to as a mutual
fund. The Trust currently consists of one series, Baron Capital
Asset Fund (the "Fund"). There are currently two classes of shares.
The Fund's investment objective is to seek capital appreciation
through investments in securities of small and medium sized
companies, with under-valued assets or favorable growth prospects.
The Fund has recently been organized and has no operating history,
but the Fund's investment adviser, BAMCO, Inc., has been an
investment advisor to registered mutual funds for over ten years.

The shares of the Fund offered by this prospectus ("Insurance
Shares") are not offered directly to the public; they are sold only
in connection with investments in and payments under variable
annuity contracts and variable life insurance contracts
(collectively "variable insurance contracts") issued by life
insurance companies ("Participating Insurance Companies"). Shares
of the Fund are also offered under a separate prospectus in
connection with certain qualified retirement plans ("Retirement
Shares"). The Trust sells and redeems its shares at net asset value
without any sales charges or redemption fees. The minimum initial
investment is $2,000. There is no minimum for subsequent purchases.

This Prospectus sets forth concisely the essential information a
prospective purchaser of a variable insurance contract should
consider before allocating premiums to the Fund. Investors are
advised to read this Prospectus and retain it for future reference
and to read the separate account prospectus of the specific
insurance product. A Statement of Additional Information, dated
, 1998, containing additional and more detailed
information about the Fund, has been filed with the Securities and
Exchange Commission and is hereby incorporated by reference into
this Prospectus. A copy of the Statement of Additional Information
may be obtained without charge by writing or calling the insurance
company.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

____________, 1998

TABLE OF CONTENTS

FUND EXPENSES.................................................... 3
INVESTMENT OBJECTIVES AND PHILOSOPHY............................. 5
INVESTMENT POLICIES AND RISKS.................................... 7
INVESTMENT PERFORMANCE........................................... 14
MANAGEMENT OF THE FUND........................................... 14
DISTRIBUTION PLAN AND OTHER EXPENSES............................. 20
PURCHASES AND REDEMPTIONS........................................ 20
DETERMINING YOUR SHARE PRICE..................................... 22
DIVIDENDS AND DISTRIBUTIONS...................................... 22
TAXES............................................................ 22
GENERAL INFORMATION.............................................. 24

The net asset value per share and the value of a shareholder's
holding in the Fund will vary with economic and market conditions. The
dividends paid by the Fund will increase or decrease in relation to the
income received by the Fund from its investments and the expenses incurred
by the Fund. Investment in the Fund involves risk, including the possible
loss of principal.

Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, nor are they federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
agency.

There is no assurance that the Fund will achieve its respective objective.
The Fund does not purport to offer a complete investment program to which
investors should commit all of their investment capital. Please see the
section entitled "Investment Policies and Risks" starting on page 8 for a
discussion of the risks associated with the Fund.

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection
with the offer contained in the Prospectus and, if given or made, such
information or representations may not be relied upon as authorized by the
Fund, its Investment Adviser or any affiliate thereof. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy
securities in any state to any person to whom it is unlawful to make such
offer in such state.

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES:

Sales Load Imposed on Purchases........................NONE
Redemption Fee.........................................NONE
Deferred Sales Load....................................NONE
Exchange Fees..........................................NONE

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets):

MANAGE- 12B-1 FEES OTHER TOTAL
MENT FEES EXPENSES OPERATING
EXPENSES
- -----------------------------------------------------------------------
Baron
Capital 1.0%* 0.25% 0.25% 1.5%*
Asset Fund
- -----------------------------------------------------------------------

Because Baron Capital Asset Fund is a new fund, "other expenses" and "total
operating expenses" are based on estimated amounts for the current fiscal
year.

*The Adviser will reduce its fee to the extent required to limit Baron
Capital Asset Fund's total operating expenses to 1.5%.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) a
5% annual return, and (2) redemption at the end of each time period:

1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
Baron Capital Asset
Fund $ 15 $ 47 $ 82 $ 179

Owners of variable insurance contracts that invest in the Fund should refer
to the variable insurance contract prospectus for a description of costs
and expenses, as the tables and example do not reflect deductions at the
separate account level or contract level for any charges that may be
incurred under a contract. This information should not be considered a
representation of past or future expenses, as actual expenses fluctuate and
may be greater or less than those shown. The example assumes a 5% annual
return as required by SEC regulations applicable to all mutual funds. The
actual performance of the Fund will vary and may result in an actual return
greater or less than 5%. The Fund has a plan of distribution pursuant to
Rule 12b-1 pursuant to which the Fund pays the Distributor a fee for
distribution-related services at the annual rate of .25% of the Fund's
average daily net assets. As a result, long-term shareholders of the Fund
may pay more than the economic equivalent of the maximum front-end sales
load permitted by the rules of the National Association of Securities
Dealers, Inc. ("NASD"). For a description of the various costs and expenses
incurred in the operation of the Fund, as well as any expense reimbursement
or reduction arrangements, see "Management of the Fund" and "Distribution
Plan."

INVESTMENT OBJECTIVES AND PHILOSOPHY

The investment objective of Baron Capital Asset Fund is to seek
capital appreciation through investments in securities of small and
medium sized companies with undervalued assets or favorable growth
prospects. Production of income, if any, is incidental to this
objective. The investment objective and philosophy of the Fund is
similar to those of Baron Asset Fund, a publicly offered "retail"
fund managed by the Fund's adviser. Although it is anticipated that
the Fund and the corresponding retail fund will hold similar
securities, differences in asset size and cash flow needs resulting
from purchases and redemptions of Fund shares may result in
different security selections, differences in the relative
weightings of securities or differences in the prices paid for
particular portfolio securities. The Fund's stated fundamental
policies and other non-fundamental policies may differ from Baron
Asset Fund's, but it presently anticipates that the investment
selections made for the Fund will be substantially similar to those
made by Baron Asset Fund. Expenses of the Fund and its
corresponding retail fund are also expected to differ. The
performance results are also expected to differ. The variable
insurance contract owner will also bear various insurance-related
costs at the insurance company level and should refer to the
accompanying separate account prospectus for a summary of contract
fees and expenses. The investment objective is fundamental and, as
such, may not be changed without the approval of a majority of the
Fund's outstanding shares. There is no assurance that the Fund will
achieve its investment objective. Investment decisions are made by
the Fund's investment adviser, BAMCO, Inc. (the "Adviser").

The Fund seeks to achieve its investment objective by investing its
assets in a diversified portfolio of primarily common stocks. The
Fund invests primarily in the securities of small sized companies
with market capitalizations of approximately $100 million to $1
billion and medium sized companies with market values of $1 billion
to $2 billion. Although the Fund invests primarily in small and
medium sized companies, it will not sell positions just because
their market values have increased. The other kinds of investments
the Fund makes and the risks associated therewith are discussed
starting on page 8 in connection with the Fund's investment
policies.

The Fund seeks to purchase securities judged by their Adviser to
have favorable price to value characteristics based on the
Adviser's assessment of their prospects for future growth and
profitability. The Adviser seeks securities that the Adviser
believes have the potential to increase in value at least 50% over
two subsequent years, although that goal may not be achieved. As a
guide in selecting such investments, the Adviser studies and
considers such fundamentals as business profitability, balance
sheet strength, undervalued and unrecognized assets, price
multiples of free cash flow and income, perceived management
skills, unit growth, and the potential to capitalize upon
anticipated economic trends. Securities are selected for investment
after thorough research of the issuers, the industries in which
they operate, and their managements. The Fund invests principally
in businesses for the long term; it is not a short-term trader of
securities.

When the Adviser determines that opportunities for profitable
investments are limited or that adverse market conditions exist and
believes that investing for temporary defensive purposes is
appropriate, all or a portion of the Fund's assets may be invested
in money market instruments, which include U.S. Government
securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other
short-term debt instruments, and repurchase agreements. Investment
grade obligations would be classified at the time of the investment
within the four highest ratings of Standard & Poor's Corporation
("S&P") or Moody's Investor's Service, Inc. ("Moody's"), or, if
unrated, would be determined by the Adviser to be of comparable
high quality and liquidity. The Fund may also invest in money
market instruments in anticipation of investing cash positions or
of meeting redemptions. To the extent the Fund is so invested its
investment objectives may not be achieved.

INVESTMENT POLICIES AND RISKS

In seeking to achieve its investment objective of capital
appreciation, the Fund invests primarily in common stocks but may
also invest in other equity-like securities such as convertible
bonds and debentures, preferred stocks, warrants and convertible
preferred stocks. Securities are selected solely for their capital
appreciation potential, and investment income is not a
consideration.

GENERAL POLICIES SMALL AND MEDIUM SIZED COMPANIES

The Fund invests primarily in small to medium sized companies with
market values between $100 million and $2 billion. The Adviser
believes there is more potential for capital appreciation in
smaller companies, but there also may be more risk. Securities of
smaller companies may not be well known to most investors and may
be thinly traded. There is more reliance on the skills of a
company's management and on their continued tenure. Investments may
be attractively priced relative to the Adviser's assessment of a
company's growth prospects, management expertise, and business
niche, yet have modest or no current cash flows or earnings.
Although the Adviser concentrates on a company's growth prospects,
it also focuses on cash flow, asset value and reported earnings.
This investment approach requires a long-term outlook and may
require shareholders to assume more risk and to have more patience
than investing in the securities of larger, more established
companies. From time to time the Adviser may purchase securities
of larger, more widely followed companies for the Fund if it
believes such investments meet the Adviser's investment criteria
and the Fund's investment objective. The Fund may invest up to 35%
of its total assets in larger companies if the Adviser perceives an
attractive opportunity in a larger company. The Fund may continue
to make investments in a company even though its market
capitalization has increased beyond the limits stated, if, in the
Adviser's judgment, the company is still an attractive investment.

Equity securities may fluctuate in value, often based on factors
unrelated to the value of the issuer or its securities. Since
convertible securities combine the investment characteristics of
both bonds and common stocks, the Fund absorbs the market risks of
both stocks and bonds. The combination does, however, make the
investment less sensitive to interest rate changes than straight
bonds of comparable maturity and quality. Because of these factors,
convertible securities are likely to perform differently than
broadly-based measures of the stock and bond markets.

DEBT SECURITIES

The debt securities in which the Fund may invest include rated and
unrated securities and convertible instruments. In making
investment selections, the Adviser, in addition to using nationally
recognized statistical rating organizations ("NRSROs"), also makes
its own independent judgments about a security and its issuer.
Securities which are not rated by an NRSRO are purchased based
solely on the Adviser's assessment of the security and its issuer.
The Fund may invest up to 35% of its total assets in non-investment
grade debt securities, commonly referred to as "junk bonds." There
is no minimum rating for the debt securities that may be purchased.
Lower rated securities may have a higher yield and the potential
for a greater return than investment grade securities but may also
have more risk. Lower rated securities are generally meant for
longer-term investing and may be subject to certain risks with
respect to the issuing entity and to market fluctuations. The
NRSROs may characterize these securities as speculative, with
moderate or little protection as to the payment of interest and
principal. See the Statement of Additional Information for a
general description of NRSRO ratings of debt obligations. The
ratings by these NRSROs represent their opinions as to the quality
of the debt obligations which they undertake to rate. It should be
emphasized that ratings are relative and subjective, and although
ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risks of
these securities. The Adviser will also evaluate the securities and
the ability of the issuers to pay interest and principal. The
Fund's ability to achieve its investment objective may be more
dependent on the Adviser's credit analysis than might be the case
with higher rated securities. The market price and yield of lower
rated securities are generally more volatile than those of higher
rated securities. Factors adversely affecting the market price and
yield of these securities will adversely affect the Fund's net
asset value. The trading market for these securities may be less
liquid than that of higher rated securities. Companies that issue
lower rated securities may be highly leveraged or may have unstable
earnings, and consequently the risk of the investment in the
securities of such issuers may be greater than with higher rated
securities.

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

The Fund from time to time may also purchase indebtedness and
participations therein, both secured and unsecured, of debtor
companies in reorganization or financial restructuring. Such
indebtedness may be in the form of loans, notes, bonds or
debentures. Participations normally are made available only on a
nonrecourse basis by financial institutions, such as banks or
insurance companies, or by governmental institutions, such as the
Resolution Trust Corporation or the Federal Deposit Insurance
Corporation or the Pension Benefit Guaranty Corporation. When the
Fund purchases a participation interest it assumes the credit risk
associated with the bank or other financial intermediary as well as
the credit risk associated with the issuer of any underlying debt
instrument. The Fund may also purchase trade and other claims
against, and other unsecured obligations of, such debtor companies,
which generally represent money due a supplier of goods or services
to such company. Some debt securities purchased by the Fund may
have very long maturities. The length of time remaining until
maturity is one factor the Adviser considers in purchasing a
particular indebtedness. The purchase of indebtedness of a troubled
company always involves a risk as to the creditworthiness of the
issuer and the possibility that the investment may be lost. The
Adviser believes that the difference between perceived risk and
actual risk creates the opportunity for profit which can be
realized through thorough analysis. There are no established
markets for some of this indebtedness and it is less liquid than
more heavily traded securities. Indebtedness of the debtor company
to a bank are not securities of the banks issuing or selling them.
The Fund may purchase loans from national and state chartered banks
as well as foreign ones. The Fund may invest in senior indebtedness
of the debtor companies, although on occasion subordinated
indebtedness may also be acquired. The Fund may also invest in
distressed first mortgage obligations and other debt secured by
real property. The Fund does not currently anticipate investing
more than 5% of its assets in trade and other claims.

OPTIONS

The Fund may purchase put and call options and write (sell) covered
put and call options on equity and/or debt securities. A call
option gives the purchaser of the options the right to buy, and
when exercised obligates the writer to sell, the underlying
security at the exercise price. A put option gives the purchaser of
the option the right to sell, and when exercised obligates the
writer to buy, the underlying security at the exercise price. The
writing of put options will be limited to situations where the
Adviser believes that the exercise price is an attractive price at
which to purchase the underlying security. A put option sold by the
Fund would be considered covered by the Fund's placing cash or
liquid securities in a segregated account with the custodian in an
amount necessary to fulfill the obligation undertaken. 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 depend on the Adviser's ability to
predict correctly the direction of stock prices, interest rates,
and other economic factors. The Adviser could be wrong in its
predictions. Where a liquid secondary market does not exist, the
Fund would likely be unable to control losses by closing its
position.

The Fund may engage in options transactions on specific securities
that may be listed on national securities exchanges or traded in
the over-the-counter market. Options not traded on a national
securities exchange are treated as illiquid securities and may be
considered to be "derivative securities." Options transactions will
not exceed 25% of the Fund's net assets, as measured by the
securities covering the options, or 5% of net assets, as measured
by the premiums paid for the options, at the time the
transactions are entered into.

BORROWINGS

The Fund may borrow up to 5% of its net assets for extraordinary or
emergency temporary investment purposes or to meet redemption requests
which might otherwise require an untimely sale of portfolio securities. The
Fund may also borrow for other short-term purposes. To the extent the Fund
borrows, it must maintain continuous asset coverage of 300% of the amount
borrowed. The Fund will not borrow in an amount exceeding 25% of the value
of its total assets, including the amount borrowed, as of the time the
borrowing is made. 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.

SHORT SALES AGAINST THE BOX

For the purpose of either protecting or deferring unrealized gains on
portfolio securities, the Fund may make short sales "against the box" where
the Fund sells short a security it already owns or has the right to obtain
without payment of additional consideration an equal amount of the same
type of securities sold. The proceeds of the short sale will be held by the
broker until the settlement date, at which time the Fund delivers the
security to close the short position. If the Fund sells securities short
against the box, it may protect unrealized gains, but will lose the
opportunity to profit on such securities if the price rises. The Fund will
not sell short against the box in excess of 25% of its net assets.

LENDING

The Fund may lend its portfolio securities to broker-dealers and other
institutions as a means of earning additional income. In lending its
portfolio securities, the Fund may incur delays in recovery of loaned
securities or a loss of rights in the collateral. To minimize such risks,
such loans will only be made if the Fund deems the other party to be of
good standing and determines that the income justifies the risk. The Fund
will not lend more than 25% of its total assets.

ILLIQUID SECURITIES

The Fund may invest up to 15%, of its net assets in securities that are not
readily marketable or are otherwise restricted. 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.

FOREIGN SECURITIES

The Fund may invest up to 10% of its total assets directly in the
securities of foreign issuers which are not publicly traded in the U.S. and
may also invest in foreign securities in domestic markets through
depositary receipts without regard to this limitation. The Adviser
currently intends to invest not more than 10% of the Fund's assets in
foreign securities, including both direct investments and investments made
through depositary receipts. These securities may involve additional risks
not associated with securities of domestic companies, including exchange
rate fluctuations, political or economic instability, the imposition of
exchange controls, or expropriation or confiscatory taxation. Issuers of
foreign securities are subject to different, often less detailed,
accounting, reporting and disclosure requirements than are domestic
issuers.

SHORT-TERM TRADING AND TURNOVER

The Fund may engage in short-term trading where the Adviser believes that
the anticipated gains outweigh the costs of short-term trading. The Adviser
expects that the average turnover rate of the Fund's portfolio should not
exceed 100%. The turnover rate may vary from year to year depending on how
the Adviser anticipates portfolio securities will perform. Short-term
trading will increase the amount of brokerage commissions paid by the Fund
and the amount of possible short-term capital gains. The amount of
portfolio activity will not be a limiting factor in making portfolio
decisions.

REAL ESTATE INVESTMENT TRUSTS

The Fund may invest in the equity securities of real estate investment
trusts ("REITs"). A REIT is a corporation or business trust that invests
substantially all of its assets in real estate and derives most of its
income from rents from real property or interest on loans secured by
mortgages on real property. REITs which meet certain specific requirements
of the Internal Revenue Code effectively do not pay corporate level federal
income tax. REITs may be affected adversely by changes in the value of
their underlying properties and by defaults by borrowers or tenants. REITs
are dependent on the skills of their management and have limited
diversification. REITs also rely on their ability to generate cash flow to
make distributions to shareholders and some REITs may have self-liquidation
provisions allowing mortgages to be paid in full. The market value of REITs
may also be affected by changes in the tax laws or by their inability to
qualify for the tax-free pass-through of their income. The REIT portion of
the portfolio may also be affected by general fluctuations in real estate
values.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with certain banks or
non-bank dealers. In a repurchase agreement the Fund buys a security at one
price, and at the time of sale, the seller agrees to repurchase that
security at a mutually agreed upon time and price. Repurchase agreements
could involve certain risks in the event of the failure of the seller to
repurchase the securities as agreed, which may cause a fund to suffer a
loss, including loss of interest on or principal of the security, and costs
associated with delay and enforcement of the repurchase agreement.
Repurchase agreements with a duration of more than seven days are
considered illiquid securities and are subject to the restrictions stated
above.

WHEN-ISSUED SECURITIES

The Fund may invest up to 5% of its assets in debt and equity securities
purchased on a when-issued basis. Although the payment and interest terms
of when-issued securities are established at the time the purchaser enters
into the commitment, the actual payment for and delivery of when-issued
securities generally takes place within 45 days. The Fund bears the risk
that interest rates on debt securities at the time of delivery may be
higher or lower than those contracted for on the when-issued security.
Failure of the issuer to deliver the security purchased on a when-issued
basis may result in a loss or missed opportunity to make an alternative
investment.

SPECIAL SITUATIONS

The Fund may invest in "special situations." A special situation arises
when, in the opinion of the Adviser, the securities of a company will be
recognized and appreciate in value due to a specific anticipated
development at that company. Such developments might include a new product,
a management change, an acquisition or a technological advancement.
Investments in special situations may carry an additional risk of loss in
the event that the anticipated development does not occur or does not
attract the expected attention. The special situation may involve
securities of companies with higher market capitalizations.

INVESTMENT PERFORMANCE

The investment results of the Fund quoted in advertisements and other sales
literature may refer to average annual total return and actual return.
Average annual total return assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to the
reinvestment of all dividends and distributions during the period at the
net asset value on the reinvestment date. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would
result in the redeemable value of the investment at the end of the period.
Because average annual returns are annualized they tend to even out
variations in the returns, and are not the same as actual year-by-year
results. The actual return performance calculations, which also may be
quoted in advertising, reflect the results of a continuous shareholder who
does not redeem. It measures the percentage change between the net asset
value of a hypothetical $1,000 investment in the Fund at the beginning of a
period and the net asset value of that investment at the end of a period,
assuming reinvestment of all dividend and capital gain distributions at the
net asset value on the reinvestment date. The performance of major market
indices such as the Dow Jones Industrial Average, Russell 2000, and
Standard & Poor's 500 may also be included in advertising so that the
Fund's results may be compared with those of groups of unmanaged securities
widely regarded by investors as measures of market performance. Brokerage
fees are not factored into the performance of the indices. The performance
data of the Fund include all recurring fees such as brokerage and
investment advisory fees. Data and rankings from Lipper Analytical
Services, Inc., CDA Investment Technologies, Morningstar or other industry
publications may also be used in advertising. See the Statement of
Additional Information.

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

The annual report contains additional performance information which is
available upon request without charge by writing or calling the Fund at the
address and telephone number set forth on the back of this Prospectus.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

BAMCO, Inc., the Adviser, is located at 767 Fifth Avenue, New York, New
York 10153, and is responsible for portfolio management. It is a wholly
owned subsidiary of Baron Capital Group, Inc. ("BCG"). Baron Capital, Inc.
("Baron Capital"), a registered broker-dealer and the distributor of the
shares of the Fund, is also a wholly owned subsidiary of BCG.

Under an advisory agreement with the Fund (the "Advisory Agreement"), the
Adviser furnishes continuous investment advisory services and management to
the Fund. Mr. Ronald Baron is the chief investment officer of the Adviser
and is primarily responsible for the day-to-day management of the portfolio
of the Fund. Mr. Baron also has primary responsibility for the investments
of two of the retail funds, Baron Asset Fund and Baron Growth & Income
Fund. He has managed the portfolios of those Funds since their inception.
The Adviser also keeps the books of account of each series, and calculates
daily the income and net asset value per share of each Fund.

As compensation for the services rendered under each Advisory Agreement,
the Adviser receives a fee payable monthly from the assets of each Fund
equal to 1% per annum of each Fund's respective average daily net asset
value. The Adviser has agreed to waive its advisory fee to the extent
necessary so that total operating expenses of the Fund do not exceed 1.5%
of the Fund's average net assets.

BROKERAGE

Brokerage transactions for the Fund are effected chiefly by or through its
Adviser's affiliate, Baron Capital, when consistent with the policy of
obtaining the best net results for the Fund and subject to the conditions
and limitations of the 1940 Act. Baron Capital is a registered
broker-dealer and a member of the NASD. In determining the best net results
for the Fund, the Adviser will examine factors such as price (including the
applicable brokerage commission or dealer spread), size of order,
efficiency and reliability of execution. The Fund's Board of Trustees has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to Baron Capital are reasonable
and fair compared to the commission, fee or other remuneration received by
other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period of time. The Fund will also consider sales of its shares
as a factor in the selection of broker-dealers to execute portfolio
transactions. See Statement of Additional Information for a description of
the commissions paid to Baron Capital.

TRUSTEES AND EXECUTIVE OFFICERS

The Trust's Board of Trustees has overall responsibility for the management
of the Fund. The Trustees and executive officers of the Fund and their
principal occupations during the last five years are set forth below.

Name and Address Position Principal Occupation(s)
Held With Baron During Past Five Years
Funds
- -------------------------------------------------------------------------
Ronald Baron*+ President, President and Director of:
767 Fifth Avenue Chief Baron Capital, Inc.
New York, NY 10153 Investment (1982-Present), Baron
Officer and Capital Management, Inc.
Trustee (1983-Present), Baron
Capital Group, Inc.
(1984-Present), BAMCO,
Inc. (1987-Present).
- -------------------------------------------------------------------------
Norman S. Edelcup Trustee Chairman, Item Processing
244 Atlantic Isle of America
N. Miami Beach, FL (1989-Present), (financial
33160 institution service
bureau); Director, Valhi,
Inc. (1975-Present)
(diversified company);
Director, Artistic
Greetings, Inc.(1985-Present).

- ----------------------------------------------------------------------
Mark M. Feldman Trustee President and Chief
444 Madison Ave, Executive Officer, Cold Spring
Ste 703 Group, Inc.(1993-Present)
New York, N.Y. (reorganization and
10020 restructuring consulting);
Executive Vice
President and Chief Re-
structuring Officer,
Lomas Financial Corp.
and subsidiaries
(1995-1996)
(reorganizing
debtors-in-possession);
Trustee, Aerospace
Creditors Liquidating
Trust (1993-Present)
(administers and
liquidates assets).
- ----------------------------------------------------------------------
Irwin Greenberg Trustee Chairman, Lehigh Valley
3048 Congress Hospital Board
Street Allentown, (1991-Present); Retail
PA 18101 Consultant, (1990-
Present); Director,
Cedar Crest
College(1990-Present);
President and Chief
Executive Officer,
Hess's Department
Stores (1976-1990).
- ----------------------------------------------------------------------
Clifford Greenberg Vice Vice President, Baron
767 Fifth Avenue President Capital, Inc., Baron
New York, NY 10153 Capital Group, Inc., BAMCO,
Inc. (1997-Present);
General Partner, HPB
Associates, L.P. (1984-1996)
(investment partnership).

- ----------------------------------------------------------------------
Linda S. Secretary, General Counsel and
Martinson*+ Vice Secretary of: Baron Capital,
767 Fifth Avenue President and Inc. (1983-Present),
New York, NY 10153 Trustee BAMCO, Inc.
(1987-Present), Baron
Capital Group, Inc.
(1984-Present), Baron
Capital Management, Inc.
(1983-Present).
- -----------------------------------------------------------------------
Charles N. Trustee Chairman of the Board,
Mathewson International Game
5270 Neil Road Technology (1986-Present)
Reno, NV (manufacturer of
89502-4169 microprocessor-controlled
gaming machines and
monitoring systems).
- -----------------------------------------------------------------------
Harold W. Milner Trustee Retired; President and
2293 Morningstar Chief Executive Officer,
Drive Kahler Realty Corporation
Park City, UT (1985-1997) (hotel
84060 ownership and management).
- -----------------------------------------------------------------------
Raymond Noveck+ Trustee President, Strategic
31 Karen Road Systems, Inc. (1990-Present)
Waban, MA 02168 (health care informa-
tion); Director,
Horizon/CMS Healthcare
Corporation (1987-Present).
- -------------------------------------------------------------------------
Susan Robbins Vice Senior Analyst, Vice
767 Fifth Avenue President President and Director of:
New York, NY 10153 Baron Capital, Inc. (1982-
Present), Baron Capital
Management, Inc.
(1983-Present), Baron
Capital Group, Inc.
(1984-Present).
- ------------------------------------------------------------------------
Morty Schaja* Senior Vice Senior Vice President and
767 Fifth Avenue President, Chief Operating Officer of
New York, NY 10153 Chief Op- Baron Capital, Inc.
erating (1997-Present), Managing
Officer and Trustee Director, Vice President,
Baron Capital, Inc.
(1991-Present) and
Director, Baron Capital Group,
Inc., Baron Capital
Management, Inc., and BAMCO,
Inc. (1997-Present).
- -----------------------------------------------------------------------
David A. Trustee Physician (1976-Present).
Silverman, M.D.
239 Central Park
West
New York, NY 10024

- -------------------------------------------------------------------------
Peggy Wong Treasurer Treasurer and Chief
767 Fifth Avenue and Chief Financial Officer of: Baron
New York, NY 10153 Financial Capital, Inc., Baron
Officer Capital Group, Inc., BAMCO,
Inc., Baron Capital
Management, Inc.
(1987-Present).
- --------------------------------------------------------------------------

A Trustees deemed to be "interested persons" of the Fund as that
term is defined in the Investment Company Act of 1940.

! A 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.

DISTRIBUTION PLAN AND OTHER EXPENSES

The Fund's Insurance Shares are distributed by Baron Capital, which is the
principal underwriter of the shares of the Baron retail funds, pursuant to
a distribution plan under Rule 12b-1 of the 1940 Act ("Distribution Plan").
The Distribution Plan authorizes the Fund to pay the Principal Underwriter
a distribution fee equal on an annual basis to 0.25% of each Fund's average
daily net assets. The distribution fee is paid to the Principal Underwriter
in connection with its activities or expenses primarily intended to result
in the sale of shares, including, but not limited to, compensation to
registered representatives or other employees of the Principal Underwriter
who engage in or support the distribution of shares or who service
shareholder accounts; telephone expenses; interest expenses; preparing,
printing and distributing promotional and advertising material; preparing,
printing and distributing the Prospectus and reports to other than current
shareholders; and commissions and other fees to broker-dealers or other
persons (excluding banks) who have introduced investors to the Funds. See
the Statement of Additional Information for a more detailed listing of the
expenses covered by the Distribution Plan.

From time to time the Adviser or the Distributor may compensate
Participating Insurance Companies or their affiliates whose customers hold
the Insurance Shares for providing a variety of administrative services,
such as record-keeping and accounting, and investor support services, such
as responding to inquiries and preparing mailings to shareholders. The
compensation may be paid as either a per account fee or a percentage of the
average daily assets invested by the participating Insurance Company. The
compensation will be paid out of [the assets of the Fund]. [the Adviser's
Fee].

The Fund pays a fee to its custodian, the Bank of New York, 48 Wall Street,
New York, NY 10015. The Fund also pays a fee to its transfer and dividend
distributing agent, DST Systems, Inc. P.O. Box 419946, Kansas City, MO
64141. In their respective capacities both institutions maintain certain
financial and accounting records pursuant to agreements with the Trust.
They do not assist in and are not responsible for investment decisions
involving assets of the Fund.

PURCHASES AND REDEMPTIONS

The Insurance Shares of the Fund are offered on a continuous basis to
separate accounts of Participating Insurance Companies and the Retirement
Shares are offered on a continuous basis through qualified plans. Investors
may not purchase or redeem shares of the Fund directly, but only through
variable insurance contracts offered through the separate accounts of
Participating Insurance Companies or through qualified retirement plans.
You should refer to the applicable Separate Account Prospectus or your plan
documents for information on how to purchase or surrender a contract, make
partial withdrawals of contract values, or change existing allocations.

All investments in the Fund are credited to a Participating Insurance
Company's separate account or a qualified plan immediately upon acceptance
of the investment by the Transfer Agent. Investments will be processed at
the net asset value next determined after an order is received and accepted
by the Transfer Agent. The Fund reserves the right to reject any purchase
order.

Redemptions are processed at the net asset value next calculated after
receipt and acceptance of the redemption order by the Transfer Agent.
Redemption proceeds will normally be wired to the qualified plan the
business day following receipt of the redemption order, but in no event
later than seven days after receipt of such order.

DETERMINING YOUR SHARE PRICE

Your purchases, sales or exchanges will be processed at the net asset value
per share of the Fund as of the close of the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York City time) on each day that the
Exchange is open for trading by dividing the current market value of the
Fund's total assets less all of its liabilities by the total number of
shares outstanding at the time the determination is made. Valid purchase
and redemption orders placed prior to the close of the Exchange on a day
the Exchange is open for trading are executed at the net asset value
determined as of the close that day, and orders placed after that time are
valued as of the close of the next trading day. The Fund may have
arrangements with certain institutional entities with respect to the actual
receipt of orders. The Fund reserves the right to change the time at which
orders are priced if the Exchange closes at a different time or an
emergency exists.

The Fund's portfolio securities traded on any national stock exchange or
quoted on the NASDAQ National Market System are valued on the basis of the
last sale price on the date of valuation or, in the absence of any sale on
that date, the last sale price on the date the security last traded. Other
securities are valued at the mean of the most recent bid and asked prices
if market quotations are readily available. Where market quotations are not
readily available the securities are valued at their fair value as
determined in good faith by the Board of Trustees, or by the Adviser,
pursuant to procedures established by the Board. Money market instruments
and debt securities with a remaining maturity of sixty days or less are
valued by the amortized cost method unless such method does not represent
fair value. Odd lot differentials and brokerage commissions are excluded in
calculating net asset value. Securities quoted in a foreign currency are
valued daily in U.S. dollars at the foreign currency exchange rates that
are prevailing at the time the daily net asset value per share is
determined. If events that materially affect the value of the Fund's
foreign investments occur, the investments will be valued at their fair
value as determined in good faith by the Board of Trustees.

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute all of its net investment income and
realized capital gains, if any, to its shareholders in a single, combined
distribution by December 31 of each year. After every distribution, the
value of a share is automatically reduced by the amount of the
distribution. All your dividends and capital gains distributions from the
Fund are automatically reinvested in additional shares of the Fund at the
next computed net asset value at the close of business on the payment date.

TAXES

The Fund intends to qualify each year as a regulated investment company
under the Internal Revenue Code of 1986 (the "Code"). Qualification as a
regulated investment company relieves the Fund of federal income and excise
taxes on the portion of its net ordinary income and net realized capital
gain distributed to shareholders. The Fund also intends to qualify under
the Code with respect to the diversification requirements for tax deferral
with respect to insurance company separate accounts.

Because the Insurance Shares may be purchased only through variable
insurance contacts and the Retirement Shares may be purchased only through
qualified plans, it is anticipated that any dividends derived from net
investment income and distributions of capital gains will be exempt from
current taxation if left to accumulate within the variable insurance
contract or qualified plan. Generally, withdrawals from such contracts may
be subject to ordinary income tax and, if made before age 59 1/2, a 10%
penalty tax. The tax status of your investment in the Insurance Shares
depends on the features of the variable insurance contracts purchased from
a Participating Insurance Company. Please see the separate account
prospectus for additional information.

The foregoing is only a summary of some important tax considerations
generally affecting the Fund and its shareholders. Prospective shareholders
are urged to consult their tax advisers concerning the tax consequences of
this investment.

GENERAL INFORMATION

The Trust is a diversified open-end management investment company
registered under the Investment Company Act of 1940 ("1940 Act"), it was
organized as a Delaware business trust on DATE. The Trust is authorized to
have separate series, but currently has only the Fund. It is authorized to
issue an indefinite number of shares of beneficial interest. The
Declaration of Trust permits the Trustees to establish additional series.
The Fund currently offers two classes of shares, one of which, the
Insurance Shares offered through Participating Insurance Companies, are
offered pursuant to this Prospectus. The shares offered hereby are
available only in connection with investments in and payments under
variable contracts and life insurance contracts. Retirement Shares of the
Fund are also available to participant directed plans through a separate
prospectus. Because the expenses of each class may differ, the performance
of each class is expected to differ. Each share of the Fund has one vote on
all matters for which a shareholder vote is required, and participates
equally in dividend and capital gain distributions when and if declared by
the Fund and in the Fund's net assets upon liquidation. Shares are fully
paid and non-assessable and there are no preemptive, conversion or exchange
rights. Shares do not have cumulative voting rights and, as a result,
holders of at least 50% of the shares voting for Trustees can elect all
Trustees and the remaining shareholders would not be able to elect any
Trustees.

As a Delaware business trust, annual shareholder meetings are not required.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of shareholders for the purpose of
voting on the removal of one or more Trustees on the written request of not
less than 10% of the outstanding shares. Such removal can be effected upon
the action of two-thirds of the outstanding shares. An insurance company
issuing a variable contract invested in the Fund requests voting
instructions from the variable contract holders. Under current law, the
insurance company must vote all shares of the Fund held by the Separate
Accounts in proportion to the voting instructions received.

CONFLICTS OF INTEREST

Each Portfolio's Shares are available only to variable annuity and variable
life separate accounts of insurance companies that are unaffiliated with
the Adviser and to certain qualified retirement plans. The Retirement
Shares, offered through a separate prospectus, are available to certain
participant directed qualified plans. Although the Fund currently does not
anticipate any disadvantages to policy owners or plan participants arising
out of the fact that the Fund offers its shares to such entities, there is
a possibility that a material conflict may arise. The Trustees monitor
events in order to identify any anticipated disadvantages or material
irreconcilable conflicts to determine what action, if any, should be taken
in response. If a material disadvantage or conflict occurs, the Trustees
may require one or more insurance company separate accounts or plans to
withdraw its investments in the Fund. If this occurs, the Fund may be
forced to sell securities at disadvantageous prices. The Trustees may
refuse to sell shares of the Fund to any separate account or qualified plan
or may suspend or terminate the offering of a Fund's shares if such action
is required by law or regulatory authority or is in the best interests of
the Fund's shareholders. It is possible that a qualified plan investing in
the Retirement Shares of the Fund could lose its qualified plan status
under the Internal Revenue Code, which could have adverse tax consequences
on insurance company separate accounts investing in the Fund. The Adviser
intends to monitor such qualified plans and the Fund may discontinue sales
to a qualified plan and require plan participants with existing investments
in the retirement shares to redeem those investments if a plan loses (or in
the opinion of the Adviser is at risk losing) its qualified plan status.

MASTER/FEEDER OPTION

The Trust may in the future seek to achieve the Fund's or any future
series' investment objective by investing all of that series' assets in
another investment company having the same investment objective and
substantially the same investment policies and restrictions as those
applicable to that series. It is expected that any such investment company
would be managed by the Adviser in substantially the same manner as the
existing series. The initial shareholder(s) of each series voted to vest
the authority to convert to a master/feeder structure in the sole
discretion of the Trustees. No further approval of the shareholders of the
series of the Trust is required. You will receive at least 30 days' prior
notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interests of a series and its
shareholders. In making that determination, the Trustees will consider,
among other things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the Adviser
believes the Trustees will not approve an arrangement that is likely to
result in higher costs, no assurance is given that costs will be materially
reduced if this option is implemented.

SHAREHOLDER INFORMATION

Shareholder inquiries about general Fund information should be directed to
the Funds' office at 1-800-99-BARON or 212-583-2100.

Owners of variable insurance contracts and plan participants will be
provided semi-annual unaudited and annual audited reports, including the
financial statements of the Fund. Each report will include a listing of
portfolio securities held. The Trust's fiscal year ends September 30.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE.

P R O S P E C T U S

BARON CAPITAL FUNDS TRUST
RETIREMENT SHARES

BARON CAPITAL ASSET FUND

767 Fifth Avenue, New York, New York 10153
1-800-99-BARON 212-583-2100

BARON CAPITAL FUNDS TRUST (the "Trust") is an open-end, diversified
management investment company, commonly referred to as a mutual
fund. The Trust currently consists of one series, BARON CAPITAL
ASSET FUND (the "Fund"). There are currently two classes of shares.
The Fund's investment objective is to seek capital appreciation
through investments in securities of small and medium sized
companies, with undervalued assets or favorable growth prospects.
The Fund has recently been organized and has no operating history,
but the Fund's investment adviser, BAMCO, Inc., has been an
investment adviser to registered mutual funds for over ten years.

The shares of the Fund offered by this prospectus ("Retirement
Shares") are not offered directly to the public; they are sold only
in connection with certain participant directed qualified
retirement plans and, under a separate prospectus, investments in
and payments under variable annuity contracts and variable life
insurance contracts (collectively "variable insurance contracts")
issued by life insurance companies ("Institutional Shares"). The
Trust sells and redeems its shares at net asset value without any
sales charges or redemption fees. The minimum initial investment is
$2,000. There is no minimum for subsequent purchases.

This Prospectus sets forth concisely the essential information a
plan participant should consider before allocating purchase
payments to the Fund. Investors are advised to read this Prospectus
and retain it for future reference and to read the plan documents.
A Statement of Additional Information, dated , 1998, containing
additional and more detailed information about the Fund, has been
filed with the Securities and Exchange Commission and is hereby
incorporated by reference into this Prospectus. A copy of the
Statement of Additional Information may be obtained without charge
by writing or calling the plan sponsor.

_______________, 1998

TABLE OF CONTENTS

FUND EXPENSES................................................ 3
INVESTMENT OBJECTIVES AND PHILOSOPHY......................... 5
INVESTMENT POLICIES AND RISKS................................ 7
INVESTMENT PERFORMANCE....................................... 14
MANAGEMENT OF THE FUND....................................... 14
DISTRIBUTION PLAN AND OTHER EXPENSES......................... 20
PURCHASES AND REDEMPTIONS.................................... 20
DETERMINING YOUR SHARE PRICE................................. 22
DIVIDENDS AND DISTRIBUTIONS.................................. 22
TAXES........................................................ 22
GENERAL INFORMATION.......................................... 24

The net asset value per share and the value of a shareholder's holding in
the Fund will vary with economic and market conditions. The dividends paid
by the Fund will increase or decrease in relation to the income received by
the Fund from its investments and the expenses incurred by the Fund.
Investment in the Fund involves risk, including the possible loss of
principal.

FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES:

Sales Load Imposed on Purchases...................... NONE
Redemption Fee..................................... NONE
Deferred Sales Load.................................. NONE
Exchange Fees...................................... NONE

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):

MANAGEMENT OTHER TOTAL
FEES EXPENSES OPERATING
EXPENSES
- ----------------------------------------------------------------------------
Baron Capital
Asset Fund 1.0%* x% x%*
- ----------------------------------------------------------------------------

Because Baron Capital Asset Fund is a new fund, "other expenses" and "total
operating expenses" are based on estimated amounts for the current fiscal
year.

*The Adviser will reduce its fee to the extent required to limit Baron
Capital Asset Fund's total operating expenses to x%.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) a
5% annual return, and (2) redemption at the end of each time period:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------
BARON CAPITAL ASSET FUND $ $ $ $

This information should not be considered a representation of past or
future expenses, as actual expenses fluctuate and may be greater or less
than those shown. The example assumes a 5% annual return as required by SEC
regulations applicable to all mutual funds. The actual performance of the
Fund will vary and may result in an actual return greater or less than 5%.
The Fund has a plan of distribution pursuant to Rule 12b-1 pursuant to
which the Fund pays the Distributor a fee for distribution-related services
at the annual rate of .25% of the Fund's average daily net assets. As a
result, long-term shareholders of the Fund may pay more than the economic
equivalent of the maximum front-end sales load permitted by the rules of
the National Association of Securities Dealers, Inc. ("NASD"). For a
description of the various costs and expenses incurred in the operation of
the Fund, as well as any expense reimbursement or reduction arrangements,
see "Management of the Fund" and "Distribution Plan."

INVESTMENT OBJECTIVES AND PHILOSOPHY

The investment objective of BARON CAPITAL ASSET FUND is to seek
capital appreciation through investments in securities of small and
medium sized companies with undervalued assets or favorable growth
prospects. Production of income, if any, is incidental to this
objective. The investment objective and philosophy of the Fund is
similar to those of Baron Asset Fund, a publicly offered "retail"
fund managed by the Fund's adviser. Although it is anticipated that
the Fund and the corresponding retail fund will hold similar
securities, differences in asset size and cash flow needs resulting
from purchases and redemptions of Fund shares may result in
different security selections, differences in the relative
weightings of securities or differences in the prices paid for
particular portfolio securities. The Fund's stated fundamental
policies and other non-fundamental policies may differ from Baron
Asset Fund's, but it presently anticipates that the investment
selections made for the Fund will be substantially similar to those
made by Baron Asset Fund. Expenses of the Fund and its
corresponding retail fund are also expected to differ. The
performance results are also expected to differ. The variable
insurance contract owner will also bear various insurance-related
costs at the insurance company level and should refer to the
accompanying separate account prospectus for a summary of contract
fees and expenses. The investment objective is fundamental and, as
such, may not be changed without the approval of a majority of the
Fund's outstanding shares. There is no assurance that the Fund will
achieve its investment objective. Investment decisions are made by
the Fund's investment adviser, BAMCO, Inc. (the "Adviser").

INVESTMENT POLICIES AND RISKS

GENERAL POLICIES SMALL AND MEDIUM SIZED COMPANIES

The Fund invests primarily in small to medium sized companies with
market values between $100 million and $2 billion. The Adviser
believes there is more potential for capital appreciation in
smaller companies, but there also may be more risk. Securities of
smaller companies may not be well known to most investors and may
be thinly traded. There is more reliance on the skills of a
company's management and on their continued tenure. Investments may
be attractively priced relative to the Adviser's assessment of a
company's growth prospects, management expertise, and business
niche, yet have modest or no current cash flows or earnings.
Although the Adviser concentrates on a company's growth prospects,
it also focuses on cash flow, asset value and reported earnings.
This investment approach requires a long-term outlook and may
require shareholders to assume more risk and to have more patience
than investing in the securities of larger, more established
companies. From time to time the Adviser may purchase securities of
larger, more widely followed companies for the Fund if it believes
such investments meet the Adviser's investment criteria and the
Fund's investment objective. The Fund may invest up to 35% of its
total assets in larger companies if the Adviser perceives an
attractive opportunity in a larger company. The Fund may continue
to make investments in a company even though its market
capitalization has increased beyond the limits stated, if, in the
Adviser's judgment, the company is still an attractive investment.

DEBT SECURITIES

OPTIONS

BORROWINGS

The Fund may borrow up to 5% of its net assets for extraordinary or
emergency temporary investment purposes or to meet redemption
requests which might otherwise require an untimely sale of
portfolio securities. The Fund may also borrow for other short-term
purposes. To the extent the Fund borrows, it must maintain
continuous asset coverage of 300% of the amount borrowed. The Fund
will not borrow in an amount exceeding 25% of the value of its
total assets, including the amount borrowed, as of the time the
borrowing is made. 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.

SHORT SALES AGAINST THE BOX

For the purpose of either protecting or deferring unrealized gains
on portfolio securities, the Fund may make short sales "against the
box" where the Fund sells short a security it already owns or has
the right to obtain without payment of additional consideration an
equal amount of the same type of securities sold. The proceeds of
the short sale will be held by the broker until the settlement
date, at which time the Fund delivers the security to close the
short position. If the Fund sells securities short against the box,
it may protect unrealized gains, but will lose the opportunity to
profit on such securities if the price rises. The Fund will not
sell short against the box in excess of 25% of its net assets.

LENDING

The Fund may lend its portfolio securities to broker-dealers and
other institutions as a means of earning additional income. In
lending its portfolio securities, the Fund may incur delays in
recovery of loaned securities or a loss of rights in the
collateral. To minimize such risks, such loans will only be made if
the Fund deems the other party to be of good standing and
determines that the income justifies the risk. The Fund will not
lend more than 25% of its total assets.

ILLIQUID SECURITIES

The Fund may invest up to 15%, of its net assets in securities that
are not readily marketable or are otherwise restricted. 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.

FOREIGN SECURITIES

The Fund may invest up to 10% of its total assets directly in the
securities of foreign issuers which are not publicly traded in the
U.S. and may also invest in foreign securities in domestic markets
through depositary receipts without regard to this limitation. The
Adviser currently intends to invest not more than 10% of the Fund's
assets in foreign securities, including both direct investments and
investments made through depositary receipts. These securities may
involve additional risks not associated with securities of domestic
companies, including exchange rate fluctuations, political or
economic instability, the imposition of exchange controls, or
expropriation or confiscatory taxation. Issuers of foreign
securities are subject to different, often less detailed,
accounting, reporting and disclosure requirements than are domestic
issuers.

SHORT-TERM TRADING AND TURNOVER

The Fund may engage in short-term trading where the Adviser
believes that the anticipated gains outweigh the costs of
short-term trading. The Adviser expects that the average turnover
rate of the Fund's portfolio should not exceed 100%. The turnover
rate may vary from year to year depending on how the Adviser
anticipates portfolio securities will perform. Short-term trading
will increase the amount of brokerage commissions paid by the Fund
and the amount of possible short-term capital gains. The amount of
portfolio activity will not be a limiting factor in making
portfolio decisions.

REAL ESTATE INVESTMENT TRUSTS

The Fund may invest in the equity securities of real estate
investment trusts ("REITs"). A REIT is a corporation or business
trust that invests substantially all of its assets in real estate
and derives most of its income from rents from real property or
interest on loans secured by mortgages on real property. REITs
which meet certain specific requirements of the Internal Revenue
Code effectively do not pay corporate level federal income tax.
REITs may be affected adversely by changes in the value of their
underlying properties and by defaults by borrowers or tenants.
REITs are dependent on the skills of their management and have
limited diversification. REITs also rely on their ability to
generate cash flow to make distributions to shareholders and some
REITs may have self-liquidation provisions allowing mortgages to be
paid in full. The market value of REITs may also be affected by
changes in the tax laws or by their inability to qualify for the
tax-free pass-through of their income. The REIT portion of the
portfolio may also be affected by general fluctuations in real
estate values.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with certain banks or
non-bank dealers. In a repurchase agreement the Fund buys a
security at one price, and at the time of sale, the seller agrees
to repurchase that security at a mutually agreed upon time and
price. Repurchase agreements could involve certain risks in the
event of the failure of the seller to repurchase the securities as
agreed, which may cause a fund to suffer a loss, including loss of
interest on or principal of the security, and costs associated with
delay and enforcement of the repurchase agreement. Repurchase
agreements with a duration of more than seven days are considered
illiquid securities and are subject to the restrictions stated
above.

WHEN-ISSUED SECURITIES

The Fund may invest up to 5% of its assets in debt and equity
securities purchased on a when-issued basis. Although the payment
and interest terms of when-issued securities are established at the
time the purchaser enters into the commitment, the actual payment
for and delivery of when-issued securities generally takes place
within 45 days. The Fund bears the risk that interest rates on debt
securities at the time of delivery may be higher or lower than
those contracted for on the when-issued security. Failure of the
issuer to deliver the security purchased on a when-issued basis may
result in a loss or missed opportunity to make an alternative
investment.

SPECIAL SITUATIONS

The Fund may invest in "special situations." A special situation
arises when, in the opinion of the Adviser, the securities of a
company will be recognized and appreciate in value due to a
specific anticipated development at that company. Such developments
might include a new product, a management change, an acquisition or
a technological advancement. Investments in special situations may
carry an additional risk of loss in the event that the anticipated
development does not occur or does not attract the expected
attention. The special situation may involve securities of
companies with higher market capitalizations.

INVESTMENT PERFORMANCE

The investment results of the Fund quoted in advertisements and
other sales literature may refer to average annual total return and
actual return. Average annual total return assumes that an
investment in the Fund was purchased with an initial payment of
$1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of all
dividends and distributions during the period at the net asset
value on the reinvestment date. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the end
of the period. Because average annual returns are annualized they
tend to even out variations in the returns, and are not the same as
actual year-by-year results. The actual return performance
calculations, which also may be quoted in advertising, reflect the
results of a continuous shareholder who does not redeem. It
measures the percentage change between the net asset value of a
hypothetical $1,000 investment in the Fund at the beginning of a
period and the net asset value of that investment at the end of a
period, assuming reinvestment of all dividend and capital gain
distributions at the net asset value on the reinvestment date. The
performance of major market indices such as the Dow Jones
Industrial Average, Russell 2000, and Standard & Poor's 500 may
also be included in advertising so that the Fund's results may be
compared with those of groups of unmanaged securities widely
regarded by investors as measures of market performance. Brokerage
fees are not factored into the performance of the indices. The
performance data of the Fund include all recurring fees such as
brokerage and investment advisory fees. Data and rankings from
Lipper Analytical Services, Inc., CDA Investment Technologies,
Morningstar or other industry publications may also be used in
advertising. See the Statement of Additional Information.

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

The annual report contains additional performance information which
is available upon request without charge by writing or calling the
Fund at the address and telephone number set forth on the back of
this Prospectus.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

BAMCO, Inc., the Adviser, is located at 767 Fifth Avenue, New York,
New York 10153, and is responsible for portfolio management. It is
a wholly owned subsidiary of Baron Capital Group, Inc. ("BCG").
Baron Capital, Inc. ("Baron Capital"), a registered broker-dealer
and the distributor of the shares of the Fund, is also a wholly
owned subsidiary of BCG.

Under an advisory agreement with the Fund (the "Advisory
Agreement"), the Adviser furnishes continuous investment advisory
services and management to the Fund. Mr. Ronald Baron is the chief
investment officer of the Adviser and is primarily responsible for
the day-to-day management of the portfolio of the Fund. Mr. Baron
also has primary responsibility for the investments of two of the
retail funds, Baron Asset Fund and Baron Growth & Income Fund. He
has managed the portfolios of those Funds since their inception.
The Adviser also keeps the books of account of each series, and
calculates daily the income and net asset value per share of each
Fund.

As compensation for the services rendered under each Advisory
Agreement, the Adviser receives a fee payable monthly from the
assets of each Fund equal to 1% per annum of each Fund's respective
average daily net asset value. The Adviser has agreed to waive its
advisory fee to the extent necessary so that total operating
expenses of the Fund do not exceed 1.5% of the Fund's average net
assets.

BROKERAGE

Brokerage transactions for the Fund are effected chiefly by or
through its Adviser's affiliate, Baron Capital, when consistent
with the policy of obtaining the best net results for the Fund and
subject to the conditions and limitations of the 1940 Act. Baron
Capital is a registered broker-dealer and a member of the NASD. In
determining the best net results for the Fund, the Adviser will
examine factors such as price (including the applicable brokerage
commission or dealer spread), size of order, efficiency and
reliability of execution. The Fund's Board of Trustees has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to Baron Capital are
reasonable and fair compared to the commission, fee or other
remuneration received by other brokers in connection with
comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable
period of time. The Fund will also consider sales of its shares as
a factor in the selection of broker-dealers to execute portfolio
transactions. See Statement of Additional Information for a
description of the commissions paid to Baron Capital.

TRUSTEES AND EXECUTIVE OFFICERS

The Trust's Board of Trustees has overall responsibility for the
management of the Fund. The Trustees and executive officers of the
Fund and their principal occupations during the last five years are
set forth below.

NAME AND ADDRESS POSITION HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST
BARON FUNDS FIVE YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Ronald Baron*+ President, Chief President and Director of: Baron
767 Fifth Avenue Investment Officer Capital, Inc. (1982-Present), Baron
New York, NY 10153 and Trustee Capital Management, Inc.
(1983-Present), Baron Capital Group,
Inc. (1984-Present), BAMCO, Inc.
(1987-Present).
- ---------------------------------------------------------------------------------------------
Norman S. Edelcup Trustee Chairman, Item Processing of America
244 Atlantic Isle (1989-Present), (financial institution
N. Miami Beach, FL service bureau); Director, Valhi, Inc.
33160 (1975-Present) (diversified company);
Director, Artistic Greetings,
Inc.(1985-Present).
- ---------------------------------------------------------------------------------------------
Mark M. Feldman Trustee President and Chief Executive Officer,
444 Madison Ave, Ste 703 Cold Spring Group, Inc.(1993-Present)
New York, N.Y. 10020 (reorganization and restructuring
consulting); Executive Vice
President and Chief Restructuring
Officer, Lomas Financial Corp. and
subsidiaries (1995-1996)
(reorganizing debtors-in-possession);
Trustee, Aerospace Creditors
Liquidating Trust (1993-Present)
(administers and liquidates assets).
- ---------------------------------------------------------------------------------------------
Irwin Greenberg Trustee Chairman, Lehigh Valley Hospital Board
3048 Congress Street (1991-Present); Retail Consultant,
Allentown, PA 18101 (1990-Present); Director, Cedar Crest
College(1990-Present); President and
Chief Executive Officer, Hess's
Department Stores (1976-1990).

- ---------------------------------------------------------------------------------------------
Clifford Greenberg Vice President Vice President, Baron Capital, Inc.,
767 Fifth Avenue Baron Capital Group, Inc., BAMCO, Inc.
New York, NY 10153 (1997-Present); General Partner, HPB
Associates, L.P. (1984-1996)
(investment partnership).
- ---------------------------------------------------------------------------------------------
Linda S. Martinson*+ Secretary, Vice General Counsel and Secretary of:
767 Fifth Avenue President and Baron Capital, Inc. (1983-Present),
New York, NY 10153 Trustee BAMCO, Inc. (1987-Present), Baron
Capital Group, Inc. (1984-Present),
Baron Capital Management, Inc.
(1983-Present).
- ---------------------------------------------------------------------------------------------
Charles N. Mathewson Trustee Chairman of the Board, International
5270 Neil Road Game Technology (1986-Present)
Reno, NV 89502-4169 (manufacturer of
microprocessor-controlled gaming
machines and monitoring systems).
- ---------------------------------------------------------------------------------------------
Harold W. Milner Trustee Retired; President and Chief Executive
2293 Morningstar Drive Officer, Kahler Realty Corporation
Park City, UT 84060 (1985-1997) (hotel ownership and
management).
- ---------------------------------------------------------------------------------------------
Raymond Noveck+ Trustee President, Strategic Systems, Inc.
31 Karen Road (1990-Present) (health care
Waban, MA 02168 information); Director, Horizon/CMS
Healthcare Corporation (1987-Present).
- ---------------------------------------------------------------------------------------------
Susan Robbins Vice President Senior Analyst, Vice President and
767 Fifth Avenue Director of: Baron Capital, Inc.
New York, NY 10153 (1982-Present), Baron Capital
Management, Inc. (1983-Present), Baron
Capital Group, Inc. (1984-Present).
- ---------------------------------------------------------------------------------------------
Morty Schaja* Senior Vice Presi- Senior Vice President and Chief
767 Fifth Avenue dent, Chief Operating Officer of Baron Capital,
New York, NY 10153 Operating Inc. (1997-Present), Managing
Officer and Trustee Director, Vice President, Baron
Capital, Inc. (1991-Present) and
Director, Baron Capital Group, Inc.,
Baron Capital Management, Inc., and
BAMCO, Inc. (1997-Present).
- ---------------------------------------------------------------------------------------------
David A. Silverman, M.D. Trustee Physician (1976-Present).
239 Central Park West
New York, NY 10024
- ---------------------------------------------------------------------------------------------
Peggy Wong Treasurer and Treasurer and Chief Financial Officer
767 Fifth Avenue Chief Financial of: Baron Capital, Inc., Baron Capital
New York, NY 10153 Officer Group, Inc., BAMCO, Inc., Baron
Capital Management, Inc.
(1987-Present).
- ---------------------------------------------------------------------------------------------

</TABLE>

* Trustees deemed to be "interested persons" of the Fund as that term
is defined in the Investment Company Act of 1940.

+ 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.

DISTRIBUTION PLAN AND OTHER EXPENSES

The Fund's Retirement Shares are distributed by Baron Capital,
which is the principal underwriter of the shares of the Baron
retail funds. From time to time the Adviser or the Distributor may
compensate plan administrators or their affiliates whose
participants hold the Retirement Shares for providing a variety of
administrative services, such as record-keeping and accounting, and
investor support services, such as responding to inquiries and
preparing mailings to shareholders. The compensation may be paid as
either a per account fee or a percentage of the average daily
assets invested by the retirement plan. The compensation will be
paid out of the assets of the Fund.

The Fund pays a fee to its custodian, the Bank of New York, 48 Wall
Street, New York, NY 10015. The Fund also pays a fee to its
transfer and dividend distributing agent, DST Systems, Inc. P.O.
Box 419946, Kansas City, MO 64141. In their respective capacities
both institutions maintain certain financial and accounting records
pursuant to agreements with the Trust. They do not assist in and
are not responsible for investment decisions involving assets of
the Fund.

PURCHASES AND REDEMPTIONS

The Retirement Shares of the Fund are offered on a continuous basis
through qualified plans. Investors may not purchase or redeem
shares of the Fund directly, but only through qualified retirement
plans. You should refer to your plan documents for information on
how to invest in or redeem the Retirement Shares of the Fund.

All investments in the Fund are credited to a qualified plan
immediately upon acceptance of the investment by the Transfer
Agent. Investments will be processed at the net asset value next
determined after an order is received and accepted by the Transfer
Agent. The Fund reserves the right to reject any purchase order.

Redemptions are processed at the net asset value next calculated
after receipt and acceptance of the redemption order by the
Transfer Agent. Redemption proceeds will normally be wired to the
qualified plan the business day following receipt of the redemption
order, but in no event later than seven days after receipt of such
order.

DETERMINING YOUR SHARE PRICE

Your purchases, sales or exchanges will be processed at the net
asset value per share of the Fund as of the close of the New York
Stock Exchange (the "Exchange") (currently 4:00 p.m., New York City
time) on each day that the Exchange is open for trading by dividing
the current market value of the Fund's total assets less all of its
liabilities by the total number of shares outstanding at the time
the determination is made. Valid purchase and redemption orders
placed prior to the close of the Exchange on a day the Exchange is
open for trading are executed at the net asset value determined as
of the close that day, and orders placed after that time are valued
as of the close of the next trading day. The Fund may have
arrangements with certain institutional entities with respect to
the actual receipt of orders. The Fund reserves the right to change
the time at which orders are priced if the Exchange closes at a
different time or an emergency exists.

The Fund's portfolio securities traded on any national stock
exchange or quoted on the NASDAQ National Market System are valued
on the basis of the last sale price on the date of valuation or, in
the absence of any sale on that date, the last sale price on the
date the security last traded. Other securities are valued at the
mean of the most recent bid and asked prices if market quotations
are readily available. Where market quotations are not readily
available the securities are valued at their fair value as
determined in good faith by the Board of Trustees, or by the
Adviser, pursuant to procedures established by the Board. Money
market instruments and debt securities with a remaining maturity of
sixty days or less are valued by the amortized cost method unless
such method does not represent fair value. Odd lot differentials
and brokerage commissions are excluded in calculating net asset
value. Securities quoted in a foreign currency are valued daily in
U.S. dollars at the foreign currency exchange rates that are
prevailing at the time the daily net asset value per share is
determined. If events that materially affect the value of a Fund's
foreign investments occur, the investments will be valued at their
fair value as determined in good faith by the Board of Trustees.

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute all of its net investment income and
realized capital gains, if any, to its shareholders in a single,
combined distribution by December 31 of each year. After every
distribution, the value of a share is automatically reduced by the
amount of the distribution. All your dividends and capital gains
distributions from the Fund are automatically reinvested in
additional shares of the Fund at the next computed net asset value
at the close of business on the payment date.

TAXES

The Fund intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986 (the "Code").
Qualification as a regulated investment company relieves the Fund
of federal income and excise taxes on the portion of its net
ordinary income and net realized capital gain distributed to
shareholders. Because of the Institutional Shares, the Fund also
intends to qualify under the Code with respect to the
diversification requirements for tax deferral with respect to
insurance company separate accounts.

Because the Retirement Shares may be purchased only through
qualified plans, it is anticipated that any dividends derived from
net investment income and distributions of capital gains will be
exempt from current taxation if left to accumulate within the
qualified plan. Generally, withdrawals from such contracts may be
subject to ordinary income tax and, if made before age 59 1/2, a
10% penalty tax. The tax status of your investment in the
Retirement Shares depends on the features of the qualified plan.
Please see your plan sponsor for additional information.

The foregoing is only a summary of some important tax
considerations generally affecting the Fund and its shareholders.
Prospective shareholders are urged to consult their tax advisers
concerning the tax consequences of this investment.

GENERAL INFORMATION

The Trust is a diversified open-end management investment company
registered under the Investment Company Act of 1940 ("1940 Act"),
it was organized as a Delaware business trust on DATE. The Trust is
authorized to have separate series, but currently has only the
Fund. It is authorized to issue an indefinite number of shares of
beneficial interest. The Declaration of Trust permits the Trustees
to establish additional series. The Fund currently offers two
classes of shares, one of which, the Institutional Shares offered
through Participating Insurance Companies, are offered pursuant to
this Prospectus. The shares offered hereby are available only in
connection with investments in and payments under variable
contracts and life insurance contracts. Retirement Shares of the
Fund are also available to participant directed plans through a
separate prospectus. Because the expenses of each class may differ,
the performance of each class is expected to differ. Each share of
the Fund has one vote on all matters for which a shareholder vote
is required, and participates equally in dividend and capital gain
distributions when and if declared by the Fund and in the Fund's
net assets upon liquidation. Shares are fully paid and
non-assessable and there are no preemptive, conversion or exchange
rights. Shares do not have cumulative voting rights and, as a
result, holders of at least 50% of the shares voting for Trustees
can elect all Trustees and the remaining shareholders would not be
able to elect any Trustees.

As a Delaware business trust, annual shareholder meetings are not
required. Shareholders have certain rights, as set forth in the
Declaration of Trust, including the right to call a meeting of
shareholders for the purpose of voting on the removal of one or
more Trustees on the written request of not less than 10% of the
outstanding shares. Such removal can be effected upon the action of
two-thirds of the outstanding shares. An insurance company issuing
a variable contract invested in the Fund requests voting
instructions from the variable contract holders. Under current law,
the insurance company must vote all shares of the Fund held by the
Separate Accounts in proportion to the voting instructions
received.

CONFLICTS OF INTEREST

Each Portfolio's Shares are available only to certain qualified
retirement plans. Institutional Shares of the Fund are available to
variable annuity and variable life separate accounts of insurance
companies through a separate prospectus. Although the Fund
currently does not anticipate any disadvantages to plan
participants or policy owners arising out of the fact that the Fund
offers its shares to such entities, there is a possibility that a
material conflict may arise. The Trustees monitor events in order
to identify any anticipated disadvantages or material
irreconcilable conflicts to determine what action, if any, should
be taken in response. If a material disadvantage or conflict
occurs, the Trustees may require one or more insurance company
separate accounts or plans to withdraw its investments in the Fund.
If this occurs, the Fund may be forced to sell securities at
disadvantageous prices. The Trustees may refuse to sell shares of
the Fund to any separate account or qualified plan or may suspend
or terminate the offering of a Fund's shares if such action is
required by law or regulatory authority or is in the best interests
of the Fund's shareholders.

MASTER/FEEDER OPTION

The Trust may in the future seek to achieve the Fund's or any
future series' investment objective by investing all of that
series' assets in another investment company having the same
investment objective and substantially the same investment policies
and restrictions as those applicable to that series. It is expected
that any such investment company would be managed by the Adviser in
substantially the same manner as the existing series. The initial
shareholder(s) of each series voted to vest the authority to
convert to a master/feeder structure in the sole discretion of the
Trustees. No further approval of the shareholders of the series of
the Trust is required. You will receive at least 30 days' prior
notice of any such investment. Such investment would be made only
if the Trustees determine it to be in the best interests of a
series and its shareholders. In making that determination, the
Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve
operational efficiencies. Although the Adviser believes the
Trustees will not approve an arrangement that is likely to result
in higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.

SHAREHOLDER INFORMATION

Shareholder inquiries about general Fund information should be
directed to the Funds' office at 1-800-99-BARON or 212-583-2100.

Owners of variable insurance contracts and plan participants will
be provided semi-annual unaudited and annual audited reports,
including the financial statements of the Fund. Each report will
include a listing of portfolio securities held. The Trust's fiscal
year ends September 30.

BARON CAPITAL FUNDS TRUST

BARON CAPITAL ASSET FUND
Insurance Shares

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

STATEMENT OF ADDITIONAL INFORMATION

________________, 1998

_______________

Baron Capital Funds Trust is an open-end, diversified management
investment company organized as a series fund with one series currently
available, Baron Capital Asset Fund (the "Fund"). There are currently two
classes of shares. Baron Capital Asset Fund's investment objective is to
seek capital appreciation through investments in securities of small and
medium sized companies with undervalued assets or favorable growth
prospects. The Fund has recently been organized and has no operating
history.

The shares of the Fund may be purchased only by the separate
accounts of insurance companies for the purpose of funding variable life
insurance policies and variable annuity contracts (collectively, "variable
insurance contracts") and by certain other qualified retirement plans
("Insurance shares"). The Fund also offers a second class of shares to
certain other participant directed qualified plans.

This Statement of Additional Information is not a prospectus and is
only authorized for distribution when preceded or accompanied by the Fund's
prospectus dated , 1998 as amended or supplemented from time to time with
respect to the Insurance Shares of the Fund. (the "Prospectus"). This
Statement of Additional Information contains additional and more detailed
information than that set forth in the Prospectus and should be read in
conjunction with the Prospectus. Additional copies of the Prospectus may be
obtained without charge from the insurance company.

No dealer, salesman or any other person has been authorized to give
any information or to make any representations, other than those contained
in this Statement of Additional Information or in the related Prospectus,
in connection with the offer contained herein, and, if given or made, such
other information or representations must not be relied upon as having been
authorized by the Funds or the Distributor. This Statement of Additional
Information and the related Prospectus do not constitute an offer by the
Funds or by the Distributor to sell or a solicitation of any offer to buy
any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such jurisdiction.

TABLE OF CONTENTS

Page in
Statement
of
Additional Page in
Information Prospectus

Investment Objectives and Policies................. 3
Investment Restrictions...................... 3
Short Sales Against the Box.................. 6
Option Transactions.......................... 6
Use of Segregated and Other Special Accounts. 9
Depository Receipts.......................... 10

Medium and Lower Rated Corporate Debt Securities... 11
Turnover Rate................................ 14

Management of the Funds
Board of Trustees and Officers............... 15
Principal Holders of Shares.................. 17
Investment Adviser........................... 17
Distributor.................................. 20
Distribution Plan............................ 20
Brokerage.................................... 23
Custodian, Transfer Agent and
Dividend Agent............................... 25
Redemption of Shares............................... 25

Net Asset Value.................................... 26

Taxes ............................................. 26

Organization and Capitalization.................... 27
General...................................... 27
Trustee Liability............................ 28

Other Information.................................. 28
Independent Accountants...................... 28
Calculation of Performance Data.............. 28

INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of the Fund's
investment objectives and policies set forth on pages of the Prospectus.
Unless otherwise specified, the investment programs and restrictions are
not fundamental policies. Such operating policies are subject to change by
the Fund's Board of Trustees without the approval by the shareholders.
Shareholders will, however, be notified prior to any material changes.
Fundamental policies may be changed only with the approval of a majority of
the Fund's outstanding voting securities.

Investment Restrictions

The Fund has adopted the following investment restrictions, which
include those described in the Prospectus. These restrictions represent
fundamental policies of the Fund and may not be changed without the
approval of the Fund's shareholders. Unless otherwise noted, all percentage
restrictions are as of the time of the investment after giving effect to
the transaction.

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

As a non-fundamental policy, The Fund will not:

1. Invest in securities of other registered 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 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.
2. Invest more than 5% of its total assets in warrants to
purchase common stock.
3. Purchase the securities of any issuer of which any officer
or director of the Fund owns 2 of 1% of the outstanding
securities or in which the officers and directors in the
aggregate own more than 5%.

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

With respect to investments in warrants, the Fund will not invest
in excess of 2% of the value of its net assets in warrants that are not
listed on the New York or American Stock Exchanges. Warrants are
essentially options to purchase equity securities at a specified price
valid for a specific period of time. Their prices do not necessarily move
parallel to the prices of the underlying securities. Warrants have no
voting rights, receive no dividends and have no rights with respect to the
assets of the issuer.

Short Sales against the Box

The Fund may sell short "against the box" to protect or defer an
unrealized gain in a security. At the time of the short sale, the Fund will
either own or have the unconditional right to acquire at no additional cost
the identical security sold short. The Fund may use this technique in
connection with convertible securities as well as common stock. The Fund
may have to pay a fee to borrow securities, which would partially offset
any gain thereon.

Options Transactions

The Fund may purchase or write put or call options. The purpose of
writing covered call options is to reduce the effect of price fluctuations
of the securities owned by the Fund (and involved in the options) on the
Fund's net asset value per share. A put option gives the purchaser of the
option, upon payment of a premium, the right to sell, and the writer the
obligation, when exercised, to buy, the underlying security, at the
exercise price. For instance, the Fund's purchase of a put option on a
security might be designed to protect its holdings in the underlying
security against a substantial decline in the market value by giving the
Fund the right to sell such security at the exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to
buy, and the seller if exercised, the obligation to sell, the underlying
security at the exercise price. The Fund's purchase of a call option on a
security might be intended to protect the Fund against an increase in the
price of the underlying security that it intends to purchase in the future
by fixing the price at which it may purchase such security or to limit the
loss to the extent of the premium for a security it might otherwise
purchase. An American style put or call option may be exercised at any time
during a fixed period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto, and
the Fund may engage in either style option. The Fund is authorized to
engage in transactions with respect to exchange-listed options and
over-the-counter options ("OTC options"). Exchange-listed options are
issued by a regulated intermediary such as the Options Clearing Corporation
("OCC"), which guarantees the performance of the obligations of the parties
to such options. The discussion below uses the OCC as an example, but is
also applicable to other financial intermediaries.

With certain exceptions, OCC-issued and exchange-listed options
generally settle by physical delivery of the underlying security, although
in the future cash settlement may become available. Rather than taking or
making delivery of the underlying security through the process of
exercising the option, listed options are usually closed by entering into
offsetting purchase or sale transactions that do not result in ownership of
the new option.

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

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

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails
to make or take delivery of the security, or other instrument underlying an
OTC option it has entered into with a Fund or fails to make a cash
settlement payment due in according with the option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of
each such Counterparty or any guarantor or credit enhancement of the
Counterparty's credit to determine the likelihood that the terms of the OTC
option will be satisfied. The Funds will engage in OTC option transactions
only with United States securities dealers recognized by the Federal
Reserve Bank of New York as "primary dealers" or broker dealers, domestic
or foreign banks or other financial institutions which have received (or
the guarantors of the obligations of which have received) a short-term
credit rating of "A-1" from Standard & Poor's Corporation ("S&P") or "P-1"
from Moody's Investor Services ("Moody's") or an equivalent rating from any
nationally recognized statistical rating organization ("NRSRO"). The staff
of the SEC currently takes the position that OTC options purchased by a
fund, and portfolio securities "covering" the amount of the fund's
obligation pursuant to an OTC option sold by it (the cost of the sell-back
plus the in-the-money amount, if any,) are illiquid, and are subject to a
fund's limitations on investments in illiquid securities.

If a Fund sells a call option, the premium that it receives may
serve as a partial hedge, to the extent of the option premium, against a
decrease in the value of the underlying securities in its portfolio or will
increase the Fund's income. The sale of put options can also provide
income.

The Fund may purchase and sell call options on corporate debt
securities and equity securities (including convertible securities). All
calls sold by the Fund must be "covered" (i.e., the Fund must own the
underlying securities) or must meet the asset segregation requirements
described below as long as the call is outstanding. Even though the Fund
will receive the option premium to help protect it against loss, a call
sold by the Fund exposes the Fund during the term of the option to possible
loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a
security or instrument which it might otherwise have sold.

The Fund may purchase and sell put options on corporate debt
securities and equity securities (including convertible securities). All
put options must be covered. In selling put options, there is a risk that
the Fund may be required to buy the underlying security at a
disadvantageous price above the market price.

Use of Segregated and Other Special Accounts

Many hedging transactions, in addition to other requirements,
require that the Fund segregate liquid high grade assets with its custodian
to the extent Fund obligations are not otherwise "covered" through
ownership of the underlying security or instrument. In general, either the
full amount of any obligation by the Fund to pay or deliver securities or
assets must be covered at all times by the securities or instruments
required to be delivered, or, subject to any regulatory restrictions, an
amount of cash or liquid high grade securities at least equal to the
current amount of the obligation must be segregated with the custodian. The
segregated assets cannot be sold or transferred unless equivalent assets
are substituted in their place or it is no longer necessary to segregate
them. For example, a call option written by the Fund will require that Fund
to hold the securities subject to the call (or securities convertible into
the needed securities without additional consideration) or to segregate
liquid high grade securities sufficient to purchase and deliver the
securities if the call is exercised. A put option written requires that the
Fund segregate liquid, high grade assets equal to the exercise price.
Hedging transactions may be covered by other means when consistent with
applicable regulatory policies.

OTC options entered into by the Fund will generally provide for
cash settlement. As a result, when the Fund sells these instruments it will
only segregate an amount of assets equal to its accrued net obligations, as
there is no requirement for payment or delivery of amounts in excess of the
net amount. These amounts will equal 100% of the exercise price in the case
of a noncash settled put, the same as an OCC guaranteed listed option sold
by the Fund, or the in-the-money amount plus any sell-back formula amount
in the case of a cash-settled put or call. OCC-issued and exchange-listed
options sold by a Fund other than those above generally settle with
physical delivery, or with an election of either physical delivery, or cash
settlement and the Fund will segregate an amount of assets equal to the
full value of the option. OTC options settling with physical delivery, or
with an election of either physical delivery or cash settlement, will be
treated the same as other options settling with physical delivery.

Depository Receipts

The Fund may invest in securities commonly known as American
Depository Receipts ("ADRs"), and in European Depository Receipts ("EDRs")
or other securities convertible into securities of foreign issuers. ADRs
are certificates issued by a United States bank or trust company and
represent the right to receive securities of a foreign issuer deposited in
a domestic bank or foreign branch of a United States bank and traded on a
United States exchange or in an over-the-counter market. EDRs are receipts
issued in Europe generally by a non-U.S. bank or trust company that
evidence ownership of non-U.S. or domestic securities. Generally, ADRs are
in registered form and EDRs are in bearer form. There are no fees imposed
on the purchase or sale of ADR's or EDRs although the issuing bank or trust
company may impose on the purchase of dividends and the conversion of ADRs
and EDRs into the underlying securities. Investment in ADRs has certain
advantages over direct investment in the underlying non-U.S. securities,
since (i) ADRs are U.S. dollar denominated investments which are easily
transferable and for which market quotations are readily available and (ii)
issuers whose securities are represented by ADRs are subject to the same
auditing, accounting and financial reporting standards as domestic issuers.
EDRs are not necessarily denominated in the currency of the underlying
security.

MEDIUM AND LOWER RATED CORPORATE DEBT SECURITIES

The Fund may invest in securities that are rated in the medium to
lowest rating categories by S&P and Moody's, some of which may be known as
"junk bonds." The Fund may invest in securities of distressed issuers when
the intrinsic values of such securities have, in the opinion of the
Adviser, warranted such investment. Corporate debt securities rated Baa are
regarded by Moody's as being neither highly protected nor poorly secured.
Interest payments and principal security appears adequate to Moody's for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
securities are regarded by Moody's as lacking outstanding investment
characteristics and having speculative characteristics. Corporate debt
securities rated BBB are regarded by S&P as having adequate capacity to pay
interest and repay principal. Such securities are regarded by S&P as
normally exhibiting adequate protection parameters, although adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for securities in
this rating category than in higher rated categories.

Corporate debt securities which are rated B are regarded by Moody's
as generally lacking characteristics of the desirable investment. In
Moody's view, assurance of interest and principal payments or of
maintenance of other terms of the security over any long period of time may
be small. Corporate debt securities rated BB, B, CCC, CC and C are regarded
by S&P on balance as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. In S&P's view, although such securities likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. BB and B are
regarded by S&P as indicating the two lowest degrees of speculation in this
group of ratings. Securities rated D by S&P or C by Moody's are in default
and are not currently performing. The Fund will rely on the Adviser's
judgment, analysis and experience in evaluating debt securities. Ratings by
S&P and Moody's evaluate only the safety of principal and interest
payments, not market value risk. Because the creditworthiness of an issuer
may change more rapidly than is able to be timely reflected in changes in
credit ratings, the Adviser monitors the issuers of corporate debt
securities held in the Funds' portfolio. The credit ratings assigned by a
rating agency to a security is a factor considered by the Adviser in
selecting a security, but the intrinsic value in light of market conditions
and the Adviser's analysis of the fundamental values underlying the issuer
are of more significance. Because of the nature of medium and lower rated
corporate debt securities, achievement by the Fund of its investment
objectives when investing in such securities is dependent on the credit
analysis of the Adviser. If the Fund purchased primarily higher rated debt
securities, risks would be substantially reduced.

A general economic downturn or a significant increase in interest
rates could severely disrupt the market for medium and lower grade
corporate debt securities and adversely affect the market value of such
securities. Securities in default are relatively unaffected by such events
or by changes in prevailing interest rates. In addition, in such
circumstances, the ability of issuers of medium and lower grade corporate
debt securities to repay principal and to pay interest, to meet projected
business goals and to obtain additional financing may be adversely
affected. Such consequences could lead to an increased incidence of default
for such securities and adversely affect the value of the corporate debt
securities in the Fund's portfolio. The secondary market prices of medium
and lower grade corporate debt securities are less sensitive to changes in
interest rates than are higher rated debt securities, but are more
sensitive to adverse economic changes or individual corporate developments.
Adverse publicity and investor perceptions, whether or not based on
rational analysis, may also affect the value and liquidity of medium and
lower grade corporate debt securities, although such factors also present
investment opportunities when prices fall below intrinsic values. Yields on
debt securities in the portfolio that are interest rate sensitive can be
expected to fluctuate over time. In addition, periods of economic
uncertainty and changes in interest rates can be expected to have an impact
on the market price of any medium to lower grade corporate debt securities
in the portfolio and thus could have an effect on the net asset value of
the Fund if other types of securities did not show offsetting changes in
values. The secondary market value of corporate debt securities structured
as zero coupon securities or payment-in-kind securities may be more
volatile in response to changes in interest rates than debt securities
which pay interest periodically in cash. Because such securities do not pay
current interest, but rather, income is accrued, to the extent that the
Fund does not have available cash to meet distribution requirements with
respect to such income, it could be required to dispose of portfolio
securities that it otherwise would not. Such disposition could be at a
disadvantageous price. Investment in such securities also involves certain
tax considerations.

To the extent that there is no established market for some of the
medium or low grade corporate debt securities in which the Fund may invest,
there may be thin or no trading in such securities and the ability of the
Adviser to value accurately such securities may be adversely affected.
Further, it may be more difficult for the Fund to sell securities for which
no established retail market exists as compared with securities for which
such a market does exist. During periods of reduced market liquidity and in
the absence of readily available market quotations for medium and lower
grade corporate debt securities held in the Fund's portfolio, the
responsibility of the Adviser to value the Fund's securities becomes more
difficult and the Adviser's judgment may play a greater role in the
valuation of the Fund's securities due to a reduced availability of
reliable objective data. To the extent that the Fund purchases illiquid
corporate debt securities or securities which are restricted as to resale,
the Fund may incur additional risks and costs. Illiquid and restricted
securities may be particularly difficult to value and their disposition may
require greater effort and expense than more liquid securities. The Fund
may be required to incur costs in connection with the registration of
restricted securities in order to dispose of such securities, although
under Rule 144A under the Securities Act of 1933 certain securities may be
determined to be liquid pursuant to procedures adopted by the Board of
Trustees under applicable guidelines.

Turnover Rate

The adviser expects that the average annual turnover rate of the
portfolio of the Fund should not exceed 100%. A portfolio turnover rate of
100% would occur if all the securities in the portfolio were replaced in a
one year period. The portfolio turnover rate is calculated by dividing the
lesser of portfolio purchases or sales by the average monthly value of
portfolio securities, excluding short term securities. The Fund has no
historical rates to report at this time. The turnover rate will fluctuate
depending on market conditions.

MANAGEMENT OF THE FUND

Board of Trustees and Officers

The Trustees and executive officers of the Fund and their principal
occupations during the last five years are set forth below.

Position Held Principal Occupation(s)
Name and Address With the Fund During Past Five Years

Ronald Baron *+ President and President and Director of:
767 Fifth Avenue Trustee Baron Capital, Inc.
New York, NY 10153 (1982-Present), Baron
Capital Management,
Inc. (1983-Present),
Baron Capital Group,
Inc. (1984-Present),
BAMCO, Inc. (1987-
Present).

Norman S. Edelcup Trustee Chairman, Item Processing
244 Atlantic Isle of America (1989-Present),
N. Miami Beach, FL 33160 (financial institution
service bureau); Direc-
tor, Valhi Inc.
(1975-Present)
(diversified company);
Director, Artistic
Greetings, Inc. (1985-
Present).

Mark M. Feldman Trustee President and Chief
444 Madison Avenue, Ste 703 Executive Officer, Cold
New York, NY 10020 Spring Group, Inc.
(1993-Present)
(reorganization and
restructuring
consulting); Executive
Vice President and
Chief Restructuring
Officer, Lomas
Financial Corp. and
subsidiaries
(1995-1996)
(reorganizing
debtors-in-posses-
sion); Trustee,
Aerospace Creditors
Liquidating Trust
(1993-Present)
(administers and
liquidates assets).

Irwin Greenberg Trustee Chairman, Lehigh Valley
3048 Congress Street Hospital Board (1991-
Allentown, PA 18101 Present); Retail
Consultant,
(1990-Present);
Director, Cedar Crest
College (1990-Pres-
ent); President and
Chief Executive
Officer, Hess's
Department Stores
(1976-1990).

Clifford Greenberg Vice President Vice President, Baron
767 Fifth Avenue Capital, Inc., BAMCO, Inc.
New York, NY 10153 (1997-Present); General
Partner, HPB
Associates, L.P.
(1984-1996) (investment
partnership).

Linda S. Martinson *+ Secretary, General Counsel and
767 Fifth Avenue Vice President, Secretary of: Baron
New York, NY 10153 and Trustee Capital, Inc. (1983-
Present), BAMCO, Inc.
(1987-Present), Baron
Capital Group, Inc.
(1984-Present),Baron
Capital Management,
Inc. (1983-Present).

Charles N. Mathewson Trustee Chairman of the Board,
5270 Neil Road International Game
Reno, NV 89502-4169 Technology (1986-Present)
(manufacturer of
micro-processor-controlled
gaming machines and
monitoring systems).

Harold W. Milner Trustee Retired; President and
2293 Morningstar Drive Chief Executive Officer,
Park City, UT 84060 Kahler Realty Corpo-
ration (1985-1997)
(hotel ownership and
management).

Raymond Noveck + Trustee President, Strategic
31 Karen Road Systems, Inc.
Waban, MA 02168 (1990-Present) (health
care information);
Director, Horizon/CMS
Healthcare Corporation
(1987-Present).

Susan Robbins Vice President Senior Analyst, Vice
767 Fifth Avenue President, Secretary
New York, NY 10153 and Director of: Baron
Capital, Inc.
(1982-Present), Baron
Capital Management,
Inc. (1983-Present),
Baron Capital Group,
Inc. (1984-Present).

Morty Schaja * Vice President Managing Director, Vice
767 Fifth Avenue and Trustee President, Baron Capital,
New York, NY 10153 Inc. (1991-Present),
and Director, Baron
Capital Group, Inc.,
Baron Capital
Management, Inc., and
BAMCO, Inc. (1997-
Present).

David A. Silverman, M.D. Trustee Physician (1976-Present).
239 Central Park West
New York, NY 10024

Peggy Wong Treasurer and Treasurer and Chief
767 Fifth Avenue Chief Financial Financial Officer of:
New York, NY 10153 Officer Baron Capital, Inc.,
Baron Capital Group,
Inc., BAMCO, Inc.,
Baron Capital
Management, Inc.,
(1987-Present).

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

* Trustees deemed to be "interested persons" of the Fund as that term
is defined in the Investment Company Act of 1940.

The Trustees who are not affiliated with or interested persons of
the Fund's investment adviser receive fees of $5,000 annually plus an
attendance fee of $500 for each meeting attended in person ($250 for
telephone participation). The Trustees who are interested persons of the
Funds' investment adviser receive no compensation from the Fund. As
indicated in the above table, certain Trustees and officers also hold
positions with the Fund's adviser and distributor.

Principal Holders of Shares

As of [DATE], the Fund had no shareholders.

Investment Adviser

The investment adviser to the Fund is BAMCO, Inc. (the "Adviser"),
a New York corporation with its principal offices at 767 Fifth Avenue, New
York, N.Y. 10153 and a subsidiary of Baron Capital Group, Inc. ("BCG"). Mr.
Ronald Baron is the controlling stockholder of BCG and is BAMCO's chief
investment officer. Mr. Baron has over 25 years of experience as a Wall
Street analyst and has managed money for others for over 20 years. He has
been a participant in Barron's Roundtable and has been a featured guest on
Wall Street Week, CNN and CNBC/FNN. Pursuant to an Advisory Agreement with
the Fund (the "Advisory Agreement"), the Adviser furnishes continuous
investment advisory services and management to the Fund, including making
the day-to-day investment decisions and arranging portfolio transactions
for the Fund subject to such policies as the Trustees may determine. The
Fund has no operating history at this time.

Under the Advisory Agreement, the Adviser, at its own expense and
without reimbursement from the Fund furnishes office space and all
necessary office facilities, equipment and executive personnel for managing
the Fund, and pays the salaries and fees of all officers and Trustees who
are interested persons of the Adviser.

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

Ronald Baron is the controlling stockholder, President and a
Director of BCG. The Adviser utilizes the staffs of Baron Capital and Baron
Capital's subsidiary Baron Capital Management, Inc. ("BCM") to provide
research. Directors, officers or employees of the Adviser and/or its
affiliates may also serve as officers or Trustees of the Fund. BCM is an
investment adviser to institutional and individual accounts. Clients of BCM
and Baron Capital have investment objectives which may vary only slightly
from those of each other and of the Fund. BCM and Baron Capital invest
assets in such clients' accounts and in the accounts of principals and
employees of BCM and Baron Capital in investments substantially similar to,
or the same as, those which constitute the principal investments of the
Fund. When the same securities are purchased for or sold by the Fund and
any of such other accounts, it is the policy of the Adviser, BCM and Baron
Capital to allocate such transactions in a manner deemed equitable by the
Adviser, and for the Adviser's, BCM's and Baron Capital's principals and
employees to take either the same or least favorable price of the day.

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

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

The Advisory Agreement with respect to the Fund was approved by a
majority of the Trustees, including a majority of the non-interested
Trustees, on [DATE]. The Fund's Advisory Agreement is for an initial two
year period but the Advisory Agreements must normally be approved annually
by the Trustees or a majority of the Fund's shares and by a majority of the
Trustees who are not parties to the Advisory Agreement or interested
persons of any such party.

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

Distributor

The Fund has a distribution agreement with Baron Capital, Inc.,
("Baron Capital" or the "Distributor") a New York corporation and a
subsidiary of BCG (controlled by Ronald Baron), located at 767 Fifth
Avenue, New York, N.Y. 10153. Baron Capital is affiliated with the Adviser.
The Distributor acts as the agent for the Fund for the continuous public
offering of its shares on a best efforts basis pursuant to a distribution
plan adopted under Rule 12b-1 under the 1940 Act ("Distribution Plan").

Distribution Plan

The Distribution Plan authorizes the Fund to pay the Distributor a
distribution fee equal on an annual basis to 0.25% of the Fund's average
daily net assets. The distribution fee is paid to the Distributor in
connection with its activities or expenses primarily intended to result in
the sale of Institutional Shares, including, but not limited to,
compensation to registered representatives or other employees of the
Distributor; compensation to and expenses of employees of the Distributor
who engage in or support the distribution of shares or who service
shareholder accounts; telephone expenses; interest expenses; preparing,
printing and distributing promotional and advertising material; preparing,
printing and distributing the Prospectus and reports to other than current
shareholders; and commissions and other fees to broker-dealers or other
persons (excluding banks) who have introduced investors to the Fund.

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

The Distribution Plan requires that while it is in effect the
Distributor report in writing, at least quarterly, the amounts of all
expenditures, the identity of the payees and the purposes for which such
expenditures were made for the preceding fiscal quarter.

The Distribution Plan has been approved by the Fund's Board of
Trustees, including a majority of the Trustees who are not interested
persons of the Funds and who have no direct or indirect financial interest
in the operation of the Distribution Plan or in any agreements related
thereto. In approving the Distribution Plan, the Trustees considered
various factors and determined that there is a reasonable likelihood that
the Plan will benefit the Funds and their shareholders.

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

Baron Capital anticipates that its actual expenditures will
substantially exceed the distribution fee received by it. If the Fund's
average daily net asset value were $2 million, even if Baron Capital
incurred $50,000 of distribution expenses, it would receive only $10,000 as
its fee. Alternatively, if, the Fund's daily average net assets were $25
million, and Baron Capital incurred $60,000 of distribution expenses, it
would receive $125,000 as its fee giving Baron Capital a $65,000 profit. If
the Distribution Plan is terminated, the Fund will owe no payments to Baron
Capital other than any portion of the distribution fee accrued through the
effective date of termination but then unpaid.

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

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

The Glass-Steagall Act and other applicable laws, among other
things, prohibit banks from engaging in business of underwriting, selling
or distributing securities. Accordingly, the Distributor will enter into
agreements with banks only to provide administrative assistance. However,
changes in federal or state statues and regulations pertaining to the
permissible activities of banks and their affiliates, as well as judicial
or administrative decisions or interpretations could prevent a bank from
continuing to perform all or a part of the contemplated services. If a bank
were prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and effective
shareholder services. It is not expected that shareholders would suffer any
adverse financial consequences as a result of these occurrences.

Brokerage

The Adviser is responsible for placing the portfolio brokerage
business of the Fund with the objective of obtaining the best net results
for the Fund, taking into account prompt, efficient and reliable executions
at a favorable price. Brokerage transactions for the Fund are effected
chiefly by or through the Adviser's affiliate, Baron Capital, when
consistent with this objective and subject to the conditions and
limitations of the 1940 Act. Baron Capital is a member of the National
Association of Securities Dealers, Inc., but is not a member of any
securities exchange.

The Fund's Board of Trustees has adopted procedures pursuant to
Rule 17e-1 of the 1940 Act which are reasonably designed to provide that
the commissions paid to Baron Capital are reasonable and fair compared to
the commission, fee or other enumeration received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of
time. The Board reviews no less frequently than quarterly that all
transactions effected pursuant to Rule 17e-1 during the preceding quarter
were effected in compliance with such procedures. The Fund and the Adviser
furnish such reports and maintain such records as required by Rule 17e-1.
The Fund does not deal with Baron Capital in any portfolio transaction in
which Baron Capital acts as principal. The Fund has no operating history.

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

Broker-dealers may be willing to furnish statistical research and
other factual information or services to the Adviser for no consideration
other than brokerage or underwriting commissions. Securities may be bought
or sold through such broker-dealers, but at present, unless otherwise
directed by the Fund, a commission higher than one charged elsewhere will
not be paid to such a firm solely because it provided research to the
Adviser. Research provided by brokers is used for the benefit of all of the
Adviser's or its affiliates' clients and not solely or necessarily for the
benefit of the Fund. The Adviser's investment management personnel attempt
to evaluate the quality of research provided by brokers. Results of this
effort are sometimes used by the Adviser as a consideration the in the
selection of brokers to execute portfolio transactions.

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

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

Custodian, Transfer Agent and Dividend Agent

The Bank of New York, 48 Wall Street, New York, NY, is the
custodian for the Fund's cash and securities. DST Systems, Inc., CT-7
Tower, 1004 Baltimore, Kansas City, MO 64105, is the transfer agent and
dividend agent for the Fund's shares. Neither institution assists in or is
responsible for investment decisions involving assets of the Fund. Both
institutions are responsible for the maintenance of the Fund's portfolios
and general accounting records, and provide certain shareholder services.

REDEMPTION OF SHARES

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

NET ASSET VALUE

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

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

U.S. Government obligations and other debt instruments having sixty
days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the
highest bid price from the dealer maintaining an active market in that
security or on the basis of prices obtained from a pricing service approved
by the Board of Trustees.

TAXES

The Fund intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986 (the "Code"). Qualification
as a regulated investment company relieves the Funds of federal income and
excise taxes on the portion of its net ordinary income and net realized
capital gain distributed to shareholders. The Fund also intends to qualify
under the Code with respect to the diversification requirements for tax
deferral regarding insurance company separate accounts.

Because the Insurance Shares may be purchased only through variable
insurance contacts and the Retirement Shares may be purchased only through
qualified plans, it is anticipated that any dividends derived from net
investment income and distributions of capital gains will be exempt from
current taxation if left to accumulate within the variable insurance
contract or qualified plan. Generally, withdrawals from such contracts may
be subject to ordinary income tax and, if made before age 591/2, a 10%
penalty tax. The tax status of an investment in the Insurance Shares
depends on the features of the variable insurance contracts purchased from
a Participating Insurance Company. Please see the separate account
prospectus for additional information.

The foregoing is only a summary of some important tax
considerations generally affecting the Fund and its shareholders.
Prospective shareholders are urged to consult their tax advisers concerning
the tax consequences of this investment.

ORGANIZATION AND CAPITALIZATION

General

The Trust is an open-end diversified investment company organized
as a series fund and established under the laws of The state of Delaware by
a Declaration of Trust dated [DATE]. The one series currently available is
Baron Capital Asset Fund. Shares entitle their holders to one vote per
share. Shares have noncumulative voting rights, which means that holders of
more than 50% of the shares voting for the election of Trustees can elect
all Trustees and, in such event, the holders of the remaining shares voting
for the election of Trustees will not be able to elect any person or
persons as Trustees. Shares have no preemptive or subscription rights, and
are transferable.

Trustee Liability

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

OTHER INFORMATION

Independent Accountants

Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York,
New York 10019, has been selected as independent accountants of the Fund.

Calculations of Performance Data

Advertisements and other sales literature for the Fund may refer to
average annual total return and actual return. Average annual total return
is computed by finding the average annual compounded rates of return over a
given period that would equate a hypothetical initial investment to the
ending redeemable value thereof, as follows:

P (1+T)n =ERV

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the end of the period
of a Hypothetical $1,000 investment made
at the beginning of the period

Actual return is computed by measuring the percentage change
between the net asset value of a hypothetical $1,000 investment in the Fund
at the beginning of a period and the net asset value of that investment at
the end of a period. All performance calculations assume that dividends and
distributions are reinvested at the net asset value on the appropriate
reinvestment dates and include all recurring fees. The Fund has no
operating history.

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

In addition to advertising average annual and actual return data,
comparative performance information may be used in advertising materials
about the Funds, including data and other information from Lipper
Analytical Services, Inc., CDA Investment Technologies, Morningstar Inc.,
Money, Forbes, SEI, Ibbotson, No Load Investor, Growth Fund Guide, Fortune,
Barron's, The New York Times, The Wall Street Journal, Changing Times,
Medical Economics, Business Week, Consumer Digest, Dick Davis Digest,
Dickenson's Retirement Letter, Equity Fund Outlook, Executive Wealth
Advisor, Financial World, Investor's Daily, Time, Personal Finance,
Investment Advisor, Smartmoney, Rukeyser, Kiplinger's, NAPFA News, US News,
Bottomline, Investors Business Daily, Bloomberg Radio, CNBC, and/or USA
Today. The Fund may also use comparative performance data from indexes such
as the Dow Jones Industrial Average, Standard & Poor's 400, 500, Small Cap
600, 1,500, or Midcap 400, Value Line Index, Wilshire 4,500, 5000, or Small
Cap; NASDAQ/OTC Composite, New York Stock Exchange; and the Russell 1000,
2000, 2500, 3000, 2000 Growth, 2000 Value, or Midcap. With respect to the
rating services, the Fund may use performance information that ranks the
Fund in any of the following categories: all funds, aggressive growth
funds, value funds, mid-cap funds, small-cap funds, growth and income
funds, equity income funds, and any combination of the above listed
categories.

BARON CAPITAL FUNDS TRUST

BARON CAPITAL ASSET FUND
RETIREMENT SHARES

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

STATEMENT OF ADDITIONAL INFORMATION

___________________, 1998

BARON CAPITAL FUNDS TRUST is an open-end, diversified management
investment company organized as a series fund with one series currently
available, BARON CAPITAL ASSET FUND (the "Fund"). There are currently two
classes of shares. BARON CAPITAL ASSET FUND'S investment objective is to
seek capital appreciation through investments in securities of small and
medium sized companies with undervalued assets or favorable growth
prospects. The Fund has recently been organized and has no operating
history.

The shares of the Fund may be purchased only in connection with
certain participant directed qualified retirement plans ("Retirement
Shares"). The Fund also offers a second class of shares in connection with
investments in and payments under variable annuity contracts and variable
life insurance contracts (collectively "variable insurance contracts")
issued by life insurance companies ("Institutional Shares"). The Trust
sells and redeems its shares at net asset value without any sales charges
or redemption fees. The minimum initial investment is $2,000. There is no
minimum for subsequent purchases.

This Statement of Additional Information is not a prospectus and is
only authorized for distribution when preceded or accompanied by the Fund's
prospectus dated , 1998 as amended or supplemented from time to time with
respect to the Retirement Shares of the Fund. (the "Prospectus"). This
Statement of Additional Information contains additional and more detailed
information than that set forth in the Prospectus and should be read in
conjunction with the Prospectus. Additional copies of the Prospectus may be
obtained without charge from the retirement plan sponsor.

TABLE OF CONTENTS

Page in
Statement
of
Additional Page in
Information Prospectus

Investment Objectives and Policies................. 3
Investment Restrictions.................... 3
Short Sales Against the Box................ 6
Option Transactions........................ 6
Use of Segregated and Other Special
Accounts................................. 9
Depository Receipts........................ 10

Medium and Lower Rated Corporate Debt Securities... 11
Turnover Rate.............................. 14

Management of the Funds
Board of Trustees and Officers............. 15
Principal Holders of Shares................ 17
Investment Adviser......................... 17
Distributor................................ 20
Distribution Plan.......................... 20
Brokerage.................................. 23
Custodian, Transfer Agent and
Dividend Agent............................. 25
Redemption of Shares............................... 25

Net Asset Value.................................... 26

Taxes ........................................... 26

Organization and Capitalization.................... 27
General.................................... 27
Shareholder and Trustee Liability.......... 28

Other Information.................................. 28
Independent Accountants.................... 28
Calculation of Performance Data............ 28

INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT RESTRICTIONS

The 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, engage in
short-sales, purchase securities on margin or maintain a net
short position.

3. Purchase or sell commodities or commodity contracts except
for hedging purposes and in conformity with regulations of
the Commodities Futures Trading Commission such that the
Fund would not be considered a commodity pool.

4. Purchase or sell oil and gas interests or real estate. Debt
or equity securities issued by companies engaged in the oil,
gas or real estate business are not considered oil or gas
interests or real estate for purposes of this restriction.
First mortgage loans and other direct obligations secured by
real estate are not considered real estate for purposes of
this restriction.

5. Invest more than 25% of the value of its total assets in any
one industry, except investments in U.S. government
securities.

6. Purchase the securities of any one issuer other than the
U.S. government or any of its agencies or instrumentalities,
if immediately after such purchase more than 5% of the value
of the Fund's total assets would be invested in such issuer
or the Fund would own more than 10% of the outstanding
voting securities of such issuer, except that up to 25% of
the value of the Fund's total assets may be invested without
regard to the 5% and 10% limitations.

7. Underwrite securities of other issuers.

8. Make loans, except to the extent the purchase of debt
obligations of any type (including repurchase agreements and
corporate commercial paper) are considered loans and except
that the Fund may lend portfolio securities to qualified
institutional investors in compliance with requirements
established from time to time by the Securities and Exchange
Commission and the securities exchanges where such
securities are traded.

9. Participate on a joint, or a joint and several, basis in any
securities trading account.

10. Mortgage, pledge or hypothecate any of its assets, except as
may be necessary in connection with options, loans of
portfolio securities, or other permitted borrowings.

11. Purchase securities of any issuer with a record of less than
three years' continuous operations, including predecessors,
except obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities, if such
purchase would cause the investments of the Fund in all such
issuers to exceed 5% of the value of the total assets of the
Fund.

12. Invest more than 15% of its assets in restricted or illiquid
securities, including repurchase agreements maturing in more
than seven days.

As a non-fundamental policy, The Fund will not:

SHORT SALES AGAINST THE BOX

OPTIONS TRANSACTIONS

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

DEPOSITORY RECEIPTS

MEDIUM AND LOWER RATED CORPORATE DEBT SECURITIES

The Fund will rely on the Adviser's judgment, analysis and
experience in evaluating debt securities. Ratings by S&P and Moody's
evaluate only the safety of principal and interest payments, not market
value risk. Because the creditworthiness of an issuer may change more
rapidly than is able to be timely reflected in changes in credit ratings,
the Adviser monitors the issuers of corporate debt securities held in the
Funds' portfolio. The credit ratings assigned by a rating agency to a
security is a factor considered by the Adviser in selecting a security, but
the intrinsic value in light of market conditions and the Adviser's
analysis of the fundamental values underlying the issuer are of more
significance. Because of the nature of medium and lower rated corporate
debt securities, achievement by the Fund of its investment objectives when
investing in such securities is dependent on the credit analysis of the
Adviser. If the Fund purchased primarily higher rated debt securities,
risks would be substantially reduced.

TURNOVER RATE

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES AND OFFICERS

The Trustees and executive officers of the Fund and their principal
occupations during the last five years are set forth below.

Position Held Principal Occupation(s)
NAME AND ADDRESS With the Fund During Past Five Years

<S> <C> <C>
Ronald Baron *+ President and President and Director of:
767 Fifth Avenue Trustee Baron Capital, Inc.
New York, NY 10153 (1982-Present), Baron Capital
Management, Inc. (1983-
Present), Baron Capital Group,
Inc. (1984-Present), BAMCO, Inc.
(1987-Present).

Norman S. Edelcup Trustee Chairman, Item Processing of
244 Atlantic Isle America (1989-Present),
N. Miami Beach, FL 33160 (financial institution service
bureau); Director, Valhi Inc.
(1975-Present) (diversified
company); Director, Artistic
Greetings, Inc. (1985-Present).

Mark M. Feldman Trustee President and Chief Executive
444 Madison Avenue, Ste 703 Officer, Cold Spring Group, Inc.
New York, NY 10020 (1993-Present) (reorganization
and restructuring consulting);
Executive Vice President and
Chief Restructuring Officer,
Lomas Financial Corp. and
subsidiaries (1995-1996)
(reorganizing debtors-in-posses-
sion); Trustee, Aerospace
Creditors Liquidating Trust
(1993-Present) (administers and
liquidates assets).

Irwin Greenberg Trustee Chairman, Lehigh Valley Hospital
3048 Congress Street Board (1991-Present); Retail
Allentown, PA 18101 Consultant, (1990-Present);
Director, Cedar Crest
College (1990-Pres-
ent); President and
Chief Executive
Officer, Hess's
Department Stores
(1976-1990).

Clifford Greenberg Vice President Vice President, Baron Capital,
767 Fifth Avenue Inc., BAMCO, Inc.
new York, NY 10153 (1997-Present); General Partner,
HPB Associates, L.P. (1984-1996)
(investment partnership).

Linda S. Martinson *+ Secretary, General Counsel and Secretary
767 Fifth Avenue Vice President, of: Baron Capital, Inc.
New York, NY 10153 and Trustee (1983-Present), BAMCO, Inc.
(1987-Present), Baron Capital
Group, Inc. (1984-
Present),Baron Capital Manage-
ment, Inc. (1983-Present).

Charles N. Mathewson Trustee Chairman of the Board, Interna-
5270 Neil Road tional Game Technology (1986-
Reno, NV 89502-4169 Present) (manufacturer of micro-
processor-controlled gaming ma-
chines and monitoring systems).

Harold W. Milner Trustee Retired; President and Chief
2293 Morningstar Drive Executive Officer, Kahler
Park City, UT 84060 Realty Corporation (1985-1997)
(hotel ownership and
management).

Raymond Noveck + Trustee President, Strategic Systems,
31 Karen Road Inc.
Waban, MA 02168 (1990-Present) (health care
information); Director, Hori-
zon/CMS Healthcare Corporation
(1987-Present).

Susan Robbins Vice President Senior Analyst, Vice President,
767 Fifth Avenue Secretary and Director of:
New York, NY 10153 Baron Capital, Inc.
(1982-Present), Baron Capital
Management, Inc. (1983-
Present), Baron Capital Group,
Inc. (1984-Present).

Morty Schaja * Vice President Managing Director, Vice
767 Fifth Avenue and Trustee President, Baron Capital, Inc.
New York, NY 10153 (1991-Present), and Director,
Baron Capital Group, Inc., Baron
Capital Management, Inc., and
BAMCO, Inc. (1997-Present).

David A. Silverman, M.D. Trustee Physician (1976-Present).
239 Central Park West
New York, NY 10024

Peggy Wong Treasurer and Treasurer and Chief Financial
767 Fifth Avenue Chief Financial Officer of: Baron Capital, Inc.,
New York, NY 10153 Officer Baron Capital Group, Inc.,
BAMCO, Inc., Baron Capital
Management, Inc., (1987-Present).

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

</TABLE>

* Trustees deemed to be "interested persons" of the Fund as that term
is defined in the Investment Company Act of 1940.

PRINCIPAL HOLDERS OF SHARES

As of [DATE], the Fund had no shareholders.

INVESTMENT ADVISER

DISTRIBUTOR

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT

REDEMPTION OF SHARES

NET ASSET VALUE

TAXES

The Fund intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986 (the "Code"). Qualification
as a regulated investment company relieves the Funds of federal income and
excise taxes on the portion of its net ordinary income and net realized
capital gain distributed to shareholders. The Fund also intends to qualify
under the Code with respect to the diversification requirements for tax
deferral regarding insurance company separate accounts.

Because the Retirement Shares may be purchased only through
qualified plans and the Insurance Shares may be purchased only through
variable insurance contacts, it is anticipated that any dividends derived
from net investment income and distributions of capital gains will be
exempt from current taxation if left to accumulate within the qualified
plan or variable insurance contract. Generally, withdrawals from such
contracts may be subject to ordinary income tax and, if made before age
591/2, a 10% penalty tax. The tax status of an investment in the Retirement
Shares depends on the features of the qualified plan. Please see the plan
sponsor for additional information.

The foregoing is only a summary of some important tax
considerations generally affecting the Fund and its shareholders.
Prospective shareholders are urged to consult their tax advisers concerning
the tax consequences of this investment.

ORGANIZATION AND CAPITALIZATION

GENERAL

THE TRUST is an open-end diversified investment company organized
as a series fund and established under the laws of The state of Delaware by
a Declaration of Trust dated [DATE]. The one series currently available is
BARON CAPITAL ASSET FUND. Shares entitle their holders to one vote per
share. Shares have noncumulative voting rights, which means that holders of
more than 50% of the shares voting for the election of Trustees can elect
all Trustees and, in such event, the holders of the remaining shares voting
for the election of Trustees will not be able to elect any person or
persons as Trustees. Shares have no preemptive or subscription rights, and
are transferable.

TRUSTEE LIABILITY

OTHER INFORMATION

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York,
New York 10019, has been selected as independent accountants of the Fund.

CALCULATIONS OF PERFORMANCE DATA

P (1+T)N =ERV

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

BARON CAPITAL FUNDS TRUST

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

a. Financial Statements:
Included in Part B of this Registration Statement:
Report of Independent Accountants
Statement of Net Assets at __________________
Statement of Assets and Liabilities at
------------------
Statement of Operations for the Year Ended to
------------------
Statement of Changes in Net Assets for the Years
Ended __________________ and______________ Notes to
the Financial Statements Supplementary Information
(condensed financial information) (also included in
Part A of this Registration Statement)

b. Exhibits:
* 1. Declaration of Trust dated November 20, 1997.
* 2. By-laws dated November 20, 1997.
3. Inapplicable.
* 4. Specimen Share Certificates representing
shares of beneficial interest of $.01
par value.
* 5. (a) Investment Advisory Agreement between
Baron Capital Asset Fund and BAMCO, Inc.
* 6. Distribution Agreement with Baron Capital, Inc.
7. Inapplicable.
* 8. (a) Custodian Agreement with The Bank of
New York.
(b) Fee Schedule for Exhibit 8(a).
* 9. (a) Transfer Agency Agreement with DST Servic-
es, Inc. (b) Fee Schedule for Exhibit 9(a).
* 10. Opinion and consent of counsel as to legality
of shares being registered (filed with Rule
24f-2 Notice).
* 11. Consent of Independent Certified Public Ac-
countants.
12. Inapplicable.
* 13. Letter agreement between the Registrant and the
Purchaser of the Initial Shares.
* 14. Distribution Plan pursuant to Rule 12b-1.
* 15. Schedule for computation of performance quo-
tations.
* 16. Power of Attorney.

* To be filed by amendment.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

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

/Ronald Baron/

90%

/Baron Capital Group, Inc./

100% 100% 100%
/ Baron Capital /
/Baron Capital, Inc./ /Management, Inc./ /BAMCO, Inc./

Baron Capital, Inc. serves as distributor of Registrant's shares and
performs brokerage services for Registrant. BAMCO, Inc. serves as
investment adviser to Registrant. Ronald Baron, President of Registrant, is
the controlling shareholder of Baron Capital Group, Inc. and serves as
President of all the above entities.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF [DATE])

(1) (2)
Title of Class of Series Number of Shareholders (approx)
Shares of beneficial interest
($.01 par value),

Baron Capital Asset Fund 0

ITEM 27. INDEMNIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ITEM 28. BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER

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

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

ITEM 29. PRINCIPAL UNDERWRITERS AND OFFICERS

(a) Inapplicable.

(b)

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

Ronald Baron Director and
Trustee and President
767 Fifth Avenue
President
New York, N.Y. 10153

Collin Baron Director None
855 Main Street
Bridgeport, CT 06604

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

Peggy Wong Treasurer
Treasurer
767 Fifth Avenue
New York, N.Y. 10153

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

Clifford Greenberg Vice President
767 Fifth Avenue Vice President
New York, N.Y. 10153

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

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

Certain accounts, books and other documents required to be
maintained by Section 31 (a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are maintained at the offices of the
Registrant, BAMCO, Inc. and Baron Capital, Inc., 767 Fifth Avenue, New
York, NY 10153. Records relating to the duties of the Registrant's transfer
agent are maintained by DST Systems, Inc. 1004 Baltimore Avenue, Kansas
City, MO 64105 and of the Registrant's custodian are maintained by The Bank
of New York, 48 Wall Street, New York, N.Y. 10015.

ITEM 31. MANAGEMENT SERVICES

Inapplicable.

ITEM 32. UNDERTAKINGS

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

Registrant undertakes to file an amendment to the Registration
Statement which includes financial statements (which need not be certified)
within four to six months from the effective date of Registrant's 1933 Act
Registration Statement.

SIGNATURES

Pursuant to the requirement of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York, on the 21st
day of November, 1997.

BARON CAPITAL FUNDS TRUST

By s/ Ronald Baron
Ronald Baron, President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in
the capacities and on the dates indicated.

Signatures Title Date

s/ Ronald Baron President (Principal November 21, 1997
________________________ Executive Officer) &
Ronald Baron Trustee

s/ Linda S. Martinson Secretary, November 21, 1997
________________________ Vice President & Trustee
Linda S. Martinson

s/ Peggy Wong Treasurer (Principal November 21, 1997
________________________ Financial & Accounting
Peggy Wong Officer)