Baron Funds® September 30, 2018 Quarterly Report

“Why don’t you speak about the straw that is trampling on the rights of his shareholders? It will break the back of the bull market.” is reassuring to investors,” he told me, “that your Chairman and CEO. Large Investment Bank. firm invests in companies with good values. That October 2, 2018. is what will enable those businesses to have sustained and growing profitability. Favorability Before I prepare the “final final” draft of my matters. You are clearly not going to invest in a annual Baron Investment Conference speech, it’s business that is going to addict teens. Your cut never really “final” until after I have given it, I point is not to invest in businesses that society speak with friends to ask for suggestions on ultimately won’t tolerate. Baron is not going to topics they believe would be of interest to Baron traffic in something that the world could Funds’ shareholders. condemn.” When, in the first week of October, I asked the “I hate stocks. I hate the stock market. I CEO of one of the largest U.S. investment banks hate mutual funds. I want to sell for ideas, my friend didn’t hesitate. Most everything.” October 11, 2018. investors, he believed, and spoken like the trader he used to be, would like to hear what I thought An unusually talented individual with whom we would cause the bull market that began in had invested when he was building a large RONALD BARON March 2009 to end. publicly-owned business many years ago CEO AND CHIEF INVESTMENT OFFICER invested $50 million in Baron Funds earlier this “What everyone wants to know pre-midterm year. He called on the day in early October that elections, will be different post the elections,” he the Dow had fallen 800 points. “I hate stocks. I told me. “Whatever we discuss now will be “Portfolio insurance” is what exacerbated the hate mutual funds. I want to sell everything. I overwhelmed by the results of those elections in Crash in 1987 and significant CDS counterparty think I would prefer to be a lender rather than an just five weeks.” risk had an important role in the financial crisis 10 years ago. Further, “HFTs, high frequency investor in stocks,” he told me. He then listed several unpredictable “macro” algorithmic traders, presently account for more events that could be troubling. Presently, things than half of the daily trading volumes. Since TABLE OF CONTENTS seemed pretty good, he thought, which would HTFs are generally undercapitalized, a mistake or Letter from Ron 2 likely continue to be the case. “But, a successful just a fat finger, could hit markets like a Letter from Linda 4 cyberattack by a foreign power; the inability to hurricane!” Baron Funds Performance 10 fund budget deficits in Southern Europe; and, Baron Asset Fund 16 whether the balance sheet of Germany could In my opinion, the dramatic 10% market Baron Growth Fund 20 afford to absorb $2 trillion of Italian debt was of “correction” in the month of October was Baron Small Cap Fund 25 Baron Opportunity Fund 30 some concern.” Further, the U.S. economy is caused by exactly the market structure issues my friend described to me four weeks ago. It Baron Partners Fund 35 presently quite strong with wages increasing Baron Fifth Avenue Growth Fund 40 was not the result of any important change in faster than expected. “Assuming interest rates Baron Focused Growth Fund 45 continue to increase gradually, higher rates will business fundamentals or prospects. Which Baron International Growth Fund 50 not be an issue.” But, if the Fed believes inflation shows exactly how smart he is...and why he was Baron Real Estate Fund 55 is increasing faster than anticipated and the Fed able to become the Chairman of this bank from Baron Emerging Markets Fund 63 is “behind the curve,” that could be an issue. “In his start in an urban “hood.” Baron Energy and Resources Fund 68 1994, in a very strong economy, interest rates Baron Global Advantage Fund 74 One more thing. When I told him about our Baron Discovery Fund 79 increased 300 basis points in 12 months. At one Growth + “Values” themed meeting on point, the Fed raised rates 75 bps and were Baron Durable Advantage Fund 83 November 9, he warned me not to be Baron Real Estate Income Fund 86 raising them between meetings.” sanctimonious. “You are not the kind of investor Baron WealthBuilder Fund 92 But, in his opinion, “the most discomforting issue who would only invest in renewables. People are Baron Health Care Fund 98 is market structure.” The proliferation of ETFs has excessively focused on ESG (environmental, Portfolio Holdings 115 given traders an ability to invest in bond ETFs social and corporate governance). You are that own illiquid underlying securities. There are obviously more likely to invest in a company run now $1 trillion invested in bond ETFs and few by Howard Schultz who puts a nice picture on investors are even sure what is in those ETFs. his coffee cup and not so much in Gordon Gekko Further, people have been leveraging those ETFs who thinks greed is good.” “Where do you want like equities. My friend called these “structured to be on the curve?,” was his advice. “Invest in products the grandson of portfolio insurance Tesla because Elon is a genius and saving the and the son of credit default swaps (‘CDS’).” world or not because you are concerned that he Letter from Ron

I answered that he should think about his after the Dow had already fallen to 8,000 from improved health care and likely greater inflation, investments with us as investments in its 14,000 peak the year before. That morning if economic growth accelerated. Since we try to businesses that just happen to be publicly there were numerous stories in general interest invest in companies that are growing 15% per traded. That means he can sell or buy at any newspapers and the financial press predicting an year, not the 7% per year of the stock market time he wishes at our Funds’ net asset values. impending second Great Depression and Dow and economy, we expect over the long term to This is regardless of whether his investments are Jones 2000!!! Pandemonium prevailed. continue to perform better than market priced fairly, or below or above what he believes benchmarks and our economy. Of course, we the intrinsic values of those businesses. “The At 7 AM that Friday, Henry Fernandez, Founder cannot guarantee that. and CEO of financial index provider MSCI, and I market doesn’t tell you what a business is worth. Every 25 years, the standard of living doubles. were interviewed on CNBC’s Squawk Box. Henry Only the price you can pay or receive for the A middle-class person now lives better than the is an immigrant from Nicaragua. His dad portion of it you own on a given day.” wealthiest person on Earth 100 years ago. Better had been a general in the Nicaraguan Army and, health. Better services. When I began to describe several of the after a government coup d’etat, had to flee with businesses in which Baron Funds has invested, he his family to America to avoid being murdered. The average middle-class person today has a stopped me when I spoke about Hyatt Hotels Henry and I spoke about the great democracy in higher standard of living than Henry Ford, John Corp. “I understand. I have known Tommy (Tom which we live; how we expected our country to Rockefeller, Andrew Carnegie, Henry Phipps and Pritzker, Hyatt Hotel’s Chairman) for a long emerge from the financial panic then taking Andrew Mellon 100 years ago. We are as certain time. OK. I like the idea of investing in place stronger; and, how investment opportunity that the average middle-class person 100 years companies like that. Thanks for explaining.” was everywhere. Baron was and remains a large from now will enjoy a higher standard of living Before we ended our call...he changed his shareholder in MSCI. MSCI’s stock price was $15 than Gates, Buffett, Zuckerberg, Musk, mind...or I guess you could say I changed his per share. MSCI’s share price is now $145 per Bloomberg, Bezos, Soros, and Icahn today. In mind...about selling. I told him that we know share. Baron and Henry have each made more large part because of their philanthropies. than $350 million on their MSCI investments in each other since 1980. I also mentioned that Just like the Pharaohs of Ancient Egypt couldn’t the past 10 years, almost 10 times the there were many periods when his company’s take their wealth with them...although they October 24, 2008 price for this unique and stock price had been depressed. We didn’t sell tried...neither can today’s entrepreneurs...nor important business. then since we didn’t think his share price on any by their incredible generosity unlike the particular day changed the value of his According to HFR, a hedge fund research firm, Pharaohs of ancient times do they evidence any business...either in the short term or the long signs of wanting to do so. term. hedge funds that “hedge against risk” missed most of the stock market rally since 2008. Baron Investment Conference 2018. I also reminded him that he twice spoke at our According to HFR, the average hedge fund has November 9, 2018. Metropolitan Opera annual meetings and told our shareholders that increased about 75% since December 2008, House, Lincoln Center. New York City. he didn’t enjoy speaking with most analysts, but about one-quarter what an investor could have that when he began to speak with me regularly, earned if he or she had invested in a low fee We hope you will be able to attend our 27th he actually “looked forward to our index fund! Since $3 trillion is still invested in Annual Investment Conference on November 9. conversations.” He then responded, “You’re hedge funds, individuals who might otherwise It is unusual for investment firms to invite their right. You did ask different questions than others invest in stocks still exhibit “fear and loathing” shareholders and clients to meet and question and you were always focused on long-term of equities. While it is not determinative, and we the chief executives of businesses in which their ideas, not the short term. Congratulations on don’t invest on this basis, investors are generally savings have been invested and to meet and owning Vail (Resorts, Inc.) for more than 20 optimistic at the beginning of a significant stock question the investment firm’s managers and years and making so much money on that market decline and negative at the beginning of analysts about those investments. At Baron, we investment. What a great business. I would like a stock market advance. Our strategy is to invest believe in providing our shareholders with to be an investor in Vail, too.” “You are,” I told in strong growth businesses and not worry so unique insights and access to the entrepreneurs him. “One more point. We have 36 other much about the stock market. and businesses that are innovating and analysts and investors working with me who are improving our world to see first hand the much younger than I am; are really smart; and, U.S. stock prices reflect the growth in GDP and opportunities we see. many of whom, have been working with me for our standard of living. Entering 1968, 50 years a really long time...and have become great at ago, the GDP of the United States was One lucky Baron Funds’ shareholder attendee asking questions, too!” “Okay. Don’t sell. If I feel $862 billion. Today it is nearly $21 trillion. without an employment or business relationship better about things next year, I’ll consider adding Approximately 23 times greater. That with the Firm will win an “electrifying” prize, just to my investments in Baron.” represents 6.5% compound annual growth rate like last year. For those of you who can’t attend, (“CAGR”). The Dow Jones in 1968 was trading you will be able to watch a live webcast on the “Aren’t you worried about the markets? The mostly in the 900s. Today it is close to 25,000. Baron Funds’ website (except for the news sounds absolutely dreadful.” Television 25 times greater. That represents about 6.6% entertainment, which we are contractually financial news anchors. October 2018. CAGR. Einstein was right. It’s all about prevented from streaming). You can also get a Ten years ago, on the morning of Baron Funds’ compounding! We expect growth in the United sense of our meeting by watching CNBC’s October 24, 2008 annual meeting, the market States during the next 50 years to exhibit a Squawk Box that morning from 6 a.m. to 8:30 was “limit down!!!” It could not open since there similar trajectory. In fact, we would not be a.m. EST, when I will appear with several of our were virtually no buyers...only sellers. This was surprised due to rapidly advancing technology, speakers and executives.

2 September 30, 2018 Letter from Ron

We hope when you attend our annual conferences or watch us on CNBC or See you on November 9th. visit our website, you will gain a better understanding of the businesses in which we invest, the character and talent of their executives, as well as the people who work at our Firm.

Ronald Baron Thank you for joining us as fellow shareholders in Baron Funds. We will CEO and Chief Investment Officer continue to work hard to justify your confidence in us. November 1, 2018 Portfolio holdings as a percentage of net assets as of September 30, 2018 for securities mentioned are as follows: Hyatt Hotels Corp. - Baron Asset Fund (1.1%), Baron Partners Fund (8.8%*), Baron Focused Growth Fund (11.9%), Baron Real Estate Fund (2.3%); MSCI, Inc. – Baron Growth Fund (4.6%); Vail Resorts, Inc. – Baron Asset Fund (4.8%), Baron Growth Fund (8.2%), Baron Partners Fund (10.8%*), Baron Focused Growth Fund (16.5%).

*%of Long Positions Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. Baron Funds Net Realized and Unrealized Gain ($ in millions) As of September 30, 2018 Baron Baron Baron Baron Baron Small Baron Baron Focused International Asset Growth Cap Opportunity Partners Growth Growth Fund Fund Fund Fund Fund Fund Fund MSCI, Inc. $(2.9) $334.8 $4.2 $1.2 $14.0 $0.9 $0.1

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: All investments are subject to risk and may lose value. The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this document reflect those of the respective writer. Some of our comments are based on management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views are a reflection of our best judgment at the time and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

3 Letter from Linda

Five of the six largest public companies in the United States are technology- driven companies1. This is not a coincidence. It is a reflection of how our world has changed and what has been driving change.

Over the past decade, technological advancements have significantly altered how we shop, get news, work, communicate, and exchange and process information, among other things. They have also altered when, where, and even why we do things. They have even made it possible to watch a football game (surreptitiously) during a dinner with the in-laws. Technologies like the internet and the smartphone have become basic necessities over a short period of time; 20 years ago less than 10% of the world’s population used the internet, and smartphones did not exist.

New Technologies Are Being Adopted Faster LINDA MARTINSON Number of Years Until 25% Adoption, U.S. CHAIRMAN, PRESIDENT AND COO 90 Dishwasher 75 Radio Telephone Air Conditioning 60 Motivated by the rapid evolution in the way people communicate, consume Washer Electricity entertainment, and access other information, MSCI and Standard & Poor’s Refrigerator 45 implemented a major revision to the Global Industry Classification Standard Television Car (GICS)2 classification on September 28, 2018. The changes affected over Microwave 30 Personal Computer 2,000 global publicly-traded companies within the three sectors that have been most impacted by the advancements in technology. The Mobile Phone 15 Telecommunication Services sector was expanded and renamed Internet Communication Services, and over 1,700 companies were moved there from 0 Information Technology and Consumer Discretionary. In addition, nearly 1867 1887 1907 1927 1947 1967 1987 2007 2017 100 companies previously classified as Information Technology were moved

Global Internet Users (in Billions) to the Consumer Discretionary sector. While this broadly summarizes the 4.0 sector changes, there are important additional details that we outlined and 3 3.5 analyzed in our recently published Baron Insight article , which we 3.0 encourage you to read. 2.5 The restructuring had a significant impact on the widely-used large-cap 2.0 indexes, partly because some of the largest companies were among the 1.5 reclassified holdings, including Facebook, Inc., Alphabet Inc., Tencent Holdings, 1.0 Ltd., and Alibaba Group Holding Limited. In addition, the growth indexes were 0.5 more affected by the changes in the classification, as technology companies 0.0 tend to be higher growth. The tables below summarize the impacts for several

1996199719981999200020012002200320042005200620072008200920102011201220132014201520162017 major U.S. and international equity indexes, including the category Source: Kleiner Perkins benchmarks of the nine U.S. equity Morningstar categories.

1 As of 9/30/2018, based on market capitalization. 2 The Global Industry Classification Standard (GICS®) was developed by Morgan Stanley Capital International (MSCI) and Standard and Poor’s (S&P) in 1999 in response to the global financial community’s need for a reliable, complete and standard industry classification system. It covers over 26,000 active companies and 29,000 securities – approximately 95% of the world’s equity market capitalization. 3 Available at www.baronfunds.com

4 September 30, 2018 Letter from Linda

The GICS Change Had a Bigger Impact on the Larger-Cap and Growth Indexes Sector Weights, 9/30/2018

S&P 500 Index MSCI ACWI ex USA Index MSCI EM Index Old GICS New GICS Change Old GICS New GICS Change Old GICS New GICS Change Information Technology 26.25% 20.99% –5.26% 11.61% 8.41% –3.20% 26.93% 15.79% –11.14% Consumer Discretionary 13.10% 10.96% –2.14% 10.90% 10.45% –0.45% 9.04% 10.56% 1.52% Telecommunication Services 1.97% N/A –1.97% 3.81% N/A –3.81% 4.49% N/A –4.49% Communication Services N/A 9.37% 9.37% N/A 7.46% 7.46% N/A 14.11% 14.11%

Russell 1000 Value Index Russell 1000 Index Russell 1000 Growth Index Information Technology 10.04% 9.77% –0.26% 26.11% 21.29% –4.82% 41.92% 32.63% –9.29% Consumer Discretionary 8.07% 5.25% –2.81% 13.06% 10.92% –2.14% 17.97% 16.50% –1.47% Telecommunication Services 3.67% N/A –3.67% 1.90% N/A –1.90% 0.15% N/A –0.15% Communication Services N/A 6.75% 6.75% N/A 8.85% 8.85% N/A 10.92% 10.92%

Russell Midcap Value Index Russell Midcap Index Russell Midcap Growth Index Information Technology 9.32% 9.07% –0.26% 19.15% 18.13% –1.02% 33.38% 31.25% –2.14% Consumer Discretionary 11.38% 8.97% –2.41% 14.02% 11.99% –2.03% 17.83% 16.37% –1.47% Telecommunication Services 0.62% N/A –0.62% 0.46% N/A –0.46% 0.22% N/A –0.22% Communication Services N/A 3.29% 3.29% N/A 3.51% 3.51% N/A 3.82% 3.82%

Russell 2000 Value Index Russell 2000 Index Russell 2000 Growth Index Information Technology 10.52% 10.26% –0.26% 15.23% 13.94% –1.30% 19.66% 17.39% –2.28% Consumer Discretionary 11.56% 9.51% –2.05% 13.43% 12.25% –1.18% 15.18% 14.83% –0.36% Telecommunication Services 0.72% N/A –0.72% 0.78% N/A –0.78% 0.84% N/A –0.84% Communication Services N/A 3.03% 3.03% N/A 3.26% 3.26% N/A 3.47% 3.47%

Source: FactSet. Despite these changes, the Information Technology sector remains a The penetration of technology, both for personal and business use, has been significant weight in most of these indexes, particularly in the Russell 1000 increasing, and we have no doubt that it will continue to be one of the Growth Index and the Russell Midcap Growth Index. main drivers of progress for a long time. Our conviction in technology- driven growth has been correspondingly reflected in the portfolios we GICS was created less than 20 years ago and quickly became the industry manage. We believe that, over the long term, technological advancements standard for classifying companies, portfolio diversification, and overall can translate into considerable returns for investors, which is why all Baron asset allocation decisions. The framework, developed jointly by two of the Funds have significant exposures to technology-driven businesses. main global index providers, MSCI and S&P, is also used for the construction Many technology-driven businesses offer significant growth opportunities, and rebalancing of their indexes. These indexes and their structures are but not all have strong and sustainable competitive advantages. The frequently used by investment professionals to determine the composition combination of these two criteria is of key importance to us. In our opinion, of portfolios, assess investment products, and provide financial advice. As of more often than not, hardware and semiconductor companies do not 9/30/2018, over $7 trillion of mutual fund and ETF assets were provide strong, durable advantages since their products have short life- benchmarked directly to S&P and MSCI indexes. Because of its widespread cycles and/or are easier to replicate. This makes many of them unattractive usage, virtually all other products are also assessed via the GICS structure. investments to us, although sometimes we find a special company that meets our stringent investment criteria. Technology Is Where the Growth Is In the late ‘90s, when hardware dominated the technology space, we did While we recognize that many people use GICS to make investment not have much exposure to technology stocks, largely because of the decisions, at Baron we use it chiefly for client reporting and for complying absence of durable competitive advantages. The staggering valuations at with regulatory limits. We do not construct portfolios based on GICS. the time did not help either. However, the world has changed significantly since the Dot-Com era. Data has become the main driver of technological The world has moved from the industrial age to the information age, where innovation, causing disruption in retail, transportation, health care, finance, technology is changing so quickly that any classification is at risk of rapidly entertainment… even sports. It has spurred megatrends like cloud becoming obsolete. Moreover, modern-day technology plays a key role in computing, artificial intelligence, autonomous driving, cybersecurity, virtually every industry, making it difficult to define clear borders. The GICS e-commerce, mobile, and many others, and quickly made the services of classification is victim to both of these issues and, while we welcome the Google (Alphabet), Amazon.com, Inc., Facebook, and their likes ubiquitous recent updates, we do not view them as long-term solutions. and a necessity for billions of people.

5 Letter from Linda

We believe that these secular shifts are still in their early stages, and we have identified many attractive businesses with durable competitive advantages that we believe will drive them or otherwise capitalize on them. As a result, a high proportion of Baron’s technology-driven investments are in software and information services companies. The table below shows the absolute and relative exposures of our diversified mutual funds using the GICS Information Technology sector and its three industry groups, reflecting our preference for software and services companies.

Baron’s IT Investments Are Mostly in Software & Services Companies Sector and Industry Group Weights, 9/30/2018

Absolute Portfolio Weights Relative Portfolio Weights* GICS Sector GICS Industry Groups GICS Sector GICS Industry Groups Technology Semiconductors & Technology Semiconductors & Information Software & Hardware & Semiconductor Information Software & Hardware & Semiconductor Diversified Baron Mutual Funds Technology Services Equipment Equipment Technology Services Equipment Equipment Baron Discovery Fund 26.5% 18.6% 2.8% 5.1% 9.1% 6.9% 0.3% 1.9% Baron Growth Fund 20.6% 19.8% 0.8% 0.0% 3.2% 8.1% –1.7% –3.2% Baron Small Cap Fund 34.6% 32.4% 2.2% 0.0% 17.2% 20.7% –0.3% –3.2% Baron Asset Fund 25.2% 24.4% 0.8% 0.0% –6.0% 3.7% –4.2% –5.5% Baron Opportunity Fund 46.9% 39.3% 4.1% 3.5% 15.5% 20.5% –4.4% –0.6% Baron Fifth Avenue Growth Fund 24.8% 19.7% 2.7% 2.4% –7.8% 0.3% –6.3% –1.8% Baron Durable Advantage Fund 24.7% 12.0% 8.2% 4.5% 3.7% 1.1% 2.0% 0.6% Baron Global Advantage Fund 32.2% 25.1% 1.6% 5.5% 10.1% 14.1% –5.4% 1.4% Baron Emerging Markets Fund 9.0% 2.2% 4.9% 1.9% –6.8% 0.2% –3.1% –3.9% Baron International Growth Fund 16.4% 11.5% 3.6% 1.3% 8.0% 9.0% 0.0% –1.0% Baron WealthBuilder Fund 22.3% 19.4% 1.9% 1.0% 1.3% 8.6% –4.4% –2.9%

Source: FactSet. * Versus primary prospectus benchmarks, as follows: for Baron Discovery Fund, Baron Growth Fund, and Baron Small Cap Fund – the Russell 2000 Growth Index; for Baron Asset Fund – the Russell Midcap Growth Index; for Baron Opportunity Fund – the Russell 3000 Growth Index; for Baron Fifth Avenue Growth Fund – the Russell 1000 Growth Index; For Baron Durable Advantage Fund and Baron Wealth Builder Fund – the S&P 500 Index; for Baron Global Advantage Fund – the MSCI ACWI Growth Index; for Baron Emerging Markets Fund – the MSCI EM Index; for Baron International Growth Fund – the MSCI ACWI ex USA Index. Our Funds’ significant exposures to the software and services industry growth opportunities in secular themes like cloud computing, group are the result of our investment process rather than an intentional software-as-a-service, big data, digital media, and e-commerce (you can decision to overweight a particular GICS-defined area. Because we are not read more about his themes in his quarterly letters). Within these themes, limited by what GICS characterizes as technology, we are able to find what Mike looks for the well-established, clear leaders that have strong recurring we believe are technology-driven growth opportunities across the GICS revenues and material free cash flows, among other factors. Such spectrum. For example, Baron Fifth Avenue Growth Fund’s weight of 19.7% companies include Guidewire Software, Inc., Expedia Group, Inc., Electronic in software and services does not account for the Fund’s investment in Arts Inc, Sage Therapeutics, Inc., CoStar Group, Inc., The Charles Schwab Veeva Systems, Inc., which could also be considered a software company Corp., and Equinix which, again, are all classified in different GICS sectors. but is categorized in the Health Care sector. Likewise, to most people, Amazon may simply be an online store, but to us it is also the largest Technology Stocks Offer Diversification employer of data scientists. To most people, Facebook and Google may be The technology space has evolved significantly over a relatively short period just a social media platform and a search engine, respectively, but to us of time and so have the companies in it. Compared to the Dot-Com era, they are also the world’s number one and two digital marketers. today there are significantly more well-established technology businesses Alex Umansky, manager of the large-cap Baron Fifth Avenue Growth Fund4, with strong fundamentals that have successfully navigated through multiple looks for opportunities in industries that are being or are likely to be disrupted industry and market cycles. Their valuations are much more in line with by technology, particularly digitization. He is focused on finding the “game- their fundamental strength too. changers” with solid growth opportunities, although the key investment criteria Moreover, many technology businesses, particularly in the software and for him is whether these companies have a strong competitive advantage services area, are highly diversified, offering broad spectrums of products because of their technology. According to Alex, Amazon, Mastercard and sourcing revenues from a wide variety of end users, markets, and Incorporated, Illumina, Inc., Alphabet, CME Group, Inc., and Equinix, Inc., all geographies. Three of our long-term investments, classified in the have that advantage in common. Something they don’t have in common is application software sub-industry, are particularly good examples of this. their GICS classification – they are all assigned to different sectors. Amazon is classified in Consumer Discretionary, Mastercard in Information Technology, ANSYS, Inc. is the market leader in simulation-driven product development. Illumina in Health Care, Alphabet in Communication Services, CME Group in The company builds simulation software that is used by mechanical and Financials, and Equinix in Real Estate. electrical engineers across multiple industries to test effects of real-world forces on a design without creating a physical model. The company is Mike Lippert, manager of the all-cap Baron Opportunity Fund, also invests sourcing its revenues from maintenance, licensing, and servicing across in technology-driven companies that are classified all over the GICS multiple countries, including the United States (38%), Japan (12%), spectrum, but he takes a slightly different approach. He focuses on finding Germany (10%), South Korea (6%), and France (5%).

4 In addition to Baron Fifth Avenue Growth Fund, Alex Umansky is the portfolio manager for Baron Global Advantage Fund and Baron Durable Advantage Fund.

6 September 30, 2018 Letter from Linda

Benefitfocus, Inc. is a leading provider of cloud-based benefits software for and billing. Most of its revenues are coming from licensing (48%) and consumers, employers, insurance carriers, and brokers. Thus, its revenues are services (41%) and a smaller proportion from maintenance. More than a derived from two end markets: employers (63% of revenue) and insurance third of revenues are coming from outside the U.S. carriers (37% of revenue). The company supports over 100 unique types of The high business diversity in the software and services industry group has benefits from 1,500 unique providers, ranging from health care, dental, and been reflected by the different stock-price movements of the companies in life insurance to transit, wellness, and pet insurance plans, which allows it to it. As the chart below shows, the average intrastock correlations in that have a highly diversified set of services and customers. segment have been amongst the lowest over the past decade, which means Guidewire Software, Inc. is the leading provider of core systems software to that these stocks did not tend to move together as much as the companies the global property and casualty insurance industry. The company sells in most other industry groups. Note that diversification could help reduce three primary web-based applications that help insurers to perform key certain investment risks, but cannot guarantee a profit or protect against functions such as underwriting, policy administration, claims management, a loss.

Software & Services Companies Have Been Less Correlated Than Most

Average Pairwise Intrastock Correlations Within Russell 3000 Index Industry Groups 9/30/2008 - 9/30/2018 0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00

Banks Energy Utilities Retailing Materials Insurance Real Estate Transportation Capital Goods Consumer Services Software & Services Diversified Financials Media & Entertainment Food & Staples Retailing Pharma, Biotech & Life Sci Food, Beverage & Tobacco Automobiles & Components Telecommunications Services Consumer Durables & Apparel Household & Personal Products Health Care Equipment & Services Technology HardwareCommercial & Equipment & Professional Services

Semiconductors & Semiconductor Equipment Source: FactSet, Baron Capital.

GICS Revision Impact on Baron Funds Our Funds’ sector and industry exposures have always been a result of our bottom-up investment approach and the recent GICS reclassification has not changed that. Because we do not have target exposures to the GICS segments, when the classification changed, our Funds’ absolute and relative exposures changed purely as a result of the reclassification. The changes were more meaningful to our large-cap and all-cap diversified Funds, which are shown in the charts on the next page.

7 Letter from Linda

Some Baron Funds Look Significantly Different After the GICS Reclassification Sector Weights, 9/30/2018

Baron Opportunity Fund Baron Fifth Avenue Growth Fund Portfolio Relative Portfolio Relative Weights vs. Russell Weights vs. Russell Portfolio Absolute Weights 3000 Growth Index Portfolio Absolute Weights 1000 Growth Index

59.2% 19.0% 42.2% 0.3% Information Technology Information Technology 46.9% 15.5% 24.8% -7.8%

14.3% -3.4% 25.6% 7.6% Consumer Discretionary 14.1% -1.0% Consumer Discretionary 28.0% 11.5%

Telecommunication Services 0.0% -0.2% Telecommunication Services 0.0% -0.2% n/a n/a n/a n/a

n/a n/a n/a n/a Communication Services 12.6% 1.0% Communication Services 14.9% 4.0%

Old GICS Classification New GICS Classification

Baron Durable Advantage Fund Baron Global Advantage Fund

Portfolio Relative Portfolio Relative Weights vs. Weights vs. MSCI Portfolio Absolute Weights S&P 500 Index Portfolio Absolute Weights ACWI Growth Index

35.6% 19.3% 54.8% 24.3% Information Technology Information Technology 24.7% 3.7% 32.2% 10.0%

12.9% -0.2% 17.0% 0.3% Consumer Discretionary 8.2% -2.7% Consumer Discretionary 18.5% 2.9%

Telecommunication Services 0.0% -2.0% Telecommunication Services 0.0% -1.1% n/a n/a n/a n/a

n/a n/a n/a n/a Communication Services 15.5% 6.1% Communication Services 21.1% 10.6%

Old GICS Classification New GICS Classification Source: Factset. It is interesting to see how different our Funds are presented, before and after the GICS reclassification. For example, Baron Fifth Avenue Growth Fund went from market weight in the Information Technology sector to underweight overnight. Baron Opportunity Fund’s weight in the Information Technology sector fell from nearly 60% to 47%. While the portfolios look more diversified now, to us they have been well-diversified all along and we have always tried to communicate to our investors. As active investors, we take our own approach to building portfolios. We don’t automatically construct or manage portfolios based on a classification system with which we don’t entirely agree. We believe that this has helped us add value over the long term and we believe that other investors can also benefit from assessing portfolios through more than a single lens.

Sincerely,

Linda S. Martinson Chairman, President, and COO November 1, 2018

8 September 30, 2018 Letter from Linda

Portfolio Holdings As a Percentage of Net Assets As of September 30, 2018 Baron Baron Baron Fifth Baron Baron Baron Baron Baron Baron Real Baron Baron Baron Small Baron Baron Avenue Focused International Real Emerging Global Baron Durable Estate Health Asset Growth Cap Opportunity Partners Growth Growth Growth Estate Markets Advantage Discovery Advantage Income Care Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Alibaba Group Holding Limited 1.3 5.0 0.5 2.7 4.7 Alphabet Inc. 4.8 4.7 4.7 4.4 Amazon.com, Inc. 6.3 16.4 5.5 ANSYS, Inc. 2.8 4.0 0.3 Benefitfocus, Inc. 1.3 1.3 1.1* 4.0 The Charles Schwab Corp. 2.9 1.7 5.0* 2.4 CME Group, Inc. 2.9 3.1 CoStar Group, Inc. 2.3 5.2 2.7 12.9* 13.0 1.7 Electronic Arts Inc. 2.1 3.5 Equinix, Inc. 1.5 1.7 2.8 5.8 2.2 6.4 Expedia Goup, Inc. 1.0 1.5 1.3 Facebook, Inc. 1.5 3.6 3.6 Guidewire Software, Inc. 3.5 1.7 3.8 4.9 4.3* 4.5 Illumina, Inc. 3.0 1.5 4.3 2.9 3.4 Mastercard Incorporated 2.0 4.7 4.6 Sage Therapeutics, Inc. 0.7 1.7 1.9 2.2 0.5 3.9 Tencent Holdings, Ltd. 1.2 1.0 3.7 Veeva Systems Inc. 1.3 3.1 3.8 1.7

* % of Long Positions. As of September 30, 2018, Baron Energy and Resources Fund did not own any of the securities listed above. The performance data quoted represents past performance. Past performance is no guarantee of future results. Portfolio holdings and weightings are subject to change. Future and current portfolio holdings are subject to risk.

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the Funds. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: Equity securities are subject to price fluctuations in the stock market. Companies propelled by innovation, including technology advances and new business models, may present the risk of rapid change and product obsolescence, and their success may be difficult to predict for the long term. Even if a Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund’s returns. Growth stocks can react differently to issuer, political, market and economic developments than the market as a whole. Non-U.S. investments may involve additional risks to those inherent in U.S. investments, including exchange-rate fluctuations, political or economic instability, the imposition of exchange controls, expropriation, limited disclosure and illiquid markets, resulting in greater share price volatility. Securities of small and medium-sized companies may be thinly traded and more difficult to sell. The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this presentation reflect those of the respective speaker. Some of our comments are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views are a reflection of our best judgment at the time and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. MSCI ACWI ex USA Growth Index captures large and mid-cap securities exhibiting overall growth style characteristics across 22 Developed Markets countries and 24 Emerging Markets countries. MSCI Emerging Markets Index is an unmanaged float-adjusted market capitalization index designed to measure equity market performance of large and mid-cap securities in the emerging markets. MSCI ACWI (All Country World) Growth Index Net USD is unmanaged free float-adjusted market capitalization weighted index designed to measure the performance of large- and mid-cap securities classified as growth in the developed and emerging markets. Russell 1000® Index measures the performance of large-sized U.S. companies. Russell 1000® Value Index measures the performance of large-sized U.S. companies that are classified as value. Russell 1000® Growth Index measures the performance of large-sized U.S. companies that are classified as growth. Russell Midcap® Index measures the performance of medium-sized U.S. companies. Russell Midcap® Value Index measures the performance of medium-sized U.S. companies that are classified as value. Russell Midcap® Growth Index mea-sures the performance of medium-sized U.S. companies that are classified as growth. Russell 2000® Index measures the performance of small-sized U.S. companies. Russell 2000® Value Index measures the performance of small-sized U.S. companies that are classified as value. Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth. Russell 3000® Growth Index measures the performance of the broad growth segment of the U.S. equity universe comprised of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The index performance is not fund performance; one cannot invest directly into an index. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

9 Baron Funds Performance Baron Asset Fund Comparison of the change in value of $10,000 investment in Baron Asset Fund (Institutional Shares)† in relation to the Russell Midcap Growth Index and the S&P 500 Index $350,000 $335,036 $300,000

$250,000 $215,939 $200,000 $194,373

$150,000

$100,000

$50,000

$0 6/12/87 12/89 12/92 12/95 12/98 12/01 12/04 12/07 12/10 12/13 12/16 9/18 Baron Asset Fund1,4 Russell Midcap Growth Index1 S&P 500 Index1 Baron Asset Fund’s annualized returns as of September 30, 2018: 1-year, 23.43%; 3-year, 19.08%; 5-year, 14.45%; 10-year, 12.45%; and Since Inception, 11.87%. Baron Growth Fund Comparison of the change in value of $10,000 investment in Baron Growth Fund (Institutional Shares)† in relation to the Russell 2000 Growth Index and the S&P 500 Index $220,000 $200,000 $205,419 $180,000 $160,000 $140,000 $120,000 $100,000 $100,111 $80,000 $70,084 $60,000 $40,000 $20,000 $0 12/31/94 12/96 12/98 12/00 12/02 12/04 12/06 12/08 12/10 12/12 12/14 12/16 9/18 Baron Growth Fund2,4 Russell 2000 Growth Index2 S&P 500 Index2 Baron Growth Fund’s annualized returns as of September 30, 2018: 1-year, 25.86%; 3-year, 17.93%; 5-year, 11.90%; 10-year, 12.67%; and Since Inception, 13.57%. Baron Small Cap Fund Comparison of the change in value of $10,000 investment in Baron Small Cap Fund (Institutional Shares)† in relation to the Russell 2000 Growth Index and the S&P 500 Index $90,000 $84,704 $80,000 $70,000 $60,000 $50,000 $45,649 $40,000 $39,071 $30,000 $20,000 $10,000 $0 9/30/9712/98 12/00 12/02 12/04 12/06 12/0812/10 12/12 12/14 12/16 9/18

Baron Small Cap Fund3,4 Russell 2000 Growth Index3 S&P 500 Index3 Baron Small Cap Fund’s annualized returns as of September 30, 2018: 1-year, 25.33%; 3-year, 20.32%; 5-year, 12.28%; 10-year, 12.80%; and Since Inception, 10.71%.

1 The indexes are unmanaged. The Russell Midcap® Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Asset Fund are with dividends, which positively impact the performance results. 2 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Growth Fund are with dividends, which positively impact the performance results. 3 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Small Cap Fund are with dividends, which positively impact the performance results. 4 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. † Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher.

10 Baron Funds Performance Baron Opportunity Fund Comparison of the change in value of $10,000 investment in Baron Opportunity Fund (Institutional Shares)† in relation to the Russell 3000 Growth Index and the S&P 500 Index $40,000 $37,585 $35,000

$30,000 $30,600

$25,000 $23,936 $20,000

$15,000

$10,000

$5,000

$0 2/29/00 12/00 12/02 12/04 12/06 12/08 12/10 12/12 12/14 12/16 9/18 Baron Opportunity Fund1,4 Russell 3000 Growth Index1 S&P 500 Index1 Baron Opportunity Fund’s annualized returns as of September 30, 2018: 1-year, 37.73%; 3-year, 23.39%; 5-year, 13.59%; 10-year, 14.23%; and Since Inception, 7.38%. Baron Partners Fund Comparison of the change in value of $10,000 investment in Baron Partners Fund (Institutional Shares)† in relation to the Russell Midcap Growth Index and the S&P 500 Index $300,000 $275,971 $250,000

$200,000

$150,000 $127,281 $122,445 $100,000

$50,000

$0 1/31/92 12/94 12/97 12/00 12/03 12/06 12/09 12/12 12/15 9/18 Baron Partners Fund2,4,5 Russell Midcap Growth Index2 S&P 500 Index2 Baron Partners Fund’s annualized returns as of September 30, 2018: 1-year, 19.32%; 3-year, 18.62%; 5-year, 14.04%; 10-year, 12.65%; and Since Inception, 13.25%. Baron Fifth Avenue Growth Fund Comparison of the change in value of $10,000 investment in Baron Fifth Avenue Growth Fund (Institutional Shares)† in relation to the Russell 1000 Growth Index and the S&P 500 Index $45,000 $41,592 $40,000 $38,607 $35,000 $35,478 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 4/30/04 12/04 12/06 12/08 12/10 12/12 12/14 12/16 9/18 Baron Fifth Avenue Growth Fund3,4 Russell 1000 Growth Index3 S&P 500 Index3 Baron Fifth Avenue Growth Fund’s annualized returns as of September 30, 2018: 1-year, 29.38%; 3-year, 22.74%; 5-year, 16.86%; 10-year, 13.07% and Since Inception, 9.82%.

1 The indexes are unmanaged. The Russell 3000® Growth Index measures the performance of those companies classified as growth among the largest 3,000 U.S. companies and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Opportunity Fund are with dividends, which positively impact the performance results. 2 The indexes are unmanaged. The Russell Midcap® Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Partners Fund are with dividends, which positively impact the performance results. 3 The indexes are unmanaged. The Russell 1000® Growth Index measures the performance of large-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Fifth Avenue Growth Fund are with dividends, which positively impact the performance results. 4 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 5 Reflects the actual fees and expenses that were charged when the Fund was a partnership. The predecessor partnership charged a 20% performance fee after reaching a certain performance benchmark. If the annual returns for the Fund did not reflect the performance fees for the years the predecessor partnership charged a performance fee, returns would be higher. The Fund’s shareholders will not be charged a performance fee. The predecessor partnership’s performance is only for periods before the Fund’s registration statement was effective, which was April 30, 2003. During those periods, the predecessor partnership was not registered under the Investment Company Act of 1940 and was not subject to its requirements or the requirements of the Internal Revenue Code relating to registered investment companies, which, if it were, might have adversely affected its performance. † Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher.

11 Baron Funds Performance Baron Focused Growth Fund Comparison of the change in value of $10,000 investment in Baron Focused Growth Fund (Institutional Shares)† in relation to the Russell 2500 Growth Index and the S&P 500 Index

$120,000 $112,397 $100,000

$80,000 $66,346 $60,000 $61,436

$40,000

$20,000

$0 5/31/96 12/96 12/98 12/00 12/02 12/04 12/06 12/08 12/10 12/12 12/14 12/16 9/18 Baron Focused Growth Fund1,4,5 Russell 2500 Growth Index1 S&P 500 Index1 Baron Focused Growth Fund’s annualized returns as of September 30, 2018: 1-year, 20.34%; 3-year, 16.80%; 5-year, 9.93%; 10-year, 10.15%; and Since Inception, 11.44%. Baron International Growth Fund Comparison of the change in value of $10,000 investment in Baron International Growth Fund (Institutional Shares)† in relation to the MSCI ACWI ex USA Index and the MSCI ACWI ex USA IMI Growth Index

$35,000

$30,000 $29,344

$25,000 $23,549 $21,346 $20,000

$15,000

$10,000

$5,000

$0 12/31/08 12/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16 12/17 9/18 Baron International Growth Fund2,5 MSCI ACWI ex USA Index2 MSCI ACWI ex USA IMI Growth Index2 Baron International Growth Fund’s annualized returns as of September 30, 2018: 1-year, 4.44%; 3-year, 12.34%; 5-year, 6.81%; and Since Inception, 11.67%. Baron Real Estate Fund Comparison of the change in value of $10,000 investment in Baron Real Estate Fund (Institutional Shares) in relation to the MSCI USA IMI Extended Real Estate Index and the S&P 500 Index

$35,000 $31,366 $30,000 $31,322 $28,375 $25,000 $23,648 $20,000

$15,000

$10,000

$5,000

$0 12/31/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16 12/17 9/18 Baron Real Estate Fund3,5 MSCI USA IMI Extended Real Estate Index3 MSCI US REIT Index3 S&P 500 Index3 Baron Real Estate Fund’s annualized returns as of September 30, 2018: 1-year, 2.12%; 3-year, 8.18%; 5-year, 8.05%; and Since Inception, 13.94%.

1 The indexes are unmanaged. The Russell 2500™ Growth Index measures the performance of small to medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Focused Growth Fund are with dividends, which positively impact the performance results. 2 The Fund has changed its primary benchmark to the MSCI ACWI ex USA Index given its broad acceptance as the standard benchmark measuring international markets equity performance. The Fund will maintain the MSCI ACWI ex USA IMI Growth Index as a secondary benchmark. The MSCI ACWI ex USA Index Net USD is an unmanaged, free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of large- and mid-cap securities across developed and emerging markets, excluding the United States. The MSCI ACWI ex USA IMI Growth Index Net USD is an unmanaged, free float-adjusted market capitalization weighted index that is designed to measure the performance of large-, mid-, and small-cap growth securities across developed and emerging markets, excluding the United States. The indexes and Baron International Growth Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. 3 The MSCI USA IMI Extended Real Estate Index is a custom index calculated by MSCI for, and as requested by, BAMCO, Inc. The index includes real estate and real estate-related GICS classification securities. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, reviewed or produced by MSCI. The MSCI US REIT Index is a free float- adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The indexes and Baron Real Estate Fund are with dividends, which positively impact performance results. 4 Reflects the actual fees and expenses that were charged when the Fund was a partnership. The predecessor partnership charged a 15% performance fee through 2003 after reaching a certain performance benchmark. If the annual returns for the Fund did not reflect the performance fees for the years the predecessor partnership charged a performance fee, the returns would be higher. The Fund’s shareholders will not be charged a performance fee. The predecessor partnership’s performance is only for the periods before the Fund’s registration statement was effective, which was June 30, 2008. During those periods, the predecessor partnership was not registered under the Investment Company Act of 1940 and was not subject to its requirements or the requirements of the Internal Revenue Code relating to registered investment companies, which, if it were, might have adversely affected its performance. 5 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. † Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher.

12 Baron Funds Performance Baron Emerging Markets Fund Comparison of the change in value of $10,000 investment in Baron Emerging Markets Fund (Institutional Shares) in relation to the MSCI EM Index and the MSCI EM IMI Growth Index $20,000

$15,000 $13,814 $11,753 $11,016 $10,000

$5,000

$0 12/31/10 12/1112/12 12/13 12/14 12/15 12/16 12/17 9/18 Baron Emerging Markets Fund1,4 MSCI EM Index1 MSCI EM IMI Growth Index1 Baron Emerging Markets Fund’s annualized returns as of September 30, 2018: 1-year, (7.79)%; 3-year, 9.55%; 5-year, 4.26%; and Since Inception, 4.26%. Baron Energy and Resources Fund Comparison of the change in value of $10,000 investment in Baron Energy and Resources Fund (Institutional Shares) in relation to the S&P North American Natural Resources Sector Index and the S&P 500 Index $30,000 $26,696 $25,000

$20,000

$15,000

$11,114 $10,000 $8,888

$5,000

$0 12/30/11 6/12 12/126/1312/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/17 6/18 9/18 Baron Energy and Resources Fund2,4 S&P North American Natural Resources Sector Index2 S&P 500 Index2 Baron Energy and Resources Fund’s annualized returns as of September 30, 2018: 1-year, 12.42%; 3-year, 6.46%; 5-year, (4.76)%; and Since Inception, (1.73)%. Baron Global Advantage Fund Comparison of the change in value of $10,000 investment in Baron Global Advantage Fund (Institutional Shares) in relation to the MSCI ACWI Growth Index and the MSCI ACWI Index $25,000 $23,489

$20,000 $19,728 $18,206

$15,000

$10,000

$5,000

$0 4/30/12 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/176/18 9/18

Baron Global Advantage Fund3,4 MSCI ACWI Growth Index3 MSCI ACWI Index3 Baron Global Advantage Fund’s annualized returns as of September 30, 2018: 1-year, 23.64%; 3-year, 23.87%; 5-year, 14.34%; and Since Inception, 14.23%.

1 The Fund has changed its primary benchmark to the MSCI EM (Emerging Markets) Index given its broad acceptance as the standard benchmark measuring emerging markets equity performance. The Fund will maintain the MSCI EM (Emerging Markets) IMI Growth Index as a secondary benchmark. The MSCI EM (Emerging Markets) Index and the MSCI EM (Emerging Markets) IMI Growth Index are unmanaged, free float-adjusted market capitalization weighted indexes. The MSCI EM (Emerging Markets) Index Net USD and the MSCI EM (Emerging Markets) IMI Growth Index Net USD are designed to measure the equity market performance of large-, mid-, and small-cap securities in the emerging markets. The MSCI EM (Emerging Markets) IMI Growth Index Net USD screens for growth-style securities. The indexes and Baron Emerging Markets Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. 2 The S&P indexes cited are unmanaged. The S&P 500 North American Natural Resources Sector Index measures the performance of U.S.-traded natural resources-related stocks, including mining, energy, paper and forest products, and plantation owning companies. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The indexes and Baron Energy and Resources Fund are with dividends, which positively impact the performance results. 3 The MSCI ACWI indexes cited are unmanaged, free float-adjusted market capitalization weighted indexes reflected in US dollars. The MSCI ACWI Growth Index Net USD measures the equity market performance of large and mid cap growth securities across developed and emerging markets. The MSCI ACWI Index Net USD measures the equity market performance of large and mid cap securities across developed and emerging markets. The indexes and Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. 4 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.

13 Baron Funds Performance Baron Discovery Fund Comparison of the change in value of $10,000 investment in Baron Discovery Fund (Institutional Shares) in relation to the Russell 2000 Growth Index and the S&P 500 Index

$25,000 $24,644

$20,000 $19,210 $17,735 $15,000

$10,000

$5,000

$0 9/30/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/17 6/18 9/18 Baron Discovery Fund1,4 Russell 2000 Growth Index1 S&P 500 Index1 Baron Discovery Fund’s annualized returns as of September 30, 2018: 1-year, 35.74%; 3-year, 30.14%; 5-year and Since Inception, 19.77%. Baron Durable Advantage Fund Comparison of the change in value of $10,000 investment in Baron Durable Advantage Fund (Institutional Shares) in relation to the S&P 500 Index

$15,000

$11,056 $10,760 $10,000

$5,000

$0 12/29/17 3/18 6/18 9/18 Baron Durable Advantage Fund2,4 S&P 500 Index2 Baron Durable Advantage Fund’s returns as of September 30, 2018: Since Inception, 7.60%.5 Baron Real Estate Income Fund Comparison of the change in value of $10,000 investment in Baron Real Estate Income Fund (Institutional Shares) in relation to the MSCI US REIT Index

$15,000

$10,132 $10,000 $10,026

$5,000

$0 12/29/173/18 6/18 9/18 Baron Real Estate Income Fund3,4 MSCI US REIT Index3 Baron Real Estate Income Fund’s returns as of September 30, 2018: Since Inception, 0.26%.5

1 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and Baron Discovery Fund are with dividends, which positively impact the performance results. 2 The index is unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The index and Baron Durable Advantage Fund are with dividends, which positively impact the performance results. 3 The index is unmanaged. The MSCI US REIT Index is a free float-adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index and Baron Real Estate Income Fund are with dividends, which positively impact the performance results. 4 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 5 Not Annualized.

14 Baron Funds Performance Baron WealthBuilder Fund Comparison of the change in value of $10,000 investment in Baron WealthBuilder Fund (Institutional Shares) in relation to the S&P 500 Index and the MSCI ACWI Index

$15,000

$11,190 $11,056 $10,000 $10,383

$5,000

$0 12/29/17 3/18 6/18 9/18 Baron WealthBuilder Fund1,3 S&P 500 Index1 MSCI ACWI Index1

Baron WealthBuilder Fund’s returns as of September 30, 2018: Since Inception, 11.90%.4

Baron Health Care Fund Comparison of the change in value of $10,000 investment in Baron Health Care Fund (Institutional Shares) in relation to the Russell 3000 Health Care Index and the S&P 500 Index

$15,000

$11,745 $11,600 $11,098 $10,000

$5,000

$0 4/30/18 6/18 9/18 Baron Health Care Fund 2,3 Russell 3000 Health Care Index 2 S&P 500 Index2

Baron Health Care Fund’s returns as of September 30, 2018: Since Inception, 16.00%.4

1 The indexes are unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The MSCI ACWI Index is an unmanaged, free float-adjusted market capitalization weighted index reflected in US dollars that measures the equity market performance of large and mid cap securities across developed and emerging markets. The indexes and Baron WealthBuilder Fund are with dividends, which positively impact the performance results. 2 The indexes are unmanaged. The Russell 3000® Health Care Index is an unmanaged index representative of companies involved in medical services or health care in the Russell 3000 Index, which is comprised of the 3,000 largest U.S. companies as determined by total market capitalization. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The indexes and Baron Health Care Fund are with dividends, which positively impact the performance results. 3 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 4 Not Annualized. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group.

15 Baron Asset Fund

Dear Baron Asset Fund Shareholder: Performance

U.S. equity indexes rose meaningfully during the quarter. Corporate earnings continued to impress, and the domestic unemployment rate reached new lows. Interest rates moved higher, as did most gauges of price inflation. Growth stocks continued to outpace value stocks, and large-cap stocks generally outperformed. Against this backdrop, we believe that Baron Asset Fund (the “Fund”) performed well on both an absolute and relative basis. The Fund gained 8.13% (Institutional Shares), while the Russell Midcap Growth Index (the “Index”) gained 7.57%, and the S&P 500 Index gained 7.71%. We are pleased that the Fund’s risk-adjusted performance led Morningstar, Inc. to assign the Fund (Institutional Shares) its five-star rating.*

Table I. Performance Annualized for periods ended September 30, 2018 Baron Baron ANDREW PECK Retail Shares: BARAX Asset Asset Russell Fund Fund Midcap S&P Institutional Shares: BARIX Retail Institutional Growth 500 PORTFOLIO MANAGER R6 Shares: BARUX Shares1,2 Shares1,2,3 Index1 Index1 Three Months5 8.05% 8.13% 7.57% 7.71% Nine Months5 19.47% 19.71% 13.38% 10.56% syndicated research provider Gartner, Inc. and credit card processor One Year 23.11% 23.43% 21.10% 17.91% Worldpay, Inc. The Fund’s lack of exposure to the lagging Materials sector Three Years 18.76% 19.08% 16.65% 17.31% also aided relative results. Five Years 14.14% 14.45% 13.00% 13.95% Ten Years 12.17% 12.45% 13.46% 11.97% Underperformance of the Fund’s investments in the Consumer Discretionary Fifteen Years 11.46% 11.64% 11.10% 9.65% Since Inception and Industrials sectors, coupled with higher exposure to the declining (June 12, 1987) 11.78% 11.87% 10.33%4 9.94% Financials and Real Estate sectors detracted the most from relative performance. Within Consumer Discretionary, underperformance of global During the quarter, the Fund’s investments in the Health Care and ski resort operator Vail Resorts, Inc. and online gambling company The Information Technology (IT) sectors, which jointly comprise approximately Stars Group Inc. hurt relative results. Vail’s shares fell late in the quarter half the Fund’s assets, contributed the most to relative results. Gains in after season pass sales growth came in modestly below Street expectations; Health Care were driven by the outperformance of DNA sequencing Stars Group was sold during the quarter. Weakness in Industrials was mainly platform Illumina, Inc., life sciences tools developer and manufacturer due to the underperformance of water heating equipment manufacturer Bio-Techne Corporation, and veterinary diagnostics leader IDEXX A. O. Smith Corporation and real estate information and marketing Laboratories, Inc. Strength in IT was driven by the outperformance of services company CoStar Group, Inc.

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of September 30, 2017 was 1.31% and 1.04%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. 1 The indexes are unmanaged. The Russell Midcap® Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 4 For the period June 30, 1987 to September 30, 2018. 5 Not annualized. * As of 9/30/2018, the Morningstar US Fund Mid-Cap Growth category consisted of 540, 483, and 540 share classes for the 3-year, 5-year, and overall ratings. Morningstar has awarded Baron Asset Fund Institutional Share Class 4 stars, 5 stars, and 5 stars for its 3-year, 5-year, and overall performance, respectively. The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange- traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five- year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

16 September 30, 2018 Baron Asset Fund

Table II. gained on the back of impressive quarterly results, which exceeded investor Top contributors to performance for the quarter ended September 30, 2018 expectations for revenues and profitability. Verisk’s insurance segment Year Percent demonstrated continued impressive growth, while the energy and financial Acquired Impact services segments both showed nice revenue improvement. We remain Gartner, Inc. 2007 1.14% positive about the company’s solid competitive position, and its prospects IDEXX Laboratories, Inc. 2006 1.01 for long-term growth and margin improvement. Illumina, Inc. 2012 0.80 Bio-Techne Corporation 2015 0.65 Table III. Verisk Analytics, Inc. 2009 0.48 Top detractors from performance for the quarter ended September 30, 2018 Year Percent Shares of Gartner, Inc., the largest provider of syndicated research on the IT Acquired Impact sector, contributed to performance. The integration of its approximate Zillow Group, Inc. 2015 –0.34% $3 billion acquisition of CEB, Inc., which provides research on best practices The Stars Group Inc. 2018 –0.21 to senior corporate executives across many industries, is proceeding ahead MarketAxess Holdings Inc. 2016 –0.12 of schedule. We believe that Gartner has wisely increased its investment The Charles Schwab Corp. 1992 –0.11 into this new business to pursue a large, incremental revenue opportunity. CBRE Group, Inc. 2005 –0.11 We believe that the company’s recent results indicate continued, positive returns from this initiative, as both sales productivity and client retention Zillow Group, Inc. operates the leading online residential real estate rates improved at CEB. We expect this acquisition to drive accelerated information websites in the U.S., offering information on homes for sale and revenue growth for Gartner over the medium term. Separately, we believe rent through the well-known Zillow and Trulia brands. Shares fell after the that key forward-looking metrics in Gartner’s core IT research business company reported a lower revenue and profitability outlook for 2018. continue to be solid, with research contract value growth and sales Although we were disappointed by the company’s reduced near-term productivity both improving. guidance, we believe that Zillow remains in the early stages of penetrating a large and growing market for online real estate advertising. IDEXX Laboratories, Inc., the leading player in the market for veterinary diagnostics, extended its gains for the year. The company’s second quarter The Stars Group Inc. is a leading company in online sports wagering and results again exceeded Wall Street’s expectations, with 12% organic revenue poker, with a particular strength in Europe and Australia. In addition, the growth. This led management to raise its estimates for revenue and earnings company is in the process of acquiring Skybet, the leading online wagering growth again for the full year 2018. Placements of the company’s flagship platform in the United Kingdom. The company’s shares fell meaningfully Catalyst instruments into veterinary offices continued to track at impressive after reporting disappointing quarterly results, and this was likely rates. This is a key metric because these instrument placements result in exacerbated by investors’ reducing their exposure to gaming shares globally. ongoing sales of highly profitable reagents to these same customers. In We reassessed our long-term investment thesis, and we decided to exit our addition, IDEXX’s domestic reference laboratory segment continued to grow position during the quarter. at approximately twice the rate of its largest competitor. The company’s MarketAxess Holdings Inc. operates the leading electronic platform for operating margins improved, and we believe there is meaningful room for trading corporate and sovereign bonds. We believe the company reported continued margin expansion over the next several years. good quarterly results, highlighted by core trading volume growth that Illumina, Inc. is the leading provider of next generation DNA sequencing increased 17%, relative to largely flat growth in its markets. Nevertheless, the instruments and consumables. Its shares rose after the company reported stock continued to underperform because of concerns that competitors might financial results that exceeded investor expectations, driven by strong enter its market. We remain confident about the company’s competitive growth of the high-margin consumables used in its sequencing instruments. position, and we continue to believe MarketAxess will be the prime beneficiary We believe that Illumina continues to have a meaningful runway for growth, of the secular shift to electronic trading in the corporate bond market. driven partly by the increased adoption of DNA sequencing in clinical Shares of brokerage firm The Charles Schwab Corp. declined during the applications, such as cancer diagnosis and treatment. quarter. Several competitors reduced their fees for securities trading, and it Bio-Techne Corporation is one of the world’s leading suppliers of proteins, is expected that Schwab will follow suit. Despite certain industry headwinds, antibodies and test kits to the life sciences research community. Shares we believe Schwab will continue to gain market share, expand the breadth gained after the company reported strong quarterly results, highlighted by of its product offerings, and increase its profitability. 9% organic revenue growth. In addition, Bio-Techne recently acquired CBRE Group, Inc. is the world’s largest commercial real estate services and Exosome Diagnostics, which has a non-invasive liquid biopsy test to help investment firm. The stock’s underperformance was in line with the broader physicians determine whether a prostate biopsy is necessary in patients with underperformance of the real estate sector, driven by concerns that rising ambiguous screening results. We believe that this transaction has the interest rates will pose a headwind to certain of CBRE’s business lines. We potential to become a meaningful growth driver for Bio-Techne. believe CBRE’s less cyclical business mix and its modest financial leverage Verisk Analytics, Inc. is a data and analytics vendor with an important position the company well for various economic environments, and we presence in the insurance, financial services, and energy markets. Its shares remain optimistic about our investment.

17 Baron Asset Fund

Portfolio Structure The Fund initiated a position in IAC/InterActiveCorp. Established by well- known businessman Barry Diller, IAC is a holding company with substantial At September 30, 2018, Baron Asset Fund held 58 positions. The Fund’s 10 stakes in two public internet companies, Match Group, Inc. and ANGI largest holdings represented 41.2% of assets, and the 20 largest represented Homeservices, Inc., as well as full ownership of many private operating 62.4% of assets. The Fund’s largest weighting was in the IT sector at 25.2% companies. of assets. This sector includes software companies, IT consulting firms, internet services companies, and data processing firms. The Fund held Match Group is the leading player in the online dating market, operating 24.2% of its assets in the Health Care sector, which includes investments in various websites that include Tinder, Hinge, and Match. An estimated 60% life sciences companies, and health care equipment, supplies, and share of all dates originating online occur on one of the company’s sites. We technology companies. The Fund held 17.4% of its assets in the Industrials believe that Match’s dominant market share affords the company important sector, which includes investments in research and consulting companies, network effects that should enhance its ability to grow the number of users, industrial conglomerates, and machinery companies. The Fund also had their engagement level, and the amount they pay to Match. Tinder is the significant weightings in Financials at 12.1% of assets and Consumer company’s largest brand with approximately 50 million users. Fewer than Discretionary at 10.7% of assets. four million of those users pay for the service, at an average rate of less than $15 per month. We believe there remains a large opportunity for Tinder to Table IV. increase these key metrics, as a result of the ongoing global, secular Top 10 holdings as of September 30, 2018 migration to online dating coupled with new site features and pricing plans. Market Quarter ANGI Homeservices was formed through the merger of IAC’s HomeAdvisor Cap End business and Angie’s List. The combined company is the market leader in When Market Percent Year Acquired Cap Amount of Net pairing homeowners with various service providers, such as plumbers and Acquired (billions) (billions) (millions) Assets electricians. Only a small portion (estimated at less than 5%) of this very IDEXX Laboratories, Inc. 2006 $2.5 $21.6 $243.8 6.7% large market (estimated at $400 billion) has migrated online. We believe Gartner, Inc. 2007 2.9 14.4 243.8 6.7 there is a long runway for growth, driven by a secular migration in Vail Resorts, Inc. 1997 0.2 11.1 175.5 4.8 consumers’ interest in using online searches to locate these types of service Verisk Analytics, Inc. 2009 4.0 19.9 149.5 4.1 vendors. Similar to our view of Match, we believe that ANGI is well Mettler-Toledo positioned to benefit from the network effects that benefit leaders in online International, Inc. 2008 2.4 15.4 142.6 3.9 marketplaces–growing demand on one side of this market should lead to Guidewire Software, Inc. 2013 2.8 8.1 127.4 3.5 growing willingness of providers to participate in the market. Illumina, Inc. 2012 5.3 54.0 111.1 3.0 IAC also owns and operates more than 100 internet-related companies, The Charles Schwab Corp. 1992 1.0 66.4 104.5 2.9 which collectively generate more than $1 billion in annual revenue. Its most Verisign, Inc. 2013 7.1 19.5 102.0 2.8 prominent holding is Vimeo, a leading software subscription service for ANSYS, Inc. 2009 2.3 15.7 101.9 2.8 video creators with nearly one million users. The value of IAC’s stakes in its two publicly-traded holdings is worth more than the entire value of IAC, Recent Activity which implies that the stock market is assigning negative value to Vimeo and the many other companies that IAC operates. We believe that this During the past quarter, the Fund established two new positions and added unusual discount afforded us the opportunity to purchase stakes in two to six others. The Fund eliminated two positions and reduced its holdings in exciting companies, Match and ANGI, while also getting ownership stakes in eight others. IAC’s other assets for less than nothing.

Table V. Table VI. Top net purchases for the quarter ended September 30, 2018 Top net sales for the quarter ended September 30, 2018 Quarter End Amount Amount Market Cap Purchased Sold (billions) (millions) (millions) IAC/InterActiveCorp $18.0 $19.4 IDEXX Laboratories, Inc. $22.3 Ceridian HCM Holding Inc. 5.8 11.1 Waters Corporation 8.4 TransUnion 13.6 7.3 The Stars Group Inc. 6.8 Teleflex Incorporated 12.2 5.3 Willis Towers Watson Public Limited Company 6.7 Liberty Broadband Corporation 15.3 4.8 Illumina, Inc. 6.0

18 September 30, 2018 Baron Asset Fund

We reduced our holdings in veterinary diagnostic firm IDEXX Laboratories, We believe that our portfolio of well-managed, competitively advantaged, Inc. and DNA sequencing firm Illumina, Inc., two of our largest positions, fast growing companies will continue to perform well, although we cannot after both stocks reached new highs during the quarter. We reduced our guarantee that they will. We continue to believe that high-quality, mid-sized holdings in Waters Corporation, a leading manufacturer of liquid growth stocks represent a compelling long-term investment opportunity. chromatography devices, over concerns about its long-term competitive During the past 15-, 20- and 30-year periods, mid-cap growth stocks, as a position. We sold our position in The Stars Group Inc., an online wagering category, have outperformed small-cap and large-cap growth stocks. company, as we grew concerned about the long-term growth trends in its markets. We reduced our holdings of insurance brokerage and consulting However, mid-caps have underperformed both these asset classes during the firm Willis Towers Watson Public Limited Company after the company past 3-year period. We are optimistic that this trend will reverse, presenting reported modestly disappointing revenue growth. an attractive opportunity for the mid-cap growth asset class in the future.

Outlook Sincerely, Despite the ongoing stock market volatility at the date of this letter, we remain optimistic about the prospects for U.S. equities. The economy remains robust, and we believe that the outlook for continued strength in corporate earnings remains solid. U.S. unemployment is quite low, most leading economic indicators remain positive, and we believe that inflation fears may be overblown. Although the market has begun to focus on the Andrew Peck implications of rising long-term interest rates, we believe that equities can Portfolio Manager continue to perform well in this environment. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in mid-sized companies, but there also may be more risk. Specific risks associated with investing in mid-sized companies include that the securities may be thinly traded and they may be more difficult to sell during market downturns. Even though the Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund’s returns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Asset Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

19 Baron Growth Fund

Dear Baron Growth Fund Shareholder: Performance

Baron Growth Fund (the “Fund”) rose 7.94% (Institutional Shares) during the quarter. This result exceeded the performance of its benchmark, the Russell 2000 Growth Index, which rose 5.52%. Domestic markets continued their rally, underpinned by strong macroeconomic conditions, robust earnings growth, and low interest rates. Growth stocks again outshined value stocks, while larger capitalization stocks surpassed smaller capitalization stocks after trailing in the first half of the year. The Fund has risen 19.47% year-to-date, which is 3.71% ahead of the benchmark, despite taking less risk. The Fund’s relative outperformance continued to be driven by favorable stock selection, which is the goal of our fundamentally driven investment philosophy. Table I. Performance Annualized for periods ended September 30, 2018 Baron Baron Growth Growth Russell RONALD BARON NEAL ROSENBERG Retail Shares: BGRFX Fund Fund 2000 S&P CEO AND LEAD CO-PORTFOLIO Institutional Shares: BGRIX Retail Institutional Growth 500 Shares1,2 Shares1,2,3 Index1 Index1 PORTFOLIO MANAGER MANAGER R6 Shares: BGRUX Three Months4 7.86% 7.94% 5.52% 7.71% Nine Months4 19.23% 19.47% 15.76% 10.56% One Year 25.55% 25.86% 21.06% 17.91% Three Years 17.62% 17.93% 17.98% 17.31% the quarter, as measured by average assets, and only five positions, Five Years 11.62% 11.90% 12.14% 13.95% representing 4.2% of average assets, declined by more than 10%. We Ten Years 12.40% 12.67% 12.65% 11.97% believe that this is an outgrowth of our preference for investing in what we Fifteen Years 10.93% 11.10% 10.61% 9.65% believe are high-quality businesses with sustainable competitive advantages Since Inception led by best-in-class management teams. All businesses can experience (December 31,1994) 13.46% 13.57% 8.54% 10.19% occasional short-term fluctuations in demand, vary the pace of their investments, mis-execute on discrete initiatives, or fall out of favor with During the third quarter, 23 positions, representing 41.8% of the portfolio’s investors. Any of these issues can cause stocks to decline. However, we average assets rose by more than 10%. Twelve positions, representing believe our investment process helps us avoid investing in businesses that 13.6% of the portfolio’s average assets, returned in excess of 20%. The presently have or are likely to develop structural flaws that permanently rationale for each stock’s move this quarter is unique, and we elaborate on impair value and weigh meaningfully on portfolio returns. some of the positions below. All share a set of common characteristics, Baron Growth Fund purchases only small-cap companies. Since the Fund having large addressable markets, benefiting from favorable secular trends, holds its investments for the long term, the Fund has a significant enjoying high barriers to entry, and being run by, in our view, best-in-class percentage of assets invested in securities that have appreciated beyond management teams. We continue to expect these investments to generate their market capitalizations at the time of the Fund’s investment. Please see attractive long-term performance as their revenue and earnings compound Table VIII. Baron Growth Fund’s median market cap is $4.4 billion; its at above-market rates. weighted geometric average market cap is $7.6 billion. The Morningstar Performance also benefited from minimizing our exposure to stocks U.S. market breakpoints for small- and mid-cap funds are $3.7 billion and suffering meaningful declines. Just 19.1% of the portfolio declined during $18.6 billion, respectively, as of September 30, 2018.

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail shares and Institutional shares as of September 30, 2017 was 1.30% and 1.04%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 4 Not annualized.

20 September 30, 2018 Baron Growth Fund

Table II. Performance Based Characteristics as of September 30, 2018 Time Interval Millennium Internet Bubble Millennium Internet Bubble Inception to Financial Panic Financial Panic to Present to Present 12/31/1994 to 12/31/1999 to 12/31/2008 12/31/2008 to 9/30/2018 12/31/1999 to 9/30/2018 9/30/2018 Alpha (%) 5.05 3.42 5.32 7.21 Beta 0.58 0.76 0.65 0.68

Table III. Performance. Millennium to Present. The Impact of Not Losing Money. Millennium Internet Bubble Financial Panic to Millennium Internet Bubble Inception to Financial Panic Present to Present 12/31/1994 to 12/31/1999 to 12/31/2008 12/31/2008 to 9/30/2018 12/31/1999 to 9/30/2018 9/30/2018 Value Value Value Value $10,000 Cumulative $10,000 Cumulative $10,000 Cumulative $10,000 Cumulative Baron Growth Fund (Institutional Shares) $12,448 24.48% $44,610 346.10% $55,533 455.33% $205,419 1,954.19% Russell 2000 Growth Index $ 6,476 (35.24)% $45,371 353.71% $29,381 193.81% $ 70,084 600.84% S&P 500 Index $ 7,188 (28.12)% $39,666 296.66% $28,512 185.12% $100,111 901.11%

Baron Growth Fund has significantly outperformed its peers over the long term. A $10,000 investment in Baron Growth Fund at its inception would be worth $205,419 at September 30, 2018. This is approximately 2.9 times greater than the $70,084 value of the same investment made in the Fund’s benchmark, the Russell 2000 Growth Index. Those returns were achieved with over 30% less volatility than the benchmark, an attribute that we believe is underappreciated during periods of calm markets. Baron Growth Fund didn’t make much money from the peak of the Internet Bubble December 31, 1999 through the trough of the Financial Crisis December 31, 2008, but did generate positive returns. This is a much better outcome than the Russell 2000 Growth Index, our benchmark, or the S&P 500 Index, both of which declined during that period. (See Table III-Millennium Internet Bubble to Financial Panic.) The effects of compounding help to illustrate this difference. A $10,000 investment in Baron Growth Fund on December 31,1999 was worth $55,533 on September 30, 2018. That is 89.0% more than an investment in a passive Russell 2000 Growth Index mutual fund, and 94.8% more than a comparable investment in a S&P 500 Index fund (See Table III – Millennium Internet Bubble to Present). We are pleased that our long-term investments in what we believe are competitively advantaged growth companies with exceptional management teams help us to generate attractive returns in good markets, and help to protect on the downside during more challenging ones.

Table IV. company to begin the commercial roll out of its new Certus capabilities. We Top contributors to performance for the quarter ended September 30, 2018 expect Iridium to continue its growth with the U.S. Department of Defense, Market Quarter maritime, aviation, and Internet of Things channels. We expect cash flow Cap End generation to move materially higher as capex needs decline. When Market Year Acquired Cap Total Percent Shares of Gartner, Inc., a provider of syndicated research, contributed to Acquired (billions) (billions) Return Impact performance. We believe forward-looking metrics in Gartner’s traditional IT Iridium research business are strong, with contract value growing at a mid-teens Communications rate. Gartner recently introduced a seat-based product to heritage CEB Inc. 2014 $0.6 $ 2.5 39.89% 0.86% clients, and is generating traction in closing new customers with this Gartner, Inc. 2007 2.3 14.4 19.25 0.84 improved product. The company meaningfully expanded its sales force to Bio-Techne pursue this large incremental opportunity, and we expect to see heritage Corporation 2009 2.1 7.7 38.20 0.71 CEB growth accelerate from 2% into the mid-to-high teens over time. Primerica, Inc. 2010 1.1 5.2 21.29 0.61 IDEXX Shares of Bio-Techne Corporation, a developer and manufacturer of life Laboratories, sciences tools, contributed to performance. The company reported strong Inc. 2005 1.9 21.6 14.55 0.58 quarterly results highlighted by 9% organic revenue growth. In addition, Bio-Techne recently acquired Exosome Diagnostics, which developed a Shares of satellite company Iridium Communications Inc. rose on strong non-invasive liquid biopsy test to help physicians determine whether a quarterly results that beat investor expectations. Iridium has now launched prostate biopsy is necessary in patients with ambiguous screening results. 65 of the 75 NEXT satellites into orbit after a multi-year investment The transaction has the potential to become a meaningful growth driver for program. This significantly reduces execution risk and positions the the company, in our view.

21 Baron Growth Fund

Table V. (C&I) customers with high power reliability needs, and has outsized Top detractors from performance for the quarter ended September 30, 2018 representation in data centers and in health care facilities. Market Quarter Cap End We believe that Bloom serves a vast global addressable market. We consider When Market Bloom’s primary competitor to be the utility grid. Today, we estimate Year Acquired Cap Total Percent Bloom’s levelized cost of electricity (LCOE) to be approximately 13 cents/ Acquired (billions) (billions) Return Impact kwh, which makes it cost competitive in the 11 states and 3 countries in Red Rock Resorts, which it currently operates. This excludes indirect benefits from attributes Inc. 2016 $2.3 $3.1 –20.19% –0.29% such as superior reliability and lower environmental externalities. We Littelfuse, Inc. 2016 2.5 5.0 –13.11 –0.12 estimate that the C&I electricity market in this subset of markets is Douglas Emmett, $175 billion. Inc. 2009 1.0 6.4 –5.49 –0.12 2U, Inc. 2017 2.3 4.3 –10.10 –0.09 Bloom’s product costs have declined at a 29% annualized rate from 2015 to Neogen Corp. 2009 0.5 3.7 –10.80 –0.06 2017. Going forward, we expect system costs to continue to decline, driven by increased capacity, improvements in energy density, and reductions in Red Rock Resorts, Inc., a casino operator in the Las Vegas locals market, manufacturing costs. We expect unit cost declines to generate LCOE savings decreased in the quarter as investors worried about earnings as for end users, and facilitate greater adoption by new and existing customers. management indicated many locals were away on vacation this summer We expect demand to be amplified by consistent increases in grid costs and given the strong economy and a heat wave that affected Vegas for much of an increasing global focus on environmental sustainability. We expect the summer. We view the lower visitation as temporary and not a sign of a Bloom’s LCOE to drop below 9 cents/kwh over the next five years, while grid slowdown. The Vegas population continues to grow 2%-to-3% a year, costs will continue to rise. Ultimately, we expect Bloom to be cost wages continue to rise 2%-to-3% a year and housing prices are at record competitive with the majority of global C&I grid rates, allowing it to address levels. a vast $1.6 trillion market. Littelfuse, Inc. is one of the world’s leading suppliers of circuit protection Cision Ltd. is a leader in earned media automation, distribution, and products that are used in virtually every market that uses electrical energy. analytics. The company has a market-leading offering that includes The company underperformed in the quarter due to general macro concerns, proprietary data, broad distribution capabilities, workflow automation tools, including global automotive production volumes and uncertainty around and social listening capability that help increase efficiency and connectivity U.S.-China tariffs. We continue to hold Littelfuse because we believe that between news sources, reporters, and media influencers. We believe that the company maintains a strong competitive advantage, has a management Cision enjoys dominant market position, with a revenue base more than team that will create value over time through organic growth and three times larger than its nearest competitor, the world’s largest acquisition, and benefits from the attractive secular theme of electrification. proprietary media contact database, and the unique ability to offer customers both workflow automation and distribution capabilities. We Douglas Emmett, Inc. detracted from performance during the third quarter. expect Cision’s scale to allow it to continue to invest more than its Douglas Emmett is a REIT that owns a portfolio of high-quality office and competitors in product development. This should create a stronger platform, multi-family assets in Western Los Angeles and Honolulu. Underperformance enable new revenue opportunities in attribution and data, and ultimately was driven by a rise in the 10-year interest rate, which made Douglas allow Cision to address the $30 billion marketing automation market. Emmett’s dividend yield relatively less attractive. We retain conviction because Douglas Emmett owns a portfolio of high-quality assets that we Cision acquired market-leading distribution platform PR Newswire in believe are irreplaceable and underappreciated at the current stock price. mid-2016, and has spent the past two years integrating and re-platforming the businesses. We believe that Cision will now focus on cross-selling these Recent Purchases products, driving meaningful acceleration in organic growth. Cision has almost 75,000 customers, but only approximately 10% are using both This quarter the Fund initiated positions in Bloom Energy Corporation and automation and distribution. We expect the cross-sell opportunity to be Cision Ltd. supported by Cision’s recently launched C3 platform and new products such Bloom Energy Corporation designs, manufactures, and sells solid-oxide as IMPACT and Audiences. We believe that the new platform and products fuel cell systems. Bloom has developed a proprietary distributed on-site provide customers with functionality enhancements, tight integration, and electric power solution, branded the Bloom Energy Server, which delivers improved user experience. These attributes are likely to reduce customer highly reliable, uninterrupted power that is also clean and sustainable. churn rates and drive pricing power over time. Installing Bloom servers allows businesses to disconnect from the electric Cision has an attractive business model, akin to many of the software and grid, which is aging, unreliable, and vulnerable to weather outages and cyber information services investments held in the Fund. Attributes include attacks. Bloom’s fuel source is the natural gas infrastructure, which we accelerating organic growth, over 80% recurring revenue, and a well- estimate is almost 40 times more reliable than traditional electric diversified customer base. Margins are already in the low to mid 30% range, infrastructure. We believe that Bloom’s proprietary solid-oxide technology is and we expect to see them exceed 40% through cost synergies and natural significantly ahead of fuel cell competition with regard to system efficiency, operating leverage. We expect much of this EBITDA to convert to free cash costs, and the footprint. Unlike renewables such as wind and solar, Bloom flow, which management can use to do M&A, reduce debt, and ultimately can deliver “baseload” power on a 24/7 basis, and can be deployed in a return to shareholders. space-efficient and modular manner. As a result, Bloom has garnered significant market share among early adopting commercial and industrial Cision is led by CEO Kevin Akeroyd, who joined the company after creating and leading the Oracle Marketing Cloud, a multi-billion dollar platform. He

22 September 30, 2018 Baron Growth Fund

joins Jack Pearlstein, an experienced public markets CFO with whom we Table VII. have successfully invested in the past. We believe that Kevin’s experience Top performing stocks owned less than five years and relationships at Oracle will be extremely valuable in helping him craft Cumulative and execute his vision for Cision. Total Return Year of Since First Date First Purchase of Purchase Portfolio Structure And Investment Strategy Trex Company, Inc. 2014 332.9% The Fund seeks to invest in businesses that have attractive and durable Iridium Communications Inc. 2014 210.8 fundamental characteristics. We look for companies that we believe have Wix.com Ltd. 2016 155.2 large addressable markets, are driven by positive secular trends, and are Moelis & Company 2015 152.7 benefiting from high and growing barriers to entry. We favor business Kinsale Capital Group, Inc. 2016 137.5 models that have high levels of recurring revenue, generate attractive Altair Engineering Inc. 2017 137.3 incremental margins, and have strong free cash flow conversion. We Ollie’s Bargain Outlet Holdings, Inc. 2017 107.1 exclusively invest with management teams that we consider to be We exclusively purchase small-capitalization companies that we think can best-in-class, who have incentives that are aligned with ours and operate double in size in a four- or five-year period. Investments held for less than their companies with the goal of driving long-term shareholder value. The five years include 21 stocks that account for 16.4% of the portfolio. As a portfolio managers define “best-in-class” as well-managed, competitively group, they have earned an annualized return of 33.7% and exceeded our advantaged, faster growing companies with higher margins and returns on benchmark by 17.3% annualized. Eleven of these investments have achieved invested capital that are leaders in their respective markets. Note that this annualized returns that exceeded our benchmark by more than 10%, and statement represents the managers’ opinion and is not based on a third- eight have achieved annualized returns that exceeded our benchmark by party ranking. When we identify businesses that meet our investment more than 20%. criteria, we seek to buy them at attractive prices relative to their long-term potential. Frequently, these opportunities arise when a management team Portfolio Holdings elects to penalize current earnings with expenditures in pursuit of longer- term growth. As a result, the Fund has been able to invest in high-quality As of September 30, 2018, Baron Growth Fund held 58 investments. The top businesses at what we believe were unusually attractive prices. 10 holdings represented 46.8% of the Fund’s net assets. All these top 10 The Fund tends to hold investments for the long term. As of September 30, investments have grown dramatically since they were purchased when they over 82% of the portfolio had been held for more than 5 years, and were smaller businesses. We believe they all continue to offer significant approximately 47% had been held for more than 10 years. This is further appreciation potential, although we cannot guarantee that will be dramatically longer than most other small-cap growth funds, who turn over the case. We believe the Fund’s diversified portfolio offers investors about 70% of their portfolios annually, according to Morningstar. We view potentially better-than-market returns with less risk than the market. Note this long-term perspective as a source of our competitive advantage and a that diversification cannot guarantee a profit or protect against loss. key driver of returns over time. Table VIII. Table VI. Top 10 holdings as of September 30, 2018 Top performing stocks owned more than five years Market Quarter Cumulative Cap End Total Return When Market Percent Year of Since First Date Year Acquired Cap Amount of Net First Purchase of Purchase Acquired (billions) (billions) (millions) Assets Choice Hotels International, Inc. 1996 2,250.4% Vail Resorts, Inc. 1997 $0.2 $11.1 $576.3 8.2% IDEXX Laboratories, Inc. 2005 1,634.7 CoStar Group, Inc. 2004 0.7 15.3 366.1 5.2 Vail Resorts, Inc. 1997 1,481.9 Gartner, Inc. 2007 2.3 14.4 356.6 5.1 CoStar Group, Inc. 2004 951.0 MSCI, Inc. 2007 1.8 15.8 322.0 4.6 Arch Capital Group Ltd. 2002 942.7 Arch Capital Group Alexander’s, Inc. 1999 767.2 Ltd. 2002 0.4 12.1 313.5 4.5 Mettler-Toledo International, Inc. 2008 744.2 IDEXX Laboratories, Inc. 2005 1.9 21.6 299.6 4.3 Baron Growth Fund owns stock in 36 businesses that it has owned for more ANSYS, Inc. 2009 2.3 15.7 280.0 4.0 than five years. These investments represent 82.4% of the Fund’s assets and FactSet Research have earned an annualized rate of return of 17.8% since they were Systems, Inc. 2006 2.5 8.6 279.6 4.0 purchased. This exceeds the performance of the Fund’s benchmark by 4.9% Choice Hotels per year. Most Fund investments that have been held for more than five International, Inc. 1996 0.4 4.7 249.9 3.6 years have realized approximately four- to seven-fold appreciation so far, Primerica, Inc. 2010 1.1 5.2 229.0 3.3 and seven have achieved returns in excess of eight times since their initial purchase. In addition, 7 of the 36 investments have achieved annualized Thank you for joining us as fellow shareholders in Baron Growth Fund. We returns that exceed their benchmark by more than 10%. believe the growth prospects for the businesses in which Baron Growth Fund has invested continue to be favorable.

23 Baron Growth Fund

We continue to work hard to justify your confidence and trust in our stewardship of your family’s hard-earned savings. We will also continue to provide you with information that we would like to have if our roles were reversed. This is so you will be able to make an informed judgment about whether Baron Growth Fund remains an appropriate and attractive investment for your family.

Respectfully,

Ronald Baron Neal Rosenberg CEO and Lead Portfolio Manager Co-Portfolio Manager November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in smaller companies, but there also may be more risk. Specific risks associated with investing in smaller companies include that the securities may be thinly traded and they may be more difficult to sell during market downturns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation. Alpha: measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. Beta: measures a fund’s sensitivity to market movements. The beta of the market (Russell 2000 Growth Index) is 1.00 by definition.

24 September 30, 2018 Baron Small Cap Fund

Dear Baron Small Cap Fund Shareholder: Performance

Baron Small Cap Fund (the “Fund”) had a very good third quarter, gaining 8.71% (Institutional Shares). For the first three quarters of 2018, the Fund is up 19.08%. The Fund outpaced the Russell 2000 Growth Index (the “Index”) by 3.19% for the quarter and by 3.32% year-to-date. The Fund is also outperforming the broader S&P 500 Index for the quarter and year-to-date.

Table I. Performance Annualized for periods ended September 30, 2018 Baron Baron Small Cap Small Cap Russell Fund Fund 2000 S&P Retail Institutional Growth 500 Shares1,2 Shares1,2,3 Index1 Index1 4 Three Months 8.65% 8.71% 5.52% 7.71% CLIFF GREENBERG Retail Shares: BSCFX 4 Nine Months 18.84% 19.08% 15.76% 10.56% Institutional Shares: BSFIX One Year 25.00% 25.33% 21.06% 17.91% PORTFOLIO MANAGER R6 Shares: BSCUX Three Years 20.00% 20.32% 17.98% 17.31% Five Years 11.98% 12.28% 12.14% 13.95% Ten Years 12.53% 12.80% 12.65% 11.97% The market was led by growth stocks, with Information Technology (IT), Fifteen Years 10.62% 10.79% 10.61% 9.65% Health Care, and Communication Services the sector leaders, as has been Since Inception the case for most of the year. Larger-cap stocks outperformed smaller (September 30, 1997) 10.58% 10.71% 6.70% 7.50% companies this quarter. High-quality companies and businesses with lower The market had its best quarter of the year, was consistently strong volatility of earnings did better–these are factors that we emphasize. throughout, and made new highs. Economic growth accelerated. Corporate Our stock selection has driven our strong absolute and relative performance. earnings continued to grow rapidly. Inflation remained in check, and bond Our higher exposure to IT stocks helped, and the performance of our yields have risen just modestly. Though trade tensions continue, and the particular holdings far surpassed those of the sector. Our Health Care and tough rhetoric escalated with China, new agreements were signed with Industrials holdings also rose nicely. Our Consumer Discretionary and Mexico and Canada. These concerns, and the tense political atmosphere, Materials stocks were weak and did poorly on a relative basis, but that was took a back seat to the strong economy and corporate performance. more than offset by strength elsewhere in the portfolio. Our stocks were Second quarter GDP grew 4.2%, a significant increase from the pace of the mostly strong across the board. There were some key positions that were long recovery. The jobs reports remained strong and unemployment fell to real standouts and drove our results. 3.7%, near historic lows. Household spending drove the increase in the quarter’s growth rate and business fixed investment picked up as well. Corporate earnings are running ahead at an impressive 20%.

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of September 30, 2017 was 1.31% and 1.05%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 4 Not annualized.

25 Baron Small Cap Fund

Table II. Other stocks that rose over 20% in the quarter but added less to our Top contributors to performance for the quarter ended September 30, 2018 absolute performance were: The Ultimate Software Group, Inc., John Percent Bean Technologies Corporation, HealthEquity, Inc., Cognex Corp., Impact Mercury Systems, Inc., Aspen Technology, Inc., Dexcom, Inc., Hudson The Trade Desk 1.09% Ltd., Altair Engineering Inc., Wingstop Inc., Planet Fitness, Inc., Ceridan Teladoc Health, Inc. 1.08 HCM Holding Inc., BJ’s Restaurants, Inc., and Ollie’s Bargain Outlet Acxiom Corporation 0.86 Holdings, Inc. Gartner, Inc. 0.80 The Ultimate Software Group, Inc. 0.58 Table III. The Trade Desk is the leading internet advertising demand side platform, Top detractors from performance for the quarter ended September 30, 2018 enabling advertising agencies to buy digital advertising most effectively. Percent Trade Desk reported another tremendous quarter, growing top line by 54% Impact with EBITDA margins of 33%, despite investing in new initiatives. The stock Floor & Decor Holdings, Inc. –0.67% was the top contributor to the Fund for the second quarter in a row. We Shutterfly, Inc. –0.57 continue to be bullish on the situation, betting on the leader in the large Installed Building Products, Inc. –0.48 addressable market that is transitioning to programmatic ad buying, that Summit Materials, Inc. –0.47 inventory will grow through entrance into new channels like TV and Audio, Red Rock Resorts, Inc. –0.36 and that international expansion will remain robust. We recently previewed the company’s upgraded product offering, which includes elements of Floor & Decor Holdings, Inc., the leading retailer of hard-surface flooring, intelligence, and came away very impressed. fell in the quarter after the company reported same-store-sales that missed Teladoc Health, Inc. is the largest global provider of telehealth services. The Street expectations. The company has had nine and a half years of double- company reported a strong quarter, with revenue growing 112% (39% digit comps (amazing!), and comps were up over 11% in the quarter that organically), fueled by a 48% increase in membership and an acceleration in just ended. But they are expected to moderate in the future. We viewed this the utilization of services. The integration of Advanced Medical, the leader in as inevitable. Weighing more heavily on the stock are trade concerns, as the telemedicine outside the U.S., is ahead of schedule and adding to the company sources almost half its product from China and several of its company’s competitive moat and opportunity. The Teladoc platform now categories are on the list of items affected by the latest tariffs. We think has a broad set of clinical capabilities, a global reach, and improved user that all companies in the industry will be similarly affected and Floor & interface for easy engagement. The company has announced notable wins Decor will be able to negotiate lower prices with its suppliers and pass on of new corporate and insurance clients, and an interesting partnership with some of the increases to customers. We understand the market’s concern CVS for retail access. Government plans will start to include telehealth about the tariffs and the slowing housing market; however, we believe benefits beginning in 2020, which we think will be a big tailwind. strongly in the long-term potential of this chain, its differentiated business model, its innovative product offerings and in-stock inventory, and the Acxiom Corporation is a leading marketing data company, in which we compelling value of its products that appeals to both consumers and have been invested for five years. During the quarter, Acxiom entered into installation pros. We added to our position during the quarter. an agreement to sell its legacy marketing services business for $2.3 billion, which exceeded Street expectations, completing the company’s multi-year Shutterfly, Inc., the premier online provider of photo prints and related program to transform its business and unlock value for shareholders. products declined in the quarter as the company reduced its growth LiveRamp Holdings, Inc., the surviving entity, is a pure play high-growth expectations for later in the year. We got involved as we gained confidence marketing cloud software company which provides the infrastructure to that new management would be able to turn around its base consumer enable digital marketing to individuals. We are very excited about its business and utilize its printing capacity to build a commercial printing prospects, as it is benefiting from similar digital ad tech trends as is Trade operation and believe there is much to gain in these efforts. We are also Desk. We believe LiveRamp can sustain strong organic growth and grow to excited about the company’s acquisition of Lifetouch, the leader in school $1 billion in revenues in five years, up four-fold from present, and be a photography, that would benefit from digitization. We believe the stock is strong stock and possible acquisition target. cheap on our estimates of near-term free cash flow, and we think there is Shares of Gartner, Inc., the provider of syndicated research, rose in the considerable growth ahead…so we added to this stock on weakness as well. quarter on the recognition of the management’s progress in turning around the large acquisition of CEB. Organic growth of that business actually Installed Building Products, Inc., an installer of fiberglass insulation and decelerated somewhat in the second quarter and the stock initially traded complementary products, fell as results disappointed. Margins are now lower. However, management explained that was temporary and expressed negatively affected as there is a lag between the higher cost of raw their increased confidence that growth will accelerate rather significantly. materials that they are experiencing and when they will pass these costs on Gartner is seeing nice traction with its new product upgrades, with the to builders. The company believes this will ultimately be a positive and conversion of its offering to a seat-based sale, and with the expansion of its additive to the margins. Another issue is that a large commercial building sales force for these channels. We think long term that revenues to the products installation business that they acquired is ramping slower than corporate functions served by former CEB products can increase almost hoped and is a drag on earnings. Moreover, there is the slowdown in the 10-fold. Trends in the company’s legacy IT research (pacing ahead at a residential housing industry. We continue to like the situation very much for mid-teens rate) and events business are solid. And the company is back in the long term. We think management is superb and will continue to build a the market repurchasing its stock, having sufficiently de-levered after the big differentiated business that can grow fast both organically and through acquisition and in front of expected significant free cash flow generation. acquisition, and can be multiple times bigger down the road.

26 September 30, 2018 Baron Small Cap Fund

Summit Materials, Inc., a U.S.-based manufacturer of construction have explained in detail in the past. We are about equal weight in the materials such as aggregates, cement, and concrete, missed consensus and Industrials and Consumer Discretionary sectors, the two other sectors with the stock got beat up. Cement margins were lower, hurt by a competitor significant weights in the Fund and the Index. who cut price. Operational challenges related to hurricane disruptions and higher transportation costs will weigh on future results. Sentiment is now We are long-term investors in small growth companies. Many of our negative toward levered building products companies in light of increasing holdings have been “big winners” for the Fund. As of September 30, we have interest rates. We expect results to improve and believe the stock is cheap, made over five times their first purchase on holdings that make up 33% of though we think the company will be less acquisitive go forward since deals our assets. In addition, we have made at least a double on other stocks that will be less accretive with the stock out of favor. make up 34% of the Fund. So, two thirds of the net assets are represented by stocks that have more than doubled since their first purchase. Since their Other stocks that fell 20% or more in the quarter include: Red Rocks first purchase, we have made strong average annualized returns on these Resorts, Inc. and Avalara, Inc. holdings of 32.1% for the former and 51.2% on the latter, which in our minds, confirms the success of our approach and gives us confidence to Portfolio Structure pursue this strategy into the future.

As of September 30, 2018, the Fund had $4.7 billion under management. Looking at the growth characteristics of our holdings at the start of the The top 10 positions represented 31.0% of the Fund. At the end of the quarter, this is what we find: quarter, we owned 70 stocks. • Year-to-date, based on the weighted averages of our positions, the revenues of our holdings have increased 13.7% organically, and 20.3% Table IV. in total revenues including acquisitions. Top 10 holdings as of September 30, 2018 • Year-to-date, EBITDA has increased 25.4%. EBIT margins are 18.6%, Quarter End and EBITDA margins are 25.1%. Investment Percent • Our stocks trade at 27.6 times 2018 EPS and 15.6 times 2019 EPS; 22.9 Year Value of Net Acquired (millions) Assets times 2018 EBITDA and 19.3 times 2019 EBITDA. • In our opinion, strong growth, high margins, high valuations, but Gartner, Inc. 2007 $221.9 4.7% deservedly so. Guidewire Software, Inc. 2012 176.8 3.8 IDEXX Laboratories, Inc. 2008 143.6 3.1 Comparing this to two years ago, when we last did this overall growth and Teladoc Health, Inc. 2017 142.5 3.0 valuation work…our holdings are growing revenues faster organically (13.7% Waste Connections, Inc. 2016 131.6 2.8 versus 9.6%) and EBITDA faster (25.4% versus 20.2%), and stocks are more TransDigm Group, Inc. 2006 130.3 2.8 highly valued (19.3 times vs 15.4 times). The reason for the higher growth ASGN Incorporated 2012 130.2 2.8 metrics and valuations is the strong performance of our companies over the The Ultimate Software Group, Inc. 2008 128.9 2.8 last few years, and the modest shift to a higher IT weighting in the portfolio. The Trade Desk 2017 124.5 2.7 ICON plc 2013 119.2 2.5 Recent Activity

The Fund’s heaviest sector concentration is in IT. This is where we are We were not so active this quarter, which often happens after nice runs in finding the most exciting growth companies, and they are up as a the market with stock valuations increasing. We bought two new names and percentage of the portfolio as these stocks have gained the most. The we added to eight existing positions. comparison of our IT concentration to that of the Index looks more extreme this quarter as a result of the reclassification of the GICS IT sector, which We sold out of 3 holdings and trimmed 16 positions. transferred some of the Russell 2000 Growth stocks to other sectors, but not ours. We didn’t change our holdings much. Table V. Top net purchases for the quarter ended September 30, 2018 We are not worried by this variance since we often view these industry Quarter End Amount characterizations as somewhat arbitrary, and since technology is affecting Year Market Cap Purchased almost all successful businesses these days. Though we own many Acquired (billions) (millions) “application software” businesses, they serve different and varied end Floor & Decor Holdings, Inc. 2017 $2.9 $20.5 markets, so we believe they are less correlated than they appear. For Americold Realty Trust 2018 3.7 18.2 instance, The Ultimate Software Group, Inc. and Ceridian HCM Holding Inc. Shutterfly, Inc. 2017 2.2 12.8 are SaaS platform providers to the human capital management industry; The Sun Hydraulics Corporation 2018 1.7 9.9 Trade Desk and Cision Ltd. are involved in media and advertising; Aspen Ingevity Corporation 2018 4.3 9.8 Technology, Inc. serves process engineering markets; 2U, Inc. the higher education market; Guidewire Software, Inc. the property and casualty We have followed Ingevity Corporation (“NGVT”) since its spin-off from insurance industry...and their fates will be affected by how these companies WestRock in 2016. We recently initiated our position after building are transforming those particular industries. conviction that the company can meet or beat its $500 million long-term EBITDA target (from $243 million in 2017). The Fund is underweight Health Care, as always. Biotechnology and pharmaceutical stocks make up over 15% of the Index, and we have NGVT has been making carbon since 1914 and has a dominant position in minimal exposure. We favor more established businesses to invest in, as we serving the adoption of gasoline evaporative emissions control in vehicles.

27 Baron Small Cap Fund

While tailpipe emissions are well understood and regulated around the Table VI. world, evaporative emissions are less visible (from the gas tank), and less Top net sales for the quarter ended September 30, 2018 regulated. The Performance Materials segment represents approximately Quarter End half the company’s profits, and as environmental standards drive stricter Market Cap Market Cap or When Market Cap Amount regulations globally, NGVT stands to meaningfully benefit. NGVT’s granular Year Acquired When Sold Sold and pellet carbon products are the preferred choice (and patent protected Acquired (billions) (billions) (millions) through 2022) to meet these regulatory standards. We believe NGVT has GCP Applied market shares approaching 90% globally! Adherence to the “China 6” Technologies Inc. 2017 $2.1 $ 1.8 $32.3 standard kicks in nationally on July 1, 2020, but many provinces have IDEXX Laboratories, Inc. 2008 2.0 21.6 24.4 declared early adoption, with approximately 60% of light vehicles expected TransDigm Group, Inc. 2006 1.1 19.6 18.6 by July 1, 2019. For NGVT, this means that its content will jump from $1 to Qualys, Inc. 2017 1.3 3.5 17.6 $6 on approximately 25 million vehicles, with close to 40% EBITDA margins HealthEquity, Inc. 2014 0.9 5.9 13.9 attached to that revenue growth. The U.S. is ramping up its standards to a ‘Near Zero’ system as well, with 80% of vehicles expected to be compliant We exited our position in GCP Applied Technologies Inc., determining that by 2020, and 100% by 2022. U.S. auto OEMs will need $15 to $20 of the business was subscale, not for sale, and would not be able to withstand NGVT’s control technology, up from $6 to $8 previously. Given these challenges with higher raw materials costs and disadvantaged foreign tailwinds, we estimate this segment can grow its EBITDA from $142 million exchange rates. We sold the remainder of our position in Beacon Roofing in 2017 to $280 million by 2022. Beyond China and the U.S., half the Supply, Inc., disappointed with the pace of organic growth and concerned world’s vehicles, including those in Mexico and Brazil, would still be about the macro environment for building products. operating on antiquated emissions providing further runway for growth. We trimmed some of our larger positions into strength, as is our normal NGVT’s Performance Chemical division takes by-products of the Kraft practice. The largest sales were in IDEXX Laboratories, Inc., TransDigm pulping process and crude tall oil to make specialty chemicals, such as Group, Inc., Qualys, Inc., HealthEquity, Inc., Waste Connections, Inc., and asphalt additives for roads and pavement and emulsion stabilization and FleetCor Technologies, Inc. All of these have been great stocks for the Fund, corrosion inhibiting chemicals for oil fields. We believe its acquisition of but near-term valuations are extended, and the market caps are high. We Georgia Pacific’s (“GP”) pine chemicals business ($310 million purchase will use the proceeds from these sales to purchase or add to smaller fresher price), which closed in March 2018, was an important catalyst to improve investments that hopefully will become our next big winners. segment EBITDA margins from approximately 20% this year to mid-20% over time. NVGT can improve GP’s EBITDA from $31 million to $45 million Outlook via optimized customer and product mix across a three-plant network, Since the end of the quarter, interest rates have risen, and stocks have fallen. improved yield and operating rates (GP’s plant was only 20% utilized), and The correction has been sudden and dramatic. IT, Health Care and growth rapid logistics savings. As important, NVGT secures a key raw material under stocks, which have been the market leaders are now market laggards….as a favorable 20-year supply contract. With limited customer overlap, GP the best become the worst, as is often the case in big sell-offs. Small caps, enables cross-selling opportunities to grow the top-line to complement which have been strong all year because these businesses are more tailwinds from a recovery in the energy markets. We expect an incremental domestically focused and are benefiting from the strong growth in the U.S., $75 million of EBITDA in this division over the next four years. are now out of favor. The volatility of these stocks is now a source of We now see a clearer path of EBITDA growing from approximately concern. Value is favored over growth, reversing the trends of the last few $310 million this year to $500 million EBITDA in four years. During that years. time, NGVT will generate close to $900 million of FCF (25% of market cap) Why have interest rates risen? First, because economic growth is strong and as its CAPX requirements should remain stable. On that basis, we feel like accelerating, and higher rates might be necessary to prevent overheating. we are buying a high ROIC, high margin (30% EBITDA), strong FCF business, Second, because tight labor markets might cause inflation. And third, with low leverage at under seven times EBITDA. We believe NGVT can because trade tensions and tariffs could result in inflation as higher prices sustain a high multiple (currently 13.6 times ‘18 EBITDA) given its market work their way through supply chains. leading positions, financial profile, and management’s ability to pursue further M&A opportunities or return capital to shareholders. At a low Our sense is that economic growth will likely moderate. Many companies double-digit EBITDA multiple on 2022 estimates, we see a $130-to-$140 are reflecting this as they report third quarter earnings. We are seeing a stock, generating a nice return from current levels. slowdown in certain interest rate sensitive sectors, such as housing and

28 September 30, 2018 Baron Small Cap Fund

lending. Industrial companies are highlighting concerns about disruption of great value over the long term, to now being more reasonable on 2019 caused by tariffs, of rising input and distribution costs, and the increase in estimates. We believe the bulk of our holdings deserve premium valuations the dollar, which is clouding the outlook of near-term earnings. Earnings because of their impregnable market positions, proven growth records, and have not been at risk for some time, but now they are in some instances. By major long-term opportunities. The market has recognized this over the last the way, if economic growth does slow, it would take some of the pressure couple of years, and we expect that to return when the market regains its off rising rates and help the market. footing.

We view the economy to be in good shape, and not so strong to stoke We believe that investing in high-quality growth companies will provide negative consequences. We believe that the modest increase in rates and solid returns, as always. inflation that we anticipate can easily be absorbed by the economy and our For now, we believe that the fundamentals are being overwhelmed by portfolio companies. We expect continued growth in the future and don’t technicals, geopolitics, and fear. We will stay focused on our process and our see a recession in the offing. holdings and ride this out. The overall market is no longer expensive. Net income is expected to grow Thanks, my fellow investors, for investing in the Fund. over 20% this year, yet the market is flat, so present multiples have contracted significantly. The fear is that earnings growth won’t materialize go forward; we don’t agree. Some of this year’s extraordinary growth is the result of the corporate tax reduction, but, even without that, earnings are growing mid-teens. We expect next year that earnings will grow closer to 10%.

Importantly, we have not changed our view on the near-term growth and long-term prospects for our holdings, for the most part. We believe our high-quality, special/niche growth businesses will be able to continue to Cliff Greenberg accrete value at about a 20% clip in aggregate, some higher, some lower. Portfolio Manager The valuation of our holdings went from expensive on near-term results, but November 1, 2018

* Acronym for Facebook, Amazon, Netflix and Google. Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in smaller companies, but there also may be more risk. Specific risks associated with investing in smaller companies include that the securities may be thinly traded and they may be more difficult to sell during market downturns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Small Cap Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

29 Baron Opportunity Fund

Dear Baron Opportunity Fund Shareholder: Performance

Considering the robust gains and outperformance of the first half of the year, Baron Opportunity Fund (the “Fund”) had a solid third quarter, climbing 7.84% (Institutional Shares). The Fund slightly trailed the Russell 3000 Growth Index, which advanced 8.88%, but kept pace with the S&P 500 Index, which rose 7.71%. Through the third quarter of the year, the Fund is up 29.72%, markedly ahead of both indexes, which have increased 16.99% and 10.56%, respectively.

Table I. Performance† Annualized for periods ended September 30, 2018 Baron Baron Opportunity Opportunity Russell Fund Fund 3000 S&P Retail Institutional Growth 500 Shares1,2 Shares1,2,3 Index1 Index1 4 Three Months 7.84% 7.84% 8.88% 7.71% MICHAEL A. LIPPERT Retail Shares: BIOPX 4 Nine Months 29.53% 29.72% 16.99% 10.56% Institutional Shares: BIOIX One Year 37.41% 37.73% 25.89% 17.91% PORTFOLIO MANAGER R6 Shares: BIOUX Three Years 23.10% 23.39% 20.36% 17.31% Five Years 13.30% 13.59% 16.23% 13.95% Ten Years 13.95% 14.23% 14.18% 11.97% Arabia) and the upcoming midterm elections on the other. I continue to Fifteen Years 12.22% 12.41% 10.67% 9.65% hear diverse and conflicting opinions among the top economists and market Since Inception strategists I follow. Some economists believe economic growth will slow (February 29, 2000) 7.24% 7.38% 4.81% 6.20% next year, stifled by what appears to be an acceleration of the impending Review & Outlook trade war with China and sharply higher interest rates (already causing a slowdown in the housing market). Still others believe GDP growth will The Fund has continued its solid start to 2018. I believe our performance has continue apace through at least 2019, pointing to high consumer been due to our consistent focus on secular innovation trends and confidence, low inflation and rates plateauing at a historically supportive sustainable growth. For much of our portfolio, stock performance and level. On one call, a presenter argued that economic expansions don’t fundamentals continued to be solid. simply die of old age. At the same time, market strategists and investors For the first few weeks of October, the market has pulled back sharply and appear to be debating market and sector leadership. I believe this is a tough has experienced a substantial increase in volatility. As I touched on last one to gauge and predict, as a shift to value leadership (such as Industrials) quarter, market leadership is unclear and unstable. Investors and traders typically requires conviction in accelerating and sustained economic growth. appear to be wrestling with positive economic news (low unemployment, As our investors know, we continue to favor secular-growth driven industries and businesses and avoid more cyclical sectors. solid GDP growth) and strong corporate earnings on one side and rising interest rates (including debates about the pace and level of Fed hikes, the This period of increased volatility could persist for some time. How long is shape of the yield curve and the neutral rate), trade war fears (particularly almost impossible to predict. But amid all this uncertainty, our research and China), other geopolitical challenges (Russia, North Korea and now Saudi company reports confirm that the growth prospects and secular trends for

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of September 30, 2017 was 1.41% and 1.14%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, visit www.BaronFunds.com or call 1-800-99BARON. † The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. 1 The indexes are unmanaged. The Russell 3000® Index measures the performance of the broad segment of the U.S. equity universe comprised of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000® Growth Index measures the performance of those companies classified as growth among the largest 3,000 U.S. companies and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 4 Not annualized.

30 September 30, 2018 Baron Opportunity Fund

our investments remain excellent – in fact, as strong as ever, in our view. We By investing in businesses capitalizing on these potent trends, we have been believe the economic and market factors and unknowns we just addressed able to build portfolios that consistently deliver revenue growth rates at should have little to no impact on the fundamentals for the industries and multiples of the general economy, as reflected in broad market indexes.1 businesses we favor given their powerful and sustainable secular and Below we compare the revenue growth rates of our portfolio and three structural growth drivers. We have confidence that our portfolio should be indexes for the trailing four quarters for which we have reliable data: in a relatively strong position to weather and thrive in a variety of economic, market and political environments. While certainly not every quarter or even Comparison of Revenue Growth (based on quarter end holdings) every year, our conviction remains that sustainable/secular growth matters Actual Actual Actual Actual and will be the predominant foundation of longer-term market leadership Q2 2018 Q1 2018 Q4 2017 Q3 2017 for both individual businesses and industry groups. Baron Opportunity Fund 27.9% 28.8% 25.0% 24.4% We do not contest, however, that factors such as potentially higher interest S&P 500 Index 11.1% 9.4% 9.6% 6.8% rates, slower economic growth and sector leadership shifts are real and Russell 3000 Index 11.2% 9.6% 9.6% 7.6% should never be ignored. We don’t – giving them appropriate consideration. We understand and have observed that such factors impact sentiment and Russell 3000 Growth Index 12.3% 10.8% 10.8% 9.3% discount rates, among other things, and therefore multiples. As I addressed last quarter, valuation and price targets matter. We have built and employ Table II. tools that examine company and industry valuations on both a relative and Top contributors to performance for the quarter ended September 30, 2018 absolute basis and evaluate both current and historical trends. We establish Percent and monitor short- and long-term price targets for all our holdings. We set Impact targets utilizing our own internal projections of revenues, earnings and free Acxiom Corporation 1.24% cash flow and what we have calculated to be historically median/average Amazon.com, Inc. 1.05 multiples for comparable companies. In that valuation work, we have taken Apple, Inc. 0.82 a hard look at multiples over time and in different market and economic The Trade Desk 0.82 environments. We are comfortable that using conservative long-term mean/ Microsoft Corporation 0.78 average multiples there are attractive return opportunities across our portfolio. I am staring at our price target worksheet as I write this and will Acxiom Corporation is a leader in marketing data services and identity share that we project the mean compound annual expected return across management for enterprises. The company’s technology platform combines our portfolio to be at mid-teens levels for the next one, two and three years. an intricate web of customer data, business intelligence and deep analytics that empowers over 7,000 global brands to improve the targeting and returns We continue with our approach of reacting to market dynamics by making on their digital advertising spend. Acxiom shares were up significantly during modest tactical adjustments to our portfolio. Our aim is to iteratively the quarter as the company entered into an agreement to sell its legacy improve portfolio quality – which I define as companies that are clear marketing services business for $2.3 billion to Interpublic Group. We had leaders in well-established secular themes; moving at a steady pace along anticipated the sale for several quarters, but the price was substantially the business maturity curve, measured by scale, customer adoption, market greater than expectations. Acxiom closed on the sale in early October and share or market capitalization; and material free cash flow generators – and has changed the name of the company to LiveRamp Holdings, Inc., becoming increasing portfolio diversification. We have trimmed or allowed inflows to a pure-play marketing cloud software company. We continue to believe in dilute some of our better-performing and/or larger positions where we LiveRamp’s unique position to become the identity management layer in the believed valuations were becoming extended (see, for example, top net sales evolving marketing and advertising ecosystem. (Ashim Mehra) below). And we have increased our weightings and added new positions where we thought valuations were particularly attractive, or a business’s Shares of Amazon.com, Inc. performed well in the quarter. Amazon prospects were misunderstood or overlooked by the Street. continues to benefit from its flywheel strategy, where more participation from Prime members drives greater loyalty and purchasing on Amazon.com. Here is a partial list of the secular megatrends we relentlessly focus on: Paid Prime membership has exceeded 100 million households globally. • Cloud computing While penetration of its core e-commerce business is rising rapidly, Amazon • Software-as-a-service (SaaS) continues to increase its total addressable market at an unprecedented pace. • “Big Data” and “Artificial Intelligence” In the next several years, we believe Amazon will continue to build out a • Mobile large advertising business, with the potential for it to grow into a $30 billion • Digital media business over the next four years. As the largest online retailer, Amazon can • Targeted, people-based digital advertising tap into the over $1 trillion global advertising market, of which more than a • E-commerce third is trade promotions, where brands pay partners to promote their • Genetics products. Advertising is not only a large revenue opportunity but should be • Minimally-invasive surgical procedures accretive to Amazon’s overall gross and operating margins. In the meantime, • Cybersecurity AWS remains the runaway leader in the vast, and still rapidly growing, cloud • Electric-drive vehicles/autonomous driving infrastructure market. Amazon remains one of our highest conviction • Electronic payments investment ideas, and we think a good bet to become the most valuable company on earth sometime soon. (Ashim Mehra)

1 Please note there is no guarantee that this performance will continue.

31 Baron Opportunity Fund

Apple, Inc. creates hardware and software products enjoyed by hundreds of Tesla, Inc. is the world’s first pure play diversified sustainable-energy millions of global users. The company outperformed in the quarter given: company, manufacturing fully electric automobiles, solar roof products and (1) better-than-expected iPhone results, with evidence of consumer energy storage solutions. Tesla’s shares underperformed during the quarter. attraction to higher-priced, premium versions of the phones; and (2) an In early August, the company reported what we considered a solid second exciting set of new product launches that should provide opportunities for quarter, revealing stabilization of Model 3 production at 5,000 units per the company to grow services in health care and augmented reality. We week, positive Model 3 gross margins and record Model S/X gross margins continue to be constructive on the global reach and power of the Apple (according to our calculations). Moreover, the company guided to brand and the growth potential for its services business, which has the better-than-expected Model 3 production for the third quarter of 50,000 to potential to drive a multiple re-rating over time. (Alexander Mahylis) 55,000 units (which they hit by building 53,239), Model 3 gross margins of 15% in the third quarter and 20% in the fourth quarter, and the expectation The Trade Desk is the leading digital-advertising demand-side platform, of not only positive earnings in the third and fourth quarters, but positive software that enables advertising agencies and advertisers to purchase cash generation as well. The stock reacted well. digital ads across every vertical – web, mobile, video, connected TV and radio – more efficiently and effectively. Shares jumped after the company However, just days later, CEO Elon Musk sent his now infamous tweet: “Am reported another exceptional quarter and raised guidance once again, considering taking Tesla private at $420. Funding secured.” His tweets demonstrating the momentum in its business. After growing more than 50% resulted in the opening of an SEC investigation and a surprisingly quick year-over-year in 2017, the company remains on track to grow at a similar settlement. As part of the settlement, Musk will be able to remain as CEO, rate in 2018. The company’s international business is growing at more than but will have his Tesla-related public statements vetted by the company twice the rate of its domestic business. The doubling of its Connected TV before they are released. He will step down as Tesla’s chairman for two business in one quarter – from first quarter to second quarter – is also years, and Tesla will add two new independent directors. We believe this noteworthy. The company’s CEO Jeff Green is spending a substantial settlement will markedly improve Tesla’s corporate governance and investor amount of his time in China, developing relationships to incubate the next communications in a way quite favorable to long-term investors. stage of the company’s growth. Finally, the company has just completed In our view, the events surrounding the tweet and SEC investigation created and rolled out a major upgrade of its product, which now incorporates a temporary disconnect between the stock price and business fundamentals. elements of artificial intelligence, designed to provide more efficiency and a Model 3 is a proven hit, and key to Tesla’s roadmap to become a much higher return on investment for users. We remain positive on shares of The larger company and continue disrupting the auto industry. We believe the Trade Desk as the company possesses only an estimated 10% share of the Model 3 program is reaching the tipping point on volume and profitability. $10 billion programmatic advertising market, which itself is just a small but We estimate that Tesla can already produce around 250,000 Model 3s a expanding subset of the $1 trillion spent each year on advertising year, more than double its Model S/X production combined, and as reported worldwide. (Ashim Mehra) by the company in early October, it delivered over 83,000 vehicles in the Microsoft Corporation is a software mega cap focusing on cloud software third quarter, more than 200% year-over-year growth. Other positive news/ with its Azure infrastructure-as-a-service offering, and its points to keep in mind: (1) Tesla has announced the acceleration of its plans software-as-service products, Office 365 and Dynamics 365. Shares of to build a China Gigafactory and recently secured land from the Shanghai Microsoft were up solidly in the third quarter after the company reported government to do so. This is the first time China will let a foreign automaker another strong quarter for its cloud business, which grew over 50%, and open shop without a Chinese company as its partner. (2) Tesla has taken continued steady expansion of its gross and operating margins. We retain massive market share of luxury car sales in the U.S., with both Model 3 and conviction in Microsoft due to the strong moat it has built around its Model S blowing away the competition.2 BMW, Audi and Mercedes have all business, based on the wide reach of its sales channel into enterprises, its seen year-over-year declines in sales of competitive models. Despite claims hybrid cloud offering and its positioning in the public cloud market. (Guy in the media and short sellers, there is no Tesla killer on the horizon. In fact, Tartakovsky) based on our research, no electric vehicle is slated to launch at the Model 3 price point until 2021, at which time, we believe, Tesla will have launched the Model Y (hatchback version) as well. (3) Consumer Reports tested the Table III. Model 3 and concluded that its braking distance was subpar for its vehicle Top detractors from performance for the quarter ended September 30, 2018 class. Tesla diagnosed the issue over the weekend and issued an over-the-air Percent Impact update to all Model 3 vehicles, sharply improving braking distance almost overnight. Consumer Reports said this was the first time something like this Tesla, Inc. –0.68% had ever been done in the automotive industry and changed its Model 3 Electronic Arts Inc. –0.36 recommendation to positive. (4) Tesla announced that it would release its Gemphire Therapeutics Inc. –0.33 third quarter earnings a week early, on October 24th. By the time you read Tencent Holdings, Ltd. –0.28 this, we will see whether the positive news flow has continued. (Ishay Levin, The Stars Group Inc. –0.27 Michael Lippert)

2 I have seen reports of U.S. third quarter vehicle delivery estimates showing: Model 3 – 53,048; BMW 3-series – 10,551; Mercedes C-Class – 12,594; and Audi A4/S4 – 10,386.

32 September 30, 2018 Baron Opportunity Fund

Electronic Arts Inc. is a leading U.S. video game publisher. The stock Table IV. underperformed in the quarter after the company announced that the Top 10 holdings as of September 30, 2018 World Cup did not lead to an immediate increase in FIFA Live Services Quarter End growth. Later in the quarter, the company lowered its fiscal year 2019 Quarter End Investment Percent Market Cap Value of Net financial guidance due to a delay in the launch of Battlefield V, a more (billions) (millions) Assets conservative mobile forecast, and ongoing FX headwinds. While we continue Amazon.com, Inc. $ 976.9 $30.0 6.3% to monitor the recent execution issues, we retain long-term conviction in Electronic Arts due to its solid game portfolio and notable tailwinds that Microsoft Corporation 877.0 23.8 5.0 should benefit the company going forward, including the shift to a more Guidewire Software, Inc. 8.1 23.0 4.9 digital business model, mobile gaming, subscription and streaming gaming, Alphabet Inc. 834.7 22.7 4.8 and eSports. (Adam Lieb) Gartner, Inc. 14.4 20.9 4.4 Apple, Inc. 1,090.3 19.5 4.1 Gemphire Therapeutics Inc. is a clinical-stage biopharmaceutical company Acxiom Corporation 3.8 13.0 2.8 developing treatments for cardiometabolic disorders. Shares decreased on CoStar Group, Inc. 15.3 12.8 2.7 safety issues uncovered during a product trial for pediatric liver disease. Due Tesla, Inc. 45.2 10.8 2.3 to our concerns about the company’s liquidity and financing and clinical Wix.com Ltd. 5.8 10.2 2.2 uncertainties, we decided to exit our position. (Josh Riegelhaupt) Tencent Holdings, Ltd. is one of the two largest internet-related companies in China. Shares of Tencent struggled this quarter due to a change in the RECENT ACTIVITY regulatory regime around video games, which has essentially frozen new Table V. game approvals for the moment. Over the next few months or quarters, we Top net purchases for the quarter ended September 30, 2018 expect this freeze to be lifted and for game approvals to resume, albeit at a Quarter End Amount slower rate than was the prior norm. Aside from being the largest online Market Cap Purchased gaming platform in China, Tencent also operates the leading social network (billions) (millions) and messaging platform in China (QQ and WeChat) and the largest online NVIDIA Corporation $170.9 $4.9 entertainment and media business in China. The company reaches almost a Mellanox Technologies Ltd. 3.9 3.9 billion monthly users and operates, or has investments in, several other RingCentral, Inc. 7.4 3.6 online business segments. We believe that Tencent will be able to grow each Arco Platform Limited 1.1 3.5 of its large business segments at fast rates for years to come given its track Aquantia Corp. 0.4 2.1 record of execution, unique online intellectual property and assets and unparalleled scale and user. (Ashim Mehra) We initiated a position during the quarter in NVIDIA Corporation, a fabless The Stars Group Inc. is one of the leading global online wagering platforms, semiconductor mega cap that is a global leader in gaming cards and with solid market leadership across Europe. The company is in the process of accelerated computing chips. NVIDIA provides the cards (graphic processing acquiring Skybet, the fastest growing and leading online wagering platform units, or GPUs) and integrated circuits that are powering the growth of in the U.K. Shares of Stars Group were down meaningfully in the quarter as artificial intelligence from data centers to edge computing. Demand for investors reduced their exposure to gaming shares globally, based on weaker computing capacity is still doubling every one-to-two years, but according results in Macau and slower growth in Las Vegas. We decided to book a to NVIDIA founder and CEO Jensen Huang, in our recent meeting: Moore’s short-term tax loss and exited our position. (Ashim Mehra) Law, something the computing industry has counted on for 30 years, is coming to an end. There is more need for computing capacity than ever at a PORTFOLIO STRUCTURE time when ‘near free’ supply growth (that was possible thanks to Moore’s Law) has stalled. NVIDIA’s accelerated architecture with parallel computing The Fund invests in secular-growth, innovative businesses across all market at scale, answers that need. According to Jensen, “we are the only solution capitalizations. As of the end of the third quarter, the largest market cap for data center acceleration that one can reasonably deploy.” With the holding in the Fund was $1.1 trillion and the smallest was $438 million. number of accelerated servers today at less than 1% of all servers, the The median market cap of the Fund was $15.7 billion. The Fund had runway for NVIDIA to disrupt computing is very long. This, together with $474.0 million of assets under management. The Fund had investments in 59 NVIDIA’s leading market share in gaming, autonomous driving and robotics securities. The Fund’s top 10 positions accounted for 39.5% of the portfolio. underlie an opportunity for rapid growth for years to come.

33 Baron Opportunity Fund

Mellanox Technologies Ltd. is a supplier of high-performance switch We increased our position during the quarter in Aquantia Corp., a small systems, adapters, cables and software supporting InfiniBand and Ethernet fabless semiconductor company, focusing on selling integrated chips and networking technologies. We increased our position in Mellanox during the adapters that enable multi-gigabit ethernet connectivity over existing third quarter as the stock corrected on a general sell-off of semiconductor copper cabling. Aquantia sells into the data center, enterprise, access and stocks and on increasing market concern over the sustainability of cloud automotive markets, all of which are at the earliest innings of a secular capex. We thought both drivers missed the boat of the strong and even transition to multi-gigabit speeds (underlined by the growth in data). With improving fundamentals in Mellanox’s own business, which continues to over 1 billion copper ethernet ports shipped annually and only 2%-to-3% of benefit from the upgrade cycle to higher interconnect speeds in data centers, them being multi-gigabit today, Aquantia’s growth runway is very long. a segment where Mellanox has unique products and dominant market share. We initiated a position during the period in RingCentral, Inc., a leader in Table VI. global enterprise cloud communications and collaboration solutions (known Top net sales for the quarter ended September 30, 2018 as unified communications as a service, or UCaaS). Its solutions provide a Quarter End unified solution across multiple locations and devices and allow for Market Cap or Market Cap Amount communication across multiple channels, including voice, video, When Sold Sold collaboration, conferencing and online meetings. RingCentral is disrupting a (billions) (millions) large category of about 300 million-to-400 million knowledge workers, Adamas Pharmaceuticals, Inc. $ 0.6 $2.8 representing an addressable market estimated to be over $100 billion. The Stars Group Inc. 7.0 2.7 RingCentral is the fastest growing UCaaS player while also being almost Netflix, Inc. 162.9 1.5 twice the size of its closest competitor thanks to its differentiated strategy ServiceNow, Inc. 34.8 0.9 of being an open platform, integrating best-of-breed partners, instead of owning the entire stack, and its high quality of service. We believe Yext, Inc. 2.3 0.9 RingCentral will continue showing accelerating growth, driven by We sold Adamas Pharmaceuticals, Inc. and The Stars Group Inc. (as best-in-class unit economics of customer lifetime value being over 10 times described above) and to book tax losses before the end of the Fund’s fiscal the cost of customer acquisition, and its visionary co-founder-CEO, who is year. not afraid to invest in the business in the near term to drive the company’s intrinsic value for long-term shareholders. We trimmed our holdings in Netflix, Inc., ServiceNow, Inc. and Yext, Inc. strictly on valuation considerations, but remain confident of the long-term We initiated a position in connection with the IPO of Arco Platform growth opportunities for each company. Limited, a Brazilian education-tech company providing educational content and software solutions to private K-12 schools in Brazil. The company’s To conclude, I believe wholeheartedly in the strategy of the Fund: growth solution is a one-stop shop for schools replacing several publishing and based on powerful, long-term, innovation-driven secular growth trends. In system vendors. Arco has grown rapidly, reaching over 1,000 school partners the highly uncertain world we live in, we believe non-cyclical, sustainable in over 450 cities in Brazil. Arco is in the early stages of disrupting the legacy and resilient growth should be part of investors’ portfolios. book publishing industry with a modern learning platform, enabling better results for students and schools (with partner schools performing better in Sincerely, rankings after starting to use its platform). It is early (5% penetrated) and the business model is highly attractive with 100% recurring revenues, high gross margins, long-term (3-year) contracts and only limited annual churn, leading to high over 30% profit margins. We believe Arco has the potential to continue its rapid growth for years to come while maintaining high profitability. Arco, like many of our other investments is led by a Michael A. Lippert founder-CEO, who is focused on growing the company while investing large Portfolio Manager amounts back into the business to maximize long-term value creation. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in securities of high growth businesses benefiting from innovation through development of pioneering, transformative or technologically advanced products or services, but there also is more risk. Companies propelled by innovation, including technological advances and new business models, may present the risk of rapid change and product obsolescence and their successes may be difficult to predict for the long term. Securities issued by small and medium sized companies may be thinly traded and may be more difficult to sell during market downturns. Even though the Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund’s returns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Opportunity Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

34 September 30, 2018 Baron Partners Fund

Dear Baron Partners Fund Shareholder: Performance

Baron Partners Fund (the “Fund”) gained 2.14% (Institutional Shares) during the three-month period ended September 30, 2018. This was less than the Russell Midcap Growth Index, its benchmark, which appreciated 7.57%, and the S&P 500 Index, which gained 7.71%. For the nine months year-to-date, Baron Partners Fund gained 17.98%. The Russell Midcap Growth Index gained 13.38% and the S&P 500 Index increased 10.56%.

Table I. Performance Annualized for periods ended September 30, 2018 Baron Baron Partners Partners Russell Fund Fund Midcap S&P Retail Institutional Growth 500 Shares1,2,3 Shares1,2,3,4 Index2 Index2 Three Months5 2.06% 2.14% 7.57% 7.71% Nine Months5 17.72% 17.98% 13.38% 10.56% RONALD BARON MICHAEL BARON Retail Shares: BPTRX One Year 18.99% 19.32% 21.10% 17.91% CEO AND LEAD CO-PORTFOLIO Institutional Shares: BPTIX Three Years 18.30% 18.62% 16.65% 17.31% PORTFOLIO MANAGER MANAGER R6 Shares: BPTUX Five Years 13.74% 14.04% 13.00% 13.95% Ten Years 12.37% 12.65% 13.46% 11.97% Since Conversion Tesla, the leading manufacturer and distributor of luxury electric (April 30, 2003) 13.99% 14.17% 12.05% 10.02% automobiles and lithium batteries, has been subject to intense analytic Fifteen Years 13.18% 13.37% 11.10% 9.65% andmediascrutiny.Thisisduetoitsrapid,and,sofar,profitlessgrowth. Twenty Years 12.21% 12.35% 9.41% 7.42% Also drawing attention to Tesla are its efforts to disrupt the powerful and Since Inception entrenched automobile, energy, and utility industries. Elon Musk, Tesla’s (January 31, 1992) 13.14% 13.25% 10.01% 9.85% controversial and undeniably brilliant CEO and chief engineer, is obviously responsible for a large part of this attention. Tesla’s business The Fund’s relative underperformance in the last three months was has grown its revenues from $3.7 billion in 2014, when we began to despite strong results for 47.76% of the Fund’s average portfolio weights purchase Tesla stock, to an estimated $20 billion in 2018. If Tesla reaches based on the Fund’s net assets. That portfolio segment achieved double- $30 billion revenues in 2019, we expect the company to achieve digit positive returns for the period. This concentrated Fund’s results in substantial positive cash flow…before reinvesting it to finance its the quarter were penalized principally by significant stock price declines continued rapid growth. of two investments, Tesla, Inc. and Zillow Group, Inc. Tesla and Zillow had average portfolio weights of 14.49% and 4.11%, respectively, in the Tesla’s share price volatility increased significantly during the quarter. This quarter based on the Fund’s net assets. Tesla’s share price fell 22.80% in was after Musk announced on a social media platform that he was the period. Zillow’s share price declined 26.89%. We remain optimistic considering forming a group to purchase Tesla in a “going private” about the long-term prospects for both businesses. transaction. After an investigation, the SEC announced on September 27

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares as of December 31, 2017 was 1.79% (comprised of operating expenses of 1.34% and interest expense of 0.45%) and Institutional Shares was 1.53% (comprised of operating expenses of 1.08% and interest expense of 0.45%). The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expenses offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1 Reflects the actual fees and expenses that were charged when the Fund was a partnership. The predecessor partnership charged a 20% performance fee after reaching a certain performance benchmark. If the annual returns for the Fund did not reflect the performance fees the returns would be higher. The Fund’s shareholders will not be charged a performance fee. The predecessor partnership’s performance is only for periods before the Fund’s registration statement was effective, which was April 30, 2003. During those periods, the predecessor partnership was not registered under the Investment Company Act of 1940 and was not subject to its requirements or the requirements of the Internal Revenue Code relating to registered investment companies, which, if it were, might have adversely affected its performance. 2 The indexes are unmanaged. The Russell Midcap® Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The Russell Midcap Growth Index, the S&P 500 Index and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 3 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 4 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 5 Not annualized.

35 Baron Partners Fund

that the company had not acted properly in making that statement. Tesla’s Hyatt’s stock gained only 3.36% in the period, and it remains significantly share price fell sharply on the final day of the quarter. We believed that the undervalued relative to its assets. Vail Resorts, Inc. reported 12% gains in SEC was determined to protect investors, not damage this company’s season pass ticket sales, and its share price was virtually unchanged during prospects, and would likely take actions to improve Tesla’s governance. We the period. Gaming and Leisure Properties, Inc.’s share price was also also believed that settlement would be well received by investors. The Fund did virtually flat despite acquisitions that are accretive to its dividend, which not purchase or sell Tesla stock during this controversy. The following weekend, now provides an approximate 8% annualized return to its shareholders. We a settlement between Tesla and the SEC was announced that we believe should believe Gaming and Leisure’s share price is undervalued relative to not impair Tesla’s ability to produce high-quality vehicles at scale. Tesla’s CEO comparable companies that provide dividend yields of 6%. CoStar Group, and Chairman positions will be separated; communications with investors will Inc., another real estate services company, gained modestly. This was be carefully controlled; and, reasonable monetary fines relative to the size of despite continued strong growth of its underlying businesses driven, in part, this business would be paid by both the company and Musk. by higher prices for its services. We believe Tesla’s share price will ultimately depend upon how many electric Health Care, Information Technology, and Industrials contributed cars and batteries the company sells; how much profit they make per unit; significantly to the benchmark’s returns in the quarter. The Fund is and how fast they grow. We remain optimistic about Tesla’s prospects. underweight those sectors (excluding a shift in the characterization of CoStar, the real estate data provider, from an Information Technology We attribute Zillow’s recent share price decline to two factors–rising business to an Industrials firm). interest rates and shifting business model. Zillow is a leading service provider for real estate brokers. Although rising interest rates have caused The U.S. economy remains on steady footing as unemployment remains near both new and existing home sales to decline, we estimate Zillow’s lead historic lows; consumer confidence is high, and housing prices are increasing. A generation revenues continue to increase significantly from prior year levels. strong dollar and higher interest rates favored companies that do business This is because it has been able to increase prices and gain share of broker domestically. An escalating trade war with China has resulted in tariffs on a advertising which is several times as large as Zillow. Zillow user growth growing number of goods and products which is obviously a long-term concern. slowed modestly in the quarter and the company increased marketing spend. We believe Zillow’s data and algorithms are better than other On a year-to-date basis, the Fund continued to have both excellent absolute providers and a lot more effective than print media. We think at least a and relative results. A significant portion of the portfolio (52.11% of the portion of the decline in Zillow’s share price is due to its efforts to average weight based on the Fund’s net assets) gained over 20% partiallytransition its business model to buying and selling some homes year-to-date. These are generally characterized as growth companies that had invested in their businesses previously to create more formidably The Fund’s investments in real estate and resort businesses, growing competitively advantaged businesses. The top three contributors to enterprises that also represent a long-term hedge against inflation, achieved performance over the first nine months, CoStar, IDEXX Laboratories, Inc., modest returns in the period. We attribute this principally to recent and Vail Resorts are good examples. CoStar and Vail Resorts had made increases in interest rates, which we think will not have a material impact on important acquisitions that now allow them to cross-sell existing services their long-term prospects. Hyatt Hotels Corp. has continued to achieve and products to new customers and enhance their competitive offering. favorable and above industry average revenue per available room gains. This IDEXX’s depth of tests and products allow it to be a single supplier to many is in part due to its reliance upon business meetings, not transient guests. veterinary clients and gain a higher share of the wallet.

Table II. Performance Periods Baron Partners Fund underperformed Baron Growth Stocks Internet Underperform Bubble 2014-2016 Annualized Returns 10/8/1998 12/31/2013 to to 3/9/2000 12/31/2016 Baron Partners Fund (Institutional Shares) 59.72% 4.00% Russell Midcap Growth Index 110.65% 6.23% S&P 500 Index 32.29% 8.87%

Table III. Performance Millennium to Present. The Impact of Not Losing Money. Millennium Internet Bubble to Financial Financial Panic to Millennium Internet Panic Present Bubble to Present Inception 12/31/1999 12/31/2008 12/31/1999 1/31/1992 to to to to 12/31/2008 9/30/2018 9/30/2018 9/30/2018 Value Value Value Value $10,000 Annualized Cumulative $10,000 Cumulative $10,000 Cumulative $10,000 Cumulative Baron Partners Fund (Institutional Shares) $11,479 1.54% 14.79% $48,389 383.89% $55,544 455.44% $275,971 2,659.71% Russell Midcap Growth Index $ 6,488 (4.69)% (35.12)% $48,664 386.64% $31,571 215.71% $127,281 1,172.81% S&P 500 Index $ 7,188 (3.60)% (28.12)% $39,666 296.66% $28,512 185.12% $122,445 1,124.45%

36 September 30, 2018 Baron Partners Fund

We believe Baron Partners Fund’s performance from 2014 through 2016, Table IV. when the Fund’s portfolio investments increased in price modestly although Top contributors to performance for the quarter ended September 30, 2018 their underlying businesses continued to grow rapidly, is analogous to the Market Quarter 18-month period from October 1998 through March 2000 amid the Cap End When Market Internet Bubble. Baron Partners Fund, which then owned no internet stocks, Year Acquired Cap Total Percent increased 59.72% annualized from 1998 to 2000, while its benchmark index Acquired (billions) (billions) Return Impact increased 110.65%. For the next nine years through December 2008, IDEXX Laboratories, Inc. 2013 $4.7 $21.6 14.55% 1.20% though, the Fund returned 14.79% (1.54% annualized) and the benchmark Arch Capital Group Ltd. 2002 0.6 12.1 12.66 1.01 index lost 35.12%, (4.69% annualized). The Fund outperformed its index by Gartner, Inc. 2013 5.7 14.4 19.26 0.88 623 basis points per year! (see Table III–Millennium Internet Bubble to FactSet Research Financial Panic.) Of course, past performance is no guarantee of future Systems, Inc. 2007 2.5 8.6 13.25 0.81 results. Space Exploration Technologies Corp. 2017 – – 15.94 0.77 During the Internet Bubble, the Fund did not own internet stocks because they did not meet our investment parameters. From 2014 through 2016, Shares of veterinary diagnostics leader IDEXX Laboratories, Inc. the companies in which the Fund had invested were reinvesting in their contributed to performance, buoyed by continued strong competitive businesses and penalizing their short-term profits. This was because they trends, highlighted by instrument installed base growth of 20%, domestic had ambitions to become meaningfully larger companies. These stocks lab growth more than twice that of competitor VCA, and improving sales underperformed the broader market during these years. We believe the productivity. We think new proprietary innovations and field sales force recent strong outperformance of Baron Partners Fund is, in part, because expansion should be meaningful contributors to growth. Margins are the long-term investments we make, and have always made are beginning moving significantly higher, and we believe they can approach 30% over to bear fruit…which provides us with increasing confidence that the Fund’s the next several years. recent strong relative and absolute outperformance will continue. Of Arch Capital Group Ltd. is a specialty insurance company based in course, we cannot assure you that will be the case. Bermuda. Shares appreciated after the company reported solid quarterly Due to the “magic” of compounding, $10,000 invested in Baron Partners results that exceeded Street expectations. The stock also benefited from Fund on December 31, 1999 is worth 5.6 times that amount, or $55,544 on improving sentiment for mortgage insurers as investors became more September 30, 2018. That is 75.9% more than an investment in a passive confident that industry returns would remain attractive despite a recent index fund or ETF that was able to track the Russell Midcap Growth Index! price cut. We continue to own the stock due to Arch’s strong management (See Table III–Millennium Internet Bubble to Present.) team and underwriting discipline.

37 Baron Partners Fund

Shares of Gartner, Inc., a provider of syndicated research, contributed to slight delay in the roll-out of Zillow Instant Offers, the company’s new performance. We believe forward-looking metrics in Gartner’s traditional home buying initiative. We retain conviction, as we believe Zillow will IT research business are strong, with contract value growing at a continue to grow its share of the $8 billion real estate advertising market. mid-teens rate. Gartner recently introduced a seat-based product to heritage CEB clients, and is generating traction in closing new customers Shares of brokerage company The Charles Schwab Corp. declined slightly with this improved product. The company meaningfully expanded its in the quarter. Competitors have repeatedly cut fees on trading and money sales force to pursue this large incremental opportunity, and we expect management business. Schwab has historically followed suit, and we to see heritage CEB growth accelerate from 2% into the mid-to-high anticipate this to be the case again. Investors are also concerned that rising teens over time. rates will not improve net interest margin to levels achieved in the past as additional revenue will be shared with clients to sustain market share. We Shares of FactSet Research Systems, Inc., a leading provider of investment believe Schwab will continue to gain assets, provide additional valuable management tools, contributed to performance. The company announced a services, and grow its earnings despite these current headwinds. large 15,000 seat deal win with Merrill Lynch Wealth Management, which Shares of Red Rock Resorts, Inc., a casino operator focused on the Las we believe should be meaningful from both a financial and a reputational Vegas locals market, decreased as many Las Vegas residents left on vacation perspective and should serve as a great reference point for FactSet as the given the strong economy and a heat wave that affected the area. We company attempts to win more Wealth Management deals. consider the drop in visitation to be temporary, and do not foresee a long- term slowdown in the locals market. Las Vegas’ population continues to Space Exploration Technologies Corp. (“SpaceX”) designs, manufactures, grow, wages continue to rise 2% to 3% per year, and housing prices are at and launches advanced rockets and spacecraft. In the future, SpaceX is record highs. We view such data optimistically, and we see the stock’s looking to build broadband capabilities by deployment of a new satellite current valuation as attractive. constellation and ultimately, is looking to enable people to live on other planets. The company continues to leverage its unique offering of reusable Douglas Emmett, Inc. is a REIT that owns a portfolio of high-quality office rockets to offer lower cost launches vs. other vendors and continues to take and multi-family assets in Western Los Angeles and Honolulu. A rise in the significant share in commercial and governmental launches. As SpaceX is a 10-year interest rate, which made Douglas Emmett’s dividend yield look private company, we value the company using a proprietary valuation relatively less attractive, drove weak performance in the quarter. We retain model, which resulted in appreciation of the stock during the quarter. conviction because Douglas Emmett owns a portfolio of high-quality assets we believe are underappreciated at the current stock price. Table V. Top detractors from performance for the quarter ended September 30, 2018 Investment Strategy and Portfolio Structure Market Quarter Cap End The goal of Baron Partners Fund is to double its value per share within five When Market Year Acquired Cap Total Percent years, although there is no guarantee that this goal will be met. Our strategy Acquired (billions) (billions) Return Impact to accomplish this goal is to invest for the long term in a focused portfolio of Tesla, Inc. 2014 $21.9 $45.2 –22.80% –3.54% what we believe are appropriately capitalized, well-managed businesses at Zillow Group, Inc. 2015 4.3 8.9 –26.89 –1.18 attractive prices across market capitalizations. We attempt to create a The Charles Schwab Corp. 1992 1.0 66.4 –3.57 –0.24 portfolio of less than 30 securities diversified by GICS sectors. The Fund can Red Rock Resorts, Inc. 2017 2.9 3.1 –20.19 –0.10 use moderate leverage to enhance returns although this may increase Douglas Emmett, Inc. 2015 4.2 6.4 –5.49 –0.08 volatility of the returns. The businesses are identified by our firm’s proprietary research. We think these are well-managed businesses that have sustainable competitive advantages and strong, long-term growth opportunities. Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions. Shares declined on investor concerns As of September 30, 2018, Baron Partners Fund held 25 investments. The around CEO Elon Musk’s announcement of potential privatization, which led median market capitalization of these growth companies was $8.9 billion. to lawsuits and investigations. Departures of a few executives and Street The top 10 positions represent 90.9% of net assets. Leverage was 21.0%. expectations for lower third quarter production and deliveries also pressured the stock. We retain conviction. We believe Tesla solved fundamental The long-term absolute and relative performance of the Fund has been very production issues, and expect it to optimize its production line to meet its good. The Fund has returned 13.25% annualized since its inception, besting margins and profitability targets over time. its benchmark index, the Russell Midcap Growth Index, by 3.24% per year. Absolute annualized returns over the past three years have surpassed their Zillow Group, Inc. operates the leading online real estate sites in the U.S. historical average. Three-year annualized returns are 18.62%, beating its Shares detracted based on a lower revenue and profitability outlook. benchmark by 1.97% annualized and the Morningstar US Fund Mid-Cap Revenue guidance was negatively impacted by reduced rental revenue and a Growth Category Average by 2.81%.

38 September 30, 2018 Baron Partners Fund

Portfolio Holdings Thank you for joining us as fellow shareholders in Baron Partners Fund. We will continue to work hard to justify your confidence and trust in our Table VI. stewardship of your hard-earned savings. We will also remain dedicated to Top 10 holdings as of September 30, 2018 continuing to provide you with the information we would like to have if our Market Quarter roles were reversed. This is so you will be able to make an informed decision Cap End When Market Percent about whether this Fund remains an appropriate investment for you. Year Acquired Cap Amount of Total Acquired (billions) (billions) (millions) Investments Respectfully, CoStar Group, Inc. 2005 $ 0.7 $15.3 $368.2 12.9% Tesla, Inc. 2014 21.9 45.2 293.9 10.3 Vail Resorts, Inc. 2008 1.6 11.1 254.1 8.9 IDEXX Laboratories, Inc. 2013 4.7 21.6 224.7 7.9 Arch Capital Group Ltd. 2002 0.6 12.1 211.7 7.4 Hyatt Hotels Corp. 2009 4.2 8.9 206.9 7.3 Ronald Baron Michael Baron FactSet Research CEO and Lead Portfolio Manager Co-Portfolio Manager Systems, Inc. 2007 2.5 8.6 172.3 6.0 November 1, 2018 The Charles Schwab Corp. 1992 1.0 66.4 142.5 5.0 Gartner, Inc. 2013 5.7 14.4 134.7 4.7 Space Exploration Technologies Corp. 2017 – – 131.5 4.7

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation using non-diversification and leverage, but there also is more risk. Specific risks associated with non-diversification and leverage include increased volatility of the Fund’s returns and exposure of the Fund to greater loss in any given period. The Fund invests in companies of all sizes, including small and medium sized companies whose securities may be thinly traded and made difficult to sell during market downturns. Leverage is the degree to which an investor or business is utilizing borrowed money. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Partners Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

39 Baron Fifth Avenue Growth Fund

DEAR BARON FIFTH AVENUE GROWTH FUND SHAREHOLDER: PERFORMANCE

Baron Fifth Avenue Growth Fund (the “Fund”) appreciated 6.0% in the September quarter and is up 22.0% year-to-date (Institutional Shares). These results compare to returns of 9.2% and 17.1%, respectively, for the Russell 1000 Growth Index and 7.7% and 10.6%, respectively, for the S&P 500 Index, the Fund’s benchmarks.

Table I. Performance Annualized for periods ended September 30, 2018 Baron Fifth Baron Fifth Avenue Avenue Growth Growth Russell Fund Fund 1000 S&P Retail Institutional Growth 500 Shares1,2 Shares1,2,3 Index1 Index1 Three Months4 5.94% 6.00% 9.17% 7.71% ALEX UMANSKY Retail Shares: BFTHX Nine Months4 21.79% 22.04% 17.09% 10.56% Institutional Shares: BFTIX One Year 29.03% 29.38% 26.30% 17.91% PORTFOLIO MANAGER R6 Shares: BFTUX Three Years 22.41% 22.74% 20.55% 17.31% Five Years 16.56% 16.86% 16.58% 13.95% Ten Years 12.80% 13.07% 14.31% 11.97% Since Inception in getting involved with The Stars Group. Though a relatively small position, (April 30, 2004) 9.64% 9.82% 10.39% 9.18% it did result in some permanent loss of capital. All told, these five investments cost us 258 basis points combined, and were the difference between a good While we are typically happy with a six percent gain, this was a relatively quarter and a mediocre one. challenging quarter for the portfolio. We had plenty of winners with Amazon, Illumina, Veeva, Mastercard, Intuitive Surgical, Apple,andVisa each Since the restructuring of this Fund on December 31, 2011, it has returned contributing over 50 basis points to absolute returns. We had an additional 221.1% cumulatively, outperforming the Russell 1000 Growth Index by eight investments that contributed over 20 basis points each. Fourteen of our 21.1% and the S&P 500 Index by 54.1%. Since that time, the Fund has holdings increased over 10% during the quarter. Unfortunately, we had an outperformed the Morningstar US Fund Large Growth Category Average by unusually high number of losers with seven double-digit decliners. The stocks 52.7% or by 3.1% per year annualized. According to Morningstar, for the of Alibaba, Naspers,andCtrip were hit hard late in the quarter as trade period ended September 30, 2018, the Fund (Institutional Shares) ranked in tensions escalated, and the likelihood that trade issues with the U.S. will have the top 8% for its year-to-date performance, top 12% for its 1-year a negative impact on the Chinese economy increased. We were clearly early performance, top 5% for its 3-year performance, top 12% for its 5-year in returning Facebook to a full position and committed an investment error performance, and top 9% since the restructuring of the Fund.*

Performance listed in the table above is net of annual operating expenses. Annual expense ratio for the Retail and Institutional Shares as of September 30, 2017 was 1.12% and 0.84%, but the net annual expense ratio was 1.00% and 0.75% (net of the Adviser’s fee waivers, restated to reflect current fee waivers). The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s, shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, visit www.BaronFunds.com or call 1-800-99BARON. 1 The indexes are unmanaged. The Russell 1000® Growth Index measures the performance of large-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 4 Not annualized. * Morningstar calculates the US Fund Large Growth Category Average using the Morningstar Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. As of 9/30/2018, the category consisted of 1,449 1,430, 1,258, 1,129 and 1,012 share classes for the year-to-date, 1-, 3-, and 5-year periods, and the period from 12/31/2011 – 9/30/2018. Baron Fifth Avenue Growth Fund Institutional Share Class ranked in the 8th,12th,5th,12th and 9th percentiles, respectively. Mr. Umansky became the portfolio manager of the Fund on November 1, 2011. Since that date, the Fund has returned 211.3% cumulatively, which compares to 199.0% for the Russell 1000 Growth Index and 169.1% for the S&P 500 Index, outperforming the Morningstar US Fund Large Growth Category Average by 48.8% over the 6+ year period. As of 9/30/2018, the category consisted of 994 share classes for the period from 10/31/2011 – 9/30/2018. Baron Fifth Avenue Growth Fund Institutional Share Class ranked in the 10th percentile for this time period.

40 September 30, 2018 Baron Fifth Avenue Growth Fund

October is off to a rough start and renewed market volatility is making Table II. many market participants nervous. On our most recent client visit trip, Top contributors to performance for the quarter ended September 30, 2018 investors seemed to care less about our investment philosophy and process Quarter End and more about our perspective on whether this correction is likely to grow Market Cap Percent (billions) Impact into a recession, whether the current trade tensions are likely to turn into prolonged trade wars (and a resultant hard landing in China), whether the Amazon.com, Inc. $976.9 2.69% Democrats will retake the House and the Senate (less likely) and derail the Illumina, Inc. 54.0 1.15 Veeva Systems Inc. 15.7 0.94 Trump economic agenda, and most importantly, whether this is the time to Mastercard Incorporated 231.2 0.61 buy stocks or to sell stocks (especially growth stocks many of which appear Intuitive Surgical, Inc. 65.3 0.59 to be expensive). We have no answers to any of these questions, and the fact is, we do not Halting the sales of our shares of Amazon.com, Inc. proved to be beneficial spend a meaningful amount of time trying to figure it out. We do however, for the time being, as the stock rose 18% in the third quarter. Amazon offer the following observations: continues to benefit from its flywheel strategy, where more participation from Prime members drives greater loyalty and purchasing on Amazon.com. 1. It is significantly more difficult to allocate capital when the markets are Paid Prime membership has exceeded 100 million households globally. going straight up then when they are going down. Consequently, we While e-commerce is growing significantly faster than overall retail, Amazon tend to be more challenged and “nervous” during periods of prolonged continues to increase its total addressable market at an unprecedented pace. market appreciation rather than during downturns. Long-term investing For instance, Solimo, Amazon’s health care-related private label products are is more akin to a marathon rather than a sprint, and corrections and growing 70% month-over-month, while the company has applied for pull-backs (and recessions) are both healthy and unavoidable. prescription filling licenses in 17 states. Then there was this “Festive Season Sale” in India where apparently 1 million Xiaomi devices were sold on 2. All students of market cycles know that tight monetary conditions can Amazon in… one day! In the next several years, Amazon will continue to throw an economy into a recession and that when the Federal Reserve build out its advertising business with the potential to reach $30 billion in embarks on a prolonged policy of raising interest rates, economic revenues over the next few years. As the largest online retailer, Amazon can growth typically slows down. Someone famous (though we can’t tap into the $1 trillion+ global advertising market, over a third of which is remember who) once said “every bull market in history has been killed trade promotions, where brands spend to promote their products. by the Fed tightening because they always overdo it.” Advertising is not only a large revenue opportunity but it has the ability to Overgeneralizations aside, the statement makes sense to us. When we substantially improve Amazon’s core margins going forward. In the examine the causes of the last two recessions: the Housing Bubble of meantime, AWS remains the runaway leader in the vast, and still rapidly 2007-2009 and the Internet Bubble in the late 1990’s/early 2000’s, growing, cloud infrastructure market by a wide margin. Amazon remains one sure enough, the Fed was on the warpath both times. Chairman of our highest conviction investment ideas, and we think a good bet to Bernanke was worried that availability of easy credit and lax lending become the most valuable company on earth sometime in the near future. standards were causing an unhealthy rise in prices of real estate (among other things), while Alan Greenspan, in his infamous speech, Illumina, Inc. is the leading provider of next generation DNA sequencing warned against “Irrational Exuberance,” seeing as new internet instruments and consumables. The stock rose 31% after the company companies with unproven business models were being valued on newly reported financial results that exceeded investor expectations, driven by invented metrics and were assigned multiples up to our eyeballs. But strong growth of sequencing consumables. We believe Illumina is a platform the thing is… during the Housing Bubble, the music didn’t stop until company with meaningful competitive advantages that will continue to the Fed Funds rate reached 5.5%, and in 2000, the Fed Funds rate was benefit from increased adoption of DNA sequencing in clinical applications close to 7%. Currently, the Fed Funds rate is just above 2%. By any such as cancer diagnosis and treatment. measure, relative or absolute, 2% can only be viewed as accommodating. Economists and the Fed itself, tell us that 3% is Veeva Systems Inc. is the leading provider of cloud-based data management neutral and that is where the newly minted Chairman Powell would solutions for the life sciences industry. Shares appreciated 42% after like to take us, conditions permitting. reporting another strong quarter, including traction with newer solutions and early positive results from its recently announced Nitro product. Veeva 3. Trade tensions are bad for the global economy. Trade wars are worse. If continues to demonstrate a healthy improvement in margins driven by a they persist, we believe every country will suffer and global growth combination of sustainable growth in both top and bottom lines. While its rates will decline. The consequences for the Chinese economy will be core product, Vault, serves as Veeva’s current engine of growth, we expect its significantly more severe than for the U.S., and yet, it will still grow expanding product line will create additional multi-year growth opportunities. faster. The Chinese economy has been re-orienting itself towards internal consumption and services for years now and given the rapid Shares of a leading global payment network provider Mastercard rise in disposable incomes and the emerging middle class, we suspect Incorporated rose 13% after reporting better-than-expected results with they will be fine. It would, of course, be better for all if the trade issues 31% revenue growth and 48% EPS growth. Management raised full-year were resolved. financial guidance, which now calls for revenue growth in the low 20%s. We continue to own the stock because Mastercard is a prime beneficiary of 4. Finally, we’d like to quote Warren Buffett from his recent interview with global consumer spending growth and the secular shift from cash to Becky Quick on August 30, 2018. “I don’t know when to buy stocks. But electronic payments. Idoknowwhether to buy stocks…” We agree. We think buying unique, well-managed, competitively-advantaged businesses for the long term is Intuitive Surgical, Inc. manufactures and sells the da Vinci robotic surgical a great idea. Whether the Democrats retake the house, or not… system, which is used for minimally invasive surgery. Shares appreciated

41 Baron Fifth Avenue Growth Fund

20% after Intuitive reported strong financial results, highlighted by 18% Naspers Limited is a South African company that operates a pay television procedure growth. Intuitive has a strong product pipeline, including a flexible business in Sub-Saharan Africa, a small print media business, and an internet robotic catheter system for lung biopsies. We believe the company has a division with substantial holdings in global internet companies. The majority long runway for growth and expect both top and bottom lines to expand as of Naspers’ value is attributed to its large ownership of publicly-traded procedure volumes increase. Chinese internet giant Tencent Holdings. The shares of Naspers’ declined 15% during the quarter due to heightened concerns about the regulatory Table III. environment in China, which led to a decline in the price of Tencent, and Top detractors from performance for the quarter ended September 30, 2018 due to a general lack of appetite for Chinese investments while trade Quarter End tensions between China and the United States endure. The company Market Cap or continues to trade at a massive discount to its net asset value and is Market Cap When Sold Percent evaluating potential strategies to narrow or rectify the situation, including (billions) Impact potentially listing itself on other stock exchanges (outside of South Africa) Alibaba Group Holding Limited $427.1 –0.66% and accelerating growth of its late stage venture businesses in an effort to Facebook, Inc. 474.8 –0.63 bring them to breakeven and IPO sooner. Naspers Limited 94.9 –0.45 Ctrip.com International, Ltd. 20.3 –0.45 Ctrip.com International, Ltd. is the dominant online travel service provider The Stars Group Inc. 6.4 –0.39 in China. Shares were down 22% in the most recent quarter due to slower reported revenue growth as the company works through changes in Alibaba Group Holding Limited is the largest retailer and e-commerce regulations in its air business, which were implemented in October of 2017 company in China. Alibaba owns and operates the two largest online and limited cross-selling by requiring customers to opt in instead of the shopping platforms in China, Taobao and Tmall. It also owns 33% of Ant prior custom of opting out. The company will anniversary the imposed Financial, whose brand Alipay is the largest third-party online payment restrictions in the fourth quarter and growth should reaccelerate once again. provider in China. Shares of Alibaba were down 11% in the third quarter Chinese consumer demand for travel could remain sluggish while global based on the company’s plans to continue to invest in grocery and online trade tensions remain front and center. However, longer term, Chinese food delivery businesses leading to lower overall margins. Trade tension- related news also impacted sentiment for Alibaba and all China-related travelers represent the fastest growing and largest segment of travelers stocks. We believe the company’s core business, excluding food delivery, globally and Ctrip remains the best-positioned company to capitalize on this logistics, and grocery, remains extremely profitable and continues to grow trend, in our view. To that end, the company has maintained its target of rapidly. If China’s economy slows as a result of a potential trade war, Alibaba one trillion Rmb in bookings by the end of 2020, which we think is likely would be well positioned to take share, much like their U.S. counterparts did achievable. in times of economic uncertainty. The company continues to benefit from The Stars Group Inc. is one of the leading companies in online wagering strong mobile and advertising growth (750 million mobile internet users in globally, with strong competitive advantages in Europe. The company is in China with a growing $5 trillion annual mobile payment volume), which the process of acquiring Skybet, the leading and fast growing online drives positive optionality beyond core e-commerce. We expect continued rapid growth in all areas, combined with a high reinvestment rate in newer wagering platform in the U.K. Shares of Stars Group were down 35% for the market segments, such as groceries, logistics, food delivery, and cloud period held due to disappointing results and a general weakness in the computing. We continue to be optimistic about Alibaba’s long-term gaming sector. This was a small position for the Fund where we lost prospects, and it remains a high conviction investment idea. conviction fairly quickly, realizing that our initial thesis was likely incorrect. We chose to take the loss and redeploy capital to higher conviction ideas. Shares of Facebook, Inc., the world’s largest social network, declined 15% during the quarter. Facebook provided a more muted outlook on revenue Portfolio Structure growth while raising expectations around expenses as the company ramps efforts to eliminate misleading and malicious content on the network, while The Fund’s portfolio is constructed on a bottom-up basis with the quality of continuing to invest in longer-term growth initiatives such as virtual reality. ideas and conviction level (rather than benchmark weights) determining the We remain optimistic that the company’s vast and engaged network of size of each individual investment. Sector weights tend to be an outcome of users along with the ongoing monetization of Instagram, and future the portfolio construction process and are not meant to indicate a positive monetization on WhatsApp and Messenger, will lead to encouraging or a negative “view.” financial results. Facebook is pivoting from news feed to stories as an ad format, similar to what the company achieved when it pivoted from desktop The top 10 positions represented 53.8% of the Fund, the top 20 were to mobile shortly after its IPO. We expect the company to be successful in 79.2%, and we exited the quarter with 33 investments. this effort, and expect to see positive updates in upcoming quarters. The company continues to be the only game in town in “social” and remains the Consumer Discretionary, Information Technology, Health Care, largest beneficiary of consumer engagement. The company utilizes its Communication Services, and Financials made up 91.2% of the portfolio. leadership position in mobile and AI to provide global advertisers targeted The remaining 8.8% is made up of a position in Equinix (which is classified marketing capabilities at scale. under Real Estate) as well as cash.

42 September 30, 2018 Baron Fifth Avenue Growth Fund

Table IV. recovery times, shorter hospital stays, and fewer post-surgical Top 10 holdings as of September 30, 2018 complications. Intuitive has a strong product pipeline, including a flexible Quarter End robotic catheter system for lung biopsies. We believe the company has a Quarter End Investment long runway for growth and expect both top and bottom lines to expand as Market Cap Value Percent of (billions) (millions) Net Assets procedure volumes increase over time. Amazon.com, Inc. $976.9 $50.1 16.4% Sage Therapeutics, Inc. is focused on developing novel drugs for central Alibaba Group Holding Limited 427.1 15.3 5.0 nervous system disorders. We have been following the positive Mastercard Incorporated 231.2 14.5 4.7 developments of the clinical trial results of its lead assets Alphabet Inc. 834.7 14.3 4.7 Sage-547/Sage-217 in postpartum depression and major depressive Illumina, Inc. 54.0 13.3 4.3 disorder, respectively. Comparatively, 2018 is a relatively quieter year Activision Blizzard, Inc. 63.4 12.5 4.1 although recent updates have been unequivocally positive. Notably, the FDA Visa, Inc. 305.3 12.5 4.1 delivered a best-case scenario outcome regarding guidance for Phase 3 Intuitive Surgical, Inc. 65.3 11.6 3.8 development of SAGE-217 in major depressive disorder that signifies the Facebook, Inc. 474.8 11.0 3.6 agency’s understanding of the significant unmet need. Additionally, Sage Veeva Systems Inc. 15.7 9.5 3.1 inked a lucrative collaboration deal for Japanese, Taiwanese, and South Korean rights to Sage-217 with Shionogi & Co. During this period, we have Recent Activity been slowly growing our investment expecting greater share performance over the next few years as Sage transitions into a commercial company and During the quarter, we continued to benefit from positive inflows, which we advances its diverse pipeline forward. Separately, Sage has announced continued to put to work by adding to 14 of our holdings. We also expansion into disease indications, like Parkinson’s and tremors, and we attempted to establish two new positions in Elanco Animal Health believe the maturation of the pipeline combined with eventual commercial Incorporated, which was spun off from Eli Lilly, and in Meituan Dianping, execution bode well for the company’s prospects. which went public during the quarter. We ultimately aborted both attempts as Elanco exceeded our price parameters on the first trade, and we chose Veeva Systems Inc. is the leading provider of cloud-based solutions not to increase our exposure to China in the midst of what was starting to targeted at the life sciences industry. Veeva offers customer relationship feel like a prolonged trade standoff with the U.S. We ended up with two tiny management, content, collaboration and data management solutions stub positions (less than 25 basis points combined) and decided to postpone tailored mostly to the life sciences industry. Most recently, Veeva reported the final decision. We eliminated our investment in the Stars Group as another set of excellent financial results. Management noted traction with described above. There were no other sales during the third quarter. newer solutions, while the more penetrated, commercial cloud products continued to show healthy growth rates. Though management is investing Table V. in the new products growth within life sciences and in new verticals, Veeva Top net purchases for the quarter ended September 30, 2018 continues to deliver on profitability, delivering over 27% of subscription Quarter End Amount revenue growth last year while maintaining EBITDA margins and year-over- Market Cap Purchased year growth of over 30%. With Vault now serving as the growth engine for (billions) (millions) the company, we expect that the growing product line will create additional, Activision Blizzard, Inc. $63.4 $2.9 multi-year growth opportunities for the company and believe it can be a Intuitive Surgical, Inc. 65.3 2.9 significantly larger company by capturing significant share, over time, in Sage Therapeutics, Inc. 6.6 2.2 new subsegments within and beyond life sciences. Veeva Systems Inc. 15.7 1.6 We added to our investment in after gaining more Worldpay, Inc. 31.6 1.2 Worldpay, Inc. conviction in the strategic rationale and financial merits of the combination We continued to build our position in Activision Blizzard, Inc., a leading of the U.S.-based Vantiv and the U.K.-based Worldpay. The combination video game publisher whose key game franchises include Call of Duty, created a leader in payments processing technology and solutions with a Destiny, World of Warcraft, Overwatch, and Candy Crush. While there is product suite spanning integrated point-of-sale and virtual terminals, credit some concern that the popularity of Fortnite (a new video game from a and debit card payments, mobile wallets, ATM services, accounting different publisher) will impact near-term performance, we believe that integration and treasury services, and others. The combined scale makes the Activision Blizzard has the opportunity to consistently grow revenues, company one of the obvious beneficiaries of the growth in e-commerce. continue to expand margins, and effectively allocate capital for years to come. We believe the company has an excellent management team and Table VI. stands to be a major beneficiary from a number of tailwinds benefiting the Top net sales for the quarter ended September 30, 2018 video game industry, including the shift to higher-margin digital revenue, Market Cap Amount mobile gaming, in-game advertising, eSports, and international expansion. When Sold Sold (billions) (millions) Intuitive Surgical, Inc. manufactures and sells the da Vinci robotic surgical The Stars Group Inc. $6.4 $1.8 system, which is used for minimally invasive surgery. We believe Intuitive is on the right side of a major long-term trend where more and more surgeons We eliminated our investment in The Stars Group, Inc. as described above. and patients are opting for robotic surgeries, which tend to have quicker There were no other sales during the third quarter.

43 Baron Fifth Avenue Growth Fund

Outlook Our goal remains to maximize long-term returns without taking significant risks of permanent loss of capital. We focus on identifying and investing in Every day we live and invest in a world full of uncertainty. The Federal what we believe are unique companies with sustainable competitive Reserve is raising interest rates, trade tensions are starting to have an advantages that have the ability to compound capital at high rates of return impact on global growth, China’s economy is slowing down, energy prices for extended periods of time. We are optimistic about the long-term are rising, politics and regulations continue to be unpredictable. These are all prospects of the companies in which we are invested and continue to search serious challenges with clearly uncertain outcomes. History would suggest for new ideas and investment opportunities. that most will prove passing or manageable. The business of capital allocation (or investing) is the business of taking risk, managing the Sincerely, uncertainty, and taking advantage of the long-term opportunities that those risks and uncertainties create. We are confident that our process is the right one, and we believe that it will enable us to make good investment decisions over time.

Alex Umansky Portfolio Manager November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Fund invests primarily in large cap equity securities which are subject to price fluctuations in the stock market. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. There is no guarantee that these objectives will be met.

The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them.

This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Fifth Avenue Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

44 September 30, 2018 Baron Focused Growth Fund

Dear Baron Focused Growth Fund Shareholder: Performance

Baron Focused Growth Fund (the “Fund”) increased 2.89% (Institutional Shares) in the September quarter. The Russell 2500 Growth Index, the benchmark against which we compare the performance of the Fund, increased 7.17% and the S&P 500 Index rose by 7.71% during the quarter. The S&P 500 Index measures the performance of large-cap companies. For the nine months ended September 30, 2018, Baron Focused Growth Fund increased 17.22%. The Russell 2500 Growth Index gained 15.78% and the S&P 500 Index rose 10.56% year-to-date.

Table I. Performance Annualized for periods ended September 30, 2018 Baron Baron Focused Focused Growth Growth Russell Fund Fund 2500 S&P Retail Institutional Growth 500 RONALD BARON DAVID BARON Retail Shares: BFGFX 1,2,3 1,2,3,4 2 2 Shares Shares Index Index CEO AND LEAD CO-PORTFOLIO Institutional Shares: BFGIX Three Months5 2.84% 2.89% 7.17% 7.71% PORTFOLIO MANAGER MANAGER R6 Shares: BFGUX Nine Months5 16.94% 17.22% 15.78% 10.56% One Year 19.96% 20.34% 23.13% 17.91% Three Years 16.49% 16.80% 17.96% 17.31% of their assets, which we regard as inflation hedges, have continued to Five Years 9.64% 9.93% 12.88% 13.95% increase. This, of course, enhances the long-term competitive advantages of Ten Years 9.89% 10.15% 13.61% 11.97% those businesses. Fifteen Years 12.30% 12.48% 11.26% 9.65% Since Inception Two investments, Tesla, Inc. and Red Rock Resorts, Inc., represented in (May 31,1996) 11.33% 11.44% 8.47% 8.84% aggregate 15.8% of the Fund’s average assets. Each experienced share price declines of slightly more than 20% in the quarter. That had a material During the quarter, 59.8% of Baron Focused Growth Fund’s average assets negative impact of 368 basis points on the Fund’s performance in the underperformed the Fund’s benchmark index. Four of those investments, period. Hyatt Hotels Corp., CoStar Group, Inc., Vail Resorts, Inc., and American Homes 4Rent, represented 43.9% of the Fund’s average assets. All four Tesla’s share price fell on the last day of the third quarter when it was businesses have a significant portion of their value attributed to real estate announced that the SEC filed a complaint alleging Elon Musk had made false holdings. In the short term, higher interest rates caused investors to value and misleading communications in August regarding a proposed Tesla income produced from real estate for less. Regardless, the replacement costs “going private” transaction. That complaint was settled two days later, and

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.40% and 1.12%, but the net annual expense ratio was 1.35% and 1.10% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) for and the Fund’s transfer agency expenses may be reduced by expense offsets froman unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. 1 Reflects the actual fees and expenses that were charged when the Fund was a partnership. The predecessor partnership charged a 15% performance fee through 2003 after reaching a certain performance benchmark. If the annual returns for the Fund did not reflect the performance fees for the years the predecessor partnership charged a performance fee, the returns would be higher. The Fund’s shareholders will not be charged a performance fee. The performance is only for the periods before the Fund’s registration statement was effective, which was June 30, 2008. During those periods, the predecessor partnership was not registered under the Investment Company Act of 1940 and was not subject to its requirements or the requirements of the Internal Revenue Code relating to registered investment companies, which, if it were, might have adversely affected its performance. 2 The indexes are unmanaged. The Russell 2500™ Growth Index measures are classified as growth and the S&P 500 Index of 500 widely the performance of small to medium-sized U.S. companies that held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 3 The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 4 Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. 5 Not annualized.

45 Baron Focused Growth Fund

when the company reported 70% increased sales in the September quarter we regard its share price as more than 35% undervalued when compared to to $6.8 billion and $1.4 billion operating income before capital spending, its the asset value of its hotels and management fee income. Hyatt’s share share price fully recovered. We expect Tesla’s business to continue to grow price increased only 3.36% in the quarter. at a very rapid rate and that improvements to governance required by the CoStar continues to increase its bookings at an accelerated rate and appears SEC and being implemented by Tesla will be well received by investors. to be taking share. This leading real estate services business share price Red Rock’s share price fell 20.19% in the period due to investors’ concerns increased only 1.99% in the period. that lower third quarter Las Vegas Strip hotel rates could hurt the Vegas locals casinos. This is although 85% of Red Rock’s revenue is derived from During the quarter, 8 of the Fund’s 14 investments that represented 40.2% local residents’ predictable slot machine gaming, and not from tourists. The of average assets, outperformed the Russell 2500 Growth Index benchmark. Las Vegas population is continuing to grow 2%-to-3% per year, home prices Seven stocks representing 34.7% of average assets, achieved double-digit are increasing, its economy is strong, and Red Rock has a strong niche returns in the period. position in a legislatively, supply-constrained market. In addition, we expect Iridium Communications Inc., with a 6.4% average weighting, gained Red Rock to generate strong returns on its two recent renovation projects at 40.62% in the period. In the quarter, the company launched 10 more of the the Palms and Palace casinos. new NEXT satellites into orbit and raised more debt, which helped eliminate The share price of Vail Resorts, the Fund’s largest holding, was virtually liquidity concerns. unchanged in the quarter. The company’s season pass sales for the FactSet Research Systems, Inc., a data analytics company for the upcoming season were ahead 15% from year ago levels. In addition, the investment community, increased 13.25% in the quarter as it signed an company has recently purchased four ski resorts in the Northeast, Colorado, agreement with Merrill Lynch Wealth Management for FactSet’s systems, and Pacific Northwest that should further increase pass sales and generate accelerating its revenue growth. The company continues to have a strong more stable earnings. product and continues to take market share while penetrating a $15 Hyatt repurchased $585 million of its shares in the first six months of 2018 billion-to-$20 billion addressable market. FactSet represents a compelling and expects to repurchase an additional $215 million before year end. The compounding growth story that should grow its earnings at a mid-teens rate company’s 3% “RevPAR” growth is above that of the industry average and over the next few years.

Table II. Performance Periods Baron Focused Growth Fund underperformed Baron Growth Stocks Internet Underperform Bubble 2014-2016 Annualized Returns 10/8/1998 12/31/2013 to to 3/9/2000 12/31/2016 Baron Focused Growth Fund (Institutional Shares) 41.77% 0.45% Russell 2500 Growth Index 126.53% 5.45% S&P 500 Index 32.29% 8.87%

Table III. Performance Millennium to Present. The Impact of Not Losing Money. Millennium Internet Bubble to Financial Financial Panic to Millennium Internet Panic Present Bubble to Present Inception 12/31/1999 12/31/2008 12/31/1999 5/31/1996 to to to to 12/31/2008 9/30/2018 9/30/2018 9/30/2018 Value Value Value Value $10,000 Cumulative $10,000 Cumulative $10,000 Cumulative $10,000 Cumulative Baron Focused Growth Fund (Institutional Shares) $12,732 27.32% $36,584 265.84% $46,579 365.79% $112,397 1,023.97% Russell 2500 Growth Index $ 6,931 (30.69)% $49,581 395.81% $34,364 243.64% $ 61,436 514.36% S&P 500 Index $ 7,188 (28.12)% $39,666 296.66% $28,512 185.12% $ 66,346 563.46%

From 2014 through 2016 we invested in several businesses whose stocks underperformed when they were investing in themselves to grow. CoStar, Benefitfocus, Inc., and Guidewire Software, Inc. are all examples of this strategy. These companies have outperformed this year as investments they made are beginning to generate returns. While the Fund’s three- and five-year performance continues to lag the index, most of this was due to the 2014 through 2016 results.

46 September 30, 2018 Baron Focused Growth Fund

We believe the Fund’s underperformance from 2014 through 2016 is analogous to instances when after brief periods of underperformance, the Fund subsequently outperformed for an extended period. For example, in the 18-month period from October 1998 through March 2000, at the height of the Internet Bubble, the Fund, which owned no internet stocks, increased 41.77% annualized while the benchmark increased 126.53% annualized…just prior to the Internet Bubble bursting and the index falling materially. Please see Table II. Similar to Baron Focused Growth Fund’s relatively strong performance in the post-Internet Bubble period, we expect the Fund to perform well over the next few years. This is despite our expectation that there will be periods when value stocks outperform the growth stocks in which we have invested. However,we can certainly make no guarantee this will be the case. Since its inception on May 31, 1996, the Fund’s 11.44% annualized performance has exceeded that of its benchmark by an average of approximately 300 basis points per year. This means that a $10,000 investment in Baron Focused Growth Fund over 22 years ago would now be worth approximately $112,400! If an investor had instead invested $10,000 in a passive index fund that mirrored the Russell 2500 Growth Index, it would be worth approximately $61,400. Please see Table I and III. Baron Focused Growth Fund’s beta has averaged .77 since inception. This means the Fund has been 77% as volatile as the benchmark. As a result of the Fund’s strong absolute and relative returns and lower risk, the Fund has achieved 4.97% annual alpha, a measure of risk-adjusted performance, since inception. Baron Focused Growth Fund didn’t make much money from the peak of the Internet Bubble on December 31, 1999 through the trough of the Financial Crisis on December 31st, 2008. But…we did make something…which gave you a much better outcome than if you had invested in a passive index fund mirroring either the Russell 2500 Growth Index, our benchmark, or the S&P 500 Index. Both indexes lost money during that period. Due to the “magic” of compounding – and of not losing money during the Millennium Internet Bubble to Financial Panic period – $10,000 invested in Baron Focused Growth Fund on December 31, 1999 is worth 4.7 times that amount or $46,579 on September 30, 2018. That is 35.5% more than an investment in a passive Russell 2500 Growth Index mutual fund.

Table IV. constellation and ultimately, is looking to enable people to live on other Top contributors to performance for the quarter ended September 30, 2018 planets. The company continues to leverage its unique offering of reusable Market Quarter rockets to offer lower cost launches vs. other vendors and continues to take Cap End significant share in commercial and governmental launches. As SpaceX is a When Market Year Acquired Cap Total Percent private company, we value the company using a proprietary valuation Acquired (billions) (billions) Return Impact model, which resulted in appreciation of the stock during the quarter. Iridium Communications Table V. Inc. 2014 $0.6 $2.5 40.62% 2.15% Top detractors from performance for the quarter ended September 30, 2018 FactSet Research Market Quarter Systems, Inc. 2008 2.5 8.6 13.25 0.83 Cap End When Market Space Exploration Year Acquired Cap Total Percent Technologies Acquired (billions) (billions) Return Impact Corp. 2017 – – 15.94 0.64 Tesla, Inc. 2014 $31.2 $45.2 –22.80% –2.97% Benefitfocus, Inc. 2014 0.7 1.3 20.39 0.64 Red Rock Guidewire Resorts, Inc. 2017 2.6 3.1 –20.19 –0.71 Software, Inc. 2013 2.7 8.1 13.78 0.52 American Shares of satellite company Iridium Communications Inc. rose in the Homes 4 Rent 2018 6.2 6.5 –1.09 –0.02 quarter on quarterly results that beat investor expectations with growth Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar across all key segments. Following years of investment, Iridium has now products, and energy storage solutions. Shares declined on investor launched 65 of its 75 NEXT satellites into orbit, significantly reducing concerns around CEO Elon Musk’s announcement of potential privatization, execution risk. We expect Iridium to continue to grow its U.S. Department which led to lawsuits and investigations. Departures of a few executives and of Defense, maritime, aviation, and Internet of Things channels, especially Street expectations for lower third quarter production and deliveries also given the upgraded capabilities of its new Certus services that should roll pressured the stock. We retain conviction. We believe Tesla solved out commercially later in 2018. fundamental production issues, and expect it to optimize its production line Shares of FactSet Research Systems, Inc., a leading provider of investment to meet its margins and profitability targets over time. management tools, contributed to performance. The company announced a Shares of Red Rock Resorts, Inc., a casino operator focused on the Las large 15,000 seat deal win with Merrill Lynch Wealth Management, which Vegas locals market, decreased as many Las Vegas residents left on we believe should be meaningful from both a financial and a reputational vacation given the strong economy and a heat wave that affected the area. perspective and should serve as a great reference point for FactSet as the We consider the drop in visitation to be temporary, and do not foresee a company attempts to win more Wealth Management deals. long-term slowdown in the locals market. Las Vegas’ population continues Space Exploration Technologies Corp. (“SpaceX”) designs, manufactures, to grow, wages continue to rise 2% to 3% per year, and housing prices are and launches advanced rockets and spacecraft. In the future, SpaceX is at record highs. We view such data optimistically, and we see the stock’s looking to build broadband capabilities by deployment of a new satellite current valuation as attractive.

47 Baron Focused Growth Fund

Shares of American Homes 4 Rent, an operator of 52,000 single family over time. Examples of these companies include electric vehicle leader rental homes across 22 states, detracted slightly from performance. Weak Tesla, Inc., commercial satellite company Iridium Communications Inc., performance was driven by rising interest rates combined with potentially commercial real estate data supplier CoStar Group, Inc., and systems higher operating costs. We retain conviction due to the company’s robust software provider to the insurance industry Guidewire Software, Inc. runway for growth via increasing rents and margins, further portfolio expansion through M&A, and a strong demand tailwind rooted in Table VII. millennials’ needs for single-family housing with the backdrop of high Investments with Irreplaceable Assets student debt burdens, which limit purchase affordability. Cumulative Return Percent Since Investment Strategy & Portfolio Structure of Net Year Initial Assets Acquired Purchase The strategy of Baron Focused Growth Fund is to invest for the long term in Vail Resorts, Inc. 16.5% 2013 383.5% a focused portfolio of what we believe are appropriately capitalized, well- Hyatt Hotels Corp. 11.9 2009 185.9 managed, small- and mid-cap growth businesses at attractive prices. We Manchester United plc 5.5 2012 68.8 attempt to create a portfolio of less than 20 securities diversified by GICS Red Rock Resorts, Inc. 3.0 2017 22.4 sectors that will be approximately 80% as volatile (beta) as the market. These businesses are identified by our Firm’s proprietary research and time- Companies that own what we believe are irreplaceable assets represented tested investment approach. approximately 37% of the assets. Vail Resorts, Inc., owner of the premier ski As of September 30, 2018, the Fund held 14 investments. The Fund’s resort portfolio in the world, upscale lodging brand Hyatt Hotels Corp.,and average portfolio turnover for the past three years was 10.96%. This means storied English Premier League sports franchise Manchester United plc are the Fund has an average holding period for its investments of 9.1 years. This all examples of companies we believe possess meaningful brand equity and contrasts sharply with the average mid-cap growth mutual fund which barriers to entry in their businesses that equate to pricing power over time. typically “turns over” its portfolio every 20 months. From a quality characteristics standpoint, the Fund’s investments have higher earnings Table VIII. growth than the average holdings in the benchmark, are more conservatively Foundational Investments: Growth, Dividends, and Share Repurchases financed (evidenced by lower debt to market capitalization ratio), and offer Cumulative Return lower beta. We believe these metrics are important to help limit risk for this Percent Since concentrated portfolio. of Net Year Initial Assets Acquired Purchase While focused, the Fund is diversified by sector. The Fund’s weightings are FactSet Research Systems, Inc. 7.4% 2008 390.6% significantly different than that of the Russell 2500 Growth Index. For Choice Hotels International, Inc. 5.5 2010 298.1 example, the Fund is heavily weighted in Consumer Discretionary businesses Arch Capital Group Ltd. 4.0 2003 718.7 with about 50% of the portfolio in this sector vs. just 15% for the index. The Fund is further diversified by investments in businesses at different stages of Steady growers that continually return excess free cash to shareholders growth and development. For example, we classify the holdings of Baron represent approximately 17% of the portfolio. For example, Choice Hotels Focused Growth Fund as one of three types: rapid, early stage growth International, Inc. employs a capital light franchise model for its economy businesses; companies with irreplaceable assets that offer pricing power and hotel brands, and this model allows the company to return cash to a hedge against inflation; and finally, foundational, long-term holdings that shareholders through buybacks and dividends while still achieving strong continue to steadily grow sales and earnings while using excess free cash to revenue and earnings growth no matter the stage of the lodging cycle. As return value to shareholders. the leading specialty P&C insurance underwriter in their industry, Arch Capital Group Ltd. generates a steady stream of cash flow that it uses for Table VI. acquisitions, debt reduction, and share buybacks. Recently, the company Investments in Less Seasoned Growth Companies acquired AIG’s mortgage insurance subsidiary at what we believe was an Cumulative unusually attractive price and which complements Arch’s underwriting Return philosophy. We expect this acquisition will lead to even faster growth in Percent Since earnings and book value per share. of Net Year Initial Assets Acquired Purchase Portfolio Holdings CoStar Group, Inc. 13.0% 2014 96.7% Tesla, Inc. 10.5 2014 5.7 For the quarter ended September 30, 2018, the Fund’s top 10 holdings Iridium Communications Inc. 7.5 2014 230.4 represented 86.8% of net assets. A number of these investments have been Space Exploration Technologies Corp. 4.5 2017 39.0 successful and were purchased when they were smaller businesses. We Guidewire Software, Inc. 4.5 2013 118.5 believe they continue to offer significant further appreciation potential Benefitfocus, Inc. 4.0 2014 48.3 although we cannot guarantee that will be the case. American Homes 4 Rent 2.2 2018 5.3 The top five positions in the portfolio, Vail Resorts, CoStar Group, Hyatt Rapidly growing firms account for approximately 46% of the Fund’s assets. Hotels, Tesla, and Iridium, all have, in our view, significant competitive On current metrics, these businesses look expensive; however, we think they advantages due to irreplaceable assets, strong brand awareness, will continue to grow and have the potential to generate exceptional returns technologically superior knowhow or exclusive data that is integral to their

48 September 30, 2018 Baron Focused Growth Fund

operations. We think these businesses cannot be easily duplicated, which Thank you for investing in Baron Focused Growth Fund. enhances their potential for superior earnings growth. We are continuing to work hard to justify your confidence and trust in our stewardship of your family’s hard-earned savings. We are also continuing to Table IX. try to provide you with information we would like to have if our roles were Top 10 holdings as of September 30, 2018 reversed. This is so you can make an informed judgment about whether Market Quarter Cap End Baron Focused Growth Fund remains an appropriate investment for your When Market Percent family. Year Acquired Cap Amount of Net Acquired (billions) (billions) (millions) Assets Vail Resorts, Inc. 2013 $ 2.3 $11.1 $37.4 16.5% CoStar Group, Inc. 2014 6.2 15.3 29.5 13.0 Respectfully, Hyatt Hotels Corp. 2009 4.2 8.9 27.1 11.9 Tesla, Inc. 2014 31.2 45.2 23.8 10.5 Iridium Communications Inc. 2014 0.6 2.5 17.0 7.5 FactSet Research Systems, Inc. 2008 2.5 8.6 16.8 7.4 Choice Hotels International, Inc. 2010 1.9 4.7 12.5 5.5 Manchester United plc 2012 2.3 3.7 12.4 5.5 Space Exploration Ronald Baron David Baron Technologies Corp. 2017 – – 10.4 4.5 CEO and Lead Portfolio Manager Co-Portfolio Manager Guidewire Software, Inc. 2013 2.7 8.1 10.3 4.5 November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in small and medium-sized companies and using non-diversification, but there also may be more risk. Specific risks associated with non-diversification include increased volatility of the Fund’s returns and exposure of the Fund to greater risk of loss in any given period. Securities of small and medium-sized companies may be thinly traded and they may be more difficult to sell during market downturns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Focused Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation. Beta: measures a fund’s sensitivity to market movements. The beta of the market (Russell 2500 Growth Index) is 1.00 by definition. P/E: the price earnings ratio is a valuation ratio of a company’s current stock price to its actual earnings per share. Alpha: measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta.

49 Baron International Growth Fund

Dear Baron International Growth Fund Shareholder: Performance

Baron International Growth Fund (the “Fund”) declined 2.53% (Institutional Shares) for the third quarter of 2018, while its principal benchmark index, the MSCI ACWI ex USA Index, gained 0.71% for the quarter. The MSCI ACWI ex USA IMI Growth Index, our all-cap growth proxy, declined 0.53% for the quarter, reflecting the adverse performance of growth-oriented and smaller-cap international equities during the quarter. While emerging market (“EM”) and international equities continued to underperform the major U.S. and global indexes in the quarter and year-to-date period, in our view, the principal catalyst for such underperformance has shifted from dollar liquidity withdrawal to the departure of U.S. foreign and trade policy from market expectations and convention, and to a lesser extent renewed concerns regarding Euro hegemony and Brexit proceedings. In our view, this has caused risk premium to increase materially on international assets and currencies, while thus far, perception has remained that the U.S. is largely insulated from such risks. While we believe U.S. aggression relating to protectionism and tariffs stands out as the primary driver of recent market MICHAEL KASS Retail Shares: BIGFX turbulence, we also highlight the U.S. departure from convention on foreign Institutional Shares: BINIX policy matters such as its orientation towards NATO allies and a major PORTFOLIO MANAGER R6 Shares: BIGUX change in U.S. sanction strategy. While the EM correction, which we anticipated in January, is now well advanced, we do not believe the U.S. markets or economy can remain insulated from the global liquidity and protectionist squeeze indefinitely. Contagion to the U.S., in our view, is likely, and could set up a bottom in international and EM assets and Table I. currencies as markets would likely begin to anticipate an associated change Performance† in the cadence of U.S. trade policy and/or Fed rhetoric. Further, we believe a Annualized for periods ended September 30, 2018 subtle catalyst could be a perceived peak in President Trump’s political Baron Baron International MSCI currency, as any dilution to the more aggressive elements of the “America International Growth MSCI ACWI ex First” policy could trigger a mean reversion in the year-to-date performance Growth Fund ACWI USA IMI gap between U.S. and international equities and currencies. We remain Fund Retail Institutional ex USA Growth Shares1,2 Shares1,2,3 Index1 Index1 generally enthusiastic regarding the longer-term prospects for international and EM equities based on the pillars of improved political direction, Three Months3 (2.56)% (2.53)% 0.71% (0.53)% productivity enhancing reforms, and greater access by private sector Nine Months3 (2.89)% (2.69)% (3.09)% (2.59)% entrepreneurs. Of course, we will be following developments in many One Year 4.18% 4.44% 1.76% 3.22% jurisdictions in coming months for signs of confirmation. We are positioned Three Years 12.05% 12.34% 9.97% 10.70% and ready to take advantage of ongoing market volatility in the coming Five Years 6.53% 6.81% 4.12% 5.51% months and remain optimistic that our differentiated discipline and process Since Inception position us well over the long term. (December 31, 2008) 11.40% 11.67% 8.09% 9.18%

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.41% and 1.13%, but the net annual expense ratio was 1.20% and 0.95% (restated to reflect management fee reduction from 1.00% to 0.88% and current expense waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, visit www.BaronFunds.com or call 1-800-99BARON. † The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings, and there is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. 1 The MSCI ACWI ex USA indexes cited are unmanaged, free float-adjusted market capitalization weighted indexes. The MSCI ACWI ex USA Index Net USD measures the equity market performance of large and mid cap securities across developed and emerging markets, excluding the United States. The MSCI ACWI ex USA IMI Growth Index Net USD measures the equity market performance of large, mid and small cap growth securities across developed and emerging markets, excluding the United States. The indexes and Baron International Growth Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. 2 The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

50 September 30, 2018 Baron International Growth Fund

For the third quarter of 2018, we underperformed our benchmark MSCI Recruit Holdings Co., Ltd. is a Japanese company with a large presence in ACWI ex USA Index, while also trailing our all-cap growth proxy, the MSCI the job placement advertisement and recruiting market. It also has a ACWI ex USA IMI Growth Index. Growth-related and smaller-cap equities footprint in the U.S. through its acquisitions of Indeed and Glassdoor. lagged the core ACWI ex USA Index during the quarter, as deteriorating Recruit shares have been strong in recent months following the liquidity conditions in the international markets were increasingly priced in. announcement of the Glassdoor acquisition in May and positive earnings For the year-to-date period, we have modestly outperformed the benchmark results in August. While it has not yet fully monetized its profitability, the ACWI ex USA Index, while performing roughly in line with our all-cap company’s growth profiles in Japan and the U.S. are setting it up for a long growth proxy. In our view, geopolitical and unconventional factors have runway for growth, in our view. amplified the effects of what we cautioned could be a year of liquidity AstraZeneca PLC is a U.K.-based pharmaceutical company that markets withdrawal and international equity underperformance. drugs for diseases such as cancer and diabetes. Positive clinical trial updates From a sector perspective, adverse stock selection effect in the Financials for two of its drugs, Tagrisso in front line lung cancer and DECLARE in sector had the largest negative impact on relative performance during the diabetes, helped boost the stock price. We expect continued strong quarter. This was driven by a significant decline in our India wealth performance as Astra comes out of its trough earnings, and we expect it to management and housing-related investments, which suffered late in the grow by 15%-to-20% per year over the next three-to-five years. quarter upon the credit downgrade of a large government affiliated Shares of MonotaRO Co., Ltd., an online distributor of repair tools and infrastructure lending entity known as IL&FS. This unexpected development consumables in Japan, rose during the quarter following an earnings update quickly led to a short-term and nationwide liquidity crisis, as well as concern showing an expanded product set and market share gains. We believe over the near-term outlook for financial sector credit growth and interest MonotaRO’s low-cost online infrastructure will allow it to continue spreads, while previously high expectations for this sector exacerbated the capturing market share from higher cost middlemen in the B2B distribution market impact. We remain confident in the long-term appeal of our business, both in Japan and in neighboring startup markets like China, Korea, holdings, but we took action during the quarter to reduce our exposure. and Indonesia. Another Financials investment, Sberbank of Russia PJSC, also retreated on concerns that U.S. sanctions may extend to Russian banks. Adverse stock Worldpay, Inc. provides technology solutions that enable merchants to selection in the Consumer Discretionary and Consumer Staples sectors also accept electronic payments. Shares increased after the company reported detracted from relative performance during the quarter. Here, companies strong quarterly results and raised full-year guidance. The integration of exposed to the U.S.-China trade friction and the slowdown in China credit card processor Vantiv and Worldpay is progressing well, and organic consumption, such as Amorepacific Corporation of Korea, KOSÉ revenue growth is improving. We remain excited about the stock because Corporation of Japan, and WH Group Limited and Midea Group Co., Ltd. we think Worldpay benefits from the secular growth of electronic payments, of China, all suffered double-digit declines, while The Stars Group Inc. of and the merger between Vantiv and Worldpay should create significant Canada, a leading online gaming operator, also corrected after near-term value over time, in our view. earnings expectations moderated. On the positive side, allocation effect, driven by our overweight position in Health Care and our underweight Table III. position in Real Estate, contributed to relative performance, while from a Top detractors from performance for the quarter ended September 30, 2018 country perspective, positive stock selection effect in the U.K., spread across Percent several quality growth investments, also contributed. Impact The Stars Group Inc. –0.33% Table II. Dechra Pharmaceuticals PLC –0.31 Top contributors to performance for the quarter ended September 30, 2018 Opera Limited –0.24 Percent Impact WANdisco plc –0.23 Mellanox Technologies Ltd. –0.23 Wix.com Ltd. 0.31% Recruit Holdings Co., Ltd. 0.30 The Stars Group Inc. is a leading company in online wagering currently in AstraZeneca PLC 0.30 the process of acquiring Skybet, another U.K.-based online wagering MonotaRO Co., Ltd. 0.29 platform. Shares detracted as investors reduced their exposure to gaming Worldpay, Inc. 0.27 shares globally based on weak results in Macau and slow growth in Las Vegas. We believe shares are attractively priced at current levels, and over Wix.com Ltd. is an Israeli internet company providing an operating system time, we expect investors to understand that the opening of online wagering for small businesses to build and maintain websites and function more in the U.S. represents a substantial opportunity for the company. efficiently. As the leader in the industry, Wix has over 130 million registered users and over 3.5 million premium subscribers. Shares appreciated due to improving conversion rates, growing collections, and the introduction of several promising new products. We retain conviction due to Wix’s innovative culture, large market opportunity, and strong cohort economics.

51 Baron International Growth Fund

Despite reporting strong quarterly results, shares of U.K.-based animal Table V. pharmaceutical company Dechra Pharmaceuticals PLC declined after some Top five holdings as of September 30, 2018 – Emerging and Frontier Countries one-off minor adjustments caused fiscal year 2019 consensus numbers to Percent of move down modestly. We believe investors overreacted to management Net Assets commentary on the ongoing consolidation in the veterinary practice Arco Platform Limited 1.1% industry and efforts by distributors to white label or rebrand Dechra’s Telesites, S.A.B. de C.V. 1.1 products to pass them off as their own. Tencent Holdings, Ltd. 1.0 PagSeguro Digital Ltd. 1.0 Opera Limited is a leading browser company in several emerging markets. América Móvil, S.A.B. de C.V. 0.9 We invested in Opera on the IPO, and we believe it has several growth vectors going forward, including online search and its news feed product. Shares of Opera declined due to lack of research coverage and concerns over Table VI. emerging market fundamentals. However, we expect investor awareness for Percentage of securities in developed markets as of September 30, 2018 the company to grow as investment banks initiate coverage. Opera has over Percent of 100 million monthly active users of its news feed product globally, a number Net Assets we believe could double in two-to-three years. We retain conviction. Japan 14.4% United Kingdom 12.2 WANdisco plc is a leading infrastructure software company. Its Fusion France 6.5 product enables clients to replicate live data across heterogeneous Canada 5.1 computing environments. Shares declined due to a delay of deployments Germany 4.5 into the second half of the year. We believe WANdisco’s technology can Netherlands 4.2 enhance live data consistency and streamline data management processes. United States 3.6 We are encouraged by its co-sell agreements with Alibaba Cloud and Israel 3.1 Microsoft and its partnership with IBM, which, in our view, position Norway 2.9 WANdisco for sustained revenue growth and enhanced scalability. Australia 2.6 Mellanox Technologies Ltd. is a supplier of high-performance switch Spain 2.4 systems, adapters, cables, and software supporting InfiniBand and Ethernet Ireland 2.3 networking technologies. Shares declined as the market became increasingly Switzerland 1.9 concerned over the sustainability of cloud capital expenditures, even though Finland 1.5 Mellanox continues to benefit from the upgrade cycle to 25/50/100G Belgium 1.0 speeds in data centers. We retain conviction given the company’s technological leadership in high-speed interconnects, which are becoming Table VII. increasingly relevant in a world of big data and Artificial Intelligence. Percentage of securities in emerging and frontier markets as of September 30, Portfolio Structure 2018 Percent of Net Assets Table IV. Top 10 holdings as of September 30, 2018 – Developed Countries China 6.0% Percent of India 3.0 Net Assets Brazil 2.7 AstraZeneca PLC 2.6% Mexico 2.0 Constellation Software, Inc. 2.0 Korea 1.4 Danone SA 1.9 Russia 1.3 Wix.com Ltd. 1.8 Argentina 1.1 Domino’s Pizza Enterprises Ltd. 1.8 Indonesia 0.3 Abcam plc 1.7 Nigeria 0.1 Recruit Holdings Co., Ltd. 1.7 The Fund may invest in companies of any market capitalization, and we argenx SE 1.6 strive to maintain broad diversification by market cap. As of September 30, Fresenius Medical Care AG & Co. KGaA 1.6 2018, the Fund’s median market cap was $10.0 billion, and it had Eurofins Scientific SE 1.5 approximately 47.2% in large- and giant-cap companies, 28.5% in mid-cap companies, and 10.4% in small- and micro-cap companies, as defined by Morningstar, with the remainder in cash.

52 September 30, 2018 Baron International Growth Fund

Recent Activity Outlook

During the quarter, we initiated several new positions, while also adding to In our second quarter letter, we suggested there was a rising risk of a larger existing investments, amid a period of notable capital inflows. The most correction in international and EM equities and currencies should, as we significant new additions included: Glenveagh Properties PLC, a leading expected, trade friction continue to escalate through the midterm elections. Irish homebuilder led by an innovative management team that we believe is The third quarter, and early fourth quarter, confirmed such concerns, as well positioned to take advantage of a consolidating market and a strong several markets exhibited higher volatility, while growth-related and and growing land bank; Koninklijke Vopak N.V., a Dutch natural gas smaller-cap international equities notably underperformed. In retrospect, we storage and transportation company with a unique and irreplaceable asset believe a key catalyst was the June transition from trade negotiation to base that we believe will benefit from growing European natural gas trade provocation regarding bilateral discussions between the U.S. trade dependency; Opera Limited, a Norwegian entity with a leading mobile delegation and its Chinese counterpart. We further view this event as internet web browser with a stronghold in emerging market countries, that confirmation of a broader exit by the Trump administration from its we believe is entering a phase of enhanced monetization potential as it rolls previous pattern of predictable transactional resolution. In other words, for out a compelling and artificial intelligence-driven news application in its key the first year of Trump’s presidency, he followed a pattern of establishing a markets; and Arco Platform Limited, a Brazilian digital education services provocative opening negotiating position, followed by a transactional and company that recently completed its initial public offering, and that we generally conventional compromise through which he could claim victory. believe has an attractive opportunity to scale its competitive advantages Late this spring, the administration began to diverge from this pattern, as and capture material market share gains in coming years. During the Trump increasingly de-emphasized the more traditional and conventional quarter, we also re-established positions in SoftBank Group Corp. of Japan advisors among his inner circle, and he began to increasingly “go with his and Itaú Unibanco Holding S.A. of Brazil, and meaningfully added to our gut” as well as favor more disruptive and unconventional positions in foreign existing positions in AstraZeneca PLC of the U.K., Encana Corp. of Canada, policy and trade policy matters. We suggested in recent quarterly letters KBC Group NV of Belgium, and Ryanair Holdings plc of Ireland. Finally, we that we believed 2018 would be a year of global dollar liquidity withdrawal established a new position in China Tower Corporation Limited, which with associated higher volatility and likely EM and international equity recently completed its initial public offering. China Tower is the dominant underperformance, but the magnitude of the short-term underperformance and near monopoly owner of wireless communications towers in China, exceeded our expectations, largely due to the higher risk premium investors formed in recent years when the three dominant Chinese telecom service demanded when the Trump administration departed from convention. providers spun off their wholly-owned tower assets. This restructuring was undertaken to achieve material scale and capital reduction benefits by While the U.S.-China trade dispute, and emerging market volatility in sharing infrastructure and reducing overbuild, and we believe the company general, captivated investor attention during recent months, several is early in the process of exploiting cost savings and capital efficiency developments in developed international markets also deserve mention. In benefits, and we envision several years of solid growth potential as China Italy, the majority populist party leadership presented a bold and defiant deploys 5G wireless equipment. budget proposal, which is outside Maastricht treaty guidelines. This position is testing EU authorities and causing volatility in the European credit and During the quarter, we exited our positions in China Construction Bank equity markets, as the hegemony of the Euro is again being questioned. In Corporation on concerns related to the escalation of the U.S.-China trade the U.K., the impending Brexit deadline nears while political factions are dispute, and Maruti Suzuki India Ltd. on concerns that recent liquidity splintering, leading to concern that the stalemate will present the markets tightening in India will likely impact auto demand. In addition, we took with gridlock, uncertainty, and higher risk premium. Finally, while the profits in several positions that have enjoyed significant gains, including: Japanese equity market was a bright spot during the third quarter, rising Wix.com Ltd. and Mellanox Technologies Ltd. of Israel; argenx SE,a global bond yields appear likely to force local authorities to finally exit its Dutch biotech company; and TechnoPro Holdings, Inc., SMS CO., LTD., unconventional monetary policy, potentially triggering volatility and an and MonotaRO Co., Ltd., of Japan. Further, we reduced our investments in abrupt change in market leadership. the China internet, technology and automation sectors, including Alibaba Group Holding Limited, Tencent Holdings, Ltd., Baidu, Inc., Momo Inc., Kingdee International Software Group Co. Ltd., and Midea Group Co., Ltd.

53 Baron International Growth Fund

The key questions for international and EM equity investors remain “What is suggest. In our view, the recent Supreme Court nomination process and/or the way forward?” and “What are the key catalysts we should look for as a the U.S. midterm elections could well mark “peak Trump” political currency, signal that a relative and absolute bottom can be formed?” In our view, the and should the House flip to the Democrats, would confirm a near-term way forward for developed international markets is positive resolution, or at peak in Trump’s influence over Congress and policy. We can envision several least certainty regarding the above challenges, while the way forward in EM related likely catalysts that could spark a mean reversion in relative remains capable political leadership, productivity enhancing reforms, and an performance between international and U.S. equities. As always, we remain ongoing shift in emphasis towards value-added, innovative and intellectual- confident in our unique forward-looking and bottom-up, fundamental capital based industries. Much of this remains likely, though we must approach, and remain attuned to developing themes and opportunities. monitor political momentum in various jurisdictions. In our opinion, the key Thank you for investing in the Baron International Growth Fund. market catalysts in the nearer term would begin with the obvious: a credible truce or transactional agreement between the U.S. and China on trade. Next, in the absence of such an agreement, any contagion to the developed, Sincerely, and particularly, the U.S. markets, would significantly increase the likelihood that the Fed would begin to shift its rhetoric and narrow the expected magnitude and duration of its rate hike cycle. We would view this as the most significant potential catalyst given the scope of divergence in market performance year-to-date as well as the current positioning of institutional investors and speculators. Last, and a subtle catalyst, would be anything that dilutes President Trump’s political currency, as we believe his policies are Michael Kass Kyuhey August exacerbating the squeeze on EM and international economies and markets Portfolio Manager V.P., Assistant Portfolio Manager beyond what traditional economic and financial fundamentals would November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: Non-U.S. investments may involve additional risks to those inherent in U.S. investments, including exchange-rate fluctuations, political or economic instability, the imposition of exchange controls, expropriation, limited disclosure and illiquid markets. This may result in greater share price volatility. Securities of small and medium-sized companies may be thinly traded and more difficult to sell. Even though the Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund’s returns. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron International Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

54 September 30, 2018 Baron Real Estate Fund

DEAR BARON REAL ESTATE FUND SHAREHOLDER: PERFORMANCE

The Baron Real Estate Fund (the “Fund”) declined 2.76% (Institutional Shares) in the third quarter, underperforming its primary benchmark, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”). Almost 60% of the Fund’s underperformance in the quarter (and 50% of its year-to-date underperformance) was due to our building products and services investments, many of which have been positive contributors over time. Over the course of 2018, we have been identifying some headwinds for these businesses, particularly the slowdown in the U.S. housing market that began to pick up late in the second quarter, and we took action by continuing to reduce our exposure in the third quarter. Nevertheless, these actions and the positive performance of other segments of real estate were not enough to overcome the downdraft that impacted building products and services stocks this past quarter.

Table I. Performance JEFFREY KOLITCH Retail Shares: BREFX Annualized for periods ended September 30, 2018 Institutional Shares: BREIX Baron Baron MSCI PORTFOLIO MANAGER R6 Shares: BREUX Real Estate Real Estate USA IMI Fund Fund Extended MSCI US Retail Institutional Real Estate REIT S&P 500 Shares1,2 Shares1,2 Index1 Index1 Index1 We encourage you to read the “Portfolio Structure” section presented later Three Months3 (2.84)% (2.76)% 1.91% 0.78% 7.71% in this letter. There, we discuss in detail the portfolio’s structure, which we Nine Months3 (7.08)% (6.91)% 1.18% 1.32% 10.56% believe will help illuminate the challenges the Fund has faced in 2018. We One Year 1.84% 2.12% 7.10% 2.37% 17.91% also describe a few key strategic steps we have been undertaking regarding Three Years 7.89% 8.18% 11.13% 6.30% 17.31% portfolio positioning and structure. Five Years 7.77% 8.05% 10.47% 7.78% 13.95% We also urge you to review our perspective on the outlook for real estate Since Inception and the Fund in the “Outlook” section later in this letter. (December 31, 2009) Despite recent underperformance, we believe Fund performance will (Annualized) 13.65% 13.94% 12.66% 10.34% 13.96% rebound and resume its outperformance just as it has in the past. Since Inception (December 31, The Fund was launched almost nine years ago on December 31, 2009. The 2009) Fund’s performance for the full 8-year period ended December 31, 2017 was (Cumulative)3 206.40% 213.22% 183.75% 136.48% 213.66% quite strong, delivering a cumulative return of 236.46% (Institutional Shares), exceeding the cumulative returns of the MSCI Real Estate Index While we are disappointed in our absolute and relative results for the (180.44%), the MSCI U.S. REIT Index (133.40%), and the S&P 500 Index quarter (and year-to-date), our process has not changed. The fundamentals (183.69%). During this same 8-year period, the Fund’s average annual return of many of the businesses we own remain strong, and we are taking of 16.38% surpassed the average annual return of the MSCI Real Estate advantage of opportunities to invest in and add to quality real estate Index (13.76%), the MSCI U.S. REIT Index (11.18%), and the S&P 500 Index companies, many of which are now trading at attractive valuations. (13.92%).

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.32% and 1.06%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1 The indexes are unmanaged. The MSCI USA IMI Extended Real Estate Index is a custom index calculated by MSCI for, and as requested by, BAMCO, Inc. The index includes real estate and real estate-related GICS classification securities. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, reviewed or produced by MSCI. The MSCI US REIT Index is a free float-adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The indexes and the Fund include reinvestment of interest, capital gains and dividends, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

55 Baron Real Estate Fund

During the Fund’s 8-year performance from 2010 to 2017, there were some footprint. This latest announcement, in conjunction with a similar expansion temporary periods when the Fund delivered only modest results. Yet, in each announcement earlier in 2018, provides strong visibility into future cash flow case during these eight years, the Fund rebounded by resuming its strong growth. We are big fans of CEO David Ruberg and his management team, and we performance. The most recent example occurred in 2016 and 2017. In 2016, remain bullish about the company’s prospects. the Fund declined 1.75%, underperforming the MSCI Real Estate Index, which In the most recent quarter, the shares of The Sherwin-Williams Company gained 8.24%, the MSCI U.S. REIT Index, which gained 7.14%, and the S&P gained 11.7% following solid second quarter business results. The company 500 Index, which increased 11.96%. In 2017, however, the Baron Real Estate is a global leader in the manufacturing, development, distribution, and sale Fund resumed its outperformance by advancing 31.42%, significantly of paint, coatings, and related products to professional, industrial, outperforming the MSCI Real Estate Index, which gained 18.04%, the MSCI commercial, and retail customers. Its well-known brands include Sherwin- US REIT Index, which increased only 3.74%, and the S&P 500 Index, which Williams, Dutch Boy, Krylon, Minwax, Thompson’s Water Seal, and Valspar. increased 21.83%. Sherwin-Williams products are sold exclusively through more than 4,100 Table II. company-operated stores and facilities, while the company’s other brands are Top contributors to performance for the quarter ended September 30, 2018 sold through leading mass merchandisers, home centers, independent paint Quarter End dealers, hardware stores, automotive retailers, and industrial distributors. Market Cap Percent (billions) Impact We believe Sherwin-Williams is an attractive long-term investment opportunity because: Royal Caribbean Cruises Ltd. $27.2 0.46% Norwegian Cruise Line Holdings, Ltd. 12.7 0.44 1. Paint/coatings tend to possess compelling business advantages InterXion Holding N.V. 4.8 0.31 including pricing power, high margins, and low risk of sales erosion The Sherwin-Williams Company 42.5 0.27 from e-commerce competition. Brookfield Asset Management, Inc. 44.2 0.26 2. Sherwin-Williams benefits from several competitive advantages. It The shares of cruise line operators Royal Caribbean Cruises Ltd. and maintains a leading market share position in North America of Norwegian Cruise Line Holdings, Ltd. each gained more than 20% in the approximately 40%, far greater than its closest competitor. The most recent quarter. Both companies reported strong second quarter business company benefits from advantages of scale achieved through its more results and cited their expectations for continued strength in cruise demand. than 4,000 stores and its national network of approximately 2,500 Both companies are benefiting from positive consumer sentiment, particularly customer service representatives. the North American consumer. Cruises are being booked in all core markets, 3. The company is positioned to potentially benefit from a cyclical including the Caribbean and Europe. Further, early indications suggest that rebound in residential construction and higher U.S. infrastructure business results in 2019 will also be strong given that consumers have been investment: Demand for paint tends to track new home construction, booking 2019 cruises at an earlier and faster rate than in previous periods. home prices, and existing home sales and purchases (home owners Cruise line stocks historically have traded in a range of 10-to-20 times paint prior to selling and after moving into new homes). earnings (average multiple of approximately 15 times earnings). Currently, 4. Sherwin’s $11 billion Valspar acquisition (the fifth largest global Norwegian trades at only 8.7 times its 2019 estimated earnings and Royal coatings company in the world) should continue to enhance the Caribbean trades at only 10.6 times its 2019 estimated earnings. We expect combined company’s long-term growth profile as the combination of both companies to generate an average earnings growth of approximately the two companies is complementary. Notably, the addition of 15% per year between 2018 and 2020. In our judgment, the valuations of Valspar’s product line will expand Sherwin-Williams’ geographic both companies are attractive. penetration and its industrial coatings presence. We also maintain our longer-term positive view of the total cruise line Shares of Brookfield Asset Management, Inc. gained 10.2% in the third industry for the following reasons: quarter. Brookfield is a global alternative asset manager with $129 billion in (a) favorable industry configuration wherein the three largest cruise fee-earning capital. In addition to its high-quality real estate portfolio, the line companies (Royal, Norwegian, and Carnival Cruise Lines) company owns and operates an equally impressive and diversified global constitute approximately 80% of the industry; portfolio of renewable power, infrastructure, and other private equity assets. (b) manageable new ship additions; Its broad range of assets generate high levels of predictable and sustainable (c) millennials have become a rapidly growing and important segment cash flow. of the cruise industry; Additionally, Brookfield benefits from certain barriers to entry that we think (d) high barriers to entry given that a new ship typically costs between could ultimately lead to significant asset appreciation over time. There are $800 million to $1 billion; abundant opportunities for Brookfield to grow cash flow in its asset (e) rational pricing strategies; and management business (raising more fee-earning capital) and its real estate (f) emerging new destination growth opportunities (e.g., Cuba). businesses (increasing occupancy and rents). Given the company’s excellent The shares of InterXion Holding N.V., a European-centric data center company, long-term investment returns and its strong and liquid balance sheet, we continued to perform well in the third quarter. The company delivered solid believe there is a major runway for growth across its various businesses for second quarter business results as it has consistently done since we began several years. Finally, officers and directors own 20% of the company’s acquiring its stock in late 2015. We are encouraged by management’s September shares. Accordingly, management’s interests are aligned with its announcement of new expansion projects in five markets across its European shareholders. We remain optimistic about Brookfield’s long-term prospects.

56 September 30, 2018 Baron Real Estate Fund

Table III. In 2018, the portfolio has been structured into four real estate buckets or Top detractors from performance for the quarter ended September 30, 2018 categories: Quarter End Market Cap Percent 1. REITs (billions) Impact Vulcan Materials Company $14.7 –0.70% Over the course of 2018, we have allocated approximately 30% of the Summit Materials, Inc. 2.1 –0.64 Fund’s net assets to REITs. We believe an allocation to REITs in the Installed Building Products, Inc. 1.2 –0.54 Fund’s diversified real estate-related portfolio is prudent. REITs, as Eagle Materials Inc. 4.1 –0.35 dividend-yielding securities and bond proxies, offer an element of Martin Marietta Materials, Inc. 11.5 –0.34 diversification versus the other real estate-related equity securities that populate 70% of the Fund’s net assets. We are quite disappointed in the second quarter business results and third quarter share price performance of the Fund’s construction materials In addition to real estate diversification benefits, the Fund’s REIT companies–Vulcan Materials Company, Summit Materials, Inc., Eagle category provides other notable positives, which include generally Materials Inc., and Martin Marietta Materials, Inc. Each company steady and growing commercial real estate cash flows, new delivered varying degrees of inadequate earnings results and business construction activity that is presently moderated by high construction outlooks, citing numerous headwinds including labor bottlenecks, shipping and labor costs, reasonable and in some cases “cheap” valuations, solid interruptions, unfavorable weather, cost pressures (such as higher diesel balance sheets, and attractive dividend yields. prices), and delays in pent-up demand in certain residential, commercial and On the other hand, the share price direction of REITs continues to be infrastructure projects. After each company’s second quarter results were highly sensitive to fluctuations in interest rates. In the last few years, announced, we sharpened our diligence. Our sense is that recent business REITs and other dividend-yielding securities have tended to perform obstacles may not be short lived. As such, we have reduced the Fund’s best in a declining interest rate environment as the relative appeal of a position in each company. REIT dividend versus the U.S. 10-Year Treasury yield has improved. We maintain, however, that the long-term prospects for each company are Conversely, REITs have generally lagged during periods when economic attractive because the key demand drivers for their businesses–government growth has increased and consequently interest rates have risen. For spending on infrastructure projects as well as residential and non-residential example, in 2018 the 75 basis point increase in the U.S. 10-year construction levels–remain at cyclically depressed levels and should increase treasury yield from 2.40% to 3.15% has served as a key headwind to over time. However, while these four companies present good prospects for positive and relative share price performance for many REITs. strong intermediate and long-term growth, their near-term prospects appear to be less certain. 2. Housing-Related Investments Installed Building Products, Inc. (“IBP”) is one of the nation’s largest For much of 2018, housing-related companies have approximated insulation installers in the residential new construction market, and is also 25%-to-30% of the Fund’s net assets. Included in this category are an installer of diversified complementary building products. The shares have investments in homebuilders, building product and services companies, been under pressure throughout 2018. Early in the year, increased costs land developers, construction material companies, and home centers. negatively impacted cash flow margins, thus weighing on IBP’s share price. For the last few years, we have been bullish regarding the prospects for Given that approximately two-thirds of IBP’s business is generated from new the U.S. housing market. The residential annual construction rate of single-family housing construction, a slowdown in the housing market, approximately 1.2 million new homes has remained 20% below the which seems to have emerged this summer and continued into the fall, has 60-year annual average of 1.5 million new homes even though the U.S. extended IBP’s share price pressure. Accordingly, we have exited most of the population is approximately 90% larger today (approximately 325 Fund’s position in IBP and may look to reacquire shares in the future. million) than it was 60 years ago (approximately 172 million)! PORTFOLIO STRUCTURE We have maintained that the large imbalance between pent-up housing demand and low construction levels bodes well for new single- In prior letters, we have described the structure of the Fund’s portfolio along family home purchases and prices. Additional positive factors include what we believe are compelling cyclical, secular, and geographic investment low mortgage rates, improvement in job and wage growth, positive opportunities. Examples are: signs that the millennial generation has begun to buy homes, lower Cyclical investments: Leading hotel and timeshare companies, residential building personal income taxes, and the recent uptick in the rate of home products and services companies, and construction materials companies. ownership. Secular investments: Wireless tower and data center companies. We anticipated that, in 2018, further strengthening of the U.S. economy and a more secure and optimistic consumer (given low Geographic investments: Las Vegas-centric real estate companies, unemployment, higher wages, and lower taxes), would continue to international real estate companies, and certain “best-in-class” REITs. boost demand for the lingering cyclically depressed U.S. housing In this letter, we are introducing an additional approach to categorize market. Surprisingly, however, activity in the housing market has the Fund’s portfolio holdings. We believe it may help to further slowed in the last few months – in some cases dramatically – due to a illuminate how the Fund has been structured. few key reasons:

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First, national home sales have slowed due to home price affordability Casino and Gaming Companies concerns. In the last 6 1⁄2 years, national home prices have increased 46%, on average, versus cumulative wage gains of only 14%! The share price performance of several casino and gaming companies Consequently, many would-be home buyers have now hit the “pause (such as MGM Resorts International) have lagged thus far in 2018 button” after several years of home price appreciation that has due in part to a recent slowdown in demand in Las Vegas (we view this outstripped wage gains. slowdown as temporary), and concerns that a moderation in Chinese Second, in 2018, the increase in mortgage rates has served as an economic growth may negatively impact casinos with properties in additional headwind to home price affordability for both first-time Macau. home buyers and those that are considering selling an existing home to Moreover, regional casino and gaming companies (such as Penn move into a new home. National Gaming, Inc., Boyd Gaming Corporation, and Red Rock Third, recent tax reform has capped property tax and mortgage interest Resorts, Inc.) with little or no exposure to Macau or the Las Vegas deductions, negatively impacting potential home buyers in several downtown strip, have nevertheless been incorrectly grouped with the states that tend to have higher priced homes such as California, New other casino companies that do have international and Las Vegas strip York, New Jersey, and Connecticut. exposure, and therefore have also seen their own share prices under Fourth, we believe that the emotional and financial scars from the pressure. We believe the share price weakness in several casino and 2008/09 housing crisis linger in the minds of several potential home gaming companies has presented several attractively valued buyers and may be causing some caution before purchasing a home. investment opportunities. Fifth, additional headwinds such as unfavorable weather, labor Vacation Timeshare Companies bottlenecks, and cost pressures have also affected home construction and purchases. The share prices of vacation timeshare companies have also corrected Importantly, we do not believe the 2018 slowdown in the housing in 2018 for reasons cited later in this letter. Our sense is that business market is the beginning of a major negative inflection point for the U.S. fundamentals remain solid, and current valuations are compelling. housing market. Instead, we suspect that the current housing market Cruise Line Companies slowdown represents a pause in what will continue to be a multi-year housing recovery. In the first nine months of 2018, the Fund’s investments in cruise line Unlike the 2008/09 housing crisis, today’s housing market maintains a companies, Norwegian Cruise Line Holdings, Ltd. and Royal favorable imbalance between housing demand and supply. Home Caribbean Cruises Ltd., have performed well. Early indications suggest prices, while a bit stretched, remain more affordable than they were in that business results in 2019 will remain strong given that consumers 2008/09. Additionally, the prospects for the U.S. consumer appear to have been booking 2019 cruises at an earlier and faster rate than in be improving as wage gains have begun to pick up. previous periods. Cruise line stocks historically have traded in a range Despite our longer-term bullish stance on the U.S. housing market, we of 10-to-20 times earnings (average multiple of approximately 15 have decreased the Fund’s investments in housing-related securities times earnings). Currently, Norwegian trades at only 8.7 times its 2019 (16.3% of the Fund’s net assets as of 9/30/2018) due to the current lull estimated earnings and Royal Caribbean trades at only 10.6 times its in the housing market. We believe valuations are becoming compelling. 2019 estimated earnings. We expect both companies to generate an We will continue to monitor the housing market closely, and may look average earnings growth of approximately 15% per year between 2018 to add additional housing-related investments should business and 2020. In our judgment, the valuations of both companies are prospects improve. attractive. 3. Pro-Growth, Less Interest Rate Sensitive Categories 4. Other Investments The Fund has approximately 30% of its net assets allocated to real estate-related categories that often perform well in a strong economic The Fund has maintained approximately 8% of its net assets in a group environment. These include hotels (approximately 10% of Fund’s net of other real estate companies. We remain bullish on the prospects for assets), casino and gaming companies (approximately 10%), vacation these investments. Examples include: timeshare companies (approximately 5%), and cruise lines (approximately 5%). • CBRE Group, Inc. – The world’s number one commercial real Hotel Companies estate services company which is currently valued at only 11.7 times our estimate of 2019 earnings versus its historical multiple Hotel company performance in 2018 has been mixed. On the positive of approximately 16-to-17 times earnings. side, corporate business and leisure travel demand has improved. This • Brookfield Asset Management, Inc. – A premier owner and has occurred at a time when supply growth appears to be peaking, operator of real estate-related and other infrastructure assets, partly due to high construction and labor costs. Conversely, hotel occupancy and room rate growth appear to be trailing overall GDP valued at a 20% discount to our assessment of intrinsic value. growth, and we suspect that there are some concerns that hotel cash • CoStar Group, Inc. – A leading provider of information and flows could decrease if economic growth slows. marketing services to the commercial real estate industry.

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Summary Thoughts Regarding Portfolio Structure Table IV. The broad-based weakness in the share prices of certain segments of real Fund investments in real estate-related categories as of September 30, 2018 estate in 2018–both commercial and residential–has been a big Percent of disappointment and a negative surprise. In prior periods when economic Net Assets growth improved and interest rates rose at least 80 basis points (such as the time periods started during the course of 2010, 2012, 2015, 2016, and 2017), REITs 29.7% we have pursued a strategy that has resulted in the Fund generating positive Hotel & Leisure 19.5 returns and outperforming the MSCI US REIT Index in every instance. The Hotels & Timeshare/Leisure 14.4% Fund also outperformed its primary benchmark in all but the latest period.* Cruise Lines 5.1 This strategy has included increasing exposure to real estate companies with Building Products/Services 13.8 short lease durations (such as hotels and casino and gaming companies), economically sensitive real estate companies (such as residential-related Casinos & Gaming Operators 10.4 building product and services companies and construction materials Data Center Operating Companies1 9.6 companies), and companies with strong pipelines of future development Real Estate Service Companies 4.5 projects and solid balance sheets. Real Estate Operating Companies 3.2 2018, however, is the only period in the last nine years when several Homebuilders & Land Developers 2.5 segments of real estate that have historically performed well in a solid economic and a rising interest rate backdrop, have disappointed thus far. 93.2 This development has been a significant negative surprise for us this year. Cash and Cash Equivalents 6.8 How are we positioning the portfolio in response to developments in 100.0% 2018? 1 Generally, we are “staying the course.” We continue to believe that a Total would be 17.5% if included data center REITs Equinix, Inc. and Digital Realty balanced, expansive, and diversified real estate portfolio is a sensible long- Trust, Inc. term strategy. Table V. We continue to favor companies that we believe should benefit from the Top 10 holdings as of September 30, 2018 ongoing recovery in the economy. Our ongoing discussions with most commercial and residential real estate companies suggest that business Quarter End conditions are likely to remain solid for most companies, notwithstanding Quarter End Investment Market Cap Value Percent of temporary slowdowns for some segments of real estate. We believe the (billions) (millions) Net Assets investment cases for many of these companies is more compelling today than they were earlier this year due to the sharp correction in share prices, American Tower Corp. $ 64.1 $50.6 5.9% particularly to casino and gaming companies and many residential real Equinix, Inc. 34.4 49.1 5.8 estate-related companies. InterXion Holding N.V. 4.8 42.2 5.0 We have, however, been making a few strategic adjustments. Home Depot, Inc. 237.0 37.3 4.4 First, we have been taking advantage of the largely indiscriminate sell-off in MGM Resorts International 15.0 33.8 4.0 several real estate companies to upgrade some of the Fund’s holdings. There are several “best-in-class”** companies that we believe are now “on sale” Penn National Gaming, Inc. 3.0 27.5 3.2 and are currently valued at attractive prices. Examples include CBRE Group, Brookfield Asset Management, Inc., Brookfield Asset Management, Inc., and Hyatt Hotels Corp. Inc. 44.2 26.9 3.2 Also, as part of our preparation to capitalize on the emerging opportunity to GDS Holdings Limited 4.4 24.0 2.8 buy fine companies at highly discounted prices, as of the date of this letter Norwegian Cruise Line we are maintaining the largest cash position (approximately 10%) since the Holdings, Ltd. 12.7 23.2 2.7 launch of our Fund in 2010. We will deploy this cash as these special buying opportunities re-emerge. Vulcan Materials Company 14.7 22.9 2.7

* For the period 10/8/2010 – 2/10/2011, the 10-Year U.S. Treasury Yield rose 134 basis points. Institutional Shares of the Fund returned 16.61% vs. 13.85% for the MSCI Real Estate Index and 9.04% for the MSCI US REIT Index. For the period 7/24/2012 – 12/31/2013, the 10-Year U.S. Treasury Yield rose 165 basis points. Institutional Shares of the Fund returned 60.33% vs. 32.83% for the MSCI Real Estate Index and 3.47% for the MSCI US REIT Index, on a cumulative basis. For the period 1/30/2015 – 6/10/2015, the 10-Year U.S. Treasury Yield rose 84 basis points. Institutional Shares of the Fund returned 3.76% vs. (1.36)% for the MSCI Real Estate Index and (10.62)% for the MSCI US REIT Index. For the period 7/8/2016 – 3/13/2017, the 10-Year U.S. Treasury Yield rose 127 basis points. Institutional Shares of the Fund returned 5.92% vs. 1.42% for the MSCI Real Estate Index and (8.43)% for the MSCI US REIT Index. For the period 9/7/2017 – 9/25/2018, the 10-Year U.S. Treasury Yield rose 104 basis points. Institutional Shares of the Fund returned 3.13% vs. 8.36% for the MSCI Real Estate Index and 0.47% for the MSCI US REIT Index. ** Note that “best-in-class” represents the manager’s opinion and is not based on a third-party ranking. In our opinion, characteristics of a “best-in-class” real estate company are: • Owns unique and well-located real estate assets in markets with high barriers to entry combined with attractive long-term demand demographics; • Enjoys strong long-term growth prospects together with a leading competitive position; • Maintains a conservative and liquid balance sheet; and, importantly, • Employs an intelligent and motivated management team whose interests are closely aligned with shareholders.

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Recent Activity (iii) prioritizes a strong and liquid balance sheet with the goal of attaining investment grade status so that the company is better positioned to grow. Table VI. The shares of Americold Realty Trust increased 2.2% for the period held after Top net purchases for the quarter ended September 30, 2018 reporting strong business results. The company is the only REIT that focuses on Quarter End Amount Market Cap Purchased owning and operating temperature-controlled warehouses, and has the largest (billions) (millions) portfolio of these warehouses in the U.S. and globally. We think Americold is Marriott Vacations Worldwide Corp. $5.3 $22.1 well positioned to deliver superior growth relative to most REITs due to strong CyrusOne Inc. 6.6 17.5 demand trends, limited supply, and opportunities to improve occupancy and Americold Realty Trust 3.7 11.8 rents in its current portfolio. We also anticipate that Americold will bolster its GDS Holdings Limited 4.4 10.9 growth by developing additional warehouses at attractive returns and through Hilton Grand Vacations Inc. 3.2 7.6 additional acquisitions of other temperature-controlled warehouses. We continue to believe the prospects for the company are strong, and the shares The shares of vacation timeshare companies Marriott Vacations remain attractively valued relative to most REITs. Worldwide Corp. and Hilton Grand Vacations Inc. have been under In the third quarter, the Fund acquired additional shares of GDS Holdings pressure in 2018. We suspect a combination of profit-taking following Limited at what we believe is an attractive price by taking advantage of its strong share price performance, concerns about the impact from hurricanes lower share price. The shares had been under pressure due to a negative and Hawaiian volcanoes, and concerns that consumers may be less likely to “short seller” report. We have conducted extensive diligence on the purchase vacation timeshares if economic growth slows, have weighed on company and believe the report’s conclusions are overstated and inaccurate. each company’s shares. More recently, the shares have likely been under pressure due to China Marriott Vacations Worldwide, a leading timeshare company with more “macro” concerns such as U.S.-China trade issues and a moderating Chinese than 100 resorts, recently completed its acquisition of timeshare operator economy. We believe both concerns will pass over time. ILG, Inc. We suspect that certain “event-driven” and “momentum” investors GDS is the leading developer and operator of data centers in China, with a have exited their shares in Marriott Vacations Worldwide in the last few customer base of more than 400 predominantly large technology and months, thereby pressuring the company’s share price. internet companies. Hilton Grand Vacations has made the strategic decision to allocate more of We have met with management on several occasions and are its current free cash flow toward real estate development rather than share bullish on the company’s long-term prospects for the following repurchases – a decision that should generate greater cash flow growth over reasons: the long term. We suspect that some Hilton Grand Vacations shareholders have sold shares in the company because they prefer a less capital-intensive • The Chinese digital economy is in an early growth phase, with approach to growth (“asset light”) and a greater emphasis on capital returns relatively low national internet access penetration. It is predicted that to shareholders (i.e., share repurchases and dividends). China will experience the sharpest universal growth in public cloud spending in the next few years. We are bullish about these two companies and their long-term prospects. • GDS is the leading data center provider to the fastest growing Accordingly, we have taken advantage of recent share price softness to companies in China including Baidu, Alibaba, and Tencent. Moreover, acquire shares in both companies. Our sense is that business fundamentals GDS has been designated as the preferred data center provider for remain solid and both shares are attractively valued. We also believe that Alibaba and Tencent. each company’s customer loyalty program (the Marriott Rewards loyalty • Its data centers are concentrated in the “Tier 1” major cities of China program with 110 million members and the Hilton Honors program with including Beijing, Shanghai, Shenzhen, Guangzhou, and Chengdu. 78 million members) serves as a key competitive advantage to source future • GDS generates attractive 25% return on investment on its new data growth. Finally, insiders have been buying stock of timeshare companies at center developments. prices above the level where the shares are currently trading–a bullish • We believe the company will grow its cash flow by more than 100% in indicator, in our opinion. the next three years, and the shares are now attractively valued relative In the third quarter, we acquired shares in CyrusOne Inc., a leading data to its growth rate. center REIT that owns and operates 43 data centers. We remain bullish about the prospects for real estate data center companies, because, in our Table VII. opinion, we are in the early stages of dynamic data center growth Top net sales for the quarter ended September 30, 2018 opportunities. This is due to a growing number of companies outsourcing Quarter End Market Cap or their technological needs to high-tech and state-of-the-art data center Market Cap Amount firms. Data center outsourcing is expected to grow by 100% in the next five When Sold Sold years, partly fueled by explosive growth in data and cloud computing. Cloud (billions) (millions) spending is projected to grow by 400% in the next five years. Vulcan Materials Company $ 14.7 $28.7 Mohawk Industries, Inc. 16.4 23.3 CyrusOne, in our opinion, is well positioned to capture an attractive portion Eagle Materials Inc. 4.1 15.4 of this significant growth opportunity because its management team, led by Martin Marietta Materials, Inc. 11.5 14.6 CEO Gary Wojtaszek: (i) is in the process of building one of the few global Home Depot, Inc. 237.0 13.4 data center companies so that CyrusOne will be better positioned to service its global customers; (ii) prioritizes its “sales-driven culture” which continues We recently reduced the Fund’s exposure to construction materials to result in the company gaining market share versus its competition; and, companies Vulcan Materials Company, Eagle Materials Inc., and Martin

60 September 30, 2018 Baron Real Estate Fund

Marietta Materials, Inc., following disappointing second quarter earnings We acknowledge that there are a few “yellow flags” of caution in some reports and subsequent research that suggests that a portion of the issues segments of real estate and the stock market. Notably, interest rates have that have plagued each company may linger. resumed their upward advance in the last few weeks in response to strong economic growth and somewhat “hawkish” commentary from Fed We maintain, however, that the long-term prospects for each company are Chairman Powell who stated that “we may go past neutral (interest rates), attractive because the key demand drivers for their businesses – government but we’re a long way from neutral at this point.” Our antenna will remain spending on infrastructure projects, residential and non-residential up. We will continue to monitor those factors that influence real estate construction levels – remain at cyclically depressed levels and should most directly such as construction activity, demand prospects, lending increase over time. We will continue to monitor business conditions and practices, interest rates and credit spreads, bank liquidity, and valuations. may increase our investments in the future should business prospects We also weigh macro dynamics that could impact certain segments of real improve. estate such as economic growth, inflation, interest rates, oil prices, and the We exited the Fund’s longtime holding in Mohawk Industries, Inc. strength of the U.S. dollar. following strong share price performance in 2017. We have some concerns While it is plausible that the outlook for real estate and the market may be that a large portion of the U.S. flooring industry (e.g., carpets, ceramic, tempered in the near term–perhaps as “the end of easy” growth hardwood) is losing market share to luxury vinyl tile, and therefore this materializes–we continue to identify several attractive investment segment is generating little to no growth and its profitability margins may opportunities for selected commercial and residential real estate stocks, have peaked. given generally solid business prospects and compelling valuations. We trimmed the Fund’s large position in Home Depot, Inc. following Regarding real estate valuations, large segments of real estate-related stocks several years of strong share price performance. We remain optimistic about have declined sharply in 2018 in what feels like a “sell now, ask questions Home Depot’s long-term prospects, and therefore, continue to hold it in the later” mentality. In our opinion, this broad-based and sharp price correction Fund. has left many real estate-related companies at valuations that are at the lowest levels in several years. We are identifying several companies that are OUTLOOK just too “cheap” today and have good prospects for strong returns over the next few years. In our second quarter shareholder letter, we referenced a Morgan Stanley report titled “The End of Easy,” which was published on May 13, 2018. In A Final Word on the Baron Real Estate Fund that report, the authors noted that the stock market performance in the last It is our sincere hope that you have found the content of this letter informative. nine years has exceeded the performance of the economy due to multiple positive tailwinds that included low inflation, historically low interest rates, While the Fund’s performance thus far in 2018 has been disappointing, and and positive U.S. policy catalysts (e.g., tax reform). below our historical pattern of outperformance, we believe it is an anomaly. Our team is highly energized and motivated to “right the ship.” I am Looking forward, however, the authors predicted that “the end of easy” stock optimistic that we will do so as we have done in the past, although we market performance may be approaching, as these previously positive cannot guarantee that will be the case. factors (i.e., the goldilocks environment of moderate growth, low inflation, low interest rates, an accommodative Fed, and other factors) start to Thank you for your past and continuing support. I remain a major moderate, and advance more modestly. The essence of the report is that shareholder of the Baron Real Estate Fund, alongside you. when this occurs, the economy will outperform the stock market. Sincerely, We said that Morgan Stanley’s thesis may prove to be prescient. In fact, recent economic data and Federal Reserve commentary portend that the “the end of easy” may be near. For example, the latest reports regarding job growth, consumer confidence, and consumer spending have all been quite strong. Additionally, inflation is approximately at the Fed’s 2% objective. Moreover, Fed Chairman Jerome Powell has remarked that “very accommodative policy is no longer appropriate in the current environment.” Interest rates have, once again, begun to rise. We continue to be of the view, however, that no one has a crystal ball Jeffrey Kolitch regarding how macroeconomic changes, political events, and central bank Portfolio Manager actions may unfold, and what the market’s reaction will be to those events. November 1, 2018

61 Baron Real Estate Fund

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: In addition to general market conditions, the value of the Fund will be affected by the strength of the real estate markets. Factors that could affect the value of the Fund’s holdings include the following: overbuilding and increased competition; increases in property taxes and operating expenses; declines in the value of real estate; lack of availability of equity and debt financing to refinance maturing debt; vacancies due to economic conditions and tenant bankruptcies; losses due to costs resulting from environmental contamination and its related cleanup; changes in interest rates; changes in zoning laws, casualty or condemnation losses; variations in rental income; changes in neighborhood values; and functional obsolescence and appeal of properties to tenants. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. Discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Real Estate Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such an offer or solicitation.

62 September 30, 2018 Baron Emerging Markets Fund

Dear Baron Emerging Markets Fund Shareholder: Performance

Baron Emerging Markets Fund (the “Fund”) declined 4.98% (Institutional Shares) for the third quarter of 2018, while its principal benchmark index, the MSCI EM Index, retreated 1.09% for the quarter. The MSCI EM IMI Growth Index declined 5.37% for the quarter, reflecting the adverse performance of growth-oriented equities during the quarter. While emerging market (“EM”) and international equities continue to underperform the major U.S. and global indexes in the quarter and year-to-date period, in our view the principal catalyst for such underperformance has shifted from expected dollar liquidity withdrawal to the departure of U.S. foreign and trade policy from market expectations and convention. In our view, this has caused risk premium to increase materially on international, and particularly, EM assets and currencies. While aggressive protectionism stands out as the primary driver of recent market turbulence, we also highlight the U.S.’s departure from convention on foreign policy matters, such as its orientation towards NATO allies and a major change in sanction strategy. Our conclusion is that in recent months it has become clear that President Trump’s “America First” policy also suggests emerging markets last. In this MICHAEL KASS Retail Shares: BEXFX context, while we certainly believe a legitimate agreement between the U.S. Institutional Shares: BEXIX and China on trade or a change in U.S. Fed rhetoric would likely spark a PORTFOLIO MANAGER R6 Shares: BEXUX reversal in EM relative and absolute performance, we also believe a more subtle catalyst could be a perceived peak in Trump’s political currency, as any dilution to the more aggressive elements of his “America First” policy Table I. would trigger a mean reversion in the year-to-date divergence of Performance† performance between U.S. and EM equities. The EM correction, which we Annualized for periods ended September 30, 2018 anticipated in January, is now well advanced, and we do not believe the U.S. Baron Baron markets or economy can remain insulated from the global liquidity and Emerging Emerging protectionist squeeze indefinitely. Contagion to the U.S. is likely in our view, Markets Markets MSCI Fund Fund EM IMI and could set up a significant bottom in international and EM assets and Retail Institutional MSCI EM Growth currencies as these markets would likely begin to discount a change in the Shares1,2 Shares1,2 Index1 Index1 cadence of trade policy and/or Fed rhetoric. We remain generally Three Months3 (5.00)% (4.98)% (1.09)% (5.37)% enthusiastic regarding the longer-term prospects for EM equities based on Nine Months3 (13.31)% (13.14)% (7.68)% (11.10)% the pillars of improved political direction, productivity enhancing reforms, One Year (8.03)% (7.79)% (0.81)% (3.84)% and greater access by private sector entrepreneurs. Of course, we will be following upcoming elections in coming months and quarters for signs of Three Years 9.26% 9.55% 12.36% 11.85% confirmation. We remain prepared to take advantage of ongoing market Five Years 3.99% 4.26% 3.61% 4.59% volatility and remain optimistic that our differentiated discipline and process Since Inception position us well over the long term. (December 31, 2010) 4.00% 4.26% 1.26% 2.11%

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.36% and 1.10%, respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

† The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings, and there is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. 1 The indexes are unmanaged. The MSCI EM (Emerging Markets) Index Net USD is designed to measure equity market performance of large and mid-cap securities across 23 Emerging Markets countries. The MSCI EM (Emerging Markets) IMI Growth Index Net USD is a free float-adjusted market capitalization index designed to measure equity market performance of large, mid and small-cap securities exhibiting overall growth characteristics across 23 Emerging Markets countries. The indexes and the Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. 2 The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

63 Baron Emerging Markets Fund

For the third quarter of 2018, we underperformed our benchmark MSCI EM Shares of leading semiconductor company Taiwan Semiconductor Index, while modestly outperforming our all-cap EM growth proxy, the MSCI Manufacturing Company Ltd. climbed on resilient demand for its leading EM IMI Growth Index. Growth-related equities notably lagged the core EM node applications driven by new consumer product cycles. Its long-term Index during the quarter, in our view, largely a result of concerns emanating competitive positioning also strengthened as competitor GLOBALFOUNDRIES from the escalating U.S.-China trade friction and the perceived associated decided to exit the advanced nodes business, creating a more favorable impact on earnings visibility. Although geopolitical and unconventional market structure for incumbents such as Taiwan Semiconductor. factors amplified the impact of what we expected to be a year of liquidity withdrawal and EM underperformance, we are still disappointed with our Shares of MyEG Services Berhad rose sharply during the quarter following year-to-date absolute and relative performance. Growth-oriented and mid-/ news that the company won several new contracts to deliver low-cost, large-cap equities, where we are overweight relative to our benchmark and software-enabled reporting services to Malaysian government agencies. many peers, were hit particularly hard during the year-to-date period. MyEG Services collects data and operates software systems allowing However, we note that we trail the all-cap growth proxy by only a relatively municipal offices to track immigration information, tax collection, and other modest amount. vital information. While the company may find certain growth opportunities untenable under the new Malaysian regime, we believe it has monetization From a sector perspective, adverse stock selection effect in the Financials opportunities in its home market and in neighboring regions and remains sector had the largest negative impact on relative performance during the undervalued. quarter. The overwhelming driver here was a significant decline in the investments comprising our India wealth management and housing finance Petróleo Brasileiro S.A. – Petrobras is one of the world’s largest oil & gas themes. All our holdings here suffered double-digit percentage declines late companies focused on the development of oil fields off the coast of Brazil. in the quarter, triggered by the credit downgrade of a large government Shares appreciated due to strong free cash flow and the relatively modest affiliated infrastructure lending entity known as IL&FS, subsequent to missed impact of diesel price caps on its refining segment. We remain invested debt service payments. This unexpected development quickly led to a short- given Petrobras’ assets with low breakeven costs, an increase in production term liquidity crisis and a concern over the near-term outlook for credit at pre-salt oil fields, the anticipated deleveraging of the balance sheet, and growth and interest spreads, while previous high expectations exacerbated progress on the Transfer-of-Rights resolution with the Brazilian government. the market impact. We remain confident in the long-term appeal of our Shares of Sinopharm Group Co. Ltd. rose in the quarter following news of holdings, but took action during the quarter to reduce our overweight an accretive acquisition we believe will help lower the company’s borrowing exposure. In addition, adverse stock selection in Health Care and lower costs. Sinopharm is China’s largest pharmaceutical distributor, and has exposure to the strong-performing Energy sector detracted from relative aggressively expanded its market share in recent years in an effort to performance. Within Health Care, our China value-added theme-related eliminate inefficient middlemen from its supply chain. We continue to holdings, Sino Biopharmaceutical Ltd., Yunnan Baiyao Group Co., Ltd., believe that Sinopharm will play an important role in assisting the and CSPC Pharmaceutical Group Limited all suffered material declines and government in lowering health care supply chain costs. reversed year-to-date gains. While near-term earnings visibility has been recently questioned for all three companies, the Trump administration is Shares of Korea-based automobile manufacturer KIA Motors Corporation directly targeting the China 2025 industrial policy, which has driven contributed to performance. KIA is gaining market share in Korea from significant declines in all related equities in China since late spring. On the General Motors. KIA is also expected to deliver strong earnings growth in the positive side during the quarter, stock selection effect in the Consumer U.S. and China after suffering temporary setbacks last year. Further, the Discretionary and Communication Services sectors contributed positively to company is a potential beneficiary of ongoing governmental reform, which is relative performance, while from a country perspective, strong stock likely to be value accretive to shareholders. We remain investors due to KIA’s selection in South Africa and Malaysia and higher exposure to Mexico were strong brand recognition, global presence, quality products, and attractive additional bright spots. valuation.

Table II. Table III. Top contributors to performance for the quarter ended September 30, 2018 Top detractors from performance for the quarter ended September 30, 2018 Percent Percent Impact Impact Taiwan Semiconductor Manufacturing Company Ltd. 0.30% Tencent Holdings, Ltd. –0.67% MyEG Services Berhad 0.25 Sino Biopharmaceutical Ltd. –0.52 Petróleo Brasileiro S.A. – Petrobras 0.24 Yunnan Baiyao Group Co., Ltd. –0.41 Sinopharm Group Co. Ltd. 0.20 CSPC Pharmaceutical Group Limited –0.41 KIA Motors Corporation 0.19 Alibaba Group Holding Limited –0.40

64 September 30, 2018 Baron Emerging Markets Fund

Tencent Holdings, Ltd. operates China’s most popular online gaming Portfolio Structure platform, as well as its leading social network and messaging service and its largest online media and entertainment business. Shares declined this quarter Table IV. due to a change in the regulations governing video games that has effectively Top 10 holdings as of September 30, 2018 frozen new game approvals for the moment. We retain conviction, as we Percent of Net Assets expect the freeze to be lifted and estimate that Tencent can grow each of its business segments for years to come given its scale, its track record of Tencent Holdings, Ltd. 3.7% execution, and its unique online intellectual property and assets. Alibaba Group Holding Limited 2.7 Samsung Electronics Co., Ltd. 2.5 Shares of Sino Biopharmaceutical Ltd., a leading Chinese pharmaceutical Taiwan Semiconductor Manufacturing Company Ltd. 1.9 player focused on R&D, detracted from performance due to the launch of a Sberbank of Russia PJSC 1.7 pilot drug reimbursement program that, if implemented, could have a KIA Motors Corporation 1.7 meaningful impact on profitability for certain medications. However, we Petróleo Brasileiro S.A. – Petrobras 1.6 believe Sino is benefiting from strong secular demand for health care China Mobile Ltd. 1.6 services in China, driven by an aging population and growing incidence of Fomento Económico Mexicano, S.A.B. de C.V. 1.5 chronic diseases. We retain conviction due to Sino’s strong leadership KB Financial Group, Inc. 1.4 position, robust drug pipeline, and extensive marketing network. Shares of China-based pharmaceutical company Yunnan Baiyao Group Co., Exposure By Country Ltd. detracted from performance as a slowdown in consumer spending hurt upgrades toward premium products. We believe the current subdued Table V. sentiment is temporary and that Yunnan Baiyao’s core brand Percentage of securities by country as of September 30, 2018 competitiveness remains solid as market share for key products continues to Percent of strengthen. Longer term, we believe Yunnan Baiyao will be a category Net Assets winner in consumer segments such as toothpaste and shampoo. China 25.9% India 13.0 Shares of CSPC Pharmaceutical Group Limited, a leading Chinese Korea 8.5 pharmaceutical player focused on R&D, detracted from performance due to Brazil 7.7 the launch of a pilot drug reimbursement program that, if implemented, Taiwan 7.2 could have a meaningful impact on profitability for certain medications. Mexico 6.5 However, we believe CSPC is benefiting from strong secular demand for South Africa 4.8 health care services in China, driven by an aging population and growing Russia 2.8 incidence of chronic diseases. We retain conviction due to CSPC’s strong leadership position, robust drug pipeline, and extensive marketing network. Philippines 2.0 Argentina 1.9 Alibaba Group Holding Limited is China’s largest e-commerce company, Thailand 1.8 owning the country’s two largest online shopping platforms in addition to United Kingdom 1.4 33% of Ant Financial. Shares detracted from performance due to fears over Hong Kong 1.0 a trade war and the company’s plan to continue investing in grocery and Malaysia 0.6 online food delivery, contributing to lower overall margins. We retain Indonesia 0.4 conviction, as we expect continued growth in all areas and a high Panama 0.4 reinvestment rate in newer market segments. We remain optimistic Nigeria 0.1 about Alibaba’s long-term prospects.

65 Baron Emerging Markets Fund

Exposure by Market Cap: The Fund may invest in companies of any market event as confirmation of a broader exit by the Trump administration from capitalization, and we have generally been broadly diversified across large-, its previous pattern of predictable transactional resolution. In other words, mid- and small-cap companies, as we believe developing world companies for the first year of Trump’s presidency, he followed a pattern of establishing of all sizes often exhibit attractive growth potential. At the end of the third a provocative opening negotiating position, followed by a transactional and quarter of 2018, the Fund’s median market cap was $9.9 billion, and we generally conventional compromise through which he could claim victory. were invested 69.2% in large- and giant-cap companies, 15.7% in mid-cap Late this spring, the administration began to diverge from this pattern, as companies, and 1.1% in small- and micro-cap companies as defined by Trump increasingly de-emphasized the more traditional and conventional Morningstar, with the remainder in cash. advisors among his inner circle, and began to increasingly “go with his gut” as well as favor more disruptive and unconventional positions in foreign Recent Activity policy and trade policy. We suggested in recent quarterly letters that we believed 2018 would be a year of global dollar liquidity withdrawal with During the quarter, we initiated several new investments, the most associated higher volatility and likely EM and international equity meaningful of which was China Tower Corporation Limited, which underperformance, but the magnitude of short-term underperformance recently completed its initial public offering. China Tower is the dominant exceeded our expectations, largely due to the higher risk premium and near monopoly owner of wireless communications towers in China, demanded by investors when the Trump administration departed from formed in recent years when the three dominant Chinese telecom service convention. In the near term, “America First” suggests EM last. providers spun off their wholly-owned tower assets. This restructuring was undertaken to achieve material scale and capital reduction benefits by The key questions then for EM and international equity investors remain sharing infrastructure and reducing overbuild, which we highlighted at the “What is the way forward?” and “What are the key catalysts we should look time as an example of our State-Owned Enterprise (“SOE”) reform theme. for as a signal that a relative and absolute bottom can be formed?” In our We believe the company is quite early in the process of exploiting cost view, the way forward for EM remains capable political leadership, savings and capital efficiency benefits, while we envision several years of productivity enhancing reforms, and an ongoing shift in emphasis towards solid growth potential as China deploys 5G wireless equipment. In addition, value-added, innovative and intellectual-capital based industries, largely led now as an independent and public entity, we believe the company has a by enhanced access for private sector entrepreneurs. Much of this remains significant opportunity to leverage its unique and nationwide asset base to largely on track, though we must monitor upcoming elections in various generate high-margin incremental revenue outside of its core tower-related jurisdictions for confirmation. In our view, the key market catalysts business. Further, we suspect the company will be a beneficiary of recently suggesting relief for EM equities would begin with the obvious: a credible announced targeted government stimulus undertaken to cushion the truce or transactional agreement between the U.S. and China on trade. tightening impact of recent U.S. trade and foreign policy measures. Next, in the absence of such an agreement, any contagion to the developed, and particularly, the U.S. markets, would significantly increase the likelihood In addition, we initiated positions in: CP All Plc of Thailand, a high-quality that the Fed would begin to shift its rhetoric and narrow the expected convenience format retailer that we believe is positioned to leverage its magnitude and duration of its rate hike cycle; we would likely view this as extensive distribution into e-commerce fulfillment activities; Sun the most significant potential catalyst given the scope of divergence in Pharmaceuticals Industries Limited, a leading India-based pharmaceutical market performance year-to-date as well as the current positioning of and generics manufacturer that we believe is in the early stages of an institutional investors and speculators. Last, and a subtle catalyst, would be extended earnings recovery; and Zai Lab Limited, an early leader in the anything that dilutes President Trump’s political currency, as we believe his nascent and developing Chinese biotech sector that is also a component of policies are exacerbating the squeeze on EM economies and markets beyond our China value-added theme. what traditional economic and financial fundamentals would suggest. In our During the quarter, we sold our position in Maruti Suzuki India Ltd., view, the period spanning the Supreme Court nomination process and the recognizing significant gains, while also reducing several positions, upcoming midterm elections could well mark “peak Trump” political particularly in China, as we moved to an underweight position given currency; and should the House flip to the Democrats, we would view such concerns that the U.S. protectionist threat would not be resolved in the an event as confirmation of a near-term peak in Trump’s influence over short term. Collectively, the largest reductions were in our internet/ Congress and policy. We believe such an outcome could spark a mean technology, SOE bank, and A-share holdings related to our China value- reversion in relative performance between EM and U.S. equities. As always, added theme. We also reduced our significant positions in a range of we remain confident in our unique forward-looking and bottom-up, financial investments, including Housing Development Finance fundamental approach, and remain attuned to developing themes and Corporation Limited of India, KB Financial Group, Inc. of Korea, and opportunities. Sberbank of Russia PJSC. Thank you for investing in the Baron Emerging Markets Fund.

Outlook Sincerely, In our second quarter letter, we suggested there was a rising risk of a larger correction in EM equities and currencies should, as we expected, trade friction continue to escalate through the midterm elections. The third quarter confirmed such concerns, as several EM markets exhibited higher volatility, while growth-related equities notably underperformed. In retrospect, we believe a key catalyst was the June transition from trade Michael Kass negotiation to trade provocation regarding bilateral discussions between the Portfolio Manager U.S. trade delegation and its Chinese counterpart. We further view this November 1, 2018

66 September 30, 2018 Baron Emerging Markets Fund

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: In addition to the general stock market risk that securities may fluctuate in value, investments in developing countries may have increased risks due to a greater possibility of: settlement delays; currency and capital controls; interest rate sensitivity; corruption and crime; exchange rate volatility; and inflation or deflation. The Fund invests in companies of all sizes, including small and medium sized companies whose securities may be thinly traded and more difficult to sell during market downturns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Emerging Markets Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

67 Baron Energy and Resources Fund

DEAR BARON ENERGY AND RESOURCES FUND SHAREHOLDER: PERFORMANCE

Table I. Performance† Annualized for periods ended September 30, 2018 Baron Baron S&P North Energy and Energy and American Resources Resources Natural Fund Fund Resources S&P Retail Institutional Sector 500 Shares1,2 Shares1,2 Index1 Index1 Three Months3 0.69% 0.80% (2.05)% 7.71% Nine Months3 6.47% 6.74% 3.13% 10.56% One Year 12.08% 12.42% 9.25% 17.91% Three Years 6.19% 6.46% 10.29% 17.31% Five Years (5.00)% (4.76)% (0.35)% 13.95% Since Inception (December 30, 2011) (1.96)% (1.73)% 1.58% 15.66%

Through the first three quarters of the year, Baron Energy and Resources JAMES STONE Retail Shares: BENFX Institutional Shares: BENIX Fund (the “Fund”) has posted strong results on an absolute and relative PORTFOLIO MANAGER R6 Shares: BENUX basis. While the strong improvements in oil prices and energy industry earnings and cash flow results should have created a clear backdrop for share price gains this year, the investment environment for energy and resource-related stocks remained challenging as investor interest in the lagged year-to-date increases in U.S. oil prices of 21.0%, growth in the Baker energy and resource sub-industries remained tepid as evidenced by various Hughes U.S. Rig Count of 13.5%, and an estimated (Source: Bloomberg) investor surveys and fund/ETF flows. The continued fervor for and increase in S&P 500 Energy Index earnings and EBITDA (earnings before performance of growth stocks in general, and particularly technology stocks, interest, taxes, depreciation, and amortization) for 2018 of 96.4% and have made it difficult for energy stocks to garner as much attention from 74.0%, respectively. We believe that the improvements that have been seen generalist investors as we believe the fundamentals warrant. Therefore, in commodity prices and business activity levels are sustainable, and can while the S&P 500 Energy Index has returned a respectable 7.5% even be improved upon over the next 12-to-24 months. This should result in year-to-date, the broader S&P 500 Index was up 10.6% and growth stocks additional earnings and cash flow growth, and provide a favorable backdrop represented by the Russell 2000 Growth Index have returned 15.8%, 862 for share price appreciation within the energy industry and for the basis points higher than Russell 2000 Value Index. Given the paltry average companies that comprise over 75% of the Fund’s holdings. index weighting of Energy within the Russell 2000 Growth Index (1.7%) While performance divergence between oil prices and equities would seem compared to the Russell 2000 Value Index (7.1%) and the performance of completely counterintuitive, there is precedent for energy equities to growth versus value this year, it is not too surprising that investor apathy underperform the spot price for oil, especially in the early phases of an toward energy-related stocks has been quite significant. industry recovery, such as we have experienced over the past year. There are Nevertheless, the Fund has gained 6.74% (Institutional Shares) year-to-date numerous examples from the past 25 years of this divergence as commodity and remains significantly ahead of its benchmark, with additional relative prices are often more volatile to both the upside and the downside than gains captured in the third quarter as shown in Table I. However, the Fund equities. However, we have also observed in past industry cycles that after and its investments have continued to underperform relative to the strength the initial recovery in the commodity, the performance differential begins to in energy prices and business fundamentals. The Fund’s year-to-date gains stabilize and eventually shift back in favor of the equities. We believe this

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.66% and 1.42%, respectively, but the net annual expense ratio was 1.35% and 1.10% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. † The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. 1 The indexes are unmanaged. The S&P North American Natural Resources Sector Index measures the performance of U.S.-traded natural resources related stocks and the S&P 500 Index of 500 widely held large cap U.S. companies. The S&P 500 Energy Index comprises those companies included in the S&P 500 that are classified as members of the GICS® energy sector. The indexes and the Fund are with dividends, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. 3 Not annualized.

68 September 30, 2018 Baron Energy and Resources Fund

phenomenon is caused by initial investor skepticism in the early phases of RSP Permian, Inc. is an exploration and production company focused on the an industry recovery and a desire to see greater industry stability and Permian Basin in West Texas. Concho Resources’ acquisition of the company improvements in profits and cash flows before increasing capital allocations closed in the third quarter. Shares appreciated prior to the merger. to the sector. Magnolia Oil & Gas Corporation is an exploration and production We believe we are in that phase of the recovery as: 1) improvements in company focused on the Eagle Ford and Austin Chalk formations in South inventory and supply/demand balances have enabled oil prices to recover Texas. Shares appreciated after Magnolia delivered earnings that beat Street from industry recession lows of around $30 per barrel to between $70-to- expectations on the back of higher production and stronger oil price $80 per barrel; 2) company financial conditions have not only stabilized, but realizations. The company also raised production guidance for the full year improved markedly in the past 18 months; and 3) growth prospects across and made an accretive acquisition. We remain investors, as we like the energy value chain are robust and attractive for the next several years. Magnolia’s low breakeven costs and exceptional, experienced management. Furthermore, the global energy industry, and, particularly, U.S. based companies, are transitioning from significant consumers of cash and capital Table III. to free cash flow generators and sharpening their focus on both returns on Top detractors from performance for the quarter ended September 30, 2018 capital and returns of capital. In our opinion, these factors and this shift in Year Percent the business model should lead to improving equity performance and should Acquired Impact position many companies across the energy value chain to be strong Tesla, Inc. 2015 –2.14% performers over the next several years. Sanchez Midstream Partners LP 2016 –0.78 Noble Midstream Partners LP 2016 –0.61 Table II. Flotek Industries, Inc. 2013 –0.46 Top contributors to performance for the quarter ended September 30, 2018 Halliburton Co. 2012 –0.37 Year Percent Acquired Impact Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar Aspen Technology, Inc. 2015 1.00% products, and energy storage solutions. Shares declined on investor concerns Concho Resources, Inc. 2012 0.86 around CEO Elon Musk’s announcement of potential privatization, which led Andeavor 2017 0.65 to lawsuits and investigations. Departures of a few executives and Street RSP Permian, Inc. 2014 0.64 expectations for lower third quarter production and deliveries also pressured Magnolia Oil & Gas Corporation 2018 0.64 the stock. We retain conviction. We believe Tesla solved fundamental production issues, and expect it to optimize its production line to meet its Shares of Aspen Technology, Inc., a leader in optimization software for the margins and profitability targets over time. process industries, contributed to performance after rallying on strong Sanchez Midstream Partners LP develops, owns, and operates midstream financial results and the potential for new products and partnerships. We services in the Western Eagle Ford Basin in South Texas. Shares declined believe demand trends for Aspen’s traditional applications are improving as given uncertainty surrounding the production plan for Sanchez Midstream’s energy budgets have stabilized. We are excited about the launch of the sponsor, for whom execution issues have presented liquidity challenges that company’s new APM suite, which we believe can add several points of may result in significantly lower throughput over the next year. The resulting revenue growth. We anticipate that margins will continue expanding from fear of a distribution cut has weighed on the stock price. We retain already robust levels, and expect continued share repurchases over time. conviction that Sanchez Midstream can meet its objectives, and at current Concho Resources, Inc. is an exploration and production company focused prices there is limited downside to holding the stock and there is potential on the Permian Basin in West Texas. Shares appreciated as Permian oil for meaningful upside. differentials tightened and investors turned optimistic regarding the Noble Midstream Partners LP provides crude oil, natural gas, and water- company’s ability to grow oil volumes. We believe the company is well related midstream services in the Delaware Basin in West Texas and positioned to exploit the deep inventory of drilling locations in the Basin. the Denver-Julesburg Basin in Colorado. Noble’s shares declined in the We expect shares to appreciate as Concho delivers on its multi-year growth quarter due to concerns regarding a pending ballot initiative in Colorado plans and continues to execute operationally on its acreage. that, if passed, could significantly curtail oil & gas exploration and Andeavor is a U.S. refining company with midstream projects on the West development in the state. Based on polling and other research, we think this Coast and in the Permian Basin in West Texas and access to cheap crude is a low probability outcome and retain conviction in the shares due to the through its refiners. Marathon Petroleum’s acquisition of Andeavor closed on company’s strong financial profile, peer-leading growth potential, and its October 1st. Shares of Andeavor increased prior to the close of the acquisition. relationship with its sponsor.

69 Baron Energy and Resources Fund

Flotek Industries, Inc. is a supplier of chemical additives to the oil & gas area, as we expect renewable energy-related businesses to have some of the industry. It has a proprietary product dubbed “Complex nano-Fluid” (CnF) best long-term growth prospects among any of the sub-industries in which that is effective in increasing oil & gas shale well productivity. Shares the Fund invests. declined due to sales that fell short of Street expectations and lower gross Oil & Gas Equipment & Services/Drilling: At 14.0%, our exposure to this margins in the Energy Chemicals and Consumer and Industrial Chemistry sub-industry was higher than at the end of last quarter due to improved Technology segments. We retain conviction, as we expect sales to resume a performance, and our decision to reallocate capital within the sub-industry differentiated growth path, and we believe the market is undervaluing the as we exited our position in U.S. Silica Holdings, Inc. We are still relatively progress Flotek has made on its cost structure. cautious about businesses in this sub-industry as earnings estimates have Halliburton Co. is a provider of oilfield services and equipment to the global been coming down due to a transitory slowdown in upstream capital energy industry. Shares declined after the company guided down earnings in investment and overcapacity across multiple service lines. However, we are September due to softness in U.S. pressure pumping demand, citing a beginning to see downward revisions slow and expect an improved combination of budget exhaustion and oil pipeline capacity constraints in environment for earnings growth in the next three-to-nine months. the Permian. We think the decline in demand is transitory and expect onshore activity to recover early next year. We like Halliburton’s growth Oil & Gas Storage & Transportation: This sub-industry, which is a mix of strategy and think future capital needs will be modest and the company MLPs, publicly traded general partnerships, and C-Corp structured should generate strong free cash flow that can be directed toward increased companies that own and operate critical oil & gas processing, storage, and dividends or an expanded share buyback program. transportation infrastructure often referred to as the “midstream,” is the fourth largest sub-industry for the Fund, representing 13.4% of its assets at PORTFOLIO STRUCTURE the end of the quarter. The weighting has continued to drift lower due to a combination of reallocation of capital within the portfolio and weaker At the end of the quarter, the portfolio breakdown in the key sub-industries relative performance during the quarter. We still think that our investments was as follows: are well positioned to capitalize on the growth in U.S. production volumes and hydrocarbon export opportunities, resulting in growth in cash flow and Oil & Gas Exploration & Production: The E&P sub-industry represented distributions, and that valuations for these companies are attractive. 41.9% of the Fund’s assets at the end of the quarter, and continued to be focused on North American-based producers that operate primarily in Oil & Gas Refining & Marketing: Independent refiners represented 7.1% of developing unconventional oil & gas reservoirs. Companies that primarily Fund assets at the end of the quarter. Refining and marketing companies operate in the Permian Basin in Texas and New Mexico remain our largest continued to be leading performers in the third quarter despite weakness in focus for E&P investments. Permian-related companies bounced back in the refining margins. One explanation for continued performance in this third quarter as investors became more comfortable that the transportation sub-industry is greater investor focus and appreciation for the pending shortages for moving oil out of the basin in 2019 may not be as problematic margin benefits that should result from a regulatory change that goes into as initially feared and perhaps began to look beyond 2019 to the industry effect in 2020 called IMO 2020. The International Maritime Organization leading production growth and free cash flow potential over a more (IMO) will mandate that beginning in 2020, shipping companies will need to extended period. We continue to believe that most of our investments in either shift to low sulfur fuels or install pollution control devices to limit this sub-industry are well positioned to grow strongly and deliver harmful emissions. It is estimated that this switch will create significant new shareholder returns even if oil prices remain flat over the next several years. demand for high value low sulfur fuels like distillates and diesel and could be This is a testament to the improvement in the asset bases and opportunity accretive to margins for complex refinery plants like those operated by most sets of these companies. Concho Resources, Inc. ended the quarter as the of the U.S. independent refining companies. In addition, the acquisition of Fund’s single largest holding at 12.2% of assets following the closing of its Andeavor by Marathon Petroleum Corp., which was announced in the acquisition of former portfolio company RSP Permian, Inc. While this is a second quarter, closed just after the end of the third quarter and the closing sizeable position for a single holding, it is lower than the 13.8% exposure we of that merger arbitrage also helped with performance. Lastly, refiners had to the two companies at the end of the second quarter and prior to the continue to pursue aggressive cash return policies through rising dividends merger. and share repurchase programs as free cash flow generation remains strong. Renewable Energy: Renewable or alternative energy is not a specific GICS Materials: Our exposure to Materials dropped further this quarter to 1.5% sub-industry, but we think this is really the appropriate classification for our as our investment in Flotek Industries, Inc. continues to suffer from a lack investments in the Utilities, Information Technology, Consumer of near-term earnings visibility as it transitions its business model away Discretionary, and Industrials sectors, since our investments in these areas from distributor-oriented sales to more direct sales. We continue to monitor are primarily companies involved in the construction and operation of solar this situation as we see material value in the shares due to their technology, and wind electricity generation assets, fuel cells, and battery storage competitive positioning, and supply chain advantages. However, systems. Investments in this area accounted for 19.4% of the Fund at the management needs to be successful in managing this transition for that end of the quarter, and we continue to expand our research efforts in this value to be realized.

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Table IV. is finally a rising propensity to invest in offshore projects once more. Drilling Top 10 holdings as of September 30, 2018 companies and others that participate in this part of the industry have been Market Quarter experiencing rising tendering and contracting activity for much of this year Cap End and that activity is expected to improve over the next several years. This When Market Percent Year Acquired Cap Amount of Net should lead to higher asset utilization and rising day rates and drive Acquired (billions) (billions) (millions) Assets Transocean’s earnings and cash flows materially higher. Even though our Concho Resources, Inc. 2012 $10.1 $30.6 $6.6 12.2% investment in Transocean is of the more cyclical variety, we think that this Parsley Energy, Inc. 2014 2.5 9.3 4.1 7.5 is a best-in-class company and best-in-class management and that the risk/ Tesla, Inc. 2015 30.3 45.2 3.7 6.8 reward is attractive. Encana Corp. 2016 5.2 12.5 3.4 6.3 During the quarter, we also established a new position in Pioneer Natural Aspen Technology, Inc. 2015 3.3 8.1 2.9 5.3 Resources Company. Pioneer, along with Concho Resources, is one of the Andeavor 2017 9.8 23.2 2.5 4.5 leading companies in the ownership and development of Permian Basin oil Golar LNG Ltd. 2012 3.5 2.8 2.5 4.5 resources, and by our estimates, it has the deepest inventory of future TPI Composites, Inc. 2017 0.5 1.0 2.3 4.2 drilling locations and longest resource life of any of the public or private Cactus, Inc. 2018 0.5 2.9 2.0 3.7 companies operating in the Basin. This is not the first time we have owned WPX Energy, Inc. 2016 4.3 8.5 2.0 3.6 Pioneer and we decided to return to the stock following a nearly 20% correction in the share price between May of this year and when we started RECENT ACTIVITY to purchase our position. Pioneer has numerous strategic advantages that we find attractive including the largest contiguous acreage position in the Midland sub-basin of the Permian, industry leading technical knowledge of Table V. the play, strategically advantaged midstream infrastructure, and a nearly Top net purchases for the quarter ended September 30, 2018 debt-free balance sheet. Pioneer’s management and board have been Quarter End Amount Market Cap Purchased making changes to its compensation structure to re-emphasize returns over (billions) (millions) growth and to enhance the focus on capital efficiency and returns of capital. Transocean Ltd. $ 6.4 $0.9 We believe these changes along with Pioneer’s ability to generate top tier Pioneer Natural Resources Company 29.7 0.8 debt-adjusted per share growth in production and cash flows will lead to Bloom Energy Corporation 3.7 0.1 superior shareholder returns. One of our biggest successes in the third quarter could have been even Our top purchase during the quarter was Transocean Ltd., which is the bigger. Bloom Energy Corporation is a company that manufactures and leading deepwater drilling contractor in the world. We have been bearish on sells fuel cell systems (Bloom Energy Servers) that convert natural gas into the offshore drilling sub-industry for many years; but the culmination of electricity without combustion, which results in affordable, low emission, several years of financial distress among contractors finally led to a period off-grid power for its customers. The company’s solutions are ideal for use in of mergers, joint ventures, sharp cost cuts, efficiency gains, and most industrial facilities, corporate campuses, data centers, health care facilities, importantly, real capacity reductions which have positioned the offshore universities, and many other commercial and industrial settings as it can drillers for a cyclical recovery in demand. Those companies with provide customers a “green” solution for consistent and clean power. Its concentrated fleets of premium deepwater and harsh environment assets along with a good combination of contract visibility and adequate systems produce electricity at costs that are competitive with wind and re-contracting capacity should be in an excellent position to benefit from a solar, but are “always on” and are a cost-effective, oftentimes more reliable, rebound in drilling demand. Transocean fits this bill as it has been at the alternative to grid power. The company’s 2018 revenues are estimated to be forefront of the industry restructuring with two major mergers/acquisitions, about $750 million, which is a mere fraction of its current serviceable significant retirements of older assets, dramatic cost reductions, and an addressable market (“SAM”) of $175 billion and the global commercial & overhaul of its management team. As a result, it is emerging as a leaner, industrial electricity market of $1.6 trillion. Bloom Energy went public in July more profitable entity with significant future optionality to grow earnings and after significant due diligence on the company including a visit to its and cash flow. While Transocean and its peers were restructuring their manufacturing facility in California, we participated in the offering. While businesses, their customers were also focused on lowering the structural per we were excited about the company’s prospects, especially its ability to barrel breakeven costs for offshore and deepwater oil & gas developments. capture more of its SAM, we were too tepid in buying the stock in the We believe that through a combination of technology and process aftermarket and building a meaningful position in this company. The shares improvements, significant reductions have been achieved, and when oil have outperformed our initial expectations and we continue to look for companies combine these lower breakeven costs with higher oil prices, there opportunities to add to our initial purchase.

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Table VI. between Saudi Arabia and the U.S. and other allies over the death of Jamal Top net sales for the quarter ended September 30, 2018 Khashoggi in Turkey. Amount Sold Amid all of this, we think it is important to maintain perspective. Global oil (millions) markets, global equity markets, and energy/resource equity markets are EQT Corporation $1.0 always dealing with a myriad of factors that frame the risks and rewards for investing. Most of these factors tend to be shorter term in nature and will U.S. Silica Holdings, Inc. 0.7 change from month-to-month, quarter-to-quarter, and year-to-year. Landis+Gyr AG 0.7 However, as long-term investors we seek to understand how and whether EOG Resources, Inc. 0.7 these things will impact our investments across multiple time horizons and Aspen Technology, Inc. 0.6 whether they will ultimately impact our investment thesis in an individual During the third quarter, we closed out positions in EQT Corporation, U.S. company or across one of the sub-industries in which we invest. We Silica Holdings, Inc., and Landis+Gyr AG and trimmed our positions in recognize that oil prices have rebounded substantially in the last two years EOG Resources, Inc. and Aspen Technology, Inc. We had received shares following the price crash that began in late 2014, and the rise has been consistent with our predictions over the past two years of improving supply/ in EQT late last year following the closing of its acquisition of Rice Energy, demand fundamentals. However, we currently believe that prices are a lot Inc. and held onto our shares on the expectation that improving gas pipeline closer to what we would consider to be a “normalized” level. This is a level infrastructure in Appalachia and a restructuring of EQT’s midstream or a price that is not so high that it kills demand and yet is one which businesses would lead to a higher share price. However, project delays, enables companies to generate the capital needed and reinvest it at an management turmoil, persistent oversupply of natural gas, and a acceptable return to offset global production declines and grow production restructuring plan that did not impact the stock as we had hoped led us to to meet demand. At this level, we think that the upside/downside price risks use our EQT holdings as a source of funds to reinvest in higher conviction are more balanced, but we also think this is a price level that is more ideas. U.S. Silica and Landis+Gyr had both been disappointing investments conducive to generating favorable returns in energy-related equities than in for the Fund in recent months and our assessment of each company’s near- the commodity itself. Commodity returns have dominated equity returns for term and long-term fundamentals cast doubt on the potential for a the past two years and we think this is poised to change over the next turnaround that would justify holding onto their shares. several years. EOG Resources and Aspen have been successful investments for the Fund Mark Twain is reputed to have said that “history doesn’t repeat itself, but it over the past several years, and we continue to like both companies’ strong often rhymes.” We see certain patterns in this recovery that are like past growth prospects, growing free cash flow, and industry-leading technology. periods, but there are also sharp differences. The biggest difference is that However, our assessment of the valuation and the position sizes for each the shale revolution has made the U.S. the epicenter for hydrocarbon supply company led us to conclude that it made more sense to trim our position growth in the world and has rapidly made the U.S. a significant exporter of and reallocate those funds toward some of the other investments made both oil and natural gas. We expect this growth to continue given the scale during the quarter. of the resource opportunity and the challenge that much of the rest of the world will have in growing its supplies following several years of severe OUTLOOK underinvestment in reserve replacement and new project sanctions. Another important difference is the evolution of the shale revolution from resource As we turn toward the end of the year, it appears that equity markets capture and delineation (the “land grab”) to resource development (“the around the world are beginning to price in more risk, and volatility has manufacturing phase”). The land grab created a lot of value for the clearly increased in recent weeks. Investors appear to be increasingly shareholders of certain companies, but it also led to a lot of value concerned about rising U.S. interest rates, slowing non-U.S. economic destruction in others due to overspending and poor capital allocation. activity, mid-term elections, trade wars, and higher oil prices (especially in Today, we think we have a clearer picture of which companies are best emerging market currencies). Along with this macro backdrop, we would add positioned to win in the “manufacturing phase” and which companies are that energy investors have been dealing with a series of micro factors such going to be serious about nailing capital allocation and generating both as volatility in regional oil pricing differentials in multiple basins in North returns on capital and returns of capital. We think this transition to an America, falling Iranian oil exports ahead of the re-imposition of U.S. industry that earns its cost of capital and returns capital to shareholders on sanctions on Iran, the collapse of the Venezuelan oil industry, the impact of a regular basis will not only help create shareholder value, but may also have the U.S./China tariff standoff on energy exports, tighter global oil the effect of prolonging the cycle by limiting the risk of overwhelming inventories, dwindling spare production capacity, and most recently tensions demand growth with excess supply.

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Currently, the Fund’s investments are focused on several key themes: 5. The installed base of alternative energy/renewable energy projects continues to grow steadily, while breakeven cost advantages 1. North America is the engine of growth for global energy supplies relative to conventional sources continues to improve. This is over the next 5-to-10 years. Unconventional oil and natural gas creating investment opportunities in a variety of technologies development are creating volume growth that is above local including generating assets, capital equipment, and energy storage. demand, leading to the creation of North America and particularly the U.S. as a growing oil and gas export power. We are also finally We continue to view the growing disparity between the fundamentals that seeing green shoots for investments by the oil industry outside of typically drive equity prices and actual equity prices as an investment North American shale for the first time in several years. opportunity. Valuations have improved significantly in the past year and the visibility for future growth and improved corporate returns are also clearer. 2. Key shale producers have significant barriers to entry or moats There are always macro and micro risks that get factored into our around their businesses due to their success at locking up the investment process and the current risks still appear to be justified by the most prospective land and through operating scale, which should potential rewards. We believe our Fund is very well positioned to capture result in cost advantages and operating efficiency benefits. these opportunities. 3. The transition to greater capital efficiency is clearly underway. Investor apathy/pressure, poor share price performance, and the Sincerely, end of the land grab are all driving changes in management attitudes and more returns-focused compensation metrics that should produce better outcomes. 4. Infrastructure and equipment that enable upstream growth and export growth remain investable themes. There has been significant restructuring and consolidation in these sub-sectors of James Stone the industry that should improve the competitive landscape and Portfolio Manager improve investor returns. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contain this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: Energy companies can be affected by fluctuations in energy prices and supply and demand of energy fuels. Resources industries can be affected by international political and economic developments, the success of exploration projects, and meteorological events. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Energy and Resources Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

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Dear Baron Global Advantage Fund Shareholder: Performance

The Baron Global Advantage Fund (the “Fund”) lost 30 basis points (Institutional Shares) in the third quarter underperforming its benchmarks, the MSCI ACWI Growth and the MSCI ACWI Indexes, which rose 4.6% and 4.3%, respectively. The Fund is up 12.5% through the first nine months of the year, which still compares favorably to returns of 7.7% and 3.8%, respectively, for the Fund’s benchmarks.

Table I. Performance† Annualized for periods ended September 30, 2018 Baron Baron Global Global Advantage Advantage MSCI Fund Fund ACWI MSCI Retail Institutional Growth ACWI Shares1,2 Shares1,2 Index1 Index1 Three Months3 (0.39)% (0.30)% 4.56% 4.28% ALEX UMANSKY Retail Shares: BGAFX Nine Months3 12.30% 12.51% 7.65% 3.83% Institutional Shares: BGAIX One Year 23.33% 23.64% 14.74% 9.77% PORTFOLIO MANAGER R6 Shares: BGLUX Three Years 23.61% 23.87% 15.26% 13.40% Five Years 14.11% 14.34% 10.70% 8.67% tensions and the resulting slowdown in global growth were going to occur, Since Inception we were likely to suffer. Although we believe the effects were likely to be (April 30, 2012) 14.00% 14.23% 11.17% 9.79% temporary. The poor stock picking–that was on us. Gemphire Therapeutics, The Stars Group, JD.com, and JM Financial all proved to be instances of After a great 18-month run, this was a bad quarter for us. Performance bad decision making and all led to permanent losses of capital. Fortunately, attribution analysis suggests that we were in the wrong places – China, none were high conviction ideas that were owned in a meaningful size. India, South Africa (we can call them broadly the Emerging Markets (“EM”)), and largely in the wrong stocks. Excluding the effects of cash and Fund Though we experienced a noted pickup in market volatility, the overall expenses, approximately 51% (or 228 basis points) of relative investing environment obviously was not bad with the benchmarks returning underperformance can be attributed to being in a “bad neighborhood” with north of 4%. We had more than our fair share of winners this quarter, with the remaining 49% coming from poor stock picking. There was not much we Veeva Systems, Amazon, Illumina, Tenable Holdings, and Splunk could do about the first one. We are perpetually bullish on EM, particularly contributing over 50 basis points each, and another 10 investments India and China. In the last two shareholder letters, we’ve been telling contributing over 20 basis points each. Eighteen of the Fund’s holdings rose investors about our significant overweights in China, India, and EM (34% EM more than 10% during the quarter, with 13 of them rising over 20%, 7 over exposure at the beginning of this quarter) based on our long-term optimism 30%, and 4 over 40%. Unfortunately, not all of these were high conviction and conviction about the size and potential of the opportunity. If the trade investments either, and so we ended up with a mixed bag overall.

Performance listed in the table above is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2017 was 1.95% and 1.59%, respectively, but the net annual expense ratio is 1.15% and 0.90% (restated to reflect management fee reduction from 1.00% to 0.85% and current fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, visit www.BaronFunds.com or call 1-800-99BARON. † The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. 1 The indexes are unmanaged. The MSCI ACWI indexes cited are unmanaged, free float-adjusted market capitalization weighted indexes reflected in US dollars. The MSCI ACWI Growth Index Net USD measures the equity market performance of large and mid cap growth securities across developed and emerging markets. The MSCI ACWI Index Net USD measures the equity market performance of large and mid cap securities across developed and emerging markets. The indexes and the Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

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According to Morningstar, for the period ended September 30, 2018, the far more things could have happened than did happen. While ‘pattern Baron Global Advantage Fund ranked in the top 4% for all World Large recognition’ is one of the most commonly used tools in the craft of Stock Funds for its year-to-date, top 2% for 1-year, top 1% for 3-year, and capital allocation, there is only so much we can learn from studying top 1% for its 5-year performance. The Fund has been awarded a 5-star history. We think it is equally important to realize that we will get only Morningstar rating for its 3-year, 5-year, and overall performance.* one sample of the future! The pattern that we will experience is just one of the infinitely many possible ones, and it will NOT be the one Since its inception on April 30, 2012, the Baron Global Advantage Fund has that we ‘expect’ statistically. It will be something different, possibly returned 134.9% (Institutional Shares) cumulatively, compared to 97.3% for very different. What matters isn’t the best possible outcome or the the MSCI ACWI Growth Index and 82.1% for the MSCI ACWI Index. Over worst possible outcome or even the single most likely outcome. What that same time period, the Fund has outperformed the Morningstar World matters is the range of outcomes and their respective probabilities and Large Stock Category Average by 55.7% cumulatively. consequences. This is how we think about all our investments. Over the last five years, the Fund has outperformed the MSCI ACWI Growth “There have been a lot of crises, corrections, and challenges over the Index by 3.6% per year, the MSCI ACWI Index by 5.7% per year, and its last 20 years. In the U.S. alone, we’ve had the bursting of the Morningstar category peers by 6.1% per year. internet bubble, followed by 9/11 and global wars on terror (not to The fourth quarter is off to a rough start with what appears to be a mention a painful economic recession), bursting of the real estate correction in Information Technology stocks, a pullback in U.S. equities bubble and a corresponding financial crisis, which shook our markets overall, and continued carnage in Chinese and Indian shares. While we have to the core, and a few history-defining elections, which currently observed some deterioration in fundamentals (as tariffs kicked in, costs make us question who we really are. And that’s just us. It seems started to rise and demand has softened), it is way too early, in our view, to Europe has been in a perpetual crisis. First the debt crisis brought on conclude that the positive long-term trajectory for global equities has been by PIGS (Portugal, Ireland, Greece, and Spain), Russia invading altered. While it bears close watching and evaluating, we believe what we Ukraine and annexing Crimea, refugee crisis, Brexit, nationalists and wrote three months ago still holds true and is worth repeating: separatists gaining popularity in Spain and Italy, and so on. Latin America? As in Brazil, Argentina (let alone Venezuela) – we don’t “Emerging markets has been a tough place to invest lately, with the even think we need to go there. Asian currency crises, China’s hard- macro narrative overshadowing strong earnings reports from most of landing (remember those ghost towns?), instability on the Korean our EM companies. Cross-border trade is increasingly more important peninsula, and so on… to the global economy rising from 12% of global GDP in the 1960s to almost 30% in 2017. It is self-evident that heightened trade tensions “While all of this is going on, Alibaba went public in September of 2014 are bad for everyone and emerging markets’ economies, which are with an IPO price of $68 per share and was trading around $210 in late perceived as more fragile, bear the brunt of investor concerns and June of this year. Also trading around $210 per share is Facebook, increased volatility… We don’t particularly like what is going on and which IPO’d in May of 2012 at $38. Over the last 20 years, Housing have no particular insight on how this will play out. Our admittedly Development Finance Corporation of India rose from approximately 20 simple view is that this is a short-term challenge, which will be rupees per share to 1,966 rupees per share. And then, of course, there is overcome in time (as all short-term challenges have in the past). We Amazon, which listed its shares on Nasdaq in 1997 and whose market think common sense and rational behavior will prevail when all is said value recently exceeded $900 billion for a tidy return of just over… and done, because the alternative is too unpalatable to all. We believe 123,000%.” that this too shall pass, and investors will once again focus on Four months later, we think the above holds true, except of course that fundamentals and long-term probabilities for businesses in EM, which is Alibaba can now be purchased around $143 per share, Facebook around (as we said above but think is worth repeating) how we always invest $145, and Amazon’s market cap is now just over $800 billion. We do not and when we tend to do best. believe that the uniqueness, competitive advantages, or the long-term “Paul Samuelson, the first American to win a Nobel Prize in Economics, opportunity for these businesses have changed, and hence, we find them to famously said that ‘we have only one sample of the past,’ meaning that be even more attractive today.

* Morningstar calculates the Morningstar US Fund World Large Stock Category Average using the Morningstar Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. As of 9/30/2018, the category consisted of 925, 895, 739, 611 and 503 share classes for the year-to-date, 1-, 3-, 5-year and since inception (4/30/2012) periods. Morningstar ranked Baron Global Advantage Fund Institutional Share Class in the 4th,2nd,1st,1st and 3rd percentiles, respectively. As of 9/30/2018, the category consisted of 739, 611 and 739 share classes for the 3-year, 5-year and overall periods, respectively. Morningstar has awarded Baron Global Advantage Fund Institutional Share Class 5 stars, 5 stars, and 5 stars for its 3-year, 5-year, and overall performance, respectively. The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

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Table II. Splunk, Inc. is a big data analytics company that helps organizations Top contributors to performance for the quarter ended September 30, 2018 analyze threats to their IT operations. Shares rose 22% largely due to Quarter End quarterly results that beat Street expectations. The company demonstrated Market Cap Percent growth in its large customer segment with seven-figure deals and ongoing (billions) Impact bookings strength. As Splunk is strategically and financially tied to the Veeva Systems Inc. $ 15.7 1.15% proliferation of data, we believe the rapid growth in digital data and its Amazon.com, Inc. 976.9 0.84 growing importance should provide a significant growth opportunity for the Illumina, Inc. 54.0 0.74 company, which we think is becoming the standard in big data analytics. Tenable Holdings, Inc. 3.6 0.62 Splunk, Inc. 17.7 0.51 Table III. Veeva Systems Inc. is the leading provider of cloud-based data management Top detractors from performance for the quarter ended September 30, 2018 solutions for the life sciences industry. Shares appreciated 42% after Quarter End Market Cap or reporting another strong quarter, including traction with newer solutions and Market Cap early positive results from its recently announced Nitro product. Veeva When Sold Percent continues to demonstrate a healthy improvement in margins driven by a (billions) Impact combination of sustainable growth in both top and bottom lines. While its Gemphire Therapeutics Inc. $ 0.1 –0.90% core product, Vault, serves as Veeva’s current engine of growth, we expect its Naspers Limited 94.9 –0.75 expanding product line will create additional multi-year growth opportunities. JD.com, Inc. 39.0 –0.63 Facebook, Inc. 474.8 –0.59 Halting the sales of our shares of Amazon.com, Inc. proved to be beneficial Ctrip.com International, Ltd. 20.3 –0.49 for the time being, as the stock rose 18% in the third quarter. Amazon continues to benefit from its flywheel strategy, where more participation Gemphire Therapeutics Inc. is a clinical-stage biopharmaceutical company from Prime members drives greater loyalty and purchasing on Amazon.com. developing treatments for cardiometabolic disorders. Shares decreased 65% Paid Prime membership has exceeded 100 million households globally. after safety issues were uncovered during a product trial for pediatric liver While e-commerce is growing significantly faster than overall retail, Amazon disease. Due to our concerns about the company’s liquidity and financing continues to increase its total addressable market at an unprecedented pace. and clinical uncertainties, we decided to exit our position. For instance, Solimo, Amazon’s health care-related private label products are Naspers Limited is a South African company that operates a pay television growing 70% month-over-month, while the company has applied for business in Sub-Saharan Africa, a small print media business, and an internet prescription filling licenses in 17 states. Then there was this “Festive Season division with substantial holdings in global internet companies. The majority Sale” in India where apparently 1 million Xiaomi devices were sold on of Naspers’ value is attributed to its large ownership of publicly-traded Amazon in… one day! In the next several years, Amazon will continue to Chinese internet giant Tencent Holdings. The shares of Naspers’ declined build out its advertising business with the potential to reach $30 billion in 15% during the quarter due to heightened concerns about the regulatory revenues over the next few years. As the largest online retailer, Amazon can environment in China which led to a decline in the price of Tencent and due tap into the $1 trillion+ global advertising market, over a third of which is to a general lack of appetite for Chinese investments during the trade trade promotions, where brands spend to promote their products. tensions between China and the United States. The company continues to Advertising is not only a large revenue opportunity but has the ability to trade at a massive discount to its net asset value and is evaluating potential substantially improve Amazon’s core margins going forward. In the strategies to narrow or rectify the situation including potentially for listing meantime, AWS remains the runaway leader in the vast, and still rapidly itself on other stock exchanges (outside of South Africa) and accelerating growing, cloud infrastructure market. Amazon remains one of our highest growth of the late stage venture businesses in an effort to bring them to conviction investment ideas, and we think a good bet to become the most breakeven and IPO sooner. valuable company on Earth sometime in the near future. Illumina, Inc. is the leading provider of next generation DNA sequencing Shares of JD.com, Inc., China’s largest first party direct sales business and instruments and consumables. The stock rose 31% after the company second largest e-commerce company, fell 33% on its lack of margin reported financial results that exceeded investor expectations, driven by expansion relative to its fiscal year 2018 guidance, which missed investor strong growth of sequencing consumables. We believe Illumina is a platform expectations, primarily driven by increasing capital expenditure needs for its company with meaningful competitive advantages that will continue to logistics buildout. In addition, the slow recovery in the apparel business and benefit from increased adoption of DNA sequencing in clinical applications misconduct allegations involving CEO Richard Liu dampened market such as cancer diagnosis and treatment. confidence. We have decided to move on and redeploy capital. Tenable Holdings, Inc. is a Maryland-based cybersecurity company focused on the Vulnerability Management (VM) and Cyber Exposure markets. The company is one of the few dominant software solutions providers in this space and is growing significantly faster than its competitors. The stock appreciated 69% after its Initial Public Offering in July and we were able to acquire a small position before the run up. Tenable reported its first set of quarterly results as a public company, which came in above the initial guidance. We believe Tenable’s differentiated architecture, focus on the VM market, and penetration of its Nessus scanner position the company well to benefit as a leader in this growing market.

76 September 30, 2018 Baron Global Advantage Fund

Shares of Facebook, Inc., the world’s largest social network, declined 15% Exposure By Country during the quarter. Facebook provided a more muted outlook on revenue growth, while raising expectations around expenses as the company ramps Table V. efforts to eliminate misleading and malicious content on the network, and Percentage of securities by country as of September 30, 2018 while continuing to invest in longer-term growth initiatives such as virtual Percent of Net Assets reality. We remain optimistic that the company’s vast and engaged network of users along with the ongoing monetization of Instagram, and future United States 48.8% monetization on WhatsApp and Messenger, will lead to encouraging China 10.8 India 5.8 financial results. Facebook is pivoting from news feed to stories as an ad Israel 4.7 format, similar to what the company achieved when it pivoted from desktop Netherlands 4.7 to mobile shortly after its IPO. We expect the company to be successful in South Africa 4.4 this effort, and expect to see positive updates in the upcoming quarters. The Argentina 3.7 company continues to be the only game in town in “social” and remains the Canada 3.1 largest beneficiary of consumer engagement. The company utilizes its Brazil 2.7 leadership position in mobile and AI to provide global advertisers targeted Japan 1.9 marketing capabilities at scale. United Kingdom 1.8 Taiwan 1.4 Ctrip.com International, Ltd. is the dominant online travel service provider Australia 0.8 in China. Shares were down 22% in the most recent quarter due to slower reported revenue growth as the company works through changes in Recent Activity regulations in its air business, which were implemented in October of 2017 and limited cross-selling by requiring customers to opt-in instead of the prior Duringthequarter,weinitiated8newinvestmentsandaddedto20existing custom of opting out. The company will anniversary the imposed restrictions positions, as we put the Fund’s inflows to work. We also closed out four in the fourth quarter and growth should reaccelerate once again. Chinese investments and reduced one (it was eliminated shortly after the quarter end), consumer demand for travel could remain sluggish while global trade none of which were able to graduate into “core” holdings. We exited the tensions remain front and center. However, longer term, Chinese travelers September quarter with 49 holdings, at the high end of our 40 to 50 name range. represent the fastest growing and largest segment of travelers globally and Ctrip remains the best-positioned company to capitalize on this trend, in our Table VI. view. To that end, the company has maintained its target of 1 trillion Rmb in Top net purchases for the quarter ended September 30, 2018 bookings by the end of 2020, which we think is likely achievable. Quarter End Amount Market Cap Purchased Portfolio Structure (billions) (millions) Activision Blizzard, Inc. $ 63.4 $1.5 The portfolio is constructed on a bottom-up basis with the quality of ideas Alibaba Group Holding Limited 427.1 1.5 and conviction level having the most significant roles in determining the size Pinduoduo Inc. 29.1 1.3 argenx SE 2.7 1.2 of each individual investment. Sector or country weights tend to be an MercadoLibre, Inc. 15.0 1.0 outcome of the portfolio construction process and are not meant to indicate a positive or a negative “view.” We continued to build our position in Activision Blizzard, Inc.,aleading The top 10 positions represented 40.9% of the Fund, and the top 20 were video game publisher whose key game franchises include Call of Duty, 64.3%. 94.6% of the Fund’s assets are invested in stocks in the Information Destiny, World of Warcraft, Overwatch, and Candy Crush. While there is some concern that the popularity of Fortnite (a new video game from a Technology, Communication Services, Consumer Discretionary, Health Care, different publisher) will impact near-term performance, we believe that and Financials sectors, as classified by GICS, with 45.8% of the assets Activision Blizzard has the opportunity to consistently grow revenues, invested in companies that are domiciled outside of the U.S. continue to expand margins, and effectively allocate capital for years to come. We believe the company has an excellent management team and Table IV. stands to be a major beneficiary from a number of tailwinds benefiting the Top 10 holdings as of September 30, 2018 video game industry, including the shift to higher-margin digital revenue, Quarter End mobile gaming, in-game advertising, eSports, and international expansion. Quarter End Investment Market Cap Value Percent of Alibaba Group Holding Limited is the largest retailer and e-commerce company (billions) (millions) Net Assets in China. Alibaba owns and operates the two largest online shopping platforms in Amazon.com, Inc. $976.9 $5.9 5.5% China, Taobao and Tmall. It also owns 33% of Ant Financial, whose brand, Alipay, Alibaba Group Holding Limited 427.1 5.0 4.7 is the largest third-party online payment provider in China. We took advantage of Alphabet Inc. 834.7 5.0 4.7 stock volatility and allocated some capital here. The company benefits from Activision Blizzard, Inc. 63.4 4.7 4.5 strong mobile and advertising growth (750 million mobile internet users in China Naspers Limited 94.9 4.7 4.4 with a growing $5 trillion annual mobile payment volume), which drives positive Veeva Systems Inc. 15.7 4.0 3.8 optionality beyond core e-commerce. We expect continued rapid growth in all Facebook, Inc. 474.8 3.8 3.6 areas, combined with a high reinvestment rate in newer market segments, such as EPAM Systems, Inc. 7.4 3.7 3.5 groceries, logistics, and cloud computing. We continue to be optimistic about argenx SE 2.7 3.3 3.1 Alibaba’s long-term prospects, and it remains a high conviction investment idea, Constellation Software, Inc. 15.6 3.3 3.1 second only to Amazon.

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Founded in 2015, Shanghai-based Pinduoduo Inc. is one of the largest and Table VII. fastest growing e-commerce platforms in China. Through its partnership Top net sales for the quarter ended September 30, 2018 with Tencent (which owns 18.5% of Pinduoduo), the company is able to Quarter End offer a social buying experience where product discovery and purchases are Market Cap or Market Cap Amount instantly shared via WeChat or QQ and the more friends purchase a When Sold Sold particular product, the lower the price for everyone leading to a potential for (billions) (millions) viral discovery and distribution. Gross merchandise value on the platform JD.com, Inc. $39.0 $1.4 exceeded $22 billion last year, less than three years after the company’s The Stars Group Inc. 6.4 0.8 founding. This is a small position for the Fund as we expect a bumpy ride Gemphire Therapeutics Inc. 0.1 0.5 due to both the macro (trade tensions impacting the growth of the Chinese JM Financial Limited 1.0 0.2 economy) and the early stage of the company’s growth cycle with its low Carbon Black, Inc. 1.6 0.0 take rates and advertising CPCs, which we expect to improve considerably As mentioned earlier in this letter, JD.com, Inc., The Stars Group Inc., over time. Gemphire Therapeutics Inc.,andJM Financial Limited were all Based in Breda, Netherlands, argenx SE is a clinical-stage biotechnology investment mistakes and were sold as soon as we realized that our investment thesis was incorrect. We were not able to build out a full company focused on research and development of human monoclonal position in Carbon Black, Inc. and chose to take a profit and reallocate antibodies for the treatment of cancer and oncological, autoimmune, and capital to other ideas. inflammatory diseases. We continue to believe that argenx’ lead asset ARGX-113 holds immense promise for treatment of several autoimmune Outlook diseases and this remains our highest conviction biotechnology investment. Every day we live and invest in a world full of uncertainty. Fed policy, Headquartered in Buenos Aires, Argentina, MercadoLibre, Inc. is the leading potential trade wars, the health of EM economies, energy prices, global e-commerce platform in Latin America with the number one market share in politics, terrorism – these are all serious challenges with clearly uncertain Brazil, Argentina, Mexico, Venezuela, Chile, and Colombia, among others. outcomes. History would suggest that most will prove passing or MercadoLibre provides e-commerce, payments, and logistics technology that manageable. The business of capital allocation (or investing) is the business enable the purchase and sale of goods online. Our thesis is that the company of taking risk, managing the uncertainty, and taking advantage of the long- term opportunities that those risks and uncertainties create. We believe that is a pure play on the growth of online and e-commerce penetrations in Latin our process is the right one and that it will enable us to make good America. With a population of over 600 million people, online penetration of investment decisions over time. only 30% and e-commerce penetration of just 3%, we believe there is a large Our goal remains to maximize long-term returns without taking significant opportunity for growth as improvements in infrastructure and payment risks of permanent loss of capital. We focus on identifying and investing in solutions both enable and drive e-commerce adoption. We started with a what we believe are unique companies with sustainable competitive small position and we expect it to grow over time. advantages that have the ability to compound capital at high rates of return for extended periods of time. We are optimistic about the long-term prospects of the companies in which we are invested and continue to search for new ideas and investment opportunities. Sincerely,

Alex Umansky Portfolio Manager November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: Growth stocks can react differently to issuer, political, market and economic developments than the market as a whole. Non-U.S. investments may involve additional risks to those inherent in U.S. investments, including exchange-rate fluctuations, political or economic instability, the imposition of exchange controls, expropriation, limited disclosure and illiquid markets, resulting in greater share price volatility. Securities of small and medium-sized companies may be thinly traded and more difficult to sell. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Global Advantage Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

78 September 30, 2018 Baron Discovery Fund

Dear Baron Discovery Fund Shareholder: Performance

We are pleased to report that Baron Discovery Fund (the “Fund”) increased 13.83% (Institutional Shares) during the third quarter, which was 8.31% better than the Russell 2000 Growth Index. The quarter’s results were driven primarily by outperformance of our investments in the Information Technology, Health Care, and Industrials sectors. This third-quarter outperformance brings our year-to-date performance to 31.31% which is 15.55% better than our benchmark.

Table I. Performance† Annualized for periods ended September 30, 2018 Baron Baron Discovery Discovery Russell Fund Fund 2000 S&P Retail Institutional Growth 500 Shares1,2 Shares1,2 Index1 Index1 Three Months3 13.78% 13.83% 5.52% 7.71% RANDY GWIRTZMAN AND LAIRD BIEGER Retail Shares: BDFFX Nine Months3 31.09% 31.31% 15.76% 10.56% Institutional Shares: BDFIX One Year 35.47% 35.74% 21.06% 17.91% PORTFOLIO MANAGERS R6 Shares: BDFUX Three Years 29.82% 30.14% 17.98% 17.31% Five Years and Since Inception prices. We will also take a longer-term view than most other investment (September 30, 2013) (Annualized) 19.48% 19.77% 12.14% 13.95% managers. We believe that by analyzing the investment over a longer- Five Years and Since Inception term horizon, we can gain an advantage over most market (September 30, 2013) participants who are only focused on the short term. 3 (Cumulative) 143.50% 146.44% 77.35% 92.10% Baron Funds Quarterly Report – December 31, 2013 We are excited to report that September 30, 2018 marked the five-year We believe our five-year anniversary is an important milestone as it anniversary of the Fund. As such, we thought it was important to emphasize represents an appropriate period of time in which to measure our the consistency of both the Fund’s philosophy of seeking to invest in what investment process. Using this criterion, we are excited to report that for the we believe are “the most innovative and dynamic businesses” and the five-year period ended September 30, 2018, we achieved annualized investment process we use to “discover” these businesses. The core performance of 19.77% or 7.63% better than the Russell 2000 Growth principles that we laid out in our first letter remain in place today: Index. This puts the Fund in the top 1% of funds in its category, according to We will continue to use the same Baron investment process that is used in Morningstar, a result we are especially proud of.* That being said, we think it all Baron Funds. We will seek high growth companies with terrific is important to remind investors that our long-term focus does not managers and long-term competitive advantages. We will also seek to necessarily work every quarter or even every year, but we believe that our purchase those companies at what we believe are reasonable stock strategy is the best way we can outperform the market over the long term.

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of September 30, 2017 was 1.47% and 1.23%, but the net annual expense ratio was 1.35% and 1.10% (net of the Adviser’s fee waivers which the Adviser has contractually agreed to forsolongasitservesastheadvisertotheFund),respectively.The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

† The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same. 1 The indexes are unmanaged. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized. * Morningstar calculates the US Fund Small Growth Category Average using the Morningstar Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. As of 9/30/2018, the category consisted of 702, 606, and 532 share classes for the 1-, 3-, and 5-year periods. Morningstar ranked Baron Discovery Fund Institutional Share Class in the 11th,1st, and 1st percentiles, respectively, in the category for the 1-, 3-, and 5-year periods.

79 Baron Discovery Fund

Table II. Acxiom Corporation is a leader in marketing data services and identity Top contributors to performance for the quarter ended September 30, 2018 management for enterprises. The company’s technology platform combines Percent an intricate web of customer data, business intelligence, and deep analysis Impact that empowers 7,000+ global brands across several industries. Acxiom was a CareDx, Inc. 2.27% contributor in the quarter, as the company entered into an agreement to The Trade Desk 2.03 sell its legacy marketing services business to Interpublic Group. Acxiom Teladoc Health, Inc. 1.69 closed on the sale in October and has changed the name of the company to Mercury Systems, Inc. 1.34 LiveRamp Holdings, Inc. Going forward, LiveRamp will be a pure play Acxiom Corporation 1.12 marketing cloud software company.

CareDx, Inc. is the market leader in transplant diagnostics, with a presence Table III. in nearly all U.S. and EU centers. As we outlined last quarter, it is the current Top detractors from performance for the quarter ended September 30, 2018 market leader in pre-transplant HLA typing (a $500 million market Percent opportunity), and heart transplant testing (a $100 million market). And Impact CareDx has a new kidney transplant test called AlloSure, which launched in the third quarter of 2017. This test addresses a large market opportunity Flexion Therapeutics Inc. –0.62% (over $2 billion), and AlloSure has higher margins than the existing CareDx Intersect ENT, Inc. –0.46 tests. Shares rose in the quarter as sales of AlloSure were impressive, and Red Rock Resorts, Inc. –0.44 concerns about a potential competitive product coming to the kidney The KEYW Holding Corporation –0.31 market some time in 2019 faded. We believe that CareDx has many AxoGen, Inc. –0.27 advantages versus this competitor, including substantial clinical data, Flexion Therapeutics Inc., has developed an extended release steroid drug reimbursement from insurers, and a long-term reputation in the end markets in which it operates (whereas this is a new market for the competitor). called Zilretta that is injected into patients’ knees to relieve osteoarthritic pain. The drug was approved by the FDA in October 2017 and launched in The Trade Desk is a leading internet advertising Demand Side Platform late November 2017. It is early days, but we are encouraged that quarterly (DSP). The company enables advertising agencies to more efficiently purchase prescriptions have increased in the last three quarters since launch. The digital advertising through PC, mobile, and online video channels. The company company should receive a billing code called a J-Code by January 2019, had exceptional results for the second quarter and raised its outlook for the which will further help to accelerate sales. We believe that the company can year. After growing more than 50% year-over-year in 2017, we believe the meet or beat Street estimates of $23 million in revenue this year, and that company is on track to grow at a similar rate in 2018. We believe The Trade revenues should be well over $100 million in 2019. With a multi-billion Desk has multiple tailwinds to growth going forward. These include a major dollar U.S. opportunity in knees alone, we see tremendous value in the upgrade of its core product in June, which we expect to drive incremental company. We are not concerned with the short-term price decline. platform spend, a mix shift towards faster growing ad channels, growth in Asia (especially China), and momentum from recent advertiser wins. We remain Intersect ENT, Inc. sells a drug coated stent-like device (Propel) that is positive on shares of The Trade Desk as we believe the company can continue implanted in the sinuses of patients immediately following invasive sinus to grow share in the fast growing programmatic advertising market. surgery. The device keeps the sinuses open and gets medication to the place where it is needed to help the healing process. Recently Intersect ENT Teladoc Health, Inc. is the leading worldwide provider of tele-health received approval for another device called SINUVA that will be used for services. The company beat on revenues (which grew 112% and 23% patients with the recurrence of severe sinus symptoms in the months and organically), earnings, and cash flow when results were announced in years following surgery. SINUVA can be implanted in minutes in an August. Teladoc also executed on the integration of a recent acquisition outpatient setting, and studies are being done to show that it is safe for the (Advance Medical which expands its geographical reach to Asia and Latin device to be implanted multiple times per year if symptoms persist. Our due America and provides chronic care and medication management diligence suggests very positive patient and doctor reviews. However, capabilities). This acquisition further solidifies Teladoc’s leadership position in the industry, and provides significant cross-selling opportunities. By the management lowered guidance for SINUVA sales in 2018 due to the current end of 2018, Teladoc will have 23 million members for which a monthly fee difficulty in obtaining reimbursement prior to the approval of a J-Code is paid, and an additional 10 million that pay on a per visit basis, for a total (which we expect will be obtained and will be effective by January 2019). In of 33 million people served in the system. We believe that this base can our opinion, the addressable market for this product could be well over grow to 50 million or more over the next few years. And we believe that $1 billion, so once reimbursement is in place sales should accelerate system utilization by members can go from 7% to over 15% (the company dramatically in 2019. already has some clients at over 30%). We continue to be very excited Shares of Red Rock Resorts, Inc., a casino operator catering to residents of about the company’s prospects in the coming years. Las Vegas, decreased in the quarter. Data coming out of Las Vegas generally Mercury Systems, Inc. is a provider of complex electronic subsystems to showed that this summer was weaker than expected, which weighed on the major defense contractors. During the third quarter, shares rebounded from stocks of all Las Vegas casino operators including Red Rock. We view the the effects of a short sale report issued in the prior quarter. Our conviction weaker conditions as temporary and not the beginning of a dramatic that the claims were mistaken paid off in the quarter, as Mercury beat the slowdown in the Las Vegas locals market. The macro backdrop for Las Vegas quarter and guided above the Street for the next fiscal year ending June 30, remains strong. The population continues to grow 2%-3% a year, local 2019. The company also continued to execute on its long-term business wages continue to rise 2%-3% a year, and Las Vegas housing prices are at plan, winning sizeable contracts and making solid tuck-in acquisitions. record levels. We view the stock as attractive at these levels.

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The KEYW Holding Corporation is a provider of specialized cybersecurity RECENT ACTIVITY and intelligence analytics products and services to government agencies. We exited the position after the company advised investors on their latest Table V. earnings call that a key contract for manned air surveillance was being Top net purchases for the quarter ended September 30, 2018 terminated early by the prime contractor (KEYW is a subcontractor). We Quarter End Amount Year Market Cap Purchased believe that this contract represented a material amount of revenue and Acquired (billions) (millions) profit to the company, and we decided to move to the sidelines as the QTS Realty Trust, Inc. 2018 $2.2 $8.7 effects ripple through. Intersect ENT, Inc. 2018 0.9 8.7 AxoGen, Inc. is a provider of specialized nerve grafts created from cadaver Ra Medical Systems, Inc. 2018 0.2 5.4 nerves. We are confident that the company’s array of products is Esperion Therapeutics, Inc. 2017 1.2 4.1 unmatched in the industry, and that it will benefit from new uses such as Endava plc 2018 1.5 3.9 breast reconstruction neurotization which enables nerve sensation after surgery. In all, AxoGen has an addressable market opportunity of over In the third quarter, we initiated a position in QTS Realty Trust, Inc.,aU.S.- $2 billion, and we believe that the company has significant competitive based data center operator. The stock hit our radar screen after it sold off advantages in clinical data and intellectual property versus its sharply earlier in the year when management announced it was transitioning competitors. Shares were down in the quarter after the company reported out of its managed services business segment (15% of revenues) and took slightly lower-than-expected sales growth (36% instead of 40%) due to down full-year guidance. After researching QTS further and spending time with some challenges in its independent sales channel. The company has a high the management team, we determined that this step to simplify the business valuation, so stumbles like this can cause corrections. We believe that the was a long-term positive and removed a low margin, less predictable revenue company will recover its pace of growth, and we are confident that, over the stream. We believe the company’s currently discounted valuation doesn’t next few years management can double and even triple its revenues beyond reflect: i) the favorable demand backdrop for data centers broadly; ii) QTS’s the $85 million level we expect in 2018. high margin and recurring revenue model; and iii) significant built-in growth potential (ability to double footprint in existing facilities). We believe QTS is PORTFOLIO STRUCTURE well positioned as an increasing number of companies determine that it is more economical to outsource their IT needs to high tech data center firms such as Table IV. QTS (60%-70% of IT workloads are still in-house). In addition, given the Top 10 holdings as of September 30, 2018 explosive growth of mobile data, internet traffic, and cloud computing, QTS is Quarter End primed to benefit as the IT infrastructure provider. Lastly, we believe that the Investment transition to the cloud is still in the early innings (e.g., Gartner, a consulting firm, Year Value Percent of Acquired (millions) Net Assets projects that cloud spending could grow by approximately four times over the The Trade Desk 2016 $15.1 3.8% next five years). These favorable demand drivers should allow the company to CareDx, Inc. 2018 13.8 3.5 compound cash flow per share in the high single-digit to low double-digit rate Teladoc Health, Inc. 2017 12.7 3.2 annually over the next several years. Mercury Systems, Inc. 2015 12.5 3.2 We added to our position in Intersect ENT, Inc. after extensive due Myriad Genetics, Inc. 2016 12.0 3.0 diligence revealed that the Company’s new SINUVA product was gaining Intersect ENT, Inc. 2018 11.2 2.9 very positive patient and doctor reviews. We are confident that revenues IntriCon Corporation 2018 9.4 2.4 will accelerate as the company continues to work on getting reimbursement Sientra, Inc. 2016 9.0 2.3 for the product. TherapeuticsMD, Inc. 2014 8.9 2.3 Americold Realty Trust 2018 8.8 2.2 Ra Medical Systems, Inc. is a small medical device firm that we added to the portfolio at the end of the quarter when the company completed its The top 10 holdings represented 28.8% of the portfolio which is in line with IPO. The company designs, manufactures, and sells the Dabra laser system historical norm of approximately 30%.

81 Baron Discovery Fund

and disposable catheters used by physicians for the treatment of vascular Table VI. blockages in the legs. It’s a space we know well from a prior investment we Top net sales for the quarter ended September 30, 2018 made in a company called Spectranetics, Inc., which was bought by Market Quarter End Cap Market Cap or Koninklijke Philips N.V. in August 2017. We believe the Dabra laser system is When Market Cap Amount unique because it is able to cross and debulk a wide variety of intravascular Year Acquired When Sold Sold plaque, removing vascular blockages that other products are unable to cross Acquired (billions) (billions) (millions) without the use of a guidewire. In addition, unlike many other treatments Novanta Inc. 2017 $0.9 $2.4 $4.9 for peripheral artery disease, Dabra employs photochemical ablation to The KEYW Holding Corporation 2013 0.5 0.4 4.2 disintegrate plaque and eliminate residual particles, while also minimizing Teladoc Health, Inc. 2017 1.3 6.0 4.0 injury to the arterial wall, which may minimize the rate of restenosis The Trade Desk 2016 1.2 6.5 2.3 (recurrence of the blockage). The Dabra’s single use catheters are priced at a Quotient Technology Inc. 2014 1.3 1.3 2.2 significant discount versus competitor devices, as the company has As active managers we are concerned not only with actively picking the verticalized its supply chain and can manufacture the catheters at a very right investments, but also with managing those investments properly over low cost. The market opportunity for peripherals could be $1 billion or more, time. A key part of our strategy is to be mindful of medium- and long-term and the company is looking to get approval for coronary artery applications, valuations, and actively manage investments that become extended from a which could add another $2 billion to the opportunity set. We believe that valuation perspective. We reduced our position in Novanta Inc. after a this could be a terrific undiscovered gem. significant run up in share price left us believing that its valuation was high. We continue to hold a meaningful investment in the company and Esperion Therapeutics, Inc., a company focused on medication to lower admire management and its strategy to build a very high-quality precision LDL cholesterol in patients who are statin-intolerant, was another position motion components company. For similar reasons, we trimmed our that we increased in the quarter. The company continues to put out very investments in Teladoc Health, Inc. and The Trade Desk. Lastly, we sold favorable phase three clinical trial data, and we continue to expect approval Quotient Technology, Inc. after the company shifted its priorities from transactional revenue to advertising revenue, a shift that we viewed of its drug in early 2020. negatively. Endava plc provides outsourced software development to business Outlook customers. The company operates at the forefront of the digital revolution by helping clients find new ways to interact with their customers and We are excited to share our five-year results with you. We also want our enabling them to become more engaging, responsive, and efficient. Endava investors to know that we are looking through the windshield and not the employs 4,700 highly skilled, low-cost software engineers in Eastern Europe rearview mirror. We come to work every day thinking not about the past, and Latin America that support clients from ideation to production. Endava but instead focusing on how we can outperform the market for investors putting their money into the Fund today. Lastly, we want to thank our works on a variety of projects, including building a new operating platform analyst team. We know our outperformance could not have been achieved for a payment processing company, designing a personalized in-store without their contributions and hard work. They are an invaluable resource. shopping experience for a fashion retailer, and enabling a shipping company Thank you for investing in the Fund. to remotely adjust the settings on shipping containers to speed up or slow down the ripening of fruit. We initiated a position in Endava as part of the company’s IPO in July. Endava benefits from growing demand for next- generation IT services from businesses around the world. Endava’s strong technical capabilities and differentiated labor pool enable the company to work on higher-value client projects with better pricing than peers. We Randy Gwirtzman & Laird Bieger believe Endava will continue gaining share in a large, growing market by Portfolio Managers adding new clients and increasing wallet share with existing clients. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Adviser believes that there is more potential for capital appreciation in smaller companies, but there also may be more risk. Specific risks associated with investing in smaller companies include that the securities may be thinly traded and they may be more difficult to sell during market downturns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio managers’ views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Discovery Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

82 September 30, 2018 Baron Durable Advantage Fund

Dear Baron Durable Advantage Fund Shareholder: Performance

Baron Durable Advantage Fund (the “Fund”) returned 4.3% (Institutional Shares) during the quarter and lagged the 7.7% return for the S&P 500 Index, the Fund’s benchmark. Year-to-date, the Fund has returned 7.6% compared to 10.6% for the S&P 500 Index.

Table I. Performance For periods ended September 30, 2018 Baron Baron Durable Durable Advantage Advantage Fund Fund Retail Institutional S&P 500 Shares1,2 Shares1,2 Index1 Three Months3 4.17% 4.26% 7.71% Nine Months and Since Inception (December 29, 2017)3 7.40% 7.60% 10.56% ALEX UMANSKY Retail Shares: BDAFX Institutional Shares: BDAIX Performance attribution analysis shows that the Fund’s underperformance PORTFOLIO MANAGER R6 Shares: BDAUX came from stock picking. A portion of the underperformance came from not owning Amazon and NVIDIA, two stocks that are not appropriate for this kind of portfolio. We lost approximately 100 basis points in Financials Table II. because our preferred investments in the space, S&P Global, BlackRock, Top contributors to performance for the quarter ended September 30, 2018 and Moody’s, underperformed. Negative stock selection in Health Care was Quarter End Market Cap Percent exacerbated by double-digit gains from Pfizer, Johnson & Johnson, Merck, (billions) Impact and other big pharma stocks we don’t own. Add to it poor results in Apple, Inc. $1,090.3 0.83% Communication Services from Electronic Arts and a questionable portfolio Microsoft Corporation 877.0 0.76 decision on Naspers and, in a nutshell, that was it. Frankly, we are not Mastercard Incorporated 231.2 0.59 terribly unhappy with the absolute result and would expect to struggle, on a UnitedHealth Group Incorporated 256.1 0.43 relative basis, in a quarter when the index returns 7.7%. Alphabet Inc. 834.7 0.31 Our biggest winners this quarter were Apple, Microsoft, Mastercard, UnitedHealth Group, and Alphabet, companies that are so well Apple, Inc. is one of the most innovative consumer electronics companies in represented in the index that it is difficult to generate much active share the world with iconic products such as iPhone, iPad, Apple Watch, and Macs. (differentiation) through their ownership. We are reluctant to go above 5% Apple is a platform company with rapidly growing, recurring revenue services in any single investment in an effort to mitigate portfolio volatility. We are businesses that benefit from network effects and meaningful barriers to focused on high-quality large-cap companies that, for the most part, no entry. The company’s shares rose 22% during the quarter that saw better- longer have the ability to reinvest excess capital at high rates of return, so a than-expected iPhone results with evidence of consumer attraction to higher significant portion of their free cash flow is regularly returned to priced phones. The company is continuing to innovate and announced an shareholders in the form of dividends or share repurchases. As a result, we exciting set of new product launches that revealed opportunities for the manage and expect the Fund to be less sensitive to short-term market business in new novel services, in health care and augmented reality. We volatility than our other large-cap fund, Baron Fifth Avenue Growth Fund is, believe Apple to be a shining example of a company with durable competitive although we cannot guarantee that it will prove to be the case. advantages and expect to be investors in the stock for years to come.

Performance listed in the table above is net of annual operating expenses. Annual estimated expense ratio for the Retail and Institutional Shares is 1.86% and 1.61%, respectively, but the net annual estimated expense ratio is 0.95% and 0.70% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s, shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month-end, visit www.BaronFunds.com or call 1-800-99BARON. 1 The index is unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The index and the Fund are with dividends, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

83 Baron Durable Advantage Fund

Microsoft Corporation is a leading software solutions provider focusing on Table III. cloud software with its Infrastructure and Platform-as-a-service offering Top detractors from performance for the quarter ended September 30, 2018 Azure and its Software-as-a-Service offerings Office 365 and Dynamics 365. Quarter End Shares of Microsoft appreciated 16% following another strong quarter for its Market Cap Percent (billions) Impact cloud business, which grew 53% year-over-year, while continuing to demonstrate margin leverage. Our conviction in Microsoft’s durability and Electronic Arts Inc. $36.7 –0.62% future growth opportunities is rooted in the strong moat it has built around Naspers Limited 94.9 –0.40 its business based on the wide reach of its sales channel into enterprises, its BlackRock Inc. 75.7 –0.18 hybrid cloud offering, and its positioning in the public cloud market. S&P Global Inc. 49.1 –0.15 ASML Holding N.V. 81.1 –0.12 Mastercard Incorporated is a leading global commerce payment solutions network. The stock outperformed, rising 13% after reporting good quarterly Shares of Electronic Arts Inc., a leading video game publisher, declined 15% results with 20% revenue growth and 52% earnings per share in the third quarter. In late August, the company lowered its fiscal year 2019 growth. Purchase volume growth accelerated to 16% on a currency-neutral financial guidance due to three issues: 1) a delay in the launch of Battlefield basis, with faster growth outside the U.S. where Mastercard generates V; 2) a more conservative mobile forecast; and 3) ongoing FX headwinds. two-thirds of its revenue. We believe Mastercard is a prime beneficiary of While this near-term execution misstep is unfortunate, we retain long-term global consumer spending growth and the secular shift from cash to conviction in Electronic Arts due to strong industry tailwinds that should electronic payments. benefit the company going forward, including the shift to digital, in-game UnitedHealth Group Incorporated (“United”) is the largest health care monetization, mobile gaming, advertising, and a leading position in eSports. franchise owner and operator in the U.S. and a leading provider of health care Naspers Limited is a South African company that operates a pay television services, IT and analytics, and pharmacy benefit management services (“PBM”). business in Sub-Saharan Africa, a small print media business, and an internet The company generates approximately $200 billion in revenue, while touching division with substantial holdings in global internet companies. The majority over 40% of the nation’s population. Shares rose 9%, basically in line with the of Naspers’ value is attributed to its large ownership of publicly-traded market, in recognition of consistently solid financial results. We believe United Chinese internet giant Tencent Holdings. The shares of Naspers declined possesses a uniquely diversified and complementary skillset, services, and 15% during the quarter due to heightened concerns about the regulatory expertise that allows it to deliver higher quality lower cost health care to its environment in China which led to a decline in the price of Tencent and due members and customers. We view United as a core holding that allows us to to a general lack of appetite for Chinese investments during the trade participate in the strong secular growth of health care. United operates under tensions between China and the U.S. The company continues to trade at a four divisions: the United Healthcare division is the nation’s largest insurer– massive discount to its net asset value and is evaluating potential strategies twice the size of its next largest competitor; the Optum Insight division offers to narrow or rectify the situation, including potentially listing itself on other IT services and analytics; the Optum RX division is the U.S.’s third largest PBM; stock exchanges (outside of South Africa) and accelerating growth of the and the Optum Health division is a provider of population health management late stage venture businesses in an effort to bring them to breakeven and and is the owner of physician groups, outpatient surgery centers, and urgent IPO sooner. care facilities. United’s unmatched size, scale, differentiated offerings, and leadership positions in all the areas in which it competes–both in terms of Shares of BlackRock Inc., an asset management firm, declined 5% in the market segments and geography–is unparalleled, and we expect the company quarter on its decelerated organic growth rate and investor expectations of to continue to take market share and deliver leading growth and profitability. a potential slowdown in revenue growth due to competitor price cuts. The Particularly strong areas of growth include its Medicare and Medicaid books of company had been a standout for its organic growth rate fueled by its business and international expansion, primarily in Latin America. United also successful ETF offerings. We still believe BlackRock remains a dominant has a heretofore largely overlooked $600 million venture capital portfolio, player in asset management and should continue to win market share. Its which could be the beneficiary of future transactions. The company’s technology business should result in high-margin revenue and improved significant excess free cash flow has been used to fund provider acquisitions client retention, in our view. and make more than $3 billion in annual technology investments, which serve S&P Global Inc. is the largest credit rating agency in the world. The to reinforce United’s competitive moat. company also provides benchmarks, analytics, and data to the financial and Alphabet Inc. is the parent company of Google, the world’s largest search commodities markets. The company reported solid quarterly results with 7% and online advertising company. Shares of Alphabet increased by 7% in the revenue growth and 26% EPS growth. However, the stock underperformed, quarter, essentially in line with the market. Recent performance has been declining 4% due to softer issuance volumes and the lack of a guidance impacted by renewed privacy concerns due to news of Google Plus, increase. We continue to believe that S&P Global benefits from numerous Alphabet’s lagging social network, having had security breaches that secular growth trends (bond issuance, passive investing, demand for data exposed user data, very similar to what we know happened to Facebook. and analytics) and operates in attractive markets where it enjoys meaningful Alphabet responded by announcing that Google Plus will be shut down, and durable competitive advantages. which we think was long overdue. We remain optimistic about Google’s opportunity set and the durability of its competitive advantages because we think Google possesses the greatest collection of human intellectual capital anywhere in the world and is the undisputed frontrunner in the areas of Artificial Intelligence (AI), Autonomous driving (via Waymo), Life Sciences (via Calico) as well as its core revenue and profit-producing core businesses like the search engine and YouTube videos.

84 September 30, 2018 Baron Durable Advantage Fund

ASML Holding N.V. designs and manufactures semiconductor production Recent Activity equipment. It specializes in photolithography equipment, where light We added to our investments in Activision Blizzard, Inc. and Danaher sources are used to photo-reactively create patterns on wafers which Corporation as we put some of the inflows to work. Our attempt to establish ultimately become printed integrated circuits. Shares of ASML were down a position in Elanco Animal Health Incorporated, which was being spun off 5% in the quarter as continued strength in the next generation EUV from Eli Lilly, had to be aborted as the price of the stock quickly exceeded our lithography business has taken a backseat to industry-wide concerns parameters and we ended up with a stub position of 1 basis point. regarding the broader semiconductor cycle. We maintain conviction in ASML as it is the de-facto standard in the next generation lithography, Table V. which is a required step for chip production at 5 nanometer and below. Top net purchases for the quarter ended September 30, 2018 Quarter End Amount Portfolio Structure Market Cap Purchased (billions) (thousands) We expect the Fund to consist of 30-to-50 investments with position sizes Activision Blizzard, Inc. $63.4 $12.0 ranging from 1% to 5% at the time of initiation. The portfolio is constructed Danaher Corporation 76.0 8.2 on a bottom-up basis with the quality of ideas and conviction level (rather Elanco Animal Health Incorporated 12.8 0.3 than benchmark weights and sector composition) having the highest roles in determining the size of each individual investment. Sector weights tend to Table VI. be an outcome of the portfolio construction process and are not meant to Top net sales for the quarter ended September 30, 2018 indicate a positive or a negative “view.” The top 10 holdings were 40.7% of Market Cap Amount When Sold Sold the Fund, the top 20 holdings represented 66.7%, and we exited the third (billions) (thousands) quarter with 36 investments. Waters Corporation $15.1 $53.2 Rockwell Automation, Inc. 21.4 33.8 Table IV. Top 10 holdings as of September 30, 2018 We eliminated positions in Waters Corporation and Rockwell Quarter End Automation, Inc. as further research weakened our conviction in the Quarter End Investment durability of their competitive advantages and we decided to move on. Market Cap Value Percent of (billions) (thousands) Net Assets Outlook Microsoft Corporation $ 877.0 $202.3 5.0% UnitedHealth Group Our goal is to invest in large-cap companies with, in our view, strong and Incorporated 256.1 195.0 4.8 durable competitive advantages, proven track records of successful capital Mastercard Incorporated 231.2 184.3 4.6 allocation, high returns on invested capital, and high free cash flow Alphabet Inc. 834.7 175.4 4.4 Apple, Inc. 1,090.3 167.3 4.1 generation, a significant portion of which is regularly returned to shareholders S&P Global Inc. 49.1 161.4 4.0 in the form of dividends or share repurchases. We hope to maximize long- Moody’s Corporation 32.1 147.6 3.7 term returns without taking significant risks of permanent loss of capital. We Electronic Arts Inc. 36.7 142.4 3.5 are optimistic about the prospects of the companies in which we are invested LVMH Moet Hennessy Louis and will always continue to search for new ideas and opportunities. Vuitton SE 178.6 134.7 3.3 BlackRock Inc. 75.7 132.0 3.3 Sincerely,

Alex Umansky Portfolio Manager November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Fund invests primarily in large cap equity securities which are subject to price fluctuations in the stock market. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Fifth Avenue Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

85 Baron Real Estate Income Fund

DEAR BARON REAL ESTATE INCOME FUND SHAREHOLDER:

Performance

Baron Real Estate Income Fund (the “Fund”) generated a modest gain of 0.41% (Institutional Shares) in the most recent quarter ended September 30, 2018, slightly trailing its primary benchmark, the MSCI US REIT Index (the “REIT Index”), which gained 0.78%. For the first nine months of 2018, the Fund is up 0.26%, modestly underperforming the REIT Index which is up 1.32%.

Table I. Performance For periods ended September 30, 2018 Baron Baron Real Estate Real Estate Income Income Fund Fund MSCI Retail Institutional US REIT Shares1,2 Shares1,2 Index1 3 Three Months 0.31% 0.41% 0.78% JEFFREY KOLITCH Retail Shares: BRIFX Nine Months and Since Inception Institutional Shares: BRIIX (December 29, 2017)3 0.06% 0.26% 1.32% PORTFOLIO MANAGER R6 Shares: BRIUX In the third quarter, REITs and other real estate income-related securities underperformed the broad market as positive momentum in the U.S. economy and a corresponding increase in interest rates benefited traditional equity In the third quarter, the Fund acquired shares of GDS Holdings Limited at securities more than “bond-like” and dividend-paying securities such as REITs. what we believe is an attractive price by taking advantage of its lower share price. The shares had been under pressure due to a negative “short seller” It appears that the near-term prospects for the U.S. economy may well remain solid. The most recent reports about job growth, consumer report. We have conducted extensive diligence on the company and believe confidence, and consumer spending have been very strong. In fact, Fed the report’s conclusions are overstated and inaccurate. More recently, the Chairman Jerome Powell has recently made several notable and bullish shares have likely been under pressure due to China “macro” concerns such comments regarding U.S. economic conditions and prospects. as U.S. trade issues and a moderating Chinese economy. We believe both concerns will pass over time. Please see the “Outlook” section at the conclusion of this letter for our forward-looking views for real estate and the Fund. The company is the leading developer and operator of data centers in China, with a customer base of more than 400 predominantly large technology and Table II. internet companies. Top contributors to performance for the quarter ended September 30, 2018 Quarter End We have met with management on several occasions and we’re Market Cap Percent bullish on the company’s long-term prospects for the following (billions) Impact reasons: GDS Holdings Limited $ 4.4 0.66% Americold Realty Trust 3.7 0.62 • The Chinese digital economy is in its early growth phase. It is predicted Park Hotels & Resorts Inc. 6.6 0.25 that China, with its relatively low national internet access penetration, AvalonBay Communities, Inc. 25.0 0.16 will experience sharp universal growth in public cloud spending over Prologis, Inc. 42.7 0.14 the next few years.

Performance listed in the above table is net of annual operating expenses. Annual estimated expense ratio for the Retail Shares and Institutional Shares is 1.96% and 1.71%, respectively, but the net annual estimated expense ratio is 1.05% and 0.80% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. 1 The index is unmanaged. The MSCI US REIT Index is a free float-adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index and the Fund include reinvestment of interest, capital gains and dividends, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

86 September 30, 2018 Baron Real Estate Income Fund

• GDS is the leading data center provider to many of the fastest growing Table III. companies in China including Baidu, Alibaba, and Tencent. Moreover, Top detractors from performance for the quarter ended September 30, 2018 GDS has been designated as the preferred data center provider for Quarter End Alibaba and Tencent. Market Cap Percent (billions) Impact • Its data centers are concentrated in the “Tier 1” major cities of China including Beijing, Shanghai, Shenzhen, Guangzhou, and Chengdu. Red Rock Resorts, Inc. $ 3.1 –0.29% • GDS generates attractive 25% return on investment on its new data NEXTDC Limited 1.6 –0.27 center developments. Hudson Pacific Properties, Inc. 5.1 –0.20 • We believe the company will grow its cash flow by more than 100% in Rayonier Inc. 4.4 –0.19 the next three years, and the shares are now attractively valued relative Weyerhaeuser Company 24.5 –0.16 to its growth rate. In the third quarter, the shares of Red Rock Resorts, Inc., a real estate In the most recent quarter, the shares of Americold Realty Trust increased gaming, development, and management company, which operates 21 casino 14.5% after reporting strong business results. The company is the only REIT and entertainment properties and generates approximately 80% of its cash that focuses on owning and operating temperature-controlled warehouses, flow in Las Vegas, declined in large part due to concerns that a recent and has the largest portfolio of these warehouses in the U.S. and globally. slowdown in business activity on the Las Vegas Strip may spread to Red We believe Americold is well positioned to deliver superior growth relative Rock’s hotel and casino properties that are located predominantly in the to most REITs due to strong demand trends, limited supply, and nearby Las Vegas “locals” market. We view the anticipated softness as opportunities to improve occupancy and rents in its current portfolio. We temporary. Red Rock is expected to benefit from favorable demand-supply also anticipate that Americold will bolster its growth by developing dynamics in Las Vegas, and its sound renovation and development plans. additional warehouses at attractive returns and through additional On the demand side, the solid improving local economy bodes well for acquisitions of temperature-controlled warehouses. We continue to believe consumer spending due to low unemployment, high weekly wages, and the prospects for the company are strong, and its shares are attractively stable housing. On the supply side, no new major gaming facilities have valued relative to most REITs. opened in this area of Las Vegas (the “locals” market) since 2009, and no The shares of hotel REIT Park Hotels & Resorts Inc. increased 8.6% in the new competitive developments have been announced. most recent quarter following strong second quarter business results. The Red Rock is undergoing a major renovation program at two of its resorts company was spun out of Hilton Worldwide in 2017. Park Hotels owns a (The Palms Casino Resort and The Palace Station) that should produce diverse portfolio of 54 premium-branded hotels and resorts with 32,000 significant cash flow growth over the next few years. At its current price, we rooms, a majority of which are in prime U.S. markets, including Hawaii, believe Red Rock’s shares are attractively valued with a path to generating Northern California, and Florida among others. The company is led by its mid-teens annual returns the next few years. talented CEO, Tom Baltimore Jr. Following share price appreciation in the first six months of 2018, the shares Park Hotels has been benefiting from improving hotel demand, driven by a of NEXTDC Limited, an Australian-based data center company, declined in pickup in corporate travel, and indications that new hotel construction may the most recent quarter following a slowdown in leasing activity. We view be peaking due to increased construction costs and more restrictive the slowdown as temporary and anticipate that business activity will pick up construction financing. Further, we have great confidence that management in the months ahead. We remain optimistic about the prospects for will continue to drive its growth and shareholder value by continuing to NEXTDC. aggressively improve its hotel portfolio through asset management, The Australian data center market is growing significantly faster than in investment initiatives, and the sale and purchase of additional hotels. other parts of the world, and is still in the early innings of its evolution. AvalonBay Communities, Inc. is a REIT that owns and operates a Following our research and discussions with management, we believe the $35 billion portfolio of high-quality apartment assets, located primarily on company has a realistic plan in place to grow its cash flow by approximately the east and west coasts of the U.S. Its shares increased in the most recent 100% in the next two-to-three years, and by 250% in the next four-to-five quarter as the company reported better-than-expected business results. We years. With the successful execution of its business plan, we believe its share believe its concentration in high-barrier-to-entry coastal markets should price should appreciate meaningfully. lead to greater cash flow growth. AvalonBay’s investment grade rating Following strong share price performance in the second quarter, the shares provides it with a cost of debt advantage compared to private developers. of Hudson Pacific Properties, Inc. declined in the most recent quarter. Management has proven to be a capable acquirer and developer of Hudson Pacific is a West Coast office REIT that owns and develops high- apartment assets. We believe AvalonBay’s shares are trading at an attractive quality office buildings in San Francisco, Silicon Valley, Los Angeles, and 13% discount to its private market value. Seattle. The company has assembled a high-quality real estate portfolio in markets that should deliver solid long-term absolute and relative growth Prologis, Inc. is the world’s largest owner, operator, and developer of given strong economic and demographic prospects. In our opinion, the industrial logistics real estate. The company owns a high-quality real estate shares are currently valued at an attractive discount to its private market portfolio that is concentrated in major global trade markets, regional value. distribution markets, and large population centers across the Americas, Europe, and Asia. Prologis reported healthy second quarter business results. Following share price appreciation in the first six months of 2018, the shares It continues to witness strong warehouse demand partly in response to of timber REITs Rayonier Inc. and Weyerhaeuser Company declined in the emergent e-commerce needs with the accelerated growth of online sales as most recent quarter as residential home sale activity decelerated. We have customers seek faster delivery. trimmed the Fund’s investments in both companies.

87 Baron Real Estate Income Fund

Portfolio Structure • Data Center REITs (16.2% of the Fund), such as Equinix, Inc., Digital Realty Trust, Inc., QTS Realty Trust, Inc., and CyrusOne Inc. are, in At September 30, 2018, the Fund’s net assets were comprised as follows: our view, well positioned for long-term growth. An increasing number • REITs: 77.1% of companies are determining that it is beneficial and economical to • Non-REIT Real Estate Companies: 19.9% outsource their technological needs to high-tech and state-of-the-art • Cash: 3.0% data center firms such as Equinix and Digital Realty Trust. This outsourcing is also propelled by the explosive growth in data and cloud We continue to structure the Fund with the following five investing computing. themes: • Industrial REITs (6.8% of the Fund), such as Prologis, Inc., Duke Realty 1. Emphasis on Growth Corporation, and Rexford Industrial Realty, Inc. are witnessing strong warehouse demand partly in response to emergent e-commerce We have been prioritizing companies that we expect to perform well in a needs as online sales continue their broad acceleration, and customers strong and growing business environment. These investments include seek faster delivery. companies that provide shorter-term leases, and therefore can increase occupancy and rents at a faster rate than other real estate companies whose 3. “Alternative” REITs portfolios are mainly comprised of longer-term leases. Examples include: We see good opportunities in “alternative” or non-traditional REITs that we • Hotel REITs (typically one-to-two day stays or “leases”) tend to benefit believe have the potential to grow faster than several traditional REITs (i.e., from an improving economic environment. Investments include: Park malls, shopping centers, offices, apartments, and self-storage). Hotels & Resorts Inc., Host Hotels & Resorts, Inc., Pebblebrook These “alternative” REITs may benefit from their emphasis on secular Hotel Trust, and Sunstone Hotel Investors, Inc. Hotels REITs demand trends and/or reduced exposure to cyclical weaknesses (i.e., currently represent 7.3% of the Fund’s net assets. elevated construction activity and excess supply) witnessed in some of the • Multi-Family and Single-Family Rental REITs (typically one-year lease traditional REIT peers. terms) should generate increases in occupancies and rents from solid job and wage growth. Additionally, the growing trend of many new We are prioritizing the following “alternative” REITs: households that are choosing to rent rather than buy a home should also serve as a positive tailwind. Multi-Family REITs AvalonBay • Cold-Storage REITs (4.9% of the Fund) Communities, Inc., Equity Residential, and Essex Property Trust, Americold Realty Trust is the only REIT focused on owning and Inc. currently represent 6.5% of the Fund. Single-Family Rental REITs operating temperature-controlled warehouses. The company owns the Invitation Homes, Inc. and American Homes 4 Rent represent 4.7% largest portfolio of temperature-controlled warehouses in the U.S. and of the Fund. globally. We believe Americold is well positioned to deliver superior • Industrial REITs (typically five-year lease terms) such as Prologis, Inc., growth versus most REITs, with good opportunities to improve Duke Realty Corporation, and Rexford Industrial Realty, Inc. occupancy and rents in its current portfolio, complete its real estate represent 6.8% of the Fund’s assets. development pipeline, and acquire additional temperature-controlled 2. REITS that Specialize in Providing Technology Facilities and warehouses. Services • Manufactured Housing REITs (3.4% of the Fund) REITs that construct and provide highly technical real estate buildings and Sun Communities, Inc. and Equity Lifestyle Properties, Inc. are part wireless towers to support the latest technological advances and of a niche real estate category that is benefiting from the strong innovations are an important focus for the Fund. Cloud computing, the demand trends of budget-conscious home buyers such as retirees and internet, artificial intelligence, autonomous vehicles, mobile data and millennials, and high barriers for development. cellphones, and wireless infrastructure are powerful secular growth opportunities that should continue for years. At Baron, we refer to these Note: We consider the wireless tower and data center REITs mentioned types of enduring developments as “megatrends.” above to be “alternative” REITs as well. REITs that we expect to directly benefit from long-term technology 4. Best-in-Class REITs that are “on sale” growth currently represent approximately 31.5% of the Fund’s net We continue to believe there is an unusual and attractive opportunity to assets across three real estate categories. They include: purchase several best-in-class REITs that are “on sale” at attractive valuations. • Wireless Tower REITs (8.5% of the Fund), such as American Tower Corp. and Crown Castle International Corp. are, in our view, Note that this statement represents the manager’s opinion and is positioned to grow for several years as the demand for data-intensive not based on a third-party ranking. In our opinion, characteristics of devices (such as iPhones) accelerates, and new wireless technologies a best-in-class real estate company are: continue to emerge. New technologies and demand for increased data require a greater number of antennae that will continue to benefit • Owns unique and well-located real estate assets in markets with high tower companies. barriers to entry combined with attractive long-term demand demographics;

88 September 30, 2018 Baron Real Estate Income Fund

• Enjoys strong long-term growth prospects together with a leading Table V. competitive position; Top 10 holdings as of September 30, 2018 • Maintains a conservative and liquid balance sheet; and, importantly, Quarter End • Employs an intelligent and motivated management team whose Quarter End Investment Market Cap Value Percent of interests are closely aligned with shareholders. (billions) (thousands) Net Assets Stock prices of best-in-class companies are seldom “on sale” or cheap. We Equinix, Inc. $34.4 $190.5 6.4% consider a company “on sale” when its stock price does not adequately American Tower Corp. 64.1 160.6 5.4 reflect our view of its intrinsic value. Americold Realty Trust 3.7 146.5 4.9 Digital Realty Trust, Inc. 24.0 113.9 3.8 Fund holdings that we classify as best-in-class companies that are MGM Resorts International 15.0 108.0 3.6 “on sale” include: Prologis, Inc. 42.7 106.3 3.6 QTS Realty Trust, Inc. 2.2 97.8 3.3 • Leading office REITs, such as Boston Properties, Inc., SL Green Realty Crown Castle International Corp., and Vornado Realty Trust, trade at historically large valuation Corp. 46.2 91.7 3.1 discounts to their net asset values or the prices that their real estate AvalonBay Communities, Inc. 25.0 88.8 3.0 would sell for in the private market. We estimate that the share price Equity Residential 24.4 88.2 3.0 of each company is 10% to 20% below its net asset value, representing some of the largest valuation discounts we have seen for these companies in the last five years. Recent Activity • High-quality multi-family REITs, such as AvalonBay Communities, Inc. and Equity Residential, are trading at attractive 10% discounts to Table VI. their net asset values. Top net purchases for the quarter ended September 30, 2018 • The premier mall REIT in the U.S., Simon Property Group, Inc.,is Quarter End Amount trading at a 15% discount to its net asset value–again, a wide valuation Market Cap Purchased (billions) (thousands) discount relative to where this REIT traded over the last five years. QTS Realty Trust, Inc. $2.2 $97.7 5. Investments in Non-REIT Real Estate Companies CyrusOne Inc. 6.6 84.1 Marriott Vacations Worldwide Corp. 5.3 64.2 We have the flexibility to invest up to 20% of the Fund’s net assets in GDS Holdings Limited 4.4 61.7 non-REIT real estate companies that, at certain times, may present superior Gaming and Leisure Properties, Inc. 7.5 34.6 growth and share price appreciation potential than many REITs.

Currently, the Fund has invested 19.9% of its net assets in non-REIT real In the last few months, we have held a series of research meetings with estate companies such as MGM Resorts International, Kennedy-Wilson three real estate data center companies–QTS Realty Trust, Inc., CyrusOne Holdings, Inc., Penn National Gaming, Inc., Red Rock Resorts, Inc., Inc., and GDS Holdings Limited. As a result of these meetings, we are NEXTDC Limited, Marriott Vacations Worldwide Corp., and GDS optimistic about the long-term prospects for each company, and we have Holdings Limited. recently acquired shares in each company. Real estate data center companies such as these are benefiting from strong Table IV. secular demand tailwinds that include strong growth in cloud computing, Fund investments in REIT categories as of September 30, 2018 accelerating internet traffic, increased outsourcing of corporate data center Percent of functions and needs, greater consumption and utilization of data on mobile Net Assets devices, and the growth and proliferation of digital photos and video. Non-REIT Real Estate Companies 19.9% Data Center REITs 16.2 Although leasing activity can be volatile quarter to quarter, we expect data Office REITs 10.0 center leasing activity (occupancy gains and rent growth) to remain strong Wireless Tower REITs 8.5 for several years given the broad-based secular demand. We believe the Hotel REITs 7.3 multi-year growth opportunity for data centers is superior to most other Other REITs 7.2 real estate categories. Industrial REITs 6.8 Multi-Family REITs 6.5 Marriott Vacations Worldwide Corp., a leading timeshare company with Single-Family Rental REITs 4.7 more than 100 resorts, recently completed its acquisition of timeshare Triple Net REITs 3.8 operator ILG, Inc. In the last few months, we suspect that certain “event- Manufactured Housing REITs 3.4 driven” and “momentum” investors have exited their shares in Marriott Mall REITs 1.4 Vacations Worldwide, thereby pressuring the company’s share price. Further, Timber REITs 1.3 we suspect a combination of profit-taking following strong share price performance, concerns about the impact from hurricanes and Hawaiian 97.0 volcanoes, and concerns that consumers may be less likely to purchase Cash and Cash Equivalents 3.0 vacation timeshares if economic growth slows, have also weighed on its 100.0% shares.

89 Baron Real Estate Income Fund

We have begun acquiring shares in Marriott Vacations Worldwide at what We reduced the Fund’s investment in real estate investment and we believe are attractive prices. We are bullish about the company’s long- management company, Kennedy-Wilson Holdings, Inc., following strong term prospects. Our sense is that business fundamentals remain solid and its share price performance. We believe the prospects for the company remain shares are attractively valued (at only 10 times 2019 estimated earnings per attractive. share). We also believe that the company’s customer loyalty program (the Marriott Rewards loyalty program with 110 million members) serves as a Outlook key competitive advantage to source future growth. Finally, we note that insiders have been buying stock at prices above the level where the shares In early October, Fed Chairman Jerome Powell made several notable and are currently trading–a bullish indicator, in our opinion. bullish comments regarding U.S. economic conditions and prospects:

In the most recent quarter, we acquired additional shares of Gaming and • He described the U.S. economy’s performance as “remarkably positive,” Leisure Properties, Inc., a triple net REIT, which owns 38 casino and hotel “extraordinary” and “particularly bright.” facilities across 14 states. Gaming and Leisure’s primary business consists of • Chairman Powel remarked that “there’s really no reason to think that acquiring, financing, and owning real estate property to be leased this (economic) cycle can’t continue for quite some time, effectively “triple-net” to gaming operators. indefinitely.” • “The economy is strong, unemployment is near 50-year lows, and We are optimistic about Gaming & Leisure because the company owns a inflation is roughly at our 2% objective. The baseline outlook of high-quality geographically diversified real estate portfolio that produces forecasters inside and outside the Fed is for more of the same,” said stable and predictable cash flows given the long-term nature of its leases. Powell. Further, the company could supplement its contracted 2% annual rent escalators with additional growth if it were to acquire additional gaming Fed Chairman Powell also made the following remarks about the outlook for properties. interest rates:

We believe the valuation of the shares is compelling. At its current price of • “Interest rates are still accommodative, but we’re gradually moving to $34, the company’s shares offer an approximate 8% dividend yield. This a place where they’ll be neutral, neither holding back nor spurring dividend yield compares favorably to its publicly-traded bonds which mature economic growth,” Powell said. in 5, 7, and 10 years yielding 5.38% to 5.75%. Further, the company’s 8% • “Very accommodative policy is no longer appropriate in the current dividend yield exceeds several other publicly-traded triple net REITs which environment...we may go past neutral, but we’re a long way from offer lower dividend yields of approximately 5.5%, on average. neutral at this point (implying that the Fed may need to catch up with more rate hikes).” We have great confidence that CEO Peter Carlino will generate excellent long-term returns for shareholders given his successful track record. He is Fed Chairman Powell describes an unusually attractive combination of also a significant shareholder of Gaming and Leisure. We are pleased that his generally solid business and economic conditions (“that may continue interests are aligned with ours. indefinitely”), modest inflation (with an expectation for “more of the same”), and low interest rates (which may gradually increase to a neutral level). These conditions, stated by Chairman Powell, typically bode well for Table VII. the stock market. Top net sales for the quarter ended September 30, 2018 So, what is our outlook for the stock market? Quarter End Amount Market Cap Sold (billions) (thousands) While our research conclusions are generally supportive of Powell’s positive view of the economy, we also believe that no one has a crystal ball Extended Stay America, Inc. $ 3.8 $82.2 regarding the outlook. No one knows with clarity how political events, American Tower Corp. 64.1 47.8 macroeconomic changes, and central bank actions may unfold, and it is Park Hotels & Resorts Inc. 6.6 47.6 virtually impossible to predict what the market’s reaction will be to these Weyerhaeuser Company 24.5 34.3 possible scenarios. Kennedy-Wilson Holdings, Inc. 3.1 33.9 In our opinion, the likely direction of the equity, bond, and real estate During the quarter, we trimmed the Fund’s positions in two hotel markets in the months and years ahead will largely be dictated by the pace companies, Extended Stay America, Inc. and Park Hotels & Resorts Inc., of change and the ultimate levels of key market influencing factors such as following strong share price performance. economic growth, inflation, and interest rates. We modestly trimmed the Fund’s position in wireless tower REIT, American What is our outlook for REITs and other real estate income Tower Corp., given its large position in the Fund. It remains a top position in securities? the Fund, and we remain optimistic about the company’s long-term prospects. On the one hand, there are several key positives that exist for REITs and real estate income securities. A few notable positives include: We trimmed the Fund’s investment in Weyerhaeuser Company, a timber REIT, because of weakness in the residential real estate market, and do not • Generally steady and growing commercial real estate fundamentals; believe its share price will appreciate commensurate with several other • New construction activity that is now being moderated by high investment opportunities we continue to research. construction and labor costs;

90 September 30, 2018 Baron Real Estate Income Fund

• Generally reasonable valuations versus equities and bonds (and, in Second, the Fund is populated with REITs and other income- some cases, “cheap” real estate securities); and oriented real estate securities that feature additional attributes • Solid balance sheets and attractive dividend yields (4%, on average). including: On the other hand, REITs have been sensitive to fluctuations in interest • Solid demand prospects and supply conditions that in many cases are rates. In the last few years, REITs and other dividend-yielding securities have peaking due to high construction and labor costs; tended to shine brightest during declining interest rate environments as the • Diversification from traditional equities and bonds; comparative appeal of a REIT dividend versus the U.S. 10-Year Treasury yield • A compelling investment allocation if interest rates continue to has improved. stabilize or decline; Conversely, REITs have generally suffered during periods when interest rates • Attractive dividend yields, many of which range from 3% to 4%; have risen. This inverse correlation between the movement in interest rates • Reasonable valuations relative to several stock and bond alternatives; and the share prices of REITs may or may not continue. and • Solid balance sheets We continue to support the merits of a diversified investment strategy that incorporates an allocation to dividend-yielding real estate securities such as To Our Shareholders REITs. We greatly appreciate your confidence by investing in the Baron Real Estate We remain bullish about the prospects for many income-oriented Income Fund. real estate securities and the Baron Real Estate Income Fund. Our Our real estate team has assembled a quality portfolio of companies with, in optimism emanates from the following key factors: our view, excellent management teams, strong growth prospects, leading competitive positions, liquid balance sheets, and attractive valuations. First, our research indicates that business conditions are generally solid for REITs and other real estate income-oriented companies. I am proud to report that I am a major shareholder of the Baron Real Estate Examples that are held in the Fund include: Income Fund, alongside you. • Data Center REITs: Equinix, Inc. and Digital Realty Thank you for your support. Trust, Inc. Sincerely, • Wireless Tower REITs: American Tower Corp. and Crown Castle International Corp. • Hotel REITs: Park Hotels & Resorts Inc. and Host Hotels & Resorts, Inc. • Multi-Family REITs: AvalonBay Communities, Inc. and Equity Residential • Single-Family Rental REITs: Invitation Homes, Inc. and American Homes 4 Rent Jeffrey Kolitch • Industrial REITs: Prologis, Inc., Duke Realty Portfolio Manager Corporation, and Rexford Industrial November 1, 2018 Realty, Inc. • West coast focused Office REITs: Kilroy Realty Corporation, Douglas Emmett, Inc., and Hudson Pacific Properties, Inc. • Manufactured Housing REITs: Sun Communities, Inc. and Equity Lifestyle Properties, Inc.

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: In addition to general market conditions, the value of the Fund will be affected by the strength of the real estate markets as well as by interest rate fluctuations, credit risk, environmental issues and economic conditions. The Fund invests in companies of all sizes, including small and medium sized companies whose securities may be thinly traded and more difficult to sell during market downturns. Prices of equity securities may decline significantly over short or extended period of time. Debt or fixed income securities such as those held by the Fund, are also subject to derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. Discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them.

91 Baron WealthBuilder Fund

Dear Baron WealthBuilder Fund Shareholder: Performance

Baron WealthBuilder Fund (the “Fund”) gained 4.28% (TA Shares) during the three months ended September 30, 2018. The Fund trailed its U.S. benchmark, the S&P 500 Index, while performing more similarly to its global index, the MSCI ACWI Index. The S&P 500 Index gained 7.71% and the MSCI ACWI Index rose 4.28%. The relative underperformance of the Fund for the past three months was principally due to its 16.3% average combined allocation to Baron Emerging Markets Fund and Baron International Growth Fund. Both markets in which these funds invest underperformed domestic stocks in the period. The Fund’s 4.5% average allocation to Baron Real Estate Fund also penalized its third quarter performance. Real estate stocks underperformed although many of the businesses’ fundamentals continued to do well. For the nine months ended September 30, 2018, Baron WealthBuilder Fund achieved favorable absolute and relative results. This diversified Fund gained 12.00% year-to-date, while the S&P 500 Index and MSCI ACWI Index advanced 10.56% and 3.83%, respectively. RONALD BARON Retail Shares: BWBFX Institutional Shares: BWBIX Table I. CEO AND PORTFOLIO MANAGER TA Shares: BWBTX Performance For periods ended September 30, 2018 Baron Baron period or year-to-date, nor did we expect it to be. Baron WealthBuilder Fund Wealth Wealth Baron has provided strong risk-adjusted returns that compare favorably to its Builder Builder Wealth Fund Fund Builder S&P MSCI indexes. Its standard deviation of returns (a measure of volatility) is 13.89% Retail Institutional Fund TA 500 ACWI year-to-date and is comparable to the 14.00% for the S&P 500 Index, Shares1,2 Shares1,2 Shares1,2 Index1 Index1 although it is higher than the 10.48% for the MSCI ACWI Index. Three Months3 4.10% 4.19% 4.28% 7.71% 4.28% More importantly, in our opinion, is the Fund’s Sharpe ratio, a risk-adjusted Nine Months and performance statistic that measures reward per unit of risk. The Fund’s Since Inception Sharpe ratio is 1.29 and is higher than the S&P 500 Index’s Sharpe ratio of (December 29, 1.11 and the MSCI ACWI Index’s Sharpe ratio of 0.38. In other words: for an 2017)3 11.80% 11.90% 12.00% 10.56% 3.83% equivalent level of risk, the Fund had a Sharpe ratio that was 3.4 times as high as the MSCI ACWI Index and 13% higher than the S&P 500 Index! (We As we discussed in last quarter’s letter, Baron WealthBuilder Fund is in its should note that the S&P 500 Index’s Sharpe ratio improved significantly in inaugural year, and it has performed as anticipated. This is although funds the third quarter relative to the first half of the year because of the recent that had been top performers, such as international, emerging markets, and strong market in large-cap “value” stocks). The limited history of the Fund real estate funds were headwinds in the period. Accordingly, Baron causes these statistics to change significantly from one period to the next. WealthBuilder Fund is not Baron Fund’s top performing fund either in this These relative figures were especially impressive during the first half of the

Performance listed in the above table is net of annual operating expenses. Annual estimated expense ratio for the Retail Shares, Institutional Shares and TA Shares is 2.13%, 1.88% and 1.88%, respectively, but the net annual estimated expense ratio is 1.41%, 1.16% and 1.16% (includes acquired fund fees, net of the Adviser’s fee waivers), respectively. The Adviser has agreed that for so long as it serves as the Adviser to the Fund, it will reimburse certain expenses of the Fund, limiting net annual operating expenses (portfolio transaction costs, interest, dividend, acquired fund fees and expenses and extraordinary expenses are not subject to the operating expense limitation) to 0.30% of average daily net assets of Retail Shares, 0.05% of average daily net assets of Institutional Shares and 0.05% of average daily net assets of TA Shares. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Baron Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1 The indexes are unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The MSCI ACWI Index is an unmanaged, free float- adjusted market capitalization weighted index reflected in US dollars that measures the equity market performance of large- and mid-cap securities across developed and emerging markets. The indexes and the Fund are with dividends, which positively impact the performance results. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. 3 Not annualized.

92 September 30, 2018 Baron WealthBuilder Fund

year when market returns were more modest (and closer to their historical and Baron Real Estate Fund’s underlying businesses are continuing to make levels). The sudden and rapid index gains in the most recent period steady progress. As a result, we believe the dramatic multiple contraction of somewhat skewed the comparative results, but we remain pleased with the real estate businesses is likely to soon be offset by higher earnings. With relative risk-return comparison. favorable long-term prospects for our real estate investments as a hedge against inflation protection, we regard these businesses as unusually The Fund’s investments in small- and mid-sized companies performed the attractive. According to Morningstar, Baron Real Estate Fund had previously best over the past three months. Our investments in larger-cap companies been a top-performing fund in its category. slightly trailed the market after strong returns in the first half of the year. Large-cap businesses held in the Fund are generally high-growth firms that The diversity of the Fund’s investments is important in our efforts to achieve dominate their respective categories and have had strong earnings growth the risk-adjusted returns discussed above. We do not expect all our and multiple expansion throughout the first half of 2018. The appreciation investments to perform well at the same time, but we expect this portfolio’s of these businesses plateaued this quarter as investors considered the diversity to provide more consistent and less volatile returns than the implications of international trade policy and tariffs. Regardless, many of benchmark over the long term. Our goal is to outperform benchmark indexes these businesses have outperformed the broad market thus far in 2018. over the long term. We cannot guarantee we will achieve our objectives. We continue to believe the environment favors active stock picking as the We encourage you to read the quarterly letters for our underlying funds to elevated correlations between securities witnessed the prior few years have gain a deeper understanding of the investments held within Baron returned to normal levels. The economy is strong and reduced bureaucracy WealthBuilder Fund. and advantageous tax changes have made domestic businesses more profitable. Job growth has consistently surpassed expectations and Fund Of Funds Structure And Investment Strategy unemployment is at lows not experienced in decades. Home prices have risen and consumer confidence remains high. Inflation, interest rates, and oil Baron WealthBuilder Fund closely mimics the way we would incrementally prices are all increasing but so far have only modestly impacted spending invest across our various funds and strategies. Baron WealthBuilder Fund and GDP growth. allows investors to diversify across several Baron Funds and gain exposure to various market caps, sectors, and geographies. But, each underlying Baron Weaker performance remains concentrated in international markets Fund abides by the same core investment process and philosophy, focused (specifically Baron International Growth Fund and Baron Emerging Markets on proprietary research to discover what we believe are competitively Fund). Prevalent political uncertainty in many emerging markets increased advantaged businesses with immense opportunities led by smart and the risk in those economies. Macro factors stemming from higher oil prices, honorable executives. Baron has had broad historical success. The unique rising interest rates, and protectionism spreading across the globe pressured investment approach and process has yielded outstanding results since the many financial systems in emerging markets. When these issues stabilize, Firm’s founding in 1982. Since their inceptions, as of September 30, 2018, we expect emerging economies to improve and the businesses in those 13 of 17 Baron mutual funds, representing 98.6% of Baron Funds’ AUM have countries to achieve much higher growth rates and associated valuations. outperformed, net of fees and expenses, their benchmarks. Nine of these We were very encouraged that in October, when markets performed very Funds, representing 95.8% of Baron Funds’ AUM, rank in the top 12% of poorly, Baron Emerging Markets Fund lost less than the S&P 500 Index. their respective Morningstar categories; and four of these Funds, As noted before, the Fund’s exposure to Baron Real Estate Fund also representing 34.5% of Baron Funds’ AUM, rank in the top 3% of their detracted from the Fund’s performance in the third quarter. Steadily rising respective Morningstar categories. We have always strived to provide top interest rates have increased the cost to build and develop properties and performance in various asset categories. Baron WealthBuilder Fund allows made other yielding investments comparatively more attractive. Regardless, individuals to gain access to a variety of these strategies in a single fund. replacement costs for our real estate businesses have continued to increase And, we are very pleased with the composition and early results.

93 Baron WealthBuilder Fund

Table II. Baron Funds Performance As of September 30, 2018 Institutional Share Class Data

Performance Performance Q-T-D Y-T-D Q-T-D Y-T-D %of September 30, September 30, Net Assets of Fund 2018 BENCHMARK 2018 31.9% SMALL CAP 3.8% Baron Discovery Fund 13.83% 31.31% Russell 2000 Growth 5.52% 15.76% 14.0% Baron Growth Fund 7.94% 19.47% 14.1% Baron Small Cap Fund 8.71% 19.08% 3.5% SMALL/MID CAP 3.5% Baron Focused Growth Fund 2.89% 17.22% Russell 2500 Growth 7.17% 15.78% 15.0% MID CAP 15.0% Baron Asset Fund 8.13% 19.71% Russell Midcap Growth 7.57% 13.38% 6.9% LARGE CAP 1.4% Baron Durable Advantage Fund 4.26% 7.60% S&P 500 Index 7.71% 10.56% 5.5% Baron Fifth Avenue Growth Fund 6.00% 22.04% Russell 1000 Growth 9.17% 17.09% 19.9% ALL CAP 5.4% Baron Opportunity Fund 7.84% 29.72% Russell 3000 Growth 8.88% 16.99% 14.5% Baron Partners Fund 2.14% 17.98% Russell Midcap Growth 7.57% 13.38% 18.6% INTERNATIONAL 11.6% Baron Emerging Markets Fund –4.98% –13.14% MSCI EM –1.09% –7.68% 2.9% Baron Global Advantage Fund –0.30% 12.51% MSCI ACWI Growth 4.56% 7.65% 4.1% Baron International Growth Fund –2.53% –2.69% MSCI ACWI ex USA 0.71% –3.09% 4.2% SPECIALTY 4.2% Baron Real Estate Fund –2.76% –6.91% MSCI USA IMI Extended Real Estate 1.91% 1.18%

Table III. Table IV. Sector exposures as of September 30, 2018 Country exposures as of September 30, 2018 Percent Percent of Net S&P MSCI of Net S&P MSCI Assets 500 Index ACWI Index Assets 500 Index ACWI Index Information Technology 22.3% 21.0% 15.7% United States 82.1% 100.0% 54.9% Consumer Discretionary 21.0 10.3 10.5 China 4.2 3.4 Health Care 13.7 15.0 11.8 India 1.8 0.9 Industrials 12.8 9.7 10.7 Brazil 1.3 0.7 Financials 12.5 13.3 17.1 Israel 1.2 0.2 Communication Services 8.2 10.0 8.9 Korea 1.0 1.6 Real Estate 5.2 2.7 2.8 United Kingdom 1.0 5.4 Consumer Staples 1.9 6.7 7.9 Taiwan 0.9 1.4 Materials 1.3 2.4 5.0 South Africa 0.9 0.7 Energy 0.9 6.0 6.7 Mexico 0.8 0.3 Utilities 0.2 2.8 2.9 Other 4.8 30.4

94 September 30, 2018 Baron WealthBuilder Fund

Thank you for investing in Baron WealthBuilder Fund Respectfully,

Thank you for joining us as fellow shareholders in Baron WealthBuilder Fund. We believe that the growth prospects for the underlying Baron Funds in which Baron WealthBuilder Fund has invested continue to be favorable.

We continue to work hard to justify your confidence and trust in our stewardship of your hard-earned savings. We will also to continue to provide you with information that we would like to have if our roles were reversed. This is so you will be able to make an informed judgment about whether Ronald Baron Michael Baron Baron WealthBuilder Fund remains an appropriate and attractive investment CEO and Portfolio Manager Assistant Portfolio Manager for you and your family. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: The Fund is a non-diversified fund because it invests, at any given time, in the securities of a select number of Baron mutual funds (the “Underlying Funds”), representing specific investment strategies. The Fund can invest in funds holding U.S. and international stocks; small-cap, small to mid-cap, large-cap, all-cap stocks; and specialty stocks. Each of the Underlying Funds has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares. To the extent that the Fund invests more of its assets in one Underlying Fund than in another, it will have greater exposure to the risks of that Underlying Fund. For further information regarding the investment risks of the Underlying Funds, please refer to the Underlying Funds’ prospectus.

The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them.

This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron WealthBuilder Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

Ranking information provided is calculated for Retail Share Class and is as of 09/30/2018.

The number of share classes in each category may vary depending on the date that Baron downloaded information from Morningstar Direct.

Morningstar calculates its category averages using its Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. The Morningstar US Fund Mid-Cap Growth Category consisted of 601, 483, and 342 share classes for the 1-, 5-, and 10-year periods.

Morningstar ranked Baron Asset Fund in the 32nd,12th,48th, and 12th percentiles, respectively, in the category for the 1-year, 5-year, 10-year, and since inception periods. The Fund was incepted 6/12/1987 and the category consisted of 18 share classes for the since inception period.

Morningstar ranked Baron Growth Fund in the 20th,54th,41st, and 5th percentiles, respectively, in the category for the 1-year, 5-year, 10-year, and since inception periods. The Fund was incepted 12/30/1994 and the category consisted of 57 share classes for the since inception period.

Morningstar ranked Baron Partners Fund in the 59th,17th,42nd, and 2nd percentiles, respectively, in the category for the 1-year, 5-year, 10-year, and since conversion periods. The Fund was converted into a mutual Fund 4/30/2003 and the category consisted of 236 share classes for the since conversion period. The Morningstar US Fund Small Growth Category consisted of 702, 532, and 404 share classes for the 1-, 5-, and 10-year time periods.

Morningstar ranked Baron Small Cap Fund in the 46th,46th,49th, and 11th percentiles, respectively, in the category for the 1-year, 5-year, 10-year, and since inception periods. The Fund was incepted 9/30/1997 and the category consisted of 116 share classes for the since inception period.

Morningstar ranked Baron Discovery Fund in the 12th,1st, and 1st percentiles, respectively, in the category for the 1-year, 5-year and since inception periods. The Fund was incepted 9/30/2013 and the category consisted of 533 share classes for the since inception period.

The Morningstar US Fund Foreign Large Growth Category consisted of 426, 313, and 235 share classes for the 1-year, 5-year, and since inception (12/31/2008) periods. Morningstar ranked Baron International Growth Fund in the 47th,25th, and 11th percentiles, respectively, in the category.

The Morningstar US Fund Real Estate Category consisted of 253, 191, and 146 share classes for the 1-year, 5-year, and since inception (12/31/2009) periods. Morningstar ranked Baron Real Estate Fund in the 85th,81st, and 3rd percentiles, respectively, in the category. The Morningstar US Fund Diversified Emerging Markets Category consisted of 838, 508, and 304 share classes for the 1-year, 5-year, and since inception (12/31/2010) periods. Morningstar ranked Baron Emerging Markets Fund in the 86th,19th, and 2nd, percentiles, respectively, in the category.

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The Morningstar US Fund World Large Stock Category consisted of 895, 611, and 503 share classes for the 1-year, 5-year, and since inception (4/30/2012) periods. Morningstar ranked Baron Global Advantage Fund in the 2nd,3rd, and 3rd percentiles, respectively, in the category. © 2018 Morningstar, Inc. All Rights Reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Fund (Institutional Shares) and Benchmark Performance 9/30/2018

Annualized Annualized Benchmark Return Since Return Since Inception Average Annualized Returns Annual Fund Primary Benchmark Fund Inception Fund Inception Date 1-Year 5-Year 10-Year 15-Year Expense Ratio Net Assets SMALL CAP Baron Growth Fund Russell 2000 Growth Index 13.57% 8.54% 12/31/1994 25.86% 11.90% 12.67% 11.10% 1.04%(3) $6.99 billion Baron Small Cap Fund Russell 2000 Growth Index 10.71% 6.70% 9/30/1997 25.33% 12.28% 12.80% 10.79% 1.05%(3) $4.68 billion Baron Discovery Fund† Russell 2000 Growth Index 19.77% 12.14% 9/30/2013 35.74% 19.77% N/A N/A 1.23%/1.10%(3)(4) $394.02 million SMALL/MID CAP Baron Focused Growth Russell 2500 Growth Fund(1) Index 11.44% 8.47% 5/31/1996 20.34% 9.93% 10.15% 12.48% 1.12%/1.10%(5)(6) $226.81 million MID CAP Baron Asset Fund Russell Midcap Growth Index 11.87% 10.33%(2) 6/12/1987 23.43% 14.45% 12.45% 11.64% 1.04%(3) $3.65 billion LARGE CAP Baron Fifth Avenue Russell 1000 Growth Growth Fund Index 9.64% 10.39% 4/30/2004 29.03% 16.56% 12.80% N/A 0.84%/0.75%(3)(8) $305.82 million Baron Durable Advantage Fund S&P 500 Index 7.60%* 10.56%* 12/29/2017 N/A N/A N/A N/A 1.61%/0.70%(12) $4.03 million ALL CAP Baron Partners Fund(1) Russell Midcap Growth Index 13.25% 10.01% 1/31/1992 19.32% 14.04% 12.65% 13.37% 1.53%(5)(7) $2.36 billion Baron Opportunity Fund† Russell 3000 Growth Index 7.38% 4.81% 2/29/2000 37.73% 13.59% 14.23% 12.41% 1.14%(3) $473.97 million INTERNATIONAL Baron Emerging Markets Fund† MSCI EM Index 4.26% 1.26% 12/31/2010 –7.79% 4.26% N/A N/A 1.10%(5) $5.25 billion Baron Global Advantage MSCI ACWI Growth Fund† Index 14.23% 11.17% 4/30/2012 23.64% 14.34% N/A N/A 1.59%/0.90%(5)(9) $106.25 million Baron International Growth Fund† MSCI ACWI ex USA Index 11.67% 8.09% 12/31/2008 4.44% 6.81% N/A N/A 1.13%/0.95%(5)(10) $285.05 million SPECIALTY Baron Energy and S&P North American Resources Fund† Natural Resources Sector Index –1.73% 1.58% 12/30/2011 12.42% –4.76% N/A N/A 1.42%/1.10%(5)(11) $54.56 million Baron Real Estate Fund MSCI USA IMI Extended Real Estate Index 13.94% 12.66% 12/31/2009 2.12% 8.05% N/A N/A 1.06%(5) $851.04 million Baron Real Estate Income Fund MSCI US REIT Index 0.26%* 1.32%* 12/29/2017 N/A N/A N/A N/A 1.71%/0.80%(12) $2.99 million Baron Health Care Fund Russell 3000 Growth Index 16.00%* 17.45%* 4/30/2018 N/A N/A N/A N/A 1.71%/0.85%(12) $6.63 million FUND OF FUNDS Baron WealthBuilder Fund S&P 500 Index 11.90%* 10.56%* 12/29/2017 N/A N/A N/A N/A 1.88%/1.16%(12) $76.85 million

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(1) Reflects the actual fees and expenses that were charged when the Funds were partnerships. The predecessor partnerships charged a 20% performance fee (Baron Partners Fund) or a 15% performance fee (Baron Focused Growth Fund) after reaching a certain performance benchmark. If the annual returns for the Funds did not reflect the performance fee for the years the predecessor partnerships charged a performance fee, returns would be higher. The Funds’ shareholders are not charged a performance fee. (2) For the period June 30, 1987 to September 30, 2018. (3) As of 9/30/2017. (4) Annual expense ratio was 1.23%, but the net annual expense ratio was 1.10% (net of the Adviser’s fee waivers). (5) As of 12/31/2017. (6) Annual expense ratio was 1.12%, but the net annual expense ratio was 1.10% (net of the Adviser’s fee waivers). (7) Comprised of operating expenses of 1.08% and interest expenses of 0.45%. (8) Annual expense ratio was 0.84%, but the net annual expense ratio was 0.75% (restated to reflect current fee waivers). (9) Annual expense ratio was 1.59%, but the net annual expense ratio was 0.90% (restated to reflect management fee reduction from 1.00% to 0.85% and current fee waivers). (10) Annual expense ratio was 1.13%, but the net annual expense ratio was 0.95% (restated to reflect management fee reduction from 1.00% to 0.88% and current fee waivers). (11) Annual expense ratio was 1.42%, but the net annual expense ratio was 1.10% (net of the Adviser’s fee waivers). (12) Expense ratios are estimated for the current fiscal year. * Not annualized. † The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future.

97 Baron Health Care Fund

Dear Baron Health Care Fund Shareholder: Performance

In the quarter ended September 30, 2018, Baron Health Care Fund (the “Fund”) advanced 10.58% (Institutional Shares), compared with the 13.61% gain for the Russell 3000 Health Care Index (the “Benchmark”) and the 7.71% gain for the S&P 500 Index. Since inception (4/30/2018), the Fund has advanced 16.00% (Institutional Shares) compared with the 17.45% gain for the Benchmark and the 10.98% gain for the S&P 500.

Table I. Performance For periods ended September 30, 2018 Baron Health Baron Russell Care Health Care 3000 Fund Fund Health S&P Retail Institutional Care 500 Shares1,2 Shares1,2 Index1 Index1 3 Three Months 10.59% 10.58% 13.61% 7.71% NEAL KAUFMAN Retail Shares: BHCFX 3 Since Inception (April 30, 2018) 15.90% 16.00% 17.45% 10.98% Institutional Shares: BHCHX PORTFOLIO MANAGER R6 Shares: BHCUX Welcome to Baron Health Care Fund! We launched the Fund on April 30, 2018 because we think the Health Care sector offers attractive investment opportunities now and will continue to do so over the next decade and beyond. Health Care is one of the largest and most complex sectors in the recurrence monitoring, and early detection of cancer. We believe DNA U.S. economy, accounting for approximately 18% of GDP, growing faster sequencing is on the verge of becoming a foundational part of patients’ than GDP, and encompassing a diverse array of sub-industries. Advances in health records. As the applications for DNA sequencing expand, we science and medical technology are occurring at a rapid pace. Health Care is believe Illumina will benefit because its sequencers will be utilized also a dynamic industry undergoing significant changes driven by legislation, more often, generating the potential for high margin consumable regulation and market forces. The Fund’s investment approach is consistent revenue for the company. with the Baron investment philosophy. We take a long-term perspective, conduct independent research and analysis, and look for businesses that we • Innovative New Drugs: We have investments in companies believe have open-ended secular growth opportunities, durable competitive developing innovative new drugs. Sage Therapeutics, Inc. is advantages, and strong management teams. We are particularly focused on developing novel medications for depression which have the potential businesses that solve problems in health care, whether by reducing costs, to offer a faster onset of action (days vs. months) and a change in the enhancing efficiency and/or improving patient outcomes. Some of the key treatment paradigm from chronic to acute. Argenx SE’s lead molecule secular growth trends we are currently investing in include: has the potential to treat a long list of severe autoimmune diseases caused by pathogenic auto-antibodies. Vertex Pharmaceuticals • Genomics: We have an investment in Illumina, Inc., the market leader Incorporated, the leader in the treatment of cystic fibrosis, has shown in DNA sequencing technology. As the cost and time to sequence a promising data for its “triple therapy,” a cocktail of three drugs human genome have declined to less than $1,000 in under a day, the combined into one pill that would address an expanded group of applications for DNA sequencing are expanding, most notably in cancer patients with the disease. Adaptimmune Therapeutics plc is diagnosis and treatment. We are closely tracking companies that are developing T-cell therapies which utilize the body’s own immune developing liquid biopsy tests for cancer therapy selection, cancer system to find and destroy cancer cells in solid tumors.

Performance listed in the above table is net of annual operating expenses. Annual estimated expense ratio for the Retail Shares and Institutional Shares is 1.96% and 1.71%, respectively, but the net annual expense ratio is 1.10% and 0.85% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. 1 The indexes are unmanaged. The Russell 3000® Health Care Index is an unmanaged index representative of companies involved in medical services or health care in the Russell 3000 Index, which is comprised of the 3,000 largest U.S. companies as determined by total market capitalization. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. 3 Not annualized.

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• Minimally Invasive Surgery: Less invasive surgery is less traumatic for relatively low multiples. At quarter end, we owned one large-cap the patient, enabling a faster recovery. We have investments in pharmaceutical stock, AstraZeneca PLC, which we believe is well positioned Intuitive Surgical, Inc., the pioneer in robotic surgery; Edwards for future growth given a strong new product pipeline and low exposure to Lifesciences Corp., a leader in transcatheter valve replacement; and blockbusters losing patent protection. The Fund’s relative performance was Teleflex Incorporated, which offers a new minimally invasive also hindered by share price declines from several smaller-cap treatment for benign prostatic hyperplasia (BPH), also known as pharmaceutical and biotechnology holdings in which we continue to have a enlarged prostate. high level of conviction, including Sage Therapeutics, Inc., argenx SE, Dechra Pharmaceuticals PLC, and Intersect ENT, Inc. We discuss why • Tools Providers to Life Sciences Companies: We believe companies these stocks detracted from performance and why we retain conviction that provide products and services to biotechnology and below. pharmaceutical companies are attractive because they can benefit from the growth in those areas without the risk inherent in drug Table II. development. We have multiple investments in companies that supply Top contributors to performance for the quarter ended September 30, 2018 equipment, analytical instruments, consumables, services, and Percent software to research and commercial laboratories or that play a role in Impact drug and food production as testers of quality, including Bio-Techne CareDx, Inc. 1.24% Corporation, Eurofins Scientific SE, Mettler-Toledo International, Bio-Techne Corporation 1.15 Inc., and Agilent Technologies, Inc., among others. Illumina, Inc. 1.10 • Integration between Payors and Providers: Efforts to control health Medtronic Public Limited Company 0.74 care costs are driving a shift towards value-based health care, which Neurocrine Biosciences, Inc. 0.69 rewards health care providers for the quality of care they provide rather than the quantity of care. As a result, the lines between health CareDx, Inc. is the leader in transplant diagnostics, with a presence in care payors and providers are blurring as providers assume more nearly all U.S. and EU transplant centers. Shares rose sharply on impressive insurance risk and payors acquire providers to control health care sales of AlloSure, a new kidney transplant test that launched last year, and costs. We have investments in UnitedHealth Group Incorporated,a fading investor concerns about a potential competitive product coming to leading managed care organization which is also the largest employer the market. We believe CareDx has many competitive advantages, including of physicians in the U.S., and Humana Inc., a leading managed care substantial clinical data, reimbursement from insurers, and a long-term organization which is also the largest hospice operator in the U.S. Both reputation in its end markets. AlloSure addresses a large market opportunity of these companies are also well positioned to benefit from enrollment of over $2 billion and has higher margins than CareDx’s other tests. growth in Medicare Advantage, the value-based Medicare program Shares of Bio-Techne Corporation, a developer and manufacturer of life which is growing more rapidly than traditional Medicare because of sciences tools, contributed to performance. The company reported strong the more attractive value proposition to enrollees. We discuss quarterly results highlighted by 9% organic revenue growth. In addition, UnitedHealth Group in more depth below. Bio-Techne recently acquired Exosome Diagnostics, which has a • Animal Health: We believe the animal health industry is attractive non-invasive liquid biopsy test to help physicians determine whether a based on the trends toward greater pet ownership, increased spend on prostate biopsy is necessary in patients with ambiguous screening results. pets, increased consumption of animal protein, and increased focus on The transaction has the potential to become a meaningful growth driver for food safety. Further, compared with drug development for humans, the company, in our view. the animal health industry is characterized by lower regulatory Illumina, Inc. is the leading provider of next generation DNA sequencing barriers, shorter and less costly R&D, less generic competition, and instruments and consumables. The stock rose after the company reported lower reimbursement since customers in animal health pay out of financial results that exceeded Street expectations, driven by strong growth pocket compared with third-party payors in human health. We have of sequencing consumables. We believe Illumina will continue to benefit investments in Dechra Pharmaceuticals PLC, which develops and from increased adoption of DNA sequencing in clinical applications, such as sells medicines for pets and food producing animals; and IDEXX cancer diagnosis and treatment. Laboratories, Inc., the leading provider of diagnostic instruments and Medtronic Public Limited Company is a large diversified medical assays used for pet care in veterinarian offices. technology company. Shares rose after the company reported organic sales growth that beat Street expectations, driven by a strong uptick in its Health Care was the best performing sector in the S&P 500 Index in the diabetes business and in emerging markets, among other areas. September quarter as health care companies benefited from strong demand Management also raised organic growth guidance. We believe Medtronic’s for their products and services, and investors sought safety in more valuation discount versus peers will narrow as the company executes its defensive areas of the market. Within the Health Care sector, the best business plan, creating attractive investment returns for shareholders. performing sub-industries were life sciences tools & services, health care facilities, and pharmaceuticals. The Fund benefited from overall sector Neurocrine Biosciences, Inc. develops treatments for neurological and appreciation, outperforming the S&P 500 in the quarter, but not as much as endocrine-related diseases. Strong performance in the quarter is the Benchmark. The rally in large-cap pharmaceuticals detracted from the attributable to the successful launch of its drug Ingrezza as a treatment for Fund’s relative performance because of the Fund’s lower exposure to this a side effect of neuroleptic drugs and approval of its drug for endometriosis. area. We believe large-cap pharmaceutical outperformance in the third We expect continued strong performance as these products gain traction in quarter was driven by a defensive rotation; earnings results that were at or their markets and we get more data from the use of Ingrezza for Tourette’s above expectations; mean reversion after a period of underperformance; and Syndrome.

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Table III. Portfolio Structure Top detractors from performance for the quarter ended September 30, 2018 Percent We build the portfolio from the bottom up, one stock at a time, using the Impact Baron investment approach. We do not try to mimic an index and we Gemphire Therapeutics Inc. –0.89% expect the Fund to look very different from the Benchmark. The Fund may Sage Therapeutics, Inc. –0.38 invest in stocks of any market cap and may hold both domestic and Dechra Pharmaceuticals PLC –0.28 international stocks. As of September 30, 2018, the Fund held 43 positions. argenx SE –0.26 This compares with 491 positions in the Benchmark. International stocks Intersect ENT, Inc. –0.25 represented 15.5% of the Fund’s net assets. The Fund’s 10 largest holdings represented 39.9% of net assets and the 20 largest holdings represented Gemphire Therapeutics Inc. is a clinical-stage biopharmaceutical company 65.3% of net assets. Compared with the Benchmark, the Fund had developing treatments for cardiometabolic disorders. Shares decreased overweight positions in life sciences tools & services, health care sharply on safety issues uncovered during a product trial for pediatric liver equipment, and biotechnology, and underweight positions in disease. Due to our concerns about the company’s liquidity and rising pharmaceuticals, health care services, and managed health care. The Fund clinical uncertainties, we decided to exit our position. includes a mix of stocks ranging from large, stable growth companies to Sage Therapeutics, Inc. develops novel drugs for central nervous system small pre-commercial biotechnology companies. The market cap range of disorders. Recent developments have been wildly positive given clinical trial the investments in the Fund was $220 million to $256 billion with a results of lead assets in postpartum depression and major depression, but weighted average market cap of $42.9 billion. This compared with the now the company is in a quiet period for news flow and it has relinquished Benchmark’s weighted average market cap of $117.1 billion. some gains. Sage has announced expansion into disease indications like Parkinson’s and tremor, and we expect the stock to appreciate as the Table IV. company researches and brings new drugs to market. Top 10 holdings as of September 30, 2018 Despite reporting strong quarterly results, shares of U.K.-based animal Market Quarter pharmaceutical company Dechra Pharmaceuticals PLC declined after some Cap End When Market Percent one-off minor adjustments caused fiscal year 2019 consensus numbers to Year Acquired Cap Amount of Net move down modestly. We believe investors overreacted to management Acquired (billions) (billions) (thousands) Assets commentary on the ongoing consolidation in the veterinary practice industry UnitedHealth Group and efforts by distributors to sell competing products on their own. Incorporated 2018 $227.2 $256.1 $448.5 6.8% argenx SE is a Netherlands-based biotechnology company developing Teleflex Incorporated 2018 12.2 12.2 268.0 4.0 innovative antibody therapies for cancer and auto-immune diseases. The stock Medtronic Public price fell after management mishandled an adverse event in a recent clinical Limited Company 2018 115.0 132.8 267.8 4.0 trial that we believe is immaterial. We expect safety data due in December argenx SE 2018 2.8 2.7 265.8 4.0 should help ease investor concerns and believe argenx’s antibody platform is Vertex one of the most valuable assets in the biotechnology development space. Pharmaceuticals Intersect ENT, Inc. sells a drug coated stent-like device implanted in Incorporated 2018 39.0 49.3 257.1 3.9 sinuses of patients immediately following surgery. The company recently Sage Therapeutics, won approval for another device called SINUVA for patients with recurring Inc. 2018 6.7 6.6 255.2 3.9 severe sinus symptoms following surgery. Shares fell on lowered guidance AstraZeneca PLC 2018 90.0 100.3 238.3 3.6 for 2018 SINUVA sales due to reimbursement difficulties prior to the Illumina, Inc. 2018 35.4 54.0 223.9 3.4 approval of a J-Code. We expect the code will be in effect by January 2019. Bio-Techne We estimate an addressable market for this product of more than $1 billion, Corporation 2018 5.7 7.7 208.8 3.2 and expect sales will accelerate after reimbursement approval is obtained. Intuitive Surgical, Inc. 2018 49.9 65.3 207.2 3.1

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Table V. investment. HCA’s volume trends have been strong and are accelerating Fund investments in GICS sub-industries as of September 30, 2018 driven in part by low unemployment. HCA has a strong presence in markets Percent of growing faster than the national average with secular tailwinds, such as Net Assets Texas and Florida. We think HCA has margin expansion opportunities from Health Care Equipment 26.3% fixed cost leverage and integration of acquired assets. Biotechnology 23.5 Dechra Pharmaceuticals PLC develops, manufactures, and distributes Life Sciences Tools & Services 16.0 specialty veterinary medicines for both pet and food producing animals in Pharmaceuticals 10.9 the EU and North America. As discussed above, we believe the animal health Managed Health Care 10.2 industry is attractive. We believe Dechra has an attractive product portfolio Health Care Supplies 3.3 that is relatively insulated from competition and can continue to generate Health Care Facilities 2.6 above market growth bolstered by geographic expansion, its new product Health Care Technology 1.7 pipeline, and acquisitions. We believe recent concerns about consolidation Cash and Cash Equivalents 5.5 among vet distributors and the distributors’ marketing their own products 100.0% are overblown. LivaNova PLC is a medical device company that sells cardiac surgery Recent Activity products and neuromodulation-based medical devices for the treatment of epilepsy and depression. We believe the company’s existing business can Table VI. generate mid-to-high single-digit revenue growth with margin expansion. In Top net purchases for the quarter ended September 30, 2018 addition, we believe the company has several pipeline product opportunities Quarter End Amount that could accelerate the company’s revenue growth, including the Market Cap Purchased (billions) (thousands) opportunity to receive Medicare reimbursement for its vagus nerve stimulation therapy for treatment-resistant depression. The company is also UnitedHealth Group Incorporated $256.1 $193.7 developing a transcatheter mitral valve replacement product that has the HCA Healthcare, Inc. 48.1 162.3 potential to be a leader in a large new market. Dechra Pharmaceuticals PLC 2.9 152.5 LivaNova PLC 6.0 139.2 ICON plc is a leading global contract research organization (“CRO”) based ICON plc 8.4 130.3 in Dublin, Ireland. Pharmaceutical companies are outsourcing more of their clinical trial work and market share is shifting toward the larger, global CROs UnitedHealth Group Incorporated is the nation’s leading health care such as ICON. We believe ICON has differentiated itself through franchise. We view UnitedHealth as a core holding that allows us to technology, providing proprietary data and analytics solutions that address participate in the strong secular growth of health care. We believe inefficiencies in clinical trials. We think ICON should be able to grow UnitedHealth has a uniquely diversified portfolio and complimentary set of revenue in the high single-to-low double-digits, achieve margin expansion skills, services, and expertise which will allow it to deliver higher quality through continued operating leverage, and generate solid cash flow. ICON is health care at lower cost to its members and customers. UnitedHealth net cash positive with the strongest balance sheet among its CRO peers, operates under four divisions: the United Healthcare division is the nation’s which gives the company the flexibility to make acquisitions or repurchase largest insurer, twice the size of its next largest competitor. Optum Insight its own stock. offers IT services and analytics. Optum RX is the nation’s 3rd largest pharmacy benefit manager. Optum Health is a provider of population health Table VII. management and owner of services providers including physician groups, Top net sales for the quarter ended September 30, 2018 outpatient surgery centers, and urgent care facilities. UnitedHealth’s size, Amount scale, differentiated offerings and leadership positions are unmatched, and Sold we expect the company to take market share and deliver industry leading (thousands) growth and profitability. Notable growth drivers include its Medicare and Waters Corporation $96.2 Medicaid books of business and international expansion. The company’s Gemphire Therapeutics Inc. 33.3 significant free cash flow has been used to fund provider acquisitions and $3 billion in annual technology investments that serve to reinforce the We sold our position in Waters Corporation due to concerns about market company’s competitive moat. share losses and to make room for other ideas. We sold our position in HCA Healthcare, Inc. is the nation’s leading operator of acute care Gemphire Therapeutics Inc. due to concerns about the company’s liquidity hospitals. We believe HCA is gaining market share after a period of capital and rising clinical uncertainties.

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Outlook We believe the companies in which the Fund invests are unique, competitively advantaged, well-managed growth companies. Thank you for The recent rise in interest rates has created increased volatility in the stock investing in Baron Health Care Fund. We are relentlessly working to identify market. Despite this volatility, we are optimistic about the outlook for the good investment ideas that we believe will generate attractive returns. I am Health Care sector. We believe the pace of innovation in drug development and medical technology is extremely high. The regulatory and funding an investor in the Fund, alongside you. environment for biotechnology and life sciences companies remains highly favorable. The number of novel drugs approved by the FDA reached a Sincerely, 21-year high in 2017 and continues at a high level in 2018. Biotechnology companies raised $66 billion through the end of the September quarter, which is on track to be the second highest level since 1996. This is positive for the biotechnology sector in general as well as for the companies that serve them, such as CROs and life sciences tools & services companies. Furthermore, Congress is expected to approve a $2 billion or 5.4% increase to NIH funding for fiscal year 2019, following similar increases in fiscal years Neal Kaufman 2016 to 2018. This is positive for life sciences tools & services companies Portfolio Manager whose customers receive research funding from the NIH. November 1, 2018

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contains this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing. Risks: In addition to general market conditions, the value of the Fund will be affected by investments in health care companies which are subject to a number of risks, including the adverse impact of legislative actions and government regulations. The Fund is non-diversified, which means it may have a greater percentage of its assets in a single issuer than a diversified fund. The Fund invests in small and medium sized companies whose securities may be thinly traded and more difficult to sell during market downturns. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Health Care Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

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Portfolio Market Capitalization (Unaudited)

Baron Asset Fund

Baron Asset Fund invests in mid-sized growth companies with market capitalizations above $2.5 billion or the smallest market cap stock in the Russell Midcap Growth Index at reconstitution, whichever is larger, and below the largest market cap stock in the Russell Midcap Growth Index at reconstitution. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Booking Holdings, Inc...... $94,185 1.4% SS&C Technologies Holdings, Inc...... $13,619 1.5% The Charles Schwab Corp...... 66,405 2.9 TransUnion ...... 13,590 2.4 Illumina, Inc...... 53,958 3.0 CDW Corporation ...... 13,459 0.8 Equinix, Inc...... 34,418 1.5 Rollins, Inc...... 13,241 1.1 Worldpay, Inc...... 31,598 2.1 CarMax, Inc...... 13,089 0.4 Align Technology, Inc...... 31,423 0.9 Elanco Animal Health Incorporated ...... 12,757 0.0 Roper Technologies Inc...... 30,612 1.9 Teleflex Incorporated ...... 12,186 1.5 Concho Resources, Inc...... 30,590 0.3 Arch Capital Group Ltd...... 12,082 2.0 T. Rowe Price Group, Inc...... 26,552 1.0 IDEX Corporation ...... 11,553 1.8 IDEXX Laboratories, Inc...... 21,618 6.7 Vail Resorts, Inc...... 11,107 4.8 FleetCor Technologies, Inc...... 20,139 1.2 Westinghouse Air Brake Technologies Verisk Analytics, Inc...... 19,856 4.1 Corporation ...... 10,109 0.8 Verisign, Inc...... 19,522 2.8 The Ultimate Software Group, Inc...... 10,052 1.0 Expedia Group, Inc...... 19,500 1.0 A. O. Smith Corporation ...... 9,105 0.8 SBA Communications Corp...... 18,448 2.0 West Pharmaceutical Services, Inc...... 9,080 2.0 Willis Towers Watson Public Limited Company .. 18,431 1.4 Zillow Group, Inc...... 8,946 0.9 IAC/InterActiveCorp ...... 18,035 0.5 Hyatt Hotels Corp...... 8,862 1.1 Fastenal Co...... 16,649 0.4 FactSet Research Systems, Inc...... 8,581 2.5 First Republic Bank ...... 15,807 1.2 Guidewire Software, Inc...... 8,142 3.5 Tiffany & Co...... 15,787 0.9 Bio-Techne Corporation ...... 7,707 2.2 ANSYS, Inc...... 15,737 2.8 MarketAxess Holdings Inc...... 6,706 1.1 Veeva Systems Inc...... 15,733 1.3 Sage Therapeutics, Inc...... 6,591 0.7 Mettler-Toledo International, Inc...... 15,355 3.9 The Toro Company ...... 6,329 0.9 CoStar Group, Inc...... 15,315 2.3 BWX Technologies, Inc...... 6,236 0.9 Liberty Broadband Corporation ...... 15,290 0.8 Wix.com Ltd...... 5,788 1.2 Waters Corporation ...... 15,003 0.7 Ceridian HCM Holding Inc...... 5,785 1.1 CBRE Group, Inc...... 14,985 1.3 Choice Hotels International, Inc...... 4,718 1.2 Gartner, Inc...... 14,395 6.7 MAXIMUS, Inc...... 4,179 0.7 The Cooper Companies, Inc...... 13,619 1.2 Alexander’s, Inc...... 1,753 0.5 97.6%

103 Baron Funds

Baron Growth Fund

Baron Growth Fund invests in small-sized growth companies with market capitalizations up to the largest market cap stock in the Russell 2000 Growth Index at reconstitution, or companies with market capitalizations up to $2.5 billion, whichever is larger. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets IDEXX Laboratories, Inc...... $21,618 4.3% Essent Group Ltd...... $4,342 0.3% MSCI, Inc...... 15,760 4.6 2U, Inc...... 4,318 0.9 ANSYS, Inc...... 15,737 4.0 MAXIMUS, Inc...... 4,179 1.4 Mettler-Toledo International, Inc...... 15,355 1.2 Boyd Gaming Corporation ...... 3,801 0.4 CoStar Group, Inc...... 15,315 5.2 Bloom Energy Corporation ...... 3,723 0.9 Church & Dwight Co., Inc...... 14,570 0.7 Neogen Corp...... 3,708 0.5 Gartner, Inc...... 14,395 5.1 Manchester United plc ...... 3,694 1.7 SS&C Technologies Holdings, Inc...... 13,619 3.1 Dick’s Sporting Goods, Inc...... 3,586 0.3 Alexandria Real Estate Equities, Inc...... 13,303 1.3 Performance Food Group Company ...... 3,488 0.5 Arch Capital Group Ltd...... 12,082 4.5 Moelis & Company ...... 3,479 0.6 Vail Resorts, Inc...... 11,107 8.2 Ellie Mae, Inc...... 3,283 0.0 West Pharmaceutical Services, Inc...... 9,080 1.2 Red Rock Resorts, Inc...... 3,105 1.2 Under Armour, Inc...... 9,016 0.8 Penn National Gaming, Inc...... 3,041 2.0 FactSet Research Systems, Inc...... 8,581 4.0 Altair Engineering Inc...... 3,028 0.4 Guidewire Software, Inc...... 8,142 1.7 Houlihan Lokey, Inc...... 2,962 0.3 Bio-Techne Corporation ...... 7,707 2.5 LendingTree, Inc...... 2,949 0.4 Gaming and Leisure Properties, Inc...... 7,535 2.7 Oaktree Capital Group, LLC ...... 2,946 0.9 Bright Horizons Family Solutions, Inc...... 6,836 2.9 Albany International Corp...... 2,560 0.0 Douglas Emmett, Inc...... 6,409 2.0 Iridium Communications Inc...... 2,492 2.8 Ollie’s Bargain Outlet Holdings, Inc...... 6,025 0.4 The Carlyle Group ...... 2,296 0.8 Wix.com Ltd...... 5,788 0.7 Cision Ltd...... 2,196 0.1 Morningstar, Inc...... 5,368 2.1 Denali Therapeutics Inc...... 2,061 0.2 Marriott Vacations Worldwide Corp...... 5,264 2.6 Pinnacle Entertainment, Inc...... 1,984 1.3 Primerica, Inc...... 5,199 3.3 Cohen & Steers, Inc...... 1,899 1.2 Littelfuse, Inc...... 4,963 0.8 American Assets Trust, Inc...... 1,761 0.2 Pegasystems, Inc...... 4,923 0.9 Alexander’s, Inc...... 1,753 0.5 Air Lease Corp...... 4,775 0.7 Kinsale Capital Group, Inc...... 1,353 0.9 Choice Hotels International, Inc...... 4,718 3.6 Benefitfocus, Inc...... 1,290 1.3 Trex Company, Inc...... 4,521 1.7 98.8%

104 Baron Funds

Baron Small Cap Fund

Baron Small Cap Fund invests 80% of its net assets in small-sized growth companies with market capitalizations up to the largest market cap stock in the Russell 2000 Growth Index at reconstitution, or companies with market capitalizations up to $2.5 billion, whichever is larger. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets IDEXX Laboratories, Inc...... $21,618 3.1% ASGN Incorporated ...... $4,132 2.8% Waste Connections, Inc...... 21,017 2.8 Cantel Medical Corp...... 3,840 1.0 FleetCor Technologies, Inc...... 20,139 0.7 Abcam plc ...... 3,828 0.6 TransDigm Group, Inc...... 19,594 2.8 Acxiom Corporation ...... 3,828 2.0 SBA Communications Corp...... 18,448 2.1 John Bean Technologies Corporation ...... 3,771 2.2 Mettler-Toledo International, Inc...... 15,355 1.5 RBC Bearings Incorporated ...... 3,698 0.9 Liberty Broadband Corporation ...... 15,290 0.7 Americold Realty Trust ...... 3,689 1.2 Liberty SiriusXM Group ...... 14,396 1.0 Moelis & Company ...... 3,479 0.9 Gartner, Inc...... 14,395 4.7 Qualys, Inc...... 3,475 0.8 DexCom, Inc...... 12,638 0.9 Red Rock Resorts, Inc...... 3,105 1.5 Cboe Global Markets, Inc...... 10,730 0.4 SiteOne Landscape Supply, Inc...... 3,054 2.1 The Ultimate Software Group, Inc...... 10,052 2.8 Altair Engineering Inc...... 3,028 1.0 Cognex Corp...... 9,603 2.2 Houlihan Lokey, Inc...... 2,962 0.6 WEX Inc...... 8,651 1.9 Eventbrite, Inc...... 2,947 0.1 SL Green Realty Corp...... 8,586 0.2 Floor & Decor Holdings, Inc...... 2,935 1.2 Liberty Media Corporation – Liberty Liberty Expedia Holdings, Inc...... 2,697 0.4 Formula One ...... 8,545 0.6 Mercury Systems, Inc...... 2,678 1.2 ICON plc ...... 8,353 2.5 The Cheesecake Factory, Inc...... 2,454 0.9 Guidewire Software, Inc...... 8,142 3.8 GTT Communications, Inc...... 2,371 2.3 Aspen Technology, Inc...... 8,089 2.0 Yext, Inc...... 2,337 0.6 Nordson Corp...... 8,077 0.7 Avalara, Inc...... 2,322 0.2 Gaming and Leisure Properties, Inc...... 7,535 0.8 Shutterfly, Inc...... 2,204 1.7 The Madison Square Garden Company ...... 7,463 1.5 Cision Ltd...... 2,196 2.2 PRA Health Sciences, Inc...... 7,093 2.1 Summit Materials, Inc...... 2,092 1.0 Bright Horizons Family Solutions, Inc...... 6,836 2.5 Hudson Ltd...... 2,087 1.3 The Trade Desk ...... 6,477 2.7 Wingstop Inc...... 1,998 0.7 Berry Global Group, Inc...... 6,378 0.8 Orion Engineered Carbons S.A...... 1,914 0.7 Ollie’s Bargain Outlet Holdings, Inc...... 6,025 0.5 Camping World Holdings, Inc...... 1,902 0.9 Teladoc Health, Inc...... 6,005 3.0 Sun Hydraulics Corporation ...... 1,750 0.6 HealthEquity, Inc...... 5,878 2.0 Raven Industries Inc...... 1,643 0.6 Wix.com Ltd...... 5,788 2.1 BJ’s Restaurants, Inc...... 1,518 0.6 Ceridian HCM Holding Inc...... 5,785 0.8 Party City Holdco Inc...... 1,307 0.9 Planet Fitness, Inc...... 5,317 1.0 Installed Building Products, Inc...... 1,233 1.0 Univar Inc...... 4,338 1.8 Emerald Expositions Events, Inc...... 1,204 0.5 2U, Inc...... 4,318 1.9 REV Group, Inc...... 992 0.3 Ingevity Corporation ...... 4,284 0.2 98.6%

105 Baron Funds

Baron Opportunity Fund

Baron Opportunity Fund invests in high growth businesses of any market capitalization selected for their capital appreciation potential. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Apple, Inc...... $1,090,308 4.1% CoStar Group, Inc...... $15,315 2.7% Amazon.com, Inc...... 976,946 6.3 Gartner, Inc...... 14,395 4.4 Microsoft Corporation ...... 877,014 5.0 SS&C Technologies Holdings, Inc...... 13,619 1.7 Alphabet Inc...... 834,658 4.8 Neurocrine Biosciences, Inc...... 11,123 0.8 Facebook, Inc...... 474,832 1.5 Dropbox, Inc...... 10,794 0.4 Alibaba Group Holding Limited ...... 427,088 1.3 PagSeguro Digital Ltd...... 9,039 0.8 Tencent Holdings, Ltd...... 393,154 1.2 Guidewire Software, Inc...... 8,142 4.9 Visa, Inc...... 305,321 1.7 RingCentral, Inc...... 7,408 0.9 Mastercard Incorporated ...... 231,170 2.0 MarketAxess Holdings Inc...... 6,706 0.7 NVIDIA Corporation ...... 170,860 1.1 Sage Therapeutics, Inc...... 6,591 1.7 Netflix, Inc...... 162,918 1.3 The Trade Desk ...... 6,477 2.0 Adobe Systems Incorporated ...... 131,772 1.5 Wix.com Ltd...... 5,788 2.2 salesforce.com, inc...... 120,338 1.1 Ceridian HCM Holding Inc...... 5,785 0.8 Booking Holdings, Inc...... 94,185 1.0 Proofpoint, Inc...... 5,452 0.7 The Charles Schwab Corp...... 66,405 1.7 Zscaler, Inc...... 4,884 0.2 Intuitive Surgical, Inc...... 65,291 1.2 2U, Inc...... 4,318 0.9 Illumina, Inc...... 53,958 1.5 Stamps.com Inc...... 4,107 0.7 Vertex Pharmaceuticals Incorporated ...... 49,257 1.7 Mellanox Technologies Ltd...... 3,891 1.5 Tesla, Inc...... 45,168 2.3 Acxiom Corporation ...... 3,828 2.8 Electronic Arts Inc...... 36,728 2.1 Bloom Energy Corporation ...... 3,723 0.7 Edwards Lifesciences Corp...... 36,454 1.1 Manchester United plc ...... 3,694 1.0 ServiceNow, Inc...... 34,803 1.1 argenx SE ...... 2,725 1.4 Equinix, Inc...... 34,418 1.7 Acceleron Pharma Inc...... 2,633 0.7 Spotify Technology S.A...... 32,509 0.7 Yext, Inc...... 2,337 1.1 Concho Resources, Inc...... 30,590 0.8 Varonis Systems, Inc...... 2,140 0.7 Verisk Analytics, Inc...... 19,856 0.7 Adaptimmune Therapeutics plc ...... 1,416 0.6 Expedia Group, Inc...... 19,500 1.5 Benefitfocus, Inc...... 1,290 1.3 SBA Communications Corp...... 18,448 0.6 Arco Platform Limited ...... 1,146 0.9 Splunk, Inc...... 17,729 0.9 Aquantia Corp...... 438 1.0 ANSYS, Inc...... 15,737 0.3 94.0%

Baron Partners Fund

Baron Partners Fund is a non-diversified fund that invests primarily in U.S. companies of any size with significant growth potential. Equity %of Equity %of Market Cap Total Market Cap Total Company (in millions) Investments Company (in millions) Investments The Charles Schwab Corp...... $66,405 5.0% Hyatt Hotels Corp...... $8,862 7.3% Tesla, Inc...... 45,168 10.3 FactSet Research Systems, Inc...... 8,581 6.0 Align Technology, Inc...... 31,423 0.6 Guidewire Software, Inc...... 8,142 4.3 IDEXX Laboratories, Inc...... 21,618 7.9 MGM Growth Properties LLC ...... 7,846 0.4 Fastenal Co...... 16,649 1.8 Gaming and Leisure Properties, Inc...... 7,535 2.5 CoStar Group, Inc...... 15,315 12.9 Douglas Emmett, Inc...... 6,409 1.3 Gartner, Inc...... 14,395 4.7 Marriott Vacations Worldwide Corp...... 5,264 2.6 Norwegian Cruise Line Holdings, Ltd...... 12,719 1.0 Air Lease Corp...... 4,775 1.4 Arch Capital Group Ltd...... 12,082 7.4 Manchester United plc ...... 3,694 4.2 Vail Resorts, Inc...... 11,107 8.9 Red Rock Resorts, Inc...... 3,105 0.4 HEICO Corporation ...... 10,946 0.6 Benefitfocus, Inc...... 1,290 1.1 Zillow Group, Inc...... 8,946 2.7 95.3%

106 Baron Funds

Baron Fifth Avenue Growth Fund

Baron Fifth Avenue Growth Fund invests in large-sized growth companies with market capitalizations no smaller than the top 85th percentile by total market capitalization of the Russell 1000 Growth Index at June 30, or companies with market capitalizations above $10 billion, whichever is smaller. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Apple, Inc...... $1,090,308 2.7% S&P Global Inc...... $49,141 1.6% Amazon.com, Inc...... 976,946 16.4 Meituan Dianping ...... 48,225 0.2 Alphabet Inc...... 834,658 4.7 Tesla, Inc...... 45,168 0.8 Facebook, Inc...... 474,832 3.6 Equinix, Inc...... 34,418 2.8 Alibaba Group Holding Limited ...... 427,088 5.0 Worldpay, Inc...... 31,598 2.2 Visa, Inc...... 305,321 4.1 Red Hat, Inc...... 24,173 1.7 Mastercard Incorporated ...... 231,170 4.7 Ctrip.com International, Ltd...... 20,266 1.5 Naspers Limited ...... 94,856 2.6 Expedia Group, Inc...... 19,500 1.3 Booking Holdings, Inc...... 94,185 2.8 Splunk, Inc...... 17,729 1.4 ASML Holding N.V...... 81,124 2.4 Veeva Systems Inc...... 15,733 3.1 Biogen, Inc...... 71,172 1.0 Elanco Animal Health Incorporated ...... 12,757 0.0 The Charles Schwab Corp...... 66,405 2.4 Dropbox, Inc...... 10,794 0.6 Intuitive Surgical, Inc...... 65,291 3.8 PagSeguro Digital Ltd...... 9,039 1.3 Activision Blizzard, Inc...... 63,425 4.1 EPAM Systems, Inc...... 7,406 2.2 CME Group, Inc...... 57,975 2.9 Sage Therapeutics, Inc...... 6,591 1.9 Illumina, Inc...... 53,958 4.3 Wix.com Ltd...... 5,788 1.5 Vertex Pharmaceuticals Incorporated ...... 49,257 2.4 94.0%

Baron Focused Growth Fund

Baron Focused Growth Fund is a non-diversified fund that invests in small and mid-sized growth companies with market capitalizations up to the largest market cap stock in the Russell Midcap Growth Index at reconstitution. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Tesla, Inc...... $45,168 10.5% Choice Hotels International, Inc...... $4,718 5.5% CoStar Group, Inc...... 15,315 13.0 Manchester United plc ...... 3,694 5.5 Arch Capital Group Ltd...... 12,082 4.0 Red Rock Resorts, Inc...... 3,105 3.0 Vail Resorts, Inc...... 11,107 16.5 Iridium Communications Inc...... 2,492 7.5 Hyatt Hotels Corp...... 8,862 11.9 Benefitfocus, Inc...... 1,290 4.0 FactSet Research Systems, Inc...... 8,581 7.4 95.5% Guidewire Software, Inc...... 8,142 4.5 American Homes 4 Rent ...... 6,480 2.2

107 Baron Funds

Baron International Growth Fund

Baron International Growth Fund is a diversified fund that invests in non-U.S companies with significant growth potential. Investments may be made across all market capitalizations. The Fund invests principally in companies of developed countries and may invest up to 35% in companies of developing countries. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Alibaba Group Holding Limited ...... $427,088 0.5% Titan Company Limited ...... $9,866 0.4% Tencent Holdings, Ltd...... 393,154 1.0 Britannia Industries Limited ...... 9,653 0.4 LVMH Moet Hennessy Louis Vuitton SE ...... 178,629 1.1 ZOZO, Inc...... 9,436 0.9 SoftBank Group Corp...... 111,112 0.8 PagSeguro Digital Ltd...... 9,039 1.0 AstraZeneca PLC ...... 100,253 2.6 Momo Inc...... 8,957 0.9 Industria de Diseño Textil, S.A...... 94,481 1.0 Kangde Xin Composite Material ...... 8,754 0.4 Mitsubishi UFJ Financial Group, Inc...... 85,593 1.4 Rentokil Initial plc ...... 7,650 0.9 Baidu, Inc...... 80,063 0.3 MonotaRO Co., Ltd...... 7,067 1.0 Sony Corporation ...... 77,020 1.2 The Stars Group Inc...... 6,756 0.8 BNP Paribas S.A...... 76,486 0.6 Koninklijke Vopak N.V...... 6,299 1.0 KEYENCE CORPORATION ...... 70,616 1.0 BlackBerry Limited ...... 6,120 0.5 Sberbank of Russia PJSC ...... 68,431 0.8 YPF S.A...... 6,077 0.8 Itaú Unibanco Holding S.A...... 66,158 0.3 Wix.com Ltd...... 5,788 1.8 Suncor Energy Inc...... 62,583 0.5 Square Enix Holdings Co., Ltd...... 5,068 0.8 Recruit Holdings Co., Ltd...... 56,602 1.7 InterXion Holding N.V...... 4,819 1.0 América Móvil, S.A.B. de C.V...... 53,377 0.9 Tullow Oil plc ...... 4,778 1.4 Danone SA ...... 53,052 1.9 Mercari Inc...... 4,661 0.5 Linde AG ...... 43,334 1.3 Cimpress N.V...... 4,219 0.7 Housing Development Finance Corporation Mellanox Technologies Ltd...... 3,891 1.3 Limited ...... 40,994 0.5 Abcam plc ...... 3,828 1.7 Midea Group Co., Ltd...... 38,814 0.2 Kingdee International Software Group Co. Ltd. ... 3,583 0.3 FANUC Corp...... 38,466 0.9 Domino’s Pizza Enterprises Ltd...... 3,287 1.8 Takeda Pharmaceutical Company Limited ...... 34,000 1.5 Dechra Pharmaceuticals PLC ...... 2,905 0.8 Vivendi SA ...... 33,627 0.6 Golar LNG Ltd...... 2,811 1.5 Fresenius Medical Care AG & Co. KGaA ...... 31,683 1.6 argenx SE ...... 2,725 1.6 Worldpay, Inc...... 31,598 1.4 Telesites, S.A.B. de C.V...... 2,605 1.1 Nokia Corporation ...... 31,446 1.5 TechnoPro Holdings, Inc...... 2,250 1.2 KBC Group NV ...... 30,953 1.0 Tata Global Beverages Limited ...... 2,035 0.5 Kotak Mahindra Bank Ltd...... 30,029 0.5 Landis+Gyr AG ...... 1,971 1.1 Aena SME, S.A...... 26,037 1.4 Godrej Properties Limited ...... 1,869 0.3 China Tower Corporation Limited ...... 25,631 0.7 SMS CO., LTD...... 1,730 0.8 Experian plc ...... 23,489 1.2 PT Tower Bersama Infrastructure, Tbk...... 1,711 0.3 Agilent Technologies, Inc...... 22,486 1.0 NEXTDC Limited ...... 1,619 0.8 Ryanair Holdings plc ...... 21,801 1.1 Endava plc ...... 1,513 0.8 KB Financial Group, Inc...... 20,430 0.5 Adaptimmune Therapeutics plc ...... 1,416 0.7 Sodexo S.A...... 15,638 0.8 Smiles Fidelidade S.A...... 1,413 0.3 Constellation Software, Inc...... 15,584 2.0 Arco Platform Limited ...... 1,146 1.1 Amorepacific Corporation ...... 13,755 0.9 Zai Lab Limited ...... 1,132 0.7 Haitong Securities Co., Ltd...... 13,657 0.3 RIB Software SE ...... 1,094 0.9 Encana Corp...... 12,511 1.3 JM Financial Limited ...... 1,002 0.4 Arch Capital Group Ltd...... 12,082 1.3 Opera Limited ...... 989 0.5 Symrise AG ...... 11,813 0.7 Glenveagh Properties PLC ...... 981 1.1 KOSÉ Corporation ...... 11,546 0.7 Bolsas y Mercados Argentinos S.A...... 665 0.3 Julius Bäer Group Ltd...... 11,200 0.8 Horizon Discovery Group plc ...... 410 0.8 Yandex N.V...... 10,801 0.5 Komplett Bank ASA ...... 388 0.8 Intertek Group plc ...... 10,501 0.9 WANdisco plc ...... 349 0.3 WH Group Limited ...... 10,329 0.8 Lekoil, Ltd...... 112 0.1 Eurofins Scientific SE ...... 10,056 1.5 86.1%

108 Baron Funds

Baron Real Estate Fund

Baron Real Estate Fund is a diversified fund that invests 80% of its net assets in equity securities of U.S. and non-U.S. real estate and real estate-related companies of any size. The Fund’s investment in non-U.S. companies will not exceed 25%. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Home Depot, Inc...... $237,008 4.4% MGM Growth Properties LLC ...... $7,846 1.6% American Tower Corp...... 64,053 5.9 Gaming and Leisure Properties, Inc...... 7,535 1.6 Marriott International, Inc...... 45,813 1.6 Fortune Brands Home & Security, Inc...... 7,457 1.0 Brookfield Asset Management, Inc...... 44,196 3.2 CyrusOne Inc...... 6,634 2.0 Prologis, Inc...... 42,675 1.5 Park Hotels & Resort Inc...... 6,603 1.1 The Sherwin-Williams Company ...... 42,508 1.7 Douglas Emmett, Inc...... 6,409 1.3 Housing Development Finance Corporation Wyndham Hotels & Resorts, Inc...... 5,554 1.2 Limited ...... 40,994 0.5 Marriott Vacations Worldwide Corp...... 5,264 2.5 Equinix, Inc...... 34,418 5.8 InterXion Holding N.V...... 4,819 5.0 Royal Caribbean Cruises Ltd...... 27,154 2.4 GDS Holdings Limited ...... 4,422 2.8 Hilton Worldwide Holdings, Inc...... 24,088 2.2 Wyndham Destinations, Inc...... 4,311 0.6 Digital Realty Trust, Inc...... 24,028 2.1 Eagle Materials Inc...... 4,073 0.7 Boston Properties, Inc...... 19,008 0.4 Extended Stay America, Inc...... 3,822 1.7 SBA Communications Corp...... 18,448 1.4 Boyd Gaming Corporation ...... 3,801 1.9 CoStar Group, Inc...... 15,315 1.7 Americold Realty Trust ...... 3,689 1.4 MGM Resorts International ...... 15,013 4.0 Hilton Grand Vacations Inc...... 3,207 2.3 CBRE Group, Inc...... 14,985 2.3 Red Rock Resorts, Inc...... 3,105 1.2 Vulcan Materials Company ...... 14,708 2.7 SiteOne Landscape Supply, Inc...... 3,054 0.8 Alexandria Real Estate Equities, Inc...... 13,303 1.3 Penn National Gaming, Inc...... 3,041 3.2 Norwegian Cruise Line Holdings, Ltd...... 12,719 2.7 Summit Materials, Inc...... 2,092 0.8 Invitation Homes, Inc...... 11,926 1.5 NEXTDC Limited ...... 1,619 1.9 Martin Marietta Materials, Inc...... 11,465 0.7 Installed Building Products, Inc...... 1,233 0.7 Masco Corporation ...... 11,254 1.0 Glenveagh Properties PLC ...... 981 1.8 Hyatt Hotels Corp...... 8,862 2.3 93.2% SL Green Realty Corp...... 8,586 0.8

109 Baron Funds

Baron Emerging Markets Fund

Baron Emerging Markets Fund is a diversified fund that invests 80% of its net assets in non-U.S. companies of all sizes domiciled, headquartered or whose primary business activities or principal trading markets are in developing countries. The Fund may invest up to 20% in companies in developed market countries and in Frontier Countries. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Alibaba Group Holding Limited ...... $427,088 2.7% Titan Company Limited ...... $9,866 0.4% Tencent Holdings, Ltd...... 393,154 3.7 BDO Unibank, Inc...... 9,696 0.9 Industrial and Commercial Bank of China Britannia Industries Limited ...... 9,653 1.2 Limited ...... 289,910 0.3 PagSeguro Digital Ltd...... 9,039 1.1 Samsung Electronics Co., Ltd...... 268,810 2.5 Momo Inc...... 8,957 1.2 Taiwan Semiconductor Manufacturing Company Kangde Xin Composite Material ...... 8,754 0.8 Ltd...... 229,017 1.9 Far EasTone Telecommunications Co., Ltd...... 7,769 1.2 China Construction Bank Corporation ...... 220,177 0.9 Infraestructura Energetica Nova S.A.B. de C.V. ... 7,623 1.4 China Mobile Ltd...... 201,790 1.6 Motherson Sumi Systems Limited ...... 7,458 0.2 Baidu, Inc...... 80,063 1.3 SBI Life Insurance Company Limited ...... 7,058 0.7 Petróleo Brasileiro S.A. – Petrobras ...... 74,214 1.6 Bid Corporation Ltd...... 6,995 1.4 Sberbank of Russia PJSC ...... 68,431 1.7 Han’s Laser Technology Co., Ltd...... 6,571 0.2 Itaú Unibanco Holding S.A...... 66,158 0.9 YPF S.A...... 6,077 1.2 América Móvil, S.A.B. de C.V...... 53,377 1.1 Piramal Enterprises Limited ...... 5,850 0.4 Wal-Mart de México, S.A.B. de C.V...... 53,213 1.4 Zee Entertainment Enterprises Ltd...... 5,811 0.4 Housing Development Finance Corporation Rumo S.A...... 5,783 1.4 Limited ...... 40,994 1.2 GRUMA, S.A.B. de C.V...... 5,478 0.8 Midea Group Co., Ltd...... 38,814 0.7 Divi’s Laboratories Ltd...... 4,801 0.6 Hangzhou Hikvision Digital Technology Co., Tullow Oil plc ...... 4,778 1.4 Ltd...... 38,542 0.7 Kroton Educacional SA ...... 4,641 0.7 Kotak Mahindra Bank Ltd...... 30,029 1.1 Bidvest Group Ltd...... 4,415 1.1 Pinduoduo Inc...... 29,124 0.2 Pepkor Holdings Limited ...... 3,884 0.3 Fomento Económico Mexicano, S.A.B. de C.V. .... 27,279 1.5 Localiza Rent a Car S.A...... 3,758 0.3 FirstRand Limited ...... 26,922 0.6 Kingdee International Software Group Co. Ltd. ... 3,583 0.6 China Tower Corporation Limited ...... 25,631 1.3 Eclat Textile Co., Ltd...... 3,397 1.0 Sasol Limited ...... 24,129 1.4 Copa Holdings, S.A...... 3,363 0.4 Coal India Ltd...... 22,799 0.6 Sun TV Network Ltd...... 3,339 0.5 Sun Pharmaceuticals Industries Limited ...... 20,628 0.8 Exide Industries Ltd...... 3,113 1.0 SK Telecom Co., Ltd...... 20,528 1.1 China Everbright Ltd...... 3,018 0.5 KB Financial Group, Inc...... 20,430 1.4 Grupo Lala, S.A.B. de C.V...... 2,831 0.3 Shenzhou International Group Holdings Ltd...... 19,279 1.2 Metro Pacific Investments Corp...... 2,771 0.2 CP All Plc...... 19,166 0.9 Banco Macro S.A...... 2,770 0.3 Samsung Life Insurance Co. Ltd...... 17,543 0.6 Tata Chemicals Limited ...... 2,433 0.8 TAL Education Group ...... 14,585 0.1 Edelweiss Financial Services Limited ...... 2,433 0.2 Amorepacific Corporation ...... 13,755 1.1 Tata Global Beverages Limited ...... 2,035 0.6 Haitong Securities Co., Ltd...... 13,657 0.4 Tata Communications Limited ...... 1,968 0.4 Sinopharm Group Co. Ltd...... 13,538 1.2 PT Tower Bersama Infrastructure, Tbk...... 1,711 0.4 CSPC Pharmaceutical Group Limited ...... 13,254 0.9 Max Financial Services Limited ...... 1,512 0.7 China Mengniu Dairy Co. Ltd...... 13,069 1.4 MyEG Services Berhad ...... 1,502 0.6 Bangkok Bank Public Co. Ltd...... 12,867 0.9 Smiles Fidelidade S.A...... 1,413 0.7 KIA Motors Corporation ...... 12,827 1.7 Zai Lab Limited ...... 1,132 0.6 JSW STEEL Ltd...... 12,726 0.5 Loma Negra Compañía Industrial Argentina Sunny Optical Technology Group ...... 12,652 0.4 Sociedad Anónima ...... 1,054 0.4 Taiwan Mobile Co., Ltd...... 12,268 1.3 Makalot Industrial Co., Ltd...... 1,039 0.6 B3 S.A. – Brasil, Bolsa, Balcao ...... 11,931 1.0 JM Financial Limited ...... 1,002 0.5 Sino Biopharmaceutical Ltd...... 11,785 0.8 Tongda Group Holdings Limited ...... 925 0.4 Techtronic Industries Co. Ltd...... 11,700 1.0 Ginko International Co., Ltd...... 607 0.4 Delta Electronics, Inc...... 11,145 0.9 Manpasand Beverages Ltd...... 171 0.1 Ayala Land, Inc...... 10,922 0.9 Lekoil, Ltd...... 112 0.1 Yandex N.V...... 10,801 1.1 Tongda Hong Tai Holdings Limited ...... 35 0.0 Yunnan Baiyao Group Co., Ltd...... 10,630 0.7 86.0% WH Group Limited ...... 10,329 1.2

110 Baron Funds

Baron Energy and Resources Fund

Baron Energy and Resources Fund is a diversified fund that invests 80% of its net assets in equity securities of U.S. and non-U.S. energy and resources companies and related companies of any size. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Petróleo Brasileiro S.A. – Petrobras ...... $74,214 2.0% WPX Energy, Inc...... $8,451 3.6% EOG Resources, Inc...... 73,889 2.1 Aspen Technology, Inc...... 8,089 5.3 Valero Energy Corporation ...... 48,617 2.5 Infraestructura Energetica Nova S.A.B. de C.V. ... 7,623 1.4 Tesla, Inc...... 45,168 6.8 Transocean Ltd...... 6,443 2.0 Halliburton Co...... 35,662 3.4 Bloom Energy Corporation ...... 3,723 0.3 Concho Resources, Inc...... 30,590 12.2 SM Energy Company ...... 3,536 2.1 Pioneer Natural Resources Company ...... 29,682 1.5 Magnolia Oil & Gas Corporation ...... 3,490 2.3 MPLX LP ...... 27,537 1.4 Cactus, Inc...... 2,867 3.7 Andeavor ...... 23,198 4.5 Golar LNG Ltd...... 2,811 4.5 Energy Transfer Equity, L.P...... 20,344 2.2 Noble Midstream Partners LP ...... 1,405 1.4 Devon Energy Corporation ...... 20,322 1.5 TPI Composites, Inc...... 983 4.2 Marathon Oil Corporation ...... 19,885 2.1 NCS Multistage Holdings, Inc...... 742 2.0 Targa Resources Corp...... 12,701 2.6 Flotek Industries, Inc...... 137 1.5 Encana Corp...... 12,511 6.3 Sanchez Midstream Partners LP ...... 113 1.3 Parsley Energy, Inc...... 9,266 7.5 Lekoil, Ltd...... 112 0.7 Siemens Gamesa Renewable Energy, S.A...... 8,620 1.4 96.3%

Baron Global Advantage Fund

Baron Global Advantage Fund is a diversified fund that invests primarily in established and emerging markets companies located throughout the world with capitalization within the range of companies included in the MSCI ACWI Growth Index Net. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Amazon.com, Inc...... $976,946 5.5% Constellation Software, Inc...... $15,584 3.1% Alphabet Inc...... 834,658 4.7 MercadoLibre, Inc...... 15,034 1.0 Facebook, Inc...... 474,832 3.6 TAL Education Group ...... 14,585 1.0 Alibaba Group Holding Limited ...... 427,088 4.7 PagSeguro Digital Ltd...... 9,039 1.8 Taiwan Semiconductor Manufacturing Company Okta, Inc...... 7,682 1.2 Ltd...... 229,017 1.4 EPAM Systems, Inc...... 7,406 3.5 Naspers Limited ...... 94,856 4.4 Sage Therapeutics, Inc...... 6,591 2.2 Booking Holdings, Inc...... 94,185 0.8 Wix.com Ltd...... 5,788 2.2 HDFC Bank Ltd...... 85,229 1.6 Zscaler, Inc...... 4,884 0.5 ASML Holding N.V...... 81,124 1.6 Mercari Inc...... 4,661 0.3 Baidu, Inc...... 80,063 1.6 Mellanox Technologies Ltd...... 3,891 2.5 KEYENCE CORPORATION ...... 70,616 1.6 Tenable Holdings, Inc...... 3,617 1.5 Activision Blizzard, Inc...... 63,425 4.5 Aerie Pharmaceuticals, Inc...... 2,783 2.3 Illumina, Inc...... 53,958 2.9 argenx SE ...... 2,725 3.1 Meituan Dianping ...... 48,225 0.4 AnaptysBio, Inc...... 2,617 0.4 Tesla, Inc...... 45,168 0.9 Yext, Inc...... 2,337 1.6 Housing Development Finance Corporation Varonis Systems, Inc...... 2,140 1.0 Limited ...... 40,994 2.4 Globant, S.A...... 2,112 1.9 Worldpay, Inc...... 31,598 2.1 NEXTDC Limited ...... 1,619 0.8 Kotak Mahindra Bank Ltd...... 30,029 1.5 Endava plc ...... 1,513 1.2 Pinduoduo Inc...... 29,124 1.3 Adaptimmune Therapeutics plc ...... 1,416 0.6 Adyen B.V...... 24,034 0.0 AxoGen, Inc...... 1,412 1.0 Ctrip.com International, Ltd...... 20,266 1.7 Arco Platform Limited ...... 1,146 0.9 Splunk, Inc...... 17,729 2.6 JM Financial Limited ...... 1,002 0.3 Veeva Systems Inc...... 15,733 3.8 Bolsas y Mercados Argentinos S.A...... 665 0.8 Take-Two Interactive Software, Inc...... 15,707 2.3 94.6%

111 Baron Funds

Baron Discovery Fund

Baron Discovery Fund invests in small-sized growth companies with market capitalizations up to the weighted median market capitalization of the Russell 2000 Growth Index at June 30 and December 31, or companies with market capitalizations up to $1.5 billion, whichever is larger. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Liberty Media Corporation – Liberty Raven Industries Inc...... $1,643 0.8% Formula One ...... $8,545 1.7% Alexander & Baldwin, Inc...... 1,634 1.7 Sage Therapeutics, Inc...... 6,591 0.5 ForeScout Technologies, Inc...... 1,580 1.8 The Trade Desk ...... 6,477 3.8 TherapeuticsMD, Inc...... 1,544 2.3 Teladoc Health, Inc...... 6,005 3.2 Endava plc ...... 1,513 1.3 JUST EAT plc ...... 5,947 0.7 Adaptimmune Therapeutics plc ...... 1,416 0.6 GCI Liberty, Inc...... 5,665 1.2 AxoGen, Inc...... 1,412 1.0 2U, Inc...... 4,318 0.6 Kinsale Capital Group, Inc...... 1,353 1.7 Coherent, Inc...... 4,184 1.3 MACOM Technology Solutions Holdings, Inc. .... 1,342 0.7 Acxiom Corporation ...... 3,828 2.0 Party City Holdco Inc...... 1,307 2.1 Bloom Energy Corporation ...... 3,723 1.3 Esperion Therapeutics, Inc...... 1,189 1.1 Americold Realty Trust ...... 3,689 2.2 RIB Software SE ...... 1,094 1.2 Tenable Holdings, Inc...... 3,617 0.8 QAD Inc...... 1,062 1.3 Qualys, Inc...... 3,475 1.8 CareDx, Inc...... 1,049 3.5 Emergent BioSolutions Inc...... 3,293 1.0 TPI Composites, Inc...... 983 2.2 Myriad Genetics, Inc...... 3,262 3.0 Cerus Corporation ...... 965 1.9 Red Rock Resorts, Inc...... 3,105 1.7 Intersect ENT, Inc...... 876 2.9 SiteOne Landscape Supply, Inc...... 3,054 0.9 Kornit Digital Ltd...... 753 1.1 Eventbrite, Inc...... 2,947 0.2 Flexion Therapeutics Inc...... 708 1.8 Envestnet, Inc...... 2,766 0.8 Sientra, Inc...... 679 2.3 Liberty Expedia Holdings, Inc...... 2,697 0.2 Luxfer Holdings PLC ...... 616 0.8 Mercury Systems, Inc...... 2,678 3.2 Adamas Pharmaceuticals, Inc...... 544 0.4 Brooks Automation, Inc...... 2,475 1.4 Ichor Holdings, Ltd...... 497 1.5 Novanta Inc...... 2,371 1.0 IntriCon Corporation ...... 473 2.4 Yext, Inc...... 2,337 2.1 Limoneira Company ...... 461 1.4 QTS Realty Trust, Inc...... 2,182 2.1 PAR Technology Corporation ...... 360 0.6 Varonis Systems, Inc...... 2,140 1.2 Corium International, Inc...... 345 0.7 Hudson Ltd...... 2,087 1.4 Red Lion Hotels Corporation ...... 303 1.4 Wingstop Inc...... 1,998 1.0 Ra Medical Systems, Inc...... 220 1.4 Myovant Sciences Ltd...... 1,811 0.9 Everspin Technologies, Inc...... 130 1.5 ESCO Technologies, Inc...... 1,763 1.2 Barfresh Food Group, Inc...... 75 0.1 Sun Hydraulics Corporation ...... 1,750 1.6 91.5%

112 Baron Funds

Baron Durable Advantage Fund

Baron Durable Advantage Fund invests primarily in large-sized companies with market capitalizations no smaller than the top 90th percentile by market capitalization of the S&P 500 Index at June 30, or companies with market capitalizations above $10 billion, whichever is smaller. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Apple, Inc...... $1,090,308 4.1% Biogen, Inc...... $71,172 1.2% Microsoft Corporation ...... 877,014 5.0 KEYENCE CORPORATION ...... 70,616 1.4 Alphabet Inc...... 834,658 4.4 Activision Blizzard, Inc...... 63,425 3.0 UnitedHealth Group Incorporated ...... 256,056 4.8 CME Group, Inc...... 57,975 3.1 Home Depot, Inc...... 237,008 2.7 The Estée Lauder Companies Inc...... 53,251 1.4 Mastercard Incorporated ...... 231,170 4.6 S&P Global Inc...... 49,141 4.0 Taiwan Semiconductor Manufacturing Illinois Tool Works Inc...... 47,325 1.7 Company Ltd...... 229,017 1.5 The Sherwin-Williams Company ...... 42,508 1.8 LVMH Moet Hennessy Louis Vuitton SE ...... 178,629 3.3 Constellation Brands, Inc...... 41,344 2.5 AbbVie Inc...... 143,220 1.8 Electronic Arts Inc...... 36,728 3.5 Accenture plc ...... 109,219 2.4 Equinix, Inc...... 34,418 2.2 Texas Instruments Incorporated ...... 104,307 0.9 Moody’s Corporation ...... 32,086 3.7 Costco Wholesale Corporation ...... 103,005 1.6 TE Connectivity Ltd...... 30,640 2.6 Naspers Limited ...... 94,856 2.4 Agilent Technologies, Inc...... 22,486 2.2 Booking Holdings, Inc...... 94,185 2.2 Fastenal Co...... 16,649 1.4 Charter Communications, Inc...... 83,971 2.3 Mettler-Toledo International, Inc...... 15,355 2.2 ASML Holding N.V...... 81,124 2.1 Elanco Animal Health Incorporated ...... 12,757 0.0 Danaher Corporation ...... 76,035 2.8 A. O. Smith Corporation ...... 9,105 1.1 BlackRock Inc...... 75,672 3.3 91.2%

Baron Real Estate Income Fund

Baron Real Estate Income Fund is a non-diversified fund that under normal circumstances, invests at least 80% of its net assets in real estate income- producing securities and other real estate securities of any market capitalization, including common stocks and equity securities, debt and preferred securities, non-U.S. real estate income-producing securities, and any other real estate-related yield securities. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets American Tower Corp...... $64,053 5.4% Kilroy Realty Corporation ...... $7,574 1.8% Simon Property Group, Inc...... 54,654 1.4 Gaming and Leisure Properties, Inc...... 7,535 2.3 Crown Castle International Corp...... 46,184 3.1 CyrusOne Inc...... 6,634 2.7 Prologis, Inc...... 42,675 3.6 Park Hotels & Resort Inc...... 6,603 2.1 Equinix, Inc...... 34,418 6.4 American Homes 4 Rent ...... 6,480 2.0 AvalonBay Communities, Inc...... 25,038 3.0 Douglas Emmett, Inc...... 6,409 0.9 Weyerhaeuser Company ...... 24,450 0.6 Marriott Vacations Worldwide Corp...... 5,264 2.1 Equity Residential ...... 24,402 3.0 Fibra UNO Administración S.A. de C.V...... 5,218 0.8 Digital Realty Trust, Inc...... 24,028 3.8 Hudson Pacific Properties, Inc...... 5,127 1.9 Boston Properties, Inc...... 19,008 1.7 GDS Holdings Limited ...... 4,422 2.7 Brookfield Property Partners L.P...... 16,906 0.3 Rayonier Inc...... 4,377 0.7 Essex Property Trust, Inc...... 16,295 0.6 Wyndham Destinations, Inc...... 4,311 0.9 Host Hotels & Resorts, Inc...... 15,649 2.4 Extended Stay America, Inc...... 3,822 1.4 MGM Resorts International ...... 15,013 3.6 Sunstone Hotel Investors, Inc...... 3,734 1.4 Vornado Realty Trust ...... 13,887 2.1 Americold Realty Trust ...... 3,689 4.9 Alexandria Real Estate Equities, Inc...... 13,303 1.5 Red Rock Resorts, Inc...... 3,105 0.9 Invitation Homes, Inc...... 11,926 2.7 Kennedy-Wilson Holdings, Inc...... 3,100 2.1 Duke Realty Corporation ...... 10,136 2.4 Penn National Gaming, Inc...... 3,041 2.9 Sun Communities, Inc...... 8,747 1.7 Rexford Industrial Realty, Inc...... 2,918 0.9 Equity Lifestyle Properties, Inc...... 8,594 1.7 Pebblebrook Hotel Trust ...... 2,511 1.4 SL Green Realty Corp...... 8,586 1.6 QTS Realty Trust, Inc...... 2,182 3.3 MGM Growth Properties LLC ...... 7,846 1.5 NEXTDC Limited ...... 1,619 1.5 JCDecaux S.A...... 7,782 1.3 97.0%

113 Baron Funds

Baron Health Care Fund

Baron Health Care Fund is a non-diversified fund that under normal circumstances, invests at least 80% of its net assets in equity securities in the formof common stock of companies engaged in the research, development, production, sale, delivery or distribution of products and services related to the health care industry. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets UnitedHealth Group Incorporated ...... $256,056 6.8% Insulet Corp...... $6,251 1.5% Medtronic Public Limited Company ...... 132,850 4.0 LivaNova PLC ...... 6,024 2.2 AstraZeneca PLC ...... 100,253 3.6 HealthEquity, Inc...... 5,878 0.5 Intuitive Surgical, Inc...... 65,291 3.1 Cantel Medical Corp...... 3,840 1.4 Illumina, Inc...... 53,958 3.4 Abcam plc ...... 3,828 0.8 Vertex Pharmaceuticals Incorporated ...... 49,257 3.9 Dechra Pharmaceuticals PLC ...... 2,905 2.5 HCA Healthcare, Inc...... 48,142 2.6 Aerie Pharmaceuticals, Inc...... 2,783 2.6 Humana Inc...... 46,636 2.9 argenx SE ...... 2,725 4.0 Edwards Lifesciences Corp...... 36,454 2.5 Acceleron Pharma Inc...... 2,633 2.0 Align Technology, Inc...... 31,423 2.4 AnaptysBio, Inc...... 2,617 1.3 Agilent Technologies, Inc...... 22,486 2.5 iRhythm Technologies, Inc...... 2,267 0.9 IDEXX Laboratories, Inc...... 21,618 1.2 Myovant Sciences Ltd...... 1,811 1.2 Veeva Systems Inc...... 15,733 1.7 Adaptimmune Therapeutics plc ...... 1,416 1.5 Mettler-Toledo International, Inc...... 15,355 2.5 AxoGen, Inc...... 1,412 0.6 Elanco Animal Health Incorporated ...... 12,757 – Zai Lab Limited ...... 1,132 0.6 DexCom, Inc...... 12,638 1.4 CareDx, Inc...... 1,049 1.8 Teleflex Incorporated ...... 12,186 4.0 Assembly Biosciences, Inc...... 945 0.8 Neurocrine Biosciences, Inc...... 11,123 2.5 Intersect ENT, Inc...... 876 1.5 Eurofins Scientific SE ...... 10,056 2.4 IntriCon Corporation ...... 473 1.5 West Pharmaceutical Services, Inc...... 9,080 0.9 Ra Medical Systems, Inc...... 220 1.9 ICON plc ...... 8,353 2.0 94.5% Bio-Techne Corporation ...... 7,707 3.2 Sage Therapeutics, Inc...... 6,591 3.9

114 Baron Funds

Baron Asset Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (97.59%) Common Stocks (continued) Communication Services (2.28%) Health Care (24.20%) Cable & Satellite (0.82%) Biotechnology (0.66%) 354,000 Liberty Broadband 170,658 Sage Therapeutics, Inc.1 $ 27,223,281 $ 24,105,442 Corporation, Cl C1 $ 25,461,927 $ 29,842,200 Health Care Equipment (8.18%) Interactive Media & 976,630 IDEXX Laboratories, Inc.1 18,197,737 243,825,446 Services (1.46%) 205,644 Teleflex, Inc. 41,408,216 54,719,812 1 92,000 IAC/InterActiveCorp. 19,402,948 19,938,240 59,605,953 298,545,258 177,831 Zillow Group, Inc., Cl A1 4,763,230 7,860,130 574,374 Zillow Group, Inc., CI C1 14,494,344 25,416,050 Health Care Supplies (4.15%) 38,660,522 53,214,420 84,360 Align Technology, Inc.1 12,821,265 33,003,319 157,418 The Cooper Companies, Inc. 19,849,960 43,628,399 Total Communication Services 64,122,449 83,056,620 605,404 West Pharmaceutical Services, Inc. 26,455,689 74,749,232 Consumer Discretionary (10.72%) 59,126,914 151,380,950 Automotive Retail (0.36%) Health Care Technology (1.34%) 178,446 CarMax, Inc.1 2,023,599 13,324,563 448,386 Veeva Systems, Inc., Cl A1 25,739,022 48,815,784 Hotels, Resorts & Cruise Life Sciences Tools & Lines (2.24%) Services (9.86%) 507,442 Choice Hotels International, Inc. 2,173,983 42,269,919 396,986 Bio-Techne Corporation 39,003,090 81,028,812 496,233 Hyatt Hotels Corp., Cl A 13,413,212 39,495,184 302,552 Illumina, Inc.1 13,002,071 111,054,737 234,117 Mettler-Toledo International, Inc.1 14,406,385 142,572,571 15,587,195 81,765,103 130,000 Waters Corp.1 26,811,713 25,308,400 Internet & Direct Marketing 93,223,259 359,964,520 Retail (2.43%) 25,759 Booking Holdings, Inc.1 4,113,567 51,105,856 Pharmaceuticals (0.01%) 288,627 Expedia Group, Inc. 35,637,276 37,660,051 8,340 Elanco Animal Health, Inc.1 200,160 290,983 39,750,843 88,765,907 Total Health Care 265,118,589 883,102,937 Leisure Facilities (4.81%) Industrials (17.36%) 639,538 Vail Resorts, Inc. 12,388,781 175,502,018 Aerospace & Defense (0.89%) Specialty Stores (0.88%) 516,082 BWX Technologies, Inc. 25,835,700 32,275,768 248,117 Tiffany & Co. 7,649,601 31,999,649 Agricultural & Farm Total Consumer Discretionary 77,400,019 391,357,240 Machinery (0.90%) 550,045 The Toro Co. 33,900,191 32,986,199 Energy (0.31%) Building Products (0.77%) Oil & Gas Exploration & 526,158 AO Smith Corp. 27,577,969 28,081,053 Production (0.31%) 74,931 Concho Resources, Inc.1 3,203,300 11,445,710 Construction Machinery & Heavy Trucks (0.83%) Financials (12.09%) 287,740 Westinghouse Air Brake Asset Management & Custody Technologies Corporation 18,573,369 30,178,171 Banks (0.98%) Environmental & Facilities 327,514 T. Rowe Price Group, Inc. 12,239,533 35,757,978 Services (1.09%) Financial Exchanges & 656,408 Rollins, Inc. 20,292,297 39,837,402 Data (3.60%) Industrial 401,723 FactSet Research Systems, Inc. 21,659,549 89,869,452 Conglomerates (1.93%) 233,267 MarketAxess Holdings, Inc. 26,260,605 41,635,827 238,192 Roper Technologies, Inc. 19,882,431 70,554,852 47,920,154 131,505,279 Industrial Machinery (1.76%) Insurance Brokers (1.38%) 426,760 IDEX Corporation 31,129,522 64,295,662 356,421 Willis Towers Watson plc2 43,878,570 50,233,976 Research & Consulting Investment Banking & Services (8.79%) Brokerage (2.86%) 198,493 CoStar Group, Inc.1 34,240,614 83,533,794 2,125,936 The Charles Schwab Corp. 1,921,092 104,489,754 1,191,500 TransUnion 57,315,611 87,670,570 1,240,206 Verisk Analytics, Inc.1 31,725,218 149,506,833 Property & Casualty Insurance (2.03%) 123,281,443 320,711,197 1,2 2,478,444 Arch Capital Group Ltd. 8,935,864 73,882,416 Trading Companies & Regional Banks (1.24%) Distributors (0.40%) 471,421 First Republic Bank 14,958,209 45,256,416 248,117 Fastenal Co. 4,100,825 14,395,748 Total Financials 129,853,422 441,125,819 Total Industrials 304,573,747 633,316,052

115 Baron Funds

Baron Asset Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (continued) Private Partnerships (0.01%) Information Technology (25.25%) Financials (0.01%) Application Software (9.84%) Asset Management & Custody 545,856 ANSYS, Inc.1 $ 14,655,945 $ 101,900,398 Banks (0.01%) 946,271 Ceridian HCM Holding, Inc.1 28,994,807 39,771,770 7,056,223 Windy City Investments 1,260,809 Guidewire Software, Inc.1 62,448,790 127,354,317 Holdings, L.L.C.1,3,4 $ 0 $ 183,462 937,076 SS&C Technologies Holdings, Inc. 26,106,444 53,254,029 114,134 The Ultimate Software Group, Inc.1 22,104,685 36,772,834 Principal Amount 154,310,671 359,053,348 Short Term Investments (2.57%) Data Processing & Outsourced $93,923,894 Repurchase Agreement with Services (3.93%) Fixed Income Clearing Corp., 194,448 FleetCor Technologies, Inc.1 7,054,686 44,303,032 dated 9/28/2018, 0.42% due 366,986 MAXIMUS, Inc. 18,343,053 23,876,109 10/1/2018; Proceeds at 744,350 Worldpay, Inc., Cl A1 40,579,407 75,380,325 maturity - $93,927,181; 65,977,146 143,559,466 (Fully collateralized by $96,245,000 U.S. Treasury Internet Services & Note, 2.875% due 5/15/2028; Infrastructure (3.95%) Market value - $95,806,508) 93,923,894 93,923,894 637,103 Verisign, Inc.1 30,837,071 102,012,932 351,000 Wix.com Ltd.1,2 29,073,966 42,014,700 TOTAL INVESTMENTS (100.17%) $1,309,014,615 3,655,142,188 59,911,037 144,027,632 LIABILITIES LESS CASH AND OTHER ASSETS (-0.17%) (6,239,097) IT Consulting & Other Services (6.68%) NET ASSETS $3,648,903,091 1,538,323 Gartner, Inc.1 33,456,031 243,824,196 RETAIL SHARES (Equivalent to $81.43 per share Technology Distributors (0.85%) based on 27,750,433 shares outstanding) $2,259,706,069 347,363 CDW Corp. 21,352,376 30,887,518 Total Information Technology 335,007,261 921,352,160 INSTITUTIONAL SHARES (Equivalent to $84.36 per share based on 15,596,104 shares outstanding) $1,315,728,209 Real Estate (5.38%) R6 SHARES (Equivalent to $84.35 per share Office REITs (0.54%) based on 871,003 shares outstanding) $ 73,468,813 57,548 Alexander’s, Inc.4 2,547,714 19,756,228 Real Estate Services (1.35%) % Represents percentage of net assets. 1,116,323 CBRE Group, Inc., Cl A1 12,667,478 49,229,844 1 Non-income producing securities. 2 Foreign corporation. Specialized REITs (3.49%) 3 At September 30, 2018, the market value of restricted and fair valued securities 123,416 Equinix, Inc. 8,292,378 53,425,552 amounted to $183,462 or 0.01% of net assets. This security is not deemed 459,856 SBA Communications Corp.1 12,304,364 73,866,670 liquid. 4 20,596,742 127,292,222 The Adviser has reclassified/classified certain securities in or out of this sub- industry. Such reclassifications/classifications are not supported by S&P or MSCI. Total Real Estate 35,811,934 196,278,294 TOTAL COMMON STOCKS 1,215,090,721 3,561,034,832

116 Baron Funds

Baron Growth Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (98.38%) Common Stocks (continued) Communication Services (4.15%) Financials (continued) Alternative Carriers (2.41%) Investment Banking & 7,488,437 Iridium Communications, Inc.1,4 $ 45,679,471 $ 168,489,833 Brokerage (0.88%) 425,000 Houlihan Lokey, Inc. $ 18,590,688 $ 19,095,250 Movies & 775,000 Moelis & Co., Cl A 21,734,239 42,470,000 Entertainment (1.74%) 5,390,000 Manchester United plc, Cl A2 76,229,602 121,275,000 40,324,927 61,565,250 Total Communication Services 121,909,073 289,764,833 Life & Health Insurance (3.28%) 1,900,000 Primerica, Inc. 40,710,153 229,045,000 Consumer Discretionary (23.60%) Property & Casualty Apparel, Accessories & Luxury Insurance (5.38%) Goods (0.77%) 10,515,000 Arch Capital Group Ltd.1,2 33,559,945 313,452,150 2,525,000 Under Armour, Inc., Cl A1 9,784,168 53,580,500 978,449 Kinsale Capital Group, Inc. 32,761,205 62,483,753 Casinos & Gaming (4.80%) 66,321,150 375,935,903 725,000 Boyd Gaming Corp. 18,479,841 24,541,250 4,155,000 Penn National Gaming, Inc.1 36,915,622 136,782,600 Thrifts & Mortgage 2,700,000 Pinnacle Entertainment, Inc.1 31,089,605 90,963,000 Finance (0.74%) 3,131,887 Red Rock Resorts, Inc., Cl A 66,868,263 83,464,788 525,000 Essent Group Ltd.1,2 14,507,433 23,231,250 125,000 LendingTree, Inc.1 36,059,034 28,762,500 153,353,331 335,751,638 50,566,467 51,993,750 Education Services (2.93%) Total Financials 489,214,230 1,660,331,553 1,740,000 Bright Horizons Family Solutions, Inc.1 55,826,128 205,041,600 Health Care (9.86%) General Merchandise Biotechnology (0.20%) Stores (0.44%) 653,051 Denali Therapeutics, Inc.1 12,346,836 14,197,329 316,228 Ollie’s Bargain Outlet Holdings, Inc.1 14,933,905 30,389,511 Health Care Equipment (4.29%) 1,200,000 IDEXX Laboratories, Inc.1 17,922,418 299,592,000 Hotels, Resorts & Cruise Lines (6.13%) Health Care Supplies (1.67%) 3,000,000 Choice Hotels International, Inc.4 72,782,127 249,900,000 486,717 Neogen Corp.1 8,075,672 34,814,867 1,600,000 Marriott Vacations 660,000 West Pharmaceutical Services, Inc. 22,685,149 81,490,200 Worldwide Corp. 87,504,361 178,800,000 30,760,821 116,305,067 160,286,488 428,700,000 Life Sciences Tools & Leisure Facilities (8.25%) Services (3.70%) 2,100,000 Vail Resorts, Inc.4 65,291,780 576,282,000 850,000 Bio-Techne Corporation 44,923,357 173,493,500 140,000 Mettler-Toledo International, Inc.1 6,414,374 85,257,200 Specialty Stores (0.28%) 51,337,731 258,750,700 550,000 Dick’s Sporting Goods, Inc. 8,214,737 19,514,000 Total Health Care 112,367,806 688,845,096 Total Consumer Discretionary 467,690,537 1,649,259,249 Consumer Staples (1.13%) Industrials (8.48%) Food Distributors (0.47%) Building Products (1.65%) 1,000,000 Performance Food Group Co.1 19,000,000 33,300,000 1,500,000 Trex Company, Inc.1 27,317,721 115,470,000 Household Products (0.66%) Electrical Components & 775,000 Church & Dwight Co., Inc. 6,995,670 46,011,750 Equipment (0.89%) 1,828,859 Bloom Energy Corp., Cl A1,5 35,870,499 62,327,515 Total Consumer Staples 25,995,670 79,311,750 Industrial Machinery (0.04%) Financials (23.75%) 40,507 Albany International Corp., Cl A 2,687,884 3,220,306 Asset Management & Custody Research & Consulting Banks (2.79%) Services (5.24%) 2,400,000 The Carlyle Group 52,323,847 54,120,000 870,000 CoStar Group, Inc.1 37,095,568 366,130,800 2,000,000 Cohen & Steers, Inc. 49,208,575 81,220,000 1,450,000 Oaktree Capital Group, LLC 65,375,827 60,030,000 Trading Companies & Distributors (0.66%) 166,908,249 195,370,000 1,000,000 Air Lease Corp. 23,203,508 45,880,000 Financial Exchanges & Total Industrials 126,175,180 593,028,621 Data (10.68%) 1,250,000 FactSet Research Systems, Inc. 62,536,096 279,637,500 1,150,000 Morningstar, Inc. 27,237,863 144,785,000 1,815,000 MSCI, Inc. 34,609,325 321,999,150 124,383,284 746,421,650

117 Baron Funds

Baron Growth Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (continued) Preferred Stocks (0.45%) Information Technology (20.62%) Communication Services (0.45%) Application Software (12.55%) Alternative Carriers (0.45%) 840,000 2U, Inc.1 $ 45,883,788 $ 63,159,600 41,074 Iridium Communications, Inc., 725,000 Altair Engineering, Inc., Cl A1 11,330,019 31,501,250 Series B, 6.75%4 $ 10,095,219 $ 31,258,957 1,500,000 ANSYS, Inc.1 35,363,292 280,020,000 2,200,000 Benefitfocus, Inc.1,4 83,233,571 88,990,000 480,000 Cision Ltd.1,2 7,753,039 8,064,000 Private Partnerships (0.00%) 24,769 Ellie Mae, Inc.1 2,055,251 2,347,358 1,190,000 Guidewire Software, Inc.1 38,711,926 120,201,900 Financials (0.00%) 1,000,000 Pegasystems, Inc. 13,997,009 62,600,000 Asset Management & Custody 3,875,000 SS&C Technologies Holdings, Inc. 30,703,660 220,216,250 Banks (0.00%) 269,031,555 877,100,358 2,375,173 Windy City Investments Holdings, L.L.C.1,3,5 0 61,755 Data Processing & Outsourced Services (1.43%) 1,530,000 MAXIMUS, Inc. 28,255,875 99,541,800 Principal Amount Electronic Components (0.79%) Short Term Investments (1.28%) 280,000 Littelfuse, Inc. 31,472,950 55,409,200 $89,307,812 Repurchase Agreement with Internet Services & Fixed Income Clearing Corp., Infrastructure (0.75%) dated 9/28/2018, 0.42% due 438,207 Wix.com Ltd.1,2 28,664,771 52,453,378 10/1/2018; Proceeds at maturity - $89,310,938; (Fully IT Consulting & Other collateralized by $91,515,000 Services (5.10%) U.S. Treasury Note, 2.875% 2,250,000 Gartner, Inc.1 34,231,162 356,625,000 due 5/15/2028; Market Total Information Technology 391,656,313 1,441,129,736 value - $91,098,058) 89,307,812 89,307,812 TOTAL INVESTMENTS (100.11%) $2,045,985,181 6,997,183,896 Real Estate (6.79%) Diversified REITs (0.24%) LIABILITIES LESS CASH AND 460,135 American Assets Trust, Inc. 8,503,418 17,158,434 OTHER ASSETS (-0.11%) (7,751,649) Office REITs (2.48%) NET ASSETS $6,989,432,247 92,000 Alexander’s, Inc.5 11,873,304 31,583,600 3,750,000 Douglas Emmett, Inc. 46,426,704 141,450,000 RETAIL SHARES (Equivalent to $80.68 per share based on 34,056,240 shares outstanding) $2,747,754,611 58,300,008 173,033,600 Specialized REITs (4.07%) INSTITUTIONAL SHARES (Equivalent to $83.09 per share 750,000 Alexandria Real Estate based on 49,756,757 shares outstanding) $4,134,223,089 Equities, Inc.5 26,517,362 94,342,500 5,400,000 Gaming and Leisure R6 SHARES (Equivalent to $83.10 per share Properties, Inc. 118,252,553 190,350,000 based on 1,293,104 shares outstanding) $ 107,454,547 144,769,915 284,692,500 % Represents percentage of net assets. Total Real Estate 211,573,341 474,884,534 1 Non-income producing securities. 2 TOTAL COMMON STOCKS 1,946,582,150 6,876,555,372 Foreign corporation. 3 At September 30, 2018, the market value of restricted and fair valued securities amounted to $61,755 or 0.00% of net assets. This security is not deemed liquid. 4 An “Affiliated” investment may include any company in which the Fund owns 5% or more of its outstanding shares. 5 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI.

118 Baron Funds

Baron Small Cap Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (98.57%) Common Stocks (continued) Communication Services (4.44%) Financials (1.86%) Advertising (0.48%) Financial Exchanges & Data (0.41%) 1,350,000 Emerald Expositions Events, Inc. $ 24,418,815 $ 22,248,000 200,000 Cboe Global Markets, Inc. $ 15,498,427 $ 19,192,000 Cable & Satellite (1.74%) Investment Banking & 100,000 Liberty Broadband Brokerage (1.45%) Corporation, Cl A1 404,823 8,433,000 600,000 Houlihan Lokey, Inc. 27,827,646 26,958,000 300,000 Liberty Broadband 750,000 Moelis & Co., Cl A 17,797,031 41,100,000 Corporation, Cl C1 1,184,602 25,290,000 45,624,677 68,058,000 1,100,000 Liberty Media Corp.-Liberty SiriusXM, Cl C1 2,399,373 47,795,000 Total Financials 61,123,104 87,250,000 3,988,798 81,518,000 Health Care (16.81%) Interactive Media & Biotechnology (0.60%) Services (0.11%) 1,500,000 Abcam plc (United Kingdom)2 14,075,552 27,997,039 134,661 Eventbrite, Inc.1 3,097,203 5,113,078 Health Care Equipment (4.99%) Movies & Entertainment (2.11%) 515,000 Cantel Medical Corp. 21,972,255 47,410,900 750,000 Liberty Media Corporation-Liberty 300,000 DexCom, Inc.1 3,984,388 42,912,000 Formula One, Cl C1 10,168,679 27,892,500 575,000 IDEXX Laboratories, Inc.1 8,859,010 143,554,500 225,000 The Madison Square Garden 34,815,653 233,877,400 Company, Cl A1 11,968,716 70,947,000 Health Care Technology (3.04%) 22,137,395 98,839,500 1,650,000 Teladoc Health, Inc. (formerly, Total Communication Services 53,642,211 207,718,578 Teladoc, Inc.)1 53,556,316 142,477,500 Consumer Discretionary (15.07%) Life Sciences Tools & Services (6.16%) 775,000 ICON plc1,2 22,033,569 119,156,250 Automotive Retail (0.89%) 115,000 Mettler-Toledo International, Inc.1 5,870,993 70,032,700 1,950,000 Camping World Holdings, Inc., Cl A 48,152,727 41,574,000 900,000 PRA Health Sciences, Inc.1 16,553,917 99,171,000 Casinos & Gaming (1.51%) 44,458,479 288,359,950 2,650,000 Red Rock Resorts, Inc., Cl A 57,676,536 70,622,500 Managed Health Care (2.02%) Education Services (2.52%) 1,000,000 HealthEquity, Inc.1 17,004,779 94,410,000 1,000,000 Bright Horizons Family Total Health Care 163,910,779 787,121,889 Solutions, Inc.1 31,568,240 117,840,000 Industrials (18.73%) General Merchandise Stores (0.51%) Aerospace & Defense (4.02%) 250,000 Ollie’s Bargain Outlet 1,050,000 Mercury Systems, Inc.1 27,591,526 58,086,000 Holdings, Inc.1 14,925,025 24,025,000 350,000 TransDigm Group, Inc.1 0 130,305,000 Home Improvement 27,591,526 188,391,000 Retail (1.22%) Construction & Machinery & 1,900,000 Floor & Decor Holdings, Inc., Cl A1 74,885,535 57,323,000 Heavy Trucks (0.34%) 1,000,000 REV Group, Inc. 23,031,720 15,700,000 Homebuilding (1.04%) 1,250,000 Installed Building Products, Inc.1 78,536,908 48,750,000 Environmental & Facilities Services (2.81%) Internet & Direct Marketing 1,650,000 Waste Connections, Inc.2 72,050,000 131,620,500 Retail (2.00%) 350,000 Liberty Expedia Holdings, Inc., Cl A1 14,587,352 16,464,000 Human Resource & Employment 1,175,000 Shutterfly, Inc.1 64,965,912 77,420,750 Services (2.78%) 1 79,553,264 93,884,750 1,650,000 ASGN, Inc. 38,840,132 130,234,500 Leisure Facilities (0.95%) Industrial Conglomerates (0.59%) 600,000 Raven Industries, Inc. 21,713,675 27,450,000 822,000 Planet Fitness, Inc., Cl A1 29,284,556 44,412,660 Industrial Machinery (4.30%) Restaurants (2.24%) 850,000 John Bean Technologies Corp. 75,035,854 101,405,000 386,191 BJ’s Restaurants, Inc. 12,584,241 27,882,990 225,000 Nordson Corp. 6,223,899 31,252,500 800,000 The Cheesecake Factory, Inc. 21,568,144 42,832,000 275,000 RBC Bearings, Incorporated1 17,532,828 41,349,000 500,000 Wingstop Inc. 10,566,238 34,135,000 500,000 Sun Hydraulics Corp. 25,351,392 27,390,000 44,718,623 104,849,990 124,143,973 201,396,500 Specialty Stores (2.19%) Trading Companies & 2,750,000 Hudson Ltd., Cl A1,2 49,913,580 62,040,000 Distributors (3.89%) 3,000,000 Party City Holdco, Inc.1 43,021,808 40,650,000 1,300,000 SiteOne Landscape Supply, Inc.1 38,519,369 97,942,000 92,935,388 102,690,000 2,750,000 Univar, Inc.1 63,423,166 84,315,000 Total Consumer Discretionary 552,236,802 705,971,900 101,942,535 182,257,000 Total Industrials 409,313,561 877,049,500

119 Baron Funds

Baron Small Cap Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (continued) Common Stocks (continued) Information Technology (34.62%) Real Estate (4.30%) Application Software (17.82%) Office REITs (0.21%) 1,200,000 2U, Inc.1 $ 57,459,648 $ 90,228,000 100,000 SL Green Realty Corp. $ 2,127,325 $ 9,753,000 1,100,000 Altair Engineering, Inc., Cl A1 18,070,704 47,795,000 800,000 Aspen Technology, Inc.1 29,983,938 91,128,000 Specialized REITs (4.09%) 300,000 Avalara, Inc.1 7,200,000 10,479,000 2,250,000 Americold Realty Trust3 44,795,574 56,295,000 850,000 Ceridian HCM Holding, Inc.1 23,711,721 35,725,500 1,100,000 Gaming and Leisure 6,000,000 Cision Ltd.1,2 64,996,212 100,800,000 Properties, Inc. 18,226,764 38,775,000 1,750,000 Guidewire Software, Inc.1 56,545,754 176,767,500 600,000 SBA Communications Corp.1 2,417,520 96,378,000 825,000 The Trade Desk, Inc., Cl A1 35,374,029 124,500,750 65,439,858 191,448,000 400,000 The Ultimate Software Group, Inc.1 15,338,294 128,876,000 1,200,000 Yext, Inc. 1 15,612,217 28,440,000 Total Real Estate 67,567,183 201,201,000 324,292,517 834,739,750 TOTAL COMMON STOCKS 1,978,892,140 4,616,070,301 Data Processing & Outsourced Services (2.66%) Principal Amount 150,000 FleetCor Technologies, Inc.1 3,450,000 34,176,000 450,000 WEX, Inc.1 18,982,530 90,342,000 Short Term Investments (1.53%) 22,432,530 124,518,000 Repurchase Agreement (1.53%) Electronic Equipment & $71,699,196 Repurchase Agreement with Instruments (2.21%) Fixed Income Clearing Corp., 1,850,000 Cognex Corp. 14,811,234 103,267,000 dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at Internet Services & maturity - $71,701,706; (Fully Infrastructure (4.43%) collateralized by $65,525,000 2,500,000 GTT Communications, Inc.1 77,310,807 108,500,000 U.S. Treasury Bond, 3.00% due 825,000 Wix.com Ltd.1,2 47,802,024 98,752,500 11/15/2044; Market value - $64,115,099, $9,525,000 125,112,831 207,252,500 U.S. Treasury Bond, 2.875% IT Consulting & Other due 8/15/2045; Market Services (6.74%) value - $9,021,975) 71,699,196 71,699,196 1 1,400,000 Gartner, Inc. 23,400,287 221,900,000 TOTAL INVESTMENTS (100.10%) $2,050,591,336 4,687,769,497 1,900,000 Acxiom Corporation 42,656,213 93,879,000 66,056,500 315,779,000 LIABILITIES LESS CASH AND OTHER ASSETS (-0.10%) (4,619,243) Systems Software (0.76%) 400,000 Qualys, Inc.1 14,213,665 35,640,000 NET ASSETS $4,683,150,254 Total Information Technology 566,919,277 1,621,196,250 RETAIL SHARES (Equivalent to $33.68 per share based on 54,379,118 shares outstanding) $1,831,284,609 Materials (2.74%) Commodity Chemicals (0.68%) INSTITUTIONAL SHARES (Equivalent to $34.95 per share 1,000,000 Orion Engineered Carbons SA2 28,618,002 32,100,000 based on 77,167,998 shares outstanding) $2,696,678,991 Construction Materials (0.99%) R6 SHARES (Equivalent to $34.94 per share 2,550,000 Summit Materials, Inc., Cl A1 53,071,791 46,359,000 based on 4,441,537 shares outstanding) $ 155,186,654 Metal & Glass Containers (0.83%) 800,000 Berry Global Group, Inc.1 12,652,147 38,712,000 % Represents percentage of net assets. 1 Non-income producing securities. Specialty Chemicals (0.24%) 2 Foreign corporation. 111,800 Ingevity Corp.1 9,837,283 11,390,184 3 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. Total Materials 104,179,223 128,561,184

120 Baron Funds

Baron Opportunity Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (93.99%) Common Stocks (continued) Communication Services (12.61%) Health Care (continued) Interactive Home Life Sciences Tools & Services (1.50%) Entertainment (2.12%) 19,415 Illumina, Inc.1 $ 1,838,580 $ 7,126,470 83,500 Electronic Arts, Inc.1 $ 9,389,684 $ 10,060,915 Total Health Care 28,298,403 51,001,344 Interactive Media & Services (7.44%) 19,050 Alphabet, Inc., Cl C1 15,611,731 22,735,603 Industrials (4.12%) 41,650 Facebook, Inc., Cl A1 4,388,595 6,849,759 Heavy Electrical Equipment (0.72%) 137,300 Tencent Holdings Ltd. (Hong Kong)2 4,134,155 5,668,546 100,125 Bloom Energy Corp. CL A1,3 1,844,270 3,412,260 24,134,481 35,253,908 Research & Consulting Movies & Entertainment (3.05%) Services (3.40%) 216,014 Manchester United plc, Cl A2 3,433,896 4,860,315 30,533 CoStar Group, Inc.1 635,568 12,849,508 16,325 Netflix, Inc.1 566,701 6,107,672 27,090 Verisk Analytics, Inc.1 1,263,025 3,265,699 19,200 Spotify Technology SA1,2 2,878,509 3,471,936 1,898,593 16,115,207 6,879,106 14,439,923 Total Industrials 3,742,863 19,527,467 Total Communication Services 40,403,271 59,754,746 Information Technology (46.91%) Consumer Discretionary (14.04%) Application Software (17.72%) Automobile Manufacturers (2.28%) 58,160 2U, Inc.1 3,260,575 4,373,050 40,800 Tesla, Inc.1 8,596,542 10,802,616 26,300 Adobe Systems, Inc.1 4,826,530 7,099,685 8,475 ANSYS, Inc.1 167,731 1,582,113 Education Services (0.91%) 151,714 Benefitfocus, Inc.1 4,535,841 6,136,831 188,736 Arco Platform Ltd., CL A1,2 3,471,822 4,303,181 87,429 Ceridian HCM Holding, Inc.1 2,573,578 3,674,641 62,503 Dropbox, Inc., Cl A1 1,312,563 1,676,956 Internet & Direct Marketing 227,500 Guidewire Software, Inc.1 8,247,341 22,979,775 Retail (10.85%) 45,100 RingCentral, Inc., Cl A1 3,601,243 4,196,555 1,2 36,900 Alibaba Group Holding Limited, ADR 2,789,515 6,079,644 31,380 salesforce.com, Inc.1 2,084,746 4,990,362 1 14,975 Amazon.com, Inc. 4,786,248 29,994,925 36,000 Splunk, Inc.1 2,090,060 4,352,760 1 2,385 Booking Holdings, Inc. 377,932 4,731,840 141,800 SS&C Technologies Holdings, Inc. 5,031,336 8,058,494 54,550 Expedia Group, Inc. 6,241,642 7,117,684 64,000 The Trade Desk, Inc., Cl A1 2,125,643 9,658,240 1 15,600 Stamps.com, Inc. 3,115,475 3,528,720 219,900 Yext, Inc.1 2,897,048 5,211,630 17,310,812 51,452,813 42,754,235 83,991,092 Total Consumer Discretionary 29,379,176 66,558,610 Data Processing & Outsourced Energy (0.80%) Services (4.47%) 42,000 MasterCard Incorporated, Cl A 3,610,011 9,349,620 Oil & Gas Exploration & 133,500 Pagseguro Digital Ltd., Cl A1,2 4,205,022 3,693,945 Production (0.80%) 54,200 Visa, Inc., Cl A 4,409,505 8,134,878 24,815 Concho Resources, Inc.1 2,557,949 3,790,491 12,224,538 21,178,443 Financials (2.42%) Internet Services & Financial Exchanges & Data (0.72%) Infrastructure (2.16%) 19,100 MarketAxess Holdings, Inc. 2,563,764 3,409,159 85,443 Wix.com Ltd.1,2 4,860,912 10,227,527 Investment Banking & Brokerage (1.70%) IT Consulting & Other 164,200 The Charles Schwab Corp. 6,253,517 8,070,430 Services (7.16%) 131,987 Gartner, Inc.1 5,353,935 20,919,940 Total Financials 8,817,281 11,479,589 263,396 Acxiom Corporation1 5,810,551 13,014,396 Health Care (10.76%) 11,164,486 33,934,336 Biotechnology (7.00%) Semiconductors (3.55%) 61,300 Acceleron Pharma, Inc.1 2,045,685 3,508,199 370,900 Aquantia Corp.1 4,785,714 4,743,811 220,100 Adaptimmune Therapeutics PLC, ADR1,2 2,782,575 2,984,556 95,200 Mellanox Technologies Ltd.1,2 6,051,335 6,992,440 90,002 argenx SE, ADR1,2 3,474,493 6,825,752 18,100 NVIDIA Corp. 4,867,083 5,086,462 29,700 Neurocrine Biosciences, Inc.1 2,480,850 3,651,615 15,704,132 16,822,713 58,200 Sage Therapeutics, Inc.1 4,409,301 8,220,750 41,300 Vertex Pharmaceuticals, Inc.1 6,450,310 7,960,162 Systems Software (7.73%) 21,643,214 33,151,034 208,100 Microsoft Corp. 18,829,509 23,800,397 28,800 Proofpoint, Inc.1 2,314,362 3,062,304 Health Care Equipment (2.26%) 27,700 ServiceNow, Inc.1 1,508,644 5,418,951 29,500 Edwards Lifesciences Corp.1 2,603,315 5,135,950 45,500 Varonis Systems, Inc.1 1,258,508 3,332,875 9,735 Intuitive Surgical, Inc.1 2,213,294 5,587,890 24,994 Zscaler, Inc.1 399,904 1,019,255 4,816,609 10,723,840 24,310,927 36,633,782

121 Baron Funds

Baron Opportunity Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Shares Cost Value Common Stocks (continued) Information Technology (continued) Technology Hardware, Storage & Peripherals (4.12%) 86,600 Apple, Inc. $ 15,417,686 $ 19,549,084 Total Information Technology 126,436,916 222,336,977 Real Estate (2.33%) Specialized REITs (2.33%) 18,525 Equinix, Inc. 3,850,303 8,019,287 18,800 SBA Communications Corp.1 469,890 3,019,844 Total Real Estate 4,320,193 11,039,131 TOTAL COMMON STOCKS 243,956,052 445,488,355

Principal Amount Short Term Investments (6.20%) $29,369,432 Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at maturity - $29,370,460; (Fully collateralized by $30,095,000 U.S. Treasury Note, 2.875% due 5/15/2028; Market value - $29,957,887) 29,369,432 29,369,432 TOTAL INVESTMENTS (100.19%) $273,325,484 474,857,787

LIABILITIES LESS CASH AND OTHER ASSETS (-0.19%) (891,599) NET ASSETS $473,966,188

RETAIL SHARES (Equivalent to $22.02 per share based on 16,513,291 shares outstanding) $363,555,034

INSTITUTIONAL SHARES (Equivalent to $22.83 per share based on 4,220,335 shares outstanding) $ 96,369,736

R6 SHARES (Equivalent to $22.86 per share based on 614,350 shares outstanding) $ 14,041,418

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. ADR American Depositary Receipt.

122 Baron Funds

Baron Partners Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (115.39%) Common Stocks (continued) Communication Services (8.38%) Information Technology (12.18%) Interactive Media & Services (3.28%) Application Software (6.47%) 1,750,000 Zillow Group, Inc., Cl A1 $ 70,643,065 $ 77,350,000 774,629 Benefitfocus, Inc.1 $ 25,012,214 $ 31,333,743 1 Movies & Entertainment (5.10%) 1,200,000 Guidewire Software, Inc. 94,569,830 121,212,000 5,350,000 Manchester United plc, Cl A2 91,115,472 120,375,000 119,582,044 152,545,743 Total Communication Services 161,758,537 197,725,000 IT Consulting & Other Services (5.71%) Consumer Discretionary (36.86%) 850,000 Gartner, Inc.1 94,205,471 134,725,000 Automobile Manufacturers (12.46%) Total Information Technology 213,787,515 287,270,743 1,110,000 Tesla, Inc.1 236,819,490 293,894,700 Casinos & Gaming (0.43%) Real Estate (5.04%) 380,787 Red Rock Resorts, Inc., Cl A 9,150,312 10,147,974 Hotel & Resort REITs (0.48%) Hotels, Resorts & Cruise Lines (13.19%) 382,727 MGM Growth Properties LLC, Cl A 8,037,267 11,286,619 2,600,000 Hyatt Hotels Corp., Cl A 72,054,423 206,934,000 Office REITs (1.57%) 675,000 Marriott Vacations 985,000 Douglas Emmett, Inc. 28,695,527 37,154,200 Worldwide Corp. 79,349,082 75,431,250 500,000 Norwegian Cruise Line Specialized REITs (2.99%) Holdings Ltd.1,2 23,556,905 28,715,000 2,000,000 Gaming and Leisure Properties, Inc. 61,345,350 70,500,000 174,960,410 311,080,250 Total Real Estate 98,078,144 118,940,819 Leisure Facilities (10.78%) TOTAL COMMON STOCKS 1,295,140,937 2,720,992,066 925,800 Vail Resorts, Inc. 27,801,851 254,058,036 Total Consumer Discretionary 448,732,063 869,180,960 Private Common Stocks (2.02%) Financials (22.33%) Industrials (2.02%) Financial Exchanges & Data (7.31%) Aerospace & Defense (2.02%) 770,000 FactSet Research Systems, Inc. 50,187,585 172,256,700 221,631 Space Exploration 1,3,4 Investment Banking & Brokerage (6.04%) Technologies Corp., Cl A 29,920,185 41,943,667 2,900,000 The Charles Schwab Corp. 50,169,841 142,535,000 30,221 Space Exploration Technologies Corp., Cl C1,3,4 4,079,835 5,719,324 Property & Casualty Insurance (8.98%) TOTAL PRIVATE COMMON STOCKS 34,000,020 47,662,991 7,100,000 Arch Capital Group Ltd.1,2 31,667,350 211,651,000 Total Financials 132,024,776 526,442,700 Private Preferred Stocks (3.56%) Health Care (10.28%) Health Care Equipment (9.53%) Industrials (3.56%) 900,000 IDEXX Laboratories, Inc.1 39,330,858 224,694,000 Aerospace & Defense (3.56%) 311,111 Space Exploration Health Care Supplies (0.75%) 1,3,4 1 Technologies Corp., Cl H 41,999,985 58,877,757 45,000 Align Technology, Inc. 14,515,502 17,604,900 131,657 Space Exploration Total Health Care 53,846,360 242,298,900 Technologies Corp., Cl I1,3,4 22,250,032 24,916,087 TOTAL PRIVATE PREFERRED STOCKS 64,250,017 83,793,844 Industrials (20.32%) Aerospace & Defense (0.74%) 100,625 HEICO Corp. 7,561,421 9,318,881 Private Partnerships (0.01%) 106,875 HEICO Corp., Cl A 6,920,982 8,069,063 Financials (0.01%) 14,482,403 17,387,944 Asset Management & Custody Research & Consulting Banks (0.01%) Services (15.62%) 7,579,130 Windy City Investments 875,000 CoStar Group, Inc.1 104,342,327 368,235,000 Holdings, L.L.C.1,3,4 0 197,057 Trading Companies & Distributors (3.96%) 900,000 Air Lease Corp. 28,803,158 41,292,000 900,000 Fastenal Co. 39,285,654 52,218,000 68,088,812 93,510,000 Total Industrials 186,913,542 479,132,944

123 Baron Funds

Baron Partners Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018 (Unaudited)

Principal Amount Cost Value Short Term Investments (0.11%) $2,644,668 Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at maturity - $2,644,761; (Fully collateralized by $2,710,000 U.S. Treasury Note, 2.875% due 5/15/2028; Market value - $2,697,653) $ 2,644,668 $ 2,644,668 TOTAL INVESTMENTS (121.09%) $1,396,035,642 2,855,290,626

LIABILITIES LESS CASH AND OTHER ASSETS (-21.09%) (497,251,444) NET ASSETS $2,358,039,182

RETAIL SHARES (Equivalent to $57.40 per share based on 21,702,640 shares outstanding) $1,245,659,768

INSTITUTIONAL SHARES (Equivalent to $58.67 per share based on 16,435,953 shares outstanding) $ 964,254,854

R6 SHARES (Equivalent to $58.67 per share based on 2,524,663 shares outstanding) $ 148,124,560

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 At September 30, 2018, the market value of restricted and fair valued securities amounted to $131,653,892 or 5.59% of net assets. These securities are not deemed liquid. 4 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. All securities are Level 1, unless otherwise noted.

124 Baron Funds

Baron Fifth Avenue Growth Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (94.04%) Common Stocks (continued) Communication Services (14.93%) Information Technology (24.86%) Cable & Satellite (2.56%) Application Software (1.99%) 36,250 Naspers Limited, Cl N (South Africa)2 $ 6,573,681 $ 7,822,643 68,172 Dropbox, Inc., Cl A1 $ 1,431,612 $ 1,829,055 35,265 Splunk, Inc.1 4,025,807 4,263,891 Interactive Home Entertainment (4.09%) 5,457,419 6,092,946 150,509 Activision Blizzard, Inc. 10,592,649 12,520,844 Data Processing & Outsourced Interactive Media & Services (8.28%) Services (12.35%) 1,948 Alphabet, Inc., Cl A1 280,365 2,351,392 65,205 MasterCard Incorporated, Cl A 3,418,561 14,515,285 10,046 Alphabet, Inc., Cl C1 4,142,964 11,989,599 140,702 Pagseguro Digital Ltd., Cl A1,2 3,735,316 3,893,225 66,670 Facebook, Inc., Cl A1 2,792,505 10,964,548 83,299 Visa, Inc., Cl A 2,537,808 12,502,347 67,778 Worldpay, Inc., Cl A1 5,136,885 6,863,878 7,215,834 25,305,539 14,828,570 37,774,735 Total Communication Services 24,382,164 45,649,026 Internet Services & Consumer Discretionary (27.99%) Infrastructure (1.50%) 38,346 Wix.com Ltd.1,2 3,094,999 4,590,016 Automobile Manufacturers (0.84%) 9,741 Tesla, Inc.1 2,746,854 2,579,125 IT Consulting & Other Services (2.20%) Internet & Direct Marketing 48,866 EPAM Systems, Inc.1 4,356,850 6,728,848 Retail (27.15%) 92,830 Alibaba Group Holding Limited, ADR1,2 7,959,441 15,294,671 Semiconductor Equipment (2.41%) 25,020 Amazon.com, Inc.1 6,139,601 50,115,060 39,157 ASML Holding N.V.2 4,042,938 7,362,299 4,337 Booking Holdings, Inc.1 2,941,040 8,604,608 1,2 Systems Software (1.70%) 120,389 Ctrip.com International Ltd., ADR 4,281,276 4,474,859 1 29,321 Expedia Group, Inc. 3,507,773 3,825,804 38,097 Red Hat, Inc. 1,910,187 5,191,859 81,482 Meituan Dianping (Hong Kong)1,2 723,562 715,069 Technology Hardware, Storage & 25,552,693 83,030,071 Peripherals (2.71%) 36,662 Apple, Inc. 869,664 8,276,080 Total Consumer Discretionary 28,299,547 85,609,196 Total Information Technology 34,560,627 76,016,783 Financials (6.91%) Real Estate (2.77%) Financial Exchanges & Data (4.55%) 52,663 CME Group, Inc. 4,968,562 8,963,769 Specialized REITs (2.77%) 25,278 S&P Global, Inc. 4,785,457 4,939,069 19,555 Equinix, Inc. 3,178,515 8,465,164 9,754,019 13,902,838 TOTAL COMMON STOCKS 135,594,614 287,584,607 Investment Banking & Brokerage (2.36%) 147,148 The Charles Schwab Corp. 5,308,760 7,232,324 Principal Amount Total Financials 15,062,779 21,135,162 Short Term Investments (7.32%) Health Care (16.58%) $22,395,436 Repurchase Agreement with Fixed Income Clearing Corp., Biotechnology (5.32%) dated 9/28/2018, 0.42% 9,053 Biogen, Inc.1 2,533,665 3,198,515 due 10/1/2018; Proceeds at 40,621 Sage Therapeutics, Inc.1 6,350,906 5,737,716 maturity - $22,396,220; 37,971 Vertex Pharmaceuticals, Inc.1 5,909,493 7,318,531 (Fully collateralized by 14,794,064 16,254,762 $22,950,000 U.S. Treasury Note, 2.875% due 5/15/2028; Health Care Equipment (3.80%) Market value - $22,845,440) 22,395,436 22,395,436 20,269 Intuitive Surgical, Inc.1 6,271,522 11,634,406 TOTAL INVESTMENTS (101.36%) $157,990,050 309,980,043 Health Care Technology (3.11%) 87,424 Veeva Systems, Inc., Cl A1 6,265,884 9,517,851 LIABILITIES LESS CASH AND OTHER ASSETS (-1.36%) (4,163,943) Life Sciences Tools & Services (4.34%) 36,146 Illumina, Inc.1 2,755,776 13,267,751 NET ASSETS $305,816,100 Pharmaceuticals (0.01%) RETAIL SHARES (Equivalent to $31.02 per share 989 Elanco Animal Health, Inc.1 23,736 34,506 based on 4,261,684 shares outstanding) $132,196,972 Total Health Care 30,110,982 50,709,276 INSTITUTIONAL SHARES (Equivalent to $31.62 per share based on 4,812,630 shares outstanding) $152,163,145 R6 SHARES (Equivalent to $31.63 per share based on 678,383 shares outstanding) $ 21,455,983

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. ADR American Depositary Receipt.

125 Baron Funds

Baron Focused Growth Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (87.93%) Private Preferred Stocks (2.60%) Communication Services (5.46%) Industrials (2.60%) Movies & Entertainment (5.46%) Aerospace & Defense (2.60%) 550,000 Manchester United plc, Cl A2 $ 8,719,507 $ 12,375,000 29,630 Space Exploration Technologies Corp., Cl H1,3,4 $ 4,000,050 $ 5,607,477 Consumer Discretionary (47.42%) 1,479 Space Exploration Technologies Corp., Cl I1,3,4 249,951 279,901 Automobile Manufacturers (10.51%) 90,000 Tesla, Inc.1 20,342,220 23,829,300 TOTAL PRIVATE PREFERRED STOCKS 4,250,001 5,887,378 Casinos & Gaming (2.99%) 254,939 Red Rock Resorts, Inc., Cl A 5,783,325 6,794,124 Preferred Stocks (7.48%) Hotels, Resorts & Cruise Communication Services (7.48%) Lines (17.44%) 150,000 Choice Hotels International, Inc. 5,080,139 12,495,000 Alternative Carriers (7.48%) 340,000 Hyatt Hotels Corp., Cl A 12,201,302 27,060,600 22,300 Iridium Communications, Inc., Series B, 6.75% 5,814,082 16,971,192 17,281,441 39,555,600 Leisure Facilities (16.48%) 136,230 Vail Resorts, Inc. 8,272,836 37,384,237 Principal Amount Total Consumer Discretionary 51,679,822 107,563,261 Short Term Investments (0.12%) $275,943 Repurchase Agreement with Financials (11.34%) Fixed Income Clearing Corp., Financial Exchanges & Data (7.40%) dated 9/28/2018, 0.42% 75,000 FactSet Research Systems, Inc. 5,828,282 16,778,250 due 10/1/2018; Proceeds at maturity - $275,953; Property & Casualty (Fully collateralized by Insurance (3.94%) $285,000 U.S. Treasury Note, 300,000 Arch Capital Group Ltd.1,2 1,800,056 8,943,000 2.875% due 5/15/2028; Total Financials 7,628,338 25,721,250 Market value - $283,702) 275,943 275,943 Industrials (12.99%) TOTAL INVESTMENTS (100.11%) $109,809,670 227,055,006 Research & Consulting LIABILITIES LESS CASH AND Services (12.99%) OTHER ASSETS (-0.11%) (240,595) 70,000 CoStar Group, Inc.1 12,744,374 29,458,800 NET ASSETS $226,814,411 Information Technology (8.55%) RETAIL SHARES (Equivalent to $17.82 per share Application Software (8.55%) based on 2,572,234 shares outstanding) $ 45,841,027 225,000 Benefitfocus, Inc.1 5,980,203 9,101,250 101,870 Guidewire Software, Inc.1 4,816,691 10,289,889 INSTITUTIONAL SHARES (Equivalent to $18.19 per share Total Information Technology 10,796,894 19,391,139 based on 4,241,861 shares outstanding) $ 77,152,234 Real Estate (2.17%) R6 SHARES (Equivalent to $18.20 per share based on 5,705,547 shares outstanding) $103,821,150 Residential REITs (2.17%) 225,000 American Homes 4 Rent, Cl A 4,700,804 4,925,250 % Represents percentage of net assets. TOTAL COMMON STOCKS 96,269,739 199,434,700 1 Non-income producing securities. 2 Foreign corporation. 3 At September 30, 2018, the market value of restricted and fair valued securities Private Common Stocks (1.98%) amounted to $10,373,171 or 4.58% of net assets. These securities are not deemed liquid. Industrials (1.98%) 4 The Adviser has reclassified/classified certain securities in or out of this sub- Aerospace & Defense (1.98%) industry. Such reclassifications/classifications are not supported by S&P or MSCI. 20,859 Space Exploration Technologies Corp., Cl A1,3,4 2,815,965 3,947,566 2,844 Space Exploration Technologies Corp., Cl C1,3,4 383,940 538,227 TOTAL PRIVATE COMMON STOCKS 3,199,905 4,485,793

126 Baron Funds

Baron International Growth Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (86.14%) Common Stocks (continued) Argentina (1.06%) India (3.03%) 100,517 Bolsas y Mercados Argentinos SA $ 929,455 $ 876,389 15,000 Britannia Industries Ltd. $ 1,250,412 $ 1,205,028 139,402 YPF SA, ADR 2,884,197 2,153,761 90,000 Godrej Properties Ltd.1 1,151,838 733,632 Total Argentina 3,813,652 3,030,150 60,669 Housing Development Finance Corp. Ltd. 1,741,868 1,468,392 Australia (2.61%) 1,027,162 JM Financial Ltd. 1,388,419 1,225,680 130,108 Domino’s Pizza Enterprises Ltd. 3,574,512 5,003,383 88,551 Kotak Mahindra Bank Ltd. 1,578,501 1,394,535 515,608 NEXTDC Ltd.1 2,517,326 2,422,597 450,408 Tata Global Beverages Ltd. 2,092,601 1,452,378 105,259 Titan Co. Ltd. 1,481,151 1,169,770 Total Australia 6,091,838 7,425,980 Total India 10,684,790 8,649,415 Belgium (0.97%) Indonesia (0.31%) 37,131 KBC Group NV 2,909,402 2,763,413 2,357,500 PT Tower Bersama Infrastructure Tbk 1,003,085 889,906 Brazil (2.68%) Ireland (2.26%) 136,966 Arco Platform Ltd., Cl A1 2,653,698 3,122,825 73,128 Itau Unibanco Holding SA, ADR 846,929 802,945 2,852,170 Glenveagh Properties PLC, 144A1 3,740,668 3,212,168 99,237 Pagseguro Digital Ltd., Cl A1 2,272,868 2,745,888 33,725 Ryanair Holdings plc, ADR1 2,228,994 3,238,949 84,115 Smiles Fidelidade SA 1,114,032 958,089 Total Ireland 5,969,662 6,451,117 Total Brazil 6,887,527 7,629,747 Israel (3.07%) Canada (5.08%) 50,866 Mellanox Technologies Ltd.1 2,357,915 3,736,108 136,714 BlackBerry Ltd.1 1,540,626 1,555,805 41,904 Wix.com Ltd.1 2,235,641 5,015,909 7,775 Constellation Software, Inc. 2,245,621 5,717,678 Total Israel 4,593,556 8,752,017 279,653 Encana Corp. 3,164,352 3,666,251 86,070 The Stars Group, Inc.1 3,132,429 2,143,143 Japan (14.39%) 36,304 Suncor Energy, Inc. 1,242,028 1,404,602 13,400 FANUC Corp. 1,954,396 2,526,210 Total Canada 11,325,056 14,487,479 5,074 KEYENCE CORPORATION 2,724,211 2,946,510 11,000 KOSÉ Corporation 1,213,104 2,096,022 China (6.04%) 43,493 Mercari, Inc.1 1,323,017 1,437,390 8,363 Alibaba Group Holding Ltd., ADR1 608,387 1,377,888 637,288 Mitsubishi UFJ Financial 3,176 Baidu, Inc., ADR1 582,728 726,288 Group, Inc., ADR 4,265,548 3,944,813 13,800,000 China Tower Corp. Ltd., Cl H, 144A1 2,061,724 2,027,247 98,400 MonotaRO Co. Ltd. 1,066,902 2,775,673 911,371 Haitong Securities Co., Ltd., Cl H 1,408,305 828,905 141,400 Recruit Holdings Co. Ltd. 2,798,441 4,719,141 560,396 Kangde Xin Composite Material 116,200 SMS Co. Ltd. 1,538,719 2,312,341 Group Co. Ltd., Cl A2 1,827,045 1,111,735 23,300 SoftBank Group Corp. 2,115,858 2,352,148 773,374 Kingdee International Software 56,223 Sony Corp., ADR 2,158,828 3,409,925 Group Co. Ltd. 187,626 841,703 52,900 Square Enix Holdings Co. Ltd. 1,764,117 2,188,259 102,032 Midea Group Co. Ltd., Cl A2 873,168 594,492 82,020 START TODAY CO., LTD. 2,791,986 2,483,267 59,672 Momo, Inc., ADR1 2,694,185 2,613,634 99,900 Takeda Pharmaceutical Co. Ltd. 4,842,023 4,274,018 69,300 Tencent Holdings Ltd. 502,298 2,861,109 57,200 TechnoPro Holdings, Inc. 2,412,198 3,549,199 3,150,000 WH Group Limited, 144A 2,520,139 2,217,134 103,941 Zai Lab Ltd., ADR1 2,350,837 2,024,771 Total Japan 32,969,348 41,014,916 Total China 15,616,442 17,224,906 Korea, Republic of (1.40%) 10,526 Amorepacific Corp. 3,349,546 2,476,706 Finland (1.48%) 31,094 KB Financial Group, Inc. 1,537,643 1,519,310 754,550 Nokia OYJ, ADR 4,624,567 4,210,389 Total Korea, Republic of 4,887,189 3,996,016 France (6.52%) Mexico (2.03%) 25,751 BNP Paribas SA 1,676,336 1,575,935 71,401 Danone SA 5,683,146 5,529,441 168,114 America Movil S.A.B. de C.V., Cl L, ADR 3,082,634 2,699,911 1 7,630 Eurofins Scientific SE 1,019,543 4,331,960 3,931,932 Telesites SAB de CV 2,882,105 3,071,756 8,587 LVMH Moet Hennessy Louis Total Mexico 5,964,739 5,771,667 Vuitton SE 2,187,513 3,036,844 21,500 Sodexo SA 2,292,253 2,280,082 Netherlands (4.22%) 71,582 Vivendi SA 1,697,429 1,842,556 59,905 argenx SE, ADR1 2,659,083 4,543,195 Total France 14,556,220 18,596,818 13,707 Cimpress NV1 1,331,640 1,872,514 42,434 InterXion Holding N.V.1 1,651,580 2,855,808 Germany (4.52%) 56,000 Koninklijke Vopak NV 2,835,740 2,759,399 43,801 Fresenius Medical Care Ag & Co. 4,048,917 4,504,751 Total Netherlands 8,478,043 12,030,916 15,889 Linde AG 3,582,744 3,757,844 125,925 RIB Software SE 982,448 2,671,170 Nigeria (0.12%) 21,419 Symrise AG 802,002 1,955,165 1,672,685 Lekoil Ltd.1 571,534 348,829 Total Germany 9,416,111 12,888,930

127 Baron Funds

Baron International Growth Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018 (Unaudited)

Shares Cost Value Principal Amount Cost Value Common Stocks (continued) Short Term Investments (13.41%) Norway (2.87%) $38,232,530 Repurchase Agreement with Fixed Income Clearing Corp., 151,500 Golar LNG Ltd. $ 3,770,987 $ 4,211,700 dated 9/28/2018, 0.42% 1 1,069,535 Komplett Bank ASA 2,410,678 2,417,994 due 10/1/2018; Proceeds at 170,777 Opera Ltd., ADR1 2,073,586 1,535,285 maturity - $38,233,868; Total Norway 8,255,251 8,164,979 (Fully collateralized by $39,180,000 U.S. Treasury Note, Russia (1.30%) 2.875% due 5/15/2028; Market value - $39,001,496) $ 38,232,530 $ 38,232,530 170,949 Sberbank of Russia PJSC, ADR 2,246,908 2,167,633 46,354 Yandex N.V., Cl A1 1,412,589 1,524,583 TOTAL INVESTMENTS (99.55%) $248,853,570 283,766,823 Total Russia 3,659,497 3,692,216 CASH AND OTHER ASSETS Spain (2.38%) LESS LIABILITIES (0.45%) 1,284,694 23,163 Aena SME SA, 144A 3,511,216 4,020,565 NET ASSETS $285,051,517 90,745 Industria de Diseño Textil SA 2,836,977 2,750,937 RETAIL SHARES (Equivalent to $23.11 per share Total Spain 6,348,193 6,771,502 based on 3,463,247 shares outstanding) $ 80,037,522

Switzerland (1.90%) INSTITUTIONAL SHARES (Equivalent to $23.44 per share 43,982 Julius Baer Group Ltd. 1,693,582 2,200,892 based on 8,153,853 shares outstanding) $191,105,733 48,253 Landis & Gyr Group AG 3,742,861 3,222,931 R6 SHARES (Equivalent to $23.44 per share Total Switzerland 5,436,443 5,423,823 based on 593,375 shares outstanding) $ 13,908,262 United Kingdom (12.26%) 256,721 Abcam plc 2,516,467 4,791,619 % Represents percentage of net assets. 1 147,669 Adaptimmune Therapeutics PLC, ADR1 1,745,937 2,002,392 Non-income producing securities. 2 188,500 AstraZeneca PLC, ADR 6,785,353 7,458,945 At September 30, 2018, the market value of restricted and fair valued securities 79,500 Dechra Pharmaceuticals plc 3,104,848 2,256,851 amounted to $1,706,227 or 0.60% of net assets. These securities are not 1 deemed liquid. 83,252 Endava plc, ADR 1,740,490 2,410,145 ADR American Depositary Receipt. 132,158 Experian plc 2,381,629 3,394,280 144A Security is exempt from registration pursuant to Rule 144A under the Securities 883,049 Horizon Discovery Group plc1 2,095,042 2,417,029 Act of 1933. This security may be resold in transactions that are exempt from 40,037 Intertek Group plc 1,846,883 2,605,037 registration, normally to qualified institutional buyers. At September 30, 2018, 650,000 Rentokil Initial PLC 2,766,778 2,697,517 the market value of Rule 144A securities amounted to $11,477,114 or 4.03% of 1,148,151 Tullow Oil plc1 3,189,936 3,940,286 net assets. These securities have been deemed liquid pursuant to policies and 116,000 WANdisco PLC1 1,616,249 967,644 procedures approved by the Board of Trustees, unless otherwise noted. Total United Kingdom 29,789,612 34,941,745 Summary of Investments by Percentage of United States (3.64%) Sector as of September 30, 2018 Net Assets 40,103 Agilent Technologies, Inc. 1,448,695 2,828,866 Information Technology 16.4% 119,567 Arch Capital Group Ltd.1 2,128,700 3,564,292 39,504 Worldpay, Inc., Cl A1 3,191,888 3,984,259 Health Care 14.5% Industrials 11.8% Total United States 6,769,283 10,377,417 Consumer Discretionary 11.2% TOTAL COMMON STOCKS 210,621,040 245,534,293 Financials 9.4% Communication Services 8.3% Energy 6.5% Consumer Staples 5.3% Materials 2.4% Real Estate 0.3% Cash and Cash Equivalents* 13.9% 100.0%

* Includes short term investments.

128 Baron Funds

Baron Real Estate Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (93.22%) Common Stocks (continued) Consumer Discretionary (36.80%) Information Technology (9.64%) Casinos & Gaming (10.39%) Internet Services & 487,450 Boyd Gaming Corp. $ 11,631,991 $ 16,500,183 Infrastructure (9.64%) 1,209,250 MGM Resorts International 28,031,881 33,750,167 683,225 GDS Holdings Ltd., ADR1,2,3 $ 20,843,383 $ 24,001,694 835,855 Penn National Gaming, Inc.1 23,930,058 27,516,347 627,050 InterXion Holding N.V.1,2,3 19,430,712 42,200,465 399,151 Red Rock Resorts, Inc., Cl A 9,193,020 10,637,374 3,370,896 NEXTDC Ltd. (Australia)1,2 13,818,630 15,838,238 72,786,950 88,404,071 Total Information Technology 54,092,725 82,040,397 Home Improvement Retail (4.39%) Materials (6.66%) 180,250 Home Depot, Inc. 14,127,825 37,338,787 Construction Materials (4.91%) Homebuilding (2.47%) 70,171 Eagle Materials, Inc. 7,063,288 5,981,376 13,377,713 Glenveagh Properties plc, 144A 33,600 Martin Marietta Materials, Inc. 4,372,097 6,113,520 (United Kingdom)1,2 16,618,533 15,066,234 374,418 Summit Materials, Inc., Cl A1 10,309,378 6,806,919 153,984 Installed Building Products, Inc.1 8,658,457 6,005,376 206,050 Vulcan Materials Co. 24,420,826 22,912,760 25,276,990 21,071,610 46,165,589 41,814,575 Hotels, Resorts & Cruise Specialty Chemicals (1.75%) Lines (19.55%) 32,650 The Sherwin-Williams Co. 8,115,892 14,862,607 707,194 Extended Stay America, Inc. 12,661,482 14,306,535 Total Materials 54,281,481 56,677,182 598,237 Hilton Grand Vacations, Inc.1 16,623,627 19,801,645 228,725 Hilton Worldwide Holdings, Inc. 11,299,709 18,476,405 241,900 Hyatt Hotels Corp., Cl A 19,139,847 19,252,821 Real Estate (32.03%) 106,650 Marriott International, Inc., Cl A 8,517,207 14,080,999 Hotel & Resort REITs (2.67%) 191,350 Marriott Vacations Worldwide Corp. 22,081,945 21,383,362 451,000 MGM Growth Properties LLC, Cl A 9,471,000 13,299,990 403,890 Norwegian Cruise Line Holdings Ltd.1,2 14,397,772 23,195,403 286,150 Park Hotels & Resorts, Inc. 8,214,499 9,391,443 2 160,050 Royal Caribbean Cruises Ltd. 14,584,872 20,796,897 17,685,499 22,691,433 119,800 Wyndham Destinations, Inc. 4,303,751 5,194,528 178,550 Wyndham Hotels & Resorts, Inc. 8,432,039 9,922,024 Industrial REITs (1.55%) 132,042,251 166,410,619 195,300 Prologis, Inc. 9,769,916 13,239,387 Total Consumer Discretionary 244,234,016 313,225,087 Office REITs (2.49%) 27,528 Boston Properties, Inc. 3,369,336 3,388,422 Financials (3.69%) 292,950 Douglas Emmett, Inc. 6,127,032 11,050,074 69,250 SL Green Realty Corp. 6,944,779 6,753,952 Asset Management & Custody Banks (3.16%) 16,441,147 21,192,448 604,300 Brookfield Asset Management, Inc., Cl A2 14,983,927 26,909,479 Real Estate Services (2.27%) 438,050 CBRE Group, Inc., Cl A1 8,836,789 19,318,005 Thrifts & Mortgage Finance (0.53%) 187,100 Housing Development Residential REITs (1.49%) Finance Corp. Ltd. (India)2 4,947,978 4,528,445 553,500 Invitation Homes, Inc. 11,070,000 12,680,685 Total Financials 19,931,905 31,437,924 Specialized REITs (21.56%) 87,950 Alexandria Real Estate Equities, Inc.3 5,534,790 11,063,231 Industrials (4.40%) 348,400 American Tower Corp. 29,802,494 50,622,520 476,550 Americold Realty Trust3 11,753,867 11,923,281 Building Products (1.96%) 263,000 CyrusOne, Inc. 17,510,622 16,674,200 158,150 Fortune Brands Home & Security, Inc. 8,875,708 8,280,734 161,844 Digital Realty Trust, Inc. 18,241,594 18,204,213 228,200 Masco Corp. 7,269,934 8,352,120 113,491 Equinix, Inc. 24,407,237 49,129,119 16,145,642 16,632,854 392,369 Gaming and Leisure Properties, Inc. 10,668,023 13,831,007 75,000 SBA Communications Corp.1 4,620,366 12,047,250 Research & Consulting Services (1.67%) 122,538,993 183,494,821 33,850 CoStar Group, Inc.1 6,190,824 14,245,434 Total Real Estate 186,342,344 272,616,779 Trading Companies & TOTAL COMMON STOCKS 584,716,454 793,407,710 Distributors (0.77%) 86,701 SiteOne Landscape Supply, Inc.1 3,497,517 6,532,053 Total Industrials 25,833,983 37,410,341

129 Baron Funds

Baron Real Estate Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018 (Unaudited)

Principal Amount Cost Value Short Term Investments (5.09%) $43,283,381 Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at maturity - $43,284,896; (Fully collateralized by $46,760,000 U.S. Treasury Note, 2.25% due 11/15/2027; Market value - $44,152,569) $ 43,283,381 $ 43,283,381 TOTAL INVESTMENTS (98.31%) $627,999,835 836,691,091

CASH AND OTHER ASSETS LESS LIABILITIES (1.69%) 14,349,309 NET ASSETS $851,040,400

RETAIL SHARES (Equivalent to $27.05 per share based on 11,604,283 shares outstanding) $313,952,739

INSTITUTIONAL SHARES (Equivalent to $27.43 per share based on 19,177,700 shares outstanding) $526,052,412

R6 SHARES (Equivalent to $27.43 per share based on 402,266 shares outstanding) $ 11,035,249

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. ADR American Depositary Receipt. 144A Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. At September 30, 2018, the market value of Rule 144A securities amounted to $15,066,234 or 1.77% of net assets. This security has been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted.

130 Baron Funds

Baron Emerging Markets Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (86.02%) Common Stocks (continued) Argentina (1.92%) India (12.98%) 393,729 Banco Macro SA, ADR $ 32,599,498 $ 16,288,569 773,298 Britannia Industries Ltd. $ 46,915,779 $ 62,123,064 2,548,922 Loma Negra Cia Industrial 8,257,953 Coal India Ltd. 37,988,207 30,330,804 Argentina SA, ADR1 51,426,232 22,532,470 1,721,722 Divi’s Laboratories Ltd. 18,152,435 31,135,403 4,014,438 YPF SA, ADR 82,269,333 62,023,067 4,850,820 Edelweiss Financial Services Ltd. 13,383,790 12,680,789 15,010,957 Exide Industries Ltd. 45,648,281 54,968,389 Total Argentina 166,295,063 100,844,106 2,515,738 Housing Development Finance Corp. Ltd. 54,946,351 60,889,258 Brazil (7.71%) 20,442,727 JM Financial Ltd. 38,101,847 24,393,653 9,516,441 B3 SA - Brasil Bolsa Balcao 48,291,675 55,139,770 4,898,434 JSW STEEL Ltd. 21,679,598 25,789,589 4,391,132 Itau Unibanco Holding SA, ADR 53,611,896 48,214,629 3,672,859 Kotak Mahindra Bank Ltd. 45,250,134 57,841,576 13,244,838 Kroton Educacional SA 41,129,656 37,387,467 4,025,216 Manpasand Beverages Ltd. 20,732,184 5,999,787 3,007,968 Localiza Rent a Car SA 19,336,866 16,944,515 6,989,754 Max Financial Services Ltd.1 62,900,687 39,369,797 2,059,496 Pagseguro Digital Ltd., Cl A1 53,976,426 56,986,254 2,999,994 Motherson Sumi Systems Ltd. 8,834,502 10,627,652 6,816,112 Petroleo Brasileiro SA, ADR 73,230,311 82,270,472 677,081 Piramal Enterprises Ltd. 25,140,267 21,476,703 19,214,955 Rumo SA1 73,345,492 71,273,112 5,372,490 SBI Life Insurance Co. Ltd., 144A 57,810,308 37,916,483 3,261,126 Smiles Fidelidade SA 48,589,979 37,144,965 4,670,380 Sun Pharmaceutical Industries Ltd. 42,327,892 40,154,702 2,839,810 Sun TV Network Ltd. 20,558,083 24,063,364 Total Brazil 411,512,301 405,361,184 4,635,725 Tata Chemicals Ltd. 52,297,499 44,278,880 2,955,898 Tata Communications Ltd. 30,610,639 20,408,704 China (25.91%) 10,204,151 Tata Global Beverages Ltd. 36,311,122 32,904,129 870,170 Alibaba Group Holding 1,931,056 Titan Co. Ltd. 27,146,242 21,460,322 Limited, ADR1 71,321,078 143,369,209 3,803,745 Zee Entertainment Enterprises Ltd. 21,647,174 23,014,520 302,970 Baidu, Inc., ADR1 55,821,334 69,283,180 Total India 728,383,021 681,827,568 53,958,564 China Construction Bank Corp., CI H 48,233,372 47,146,152 Indonesia (0.44%) 16,162,517 China Everbright Ltd. 40,180,236 28,945,881 61,902,105 PT Tower Bersama 22,172,732 China Mengniu Dairy Co. Ltd. 44,859,845 73,783,067 Infrastructure Tbk 31,519,830 23,366,731 8,318,189 China Mobile Ltd. 92,551,326 81,977,464 454,488,680 China Tower Corp. Ltd., Cl H, 144A1 71,563,221 66,765,280 Korea, Republic of (8.45%) 22,114,641 CSPC Pharmaceutical Group Ltd. 50,201,374 46,950,549 243,873 Amorepacific Corp. 77,542,559 57,381,882 23,596,946 Haitong Securities Co., Ltd., Cl H 38,659,143 21,461,771 1,544,843 KB Financial Group, Inc. 67,230,753 75,483,877 1,453,915 Han’s Laser Technology Industry 2,812,748 KIA Motors Corp. 87,000,496 89,003,791 Group Co. Ltd., Cl A 11,161,726 8,953,053 3,101,000 Samsung Electronics Co., Ltd. 98,195,642 129,854,812 9,114,864 Hangzhou Hikvision Digital 387,314 Samsung Life Insurance Co., Ltd. 39,718,428 33,973,993 Technology Co. Ltd., Cl A 27,776,393 38,072,434 228,805 SK Telecom Co. Ltd. 49,696,179 58,168,141 18,324,812 Industrial & Commercial Bank of Total Korea, Republic of 419,384,057 443,866,496 China Ltd., Cl H 15,103,716 13,389,530 21,922,610 Kangde Xin Composite Material Malaysia (0.56%) Group Co. Ltd., Cl A3 74,000,773 43,490,920 27,143,166 Kingdee International Software 70,169,893 My EG Services Bhd 25,281,509 29,671,937 Group Co. Ltd. 10,806,225 29,541,318 6,465,008 Midea Group Co. Ltd., Cl A3 33,102,309 37,668,542 Mexico (6.46%) 1,411,196 Momo, Inc., ADR1 52,564,637 61,810,385 3,643,933 AmericaMovilS.A.B.deC.V.,ClL,ADR 66,878,474 58,521,564 342,346 Pinduoduo, Inc., ADR1 6,504,574 9,000,276 800,825 Fomento Económico Mexicano, 5,095,486 Shenzhou International Group S.A.B. de C.V., ADR 75,031,069 79,257,650 Holdings Ltd. 24,315,464 65,350,527 3,408,095 GRUMA S.A.B. de C.V., Cl B 46,468,863 43,326,914 43,187,365 Sino Biopharmaceutical Ltd. 24,888,050 40,272,569 13,070,961 Grupo Lala S.A.B. de C.V. 25,303,050 14,947,022 12,623,350 Sinopharm Group Co. Ltd., Cl H 51,661,536 61,759,414 14,513,372 Infraestructura Energetica Nova S.A.B. de C.V. 69,695,853 72,124,805 1,646,592 Sunny Optical Technology 23,487,020 Wal-Mart de Mexico S.A.B de C.V. 55,017,766 71,249,232 Group Co., Ltd. 3,726,328 18,993,435 291,502 TAL Education Group, ADR1 1,173,804 7,494,516 Total Mexico 338,395,075 339,427,187 4,719,314 Tencent Holdings Ltd. 129,280,316 194,840,839 143,569,583 Tongda Group Holdings Ltd. 36,830,198 21,090,654 Nigeria (0.13%) 88,440,812 WH Group Limited, 144A 75,942,842 62,249,245 32,618,323 Lekoil Ltd.1,2 14,881,766 6,802,357 3,660,217 Yunnan Baiyao Group Co. Ltd., Cl A3 55,227,323 37,630,984 Panama (0.39%) 1,562,978 Zai Lab Ltd., ADR1 32,301,343 30,446,812 253,953 Copa Holdings, S.A., Cl A 13,808,429 20,275,607 Total China 1,179,758,486 1,361,738,006 Philippines (2.04%) Hong Kong (0.97%) 67,435,465 Ayala Land, Inc. 52,811,035 49,986,866 7,926,950 Techtronic Industries Co. Ltd. 32,888,582 50,629,762 20,323,556 BDO Unibank, Inc. 45,846,397 45,063,150 138,168,735 Metro Pacific Investments Corp. 15,125,467 12,146,983 2,879,303 Tongda Hong Tai Holdings Ltd.1 901,617 511,249 Total Philippines 113,782,899 107,196,999 Total Hong Kong 33,790,199 51,141,011 Russia (2.82%) 7,207,699 Sberbank of Russia PJSC, ADR 80,340,627 91,393,623 1,729,219 Yandex N.V., Cl A1 31,110,886 56,874,013 Total Russia 111,451,513 148,267,636

131 Baron Funds

Baron Emerging Markets Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018 (Unaudited)

Shares Cost Value Principal Amount Cost Value Common Stocks (continued) Short Term Investments (11.69%) South Africa (4.83%) $614,290,278 Repurchase Agreement with Fixed Income Clearing Corp., 3,410,622 Bid Corp. Ltd. $ 71,119,178 $ 71,129,543 dated 9/28/2018, 0.42% 4,529,428 Bidvest Group Ltd. 54,964,590 59,255,312 due 10/1/2018; Proceeds at 7,008,176 FirstRand Ltd. 26,008,569 33,635,280 1 maturity - $614,311,778; 14,061,384 Pepkor Holdings Ltd., 144A 22,097,068 15,830,088 (Fully collateralized by 1,243,641 Sasol Ltd. 41,899,428 48,152,091 $689,210,000 U.S. Treasury 664,897 Sasol Ltd., ADR 21,846,771 25,691,620 Note, 1.625% due 2/15/2026; Total South Africa 237,935,604 253,693,934 Market value - $626,579,420) $ 614,290,278 $ 614,290,278 Taiwan, Province of China (7.20%) TOTAL INVESTMENTS (97.72%) $4,942,228,295 5,135,087,741 10,551,879 Delta Electronics, Inc. 48,394,648 45,272,202 CASH AND OTHER ASSETS 4,162,439 Eclat Textile Co., Ltd. 49,707,048 51,531,194 LESS LIABILITIES (2.28%) 119,620,152 25,698,000 Far EasTone Telecommunications Co., Ltd. 61,140,054 61,271,883 NET ASSETS $5,254,707,893 3,175,065 Ginko International Co., Ltd. 39,134,743 20,849,590 6,242,936 Makalot Industrial Co. Ltd. 29,536,642 30,976,478 RETAIL SHARES (Equivalent to $13.29 per share 18,799,000 Taiwan Mobile Co., Ltd. 67,175,658 67,418,547 based on 69,327,563 shares outstanding) $ 921,484,694 2,288,035 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 57,209,845 101,039,626 INSTITUTIONAL SHARES (Equivalent to $13.35 per share Total Taiwan, Province of China 352,298,638 378,359,520 based on 323,946,943 shares outstanding) $4,325,543,323 R6 SHARES (Equivalent to $13.36 per share Thailand (1.78%) based on 574,853 shares outstanding) $ 7,679,876 3,226,229 Bangkok Bank PCL, Cl F 20,413,751 21,747,617 3,872,664 Bangkok Bank PCL, NVDR 20,554,524 25,147,169 21,928,334 CP All Plc, Cl C 49,936,957 46,785,870 % Represents percentage of net assets. 1 Non-income producing securities. Total Thailand 90,905,232 93,680,656 2 An “Affiliated” investment may include any company in which the Fund owns 5% or more of its outstanding shares. United Kingdom (1.43%) 3 At September 30, 2018, the market value of restricted and fair valued 21,837,142 Tullow Oil plc1 58,186,424 74,941,862 securities amounted to $118,790,446 or 2.26% of net assets. These securities TOTAL COMMON STOCKS 4,327,570,046 4,520,462,797 are not deemed liquid. ADR American Depositary Receipt. NVDR Non-Voting Depositary Receipt. 144A Security is exempt from registration pursuant to Rule 144A under the Private Preferred Stocks (0.01%) Securities Act of 1933. This security may be resold in transactions that are India (0.01%) exempt from registration, normally to qualified institutional buyers. At September 30, 2018, the market value of Rule 144A securities amounted to 3,098,340 Zee Entertainment Enterprises $182,761,096 or 3.48% of net assets. These securities have been deemed Ltd., 6.00% due 3/5/2022 367,971 334,666 liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted.

Summary of Investments by Percentage of Sector as of September 30, 2018 Net Assets Communication Services 17.2% Financials 15.3% Consumer Discretionary 11.9% Consumer Staples 11.8% Information Technology 9.0% Health Care 6.3% Energy 4.9% Materials 4.0% Industrials 3.3% Utilities 1.4% Real Estate 0.9% Cash and Cash Equivalents* 14.0% 100.0%

* Includes short term investments.

132 Baron Funds

Baron Energy and Resources Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (96.36%) Common Stocks (continued) Consumer Discretionary (6.84%) Information Technology (5.31%) Automobile Manufacturers (6.84%) Application Software (5.31%) 14,100 Tesla, Inc.1 $ 3,242,964 $ 3,733,257 25,400 Aspen Technology, Inc.1 $ 960,775 $ 2,893,314 Energy (75.44%) Materials (1.47%) Integrated Oil & Gas (1.96%) Specialty Chemicals (1.47%) 88,400 Petroleo Brasileiro SA, ADR (Brazil)2 921,259 1,066,988 333,539 Flotek Industries, Inc.1 3,663,555 800,494 Oil & Gas Drilling (1.97%) Utilities (1.39%) 77,100 Transocean, Ltd.1,2 923,894 1,075,545 Gas Utilities (1.39%) Oil & Gas Equipment & 152,866 Infraestructura Energetica Nova Services (9.15%) S.A.B. de C.V. (Mexico)2 642,193 759,674 1 53,400 Cactus, Inc., Cl A 1,014,600 2,044,152 TOTAL COMMON STOCKS 37,179,205 52,567,486 45,896 Halliburton Co. 1,700,173 1,860,165 66,000 NCS Multistage Holdings, Inc.1 1,150,709 1,089,660 3,865,482 4,993,977 Private Common Stocks (2.88%) Oil & Gas Exploration & Energy (2.88%) Production (41.87%) 1 Oil & Gas Equipment & 43,448 Concho Resources, Inc. 3,214,309 6,636,682 Services (2.88%) 20,000 Devon Energy Corp. 683,490 798,800 127,500 Gravity Oilfield Services, Inc., Cl A, 144A1,3,4 1,498,126 1,573,350 260,800 Encana Corp.2 1,629,194 3,419,088 8,968 EOG Resources, Inc. 666,234 1,144,048 1,823,454 Lekoil Ltd. (Nigeria)1,2 571,211 380,270 Principal Amount 84,900 Magnolia Oil & Gas Corp. (formerly, TPG Pace Energy Holdings Corp., Cl A)1 896,911 1,274,349 Short Term Investments (1.05%) 50,400 Marathon Oil Corp. 1,084,350 1,173,312 $571,352 Repurchase Agreement with 140,800 Parsley Energy, Inc., Cl A1 2,250,065 4,118,400 Fixed Income Clearing Corp., 4,600 Pioneer Natural Resources Co. 795,424 801,274 dated 9/28/2018, 0.42% 35,600 SM Energy Co. 730,964 1,122,468 due 10/1/2018; Proceeds at 98,000 WPX Energy, Inc.1 1,173,412 1,971,760 maturity - $571,372; 13,695,564 22,840,451 (Fully collateralized by $590,000 U.S. Treasury Note, Oil & Gas Refining & 2.875% due 5/15/2028; Marketing (7.07%) Market value - $587,312) 571,352 571,352 16,100 Andeavor 1,335,699 2,471,350 12,200 Valero Energy Corporation 686,295 1,387,750 TOTAL INVESTMENTS (100.29%) $39,248,683 54,712,188 2,021,994 3,859,100 LIABILITIES LESS CASH AND OTHER ASSETS (-0.29%) (156,804) Oil & Gas Storage & Transportation (13.42%) NET ASSETS $54,555,384 68,200 Energy Transfer Equity L.P. 407,818 1,188,726 88,735 Golar LNG Ltd.2 1,621,277 2,466,833 RETAIL SHARES (Equivalent to $8.72 per share 21,800 MPLX LP 660,163 756,024 based on 4,321,235 shares outstanding) $37,692,467 22,338 Noble Midstream Partners LP 502,605 790,989 97,600 Sanchez Midstream Partners LP 1,073,600 692,960 INSTITUTIONAL SHARES (Equivalent to $8.87 per share 25,300 Targa Resources Corp. 634,936 1,424,643 based on 1,834,460 shares outstanding) $16,276,950 4,900,399 7,320,175 R6 SHARES (Equivalent to $8.87 per share Total Energy 26,328,592 41,156,236 based on 66,072 shares outstanding) $ 585,967

Industrials (5.91%) % Represents percentage of net assets. Electrical Components & 1 Non-income producing securities. Equipment (0.26%) 2 Foreign corporation. 4,154 Bloom Energy Corp., Cl A1,4 62,310 141,568 3 At September 30, 2018, the market value of restricted and fair valued securities amounted to $1,573,350 or 2.88% of net assets. This security is not Heavy Electrical Equipment (5.65%) deemed liquid. 61,100 Siemens Gamesa Renewable 4 The Adviser has reclassified/classified certain securities in or out of this sub- Energy SA (Spain)1,2 893,592 773,248 industry. Such reclassifications/classifications are not supported by S&P or 80,900 TPI Composites, Inc.1 1,385,224 2,309,695 MSCI. ADR American Depositary Receipt. 2,278,816 3,082,943 144A Security is exempt from registration pursuant to Rule 144A under the Total Industrials 2,341,126 3,224,511 Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. At September 30, 2018, the market value of Rule 144A securities amounted to $1,573,350 or 2.88% of net assets. This security is not deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted.

133 Baron Funds

Baron Global Advantage Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (94.58%) Common Stocks (continued) Argentina (3.69%) United States (continued) 92,743 Bolsas y Mercados Argentinos SA $ 1,568,116 $ 808,609 18,540 Okta, Inc.1 $ 390,056 $ 1,304,474 1 34,680 Globant SA 1,568,088 2,045,773 16,229 Sage Therapeutics, Inc.1 1,973,559 2,292,346 3,117 MercadoLibre, Inc. 1,021,312 1,061,245 22,573 Splunk, Inc.1 1,988,191 2,729,301 Total Argentina 4,157,516 3,915,627 17,489 Take-Two Interactive Software, Inc.1 1,774,071 2,413,307 41,435 Tenable Holdings, Inc.1 953,005 1,610,993 Australia (0.76%) 1 1 3,638 Tesla, Inc. 1,048,764 963,233 171,735 NEXTDC Ltd. 863,406 806,901 13,912 Varonis Systems, Inc.1 405,714 1,019,054 36,671 Veeva Systems, Inc., Cl A1 2,655,402 3,992,372 Brazil (2.69%) 1 42,198 Arco Platform Ltd., Cl A1 771,578 962,114 22,031 Worldpay, Inc., Cl A 1,733,397 2,231,079 68,661 Pagseguro Digital Ltd., Cl A1 1,863,719 1,899,850 72,963 Yext, Inc.1 949,341 1,729,223 12,506 Zscaler, Inc.1 200,096 509,995 Total Brazil 2,635,297 2,861,964 Total United States 36,055,323 51,879,966 Canada (3.09%) 4,468 Constellation Software, Inc. 2,472,621 3,285,735 TOTAL COMMON STOCKS 80,095,892 100,493,074 China (10.77%) 30,481 Alibaba Group Holding Ltd., ADR1 3,947,296 5,022,049 Principal Amount 7,630 Baidu, Inc., ADR1 1,628,600 1,744,828 49,581 Ctrip.com International Ltd., ADR1 2,135,192 1,842,926 Short Term Investments (6.16%) 43,518 Meituan Dianping, Cl B1 386,441 381,905 54,602 Pinduoduo, Inc., ADR1 1,293,814 1,435,487 Repurchase Agreement (6.16%) 1 39,624 TAL Education Group, ADR 213,311 1,018,733 $6,541,537 Repurchase Agreement with Fixed Income Total China 9,604,654 11,445,928 Clearing Corp., dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at maturity - India (5.77%) $6,541,766; (Fully collateralized by 18,255 HDFC Bank Ltd., ADR 1,724,939 1,717,795 $6,705,000 U.S. Treasury Note, 2.875% due 105,600 Housing Development Finance Corp. Ltd. 2,854,644 2,555,873 5/15/2028; Market value - $6,674,452) 6,541,537 6,541,537 252,250 JM Financial Ltd. 498,087 301,002 98,500 Kotak Mahindra Bank Ltd. 1,579,636 1,551,215 TOTAL INVESTMENTS (100.74%) $86,637,429 107,034,611 Total India 6,657,306 6,125,885 LIABILITIES LESS CASH AND Israel (4.72%) OTHER ASSETS (-0.74%) (787,931) 36,210 Mellanox Technologies Ltd.1 2,203,409 2,659,625 NET ASSETS $106,246,680 19,663 Wix.com Ltd.1 1,614,404 2,353,661 Total Israel 3,817,813 5,013,286 RETAIL SHARES (Equivalent to $23.10 per share based on 2,027,624 shares outstanding) $ 46,829,959 Japan (1.92%) 3,000 KEYENCE CORP. 1,769,267 1,742,123 INSTITUTIONAL SHARES (Equivalent to $23.38 per share 8,883 Mercari, Inc.1 242,385 293,572 based on 2,330,434 shares outstanding) $ 54,474,093 Total Japan 2,011,652 2,035,695 R6 SHARES (Equivalent to $23.39 per share Netherlands (4.70%) based on 211,324 shares outstanding) $ 4,942,628 18 Adyen NV, 144A1 5,091 14,692 43,328 argenx SE, ADR1 2,323,131 3,285,996 9,070 ASML Holding N.V. 1,356,327 1,694,394 % Represents percentage of net assets. 1 Total Netherlands 3,684,549 4,995,082 Non-income producing securities. ADR American Depositary Receipt. South Africa (4.42%) 144A Security is exempt from registration pursuant to Rule 144A under the 21,775 Naspers Limited, Cl N 5,360,091 4,698,981 Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. At Taiwan, Province of China (1.37%) September 30, 2018, the market value of Rule 144A securities amounted to 33,084 Taiwan Semiconductor $14,692 or 0.01% of net assets. This security has been deemed liquid Manufacturing Co., Ltd., ADR 1,297,429 1,460,989 pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. United Kingdom (1.85%) 47,904 Adaptimmune Therapeutics PLC, ADR1 534,016 649,578 45,508 Endava plc, ADR1 944,219 1,317,457 Summary of Investments by Percentage of Sector as of September 30, 2018 Net Assets Total United Kingdom 1,478,235 1,967,035 Information Technology 32.2% United States (48.83%) Communication Services 21.1% 56,916 Activision Blizzard, Inc. 4,128,860 4,734,842 40,521 Aerie Pharmaceuticals, Inc.1 2,275,418 2,494,068 Consumer Discretionary 18.5% 4,162 Alphabet, Inc., Cl C1 4,036,919 4,967,222 Health Care 16.3% 2,921 Amazon.com, Inc.1 2,285,253 5,850,763 4,800 AnaptysBio, Inc.1 367,616 478,896 Financials 6.5% 28,069 AxoGen, Inc.1 628,709 1,034,343 Cash and Cash Equivalents* 5.4% 439 Booking Holdings, Inc.1 627,992 870,976 27,205 EPAM Systems, Inc.1 2,586,513 3,746,129 100.0% 23,145 Facebook, Inc., Cl A1 3,404,219 3,806,427 8,448 Illumina, Inc.1 1,642,228 3,100,923 * Includes short term investments.

134 Baron Funds

Baron Discovery Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (91.44%) Common Stocks (continued) Communication Services (3.04%) Health Care (continued) Cable & Satellite (1.22%) Health Care Supplies (4.17%) 94,500 GCI Liberty, Inc., Cl A1 $ 4,998,118 $ 4,819,500 1,026,000 Cerus Corp.1 $ 4,527,220 $ 7,397,460 378,100 Sientra, Inc.1 3,170,888 9,029,028 Interactive Media & Services (0.15%) 7,698,108 16,426,488 14,962 Eventbrite, Inc.1 344,126 568,107 Health Care Technology (3.22%) Movies & Entertainment (1.67%) 147,000 Teladoc Health, Inc. (formerly, 185,000 Liberty Media Corporation-Liberty Teladoc, Inc.)1 3,908,196 12,693,450 Formula One, Cl A1 5,634,811 6,582,300 Pharmaceuticals (5.80%) Total Communication Services 10,977,055 11,969,907 291,474 Corium International, Inc.1 2,747,911 2,771,918 390,000 Intersect ENT, Inc.1 12,133,667 11,212,500 Consumer Discretionary (8.56%) 1,349,200 TherapeuticsMD, Inc.1 7,344,247 8,850,752 Casinos & Gaming (1.69%) 22,225,825 22,835,170 250,000 Red Rock Resorts, Inc., Cl A 5,703,194 6,662,500 Total Health Care 86,297,629 121,827,810 Hotels, Resorts & Cruise Lines (1.41%) Industrials (13.07%) 445,000 Red Lion Hotels Corp.1 5,363,739 5,562,500 Aerospace & Defense (3.18%) Internet & Direct Marketing 226,800 Mercury Systems, Inc.1 6,663,724 12,546,576 Retail (0.92%) Electrical Components & 335,000 JUST EAT plc (United Kingdom)1,2 2,365,362 2,926,355 15,000 Liberty Expedia Holdings, Inc., Cl A1 620,095 705,600 Equipment (1.34%) 154,685 Bloom Energy Corp., Cl A1,4 2,959,268 5,271,665 2,985,457 3,631,955 Heavy Electrical Equipment (2.19%) Restaurants (1.04%) 302,000 TPI Composites, Inc.1 6,425,383 8,622,100 60,000 Wingstop, Inc. 1,381,930 4,096,200 Industrial Conglomerates (0.84%) Specialty Stores (3.50%) 72,000 Raven Industries, Inc. 2,637,579 3,294,000 250,000 Hudson Ltd., Cl A1,2 4,398,812 5,640,000 600,000 Party City Holdco, Inc.1 8,454,966 8,130,000 Industrial Machinery (4.66%) 71,600 ESCO Technologies, Inc. 3,678,722 4,872,380 12,853,778 13,770,000 193,000 Kornit Digital Ltd.1,2 2,853,283 4,226,700 Total Consumer Discretionary 28,288,098 33,723,155 126,960 Luxfer Holdings plc2 2,911,493 2,951,820 115,000 Sun Hydraulics Corp. 5,537,388 6,299,700 Consumer Staples (1.54%) 14,980,886 18,350,600 Agricultural Products (1.42%) 215,000 Limoneira Co. 5,133,722 5,613,650 Trading Companies & Distributors (0.86%) Packaged Foods & Meats (0.12%) 45,000 SiteOne Landscape Supply, Inc.1 1,778,482 3,390,300 750,000 Barfresh Food Group, Inc.1 417,200 465,000 Total Industrials 35,445,322 51,475,241 Total Consumer Staples 5,550,922 6,078,650 Information Technology (26.55%) Financials (1.70%) Application Software (9.85%) Property & Casualty 33,000 2U, Inc.1 1,643,785 2,481,270 Insurance (1.70%) 50,700 Envestnet, Inc.1 1,772,888 3,090,165 105,000 Kinsale Capital Group, Inc. 3,348,942 6,705,300 75,000 QAD, Inc., Cl A 2,888,702 4,248,750 20,000 QAD, Inc., Cl B 364,789 830,000 Health Care (30.92%) 225,000 RIB Software SE (Germany)2 5,355,563 4,772,788 1 Biotechnology (12.90%) 100,000 The Trade Desk, Inc., Cl A 3,500,208 15,091,000 78,200 Adamas Pharmaceuticals, Inc.1 1,259,967 1,565,564 350,000 Yext, Inc.1 4,626,582 8,295,000 184,600 Adaptimmune 20,152,517 38,808,973 Therapeutics PLC, ADR1,2 2,257,508 2,503,176 478,000 CareDx, Inc.1 7,230,383 13,790,300 Electronic Equipment & 60,000 Emergent BioSolutions, Inc.1 2,841,009 3,949,800 Instruments (2.85%) 100,000 Esperion Therapeutics, Inc.1 5,052,791 4,437,000 29,300 Coherent, Inc.1 5,356,999 5,045,167 385,000 Flexion Therapeutics, Inc.1 7,945,336 7,203,350 55,000 Novanta, Inc.1,2 1,465,584 3,762,000 129,677 Myovant Sciences Ltd.1,2 3,072,528 3,442,925 110,000 PAR Technology Corp.1 1,950,224 2,444,200 260,000 Myriad Genetics, Inc.1 6,046,399 11,960,000 8,772,807 11,251,367 14,000 Sage Therapeutics, Inc.1 905,737 1,977,500 36,611,658 50,829,615 IT Consulting & Other Services (3.33%) Health Care Equipment (4.83%) 180,000 Endava plc, ADR1,2 3,896,913 5,211,000 111,339 AxoGen, Inc.1 2,848,259 4,102,842 160,000 Acxiom Corporation1 4,030,303 7,905,600 167,424 IntriCon Corp.1 7,613,371 9,409,229 303,902 RA Medical Systems, Inc.1 5,392,212 5,531,016 7,927,216 13,116,600 15,853,842 19,043,087

135 Baron Funds

Baron Discovery Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Shares Cost Value Principal Amount Cost Value Common Stocks (continued) Short Term Investments (9.00%) Information Technology (continued) Repurchase Agreement (9.00%) Semiconductor Equipment (2.88%) $35,449,286 Repurchase Agreement with 155,000 Brooks Automation, Inc. $ 4,401,708 $ 5,429,650 Fixed Income Clearing Corp., 290,000 Ichor Holdings Ltd.1,2 5,752,195 5,921,800 dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at 10,153,903 11,351,450 maturity - $35,450,526; Semiconductors (2.18%) (Fully collateralized by 750,000 Everspin Technologies, Inc.1 6,800,372 5,760,000 $38,295,000 U.S. Treasury Note, 137,000 MACOM Technology Solutions 2.25% due 11/15/2027; Holdings, Inc.1 3,615,947 2,822,200 Market value - $36,159,594) $ 35,449,286 $ 35,449,286 10,416,319 8,582,200 TOTAL INVESTMENTS (100.45%) $296,979,935 395,781,564 Systems Software (5.46%) LIABILITIES LESS CASH AND 184,300 ForeScout Technologies, Inc.1 5,016,159 6,959,168 OTHER ASSETS (-0.45%) (1,763,134) 78,000 Qualys, Inc.1 2,266,334 6,949,800 78,565 Tenable Holdings, Inc.1 1,806,995 3,054,607 NET ASSETS $394,018,430 62,000 Varonis Systems, Inc.1 1,687,630 4,541,500 RETAIL SHARES (Equivalent to $23.77 per share 10,777,118 21,505,075 based on 4,551,802 shares outstanding) $108,218,565 Total Information Technology 68,199,880 104,615,665 INSTITUTIONAL SHARES (Equivalent to $24.03 per share Real Estate (6.06%) based on 11,658,757 shares outstanding) $280,159,087 Diversified REITs (1.73%) R6 SHARES (Equivalent to $24.03 per share 300,000 Alexander & Baldwin, Inc. 8,519,058 6,807,000 based on 234,748 shares outstanding) $ 5,640,778 Specialized REITs (4.33%) 350,000 Americold Realty Trust4 6,167,793 8,757,000 % Represents percentage of net assets. 195,000 QTS Realty Trust, Inc., Cl A 8,735,950 8,320,650 1 Non-income producing securities. 2 Foreign corporation. 14,903,743 17,077,650 3 At September 30, 2018, the market value of restricted and fair valued Total Real Estate 23,422,801 23,884,650 securities amounted to $51,900 or 0.01% of net assets. This security is not deemed liquid. TOTAL COMMON STOCKS 261,530,649 360,280,378 4 The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. Warrants (0.01%) ADR American Depositary Receipt. Consumer Staples (0.01%) Packaged Foods & Meats (0.01%) 300,000 Barfresh Food Group, Inc. Warrants Exp 3/13/20201,3 0 51,900

136 Baron Funds

Baron Durable Advantage Fund — PORTFOLIO HOLDINGS September 30, 2018

Shares Cost Value Shares Cost Value Common Stocks (91.23%) Common Stocks (continued) Communication Services (15.49%) Health Care (continued) Cable & Satellite (4.64%) Life Sciences Tools & Services (4.40%) 283 Charter Communications, Inc., Cl A1 $ 89,042 $ 92,224 1,249 Agilent Technologies, Inc. $ 84,744 $ 88,105 2,223 Naspers Ltd., ADR2 130,594 95,122 147 Mettler-Toledo International, Inc.1 89,886 89,520 219,636 187,346 174,630 177,625 Interactive Home Entertainment (6.50%) Managed Health Care (4.84%) 1,438 Activision Blizzard, Inc. 103,062 119,628 733 UnitedHealth Group, Inc. 166,293 195,007 1,182 Electronic Arts, Inc.1 138,754 142,419 Pharmaceuticals (0.01%) 241,816 262,047 13 Elanco Animal Health, Inc.1 312 454 Interactive Media & Services (4.35%) Total Health Care 566,373 606,651 147 Alphabet, Inc., Cl C1 159,798 175,440 Total Communication Services 621,250 624,833 Industrials (4.15%) Building Products (1.08%) Consumer Discretionary (8.24%) 819 AO Smith Corp. 51,801 43,710 Apparel, Accessories & Luxury Industrial Machinery (1.69%) Goods (3.34%) 483 Illinois Tool Works, Inc. 79,341 68,161 381 LVMH Moet Hennessy Louis Vuitton SE (France)2 122,482 134,743 Trading Companies & Distributors (1.38%) 962 Fastenal Co. 51,877 55,815 Home Improvement Retail (2.69%) 523 Home Depot, Inc. 99,533 108,339 Total Industrials 183,019 167,686 Internet & Direct Marketing Retail (2.21%) Information Technology (24.74%) 45 Booking Holdings, Inc.1 87,686 89,280 Data Processing & Outsourced Total Consumer Discretionary 309,701 332,362 Services (4.57%) 828 MasterCard Incorporated, Cl A 129,968 184,321 Consumer Staples (5.44%) Electronic Equipment & Distillers & Vintners (2.48%) Instruments (1.44%) 464 Constellation Brands, Inc., Cl A 104,844 100,048 100 KEYENCE CORPORATION (Japan)2 57,507 58,071 Hypermarkets & Super Centers (1.56%) Electronic Manufacturing Services (2.64%) 268 Costco Wholesale Corp. 50,734 62,948 1,212 TE Connectivity Ltd.2 119,608 106,571 Personal Products (1.40%) 388 The Estee Lauder Companies, Inc., Cl A 53,240 56,384 IT Consulting & Other Services (2.38%) 564 Accenture plc, Cl A2 87,972 95,993 Total Consumer Staples 208,818 219,380 Semiconductor Equipment (2.11%) Financials (14.06%) 452 ASML Holding N.V.2 83,279 84,985 Asset Management & Custody Semiconductors (2.44%) Banks (3.27%) 1,411 Taiwan Semiconductor 280 BlackRock, Inc. 149,963 131,973 Manufacturing Co., Ltd., ADR2 58,619 62,310 337 Texas Instruments, Inc. 35,644 36,156 Financial Exchanges & Data (10.79%) 741 CME Group, Inc. 113,208 126,126 94,263 98,466 883 Moody’s Corp. 136,353 147,637 826 S&P Global, Inc. 145,055 161,392 Systems Software (5.01%) 1,769 Microsoft Corp. 156,765 202,321 394,616 435,155 Technology Hardware, Storage & Total Financials 544,579 567,128 Peripherals (4.15%) 741 Apple, Inc. 130,602 167,273 Health Care (15.04%) Total Information Technology 859,964 998,001 Biotechnology (2.96%) 754 AbbVie, Inc. 78,928 71,313 Materials (1.83%) 136 Biogen, Inc.1 44,793 48,050 Specialty Chemicals (1.83%) 123,721 119,363 162 The Sherwin-Williams Co. 65,854 73,744 Health Care Equipment (2.83%) 1,051 Danaher Corp. 101,417 114,202 Real Estate (2.24%) Specialized REITs (2.24%) 209 Equinix, Inc. 93,436 90,474 TOTAL COMMON STOCKS 3,452,994 3,680,259

137 Baron Funds

Baron Durable Advantage Fund — PORTFOLIO HOLDINGS (Continued) September 30, 2018

Principal Amount Cost Value Short Term Investments (10.57%) $426,376 Repurchase Agreement with Fixed Income Clearing Corp., dated 9/28/2018, 0.42% due 10/1/2018; Proceeds at maturity - $426,391; (Fully collateralized by $440,000 U.S. Treasury Note, 2.875% due 5/15/2028; Market value - $437,995) $ 426,376 $ 426,376 TOTAL INVESTMENTS (101.80%) $3,879,370 4,106,635

LIABILITIES LESS CASH AND OTHER ASSETS (-1.80%) (72,799) NET ASSETS $4,033,836

RETAIL SHARES (Equivalent to $10.74 per share based on 54,198 shares outstanding) $ 582,034

INSTITUTIONAL SHARES (Equivalent to $10.76 per share based on 279,691 shares outstanding) $3,008,126

R6 SHARES (Equivalent to $10.75 per share based on 41,259 shares outstanding) $ 443,676

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. ADR American Depositary Receipt.

138 Baron Funds

Baron Real Estate Income Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (96.99%) Common Stocks (continued) Communication Services (1.33%) Real Estate (continued) Advertising (1.33%) Retail REITs (1.44%) 1,087 JC Decaux SA (France)2 $ 39,825 $ 39,755 244 Simon Property Group, Inc. $ 41,231 $ 43,127 Consumer Discretionary (11.85%) Specialized REITs (34.63%) 349 Alexandria Real Estate Equities, Inc.3 44,702 43,901 Casinos & Gaming (7.43%) 1,105 American Tower Corp. 156,844 160,557 3,871 MGM Resorts International 126,448 108,040 3 1 5,857 Americold Realty Trust 110,228 146,542 2,601 Penn National Gaming, Inc. 72,936 85,625 824 Crown Castle International Corp. 90,421 91,736 1,059 Red Rock Resorts, Inc., Cl A 30,313 28,222 1,261 CyrusOne, Inc. 84,053 79,947 229,697 221,887 1,013 Digital Realty Trust, Inc. 112,991 113,942 440 Equinix, Inc. 193,391 190,472 Hotels, Resorts & Cruise Lines (4.42%) 1,988 Gaming and Leisure Properties, Inc. 72,818 70,077 2,066 Extended Stay America, Inc. 39,432 41,795 2,293 QTS Realty Trust, Inc., Cl A 97,669 97,842 561 Marriott Vacations Worldwide Corp. 64,168 62,692 585 Rayonier, Inc. 18,558 19,779 636 Wyndham Destinations, Inc. 28,745 27,577 593 Weyerhaeuser Co. 20,760 19,136 132,345 132,064 1,002,435 1,033,931 Total Consumer Discretionary 362,042 353,951 Total Real Estate 2,288,389 2,374,912 Information Technology (4.27%) TOTAL COMMON STOCKS 2,803,338 2,895,941 Internet Services & Infrastructure (4.27%) 1,2,3 2,327 GDS Holdings Ltd., ADR 61,673 81,747 Principal Amount 9,700 NEXTDC Ltd. (Australia)1,2 51,409 45,576 Total Information Technology 113,082 127,323 Short Term Investments (4.28%) $127,891 Repurchase Agreement with Real Estate (79.54%) Fixed Income Clearing Corp., Diversified REITs (0.80%) dated 9/28/2018, 0.42% 17,938 Fibra Uno Administracion SA de CV (Mexico)2 26,979 23,724 due 10/1/2018; Proceeds at maturity - $127,896; Hotel & Resort REITs (8.79%) (Fully collateralized by 3,350 Host Hotels & Resorts, Inc. 65,734 70,685 $135,000 U.S. Treasury Note, 1,518 MGM Growth Properties LLC, Cl A 43,859 44,766 2.875% due 5/15/2028; 1,918 Park Hotels & Resorts, Inc. 55,232 62,949 Market value - $134,385) 127,891 127,891 1,191 Pebblebrook Hotel Trust 43,879 43,317 2,499 Sunstone Hotel Investors, Inc. 41,725 40,883 TOTAL INVESTMENTS (101.27%) $2,931,229 3,023,832 250,429 262,600 LIABILITIES LESS CASH AND OTHER ASSETS (-1.27%) (37,846) Industrial REITs (6.85%) 2,476 Duke Realty Corp. 66,099 70,244 NET ASSETS $2,985,986 1,568 Prologis, Inc. 100,947 106,295 874 Rexford Industrial Realty, Inc. 25,505 27,933 RETAIL SHARES (Equivalent to $9.76 per share 192,551 204,472 based on 37,534 shares outstanding) $ 366,168 Office REITs (9.96%) INSTITUTIONAL SHARES (Equivalent to $9.78 per share 405 Boston Properties, Inc. 51,473 49,851 based on 226,451 shares outstanding) $2,214,741 686 Douglas Emmett, Inc. 28,392 25,876 1,715 Hudson Pacific Properties, Inc. 55,297 56,115 R6 SHARES (Equivalent to $9.79 per share 736 Kilroy Realty Corp. 53,129 52,764 based on 41,396 shares outstanding) $ 405,077 505 SL Green Realty Corp. 50,093 49,253 869 Vornado Realty Trust 64,044 63,437 % Represents percentage of net assets. 302,428 297,296 1 Non-income producing securities. 2 Foreign corporation. Real Estate Operating Companies (2.42%) 3 The Adviser has reclassified/classified certain securities in or out of this 435 Brookfield Property Partners LP2 8,787 9,087 sub-industry. Such reclassifications/classifications are not supported by S&P or 2,935 Kennedy-Wilson Holdings, Inc. 51,841 63,102 MSCI. ADR American Depositary Receipt. 60,628 72,189 Residential REITs (14.65%) 2,669 American Homes 4 Rent, Cl A 54,362 58,424 490 AvalonBay Communities, Inc. 81,530 88,763 533 Equity LifeStyle Properties, Inc. 47,037 51,408 1,331 Equity Residential 81,883 88,192 74 Essex Property Trust, Inc. 17,875 18,257 3,582 Invitation Homes, Inc. 83,424 82,064 497 Sun Communities, Inc. 45,597 50,465 411,708 437,573

139 Baron Funds

Baron WealthBuilder Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Affiliated Mutual Funds (100.02%) Small Cap Funds (31.91%) 120,270 Baron Discovery Fund - Institutional Shares $ 2,615,821 $ 2,890,095 129,895 Baron Growth Fund - Institutional Shares 10,098,655 10,792,993 310,233 Baron Small Cap Fund - Institutional Shares 10,047,857 10,842,641 Total Small Cap Funds 22,762,333 24,525,729 Small to Mid Cap Funds (3.51%) 148,152 Baron Focused Growth Fund - Institutional Shares 2,655,099 2,694,890 Mid Cap Funds (15.05%) 137,076 Baron Asset Fund - Institutional Shares 10,788,423 11,563,766 Large Cap Funds (6.89%) 97,869 Baron Durable Advantage Fund - Institutional Shares 1,038,170 1,053,071 134,147 Baron Fifth Avenue Growth Fund - Institutional Shares 3,954,235 4,241,739 Total Large Cap Funds 4,992,405 5,294,810 All Cap Funds (19.88%) 182,293 Baron Opportunity Fund - Institutional Shares 3,921,970 4,161,758 189,435 Baron Partners Fund - Institutional Shares 10,808,958 11,114,126 Total All Cap Funds 14,730,928 15,275,884 International Funds (18.62%) 665,158 Baron Emerging Markets Fund - Institutional Shares 9,563,113 8,879,862 96,369 Baron Global Advantage Fund - Institutional Shares 2,222,770 2,253,101 135,626 Baron International Growth Fund - Institutional Shares 3,298,771 3,179,072 Total International Funds 15,084,654 14,312,035 Specialty Funds (4.16%) 116,474 Baron Real Estate Fund - Institutional Shares 3,364,894 3,194,895 TOTAL AFFILIATED INVESTMENTS (100.02%) $74,378,736 76,862,009

LIABILITIES LESS CASH AND OTHER ASSETS (-0.02%) (12,749) NET ASSETS $76,849,260

RETAIL SHARES (Equivalent to $11.18 per share based on 151,251 shares outstanding) $ 1,691,601

TA SHARES (Equivalent to $11.20 per share based on 882,124 shares outstanding) $ 9,877,687

INSTITUTIONAL SHARES (Equivalent to $11.19 per share based on 5,832,186 shares outstanding) $65,279,972

% Represents percentage of net assets.

140 Baron Funds

Baron Health Care Fund — PORTFOLIO HOLDINGS September 30, 2018 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (94.47%) Common Stocks (continued) Health Care (94.47%) Health Care (continued) Biotechnology (23.55%) Managed Health Care (10.19%) 2,913 Abcam plc (United Kingdom)2 $ 51,261 $ 54,370 365 HealthEquity, Inc.1 $ 25,707 $ 34,460 2,335 Acceleron Pharma, Inc.1 110,168 133,632 568 Humana, Inc. 174,619 192,279 7,426 Adaptimmune Therapeutics PLC, ADR1,2 88,793 100,697 1,686 UnitedHealth Group, Inc. 423,521 448,543 1 879 AnaptysBio, Inc. 78,395 87,698 623,847 675,282 3,505 argenx SE, ADR1,2 307,237 265,819 4,133 CareDx, Inc.1 58,015 119,237 Pharmaceuticals (10.88%) 3,084 Myovant Sciences Ltd.1,2 65,436 81,880 2,741 Aerie Pharmaceuticals, Inc.1 163,564 168,708 1,334 Neurocrine Biosciences, Inc.1 119,193 164,015 1,362 Assembly Biosciences, Inc.1 49,572 50,585 1,807 Sage Therapeutics, Inc.1 274,141 255,239 6,023 AstraZeneca PLC, ADR2 223,360 238,330 1,334 Vertex Pharmaceuticals, Inc.1 212,715 257,115 5,883 Dechra Pharmaceuticals plc 2,130 Zai Lab Ltd., ADR1,2 46,631 41,493 (United Kingdom)2 184,948 167,007 1,411,985 1,561,195 17 Elanco Animal Health, Inc.1 408 593 3,336 Intersect ENT, Inc.1 105,273 95,910 Health Care Equipment (26.30%) 727,125 721,133 1,119 AxoGen, Inc.1 42,271 41,235 1,030 Cantel Medical Corp. 109,150 94,822 TOTAL COMMON STOCKS 5,640,309 6,263,206 661 DexCom, Inc.1 65,208 94,549 952 Edwards Lifesciences Corp.1 128,344 165,743 Principal Amount 319 IDEXX Laboratories, Inc.1 64,699 79,641 905 Insulet Corp.1 81,042 95,885 Short Term Investments (14.85%) 1,793 IntriCon Corp.1 78,306 100,767 361 Intuitive Surgical, Inc.1 170,630 207,214 $984,204 Repurchase Agreement with 602 iRhythm Technologies, Inc.1 41,947 56,985 Fixed Income Clearing Corp., 1,157 LivaNova plc1,2 139,230 143,433 dated 9/28/2018, 0.42% 2,722 Medtronic plc2 235,013 267,763 due 10/1/2018; Proceeds at 6,998 RA Medical Systems, Inc.1 122,449 127,364 maturity - $984,239; 1,007 Teleflex, Inc. 260,270 267,953 (Fully collateralized by $1,010,000 U.S. Treasury Note, 1,538,559 1,743,354 2.875% due 5/15/2028; Health Care Facilities (2.55%) Market value - $1,005,398) 984,204 984,204 1,217 HCA Healthcare, Inc. 162,338 169,309 TOTAL INVESTMENTS (109.32%) $6,624,513 7,247,410 Health Care Supplies (3.33%) LIABILITIES LESS CASH AND 407 Align Technology, Inc.1 122,173 159,227 500 West Pharmaceutical Services, Inc. 46,203 61,735 OTHER ASSETS (-9.32%) (617,718) 168,376 220,962 NET ASSETS $6,629,692 Health Care Technology (1.67%) RETAIL SHARES (Equivalent to $11.59 per share 1,019 Veeva Systems, Inc., Cl A1 79,457 110,939 based on 256,516 shares outstanding) $2,972,459

Life Sciences Tools & Services (16.00%) INSTITUTIONAL SHARES (Equivalent to $11.60 per share 2,388 Agilent Technologies, Inc. 159,624 168,449 based on 290,383 shares outstanding) $3,368,833 1,023 Bio-Techne Corporation 161,458 208,805 277 Eurofins Scientific SE (France)2 152,436 157,268 R6 SHARES (Equivalent to $11.60 per share 871 ICON plc1,2 130,258 133,916 based on 24,864 shares outstanding) $ 288,400 610 Illumina, Inc.1 165,569 223,907 277 Mettler-Toledo International, Inc.1 159,277 168,687 % Represents percentage of net assets. 928,622 1,061,032 1 Non-income producing securities. 2 Foreign corporation. ADR American Depositary Receipt.

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