Baron Funds® December 31, 2020 Quarterly Report

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“Ron, when I first met you 35 years ago, you business in 1982. Our Firm now manages that only 1 of 19 analysts who had published a were investing in wireless telephones. $50 billion of assets. Further, since 1992, we research report with a sell recommendation on ‘Wow! That’s a pretty far out idea,’ have earned more than $47 billion realized and Tesla had met Elon Musk; only 3 had visited its I thought.” After beginning a recent phone call unrealized profits for our clients. Baron Capital Fremont factory; none had visited its huge to me with that comment, Chuck no longer has an insignificant book value. facility in Reno...which we visited 3 times!...and Mathewsontoldmehewascallingto no one I knew had read either Elon’s biography Although Chuck called to congratulate us on congratulate us on our Tesla investment. or “The Last Days of Night,” an historical fiction Tesla, he had previously been skeptical about Chuck Mathewson. Chairman Emeritus book about Nikola Tesla that was a really fun Tesla’s prospects. That was also the case for International Game Technology and Chairman read. The last was a book my wife, Judy, insisted most of my friends, clients and my contacts in Emeritus Baron Funds. December 2020. I read. I finished it in two nights. After extensive the media. To say nothing of the executives of diligence...that is ongoing nine years later...we In 1970, I began my career as a Wall Street businesses that manufacture cars with internal invested $372 million in Tesla shares, securities analyst. I was 26, and at the about 1.5% of our assets under beginning of the Summer of ‘69, I had management in 2016. We have since resigned from my “critical skills” job as a “earned” about $5.5 billion realized and Chemistry Patent Examiner in the United unrealized profits on our Tesla investment! States Patent Office. While patent We are hopeful we will triple our money examining by day, I had been attending again by 2030. Of course, there can be no George Washington University Law School assurance that will be the case. in the evenings. Short of money, despite a partial tuition scholarship, I also “dropped On a recent zoom call to David Schneider, out” of law school...just one semester our Firm’s head trader, I spoke about how before graduation. I changed my life path excited I was about the BioNTech/Pfizer to live rent free and food insecure in the mRNA vaccines. Their technology seems to basement of one of my best high school offer the potential to treat cancers and friend’s home in Maplewood, New other presently untreatable diseases, I Jersey. This was while I commuted daily to remarked. Only about 600 of 5,000 known Wall Street trying to find a job as an 22-year-old Amanda Gorman, the youngest poet ever to perform at a diseases are now treatable. I think analyst. My net worth was a negative Presidential inauguration and the first-ever National Youth Poet BioNTech’s management team is super $15,000. My parents were beside Laureate, inspires America with poem, “The Hill We Climb.” “For there is and its messenger RNA modality protected themselves. always light. If only we’re brave enough to see it. If only we’re brave by hundreds of patents is innovative and enough to be it.” I landed my first analyst job after an unpleasant three-month unemployment stint combustion engines (“ICEs”). Those businesses’ TABLE OF CONTENTS Letter from Ron 1 and, in 1982, founded Baron Capital with two investments of billions in factories that make Letter from Linda 7 other individuals, Linda Martinson and Susan motors would become “stranded assets” if Baron Funds Performance 16 Baron Asset Fund 23 Robbins. Both still work with me. My steadily electric cars replaced ICE cars. Dealers who make Baron Growth Fund 28 growing family business is now comprised of 172 money servicing ICE cars not selling them also Baron Small Cap Fund 34 employees, who are our most important assets. believed Tesla’s prospects were dubious. Electric Baron Opportunity Fund 40 Baron Partners Fund 45 Among them are 40 incredibly talented analysts Vehicle (“EV”) cars require little service since Baron Fifth Avenue Growth Fund 51 and portfolio managers...many of whom are they have a lot fewer parts than ICE cars. Also, Baron Focused Growth Fund 58 Baron International Growth Fund 65 extremely long tenured... who have worked among the Tesla skeptics were nearly all Baron Real Estate Fund 70 together for 10 and 15 and 20 plus years automotive investment analysts, whose expertise Baron Emerging Markets Fund 80 actually. on engine manufacturing would become obsolete Baron Global Advantage Fund 85 Baron Discovery Fund 91 if EVs became prevalent... and short sellers who Thirty-eight years ago, Baron Capital was Baron Durable Advantage Fund 96 would profit if Tesla were not successful. Baron Real Estate Income Fund 100 principally an institutional brokerage firm. Our Baron WealthBuilder Fund 109 clients paid us brokerage commissions in return When we began to research Tesla in 2012, we Baron Health Care Fund 116 Baron FinTech Fund 122 for our research investment ideas. Since we had met and spoke with Elon Musk numerous times; Portfolio Holdings 141 just $10 million in assets under management in visited Tesla’s factories in Fremont and Reno 1982, we relied upon our clients’ brokerage regularly; and met with and spoke to his commissions to “pay the rent.” When our assets operations, finance, and senior executives under management reached $100 million in frequently. We also visited and spoke with ICE 1992, we stopped selling our ideas to car manufacturing executives, and car dealers. In others. Baron Capital was a truly “capital-light” the course of our due diligence, I was surprised Letter from Ron

disruptive. “Messenger RNA teaches the body’s investors. Further, since the start of the new our currency’s purchasing power. To prove this, immune system to manufacture antibodies to Millennium, our nation has endured 9/11; the Google the prices of anything back in 1999 and attack viruses. BioNTech’s mRNA technology bursting of the internet bubble; the 2009 compare them to present prices. Most prices and years of research and clinical test data could financial panic; a once-in-100-years pandemic have since about doubled! Stock prices of be as significant to health care as small chemical that is presently claiming 4,000 American lives indexes are nearly three times what they were in pills and large molecule biotech monoclonal per day; and, an insurrectionist attack on 2000...and more than four times as much when antibodies that are ingested!” Congress on January 6, 2021 that threatened our you include dividends. democracy. David’s response surprised me. “Ron, I joined “Teach your children well...you must have a Baron Capital in 1987. All you could talk about Regardless, our economy and stock market have code you can live by.” Crosby, Stills, Nash & then were cellular telephones. You were grown significantly since March 1999. The Dow Young. 1969. investing in your friend George Lindemann’s Jones Industrial Average is now above 30,000. In the summer of 2001, we had become Metro Mobile CTS, U.S. Cellular, McCaw Cellular, This represents a 6.61% annualized rate of interested in investing in a well-managed and Lin Broadcasting. You had just returned from return investors could have earned since property and casualty (“P&C”) insurance a brief vacation to Italy with Judy and had seen December 1999 by hypothetically investing in a business. That was since P&C industry reserves fisherman using cell phones! You said, low fee, index fund that mirrors the S&P 500 had fallen 30% during the prior several years and ‘Everyone’s going to have them! Whether you’re Index. $10,000 hypothetically invested in such premium rates had not yet increased. The rich or poor!!’ You were convinced of that. Just an index fund then would now be worth more reserves had fallen due to unusually large like you were convinced about electric cars 10 than $38,000! This is despite returns in this insured catastrophic losses from hurricanes, fires, years ago! You’ve always invested like that.” I period below historic 10% annual rates of return floods, and earthquakes. Large insured losses asked David: “Did my executive assistant Alice on U.S. equity investments since World War II. from malfeasance and misfeasance awards tell you what I was writing about in this letter?” Further, those 6.61% annualized passive returns magnified the negative impact on those He told me she had not. were far better than the returns that most reserves. We believed that if one more “In the 20th century, the United States pension funds, endowments, foundations, and unexpected loss occurred, premium rates would endured two world wars, and other traumatic institutional investors earned during the period increase significantly...and profits in this cyclical and expensive military conflicts; the despite their sophisticated investment industry would increase substantially. We had Depression; a dozen or so recessions; strategies. never previously invested in P&C businesses. financial panics; oil shocks; the 1918 Spanish So, the question we think investors should ask is, When an investment banker cold called flu epidemic; and the resignation of a “Why?” Why have stocks done well amid fortuitously and offered a meeting with Dinos disgraced president. Yet the Dow rose from turmoil? Why haven’t many of the “best and Iordanu, an entrepreneur founder of P&C insurer 66 to 11,497.” Warren Buffett. Chairman, brightest” been able to match average Arch Capital Group Ltd., we immediately Berkshire Hathaway. March 2019. benchmark returns? accepted. Dinos was raising fresh capital to take advantage of circumstances. Further, I In his address to Berkshire Hathaway’s Stock prices reflect the nominal growth rate of remembered Warren Buffett mentioning Dinos’ shareholders at their 1994 annual meeting, our economy discounted by the “risk-free unforgettable name and attributing significant Buffett told the gathering, “I bought my first return” provided by current interest rates. profits one year to Dinos’ skills as an stock in April 1942 when I was 11. World War II Furthermore, the impact of digitization on our underwriter. It did not take us long to come to didn’t look so good at the time. We were not economy means capital requirements for our the same conclusion as Buffett. We soon doing well in the Pacific. Just think of all the nation’s businesses have been reduced, while became one of Arch’s largest shareholders. We things that have happened since. Atomic technology offers businesses greater competitive purchased approximately 10% of that company weapons and major wars. Presidents resigning, advantages and opportunities to grow faster at and earned our investors more than 10 times our massive inflation at certain times.” lower costs. Interest rates below the rate of initial purchase price over the last 18 years. Buffett then explained why he believes investing inflation are intended to make debt affordable Dinos’ story is a remarkable one, similar to that in good businesses for the long term is a better and for it to decline as a percentage of our of so many individuals in whom we have idea than trying to continuously rebalance your economy over the long term. Investment invested on behalf of Baron Funds’ shareholders. portfolio based upon the current news cycle. “To allocations and trading strategies do not change Dinos was an immigrant from Cyprus who came give up what you’re doing well because of guesses these economics. They just add costs. Finally, to America with his two brothers and sister as about what’s going to happen in some macro perhaps the most important reason asset children. They were penniless when they arrived. way, just doesn’t make any sense to us.” Of allocating based upon news doesn’t work is that Dinos has since earned hundreds of millions of course, to adopt Buffett’s long-term strategy decisions based upon predicting what is dollars for his family as Chairman of Arch while requires an unquenchable optimism, like his and unpredictable, even when you are right, still will his siblings became a professor at Harvard, a ours, and a belief that it is “never a good time to not ensure that the companies’ stock prices doctor, and a judge. Until Dinos became Arch bet against America”....which history has proven haven’t already reflected those particular Chairman Emeritus, he visited us quarterly after correct. developments. Arch earnings were reported to update us on In March 1999, the Dow Jones Industrial Average We believe the purchasing power of your money business developments. I would meet with Dinos reached 10,000 for the first time. That was will continue to decline 50% every 17 and his fellow executives who accompanied him 12 months before the “internet bubble burst” years...about 3% to 4% per year! Growth stocks on these visits. I always included a few younger beginning the Biblical seven lean years for are a hedge that protects you against the loss of Baron analysts or managers in these meetings.

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At the end of one of those visits, Dinos turned to SpaceX rocket launch. I then noticed there were State. When introduced to the media by the the young Baron investors in the room after three jars on his desk filled with dollar bills. then President-elect, Tony spoke movingly of updating us on current developments. He then “What’s that?” I asked. “I now get an allowance, how his family had come to America and his asked if they knew why Ron had invested in Arch Gran’pa. $6 per week.” “Wow, Leo. That’s a lot. I family’s culture of service. “For my family, as all those years ago? When the answer was “no,” guess that’s because everything in this city is so well as for many generations of Americans, as Dinos expected, he went on with his narrative. expensive. But, why do you have three jars?” America has literally been the last best hope on “Ron was interested in our business and my “The first is for spending,” he told me. “The earth.” Tony’s grandfather, Maurice Blinken, fled industry, of course, but he was really interested second is for investing.” (Wow, it’s working, I pogroms in Russia; his dad, Donald Blinken, in me. When we met, he began to ask me thought.) “The third is for charity.” “Wow, Leo. I served in the United States Air Force during questions that no one else had asked. ‘How did am so proud of you.” I actually couldn’t decide World War II and then as a United States you come to America?’ ‘Where do you live?’ at that moment if I was prouder of Leo or of his Ambassador; and, his father’s wife, Vera Blinken, ‘What was your house like?’ ‘Where did your parents for “teaching their children well” as fled communist Hungary as a young girl and has children go to school?’ ‘Did your wife work?’ ‘Do Crosby, Stills, Nash & Young sang...or as Dinos spent her life helping generations of refugees you own a plane?’ ‘A boat?’ ‘Where do you go might say. come to America. Tony’s mother, Judith Pisar, on vacations?’ They were the right questions. “builds bridges to America through arts and Fifteen years ago, Warren Buffett spoke about Ron was trying to get a sense of me as a person. culture.” a female friend of his who was a survivor of He was investing in me, and he wanted to Auschwitz 60 years previously. Many in her Tony’s late stepfather Samuel Pisar, was one of understand my values so he could judge what family didn’t make it. Buffett noted that his 900 children in his school in Bialystok, Poland, kind of risks I would likely take and how friend was having trouble making friends. It was but the only one to survive the Holocaust after successful I would likely be.” because, he remarked, that when she meets four years in concentration camps. At the end On another visit, I asked him, “Dinos, tell me people, she views them through the prism of of the war, Samuel made a break from a death again about where you lived as a child and what “whether they would have hidden me?” Just march into the woods in Bavaria. From his you think enabled you to become so successful.” like she was discerning whom she trusts, so hiding place, he heard a deep rumbling sound. It He then told us that he grew up in a small are we about the individuals in whom we invest. was a tank with a five-pointed white star village on Cyprus, and he lived in a small painted on its side. He ran to the tank, the home with a dirt floor. His dad was a hatch opened and a tall African American constable who did not own a pair of shoes GI looked down at him. Samuel got down when he was a child. In fact, his father had on his knees and said the only three words to borrow a pair of shoes when he was 16 he knew in English that his mother taught to apply for that constable job, a job of him before the war, “God bless America.” which he was proud and at which he It is hard for me to conceive of a stronger worked for his entire life. Dinos then told reason for optimism about America than us when he was young every evening his Tony Blinken’s life story. It makes it easy to dad, who valued education that he was understand why U2’s Bono says, “America is lacking, would ask Dinos and his siblings not just a country...it is an idea.” about their day. “What did you learn today? Were you kind to someone today? “Don’t look for the needle in the haystack. Did you say your prayers last night to Three presidents. Two parties. Three friends. One America. Just buy the haystack!” John Bogle. thank God for all we have?” Dinos returns Former presidents volunteer to get coronavirus vaccination to prove it’s safe. Founder. Vanguard. 1960s. to the town on Cyprus where he grew up on vacations and has established charities for Whether it is the individuals with whom we work John Bogle was a proponent of investing in that island’s residents. or the executives of businesses in which passive index mutual funds. That was since few we invest. The prism I use is “would I trust mutual funds have consistently outperformed Baron closed its office on March 13, 2020 and individuals like Dinos…to manage assets for my their benchmark indexes over the long term. our employees have been working at a distance family.” I realize this is not exactly like hiding a Baron Funds are among the few that have until it is safe to return. My wife, Judy, and I Jewish family from Nazis and risking your life and outperformed. have been living at what is normally our that of your family to do so...but the concept of weekend home since then and have returned to Our objective is to have our mutual funds empathy and kindness is similar to what those New York City about five times for one or two outperform their benchmarks by several hundred righteous individuals did 75 years ago. days at a time to see our doctors and dentists. basis points per year over the long term. We On my last visit, after my doctor appointments I apologize for using so many of Buffett’s quotes have accomplished that goal. We believe we and before I returned to our summer home on in this letter and promise to be more judicious in have been successful for two reasons. First, our Long Island, I visited my son David, his wife the future... but, he does say the coolest things. investment process, which consists of investing Jamie, and my two grandsons, Leo age 8 and Ari for the long term in competitively advantaged, “God Bless America.” Samuel Pisar. Auschwitz, age 6. Masked up, of course. When I arrived, Leo well-managed, growth companies is unusual; Poland. 1945. was excited to see me. “Come with me, Gran’pa. and second, we have been able to hire, train and I want to show you my room.” The first thing he Tony Blinken is newly inaugurated President Joe retain many exceptionally talented, long- pointed to was a huge poster on the wall of a Biden’s choice to be America’s next Secretary of tenured investors, analysts, and co-workers.

3 Letter from Ron

When we consider long-term objectives we have mutual funds since its conversion to a mutual management fee and operating expenses are 10-year time horizons that we focus on…not on fund in 2003.* Since conversion, it earned capped at 5 bps annually. Of course, the results in the next quarter...or even the next year. 19.50% annualized return vs. 13.18% for the underlying funds in which Baron WealthBuilder When we invest, we are most interested in Russell Midcap Growth Index (the “Benchmark”). invests charge their institutional management learning about the characteristics of a business From its inception as a partnership in 1992, it has fees and expenses. But, that’s it. that differentiate it from others. We focus on its earned 16.52% vs. 10.85% for its benchmark. competitive advantages and the entrepreneurial Baron WealthBuilder Fund is a diversified fund As of December 31, Baron Growth Fund’s personalities, talent and leadership of its that invests in a portfolio of Baron mutual funds performance made it number 11 out of 580 executives. That is what cannot be analyzed by all but one of which have outperformed their mutual funds since its inception in computers and algorithms. That is how we are benchmark indexes since their inception. Baron 1994.** Baron Focused Growth Fund’s different from other investors and the reason we WealthBuilder Fund is designed to be attractive performance made it number 76 out of 3,595 believe we have outperformed so dramatically to long-term shareholders saving for their mutual funds since its conversion from a over the long term. What services are provided retirements and/or their children’s college partnership in 2008.*** that would be extraordinarily difficult for others tuition, weddings, or first homes. We are hopeful that foundations, endowments, sovereign wealth to provide and what risk is there over the long Baron Global Advantage Fund is in the top 1% funds, and corporate pension plans with long- term that someone could leapfrog your business of its category since its inception. So is Baron term investment horizons similar to Baron’s will and provide a better service at a lower cost? Real Estate Fund.SoisBaron Partners Fund. also find Baron WealthBuilder Fund Baron Discovery Fund and Baron Emerging In 2020, many businesses in which we have been attractive. Especially those institutional entities Markets Fund are in the top 3% of their investing for 5 to 10 years had been penalizing that need to meet unfunded liabilities, which, respective categories since inception. (All based their earnings as they digitized their businesses. due to actuarial assumptions, require 7% annual on Retail Shares.) Their growth rates accelerated during COVID-19 returns that few have achieved. because they began to benefit from those Baron WealthBuilder Fund’s inception date was I am quite excited about the prospects for the substantial expenditures in digitization. Their December 29, 2017. Baron WealthBuilder Fund Baron WealthBuilder Fund and expect it to exceptional performance during such a difficult was conceived to enable investors to obtain become one of the largest Baron mutual funds in period enabled Baron Funds to earn unusually exposures to (and the performance of) many the next 10 years...perhaps even the largest. positive returns in 2020. In that tumultuous year, Baron mutual funds by investing in just one 15 out of 17 Baron mutual funds outperformed fund. Based on its 3-year performance, since We will continue to provide you with their benchmark indexes. inception performance, Baron WealthBuilder information about Baron Funds that we As of 12/31/2020, 16 of 17 Baron Funds, Fund (Institutional Shares) was the number would like to have if our roles were representing 98.3% of Baron Funds’ assets under 1 fund out of the 154 funds in the Morningstar reversed. Thank you again for your management (“AUM”), outperformed their Allocation–85%+ Equity Category.**** confidence in joining us as investors in Baron respective passive benchmark since their mutual funds. In 2020, Baron WealthBuilder Fund increased inceptions. In addition, 14 of those funds, 62.85%. This compares to an 18.40% increase Respectfully, representing 98.2% of AUM, rank in the top for the S&P 500 Index and 16.25% for the MSCI 22% of their respective Morningstar categories; ACWI Index, the Fund’s two primary 11 funds, representing 70.9% of AUM, rank in benchmarks. Since WealthBuilder Fund’s the top 7% of their respective Morningstar inception in December 2017, its annualized categories; and 6 funds, representing 44.9% of rate of return has been 27.67% per year. That AUM, rank in the top 3%. compares to 14.18% per year for the S&P 500 Ronald Baron As of December 31, Baron Partners Fund’s Index and 10.06% for the MSCI ACWI CEO and Portfolio Manager performancemadeitnumber2outof2,256 Index! Baron WealthBuilder Fund charges no January 20, 2021

Portfolio holdings as a percentage of net assets as of December 31, 2020 for securities mentioned are as follows: Tesla, Inc.–Baron Opportunity Fund (3.7%), Baron Partners Fund (44.6%*), Baron Focused Growth Fund (38.4%); Space Exploration Technologies Corp.–Baron Asset Fund (0.5%), Baron Opportunity Fund (0.4%), Baron Partners Fund (3.0%*), Baron Focused Growth Fund (2.7%); Arch Capital Group Ltd.–Baron Asset Fund (1.3%), Baron Growth Fund (3.8%), Baron Partners Fund (3.3%*), Baron Focused Growth Fund (1.6%), Baron International Growth Fund (1.3%). * % of Long Positions. Portfolio holdings may change over time. * This is a hypothetical ranking created by Baron Capital using Morningstar data and is as of 12/31/2020. There are 2,256 share classes in these nine Morningstar Categories for the period from 4/30/2003 to 12/31/2020. ** This is a hypothetical ranking created by Baron Capital using Morningstar data and is as of 12/31/2020. There are 580 share classes in these nine Morningstar Categories for the period from 12/31/1994 to 12/31/2020. *** This is a hypothetical ranking created by Baron Capital using Morningstar data and is as of 12/31/2020. There are 3,595 share classes in these nine Morningstar Categories for the period from 6/30/2008 to 12/31/2020. **** The Morningstar Allocation – 85%+ Equity Category consisted of 163 and 154 share classes for the 1-year and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund Institutional Shares in the 1st and 1st percentiles, respectively.

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Note, the peer groups used for these analyses include all U.S. equity share classes in Morningstar Direct domiciled in the U.S., including obsolete funds, index funds, and ETFs. The individual Morningstar Categories used for these analyses are the Morningstar Large Blend, Large Growth, Large Value, Mid-Cap Blend, Mid-Cap Growth, Mid-Cap Value, Small Blend, Small Growth, and Small Value Categories. 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. Baron Funds (Institutional Shares) and Benchmark Performance 12/31/2020

Annualized Annualized Benchmark Return Return Since Fund Since Fund Inception Average Annualized Returns Annual Expense Fund Primary BenchmarkInception Inception Date 1-Year 3-Year 5-Year 10-Year Ratio Net Assets SMALL CAP Baron Growth Fund Russell 2000 Growth Index 14.16% 9.04% 12/31/1994 33.06% 22.08% 19.76% 15.06% 1.04%(3) $8.66 billion Baron Small Cap Fund Russell 2000 Growth Index 11.49% 7.43% 9/30/1997 40.68% 20.78% 19.88% 14.47% 1.05%(3) $5.08 billion Baron Discovery Fund† Russell 2000 Growth Index 20.99% 12.86% 9/30/2013 66.13% 28.48% 28.52% N/A 1.08%(3) $1.32 billion SMALL/MID CAP Baron Focused Growth Fund(1) Russell 2500 Growth Index 14.68% 9.42% 5/31/1996 122.75% 44.56% 31.03% 18.83% 1.11%/1.10%(4) $662.73 million MID CAP Baron Asset Fund Russell Midcap Growth Index 12.47% 11.03%(2) 6/12/1987 33.33% 22.58% 19.93% 15.64% 1.05%(3) $5.91 billion LARGE CAP Baron Fifth Avenue Growth Fund Russell 1000 Growth Index 11.88% 12.00% 4/30/2004 50.81% 27.09% 23.24% 18.10% 0.78%/0.75%(3)(6) $712.95 million Baron Durable Advantage Fund S&P 500 Index 16.34% 14.18% 12/29/2017 20.32% 16.34% N/A N/A 2.40%/0.70%(3)(7) $17.18 million ALL CAP Baron Partners Fund(1) Russell Midcap Growth Index 16.52% 10.85% 1/31/1992 149.18% 52.68% 37.40% 24.04% 1.96%(4)(5) $6.88 billion Baron Opportunity Fund† Russell 3000 Growth Index 10.73% 6.57% 2/29/2000 89.28% 42.34% 31.13% 19.09% 1.08%(3) $1.41 billion INTERNATIONAL Baron Emerging Markets Fund MSCI EM Index 7.13% 3.63% 12/31/2010 29.22% 7.78% 12.88% 7.13% 1.09%(4) $6.75 billion Baron Global Advantage Fund† MSCI ACWI Index 21.09% 10.29% 4/30/2012 79.46% 35.99% 30.14% N/A 1.00%/0.90%(4)(8) $2.41 billion Baron International Growth Fund MSCI ACWI ex USA Index 12.71% 8.08% 12/31/2008 30.83% 11.70% 14.17% 8.82% 1.04%/0.95%(4)(9) $611.90 million SECTOR Baron Real Estate Fund MSCI USA IMI Extended Real Estate Index 16.70% 11.76% 12/31/2009 44.28% 17.56% 15.97% 15.72% 1.08%(4) $1.05 billion Baron Real Estate Income Fund MSCI US REIT Index 14.11% 2.25% 12/29/2017 22.30% 14.11% N/A N/A 5.63%/0.80%(4)(10) $47.07 million Baron Health Care Fund Russell 3000 Health Care Index 27.43% 17.23% 4/30/2018 47.72% N/A N/A N/A 2.39%/0.85%(4)(11) $70.34 million Baron FinTech Fund S&P 500 Index 47.20% 18.40% 12/31/2019 47.20% N/A N/A N/A 1.62%/0.95%(12) $34.09 million FUND OF FUNDS Baron WealthBuilder Fund S&P 500 Index 27.67% 14.18% 12/29/2017 62.85% 27.67% N/A N/A 1.33%/1.23%(4)(13) $272.62 million

(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 December 31, 2020. (3) As of 9/30/2020. (4) As of 12/31/2019. (5) Comprised of operating expenses of 1.06% and interest expenses of 0.90%. (6) Annual expense ratio was 0.78%, but the net annual expense ratio was 0.75% (net of Adviser’s fee waivers). (7) Annual expense ratio was 2.40%, but the net annual expense ratio was 0.70% (net of Adviser’s fee waivers). (8) Annual expense ratio was 1.00%, but the net annual expense ratio was 0.90% (net of Adviser’s fee waivers). (9) Annual expense ratio was 1.04%, but the net annual expense ratio was 0.95% (net of Adviser’s fee waivers). (10) Annual expense ratio was 5.63%, but the net annual expense ratio was 0.80% (net of Adviser’s fee waivers). (11) Annual expense ratio was 2.39%, but the net annual expense ratio was 0.85% (net of Adviser’s fee waivers). (12) Expense ratios are estimated for the current fiscal year. (13) Annual expense ratio was 1.31%, but the net annual expense ratio was 1.21% (includes acquired fund fees and expenses, net of the Adviser’s fee waivers). * 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.

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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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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. Performance for the Institutional Shares prior to 5/29/2009 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 5/29/2009 did not reflect this fee, the returns would be higher. Global Advantage Fund’s 3- and 5-year, Discovery Fund’s 1-, 3- and 5-year, and Opportunity Fund’s 3-, 5- and 10-year historical performance were impacted by gains from IPOs and/or secondary offerings, and there is no guarantee that these results can be repeated or that the Funds’ level of participation in IPOs and secondary offerings will be the same in the future. Risks: All investments are subject to risk and may lose value. Ranking information provided is calculated for the Retail Share Class and is as of 12/31/2020. 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 average performance and rankings using its Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. The Morningstar Mid-Cap Growth Category consisted of 604, 504, and 383 share classes for the 1-, 5-, and 10-year periods. Morningstar ranked Baron Asset Fund in the 53rd, 27th,20th and 22nd percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 6/12/1987, and the category consisted of 20 share classes. Morningstar ranked Baron Growth Fund in the 54th,28th,34th, and 7th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/1994, and the category consisted of 56 share classes. Morningstar ranked Baron Partners Fund in the 1st,1st,1st, and 1st percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 4/30/2003, and the category consisted of 227 share classes. Morningstar ranked Baron Focused Growth Fund in the 3rd,2nd,5th, and 5th percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 6/30/2008, and the category consisted of 326 share classes. The Morningstar Small Growth Category consisted of 616, 505, and 381 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Small Cap Fund in the 38th,33rd,45th, and 16th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 9/30/1997, and the category consisted of 94 share classes. Morningstar ranked Baron Discovery Fund in the 9th,5th, and 3rd percentiles for the 1-, 5-year, and since inception periods, respectively. The Fund launched 9/30/2013, and the category consisted of 439 share classes. The Morningstar Real Estate Category consisted of 248, 199, and 144 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Real Estate Fund in the 1st,3rd,1st, and 1st percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/2009, and the category consisted of 131 share classes. Morningstar ranked Baron Real Estate Income Fund in the 4th and 4th percentiles for the 1-year and since inception periods, respectively. The Fund launched 12/29/2017, and the category consisted of 225 share classes. The Morningstar Large Growth Category consisted of 1,289, 1,070, 789, and 291 share classes for the 1-, 5-, 10-year, and since inception (2/29/2000) periods. Morningstar ranked Baron Opportunity Fund in the 2nd,2nd,7th, and 4th percentiles, respectively. The Morningstar Foreign Large Growth Category consisted of 447, 313, 226, and 207 share classes for the 1-, 5-, 10-year, and since inception (12/31/2008) periods. Morningstar ranked Baron International Growth Fund in the 21st,18th,26th, and 12th percentiles, respectively. The Morningstar Diversified Emerging Markets Category consisted of 796, 597, and 278 share classes for the 1-, 5-year, and since inception (12/31/2010) periods. Morningstar ranked Baron Emerging Markets Fund in the 17th,35th, and 3rd percentiles, respectively. The Morningstar World Large Stock Category consisted of 867, 631, and 438 share classes for the 1-, 5-year, and since inception (4/30/2012) periods. Morningstar ranked Baron Global Advantage Fund in the 3rd,1st, and 1st percentiles, respectively. The Morningstar Health Category consisted of 157 and 139 share classes for the 1-year and since inception (4/30/2018) periods. Morningstar ranked Baron Health Care Fund in the 13th and 7th percentiles, respectively. The Morningstar Allocation—85%+ Equity Category consisted of 163 and 154 share classes for the 1-year and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund in the 2nd and 2nd percentiles, respectively. © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may notbe 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. Past performance is no guarantee of future results. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

6 December 31, 2020 Letter from Linda

2020: A Year We Will Remember

LINDA MARTINSON CHAIRMAN, PRESIDENT AND COO

2020 was a year that will be hard to forget. The headlines were dominated We did not know where the market would end up either, and we did not try by the pandemic and its social and economic aftermath, but there were also to guess. While we closely monitored short-term developments, our wildfires, violent social and racial unrest, the U.S. elections chaos and results, investment decisions continued to be made with a focus on the long term. growing political divide, and exacerbated tensions between leading global We believe our long-term view, combined with our time-tested process and economies, among other important things. Few positives made it to the expertise, resulted in the outstanding absolute and relative performance of front pages. our Funds in 2020. Those investors that remained invested in the Baron Funds were meaningfully rewarded for the active risk taken over the past 3-, The extent and unpredictability of these events made the year extra 5-, and 10-year periods, as evidenced by the superior risk-adjusted returns of challenging. But, even if we somehow knew at the beginning of the year that the majority of our Funds (see the Appendix for Sharpe ratio and a deadly pandemic would strike our world, I do not think anyone could have information ratio data). predicted the way things unfolded after that. Many investors could likely have forecasted the economic and market volatility, although few could All of Baron’s 17 mutual Funds outperformed the S&P 500 Index for the have guessed the severity. With the complete or near-complete shutdown year, with 13 Funds outperforming by double digits and two Funds of many businesses, we saw record high layoffs, the worst quarterly GDP outperforming by triple digits. All but two of our Funds outperformed their drop in modern U.S. history, and record-high market volatility, among other primary benchmarks in 2020, and all Funds outperformed over the past dismaying developments. I think even fewer would have thought it was three, five, and 10 years (or since inception for the Funds with track record possible for the stock market to end the year in positive territory, and hardly less than 10 years). The table on the next page shows the performance anyone would have guessed the S&P 500 Index could end up as high as figures by Fund and by period. 18.40%. The magnitude of our recent performance stands out in the scorecard on the next page. Annual increases of 30%-50% or 100% or 150% are not something we see or expect to see every year. And when such sizeable returns happen, we certainly do not expect to see them simultaneously across all our Funds. So why did Baron generate such an outstanding record in 2020?

7 Letter from Linda

Baron’s Scorecard Absolute and Relative Performance as of 12/31/2020 (Institutional Shares)

Fund Total Return Fund Excess Return (annualized) (annualized, vs. Primary Benchmark) 10 Years or 10 Years or Asset Class Fund Name 1 Year 3 Years 5 Years Since Inception* 1 Year 3 Years 5 Years Since Inception* Baron Growth Fund 33.06% 22.08% 19.76% 15.06% -1.57% 5.88% 3.40% 1.58% Small Cap Baron Small Cap Fund 40.68% 20.78% 19.88% 14.47% 6.05% 4.58% 3.52% 0.99% Baron Discovery Fund 66.13% 28.48% 28.52% 20.99% 31.50% 12.28% 12.16% 8.13% Small-Mid Cap Baron Focused Growth Fund 122.75% 44.56% 31.03% 18.83% 82.28% 24.65% 12.35% 3.83% Mid Cap Baron Asset Fund 33.33% 22.58% 19.93% 15.64% -2.26% 2.08% 1.27% 0.60% Baron Fifth Avenue Growth Fund 50.81% 27.09% 23.24% 18.10% 12.32% 4.10% 2.24% 0.89% Large Cap Baron Durable Advantage Fund 20.32% 16.34% – 16.34% 1.92% 2.16% – 2.16% Baron Partners Fund 149.18% 52.68% 37.40% 24.04% 113.59% 32.18% 18.74% 9.00% All Cap Baron Opportunity Fund 89.28% 42.34% 31.13% 19.09% 51.02% 19.84% 10.46% 2.16% Baron Emerging Markets Fund 29.22% 7.78% 12.88% 7.13% 10.91% 1.61% 0.07% 3.50% International Baron International Growth Fund 30.83% 11.70% 14.17% 8.82% 20.18% 6.82% 5.24% 3.90% Baron Global Advantage Fund 79.46% 35.99% 30.14% 21.09% 63.21% 25.93% 17.88% 10.80% Baron Real Estate Fund 44.28% 17.56% 15.97% 15.72% 40.07% 10.96% 6.84% 5.19% Baron Real Estate Income Fund 22.30% 14.11% – 14.11% 31.00% 11.86% – 11.86% Sector Baron Health Care Fund 47.72% – – 27.43% 28.38% – – 10.20% Baron FinTech Fund 47.20% – – 47.20% 28.80% – – 28.80% Fund of Funds Baron WealthBuilder Fund 62.85% 27.67% – 27.67% 44.45% 13.49% – 13.49%

Source: FactSet PA, Baron Capital. * Since inception for the Baron Funds younger than 10 years. Notes:ExcessReturnsarecalculatedversuseachFund’sprimarybenchmark.Fund Primary Benchmarks: for Baron Growth Fund, Baron Small Cap Fund, and Baron Discovery Fund – Russell 2000 Growth Index; Baron Focused Growth Fund – Russell 2500 Growth Index; Baron Partners Fund and Baron Asset Fund – Russell Midcap GrowthIndex;Baron Opportunity Fund – Russell 3000 Growth Index; Baron Fifth Avenue Growth Fund – Russell 1000 Growth Index; Baron Durable Advantage Fund, Baron WealthBuilder Fund, and Baron FinTech Fund – S&P 500 Index; Baron Emerging Markets Fund – MSCI EM Index; Baron International Growth Fund – MSCI ACWI ex USA Index; Baron Global Advantage Fund – MSCI ACWI Index; Baron Real Estate Fund – MSCI USA IMI Extended Real Estate Index; Baron Real Estate Income Fund – MSCI US REIT Index; Baron Health Care Fund – Russell 3000 Health Care Index. Fund Inception Dates: Baron Growth Fund – 12/31/1994; Baron Small Cap Fund – 9/30/1997; Baron Discovery Fund – 9/30/2013; Baron Asset Fund – 6/12/1987; Baron Focused Growth Fund – 5/31/1996; Baron Partners Fund – 1/31/1992; Baron Opportunity Fund – 2/29/2000; Baron Fifth Avenue Growth Fund – 4/30/2004; Baron Durable Advantage Fund – 12/29/2017; Baron Emerging Markets Fund – 12/31/2010; Baron International Growth Fund – 12/31/2008; Baron Global Advantage Fund – 4/30/2012; Baron Real Estate Fund – 12/31/2009; Baron Real Estate Income Fund – 12/29/2017; Baron Health Care Fund – 4/30/2018; Baron FinTech Fund – 12/31/2019, Baron WealthBuilder Fund – 12/29/2017. Annual expense Ratios for Inst. shares as of 9/30/2020: Baron Asset Fund, 1.05%, Baron Growth Fund, 1.04%, Baron Small Cap Fund, 1.05%, Baron Opportunity Fund, 1.08%, Baron Fifth Avenue Growth Fund, 0.78%, but the net annual expense ratio was 0.75% (net of the Adviser’s fee waivers), Baron Discovery Fund, 1.08%, Baron Durable Advantage Fund, 2.40% but the net annual expense ratio was 0.70% (net of the Adviser’s fee waivers). Annual expense Ratios for Inst. shares as of 12/31/2019: Baron Partners Fund, 1.96% (comprised of operating expense of 1.06% and interest expense of 0.90%), Baron Focused Growth Fund, 1.11%, but the net annual expense ratio was 1.10% (net of the Adviser’s fee waivers), Baron International Growth Fund, 1.04%, but the net annual expense ratio was 0.95% (net of the Adviser’s fee waivers), Baron Real Estate Fund, 1.08%, Baron Emerging Markets Fund, 1.09%, Baron Global Advantage Fund, 1.00%, but the net annual expense ratio was 0.90% (net of the Adviser’s fee waivers), Baron Real Estate Income Fund, 5.63%, but the net annual expense ratio was 0.80% (net of the Adviser’s fee waivers), Baron Health Care Fund, 2.39%, but the net annual expense ratio was 0.85% (net of the Adviser’s fee waivers), Baron FinTech Fund, 1.62%, but the net annual expense ratio was 0.95% (estimated for the current fiscal year, net of the Adviser’s fee waivers), and Baron WealthBuilder Fund, 1.33%, but the net annual expense ratio was 1.23% (net of the Adviser’s 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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.

8 December 31, 2020 Letter from Linda

The Drivers of Our Returns In 2020, the pandemic amplified the ongoing secular changes in multiple industries (e.g., digital transformation, e-commerce, cybersecurity, etc.), The remarkable returns of most of our Funds have been strongly driven by which boosted the stock prices of many businesses that are or may be long-term investments in exceptional businesses and secular growth trends beneficiaries of these trends. Our Funds were well positioned and benefitted, that we have identified and thoroughly researched over the years. We invest not only because of our strategic exposure to the accelerating areas, but in companies we believe have significant growth potential that the market also because of strong stock selection. As the table below shows, in 2020, has not yet appreciated, and we often have to wait for years before our stock selection contributed positively to all of our Funds except one and was investments pay off. Sometimes the market gradually recognizes a a significant driver of outperformance. Over longer periods, stock selection company’s merits and value creation, but most of the time the payoffs are has been positive and significant for all Baron Funds with no exceptions. highly nonlinear. We may see slow growth and even below-market performance for several years before a stock takes off.

Stock Selection Drove Baron’s Excess Returns Contributions to Excess Return from Stock Selection as of 12/31/2020 (Institutional Shares)

Excess Return from Fund Excess Return Stock Selection Effect (annualized, vs. Primary Benchmark) (annualized, vs. Primary Benchmark) 10 Years or 10 Years or Asset Class Fund Name 1 Year 3 Years 5 Years Since Inception* 1 Year 3 Years 5 Year Since Inception* Baron Growth Fund –1.57% 5.88% 3.40% 1.58% 5.74% 7.49% 3.78% 2.11% Small Cap Baron Small Cap Fund 6.05% 4.58% 3.52% 0.99% 7.98% 4.13% 3.32% 1.87% Baron Discovery Fund 31.50% 12.28% 12.16% 8.13% 32.44% 10.40% 11.17% 7.67% Small-Mid Cap Baron Focused Growth Fund 82.28% 24.65% 12.35% 3.83% 89.91% 26.03% 11.09% 3.56% Mid Cap Baron Asset Fund –2.26% 2.08% 1.27% 0.60% –1.01% 2.62% 1.29% 0.88% Baron Fifth Avenue Growth Fund 12.32% 4.10% 2.24% 0.89% 13.25% 3.98% 2.14% 1.09% Large Cap Baron Durable Advantage Fund 1.92% 2.16% – 2.16% 5.85% 2.43% – 2.43% Baron Partners Fund 113.59% 32.18% 18.74% 9.00% 108.29% 25.74% 11.72% 3.61% All Cap Baron Opportunity Fund 51.02% 19.84% 10.46% 2.16% 44.75% 15.47% 6.36% 0.78% Baron Emerging Markets Fund 10.91% 1.61% 0.07% 3.50% 6.49% 1.03% 1.04% 2.14% International Baron International Growth Fund 20.18% 6.82% 5.24% 3.90% 15.01% 4.41% 4.44% 3.29% Baron Global Advantage Fund 63.21% 25.93% 17.88% 10.80% 50.20% 20.03% 13.34% 7.34% Baron Real Estate Fund 40.07% 10.96% 6.84% 5.19% 25.70% 7.11% 3.05% 2.50% Baron Real Estate Income Fund 31.00% 11.86% – 11.86% 17.14% 9.17% – 9.14% Sector Baron Health Care Fund 28.38% – – 10.20% 31.01% – – 11.17% Baron FinTech Fund 28.80% – – 28.80% 18.52% – – 18.52%

Source: FactSet PA, Baron Capital. * Since inception for the Baron Funds younger than 10 years. Notes: Excess Returns are calculated versus each Fund’s primary benchmark. Stock Selection Effect was calculated using the Brinson performance attribution method and is a combination of selection and interaction effects. Brinson attribution is a form of relative performance attribution and was introduced to the investment industry in 1985, known as Brinson, Hood, Beebower (BHB). The BHB framework evaluates excess performance based on the manager’s decision-making process. A portfolio manager that has discretion as to which sectors to invest in and which assets within those sectors to buy can be evaluated as to how well he or she executes those decisions. Which sectors to invest in are known as allocation decisions. Which assets to buy are known as selection decisions. For additional information, please see last page. The performance data quoted represents past performance. Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

While many of our stocks rose significantly more than the broad market, the Fund, despite other excellent investments in these Funds, rising 50% – ranges of returns and contributions to Fund performance were wide. Our 100% for the year. For the rest of our Funds, the overall returns were driven most lucrative investment for the year, Tesla, Inc., increased significantly by a variety of strongly performing holdings, as the table on the next page and drove the returns of Baron Partners Fund and Baron Focused Growth shows.

9 Letter from Linda

Baron’s Returns Were Driven by Many Well-Performing Stocks Contributions to Return as of 12/31/2020 (Institutional Shares) Fund Contribution to Return From Top Contributors Fund Return Asset Class Fund Name CY 2020 Top 1 Top 3 Top 5 Top 10 Baron Growth Fund 33.06% 7.05% 17.39% 23.70% 33.37% Small Cap Baron Small Cap Fund 40.68% 4.95% 12.13% 16.76% 26.11% Baron Discovery Fund 66.13% 4.35% 12.14% 18.76% 31.97% Small-Mid Cap Baron Focused Growth Fund 122.75% 106.10% 126.83% 134.92% 141.78% Mid Cap Baron Asset Fund 33.33% 5.28% 10.06% 13.98% 21.74% Baron Fifth Avenue Growth Fund 50.81% 9.44% 19.76% 26.25% 38.87% Large Cap Baron Durable Advantage Fund 20.32% 2.38% 6.82% 9.90% 15.75% Baron Partners Fund 149.18% 139.80% 158.92% 170.15% 182.13% All Cap Baron Opportunity Fund 89.28% 16.81% 27.77% 33.33% 45.48% Baron Emerging Markets Fund 29.22% 3.44% 9.29% 13.41% 21.95% International Baron International Growth Fund 30.83% 2.92% 7.52% 10.89% 18.17% Baron Global Advantage Fund 79.46% 6.28% 16.85% 26.02% 42.39% Baron Real Estate Fund 44.28% 11.00% 20.10% 27.07% 37.76% Baron Real Estate Income Fund 22.30% 9.95% 16.89% 20.95% 27.62% Sector Baron Health Care Fund 47.72% 6.46% 14.63% 20.25% 28.87% Baron FinTech Fund 47.20% 6.69% 15.01% 20.70% 31.21% Source: FactSet PA, Baron Capital. The performance data quoted represents past performance. Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

Furthermore, the top contributions to our performance came from a diverse only one Fund and another 18 stocks were a top 10 contributor to just two group of stocks, with no or little overlap among Funds. In other words, a Funds. Only one stock was a top 10 contributor to six of our Funds at the stock that was a top contributor for one Fund, was most likely not a top same time. A top 10 contributor in one Fund may have not been a top contributor for any or most of our other Funds. As the table below shows, contributor in another Fund, although it may have been held by both Funds among our 13 domestic Funds, including sector, there were 79 unique top over the same period. Our analysis shows similar results for our 10 contributors to returns in 2020. 49 of them were a top 10 contributor to international/global Funds and for the three-year period ended 12/31/2020.

Baron’s Returns Were Driven by a Broad Variety of Stocks Breakdown of the Top 10 Contributors (as of 12/31/2020) 12/31/2019 - 12/31/2020 12/31/2017 - 12/31/2020 Top 10 Contributors to Baron’s Top 10 Contributors to Baron’s Top 10 Contributors to Baron’s Top 10 Contributors to Baron’s Domestic Funds, incl. Sector International/Global Funds Domestic Funds, incl. Sector International/Global Funds (13 Funds Total) (3 Funds Total) (11 Funds Total) (3 Funds Total) Total Number of Unique Top 10 Contributors 79 27 68 25 Contributors to 6 Funds 1 – 1 – Contributors to 5 Funds – – – – Contributors to 4 Funds 6 – 3 – Contributors to 3 Funds 5 – 4 – Contributors to 2 Funds 18 3 20 5 Contributors to 1 Fund 49 24 40 20 Information Technology 21 12 23 11 Health Care 19 5 11 4 Consumer Discretionary 13 6 10 7 Industrials 8 1 9 1 Communication Services 7 3 2 2 Financials 6 6 Real Estate 5 7 Disruptive Growth 32 15 22 14 Steady Growth 47 12 46 11 Source: FactSet PA, Baron Capital. Portfolio holdings and sectors are subject to change. Current and future portfolio holdings are subject to risk.

10 December 31, 2020 Letter from Linda

Dissecting the data further shows that there was a good balance of For example, out of the 79 unique top 10 contributors in 2020 in the Baron company growth profiles among the top contributors to our performance. In domestic Funds, including sector, 21 came from the Information Technology the domestic and sector Funds, 32 out of the 79 top contributors for 2020 (“IT”) sector, 19 came from Health Care, and 13 came from Consumer were disruptive growth companies and the remaining 47 were steady Discretionary. The diversity of top contributors was similarly significant over growers. For the international and global Funds, a little more than half of the the past three years and in our international/global portfolios. top contributors were disruptive growth companies. The balance is similar It is no coincidence that our top contributors came specifically from the among the top contributors to our three-year returns. We characterize as sectors shown in the table on the prior page. Some of the strongest secular disruptive growth those companies whose businesses are growing or we growth themes that we have identified are led by companies in these expect will grow rapidly as a result of disruptive change that they are sectors. For example, the disruptive changes caused by cloud computing, causing or from which they are benefitting. Steady Growers are typically artificial intelligence, and big data are mostly driven by IT companies; trends businesses with established market positions, strong competitive in genomics, minimally invasive surgery, and animal health are mostly advantages, and more stable fundamentals that are growing or we expect driven by Health Care companies; and the secular shift to e-commerce is will grow at a moderate to fast pace. mostly driven by businesses in the Consumer Discretionary sector. Our most lucrative investments in 2020 came from a broad variety of sectors, which is also presented in the table on the prior page.

What’s Next Despite the already impressive performance of the top contributors to our During the year, we added 152 new names that we still hold in our mutual returns, we believe that for many of them there is significant upside, and we funds, which is a little more than half of the total number of securities continue to be invested. We believe that some of these companies are the purchased over the past three years and are still held, as shown in the left prime beneficiaries of secular growth trends that are in their early days, with chart below. Our net cost for these securities was $2.9 billion. multifold returns yet to be made. Of course, we do not expect the stocks of As the chart further shows, 278 of the 484 securities held by our mutual these businesses to increase smoothly over time, but we believe that the Funds at the end of 2020 were purchased over the past three years. Our long-term outcomes will eclipse any short-term fluctuations. aggregate net investment in these securities was $6.5 billion. As of We also expect that a significant part of our future returns will be driven by 12/31/2020, our investments in these companies had grown to nearly stocks that we purchased over the past few years. The market volatility and $11 billion, which is around 26% of our net mutual Fund assets. The chart the changing environment in 2020 presented us with a unique window of on the right below shows a breakdown of the market values of our holdings opportunity for purchasing stocks. by vintage.

Recent Baron Investments Represent A Large Number of Our Stocks and a Quarter of Our Assets

Number of New Securities Purchased by Year * Value of Net Purchases by Vintage as of 12/31/2020 as of 12/31/2020

Purchased Ending Value of Securities in 2020: Purchased 152 stocks in 2020: (net cost: $2.9 bn) $4.3 Bn 2019: $3.2 Bn Pre-2018: 206 Total Total Baron Mutual Fund Baron 2018: stocks $3.4 Bn Securities Held Mutual Fund Assets as of 12/31/20: 12/31/20:

484 $41.6 Bn 2019: Pre-2018: 68 stocks $30.5 (net cost: $2.0 bn) 2018: 58 stocks (net cost: $1.6 bn)

Source: FactSet PA, Baron Capital. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. *New Securities Purchased includes only those stocks that were not held by any Baron Mutual Fund before the beginning of the period and were still held by at least one Baron Mutual Fund at the end of the period. Net cost is calculated as the total amount of purchases of New Securities Purchased less any subsequent sales of these securities.

11 Letter from Linda

We expect these recent investments to multiply in value over the next few our past returns, our recent investments span across multiple sectors, with an years, although there are no guarantees. Similar to the top 10 contributors to emphasis on the IT, Health Care, and Consumer Discretionary sectors.

Baron’s New Purchases Have Come from Diverse Areas Number of New Securities Purchased* by Sector and By Year as of 12/31/2020 2020 16 11 2019 2018

20 19 9

9 5 5 5 6 28 26 23 6 3 5 1 17 14 10 12 4 7 5 118 11

IT Care Energy Utilities Industrials Financials Materials Health Real Estate Unclassiﬁed Consumer Discr. Comm. Services Consumer Staples

Our new purchases were well balanced between stable and disruptive growth companies, and IPOs. While we have participated in such offerings, 65% of businesses. Some of our more recent disruptive investments include cloud- our new purchases over the past three years that are still held have been in based platforms Snowflake Inc. and ZoomInfo Technologies, Inc., both of which listed companies with longer trading histories. we expect to benefit from the strong secular trends in the adoption of cloud- Our investment style has not changed, and neither has our outlook. Despite the basedcomputingandstorage,aswellasthegrowingdemandfordatainsights. turbulent 2020, our long-term view on the U.S. and global economies remains In our international portfolios, a couple of new investments, one stable optimistic. We do not know, nor are we trying to guess, if 2021 will be more growth and one disruptive, were Kingsoft Corp. Ltd., an internet service and like 2020 or 2019. Our attention and efforts remain firmly on the long run. software company, and Ozon Holdings PLC, a leading Russian internet Last year was an unsettling reminder to investors that the future is retailer. Both businesses are benefitting from the global shift toward unpredictable, and so is the stock market. As we have often written, no one digitization. In 2020, COVID accelerated the penetration of digitization and can time the market consistently and profit from that in the long run. Those how people do and transact business, which gave an additional boost to investors sitting on cash at the start of 2020 perhaps thought they these companies. outsmarted the market when it fell 35% by late March. If they failed to invest Genomics is another long-term theme where we have been investing. As the then, they have likely missed out on some handsome returns. Those who sold cost of DNA sequencing has declined, new applications for DNA sequencing their stocks in March, and stayed out of the market, perhaps regret their have emerged in cancer diagnostics and treatment, as well as in decision today. And so, our advice remains: do not try to time the market, reproductive health. Examples of newly established positions in this space invest for the long term, and preferably, do it with a skilled active investor. include disruptive growth companies Adaptive Biotechnologies Corporation, Sincerely, which offers ClonoSeq for detection and monitoring of minimal residual disease in blood cancers and is developing early disease detection tests and other products based on its immune system sequencing platform; 10X Genomics, Inc., whose technology enables life sciences researchers to conduct high throughput single-cell and spatial genomic analysis using Illumina sequencers; and Pacific Biosciences of California, Inc., which offers a differentiated long-read sequencing platform for genetic analysis. Linda S. Martinson Some of our recent purchases are in newer companies and in early-stage Chairman, President and COO trends, and we have invested via private equity, special purpose acquisition January 20, 2021

12 December 31, 2020 Letter from Linda

Disclosures: 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. Performance for the Institutional Shares prior to 5/29/2009 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 5/29/2009 did not reflect this fee, the returns would be higher. Global Advantage Fund’s 3- and 5-year, Discovery Fund’s 1-, 3- and 5-year, and Opportunity Fund’s 3-, 5- and 10-year historical performance were impacted by gains from IPOs and/or secondary offerings, and there is no guarantee that these results can be repeated or that the Funds’ level of participation in IPOs and secondary offerings will be the same in the future. 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. Portfolio holdings as a percentage of net assets as of December 31, 2020 for securities mentioned are as follows: Snowflake Inc. – Baron Opportunity Fund (1.2%), Baron Fifth Avenue Growth Fund (1.9%), Baron Global Advantage Fund (1.8%); ZoomInfo Technologies Inc. – Baron Asset Fund (1.4%), Baron Opportunity Fund (2.5%), Baron Fifth Avenue Growth Fund (2.0%), Baron Global Advantage Fund (2.0%), Baron FinTech Fund (1.0%); Kingsoft Corporation Ltd. –Baron International Growth Fund (0.7%), Baron Emerging Markets Fund (1.3%); Ozon Holdings PLC – Baron Emerging Markets Fund (0.4%); Adaptive Biotechnologies Corporation – BaronGrowthFund(0.3%),BaronHealthCareFund(0.8%);10X Genomics, Inc. – Baron Asset Fund (0.2%), Baron Opportunity Fund (0.5%), Baron Fifth Avenue Growth Fund (1.8%), Baron Global Advantage Fund (1.8%), Baron Health Care Fund (1.1%); Pacific Biosciences of California, Inc. – Baron Opportunity Fund (1.5%), Baron Discovery Fund (1.9%), Baron Health Care Fund (3.2%). Baron Partners Fund’s Top 10 Holdings as of 12/31/2020 were as follows: % of Total GICS Sector Holding Investments Consumer Discretionary Tesla, Inc. 44.6 Industrials CoStar Group, Inc. 9.4 Health Care IDEXX Laboratories, Inc. 5.5 Communication Services Zillow Group, Inc. 5.2 Consumer Discretionary Vail Resorts, Inc. 3.6 Financials Arch Capital Group Ltd. 3.3 Financials FactSet Research Systems, Inc. 3.2 Industrials Space Exploration Technologies Corp. 3.0 Consumer Discretionary Hyatt Hotels Corp. 3.0 Financials The Charles Schwab Corp. 2.9 Total 83.7 Long Equity Exposure 105.3 Cash & Equivalents (5.3) Baron Focused Growth Fund’s Top 10 Holdings as of 12/31/2020 were as follows:

%of GICS Sector Holding Net Assets Consumer Discretionary Tesla, Inc. 38.4 Industrials CoStar Group, Inc. 8.6 Consumer Discretionary Penn National Gaming, Inc. 7.8 Consumer Discretionary Vail Resorts, Inc. 5.6 Consumer Discretionary Hyatt Hotels Corp. 3.8 Financials FactSet Research Systems, Inc. 3.8 Industrials Space Exploration Technologies Corp. 2.6 Consumer Discretionary Choice Hotels International, Inc. 2.5 Communication Services Iridium Communications Inc. 2.4 Communication Services Spotify Technology S.A. 2.4 Total 77.9 Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

13 Letter from Linda

The Russell 1000® Growth Index measures the performance of large-sized U.S. companies that are classified as growth. The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth. The Russell 2500® Growth Index measures the performance of small to medium-sized U.S. companies that are classified as growth. The 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 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. 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. The 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. The MSCI ACWI Index measures the equity market performance of large and midcap securities across developed and emerging markets, including the United States. The MSCI ACWI ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets countries (excluding the US) and 26 Emerging Markets countries. MSCI USA IMI Extended Real Estate Net Index is an unmanaged custom index calculated by MSCI for, and as requested by, BAMCO, Inc. The index includes real estate and real estate-related GICS classified 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. MSCI US REIT Index is an unmanaged 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. The indexes are unmanaged. The index performance is not fund performance; one cannot invest directly into an index. The stock selection effect appearing in the table on page 3 measures the aggregate result of the portfolio manager’s ability to select securities within each of the GICS sectors relative to their benchmarks. The over or underperformance of the portfolio within each sector is weighted by the benchmark sector weight, therefore, selection is not affected by the manager’s allocation to the sector. The weight of the sector in the benchmark determines the size of the effect – the larger the sector, the larger the effect is, positive or negative. Selection effect is calculated as follows: [(benchmark weight)] * [(portfolio return) – (benchmark return)]. For a full description of the Brinson attribution method, please refer to Brinson, Gary P., L. Randolph Hood, and Gilbert L. Beebower, “Determinants of Portfolio Performance,” Financial Analysts Journal, July-August 1986, pp. 39-44. Sharpe Ratio is a risk-adjusted performance statistic that measures reward per unit of risk. The higher the Sharpe ratio, the better a fund’s risk adjusted performance. Information Ratio (Info Ratio) is a ratio of portfolio returns above the returns of a benchmark -- usually an index -- to the volatility of those returns. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

14 December 31, 2020 Letter from Linda

Appendix Baron Funds vs. Primary Benchmarks and Category Averages – Sharpe Ratios and Information Ratios as of 12/31/2020

Sharpe Ratios:

10 Years or 3 Years 5 Years Since Inception* Category Category Category Asset Class Fund Name Primary Benchmark Morningstar Category Fund Benchmark Average Fund Benchmark Average Fund Benchmark Average Baron Growth Fund Russell 2000 Growth Index Mid-Cap Growth 0.86 0.57 0.80 0.95 0.71 0.90 0.87 0.67 0.79 Small Cap Baron Small Cap Fund Russell 2000 Growth Index Small Growth 0.75 0.57 0.67 0.90 0.71 0.79 0.76 0.67 0.68 Baron Discovery Fund Russell 2000 Growth Index Small Growth 0.97 0.57 0.67 1.19 0.71 0.79 0.93 0.61 0.64 Small-Mid Cap Baron Focused Growth Fund Russell 2500 Growth Index Mid-Cap Growth 1.28 0.76 0.80 1.10 0.86 0.90 0.83 0.80 0.79 Mid Cap Baron Asset Fund Russell Midcap Growth Index Mid-Cap Growth 1.04 0.87 0.80 1.10 0.98 0.90 0.97 0.91 0.79 Baron Fifth Avenue Growth Fund Russell 1000 Growth Index Large Growth 1.26 1.08 0.95 1.25 1.22 1.05 1.06 1.16 0.97 Large Cap Baron Durable Advantage Fund S&P 500 Index Large Growth 0.83 0.67 0.95 – – – 0.83 0.67 0.95 Baron Partners Fund Russell Midcap Growth Index Mid-Cap Growth 1.30 0.87 0.80 1.12 0.98 0.90 0.92 0.91 0.79 All Cap Baron Opportunity Fund Russell 3000 Growth Index Large Growth 1.83 1.04 0.95 1.54 1.18 1.05 1.03 1.13 0.97 Baron Emerging Markets Fund MSCI Emerging Markets Index Diversified Emerging Mkts 0.29 0.23 0.19 0.65 0.66 0.59 0.40 0.17 0.14

International Baron International Growth MSCI ACWI ex USA Index Foreign Large Growth Fund 0.52 0.18 0.55 0.81 0.50 0.73 0.53 0.28 0.48 Baron Global Advantage Fund MSCI ACWI Index World Large Stock 1.55 0.46 0.46 1.52 0.74 0.72 1.15 0.70 0.71 Baron Real Estate Fund MSCI USA IMI Extended Real Real Estate Sector Estate Index 0.70 0.23 0.14 0.76 0.44 0.24 0.85 0.63 0.47 Baron Real Estate Income Fund MSCI US REIT Index Real Estate 0.71 0.03 0.14 – – – 0.71 0.03 0.14 Fund of Funds Baron WealthBuilder Fund S&P 500 Index Allocation–85%+ Equity 1.07 0.67 0.38 – – – 1.07 0.67 0.38

Source: FactSet, Morningstar Direct, Baron Capital. * Since inception for the Baron Funds younger than 10 years. The performance data quoted represents past performance. Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Portfolio holdings are subject to change.

Information Ratios

10 Years or 3 Years 5 Years Since Inception* Category Category Category Asset Class Fund Name Primary Benchmark Morningstar Category Fund Average Fund Average Fund Average Baron Growth Fund Russell 2000 Growth Index Mid-Cap Growth 0.88 0.53 0.48 0.18 0.23 –0.04 Small Cap Baron Small Cap Fund Russell 2000 Growth Index Small Growth 0.74 0.67 0.58 0.39 0.18 –0.18 Baron Discovery Fund Russell 2000 Growth Index Small Growth 1.42 0.67 1.59 0.39 0.97 –0.91 Small– Mid Cap Baron Focused Growth Fund Russell 2500 Growth Index Mid-Cap Growth 1.20 –0.19 0.72 –0.36 0.30 –0.56 Mid Cap Baron Asset Fund Russell Midcap Growth Index Mid-Cap Growth 0.46 –0.56 0.29 –0.60 0.15 –0.91 Baron Fifth Avenue Growth Fund Russell 1000 Growth Index Large Growth 0.58 –1.28 0.32 –1.43 0.14 –1.28 Large Cap Baron Durable Advantage Fund S&P 500 Index Large Growth 0.52 1.67 – – 0.52 1.67 Baron Partners Fund Russell Midcap Growth Index Mid-Cap Growth 1.29 –0.56 0.92 –0.60 0.59 –0.91 All Cap Baron Opportunity Fund Russell 3000 Growth Index Large Growth 2.58 –1.24 1.30 –1.44 0.26 –1.36 Baron Emerging Markets Fund MSCI Emerging Markets Index Diversified Emerging Mkts 0.28 –0.28 0.01 –0.57 0.52 –0.21

International Baron International Growth Fund MSCI ACWI ex USA Index Foreign Large Growth 1.03 1.45 0.86 0.71 0.67 0.71 Baron Global Advantage Fund MSCI ACWI Index World Large Stock 2.08 –0.08 1.59 –0.35 1.06 –0.15 MSCI USA IMI Extended Real Sector Baron Real Estate Fund Estate Index Real Estate 1.28 –0.33 0.86 –0.66 0.73 –0.39 Baron Real Estate Income Fund MSCI US REIT Index Real Estate 1.28 1.23 – – 1.28 1.23 Fund of Funds Baron WealthBuilder Fund S&P 500 Index Allocation–85%+ Equity 1.54 –1.58 – – 1.54 –1.58

15 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

$600,000

$515,498 $500,000

$400,000

$333,196 $300,000 $261,687 $200,000

$100,000

$0 6/12/87 12/88 12/91 12/94 12/97 12/00 12/03 12/06 12/09 12/12 12/15 12/18 12/20 Baron Asset Fund1,4 Russell Midcap Growth Index1 S&P 500 Index1 Baron Asset Fund’s annualized returns as of December 31, 2020: Three months, 15.21%; 1-year, 33.33%; 3-year, 22.58%; 5-year, 19.93%; 10-year, 15.64%; and Since Inception, 12.47%. 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

$350,000 $312,868 $300,000

$250,000

$200,000

$150,000 $134,780 $100,000 $94,981

$50,000

$0 12/31/94 12/97 12/00 12/03 12/06 12/09 12/12 12/15 12/18 12/20 Baron Growth Fund2,4 Russell 2000 Growth Index2 S&P 500 Index2 Baron Growth Fund’s annualized returns as of December 31, 2020: Three months, 21.10%; 1-year, 33.06%; 3-year, 22.08%; 5-year, 19.76%; 10-year, 15.06%; and Since Inception, 14.16%. 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

$140,000 $125,332 $120,000

$100,000

$80,000

$60,000 $61,457 $52,950 $40,000

$20,000

$0 9/30/9712/98 12/00 12/02 12/04 12/0612/08 12/10 12/12 12/14 12/16 12/18 12/20

Baron Small Cap Fund3,4 Russell 2000 Growth Index3 S&P 500 Index3 Baron Small Cap Fund’s annualized returns as of December 31, 2020: Three months, 17.59%; 1-year, 40.68%; 3-year, 20.78%; 5-year, 19.88%; 10-year, 14.47%; and Since Inception, 11.49%.

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.

16 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 $100,000

$83,554 $80,000

$60,000

$41,196 $40,000 $37,615

$20,000

$0 2/29/00 12/00 12/02 12/04 12/06 12/08 12/10 12/12 12/14 12/16 12/18 12/20 Baron Opportunity Fund1,4 Russell 3000 Growth Index1 S&P 500 Index1 Baron Opportunity Fund’s annualized returns as of December 31, 2020: Three months, 23.02%; 1-year, 89.28%; 3-year, 42.34%; 5-year, 31.13%; 10-year, 19.09%; and Since Inception, 10.73%. 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 $900,000 $832,574 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $196,396 $164,849 $100,000 $0 1/31/92 12/94 12/97 12/00 12/03 12/06 12/09 12/12 12/15 12/18 12/20 Baron Partners Fund2,4,5 Russell Midcap Growth Index2 S&P 500 Index2 Baron Partners Fund’s annualized returns as of December 31, 2020: Three months, 42.87%; 1-year, 149.18%; 3-year, 52.68%; 5-year, 37.40%; 10-year, 24.04%; and Since Inception, 16.52%. 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 $70,000 $66,082 $64,938 $60,000

$50,000 $47,764 $40,000

$30,000

$20,000

$10,000

$0 4/30/04 12/04 12/06 12/08 12/10 12/12 12/14 12/16 12/18 12/20 Baron Fifth Avenue Growth Fund3,4 Russell 1000 Growth Index3 S&P 500 Index3 Baron Fifth Avenue Growth Fund’s annualized returns as of December 31, 2020: Three months, 8.15%; 1-year, 50.81%; 3-year, 27.09%; 5-year, 23.24%; 10-year, 18.10%; and Since Inception, 11.88%.

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. The Fund’s 3-, 5-, and 10-year 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. 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.

17 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

$300,000 $289,701

$250,000

$200,000

$150,000

$100,000 $91,493 $89,322 $50,000

$0 5/31/96 12/97 12/00 12/03 12/06 12/09 12/12 12/15 12/18 12/20 Baron Focused Growth Fund1,4,5 Russell 2500 Growth Index1 S&P 500 Index1 Baron Focused Growth Fund’s annualized returns as of December 31, 2020: Three months, 32.35%; 1-year, 122.75%; 3-year, 44.56%; 5-year, 31.03%; 10-year, 18.83%; and Since Inception, 14.68%. 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

$45,000 $42,021 $40,000 $35,000 $31,951 $30,000 $25,000 $25,412 $20,000 $15,000 $10,000 $5,000 $0 12/31/08 12/10 12/12 12/14 12/16 12/18 12/20 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 December 31, 2020: Three months, 18.56%; 1-year, 30.83%; 3-year, 11.70%; 5-year, 14.17%; 10-year, 8.82%; and Since Inception, 12.71%. 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 MSCI US REIT Index

$60,000 $54,666 $50,000

$40,000 $33,973 $30,000 $24,950 $20,000

$10,000

$0 12/31/09 12/11 12/13 12/15 12/17 12/19 12/20 Baron Real Estate Fund3,5 MSCI USA IMI Extended Real Estate Index3 MSCI US REIT Index3 Baron Real Estate Fund’s annualized returns as of December 31, 2020: Three months, 16.79%; 1-year, 44.28%; 3-year, 17.56%; 5-year, 15.97%; 10-year, 15.72%; and Since Inception, 16.70%.

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 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 midcap 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. 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.

18 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 $19,912 $17,427

$15,000 $14,282

$10,000

$5,000

$0 12/31/10 12/1112/12 12/13 12/14 12/15 12/16 12/17 12/18 12/19 12/20 Baron Emerging Markets Fund1,3 MSCI EM Index1 MSCI EM IMI Growth Index1 Baron Emerging Markets Fund’s annualized returns as of December 31, 2020: Three months, 20.48%; 1-year, 29.22%; 3-year, 7.78%; 5-year, 12.88%; 10-year and Since Inception, 7.13%. 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 Index and the MSCI ACWI Growth Index

$60,000 $52,504 $50,000

$40,000

$30,000 $29,855 $23,378 $20,000

$10,000

$0 4/30/12 12/12 12/13 12/14 12/15 12/16 12/17 12/18 12/19 12/20

Baron Global Advantage Fund2,3 MSCI ACWI Index2 MSCI ACWI Growth Index2 Baron Global Advantage Fund’s annualized returns as of December 31, 2020: Three months, 17.33%; 1-year, 79.46%; 3-year, 35.99%; 5-year, 30.14%; and Since Inception, 21.09%.

1 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and Baron Emerging Markets Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. 2 The MSCI ACWI Index and the MSCI ACWI Growth Index are unmanaged, free float-adjusted market capitalization weighted indexes. The MSCI ACWI Index Net USD and the MSCI ACWI Growth Index Net USD are designed to measure the equity market performance of large- and mid-cap securities across developed and emerging markets, including the United States. The MSCI ACWI Growth Index Net USD screens for growth-style securities. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. The Fund’s 3- and 5-year 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. 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.

19 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

$40,000 $39,802 $35,000

$30,000 $25,863 $25,000 $24,035 $20,000

$15,000

$10,000

$5,000

$0 9/30/13 12/13 12/14 12/15 12/16 12/17 12/18 12/19 12/20 Baron Discovery Fund1,4 Russell 2000 Growth Index1 S&P 500 Index1 Baron Discovery Fund’s annualized returns as of December 31, 2020: Three months, 25.54%; 1-year, 66.13%; 3-year, 28.48%; 5-year, 28.52%; and Since Inception, 20.99%. 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 $20,000

$15,745 $15,000 $14,885

$10,000

$5,000

$0 12/29/17 3/18 6/18 9/18 12/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 Baron Durable Advantage Fund2,4 S&P 500 Index2 Baron Durable Advantage Fund’s annualized returns as of December 31, 2020: Three months, 7.62%; 1-year, 20.32%; 3-year and Since Inception, 16.34%. 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 $14,858

$10,690 $10,000

$5,000

$0 12/29/17 3/18 6/18 9/1812/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 Baron Real Estate Income Fund3,4 MSCI US REIT Index3 Baron Real Estate Income Fund’s annualized returns as of December 31, 2020: Three months, 14.36%; 1-year, 22.30%; 3-year and Since Inception, 14.11%.

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. The Fund’s 1-, 3-, and 5-year 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. 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The index and Baron Real Estate Income Fund include reinvestment of interest, capital gains and dividends, which positively impact the performance results. The index performance is not Fund performance; one cannot invest directly into an index. 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.

20 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

$25,000

$20,810 $20,000

$15,000 $14,885 $13,332

$10,000

$5,000

$0 12/29/17 3/18 6/189/18 12/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 Baron WealthBuilder Fund1,3 S&P 500 Index1 MSCI ACWI Index1 Baron WealthBuilder Fund’s annualized returns as of December 31, 2020: Three months, 23.11%; 1-year, 62.85%; 3-year and Since Inception, 27.67%. 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

$20,000 $19,085

$15,279 $15,000 $14,942

$10,000

$5,000

$0 4/30/18 6/18 9/18 12/18 3/196/19 9/19 12/19 3/20 6/20 9/20 12/20 Baron Health Care Fund 2,3 Russell 3000 Health Care Index 2 S&P 500 Index2 Baron Health Care Fund’s annualized returns as of December 31, 2020: Three months, 17.09%; 1-year, 47.72%; and Since Inception, 27.43%.

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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. 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.

21 Baron Funds Performance Baron FinTech Fund Comparison of the change in value of $10,000 investment in Baron FinTech Fund (Institutional Shares) in relation to the S&P 500 Index and the FactSet Global FinTech Index

$15,000 $14,720 $13,478 $11,840

$10,000

$5,000

$0 12/31/191/20 2/20 3/20 4/20 5/20 6/20 7/20 8/20 9/20 10/20 11/20 12/20 Baron FinTech Fund1,2 S&P 500 Index1 FactSet Global FinTech Index1 Baron FinTech Fund’s returns as of December 31, 2020: Three months, 13.67%; 1-year and Since Inception, 47.20%.

1 The indexes are unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The FactSet Global Fintech Index is an unmanaged and equal-weighted index that measures the equity market performance of companies engaged in Financial Technologies, primarily in the areas of software and consulting, data and analytics, digital payment processing, money transfer, and payment transaction-related hardware, across 30 developed and emerging markets. The Fund and the indexes include reinvestment of dividends. 2 Past performance is not predictive of future performance. The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.

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. Three month returns for all funds are not annualized. 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. 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 reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term, 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 Risks: The Funds invest primarily in equity securities, which are subject to price fluctuations in the stock market. 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. 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. Investments in health care companies are subject to a number of risks, including the adverse impact of legislative actions and government regulations. Securities issued by small and medium sized companies may be thinly traded and may be more difficult to sell during market downturns. 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. In addition to general market conditions, the value of the real estate and real estate related investments 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. Even though the Funds are diversified, they may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Funds’ returns. The index performance is not fund performance; one cannot invest directly into an index. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

22 December 31, 2020 Baron Asset Fund

DEAR BARON ASSET FUND SHAREHOLDER: PERFORMANCE

U.S. equity markets continued their rally during the fourth quarter, driven by factors including the successful development of COVID vaccines, the resolution of the U.S. Presidential election, the ongoing tailwind from central bank liquidity measures, additional monetary policy accommodation, and stronger-than-expected economic and corporate earnings data. Within the mid-cap space, all sectors except Consumer Staples had positive returns. Information Technology (IT), which comprises the largest sector within the mid-cap growth universe, had particularly strong returns, partly driven by sharp gains from semiconductor, semiconductor equipment, and software stocks. This presented a headwind for the Fund, given its underweighting in the IT sector, along with its lack of exposure to semiconductor-related securities. The Communication Services sector also performed well, driven by interactive media & services stocks. The Energy sector, in which the Fund has no investments, rebounded alongside the rising price of oil. The Industrials, Health Care, and Financial sectors, in which the Fund has significant investments, all trailed the broader market during the quarter. ANDREW PECK Retail Shares: BARAX Institutional Shares: BARIX These conditions presented an attractive absolute, but difficult relative, PORTFOLIO MANAGER R6 Shares: BARUX backdrop for Baron Asset Fund (the “Fund”), which gained 15.21% (Institutional Shares), while the Russell Midcap Growth Index (the “Index”) gained 19.02%, and the S&P 500 Index gained 12.15%. Consumer Discretionary investments and lack of exposure to the Table I. underperforming Consumer Staples sector contributed the most to relative Performance results. Strength in Consumer Discretionary was partly due to the Annualized for periods ended December 31, 2020 outperformance of luxury fashion e-commerce marketplace Farfetch Baron Baron Limited and global ski resort operator Vail Resorts, Inc. Farfetch’s shares Asset Asset Russell more than doubled after being added to the Fund early in the quarter. Fund Fund Midcap S&P Retail Institutional Growth 500 Investors were enthusiastic about the company’s recently announced Shares1,2 Shares1,2,3 Index1 Index1 partnership with Alibaba and Richemont in China, which is expected to Three Months5 15.14% 15.21% 19.02% 12.15% expand its reach in one of the most important luxury markets. Vail was a One Year 32.98% 33.33% 35.59% 18.40% significant contributor, as its ski pass sales rose 20% from last year’s levels Three Years 22.26% 22.58% 20.50% 14.18% despite the pandemic’s impact. Lower exposure to this sector, which failed Five Years 19.61% 19.93% 18.66% 15.22% to keep pace with the broader market during the quarter, also added value. Ten Years 15.33% 15.64% 15.04% 13.88% Investments in IT, Real Estate, Industrials, and Communication Services Fifteen Years 11.29% 11.52% 11.55% 9.88% accounted for all the relative underperformance during the period. Since Inception Weakness in IT was largely due to share price declines from web software 4 (June 12, 1987) 12.37% 12.47% 11.03% 10.22% firm Wix.com Ltd. and payment services provider Fidelity National

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, 2020 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 December 31, 2020. BARON FUNDS 5 Not annualized.

23 Baron Asset Fund

Information Services, Inc. After doubling during the first three quarters of be indications that COVID-related testing will further accelerate growth in 2020, Wix’s shares fell slightly on concerns that its business, which veterinary diagnostics. We believe these results continued to demonstrate benefited from increased website creation during the pandemic, could that IDEXX is a unique, competitively advantaged business that is likely to eventually moderate. Fidelity National’s stock underperformed because of outperform across economic cycles. revenue headwinds from the pandemic as reduced travel and spending Shares of Gartner, Inc., a provider of syndicated research primarily on activity led to lower payment processing volumes. Management believes information technology, increased after reporting financial results that these headwinds are temporary and expects growth to accelerate next year. exceeded analyst expectations. The company’s research business continued Lack of exposure to semiconductor and semiconductor equipment stocks to generate growth, albeit at a slower rate than before the pandemic. We also detracted from relative results. expect its growth to re-accelerate as economic conditions stabilize, which Negative stock selection in Real Estate stemmed from specialized REITs SBA we believe will lead to meaningful margin expansion and enhanced free cash Communications Corp. and Equinix, Inc. Both stocks were among the best- flow generation. While Gartner’s destination events business has been performing REITs earlier in the year, and they were penalized as investors disrupted by the pandemic and the suspension of corporate travel, rotated into more cyclical companies. Within Industrials, underperformance the company has pivoted to virtual events, which may offer enhanced of research & consulting services businesses Clarivate Plc, CoStar Group, economics over the long term. Inc., and Verisk Analytics, Inc. and higher exposure to this lagging Shares of Vail Resorts, Inc., a global operator of ski resorts, gained in the sub-industry hampered relative results. These companies’ share prices also quarter on season ski pass sales that increased 20% from last year’s levels, trailed the more cyclically exposed stocks in the Industrials sector. despite the pandemic-related headwind. Robust renewal rates demonstrated Performance in Communication Services was hampered by ZoomInfo the loyalty of Vail’s existing skiers, while first time pass sales demonstrated Technologies Inc., which operates a cloud-based information platform used their potential to accelerate Vail’s future growth. In addition, we believe that primarily by sales professionals to identify and target their highest-value the company’s robust balance sheet positions the company well for potential sales targets. The company’s shares underperformed on fears about potential acquisitions of ski resorts that have suffered from the pandemic. spending trends among its clients, which we believe to be improving. Shares of Ceridian HCM Holding Inc., a leader in payroll and workforce Table II. management software, contributed to performance in the quarter. New Top contributors to performance for the quarter ended December 31, 2020 sales of the company’s flagship Dayforce platform already exceed Year Percent pre-pandemic levels and should accelerate across 2021. We Acquired Impact expect Dayforce to generate rapid revenue growth, leading to meaningful IDEXX Laboratories, Inc. 2006 1.82% gross margin expansion, improved free cash flow conversion, and rapid Gartner, Inc. 2007 1.16 deleveraging of its balance sheet. We are also excited about the possibility Vail Resorts, Inc. 1997 0.80 of Dayforce Wallet, a new product that will allow employees access to Ceridian HCM Holding Inc. 2018 0.74 earned wages on a real-time basis (i.e., at the end of each work day rather Mettler-Toledo International, Inc. 2008 0.72 than on the traditional once every two week pay cycle).

IDEXX Laboratories, Inc., a veterinary diagnostic company, was the largest Mettler-Toledo International, Inc. is the world’s leading supplier of contributor to performance for the third consecutive quarter. The stock weighing instruments for laboratory and industrial applications. The gained after the company again reported excellent quarterly results that company’s shares increased on third quarter financial results that exceeded expectations, despite the headwinds caused by the pandemic. significantly exceeded investor expectations, coupled with guidance for Recurring revenue growth in IDEXX’s core companion animals group 2021 well ahead of market forecasts. We continue to believe Mettler is an improved to 21% and consolidated operating margins expanded nearly 500 excellent business with best-in-class management that should be able to basis points. Competitive trends remain outstanding, and there continue to compound its earnings at attractive rates well into the future.

24 December 31, 2020 Baron Asset Fund

Table III. PORTFOLIO STRUCTURE Top detractors from performance for the quarter ended December 31, 2020 Year Percent At December 31, 2020, Baron Asset Fund held 65 positions. The Fund’s 10 Acquired Impact largest holdings represented 38.1% of assets, and the 20 largest represented SBA Communications Corp. 2007 –0.32% 60.4% of assets. The Fund’s largest weighting was in the IT sector at 28.8% DexCom, Inc. 2019 –0.20 of assets. This sector includes software companies, internet services GoodRx Holdings, Inc. 2020 –0.15 companies, IT consulting firms, and data processing firms. The Fund held Equinix, Inc. 2007 –0.10 24.9% of its assets in the Health Care sector, which includes investments in Veeva Systems Inc. 2017 –0.10 life sciences companies, and health care equipment, supplies, and technology companies. The Fund held 16.6% of its assets in the Industrials After strong performance earlier in the year, SBA Communications Corp.,a sector, which includes investments in research and consulting companies, REIT that owns and operates approximately 30,000 cell towers domestically industrial conglomerates, and machinery companies. The Fund also had and internationally, detracted from performance. SBA was impacted as significant weightings in Financials at 10.6% of assets and Consumer many investors rotated into “laggards.” In addition, the slight increase in Discretionary at 8.1% of assets. interest rates during the quarter impacted companies with elevated valuations and leveraged balance sheets. We are optimistic about SBA’s Table IV. prospects because we believe the inevitable growth in data and video usage Top 10 holdings as of December 31, 2020 should be a durable driver of demand for its services. We also believe the Market Quarter Quarter company will be able to consistently return capital to shareholders via share Cap End End When Market Investment Percent buybacks and dividends. Year Acquired Cap Value of Net Acquired (billions) (billions) (millions) Assets DexCom, Inc. sells a continuous glucose monitoring device used by diabetics. The stock performed well early this year, but fell during the IDEXX Laboratories, Inc. 2006 $2.5 $42.6 $424.7 7.2% quarter on concerns about competition from Abbott Laboratories, which Gartner, Inc. 2007 2.9 14.3 253.8 4.3 received regulatory approval to market its third generation Libre device in Verisk Analytics, Inc. 2009 4.9 33.8 236.9 4.0 Europe. We continue to believe that the market DexCom is addressing will Mettler-Toledo be large enough to support two different players, and we believe that there International, Inc. 2008 2.4 27.1 226.9 3.8 is significant value in its new product pipeline. ANSYS, Inc. 2009 2.3 31.2 213.5 3.6 CoStar Group, Inc. 2016 5.0 36.4 199.2 3.4 GoodRx Holdings, Inc. operates the nation’s largest online platform Guidewire Software, Inc. 2013 2.8 10.8 183.0 3.1 providing users free access to drug pricing information and pharmacy Ceridian HCM Holding Inc. 2018 4.3 15.7 174.3 3.0 discounts. After a well-received IPO, the shares fell on Amazon.com, Inc.’s Vail Resorts, Inc. 1997 0.2 11.2 171.2 2.9 announcement that it has entered the online pharmacy space. Although Zillow Group, Inc. 2015 1.5 30.6 167.2 2.8 Amazon is a formidable rival, we believe its success is not assured, as its participation is limited to the low-penetration mail order segment of the RECENT ACTIVITY market. GoodRx has the advantages of the leading brand in its space, best pricing, a tie-in with its telehealth unit, and nascent opportunities in During the past quarter, the Fund established 4 new positions and added to 2 referrals from drug manufacturers. others. The Fund eliminated 1 position and reduced its holdings in 13 others. Equinix, Inc. is a REIT that operates network-dense, carrier-neutral colocation data centers spanning the globe. After strong performance earlier Table V. in the year, Equinix, like SBA Communications Corp., was negatively Top net purchases for the quarter ended December 31, 2020 impacted by investors’ shift toward “laggards” and increased interest rates. Quarter End Amount Market Cap Purchased We remain optimistic about the company benefiting from cloud adoption (billions) (millions) and IT outsourcing, its unique position as one of the only operators that can Stitch Fix, Inc. $ 6.2 $37.2 offer a global platform, and continued execution on strategic M&A Farfetch Limited 21.7 29.8 transactions to enhance its moat. DoorDash Inc. 45.3 19.0 Veeva Systems Inc. offers cloud-based software solutions for the life sciences RingCentral, Inc. 34.0 6.4 industry. Its shares lagged during the quarter. Despite strong third quarter Pinterest, Inc. 40.7 1.5 results, management offered a more cautious 2021 outlook, suggesting some headwinds to its commercial business. A new Presidential administration also Stitch Fix, Inc. is an online personal styling service (stitchfix.com) that caused some uncertainty about the regulatory environment for its key utilizes recommendation algorithms and data science to personalize clothing end-markets. We believe Veeva remains well positioned to benefit from the items based on size, budget, and style across all genders and ages. Stitch Fix life science industry’s ongoing digitalization initiatives. users rank their style preferences across a series of images and receive their “fix” of curated apparel based on their results and personal stylists’ recommendations, which are informed by historical data from like-minded consumers. Under the company’s initial business model, users paid $20/box

25 Baron Asset Fund

to receive a curated outfit of five items which they could try on at home competitive advantages and is well positioned for long-term growth within before purchasing. This required a lot of customer effort and intensive an expanding addressable market as more luxury spending moves online. reverse logistics, which limited the service’s appeal. However, Stitch Fix is in the process of leveraging its proprietary data and algorithms to enable Table VI. direct retail purchases from its site. To support its new product roadmap, Top net sales for the quarter ended December 31, 2020 Stitch Fix hired President Elizabeth Spaulding, with 20 years of previous Amount experience at Bain where she led its digital practice, and CFO Dan Jedda, Sold (millions) with 15 years of previous experience at Amazon. We are optimistic about the prospects for the company’s new business model under its expanded BWX Technologies, Inc. $31.8 management team. West Pharmaceutical Services, Inc. 22.8 FleetCor Technologies, Inc. 16.0 We believe the company’s new “direct buy” offering expands its total IDEXX Laboratories, Inc. 10.5 addressable market to include the nearly $400 billion U.S. apparel market, CBRE Group, Inc. 10.0 which will be supplemented by international opportunities. Stitch Fix recently expanded its direct buy capabilities with the launch of “Shop by We sold our stake in BWX Technologies, Inc., which designs and Category,” a highly personalized digital shopping feed that leverages manufactures nuclear components for the U.S. government, on concerns individual clients’ data-driven “style graph,” which is powered by a wealth of that the company’s growth prospects were no longer attractive. In addition, proprietary data about shoppers’ preferences. The richer customer we modestly reduced our stakes in several successful long-term holdings to experience has driven increasing direct buy penetration across both men’s raise capital to allocate elsewhere in the Fund. These included West and women’s categories. We believe Stitch Fix will continue to successfully Pharmaceutical Services, Inc., FleetCor Technologies, Inc., IDEXX penetrate the market for traditional retail purchases. Laboratories, Inc., and CBRE Group, Inc.

We believe that Stitch Fix will also be better able to optimize its inventory OUTLOOK management to drive faster conversion rates and stronger revenue growth, while also improving capital efficiency. Management envisions a dynamic Baron Asset Fund is a long-term investor in businesses that we believe will marketplace with active vendor management, pricing and demand benefit from long-lived secular growth trends, with sustainable competitive forecasting, and increased high-margin private label penetration. The advantages, led by exceptional management teams. We remain sensitive to company is optimistic that its model can be successfully expanded into new valuation levels, particularly in light of the recent strength in the overall categories like furniture, décor, beauty, resale, and luxury. We believe the market and the high valuations being assigned to many speculative company is poised to more than double its sales and meaningfully expand companies. We continue to own businesses that we believe will allow us to its profitability over the next five years. double our investments over a five-year period. We believe that we have created value for our investors throughout the Farfetch Limited is a global luxury fashion e-commerce marketplace that Fund’s 30-plus years by understanding and analyzing businesses better than connects luxury brands, consumers, and retailers. The platform sells luxury many others. We do not believe that we have unusual insight into the merchandise from upscale boutiques, larger retailers, and the brand macroeconomic, political, and public health issues that the nation and the manufacturers to more than 2.5 million consumers globally. Led by visionary stock market have been grappling with. However, we are optimistic that we founder José Neves, the company uses its longstanding relationships with are soon approaching the end of the pandemic, which should lead to a rapid exclusive brands and boutiques to create an unmatched product selection recovery in many businesses that have suffered during the past year. through an attractive “asset-light” marketplace model. Unlike a traditional retailer, Farfetch’s marketplace does not need to hold much of the inventory We believe that advances in technology and changing consumer preferences listed for sale on its site. This allows Farfetch to boast more than seven and business practices will continue to cause long-lasting benefits for certain times the selection of its nearest competitor. Farfetch’s supply is further businesses and challenges for others. We continue to adhere to our traditional differentiated by its exclusive content. The company owns New Guards investment methodology, while working hard to identify these long-term corporate beneficiaries. We remain optimistic that this approach will generate Group (collective of luxury brands like Off-White and Palm Angels), and it strong performance for our portfolio, no matter the economic climate. can leverage insights from its brand designers and use product launches to attract new consumers. We believe Farfetch will continue to gain market Sincerely, share from other online retailers and traditional luxury retailers that carry their own inventory. As the only global luxury online marketplace, Farfetch is positioned to benefit from the acceleration of luxury spending online, which according to Bain, is expected to rise from 12% penetration pre-COVID to 30% by 2025. Farfetch recently announced a partnership with Alibaba and Richemont in Andrew Peck China, one of the most important and fastest growing luxury markets. Portfolio Manager Following the deal, we have even more conviction that Farfetch has durable January 20, 2021

26 December 31, 2020 Baron Asset Fund

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

27 Baron Growth Fund

DEAR BARON GROWTH FUND SHAREHOLDER:

PERFORMANCE

Baron Growth Fund (the “Fund”) returned 33.06% (Institutional Shares) during the year ended December 31, 2020. This is robust absolute performance and is comparable to the Fund’s primary benchmark, the Russell 2000 Growth Index (the “Benchmark”), which gained 34.63%. The Fund’s performance compares favorably to the S&P 500 Index, which measures the performance of publicly traded large-cap U.S. companies. That index gained 18.40% during the year. While the Fund slightly trailed the benchmark during 2020, our performance continued to exhibit favorable stock selection. Stock selection has contributed approximately 685 basis points to the Fund’s annualized excess returns over the last four years, including 570 basis points in 2020. This is the goal of our fundamentally driven investment strategy, and where we devote the preponderance of our time and attention. Our favorable stock selection was offset by a market rotation that occurred during the fourth quarter. Cyclical stocks surged after underperforming for much of the year, NEAL ROSENBERG RONALD BARON Retail Shares: BGRFX and shares of biotechnology stocks also outperformed. The Fund has CO-PORTFOLIO CEO AND LEAD Institutional Shares: BGRIX minimal exposure to both categories. While such cycles ebb and flow, we MANAGER PORTFOLIO MANAGER R6 Shares: BGRUX remain optimistic that our portfolio of durable growth businesses led by best-in-class management teams will generate compelling investment returns across market cycles. The Fund rose 21.10% in the fourth quarter alone, while the Benchmark rose 29.61% and the S&P 500 Index rose 12.15%. Markets took their cue from Table I. the unexpectedly positive results of COVID vaccine trials, which Performance demonstrated safety and efficacy that exceeded most expectations. The Fed Annualized for periods ended December 31, 2020 reiterated its commitment to keeping borrowing costs at near zero Baron Baron indefinitely, and a Democratic-led government seems likely to pursue Growth Growth Russell Fund Fund 2000 S&P aggressive fiscal policy in 2021. Investors extrapolated these developments Retail Institutional Growth 500 into an upbeat outlook and bid up stocks, with a particular focus on those Shares1,2 Shares1,2,3 Index1 Index1 that have pro-cyclical attributes, have more risky or volatile business Three Months4 21.02% 21.10% 29.61% 12.15% models, and had underperformed earlier in 2020. Biotechnology shares also One Year 32.72% 33.06% 34.63% 18.40% surged. We tend not to find businesses that meet our investment criteria in Three Years 21.77% 22.08% 16.20% 14.18% many of these sectors, and do not change our process or strategy just Five Years 19.45% 19.76% 16.36% 15.22% because an area of the market is temporarily in vogue. Ten Years 14.76% 15.06% 13.48% 13.88% Fifteen Years 11.23% 11.46% 10.69% 9.88% Since Inception (December 31, 1994) 14.03% 14.16% 9.04% 10.52%

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, 2020 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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. BARON FUNDS 4 Not annualized.

28 December 31, 2020 Baron Growth Fund

When we assess this year’s performance, we find that the businesses in with proven best-in-class businesses. We successfully executed this strategy which we have invested demonstrated operational excellence against an with Schrodinger, Inc., which has matured from a small private investment extraordinary backdrop. The Fund has always applied stringent investment made three years ago into public company in which we hold a 0.9% position criteria to ensure that we invest in the highest-quality companies. These currently. We are optimistic that we have identified other investments with include businesses with large addressable markets, high barriers to entry, similar long-term return potential. positive secular trends, recurring or highly visible revenue, high margins, strong free cash conversion, and best-in-class management teams. Those We intentionally keep our new investments small as we build confidence in attributes have been nice to own in good environments but have been our investment thesis and management’s ability to execute. We will seek to critical to own in unprecedented times. Most of the businesses in our add opportunistically to these positions where appropriate. Our preference portfolio used 2020 to enhance their structural earnings potential by is to continue to hold stocks for the long term, even as they rise in market expanding their addressable markets, investing in new products and capitalization, as long as our thesis remains intact and we see an ability to distribution to pursue long-term growth, and refining operating procedures double our money over the subsequent five-year period. That leads to a for a digital-first world. This led to favorable stock returns this year, and we portfolio that has a higher-than-average market capitalization relative to believe will help sustain performance in the years to come. other small-cap strategies. We view it as a portfolio that is long tenured and high conviction, with larger position sizes generated through performance The portfolio exclusively invests in small capitalization stocks. During 2020, rather than investment. For example, our current top 10 positions presently we initiated six new positions with a weighted average initial market represent 54.7% of the portfolio. Our top 10 positions have increased by an capitalization of $2.79 billion (excludes private investments). This quarter, average of 18.0 times since our initial investment, and all have continued to we initiated a new position in Desktop Metal, Inc., an emerging leader in perform at above-market rates. In 2020, the group returned an average of additive manufacturing systems. Additive manufacturing, which is 58.9%, including seven positions rising by more than 25% and six rising by colloquially known as “3D printing,” offers the prospect of a single machine more than 40%. that can produce an unlimited number of parts with infinite degrees of complexity using a vast array of materials. Please see the section titled We remain optimistic about the portfolio’s prospects in 2021 and beyond. “Recent Purchases” for more details on Desktop Metal. We believe we have invested in a portfolio of businesses that can compound at faster-than-expected rates for longer-than-expected time periods. We are Desktop Metal is the fourth private investment that we made this year. In optimistic that a vaccine will be safe, effective, and well distributed, which total, our private investments represented just 0.5% of our net assets. We will help return economic activity to more normal levels. We also believe expect private investments to remain a very small portion of the portfolio, there is a lot of pent-up demand for activities that have been deferred or both individually and in the aggregate, going forward. We think that delayed because of COVID. We think a return to normalcy will help all participating in a limited number of private investments offers several businesses but will be a particular tailwind to our Consumer Discretionary benefits to the Fund. First, being an investor in a company that is still private investments, such as Vail Resorts, Inc., Marriott Vacations Worldwide gives us earlier access to a management team. It allows us to spend more Corp., and Bright Horizons Family Solutions, Inc., which represent a time observing managers shaping a company’s strategy and financial model, meaningful portion of the Fund. and more data points to assess the likelihood of long-term success. We expect this extra information to lead to enhanced conviction regarding an More generally, we have found that the best-in-class businesses that we investment decision when the company ultimately comes public, potentially own tend to take market share during recessions. During downturns, these enabling the Fund to make a follow-on investment before the company’s businesses continue to invest in critical areas such as R&D, sales, and merits are widely recognized by public markets. Second, we expect our product development. They accommodate customers, which creates loyalty private investments to be limited to emerging industries and disruptive and goodwill, and enhances lifetime value. Conversely, sub-scale, poorly businesses, such as Desktop Metal disrupting manufacturing, or Farmers capitalized, or less well-managed businesses tend to fall away. They may cut Business Network, Inc. disrupting traditional agricultural markets. Investing costs critical for future growth too deeply, lose focus on servicing their privately gives us an entrée into an emerging ecosystem, where we can both customers, or experience financial distress. When conditions ultimately search for additional potential investments and assess the impact on normalize, we find that the survivors are better positioned than ever to take incumbents, many of which are public. advantage of their resiliency and aggregate market share. Finally, we believe that these investments offer attractive risk-reward Additionally, we expect well-capitalized, well-managed businesses to profiles in their own right. We apply the same investment criteria to private participate in opportunistic M&A. We think that strategic acquirers with investments as we have done to public investments, but we hope to find robust balance sheets can be attractive buyers. According to Bloomberg, U.S. them earlier and at lower valuations. By investing privately at very small corporations boasted a record $2.1 trillion of cash on their balance sheets at scale, we believe we are risking a modest amount of capital with the the end of September, with ample additional equity capital residing with potential to earn outsized long-term returns. While the risk is higher, it private equity funds. We believe that most of our investments are remains extremely low in the context of our high-quality portfolio replete positioned to be acquirers, but we believe that some may also be targets.

29 Baron Growth Fund

Table II. Performance Based Characteristics as of December 31, 2020 Millennium Internet Bubble Financial Panic to COVID-19 Millennium Internet Bubble Inception to Financial Panic Pandemic to Present 12/31/1994 to 12/31/1999 to 12/31/2008 12/31/2008 to 12/31/2019 12/31/1999 to 12/31/2020 12/31/2020 Alpha (%) 5.05 3.98 5.55 7.17 Beta 0.58 0.78 0.69 0.71

Table III. Performance Millennium to COVID-19 Pandemic. The Impact of Not Losing Money. Millennium Internet Financial Panic COVID-19 Pandemic Millennium Internet Bubble to Financial Panic to COVID-19 Pandemic to Present Bubble to Present Inception 12/31/1999 to 12/31/2008 to 12/31/2019 to 12/31/1999 to 12/31/1994 to 12/31/2008 12/31/2019 12/31/2020 12/31/2020 12/31/2020 Value Value Value Value Value $10,000 Annualized $10,000 Annualized $10,000 Cumulative $10,000 Annualized $10,000 Annualized Baron Growth Fund (Institutional Shares) $12,448 2.46% $51,065 15.98% $13,306 33.06% $84,580 10.70% $312,868 14.16% Russell 2000 Growth Index $ 6,476 –4.71% $45,672 14.81% $13,463 34.63% $39,818 6.80% $ 94,981 9.04% S&P 500 Index $ 7,188 –3.60% $45,104 14.68% $11,840 18.40% $38,386 6.61% $134,780 10.52% The indexes are unmanaged. The index performance is not fund performance; one cannot invest directly into an index. The Fund has meaningfully outperformed its Benchmark over the long term. Table IV. This is principally the result of not losing money during the nine years ended Top contributors to performance for the quarter ended December 31, 2020 December 2008, when most others did…as well as outstanding performance Market Quarter of our growth stock investments. The Fund has compounded at 14.16% Cap End When Market annually since its inception on December 31, 1994, which exceeds the Year Acquired Cap Total Percent Benchmark by 5.12% annually. While the Fund did not make much money Acquired (billions) (billions) Return Impact from the peak of the Internet Bubble on December 31, 1999 through the MSCI, Inc. 2007 $1.8 $37.0 25.41% 2.19% trough of the Financial Panic on December 31, 2008, it did generate a Vail Resorts, Inc. 1997 0.2 11.2 30.40 1.90 positive annualized return of 2.46%. Conversely, a hypothetical investment Iridium Communications in a fund designed to track the Fund’s Benchmark would have declined in Inc. 2014 0.6 5.2 53.73 1.64 value by 4.71% on an annualized basis over the same time, while a IDEXX Laboratories, Inc. 2005 1.9 42.6 27.16 1.33 hypothetical investment in a fund designed to track the S&P 500 Index Morningstar, Inc. 2005 0.8 9.9 44.62 1.14 would have declined 3.60% annualized. (Please see Table III–Millennium Internet Bubble to Financial Panic). From the Financial Panic to the onset of Shares of MSCI, Inc., a leading provider of investment decision support tools, the COVID Pandemic, the Fund generated compounded returns of 15.98%, contributed to performance. The company reported solid third quarter which exceeded that of its Benchmark by 1.17% annually. In 2020, the Fund earnings despite the challenging COVID-19 backdrop, and management is largely kept pace with its Benchmark and returned 33.06% for the full year. continuing to proactively manage its cost base. MSCI’s asset-based fee revenue has also positively contributed due to strong underlying market The power of compounding is best demonstrated by viewing this return in conditions and inflows. We retain long-term conviction as the company dollar terms. A hypothetical investment of $10,000 in the Fund at its owns strong, “all weather” franchises and remains well positioned to benefit inception on December 31, 1994 would be worth $312,868 at December 31, from multiple prominent tailwinds in the investment community. 2020. This is approximately 3.3 times greater than the $94,981 the same hypothetical investment made in a fund designed to track the Benchmark Vail Resorts, Inc., a global operator of ski resorts, contributed to would be worth. Hypothetically, our returns were achieved with performance. Season pass sales grew 20% despite the pandemic. Robust approximately 30% less volatility than the Benchmark, as represented by its renewal rates demonstrated the loyalty of Vail’s pass base, while strong beta. (Please see Tables II and III.) We are pleased that our long-term first-time pass sales have the potential to accelerate future growth. We investments in what we believe are competitively advantaged growth expect Vail to grow recurring revenue given its strong renewal rates, which, companies with exceptional management teams have generated attractive combined with a robust balance sheet, should position the company for returns in good markets and have helped to protect capital during more continued growth in the years ahead. challenging ones. Iridium Communications Inc., a leading satellite communications provider, rose after results demonstrated resiliency despite exposure to pandemic- impacted verticals. Iridium is uniquely able to offer commercial customers true global voice and data coverage. Iridium’s Certus products have a growing pipeline with Maritime and Department of Defense customers, which should add to growth as installations accelerate. The company also saw strong growth in consumer-facing channels, which are benefiting from attractive secular trends.

30 December 31, 2020 Baron Growth Fund

Table V. We believe that Desktop Metal’s breakthrough product portfolio overcomes Top detractors from performance for the quarter ended December 31, 2020 many of the limitations that have historically constrained additive Market Quarter manufacturing to prototyping. The company’s patented single-pass jetting Cap End technique is up to 100 times faster than existing metal 3D printing When Market Year Acquired Cap Total Percent technology. It is designed to work on almost any metal alloy or ceramic Acquired (billions) (billions) Return Impact material that can be developed with a powdered metallurgy process. FactSet Research Systems, Inc. 2006 $2.5 $12.6 –0.46% –0.05% Desktop Metal’s system is managed by proprietary fabrication and sintering American Well Corporation 2020 5.1 6.0 –16.91 –0.05 software that automates the entire build while improving part accuracy and Wix.com Ltd. 2016 2.0 13.9 –2.71 –0.01 reducing waste. Neogen Corp. 2009 0.5 4.2 1.34 –0.01 We believe that Desktop Metal’s enhancements to speed, throughput, ease Shares of FactSet Research Systems, Inc., a leading provider of investment of use, and material menu will help additive manufacturing cross the chasm management tools, detracted from performance. The company reported from prototyping to production. As additive manufacturing is adopted for resilient first fiscal quarter 2021 earnings results, but shares lagged during end-use parts, we expect industry growth to accelerate toward 25% the quarter after outperforming earlier in the year. We retain conviction in annually. The additive manufacturing industry has the potential to approach FactSet due to the large addressable market, consistent execution on both $145 billion in annual revenue, or more than a 12 times increase from new product development and financial results, and robust free cash flow current levels. generation. Shares of American Well Corporation, one of the U.S.’s largest telehealth Desktop Metals will monetize its technology by selling 3D printers and metal companies for health systems, health plans, employers, and doctors, gave powder consumables, analogous to the way traditional printer companies back some of its post-September IPO gains. Financial results exceeded make money by selling hardware and ink refills. We expect Desktop Metal to consensus estimates but included some pull forward from the fourth quarter eventually manufacture parts for customers on an outsourced basis, further and benefited from nonrecurring service revenues. Full-year 2020 guidance expanding its ability to capture revenue. The company already generates exceeded Street estimates but implied top-line and margin deceleration, attractive gross margins on its proprietary hardware, and we expect which we believe will end up being conservative given the lack of assumed hardware margins to increase with scale. As the company’s installed base increase in pandemic-driven volumes. grows, it will sell an increasing quantity of consumables, which carry relatively higher gross margins and will improve the company’s overall Wix.com Ltd. provides software to help small companies build and maintain profitability. This should grow as the company brings a greater variety of websites and operate their businesses. Wix has over 180 million registered users materials to market, increasing its portfolio and broadening the use cases it and five million premium users. Shares declined slightly during the quarter after can serve. doubling in the first nine months of the year as Wix benefited from accelerating digitization due to COVID-19. Wix’s rapid innovation is driving continued As with all our investments, we believe that Desktop Metal is run by a growth in its core do-it-yourself market, while its expansion to serve website best-in-class management team. Desktop Metal’s binder jetting method designers has meaningfully expanded the total addressable market. traces its roots to MIT, where Dr. Eli Sachs and colleagues invented the technology. Dr. Sachs and colleagues are co-founders of Desktop Metal, RECENT PURCHASES along with CEO Ric Fulop and CTO Jonah Myerberg. Management is This quarter the Fund made a private investment in Desktop Metal, Inc.,an complemented by a Board of Directors that boasts representatives from the emerging leader in additive manufacturing systems. Additive manufacturing, world’s largest manufacturers, including Ford, General Electric, and Koch which is colloquially known as “3D printing,” has long tantalized Industries. manufacturers with the idea of a single machine capable of producing an unlimited number of parts with infinite degrees of complexity from a vast PORTFOLIO STRUCTURE AND INVESTMENT STRATEGY array of materials. The Fund seeks to invest in businesses that we believe have attractive Traditional manufacturing techniques frequently rely on expensive fundamental characteristics and are underpinned by durable competitive equipment known as “tooling.” Tooling is limited in the range of parts it can advantages. We search for businesses that serve large addressable markets make, and creates high levels of scrap, waste, and pollution. Manufacturers and are benefiting from favorable secular trends. We favor business models also have to make runs that exceed a minimum size in order to cover the that have high levels of recurring revenue, generate attractive incremental significant upfront cost of the equipment. We believe that additive margins, are cash generative, and are not dependent on third-party manufacturing has the potential to improve on many of these shortcomings. A single, flexible additive manufacturing system can reduce the required financing. We exclusively invest with management teams that we consider investment in tooling, eliminate scrap, waste, and inventory, decrease exceptional and are investing in their businesses to generate long-term time-to-market, and reduce complexity. Ultimately, additive manufacturing profitable growth. can reduce the total cost to make a part of product. The Fund holds investments for the long term. As of December 31, 2020, 32 The additive manufacturing industry already generates around $12 billion of of the Fund’s investments, representing 91.6% of the portfolio’s net assets, annual revenue, primarily from parts and services, and is growing at a 20% had been held for more than 5 years, and 21 investments, representing 8.4% CAGR. However, over 80% of companies restrict their use of additive of the portfolio’s net assets, had been held for less than 5 years. Twenty-one manufacturing to design and rapid prototyping rather than making end-use investments, representing 72.6% of the portfolio’s net assets, had been parts. To date, most additive systems have limits in their speed, accuracy, owned for more than 10 years. This is dramatically longer than most other material variety, and build volume that have inhibited them from being used small-cap growth funds, which, according to Morningstar, turn over about to manufacture end-use parts. 71% of their portfolios annually.

31 Baron Growth Fund

We view this long-term perspective as a source of our competitive by more than 10% per year, including five that have achieved annualized advantage. Most investors focus on short-term results. By concentrating on returns that exceed the Benchmark by more than 30% per year. long-term results, we are researching a less efficient area of the market. We believe this enables us, along with our growing team of analysts, to uncover Portfolio Holdings high-quality businesses that can compound revenue and earnings at faster rates for far longer than others prospectively recognize. Our long-term As of December 31, 2020, Baron Growth Fund held 53 investments. The top orientation also allows us to act opportunistically. When companies miss 10 holdings represented 54.7% of the Fund’s net assets. All were small-cap quarterly earnings estimates, or announce investment programs, stocks go businesses at the time of purchase and have become Top 10 positions down indiscriminately. We can evaluate these situations dispassionately and mostly through stock appreciation. Our holdings in these stocks have assess the fundamentals of the opportunity or the expected return of an increased by an average of 18.0 times since our initial investment. We investment program. Ideally, this allows us to buy a best-in-class business at believe all positions offer significant further appreciation potential a more attractive valuation. individually, and that the Fund’s diversification offers potentially better- than-market returns with less risk than the market. Note that diversification We believe the merits of our long-term approach are evident in our cannot guarantee a profit or protect against loss. historical performance. As of December 31, 2020, the portfolio’s 10 largest positions have been owned for an average of 15.7 years, ranging from a 6.7 Baron Growth Fund only purchases small-cap companies. Since the Fund year investment in Iridium to a 24.2 year investment in Choice Hotels. This holds its investments for the long term, the Fund has a significant group has returned 21.6% annually based on weighted average assets since percentage of assets invested in securities that have appreciated beyond their initial purchase, which has exceeded the Benchmark by 10.5% their market capitalizations at the time of the Fund’s investment. Baron annualized. Growth Fund’s median market cap is $5.9 billion and its weighted average market cap is $17.4 billion. This compares to Morningstar’s U.S. market cap breakpoints for small- and mid-cap funds of $6.7 billion and $34.4 billion, Table VI. respectively, as of December 31, 2020. Top performing stocks owned more than five years Cumulative Total Return Table VIII. Year of Since First Date Top 10 holdings as of December 31, 2020 First Purchase of Purchase Market Quarter Quarter IDEXX Laboratories, Inc. 2005 3,373.1% Cap End End When Market Investment Percent CoStar Group, Inc. 2004 2,208.4 Year Acquired Cap Value of Net Choice Hotels International, Inc. 1997 2,125.8 Acquired (billions) (billions) (millions) Assets MSCI, Inc. 2007 1,825.3 MSCI, Inc. 2007 $1.8 $37.0 $773.6 8.9% Vail Resorts, Inc. 1997 1,599.6 CoStar Group, Inc. 2004 0.7 36.4 570.7 6.6 Mettler-Toledo International, Inc. 2008 1,479.8 Vail Resorts, Inc. 1997 0.2 11.2 557.9 6.4 ANSYS, Inc. 2009 1,299.8 Penn National Penn National Gaming, Inc. 2008 1,188.2 Gaming, Inc. 2008 2.5 13.4 539.8 6.2 ANSYS, Inc. 2009 2.3 31.2 485.7 5.6 The cohort of investments that have been held for more than five years IDEXX Laboratories, Inc. 2005 1.9 42.6 426.1 4.9 earned an annualized rate of return of 20.7% based on weighted average FactSet Research assets since they were first purchased, which exceeds the performance of Systems, Inc. 2006 2.5 12.6 399.0 4.6 the Fund’s Benchmark by 8.2% per year annualized. Eight of these Iridium Communications investments have achieved annualized returns that exceed the Benchmark Inc. 2014 0.6 5.2 347.4 4.0 by more than 10% per year, including three that have achieved annualized Arch Capital Group Ltd. 2002 0.4 14.6 332.7 3.8 returns that exceed the Benchmark by more than 15% per year. Choice Hotels International, Inc. 1996 0.4 5.9 320.2 3.7 Table VII. Thank you for joining us as fellow shareholders in Baron Growth Fund. We Top performing stocks owned less than five years are appreciative of the confidence you have shown in us, and we will Cumulative Total Return continue to work hard to justify that confidence. Year of Since First Date First Purchase of Purchase Respectfully, Kinsale Capital Group, Inc. 2016 649.6% Schrodinger, Inc. 2018 646.9 Wix.com Ltd. 2016 433.0

The cohort of investments that have been held for less than five years has returned 50.4% annually based on weighted average assets since their initial Ronald Baron Neal Rosenberg purchase and exceeded the Benchmark by 30.9% annualized. Six of these CEO and Lead Portfolio Manager Co-Portfolio Manager investments have achieved annualized returns that exceed the Benchmark January 20, 2021 January 20, 2021

32 December 31, 2020 Baron Growth Fund

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: 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. The portfolio manager defines “Best-in-class” as well-managed, competitively advantaged, faster growing companies with higher margins and returns on invested capital and lower leverage that are leaders in their respective markets. Note that this statement represents the manager’s opinion and is not based on a third-party ranking. 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

33 Baron Small Cap Fund

Dear Baron Small Cap Fund Shareholder: Performance

Baron Small Cap Fund (the “Fund”) had a strong year. The Fund appreciated 17.59% (Institutional Shares) in the fourth quarter of 2020 and 40.68% for the year. These strong absolute returns compare to the Russell 2000 Growth Index (the “Index”), which gained 29.61% in the fourth quarter and 34.63% for the year, and the S&P 500 Index (the “S&P 500”) which gained 12.15% for the fourth quarter and 18.40% for the year. The Fund has outperformed both the Index and the S&P 500 over all relevant periods of comparison (1-, 3-, 5-, 10-year, and since inception). Since we started the Fund in 1997, it has generated 11.49% annualized returns, outperforming the Index by 4.06% and the S&P 500 by 3.37%.

Table I. Performance Annualized for periods ended December 31, 2020 Baron Baron CLIFF GREENBERG Retail Shares: BSCFX Small Cap Small Cap Russell Institutional Shares: BSFIX Fund Fund 2000 Retail Institutional Growth S&P 500 PORTFOLIO MANAGER R6 Shares: BSCUX Shares1,2 Shares1,2,3 Index1 Index1 Three Months4 17.52% 17.59% 29.61% 12.15% One Year 40.33% 40.68% 34.63% 18.40% remained super low, and the Fed appears to remain committed to additional Three Years 20.46% 20.78% 16.20% 14.18% accommodation if necessary. Five Years 19.56% 19.88% 16.36% 15.22% Ten Years 14.18% 14.47% 13.48% 13.88% This quarter, there was a change in market leadership. The best performing Fifteen Years 10.86% 11.08% 10.69% 9.88% stocks shifted from growth and momentum to more value and cyclical Since Inception companies. These had lagged and now their prospects seem brighter. (September 30, 1997) 11.35% 11.49% 7.43% 8.12% Though we are heavily invested in many stocks that fit the former bill, the U.S. equity markets continued their powerful rally in the fourth quarter. Fund still had a strong quarter on an absolute basis: 28 stocks (of 76 owned Positive news about the availability and effectiveness of vaccines to fight during the quarter) rose over 30% in the quarter, and 10 stocks rose over COVID excited investors about the prospects of a quicker-than-expected 50%. Our best performers came from many different sectors and featured return to normalcy (that is certainly my hope!). The election of Joe Biden as many smaller positions that came to life this quarter. These included President and the flip of the Senate were viewed favorably, with the Information Technology (“IT”) companies The Trade Desk, Gartner, Inc., expectation that a more stable governing environment will return to and WEX Inc.; Industrials companies Array Technologies, Inc., Kratos Washington, which would likely provide additional near-term support to Defense & Security Solutions, Inc., and RBC Bearings Incorporated; businesses and individuals who are in need. Corporate profits remained Consumer Discretionary companies Red Rock Resorts, Inc., Fiverr strong, especially for those businesses benefiting from digital conversion, International Ltd., and OneSpa World Holdings Limited; and Health Care and optimism returned for the prospects of many companies that had companies Inspire Medical Systems, Inc., HealthEquity, Inc., and IDEXX struggled because of the conditions of the last nine months. Interest rates Laboratories, Inc. However, we did have a bunch of positions that kind of sat it out this quarter and didn’t participate in the rally, including some of

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, 2020 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 BARON returns would be higher. FUNDS 4 Not annualized.

34 December 31, 2020 Baron Small Cap Fund

our larger holdings, such as DexCom, Inc., Clarivate Plc, Wix.com Ltd., hold onto our winners. Our bias towards earnings quality and profitability Installed Building Products, Inc., Kinsale Capital Group, Inc., and Vertiv were drags, as volatile stocks outperformed and our holdings less so. Holdings, LLC. We believe this is primarily because they had performed very For the year, the Fund’s strong results were driven by terrific performance of well earlier in the year and the market rotated. many stocks as their businesses excelled during the year. Most of our larger In the quarter, the Fund underperformed the Russell 2000 Growth Index, holdings had a great year, and we had a bunch of new positions that rocketed. which was on fire and gained almost 30%. The Index was led by the sharp Our biggest contributors for the year were IT holdings Trade Desk, Wix, bounce back of lower-quality companies. Cyclical stocks in the Industrials, Repay Holdings Corporation,andCognex Corporation;HealthCare Energy, and Materials sectors did great. So called “re-opening stories” led holdings Teladoc Health, Inc., IDEXX,andInspire Medical;Industrials the way. The Fund invests in high-quality, secular growers, so it did not holdings SiteOne Landscape Supply, Inc., Clarivate,andVertiv;Consumer benefit as these other stocks were in vogue. Health Care stocks were strong Discretionary holdings Penn National Gaming, Inc., DraftKings, Inc., Floor & as well, especially biotechnology and pharmaceutical companies, and these Decor Holdings, Inc., Installed Building Products; and Financials holdings sub-industries made up over 20% of the Index by the end of the quarter. Kinsale and BRP Group, Inc. Many of the stocks listed were up over 100%, Baron Small Cap Fund has modest investments in these sub-industries, as and all were up around 50% or more. Our stock selection was excellent, as our explained in the past. This made up a significant part of the variance of holdings in key sectors solidly outperformed the Index constituents in those performance between the Fund and the Index in the quarter. Some other sectors. We significantly outperformed the Russell 2000 Growth Index and the “style biases” and “factors” also worked against us in the quarter. Smaller S&P 500 Index. All in all, a terrific year. stocks did better, and our Fund has some larger market cap positions as we

Table II. Exposures and Returns by COVID-19 Impact Type Exposures as of 12/31/2020 4th Quarter of 2020 Returns Cash 1.9% 35% 29.6% 30% Beneﬁng 10.5% 25% 21.7% 19.7% 19.7% 20% 17.6%

Macro Slowdown 15% Direct Business 37.2% Interrupon 10% 23.8% 5% 3.0%

0% Minor Impact Russell Macro Minor Direct Baron Small Beneﬁng 26.6% 2000 Slowdown Impact Business Cap Fund* Growth Interrupon Index Baron Small Cap Fund Cumulave Returns by COVID-19 Impact Type vs. the Russell 2000 Growth Index YTD through 12/31/2020 100%

86.6% 80%

60% 62.1%

40.5% 40% 36.3% 34.6% 20% 25.9%

-20%

-40%

-60% 31-Dec-19 31-Jan-20 29-Feb-20 31-Mar-20 30-Apr-20 31-May-20 30-Jun-20 31-Jul-20 31-Aug-20 30-Sep-20 31-Oct-20 30-Nov-20 31-Dec-20

Beneﬁng Minor Impact Macro Slowdown Direct Business Interrupon Baron Small Cap Fund* Russell 2000 Growth Index Sources: BAMCO, FactSet PA, and Russell, Inc. The index is unmanaged. The index performance is not fund performance; one cannot invest directly into an index. * Represents the blended return of all share classes of the Fund.

35 Baron Small Cap Fund

Throughout the year, we have been explaining how the performance of our Shares of Gartner, Inc., the provider of syndicated research about Fund has been particularly affected by the pandemic. We have classified our technology and business practices, increased after reporting results that well holdings in four buckets and monitored how the stocks in those groupings exceeded estimates on both revenues and EBITDA. Though the core research have acted in each quarter, especially since we saw much uniformity in business has slowed as corporations have cut back on spending, trends in performance based on characteristics earlier in the year. To review, when both their IT and corporate offerings are on the upswing, and we expect COVID hit in the first quarter, the stocks we owned that suffered direct re-acceleration as business conditions stabilize. Gartner’s destination business interruption got slaughtered, while the stocks whose businesses conferences are on hold, but the company has successfully pivoted to virtual actually benefited from the new conditions held solid. These beneficiaries events, which will probably remain relevant even after travel restrictions are soared in the second period, but by the third quarter they leveled out, since behind us. Profit margins rose considerably in the quarter, and free cash flow the catalysts that propelled these stocks were then understood by the generation was strong, resulting in the company having an underleveraged market and they had performed so well. Our best performers in the third balance sheet that could be used for acquisitions and/or share repurchases. quarter were the stocks that were originally most affected by the pandemic, Though shares have bounced back, we still believe they are undervalued on as their prospects improved, and their stocks started to participate in the our near-term estimates and do expect the company to revert to its historic broad market rally. The fourth quarter was more of the same. Our COVID strong long-term growth. beneficiaries were flattish, and our other holdings all did well, performing SiteOne Landscape Supply, Inc., the largest distributor of wholesale similarly, as shown in the bar chart above. supplies to the landscaping industry, rose after reporting strong results. For the year, as might be expected because of the extreme dislocation Same-store sales in the quarter were the best since the company has been caused by the virus, our biggest contributors were our “beneficiaries” (see public, and margins showed good improvement. The company restarted its the line chart above). The second-best group were those stocks that weren’t acquisition program and has acquired eight companies so far this year and so affected, and our worst performers were those directly affected. We has a robust pipeline of future opportunities. Management explained how its presently have lower exposure to the “beneficiaries,” about 10% of the operational and selling initiatives are making great strides, which we believe portfolio versus a peak of 15%, because we have sold or trimmed those will lead to market share gains and higher margins in the future. positions as the stocks realized the growth potential offered by the ASGN Incorporated is the second largest staffing company in the U.S., pandemic, and we invested new capital into stocks in other categories. specializing in high-end recruiting for the IT industry and other growing We think this was a worthwhile and interesting way to understand end-markets. Because ASGN is so differentiated and focuses on secularly performance in the unusual year that just ended. But, as we approach a growing industries, it was able to grow revenues, even as the unemployment more normal economic environment (fingers crossed!), we note these rate doubled and other industry players reported weak sales. The highlights categorizations are less meaningful in illustrating how stocks are acting, so were their government services segment, which grew 40% overall, including we will stop this exercise go forward. acquisitions and one-time contracts; and its consulting operation, which provides great high-margin assignments and is growing organically by Table III. double-digits. Trends indicate further improvement go forward. The Top contributors to performance for the quarter ended December 31, 2020 company made two small acquisitions in the quarter and its balance sheet is Percent now set up to enable more in the future. Strategic and accretive acquisitions Impact have been a tremendous means of value creation in the past. We believe the The Trade Desk 1.55% stock remains inexpensive on near-term expectations and cheap against our Gartner, Inc. 0.88 longer-term view. SiteOne Landscape Supply, Inc. 0.83 We bought shares in Array Technologies, Inc. during its IPO this quarter. ASGN Incorporated 0.79 The company is one of the largest manufacturers of solar trackers, a type of Array Technologies, Inc. 0.78 mounting system used for ground-mounted commercial solar installments. The stock rose nicely after the offering. Please see our brief writeup on the The Trade Desk, the leading online advertising platform enabling advertisers company later in this quarterly report. and their agencies to efficiently purchase digital advertising, continued its great run. The stock was our best performer this quarter and second best for the year, more than tripling in 2020. This period, the company reported Table IV. revenues that were well above Street estimates and continued to outline a Top detractors from performance for the quarter ended December 31, 2020 bright future. Viewership of connected TV (Netflix, YouTube….) continues to Percent Impact greatly expand and ad avails increase. Trade Desk’s revenues more than doubled in this important line of business. The company believes its new SBA Communications Corp. –0.33% software release is a significant upgrade and will lead to even better DraftKings, Inc. –0.30 measurement of the value of advertising being placed. The company DexCom, Inc. –0.29 reported great progress with its “Unified ID” product, which would replace Teladoc Health, Inc. –0.21 cookies that are now used by walled gardens and independent websites. The SOC Telemed, Inc. –0.17 company foresees this product reaching critical adoption in the upcoming year, further embedding Trade Desk in the digital advertising ecosystem.

36 December 31, 2020 Baron Small Cap Fund

SBA Communications Corp., the operator of 30,000 cell phone towers in Portfolio Structure & Recent Activity the U.S. and abroad, fell in the quarter as the market favored more cyclical and volatile equities. Interest rates ticked up in the quarter, which also As of December 31, 2020, the Fund had $5.1 billion under management. The weighs against REIT shares. Operating results were fine, with 15% AFFO top 10 holdings made up 28.1% of the Fund’s net assets. These top holdings growth. Leasing activity and forward bookings picked up as wireless usage include some we have held over the last decade and some we have bought this year and last. We owned 72 securities. remained strong. We expect continued momentum in the business as we enter 2021, with all the major carriers expanding their networks for the Table V. rollout of 5G services. We have owned SBA for over 16 years, buying our Top 10 holdings as of December 31, 2020 initial position at a $235 million market cap. We have made almost a 30% Quarter End annualized return since its initial purchase, and the present market cap is Investment Percent over $31 billion. We trimmed our position earlier in the year when the stock Year Value of Net was near its peak. Acquired (millions) Assets Installed Building Products, Inc. 2017 $170.7 3.4% Shares of DraftKings, Inc., one of the leading online sports betting and Gartner, Inc. 2007 160.2 3.2 i-gaming platforms, fell on profit taking after its incredible run since its April SiteOne Landscape Supply, Inc. 2016 158.6 3.1 IPO. We invested in January, in the SPAC that was acquiring DraftKings and Guidewire Software, Inc. 2012 157.7 3.1 the stock has risen over 260% from our initial purchase price. We are bullish The Trade Desk 2017 140.2 2.8 about the future of sports betting and DraftKings’ position as one of the Floor & Decor Holdings, Inc. 2017 139.3 2.7 leaders and innovators. The company launched its offerings in Illinois this ASGN Incorporated 2012 133.6 2.6 Vertiv Holdings, LLC 2020 130.7 2.6 quarter, and there are many more states that have approved sports betting Clarivate Plc 2019 118.8 2.3 for 2021, and we suspect more will do so, which will drive huge growth. Our ICON Plc 2013 117.0 2.3 work leads us to believe that the company could ultimately earn close to $1 billion in EDITDA, which is kind of amazing. Even so, we have been The Fund is most heavily invested in four sectors. As has been the case for trimming our position during the year as the stock rose on excitement about some time, our largest concentration is in IT (25.6% of net assets), Industrials this trend. (23.1%), Consumer Discretionary (16.7%), and Health Care (16.2%). Compared to the Russell 2000 Growth Index, we are overweight in IT, DexCom, Inc. sells continuous glucose monitoring devices for use by Industrials, and Consumer Discretionary; and significantly underweight in diabetics. The stock fell this quarter, after a big run, when a competitor Health Care, which stems from our aversion to biotechnology and received regulatory approval in Europe for its newest device. We continue to pharmaceutical stocks. We own more Financials than in the past and own a have great conviction in DexCom based on the large addressable market bunch of FinTech stocks that are classified as tech companies. We only own that its products address, the stellar execution of management, and the new two Consumer Staples companies, UTZ Brands, Inc. and Whole Earth product pipeline. DexCom’s G7 product, which addresses the larger Type 2 Brands, Inc., and no Utilities or Energy stocks. Our investments are made diabetes market, will be introduced in 2021 and has great promise. At its “bottom-up,” meaning we are not aiming to find stocks in particular sectors recent investor day, the company projected that its revenues and profits so that we look similar to the Index. Just the opposite, we are looking for would grow 250% and 300%, respectively, over the next five years, which companies that meet our criteria across sectors and the portfolio composition we believe is eminently doable and is not reflected in the present stock flows from that effort. price. We are long-term investors in small-growth companies. Stocks that we have held for over 10 years make up 15.8% of our Fund’s assets. Another 22.6% Shares of Teladoc Health, Inc., the nation’s largest telehealth company, of our holdings have been held 5 to 10 years. We hold these stocks for the declined in the fourth quarter after more than doubling earlier in the year. long term because that has led to good returns. The stocks that we have Teladoc was a major beneficiary of the pandemic, as utilization of its held for more than 5 years have a weighted average annualized total return services accelerated and the prospects for telehealth became more of 25%, which well surpasses the indexes over those holding periods. We cemented in the health care system as an integral modality of delivery. often quote the old investment adage I first learned over 30 years ago, to Teladoc closed a major acquisition of disease management company “water your flowers and cut your weeds.” These long-term holdings are “our Livongo in the quarter. Teladoc was the top contributor to performance in flowers.” As we make new investments, we are looking for our next long- 2020. However, we sold our position by year end since the stock had risen term holdings, which involves a different type of mindset and research than so much that the market cap of the company post acquisition was very most other investors undertake. high, and we are somewhat concerned about increased competition in the Our Fund is laden with “big winners.” Investments in 14 stocks that make up space. We owned Teladoc for three years and made a terrific 80% 30% of our assets have appreciated five times or more in the Fund. An annualized return since its initial purchase. additional 27 stocks, making up 42% of our assets, have more than doubled SOC Telemed, Inc. is also a telehealth company that we invested in this since bought for the Fund. So almost three-quarters of our holdings have quarter. The stock fell after its SPAC merger was complete. The increase in already been very successful investments. We hold these stocks only when COVID cases will hurt the company’s business near term. We discuss the we believe they can continue to be great stocks. Some of our holdings now company more fully later in this report and our rationale for purchase, so have larger market caps than is typical in small-cap funds, but all these stocks were purchased when they are small and have appreciated please read on to learn more. significantly over time through long-term compounding and issuance of equity to grow their businesses. We sell some of our positions in these larger market caps to maintain what we believe are appropriate position sizes, to raise capital to reinvest in new small-cap ideas, and to be cognizant of the overall market cap of the Fund and stay true to our small-cap mandate.

37 Baron Small Cap Fund

We were a little more active in adding new names to the portfolio in 2020. SOC Telemed, Inc. is a nationwide leader in the ever-emerging field of The market was more volatile, which created opportunities. And we had acute telemedicine. The company provides high-quality specialty clinical continued success finding new investments that came public through SPAC care at scale through technology. SOC Telemed enables its critical mass of transactions and IPOs. Our turnover for the year was about 17%, which is in scarce physicians to provide real-time neurology, psychiatric, and keeping with our historical levels of 15% to 20%. For the quarter, the emergency room services to hospitals in need, over the company’s weighted average market cap of the new stocks bought was $2.0 billion and proprietary digital platform. The adoption of telemedicine has accelerated the weighted average market cap of all stocks bought, either new companies because of the pandemic and is still early stage. The company is a or additions to existing positions was $2.1 billion. For the year, our new differentiated provider (acute care market focus) with a compelling market stocks had a weighted average market cap of $1.5 billion when acquired, opportunity. We believe the company has substantial opportunities to and all purchases had a weighted average market cap of $2.0 billion. These expand its services with existing clients, to serve additional heath systems, levels are in line with the market caps of initial investments over the life of and provide adjacent specialties which they will enter organically or through the Fund. As we have discussed, SPACs are a great source of new ideas for acquisition. the Fund. In the quarter, we bought one SPAC. We bought five SPACs during We admire the company’s business model, which features recurring the year. About 37% of the capital invested in new ideas were in the SPACs. revenues, high rates of customer retention, and modest capital intensity. We We also have committed to two PIPES in conjunction with SPAC believe that its software offering, Telemed IQ, is highly advanced and transactions that will fund in the first quarter. We expect SPACs to continue proprietary, and we are excited about the company’s plan to sell licenses of as a great source of new idea flow in 2021, as we expect triple the amount its software outright in a SaaS model to hospitals and doctor groups who of backend mergers to close, so lots for us to look over. want to utilize it on their own. We foresee rapid growth and expanding margins for years to come. However, revenues in 2020 were down because Table VI. hospitals were using their beds and resources to deal with COVID at the Top net purchases for the quarter ended December 31, 2020 expense of focusing on providing regular acute services. The company came Quarter End Amount public by merging into a SPAC (the principals of which we highly respect), Year Market Cap Purchased Acquired (billions) (millions) but, unfortunately, the deal closed when the market was weak, and the stock has traded down. We think the company is trading at about five times Array Technologies, Inc. 2020 $5.5 $35.7 our estimate of forward annual revenues, which we think is cheap for a high- SOC Telemed, Inc. 2020 0.6 32.3 quality/fast-growing business. CryoPort, Inc. 2020 1.7 13.7 Certara, Inc. 2020 5.2 13.3 Table VII. Jamf Holding Corp. 2020 3.5 12.5 Top net sales for the quarter ended December 31, 2020 During the quarter, we made investments in six new ideas. We also added to Quarter End nine positions. The new investments were in IPOs, SPACs, and existing Market Cap Market Cap or When Market Cap Amount businesses either owed by other Baron Funds or new. Year Acquired When Sold Sold Acquired (billions) (billions) (millions) Array Technologies, Inc. has a dominant market position in solar trackers, a single-axis mounting system that rotates solar panels to follow the sun. A Teladoc Health, solar tracker increases the yield of the solar panels, producing up to 25% Inc. 2017 $1.8 $30.4 $75.0 more energy for 7% higher cost, and ultimately reduces the levelized cost of The Trade Desk 2017 1.7 37.6 47.1 electricity produced by the system vs. “fixed-tilt” or stationary mounting Moelis & Company 2014 0.4 2.4 29.2 systems. Array is a direct beneficiary of the economic competitiveness of Quaker Chemical solar energy and is agnostic to panel technology. The company has a Corporation 2019 2.6 4.5 24.8 patented tracker technology (around 10 years left on the patent) that uses Floor & Decor less labor to install and 180 times fewer components, resulting in lower Holdings, Inc. 2017 3.0 9.2 21.9 operating costs and fewer unscheduled repairs over an expected 30-year During the quarter, we sold out of Teladoc Health, Inc., a great position for project’s life. Array’s automatic mechanical stowing design, which protects the Fund, because of market cap considerations and valuation concerns. We panels in high wind conditions as well as new software and machine learning also sold out of our smaller positions in Moelis & Company, Quaker capabilities further differentiates the company in improving the output of a Chemical Corporation, and Cantel Medical. All were deemed either full in solar project. Array’s unique product design and strong execution has led to valuation or less exciting than other ideas in which we were investing. All a dominant market position in the U.S. market with an over 50% share, up were bad sales so far, as these stocks continued to rally in the quarter and from 20% to 25% a few years ago. into the new year. We believe Array can double its revenue in the near term and more so We trimmed some of our larger positions into strength. The largest thereafter through growth in the U.S. solar market and increased tracker decreases, measured by dollars raised, were The Trade Desk, Floor & Decor penetration from 70% to 90%, taking share and further adoption of the Holdings, Inc., Fiverr, and IDEXX. All these holdings have been very strong global tracking market (currently 32% tracker vs. 68% fixed tilt) and in the quarter, and for the year, so we were reducing into strength, as is our expanding into adjacencies to sell through its existing sales channels via usual practice. M&A, while maintaining a healthy 16% to 18% EBITDA margin with minimal capital expenditure.

38 December 31, 2020 Baron Small Cap Fund

Outlook stocks will reflect these results over time. We are “in it to win it”…. we like to stay invested to capture the returns when they come (like in 2020) and The market remains strong into the new year, continuing the momentum of not be too cute to try to think we (or anyone) can time it. And if stocks the fourth quarter. Business remains strong for many of our holdings, trade down, because multiples contract, I revert back to the teachings of the especially those companies that are prospering from the acceleration of immortal Dick Gilder, who would say “growth cures all,” which means if the digital trends brought on by dealing with the pandemic. There is much companies perform and grow to be much bigger, their stocks won’t seem optimism about the prospects for companies that suffered, as the end of the overvalued for long. This is one of the great advantages of being a long- pandemic appears to be in sight and the return to normalcy is palpable. We term, research-driven, investor; we don’t have to time it right, we just have expect strong continued results from most of our investments as the trends to get it right. And we have more times than not over the life of the Fund. set in place in 2020 continue to play out. And other companies should benefit from pent-up demand and their business should bounce back I would like to recognize the immense contribution of the Baron research vibrantly. Interest rates remain very low, which bodes well for high stock group, which continues to do outstanding work in identifying, researching, multiples, and, as rates tick higher, that negatively affects the attractiveness and following the eclectic holdings of the Fund, each of which we believe of bonds as an alternative to equities. has the common attributes of being competitively advantaged, well managed, growing nicely, and having great prospects for long-term success. We expect the new Biden administration and Democrat-controlled Congress Our team is very talented and dedicated, and it is showing its mettle and to be fine for business and the market. While we expect corporate and prowess through the strong results of the Baron Small Cap Fund and other individual tax rates to increase, we think it is likely that there will be funds at Baron. And thanks to assistant portfolio manager David Goldsmith additional fiscal stimulus and support programs for individuals, which will for his invaluable role in managing the Fund. add to growth. Hopefully, health care policy will be in capable hands and there will be an efficient and effective rollout of the vaccine and thoughtful I wish you all a happy and healthy New Year. For those who suffered this oversight of future challenges. Though the country is terribly divided, we are past year, you have my heartfelt sympathy, and I hope that better times are hopeful that the temperature will be turned down, calming tensions, and, ahead. even if not, we don’t believe it will be an impediment to economic growth Thank you for your confidence in us and your investment in the Fund. or the market outlook. The primary concern about the market is valuation. We acknowledge that stocks are trading at higher valuation levels than in the past. This is probably appropriate since the near-term and long-term prospects of our investments are rosier than usual, interest rates are so low, and we believe our holdings are so special, making valuations seem appropriate. But they are extended. As we underwrite our companies, we still see considerable upside based on our view of the future prospects of the businesses, but, again, we find ourselves embedding higher multiples. Cliff Greenberg Portfolio Manager We know that it is hard to understand the timing of when stocks will January 20, 2021 perform. So, we focus on how the business will perform and know that

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

39 Baron Opportunity Fund

Dear Baron Opportunity Fund Shareholder: Performance

The unprecedented market rebound from the COVID pandemic induced February/March sell-off continued into year end. For the fourth quarter, Baron Opportunity Fund (the “Fund”) delivered robust returns, advancing 23.02% (Institutional Shares), outperforming both the Russell 3000 Growth Index, which rose 12.41%, and the S&P 500 Index, which climbed 12.15%. For the full calendar year 2020, the Fund finished up 89.28%, significantly ahead of both indexes, which increased 38.26% and 18.40%, respectively.

Table I. Performance Annualized for periods ended December 31, 2020 Baron Baron Opportunity Opportunity Russell Fund Fund 3000 S&P Retail Institutional Growth 500 Shares1,2 Shares1,2,3 Index1 Index1 MICHAEL A. LIPPERT Retail Shares: BIOPX 4 Three Months 22.95% 23.02% 12.41% 12.15% Institutional Shares: BIOIX One Year 88.75% 89.28% 38.26% 18.40% PORTFOLIO MANAGER R6 Shares: BIOUX Three Years 41.97% 42.34% 22.50% 14.18% Five Years 30.78% 31.13% 20.67% 15.22% Ten Years 18.77% 19.09% 16.93% 13.88% the human side of the ledger, we had suffering, loss, and death from the Fifteen Years 15.16% 15.39% 12.41% 9.88% COVID pandemic; struggles, uncertainty, job losses, and business closures Since Inception for large swaths of the domestic and global economy; and frightening, (February 29, 2000) 10.56% 10.73% 6.57% 7.03% stunning, and historic political discord across the nation, culminating with the riots and storming of the U.S. Capitol – a beacon of freedom and REVIEW &OUTLOOK democracy – on January 6th (the first time since the British did so in 1814 during the War of 1812). What accounted for this discrepancy? To vastly I think many market participants may have felt similar to the way I did at oversimplify for this letter, as we all know, the market looks forward and year end, as well as over the first couple of weeks of the new year, wrestling discounts future expectations. The market looked through the pandemic, with the stark incongruity between the human and economic toll all around bolstered by reports and data of vaccine development; expectations for us and the stock market’s record performance. The S&P 500 Index ended the economic recovery and strong corporate earnings; projections for a year at all-time highs and continued its steady rise to start the year. But, on sustained Federal Reserve backstop and persistent historically low interest

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, 2020 was 1.34% and 1.08%, 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 The Adviser reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 3-, 5- and 10-year 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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. BARON FUNDS 4 Not annualized.

40 December 31, 2020 Baron Opportunity Fund

rates (increasing the present value of future cash flows); and the hope and advantages, profitable business models, and long-term oriented managers. I experience that humanity has eventually defeated every crisis it has ever know it might sound like a broken record – but, to put it plainly, it is what faced, whether natural disasters, war, political tyrants, or plagues. we do. Our long-term performance is due to our steadfast commitment to this approach. And I trust it is why our shareholders have entrusted us with 2020 was a record year for the Baron Opportunity Fund. First, I want to their capital. quickly share how incredibly proud I am of our research team at Baron, who did an amazing job overcoming the personal and professional disruptions of We remain convinced that our investments and themes, many of which the pandemic, responding with tireless efforts, teamwork, collaboration, thrived and proved vital during this period as highlighted above, will be even flexibility, and commitment. Second, I want to reiterate, as I’ve underlined in stronger when the post-COVID “new normal” world emerges. The pandemic prior letters during this crisis, that our strong returns for the year were – and consumer and business responses to the crisis it caused – merely driven by the precise tenets of our long-term performance: the quality of accelerated the changes driven by the last few decades of innovation, the businesses in which we invest and the importance of the long-term technology disruption, and digital transformation. The world is not going secular themes we emphasize. As we accentuate in all our investor back. As I have said to many shareholders in one-on-one calls, I believe in communications, we focus our investments on secular growth themes that, the human law of inertia. Change is hard, but once we change, whether in a normal world, drive or capture ongoing, undeniable shifts in industry because we are forced to do so or choose it voluntarily, and we see that the dynamics and user adoption/behavior. But many of these themes proved changes are better, we seldom retreat to the old ways of doing things. simply critical to permit businesses and people to carry on with life and Innovation – the overarching theme of the Fund – stood with us during the work during this COVID-19-driven health and economic crisis. These COVID pandemic, it will likely be the light that leads out of this dark tunnel include: e-commerce for the necessities of life delivered safely to your door (indeed, Moderna developed a vaccine prototype within two days of (Amazon, Alibaba); electronic payment systems to transact safely and receiving the virus’s DNA sequence), and it will drive us further forward into securely in a social-distancing world and, more often than not, online the future, always separating the business winners and losers. As I have (PayPal, Square, Adyen, Visa); digital entertainment, media and advertising written ad nauseum, stretching the famous Wayne Gretzky quote, “we to enable businesses to reach their customers with targeted content and invest to where the world is going, not where it has been.” advertising where they are spending their time and in a manner that Below is a partial list of the secular megatrends we focus on. These themes complements, not interrupts, the content a user is consuming will be the key drivers of revenue, earnings, and cash flow growth – and (Netflix, Pinterest, Alphabet, Snap); digital workflows to enable buyers and stock performance – for the companies in which we are invested: sellers to safely and easily navigate a real estate transaction, including mortgage financing, in this difficult environment (Zillow, Opendoor); cloud • Cloud computing computing infrastructure and applications to enable enterprise and personal • Software-as-a-service (“SaaS”) use cases from whatever device wherever your location • Artificial Intelligence (“AI”) and big data (Amazon, Microsoft, NVIDIA, Snowflake); cybersecurity to keep you safe • Mobile and secure in this digital world (CrowdStrike); and whole genome • Digital communications sequencing to better understand diseases and design targeted therapies, • Digital media/entertainment drugs and vaccines (Illumina, Pacific Biosciences, Guardant Health). • Targeted digital advertising • E-commerce What do we expect for 2021? I have learned from Ron, and my own • Genomics experience over almost 20 years at Baron, that the immediate future is • Genetic medicine almost impossible to predict. Consensus expectations appear to be that • Minimally invasive surgical procedures mass vaccination will be successful and that we will emerge into a post- • Cybersecurity COVID world hopefully by the summer, or by year end at the latest; the • Electric-drive vehicles/autonomous driving economic recovery will be significant, particularly during the second half of • Electronic payments the year; the Federal Reserve and accommodative monetary policy will continue to support the economic recovery and produce low interest rates By investing in businesses capitalizing on these potent trends, we have been for several years. Many predict, and hope, that our politics and governance able to build portfolios that have revenue growth rates that are multiples of will become more stable and potentially more bipartisan with a new the general economy, as reflected in broad market indexes. Below we administration and a 50/50 Senate, yielding, among other things, more compare the revenue growth rates of our Fund and three indexes for the aggressive fiscal stimulus and an acceleration of the vaccine rollout. If these trailing four quarters for which we have reliable data: things come to pass, I believe it will be a favorable environment for the market and our Fund. Comparison of Revenue Growth (based on quarter-end holdings) But as I have emphasized in the past: we don’t try to predict the Actual Actual Actual Actual unpredictable; we don’t try to call or game the market; and, most Q3 2020 Q2 2020 Q1 2020 Q4 2019 critically, we don’t need to answer the unanswerable to deliver outstanding Baron Opportunity Fund 25.2% 18.4% 18.8% 20.5% investment returns for our shareholders. As we have always done, we S&P 500 Index -1.0% -9.3% -1.5% 5.8% continue to focus our research, analysis, and investment decisions on Russell 3000 Index -1.3% -10.3% -0.9% 5.3% identifying the indisputable, powerful, durable secular growth trends that will drive economic growth going forward, regardless of short-term Russell 3000 Growth Index 9.3% 1.3% 8.8% 8.5% economic cycles or stock market gyrations, and the individual companies Source: BAMCO and FactSet. that are leading or riding those trends and possess sustainable competitive

41 Baron Opportunity Fund

Table II. QuantumScape Corporation is developing solid-state battery technology Top contributors to performance for the quarter ended December 31, 2020 for electric vehicles designed to improve key aspects of the battery, Percent including safety, charging times, energy density, and cost. We believe the Impact company’s existing material development and manufacturing techniques Tesla, Inc. 2.16% can help overcome solid state technological and commercialization hurdles. Pacific Biosciences of California, Inc. 1.91 During the quarter, we participated in the merger between QuantumScape Snap Inc. 1.35 and SPAC Kensington Capital. Shares have since appreciated, driven by Opendoor Technologies Inc. 1.32 investor excitement for the growth opportunities the company may capture QuantumScape Corporation 1.17 with its innovative battery technology. (Ishay Levin)

Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar Table III. products, and energy storage solutions. The stock increased on strong Top detractors from performance for the quarter ended December 31, 2020 financial results, including profitability that exceeded market forecasts and Percent strong growth across different geographies and vehicle programs. Indeed, in Impact the third quarter, Tesla delivered almost 140,000 total vehicles – with strong Alibaba Group Holding Limited –0.50% unit level economics of 27.7% GAAP automotive gross profit margins – and Vroom, Inc. –0.35 another quarter of GAAP profitability and strong free cash flow (almost $1.4 Splunk, Inc. –0.21 billion). Recently, Tesla announced a record of over 180,000 total vehicle Zoom Video Communications, Inc. –0.19 deliveries for the fourth quarter, effectively hitting its goal of 500,000 Vertex Pharmaceuticals Incorporated –0.13 deliveries for the calendar year, a projection given before the COVID pandemic. In addition, we believe newly released full self- Alibaba Group Holding Limited is the largest retailer and e-commerce driving functionality should yield further improvements in unit economics company in China. Alibaba operates shopping platforms Taobao and open exciting new growth opportunities. Lastly, Tesla joined the S&P and Tmall and owns 33% of Ant Group, which operates Alipay, China’s 500 Index, a meaningful milestone that significantly expands the potential largest third-party online payment provider. Shares were down on the news shareholder base. (Ishay Levin) that Chinese regulators had launched an investigation into Alibaba for suspected monopolistic behavior. We continue to believe Alibaba’s core Pacific Biosciences of California, Inc. provides long-read DNA sequencing business remains highly profitable, complemented by rapid growth in the systems to help scientists conduct genetic analysis. Shares performed well cloud business and inflections in the Cainiao logistics and New Retail during the quarter. We believe there is increasing excitement about the segments. (Ashim Mehra) potential for its platform as it lowers sequencing costs and seeks to move beyond its current commercial niche. Recently appointed CEO Christian Vroom, Inc. is an e-commerce platform that buys and sells used Henry previously served as CFO and Chief Commercial Officer at Illumina, vehicles online and through its app, handling inbound and outbound Inc., and we think he is well qualified to commercially execute on Pacific transportation and offering insurance, financing, and warranty products Biosciences’ differentiated long-read platform. (Neal Kaufman) through third-party partnerships. Shares were down in the quarter given customer service challenges, which we expect to be resolved in the near Snap Inc. is the leading social network among teens and young adults in the term. In our view, given its differentiated asset-light approach that should U.S. Shares of Snap were up this quarter on excellent financial results, drive higher returns on capital than that of its competitors, Vroom could be including revenue growth that benefited from a recovery in ad spending and one of several winners in the $840 billion-plus U.S. used auto market, of evidence of impressive operating leverage. We continue to view Snap which less than 0.1% is online. (Ashim Mehra) favorably as the company sustains its rapid pace of product innovation and expands its ecosystem through premium partnerships and increased Splunk, Inc. leverages its scalable data analytics solutions to enable developer accessibility, helped by its unique audience reach, powerful video customers to manage operations more efficiently across a broad array of business, improved ad products, and robust augmented and virtual reality use cases, including IT operations, IT and application monitoring, and technology. (Ashim Mehra) cybersecurity. The stock fell after Splunk reported a slowdown in bookings driven by delays in closing its largest pipeline deals. Management withdrew Opendoor Technologies Inc. operates a digital platform where buyers can its long-term targets as it evaluates deal activity during the company’s fiscal tour homes, make offers, and get financing, while sellers can receive fourth quarter. We have cautiously maintained conviction – post a series of next-day cash offers with flexible close dates. Shares were up in the quarter management calls and interactions, as well as customer and industry-expert on continued reacceleration in residential real estate activity. In our channel checks – as we expect Splunk’s differentiated data platform, newer view, Opendoor is the iBuying industry leader disrupting an enormous and cloud services, and more flexible pricing models to support growth, although highly inefficient industry, with 2019 revenue of $4.7 billion representing we acknowledge it may take longer to achieve in the pandemic-impacted less than 0.5% share of a $1.3 trillion addressable market. See below under enterprise spending environment. (Ishay Levin) “top net purchases for the quarter” for further discussion of Opendoor. (Ashim Mehra)

42 December 31, 2020 Baron Opportunity Fund

Zoom Video Communications, Inc. is a cloud-based software company Visa, Inc. and Mastercard Incorporated are both long-term holdings in the providing a video-first platform for communication. Shares of Zoom Fund and leaders of the long-term e-payments trend. Each will also benefit declined during the fourth quarter on profit taking following the strong run from the post-pandemic normalization of the global economy, particularly in the stock because of accelerated pandemic-driven Zoom adoption, travel-related cross-border spending. Our position sizes in each diluted down revenue growth, and free cash flow generation. We retain conviction as last year given the sizable inflows the Fund experienced and the Zoom remains a leading player in disrupting the $100 billion unified underperformance of their stocks during the year, and we decided to communications market with its scalable, globally distributed, cloud-based, increase our portfolio weightings in each during the period. video-first offering, while its well-known brand (Zoom is now a verb!) should enable it to grow profitably as it takes market share. (Guy Tartakovsky) Opendoor Technologies Inc. operates the leading “iBuying” digital platform in the U.S. enabling consumers to buy and sell homes instantly. On Vertex Pharmaceuticals Incorporated is a pharmaceutical company best known for its commercial products targeting cystic fibrosis. Share weakness Opendoor, home buyers can tour properties virtually, make offers, and in the quarter was due to the negative initial readout of a pipeline asset receive financing, while sellers can receive express cash offers on their targeting Alpha-1 antitrypsin disease, an inherited disorder that increases homes with flexible close dates. In our view, Opendoor can be one of several the chance of lung and liver disease. Given Vertex’s best-in-class growth winners in a massive and highly fragmented industry, with the company’s profile and cash flow, as well as upcoming drug-development catalysts, we 2019 revenue of $4.7 billion representing less than 0.5% share of the $1.3 retain long-term conviction in the name. (Josh Riegelhaupt) trillion in addressable U.S. residential real estate sales annually. This view is driven by our conviction that the one-stop shop iBuyer model is a vastly Portfolio Structure simpler experience for home buyers and sellers and will attract increasing consumer adoption to Opendoor. It is further bolstered by Opendoor’s The Fund invests in secular growth and innovative businesses across all impressive Net Promoter Score of 70. market capitalizations, with the bulk of the portfolio landing in the large-cap zone and the Fund is categorized as Large Growth by Morningstar. As of the Looking ahead, we expect tailwinds not only from increasing iBuyer end of the fourth quarter, the largest market-cap holding in the Fund was adoption but also from Opendoor’s geographical expansion to over 100 $1.7 trillion and the smallest was $391 million. markets from 21 currently, as well as its growing suite of ancillary offerings The median market cap of the Fund was $24.0 billion. beyond title/escrow, mortgages, and automated closing processes to include home warranty, renovations, insurance, moving services, and more. Over The Fund had $1.4 billion of assets under management. The Fund had time, we believe Opendoor can reach mid- to high-single-digit contribution investments in 76 securities. The Fund’s top 10 positions accounted for margins per home vs. 4% in its most mature markets today driven by 33.5% of net assets. increasing attach rates of ancillary services. Today, 90% of Opendoor’s Fund inflows accelerated during 2020 and remained solidly positive in the current markets are contribution margin positive, and as the company scales fourth quarter. further and adds ancillary offerings, we expect improving unit economics to drive EBITDA breakeven by 2023. Table IV. Top 10 holdings as of December 31, 2020 Stitch Fix, Inc. is an online personal styling service that uses Quarter End recommendation algorithms and data science to personalize clothing items Quarter End Investment Percent based on size, budget and style across all genders and ages. Previously a Market Cap Value of Total subscription-type business, Stitch Fix is starting to leverage its proprietary (billions) (millions) Investments data to enable direct retail from its site. We believe this new offering Microsoft Corporation $1,681.6 $94.3 6.7% expands Stitch Fix’s total addressable market to the broader $375 billion to Amazon.com, Inc. 1,634.2 77.4 5.5 $400 billion U.S. apparel market (along with international opportunities). To Alphabet Inc. 1,185.3 53.5 3.8 support its new product roadmap, Stitch Fix brought in President Elizabeth Tesla, Inc. 668.9 52.6 3.7 Spaulding (previously 20 years of experience at Bain) and CFO Dan Jedda ZoomInfo Technologies Inc. 18.8 35.6 2.5 (previously 15 years at Amazon). We came away from our meetings with RingCentral, Inc. 34.0 35.1 2.5 Facebook, Inc. 778.0 33.7 2.4 management incredibly impressed by the strong bench and apparent firm Opendoor Technologies Inc. 12.4 31.7 2.3 culture of risk-taking and big ambition. We believe this is just the beginning Pinterest, Inc. 40.7 29.9 2.1 of Stitch Fix’s successful pivot into traditional retail. Its proprietary data Guidewire Software, Inc. 10.8 28.8 2.0 makes it one of the only retailers that can execute human-assisted AI by pairing more than 6 billion data points about specific customer preferences RECENT ACTIVITY with over 5,000 stylists. As it gathers more data around direct buy, Stitch Fix can also optimize inventory to drive better conversion. Over time, Table V. management envisions Stitch Fix evolving into a dynamic marketplace with Top net purchases for the quarter ended December 31, 2020 active vendor management, pricing/demand forecasting, and increased Quarter End Amount private label penetration (which is higher margin, with higher customer Market Cap Purchased satisfaction scores and lower return rates). Looking further out, it can (billions) (millions) expand into new international markets or new categories, like furniture, Visa, Inc. $527.0 $15.2 decor, beauty, resale, and luxury. Over the next five years, we believe that Opendoor Technologies Inc. 12.4 15.0 sales can double from today’s level around $2 billion and that the stock Mastercard Incorporated 355.8 12.5 offers significant upside potential. Stitch Fix, Inc. 6.2 12.5 Farfetch Limited 21.7 11.9

43 Baron Opportunity Fund

We invested in Farfetch Limited, a global luxury fashion e-commerce The sales of Pacific Biosciences of California, Inc., Tesla, Inc., and marketplace that connects luxury brands, consumers, and retailers. Led by Snowflake Inc. were all trims after orders-of-magnitude type stock returns visionary founder José Neves, the company uses its over 10-year last year for these three investments – Tesla is now up nearly 15 times our relationships with brands and boutiques to create an unmatched product average cost; Pacific Biosciences is up over 5 times; and Snowflake is up selection through an attractive asset-light marketplace model, which allows almost 2.5 times – for position-sizing purposes. We continue to believe all of Farfetch to boast over 7 times the selection of its nearest competitor. Its these companies have strong fundamentals and open-ended long-term supply is then further differentiated by exclusive content from New Guards opportunities. Tesla, in particular, remains a top four position in the Group (a collection of luxury brands like Off-White and Palm Angels). As a portfolio. result of its differentiated supply, we believe Farfetch should continue winning market share from other online players, like Net-a-Porter, and The sales of salesforce.com, inc. and Cellnex Telecom, S.A. were both traditional luxury retailers, like Saks and Neiman Marcus, that do not have made to raise capital for other names in their respective spaces, namely their own brands and can only sell what they physically own. As the only software and IT infrastructure. global luxury marketplace, Farfetch is also uniquely positioned to benefit from the acceleration of online luxury spending, which according to Bain, is To conclude, I believe wholeheartedly in the strategy of the Fund: growth expected to rise from 12% global penetration pre-COVID to 30% by 2025. based on powerful, long-term, innovation-driven secular growth trends. In Capitalizing on the digitization of luxury, Farfetch recently announced a the highly unpredictable times we live in – both during this crisis and in the partnership with Alibaba in China, one of the most important and fastest “new normal” hopefully around the corner – we believe non-cyclical, growing luxury markets in the world. Currently under-indexed to China sustainable, and resilient growth should be part of investors’ portfolios. (20% to 25% of Farfetch sales but over one-third of global luxury spending), this is a big white space opportunity for Farfetch. Following the Alibaba deal, Sincerely, we have even greater conviction that Farfetch has durable competitive advantages and is well positioned for long-term growth with an expanding addressable market as more luxury spending moves online.

Table VI. Michael A. Lippert Top net sales for the quarter ended December 31, 2020 Portfolio Manager Quarter End January 20, 2021 Market Cap or Market Cap Amount When Sold Sold (billions) (millions) Pacific Biosciences of California, Inc. $ 4.8 $14.5 Tesla, Inc. 668.9 12.1 Snowflake Inc. 79.7 11.1 salesforce.com, inc. 202.0 10.4 Cellnex Telecom, S.A. 23.1 8.7

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

44 December 31, 2020 Baron Partners Fund

Dear Baron Partners Fund Shareholder: Performance

Baron Partners Fund (the “Fund”) rose substantially in the final quarter of 2020 and outpaced its comparable benchmarks and peer group. The Fund gained 42.87% (Institutional Shares) in the quarter. The Russell Midcap Growth Index (the “Index”) and S&P 500 Index were up 19.02% and 12.15%, respectively. The Morningstar Mid-Cap Growth Category Average rose 21.03%. TheFund’squarterlyperformancecapsanexcellentyearonbothanabsolute and relative basis. The Fund rebounded considerably since the depths of the COVID-19-induced market panic in March and that strong performance continued throughout the latter part of the year. The Fund advanced 149.18% in 2020. This result again compares favorably to its benchmarks and peer group. The Index gained 35.59% for the year. The Morningstar Mid-Cap Growth Category Average increased 39.26%, and the S&P 500 Index was up 18.40%. For the 17-plus years since Baron Partners Fund converted from a private partnership into a mutual fund on April 30, 2003, it is ranked 2nd among all U.S. equity funds (2,256 share classes) through December 31, 2020.*

Table I. MICHAEL BARON RON BARON Retail Shares: BPTRX Performance CO-PORTFOLIO MANAGER CEO AND LEAD Institutional Shares: BPTIX Annualized for periods ended December 31, 2020 PORTFOLIO MANAGER R6 Shares: BPTUX Baron Baron Partners Partners Russell Fund Fund Midcap S&P Retail Institutional Growth 500 Shares1,2,3 Shares1,2,3,4 Index2 Index2 We are optimistic that the end of the COVID-19 pandemic is within sight. 5 Scientific research and discovery have led to viable vaccines, which are now Three Months 42.78% 42.87% 19.02% 12.15% in the process of being administered. Governments continue to provide One Year 148.52% 149.18% 35.59% 18.40% financial assistance to their citizens and various industries. And the incoming Three Years 52.28% 52.68% 20.50% 14.18% new Presidential administration in the U.S. has pledged to continue this Five Years 37.04% 37.40% 18.66% 15.22% support while also taking steps to slow the virus’ spread. These Ten Years 23.71% 24.04% 15.04% 13.88% developments have been well received by investors. Since Conversion (April 30, 2003) 19.29% 19.50% 13.18% 10.54% Since Inception (January 31,1992) 16.40% 16.52% 10.85% 10.18%

* This is a hypothetical ranking created by Baron Capital using Morningstar data and is as of 12/31/2020. Note, the peer group used for this analysis includes all U.S. equity share classes in Morningstar Direct domiciled in the U.S., including obsolete funds, index funds, and ETFs. The individual Morningstar Categories used for this analysis are the Morningstar Large Blend, Large Growth, Large Value, Mid-Cap Blend, Mid-Cap Growth, Mid-Cap Value, Small Blend, Small Growth, and Small Value Categories. There are 2,256 share classes in these nine Morningstar Categories for the period from 4/30/2003 to 12/31/2020. As of 12/31/2020 The Morningstar Mid-Cap Growth Category consisted of 604, 504, and 383 share classes for the 1-, 5-, and 10-year periods. Morningstar ranked Baron Partners Fund (Retail Shares) in the 1st,1st,1st, and 1st percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 4/30/2003, and the category consisted of 227 share classes. Morningstar calculates the Morningstar Mid-Cap Growth Category Average performance and rankings 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. (c) 2021 Morningstar. All Rights Reserved. The 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. Past performance is no guarantee of future results. Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares as of December 31, 2019 was 2.22% (comprised of operating expenses of 1.32% and interest expense of 0.90%) and Institutional Shares was 1.96% (comprised of operating expenses of 1.06% and interest expense of 0.90%). 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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. Currentperformancemaybelowerorhigherthantheperformance 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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. 45 Baron Partners Fund

We did not predict the pandemic, or its severity, nor do we know when it will be unable to attain such cost levels using antiquated disposable will end. We did not alter the portfolio to populate it with “work-from- rockets. home” businesses because of the virus’ impact. And the main contributors Real/Irreplaceable Assets were lifted by optimism surrounding vaccine to performance have been companies that had long been held in the discovery. The businesses within this group have weathered a very difficult portfolio prior to the COVID-19 outbreak. We believe this pandemic will not year and their financial strength allowed them to endure. Pent-up client fundamentally change the long-term trajectory of the economy but rather demand for many of these properties is high and we believe customers will accelerated its transformation. The Fund owns businesses that are driving return in 2021. However, these companies did not sit idle during the prior this change. year. Instead, they reassessed their cost structure and client acquisition We continue to analyze the Fund’s performance in 2020 during various strategies. Hyatt Hotels Corp. and Vail Resorts, Inc. were the two largest periods: Pre-COVID-19, the COVID-19 Panic, and the COVID-19 Temporary contributors to performance in the group. Hyatt reviewed the cost structure Normal. We also segment the Fund’s concentrated portfolio into four at the corporate and property levels. Vail’s network of acquired properties business categories (Core Growth, Disruptive Growth, Financials, and Real/ helped the company attain a large number of recurring season pass users. Its Irreplaceable Assets). customer acquisition costs should decline as these skiers comprise a larger percent of lift pass sales. We are hopeful that the end of 2020 coincides with the end of this “COVID-19 Temporary Normal” period. Over the past year, individuals and Our holdings of Financials and Core Growth businesses also did well in the businesses were forced to adapt many of their practices because of the quarter, but these returns approximated the benchmark’s return. Financials pandemic. While many mandated restrictions will likely ease throughout the businesses appreciated 20.1%. The Charles Schwab Corp. and Arch Capital upcoming year, we believe many changes made by both businesses and Group Ltd. were the largest contributors in this group. Schwab continues to individuals will endure. successfully integrate key acquisitions to improve its services and scale. We believe its organic asset growth should improve post-COVID as advisors Disruptive Growth had the most sizable positive impact in the quarter. turning independent reaccelerate. Arch is exploring improved pricing for its These companies gained 52.7% in the most recent period. Tesla, Inc., property and casualty policies. The industry has endured elevated losses and Zillow Group, Inc., and Space Exploration Technologies Corp. (“SpaceX”) reserves are low. Current low interest rates and increasing inflation should were the largest contributors. Tesla deliveries were up 36% in the year provide additional support for insurance pricing. Arch’s previously despite restrictions that led to shutdowns throughout their facilities. Zillow’s conservative underwriting positions it to meet demand for new policies. mortgage business reached an inflection point in the recently reported period with 114% growth compared to the prior year. Its core Premier Agent Core Growth businesses advanced 16.9% in the fourth quarter. This group service grew a strong 24% as agents recognized its benefits. And SpaceX had had been able to consistently grow throughout the preceding year. Vaccine a record number of launches (26) and a record number of flights (7) using developments should not alter their trajectories. Two exceptions are HEICO the same booster. Its operational satellites increased nearly 8 times, which Corporation and Gartner, Inc. These two companies had the largest enabled it to begin the beta test of Starlink, its internet service. appreciation in the group. HEICO, a provider of alternative parts and technology systems to the aerospace sector, gained 28.9% in the quarter. Not only have these companies exhibited an ability to continue their Vaccines should enable an increase in flight hours this coming year. We also growth despite COVID restrictions, but customers and clients are unlikely believe that the COVID pandemic reinforced the importance of alternative to fully return to prior ways of doing business. Tesla has pioneered over the parts for the financially stressed airlines. HEICO’s parts have a cost savings air vehicle updates and eliminated most in-person service requirements. of around 40%. Gartner gained 28.2% in the quarter. Reduced COVID These updates have improved Tesla’s vehicle functionality and increased its restrictions should enable its in-person conferences to resume in 2021. We value to consumers. Historically, competitors’ cars immediately drop in also believe the company will implement virtual elements to its gatherings value by more than 20% upon leaving the dealership. Zillow has facilitated that should yield higher margins. home transactions without physically visiting properties. It has improved efficiency and transparency throughout this once opaque process. And We are pleased with the Fund’s performance. Most companies in the SpaceX has dramatically reduced the cost to reach orbit through its largely portfolio were able to continue their growth. We believe the high-quality reusable equipment. The data transmission that its satellites enable will be growth businesses in the Fund are well positioned to benefit as the economy increasingly more important in the future. Incumbent launch organizations continues its transformation.

46 December 31, 2020 Baron Partners Fund

Table II. Total returns by category for the year ended December 31, 2020 COVID-19 COVID-19 Pre-COVID-19 Panic Temporary 12/31/2019 Peak Normal %of to Peak to Trough Trough to YTD Net Assets (2/19/2020) (3/23/2020) 12/31/2020 Total (as of Total Return Total Return Total Return Return 12/31/2020) (%) (%) (%) (%) Disruptive Growth 60.6 65.85 -45.21 448.03 399.68 Tesla, Inc. 47.0 119.31 -52.66 713.19 744.21 Zillow Group, Inc. 5.4 19.90 -45.19 352.44 197.34 Airbnb, Inc. 0.0 – – 115.88 115.88 Virgin Galactic Holdings Inc 0.1 223.38 -65.27 82.96 105.45 Spotify Technology S.A. 0.9 -4.14 -18.08 142.35 90.33 Iridium Communications Inc. 0.9 26.30 -35.92 97.32 59.64 Space Exploration Technologies Corp. 3.2 8.74 -7.63 32.71 33.30 Shopify Inc. 1.1 – -9.51 43.07 27.96 Guidewire Software, Inc. 1.7 11.69 -38.55 69.08 16.46 American Well Corp 0.2 – – 12.92 12.92 Zoom Video Communications, Inc. – – – -0.23 -0.23 GoodRx Holdings, Inc. 0.1 – – -8.65 -8.65 Benefitfocus, Inc. – -22.01 -5.62 – -46.99 Core Growth 22.1 16.31 -32.01 105.52 62.56 Adyen N.V. 2.0 6.71 -21.29 203.95 154.64 IDEXX Laboratories, Inc. 5.8 11.43 -37.40 173.33 91.13 GDS Holdings Limited 1.3 15.87 -16.86 87.41 81.12 Activision Blizzard, Inc. 1.1 8.33 -12.27 65.27 57.07 CoStar Group, Inc. 9.9 23.32 -29.57 76.59 53.80 HEICO Corporation 0.4 14.77 -45.64 96.21 22.41 Gartner, Inc. 1.6 -0.27 -44.89 88.75 4.10 Moderna, Inc. – – – -32.06 -32.06 Financials 11.3 10.90 -44.30 70.30 5.42 MSCI, Inc. 0.8 28.64 -28.39 94.04 77.31 FactSet Research Systems, Inc. 3.4 15.04 -34.12 63.72 24.80 The Charles Schwab Corp. 3.0 0.12 -39.92 88.43 13.34 Brookfield Asset Management, Inc. 0.6 17.49 -51.13 87.76 7.64 Windy City Investments Holdings, L.L.C. 0.0 0.39 – 1.95 2.35 Arch Capital Group Ltd. 3.5 12.33 -51.81 55.04 -15.97 Air Lease Corp. – -7.93 -78.98 – -79.50 Real/Irreplaceable Assets 11.3 1.39 -49.50 82.82 -6.15 Vail Resorts, Inc. 3.8 2.36 -42.24 99.20 17.77 Marriott Vacations Worldwide Corp. 1.4 -1.77 -65.81 212.24 5.97 Gaming and Leisure Properties, Inc. 1.1 13.64 -59.94 125.88 4.45 Red Rock Resorts, Inc. 0.2 11.57 -78.23 232.59 -10.51 Manchester United plc 1.2 -4.06 -29.91 26.35 -15.05 Hyatt Hotels Corp. 3.2 0.26 -47.07 56.24 -16.84 Douglas Emmett, Inc. 0.4 1.18 -44.71 23.59 -30.86 MGM Growth Properties LLC – 8.91 -90.86 – -65.05 Norwegian Cruise Line Holdings, Ltd. – -10.94 -64.96 – -67.23 [Cash] -5.3 -0.00 -0.01 -0.02 -0.03 [Fees] – -0.24 -0.16 -1.07 -1.46 Baron Partners Fund 100.0 30.85* -50.76* 286.37* 148.93* Russell Midcap Growth Index 6.97 -35.71 97.15 35.59 Sources: FactSet PA, BAMCO, and Russell, Inc. * Represents the blended return of all share classes of the Fund. The peak and trough dates are based on the Russell Midcap Growth Index. The index is unmanaged. The index performance is not fund performance; one cannot invest directly into an index.

47 Baron Partners Fund

Table III. Table IV. Top contributors to performance for the quarter ended December 31, 2020 Top detractors from performance for the quarter ended December 31, 2020 Market Quarter Market Quarter Cap End Cap End When Market When Market Year Acquired Cap Total Percent Year Acquired Cap Total Percent Acquired (billions) (billions) Return Impact Acquired (billions) (billions) Return Impact Tesla, Inc. 2014 $22.0 $668.9 64.54% 26.80% GoodRx Holdings, IDEXX Laboratories, Inc. 2020 $ 1.9 $15.8 –33.88% –0.50% Inc. 2013 4.7 42.6 27.17 2.01 American Well Zillow Group, Inc. 2015 1.5 30.6 33.88 1.89 Corporation 2020 5.1 6.0 –16.25 –0.28 The Charles Schwab FactSet Research Corp. 1992 1.0 99.5 46.97 1.67 Systems, Inc. 2007 2.7 12.6 –0.47 –0.08 Hyatt Hotels Corp. 2009 4.2 7.5 39.12 1.61 Moderna, Inc. 2020 61.4 44.0 –32.06 –0.01

Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, GoodRx Holdings, Inc. operates the nation’s largest online platform and energy storage solutions. The stock increased on strong financial results, providing users free access to drug pricing information and pharmacy including profitability that exceeded market forecasts and strong growth across discounts. Its shares gave back some of their heady post-IPO run after different geographies and vehicle programs. Newly released full self-driving Amazon’s announcement that it has entered the online pharmacy space. functionality could also lead to improving unit economics and growth Although Amazon is a formidable rival, we believe its success is not assured opportunities, in our view. Lastly, Tesla joined the S&P 500 Index, a meaningful as its participation is limited to the low-penetration mail order segment of milestone that expands its potential shareholder base. the market. GoodRx has the advantages of the leading brand, best pricing, telehealth tie-in, and nascent opportunities in drug manufacturer referrals. Shares of veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance in the quarter. Veterinary visits continued to recover from American Well Corporation is one of the U.S.’s largest telehealth lows in the early months of the pandemic, with practice visits growing at companies for health systems, health plans, employers, and doctors. The double-digit rates through October. IDEXX’s competitive trends are stock declined after reporting third quarter results. Full-year 2020 guidance outstanding, and we expect new proprietary innovations and field salesforce exceeded consensus estimates but implied top-line and margin deceleration. expansion to be meaningful contributors to growth. Margins are moving We believe future results could exceed these forecasts due to increases in significantly higher, and we believe margins can exceed 30% over time. pandemic-driven volumes. Zillow Group, Inc. operates leading U.S. real estate sites, a mortgage marketplace, and the Zillow Offers home-buying business. Shares were up Investment Strategy and Portfolio Structure on strong results driven by record top-of-funnel metrics, an inflection in mortgages revenue, and excellent profitability in the core business. In our Baron Partners Fund seeks to invest in businesses that we believe could view, Zillow is well positioned to penetrate the large online real estate double in value within five or six years. Our strategy to accomplish this goal advertising opportunity with substantial upside from Offers, leads for is to invest for the long term in a focused portfolio of appropriately Premier Agents, and Zillow Home Loans. capitalized, well-managed growth businesses at attractive prices across market capitalizations. We attempt to create a portfolio of approximately Shares of brokerage firm The Charles Schwab Corp. rose in the quarter. The 30 securities diversified by GICS sectors, but with the top 10 positions company has been integrating its recent acquisition of TD Ameritrade. The representing a significant portion of net assets. The Fund uses leverage to combined company should result in improved services as it cross-sells enhance returns, although this does increase the volatility of performance. products to clients of Schwab and TD Ameritrade as well as expense These businesses are identified by our analysts using our Firm’s proprietary synergies that should lower the cost of operation per custodial asset to research approach. We think these well-managed businesses have industry-leading levels. Finally, Schwab has maintained an impressive sustainable competitive advantages and strong, long-term growth mid-single-digit organic growth rate. Once interest rates eventually rise, opportunities. Schwab’s profitability should improve significantly. As of December 31, 2020, Baron Partners Fund held 32 investments. The Global hotelier Hyatt Hotels Corp. contributed to results on investor median market capitalization of these growth companies was $15.2 billion. expectations that travel will increase as several newly developed COVID-19 The top 10 positions represented 88.0% of net assets. Leverage was 5.3%. vaccines work to help bring an end to the pandemic. While it may take time for Hyatt’s business and group customers to return, a strong leisure business The long-term absolute and relative performance of the Fund has been very is aiding recovery in revenue per available room. Hyatt has also successfully good. The Fund has returned 16.52% annualized since inception as a private lowered its breakeven occupancy levels by reducing fixed costs and has cut partnership on January 31, 1992, besting its comparable Index by 5.67% per its capital budget to preserve cash. Hyatt’s strong balance sheet is allowing year. Additionally, the Fund’s performance has exceeded its Index over the it to weather the pandemic-generated disruption. prior 1-, 3-, 5-, 10-, and 15-year periods.

48 December 31, 2020 Baron Partners Fund

The Fund outperformed modestly in good times… Additionally, the current volatile COVID-19 period has again led to strong absolute and relative results. The Fund has returned 149.18% while the In addition to viewing the Fund’s returns over various trailing periods, we Russell Midcap Growth Index gained 35.59% and the S&P 500 Index rose believe it is helpful to understand how the Fund has performed in various 18.40%. economic cycles. (Please see Table V.) The Fund had performed well during The preservation (and modest growth) during difficult times is what we the economic expansion that followed the Financial Panic. This 11-year believe sets the Fund apart and makes its long-term returns exceptional. A period has seen steady financial growth and stock market appreciation. Had $10,000 hypothetical investment at the inception of the Fund in 1992 you hypothetically invested $10,000 in the Fund on 12/31/2008, it would would be worth $832,574 today. That same $10,000 hypothetical have been worth $58,586 at the end of the bull run on 12/31/2019. Had investment would be worth 76% less had it been invested in a fund you only tried to mimic benchmark returns, that $10,000 hypothetical designed to track the Russell Midcap Growth Index or 80% less had it been investment would be worth $55,380 if you invested in a fund designed to invested in a fund that tracked the S&P 500 Index. Those investments would track the Russell Midcap Growth Index or $45,104 if you invested in a fund be worth only $196,396 and $164,849, respectively. designed to track the S&P 500 Index. The Fund consistently invests in businesses based on their future earnings potential. Those businesses often penalize near-term results while investing The Fund outperformed significantly in difficult times… to become larger and more profitable businesses. The current global health pandemic is unlike other economic periods the Fund has successfully We believe it is equally important to look at the Fund during more navigated in the past. This COVID-19 crisis has negatively impacted many challenging economic times. The nine-year period from the Internet Bubble sectors. However, we were assured that the high-quality growth businesses collapse through the Financial Panic (12/31/1999 –12/31/2008) saw lower in which we are invested could still execute their strategies throughout the returns for the Fund. It had gained 1.54% annualized. $10,000 cycle. The Fund’s portfolio investments have once again successfully hypothetically invested at the start of this period would have been worth weathered a difficult economic period. This is because many of these $11,479 after the nine years. The Fund preserved (and slightly grew) capital businesses had penalized earnings for years to implement technologically during this challenging economic time because of its investments in high- enabled growth strategies. They are now realizing the benefits of those prior quality growth businesses that were able to weather the environment while investments. its competition retrenched. The indexes performed worse. The Russell Due to strong growth in its portfolio companies since its conversion to a Midcap Growth Index and S&P 500 Index fell 4.69% annualized and 3.60% mutual fund on April 30, 2003 through December 31,2020, the Fund’s annualized, respectively. A $10,000 hypothetical investment would be worth performance ranked 2nd among all U.S equity funds (2,256 share classes). only $6,488 and $7,188 in each of those indexes, respectively. The Fund also ranked in the 1st percentile for the same time period.

Table V. Performance Millennium to COVID-19 Pandemic. The Impact of Not Losing Money. Millennium Internet Bubble Financial Panic to COVID-19 Pandemic to Millennium Internet Inception to Financial Panic COVID-19 Pandemic Present Bubble to Present 1/31/1992 to 12/31/1999 to 12/31/2008 12/31/2008 to 12/31/2019 12/31/2019 to 12/31/2020 12/31/1999 to 12/31/2020 12/31/2020 Value Value Value Value Value $10,000 Annualized $10,000 Annualized $10,000 Cumulative $10,000 Annualized $10,000 Annualized Baron Partners Fund (Institutional Shares) $11,479 1.54% $58,586 17.44% $24,918 149.18% $167,570 14.37% $832,574 16.52% Russell Midcap Growth Index $ 6,488 (4.69)% $55,380 16.84% $13,559 35.59% $ 48,715 7.83% $196,396 10.85% S&P 500 Index $ 7,188 (3.60)% $45,104 14.68% $11,840 18.40% $ 38,386 6.61% $164,849 10.18%

49 Baron Partners Fund

Portfolio Holdings

Table VI. Top 10 holdings as of December 31, 2020 Market Quarter Quarter Cap End End When Market Investment Percent Year Acquired Cap Value of Total Acquired (billions) (billions) (millions) Investments Tesla, Inc. 2014 $22.0 $668.9 $3,228.4 44.6% CoStar Group, Inc. 2005 0.7 36.4 679.3 9.4 IDEXX Laboratories, Inc. 2013 4.7 42.6 399.9 5.5 Zillow Group, Inc. 2015 1.5 30.6 373.8 5.2 Vail Resorts, Inc. 2008 1.6 11.2 258.0 3.6 Arch Capital Group Ltd. 2002 0.6 14.6 236.3 3.3 FactSet Research Systems, Inc. 2007 2.7 12.6 232.8 3.2 Space Exploration Technologies Corp. 2017 – – 220.5 3.0 Hyatt Hotels Corp. 2009 4.2 7.5 215.3 3.0 The Charles Schwab Corp. 1992 1.0 99.5 206.9 2.9

Thank you for joining us as fellow shareholders in Baron Partners Fund. We Respectfully, continue to work hard to justify your confidence and trust in our stewardship of your hard-earned savings. We remain dedicated to continuing to provide you with the information we would like to have if our roles were reversed. We hope this letter enables you to make an informed decision about whether this Fund remains an appropriate investment. Ronald Baron Michael Baron CEO and Lead Portfolio Manager Co-Portfolio Manager January 20, 2021 January 20, 2021

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

50 December 31, 2020 Baron Fifth Avenue Growth Fund

DEAR BARON FIFTH AVENUE GROWTH FUND SHAREHOLDER: PERFORMANCE

Baron Fifth Avenue Growth Fund (the “Fund”) gained 8.2% (Institutional Shares) compared to gains of 11.4% for the Russell 1000 Growth Index (“R1KG”) and 12.2% for the S&P 500 Index (“SPX”), respectively. Despite giving back some of our excess return in this most recent quarter, the Fund had a good year with a gain of 50.8%, which was better than the R1KG’s return of 38.5% and significantly better than the 18.4% gain for the SPX.

Table I. Performance Annualized for periods ended December 31, 2020 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 8.09% 8.15% 11.39% 12.15% ALEX UMANSKY Retail Shares: BFTHX One Year 50.42% 50.81% 38.49% 18.40% Institutional Shares: BFTIX Three Years 26.77% 27.09% 22.99% 14.18% PORTFOLIO MANAGER R6 Shares: BFTUX Five Years 22.92% 23.24% 21.00% 15.22% Ten Years 17.79% 18.10% 17.21% 13.88% Fifteen Years 11.76% 11.98% 12.54% 9.88% The year 2020 will undoubtedly go down in history for many things. We Since Inception think one of them will be for one of the most compressed and violent (April 30, 2004) 11.68% 11.88% 12.00% 9.84% market cycles. Stocks and indexes continued the prior year’s rally uninterrupted until the peak of February 19 (Stage 1), suffered an Amazingly, and despite everything that has happened this year, 2020 turned unprecedented decline (-31% for the R1KG and -34% for the SPX) over the out to be another year in which it was hard to lose money, as long as… one next five weeks until the trough on March 23 (Stage 2), and then staged an had the courage to remain invested through the scary downturn. Most equally unprecedented recovery (85% and 70%, respectively) over the next equity indexes were up double-digits, both domestically and globally. nine months, through the end of the year (Stage 3). Relative to the R1KG, Emerging markets were up, and developed markets were up as well. Bonds the Fund had outperformed by 2.9% during Stage 1, 2.8% during Stage 2, were up, gold was up, and bitcoin was also up (a lot!). Growth companies and 3.8% during Stage 3. The outperformance over the SPX was far greater continued to be in favor, driven by lower interest rates for longer, and in and equally consistent. many cases by rapidly improving business fundamentals. COVID-19 proved to be a strong accelerant for every company that enables modernization and digital transformation, and as we have written over the years, the Fund had invested in many of them.

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, 2020 was 1.05% and 0.78%, 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 BARON returns would be higher. FUNDS 4 Not annualized.

51 Baron Fifth Avenue Growth Fund

As is usually the case, excess returns were driven by stock selection, which According to Morningstar, for the period ended December 31, 2020, the accounted for over 100% of the Fund’s outperformance. Stock selection was Fund ranked in the top 11% for its 1-year return, top 10% for its 3-year responsible for 13.3% of excess returns, while cash in an up market was a return, top 8% for its 5-year return, and top 9% since the Fund’s moderate headwind. Investments classified as Information Technology restructuring at the end of 2011.* Since that time, it has returned 440.1% (“IT”), Health Care, and Consumer Discretionary, which represented over cumulatively, outperforming the R1KG by 63.4%, the S&P 500 by 180.7%, 76% of the Fund’s average holdings were responsible for essentially all of and the Morningstar Large Growth Category Average by 137.0%. Baron Fifth the outperformance (positive 12.6%). Portfolio holdings in IT (41% of the Avenue Growth Fund received a 5-Star Overall Morningstar Rating™, 5-Star Fund, on average) were up 76% in 2020, Consumer Discretionary (18%, on 3-Year Rating, 5-Star 5-Year Rating, and 4-Star 10-Year Rating. average) were up 67%, while investments in Health Care (17%, on average) Needless to say, 2020 was an incredibly difficult, challenging year. The pain, appreciated 40%. Relative returns also benefited from not investing in any the suffering, the human tragedy… it was real, and it was personal. When Industrials, Consumer Staples, Materials, and Energy companies, which were looking at the Fund’s investment returns, it is tempting to conclude that it some of the worst performing sectors in 2020. was an excellent year. We are not certain that is the case. Though it is too Once again, we had a large number of winners this year while our losers early for a full post-mortem, it is clear that we struggled mightily with many were few and had less than consequential size in the portfolio. Over the decisions. Human beings often confuse good outcomes with good decisions course of the year, 15 of our investments appreciated at least 75% each, 9 (we wrote extensively about that in the last letter). We work hard not to. It is of which at least doubled, 1 more than tripled, and yet another 1 more than important to separate outcomes from decisions because good outcomes can quadrupled. Looked at differently, 18 of our holdings contributed at least come from good decisions as well as poor ones (and, of course, the opposite 100bps each to absolute returns. Amazon, Twilio, Veeva, CrowdStrike, is true as well). An environment conducive to good decision-making requires MercadoLibre, Datadog, RingCentral, Adyen, Wix, and ServiceNow were balance and we could not find it in our economy, in our country, at home, or the top 10 contributors generating more than 220bps each. Surprisingly, abroad. In 2020, balance was hard to find. We try to think probabilistically none of them were new additions to the Fund, meaning all were first and allocate capital against a range of outcomes and this time the range was purchased prior to 2020. More on that to follow. not only extremely wide, but some of the consequences were really dark. Since we could not find that balance, we tried to postpone as many decisions as we could because we thought they were equally or more likely to be bad than good, and postponing bad decisions was one of the more valuable lessons we learned from past mistakes. So, we focused on doing the little things right, and we focused on risk management.

* Mr. Umansky became the portfolio manager of the Fund on November 1, 2011. Since that date, the Fund has returned 423.65% cumulatively, which compares to 375.12% for the Russell 1000 Growth Index and 262.28% for the S&P 500 Index, outperforming the Morningstar US Fund Large Growth Category average by 129.32% over the 9 plus-year period. As of 12/31/2020, the annualized returns of the Morningstar Large Growth Category average were 35.86%, 20.50%, 18.30%, and 15.14% for the 1-, 3-, 5, and 10-year periods, respectively. Morningstar calculates the Morningstar Large Growth Category average performance and rankings using the Morningstar Fractional Weighting methodology. Total returns do account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. Morningstar rankings are based on total returns and do not include sales charges. As of 12/31/2020, the Category consisted of 1,289, 1,197, 1,070, and 789 share classes for the 1-, 3-, 5-, and 10-year periods. Morningstar ranked Baron Fifth Avenue Growth Fund Institutional Share Class in the 11th,10th,8th, and 11th percentiles, respectively. For the period ended 12/31/2020, Baron Fifth Avenue Growth Fund received a 5-Star Overall Morningstar Rating™, 5-Star 3-Year Rating, 5-Star 5-Year Rating, and 4-Star 10-Year Rating. The Morningstar Ratings are based on the Morningstar Risk-Adjusted Return measures of 1,197, 1,197, 1,070, and 789 funds in the category, respectively. This Morningstar Rating is for the Institutional share class only; other classes may have different performance characteristics. 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 Morningstar Rating does not include any adjustment for sales loads. 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. © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may notbe 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. Past performance is no guarantee of future results.

52 December 31, 2020 Baron Fifth Avenue Growth Fund

Under normal circumstances, we are not risk-averse. Successful investing, as Uncertainty was high, on occasions extreme, generating an unusually wide we see it, is all about risk assessment and willingness to take on investment range of possible outcomes, while at the same time, stocks were hitting new risk. It is the only way to generate investment returns that are above risk- all-time highs. Ordinarily, we put fresh capital to work by buying the entire free rates. We seek asymmetric risk-reward opportunities where for every portfolio (in proportion to the size of each individual investment). However, unit of risk taken, we believe we are receiving multiple units of return. It is this year we chose to be more tactical (or rigid if you will), and we did not an oversimplification, but the key assumption here is that we know how to add to positions whose valuations were unattractive to us. The decision price risk appropriately. There was no way to do that with any conviction in allowed us to effectively reduce the size of these positions, somewhat the midst of a global pandemic, and so we made a conscious decision to meaningfully, without having to sell their shares (which would have created reduce the number of “risk units” that we would take on under normal taxable gains for some of our shareholders). Ironically, these were the circumstances. companies that continued to rally the hardest in a market driven by momentum, so it has not benefited the Fund so far. So how do we reconcile taking on a reduced number of “risk units” with what was an objectively strong investment return? We attribute it primarily Table II. to three factors: Top contributors to performance for the quarter ended December 31, 2020 1. We were undoubtedly helped by good luck. Even during the depth of Quarter End the crisis, the investment environment remained favorable to our style Market Cap Percent (billions) Impact and to the kinds of businesses we favor. Of course, we could have gotten even luckier had we not sold Tesla and Zoom Video in the Twilio Inc. $ 51.1 1.28% second half of 2019, but the point is that we are cognizant that the MercadoLibre, Inc. 83.4 1.13 environment and our style will not always remain favorable to us. CrowdStrike, Inc. 46.9 1.01 RingCentral, Inc. 34.0 0.88 2. We benefited disproportionately from the good investment decisions ASML Holding N.V. 204.6 0.76 made in prior years. None of our top 12 contributors for the year came from investments initiated this year. In fact, only 2 of our top 20 were Twilio Inc. is a leading Communications-Platform-as-a-Service (“CPaaS”) bought in the last 12 months. Intuitive Surgical and EPAM were bought company offering a set of application programming interfaces that help in 2016, Veeva, Wix, and Vertex Pharmaceuticals in 2017, RingCentral developers embed communications into their software through its cloud in 2018, and Twilio, CrowdStrike, MercadoLibre, Datadog, Adyen, platform. Shares were up 37% during the fourth quarter, ending the year up ServiceNow, and Slack were all added in 2019. It is unclear how 245% as Twilio continued showing broad strength due to accelerated promising the 2020 crop is, but time will tell. digitization trends, as a result of COVID-19, which drove 50% plus revenue growth. We believe the accelerating pace of digitization is driving businesses 3. The Baron investment process. The one thing we never lost conviction to increasingly embed communications into their software, creating a in, even during most challenging times, is that our process works! potential multi-billion dollar market opportunity for Twilio. Invest in unique, competitively advantaged businesses, managed by exceptional people who focus on long-term value creation. Evaluate Shares of MercadoLibre, Inc., the leading e-commerce and digital payments companies through the disruptive change lens, with emphasis on platform in Latin America, appreciated 55% during the quarter, closing 2020 specific characteristics (platform businesses, eco-systems, network up 193%. While MercadoLibre saw significant benefit from the accelerated effects, etc.) that enable companies’ growth to be particularly durable. e-commerce penetration due to COVID-19, the company showed Valuations matter – margin of safety at purchase price is the most accelerating gross merchandise value in its third quarter results despite the effective risk management tool available to us. reopening of physical retail over the summer, indicating stickiness among recently acquired users and market share growth in some of its largest Bottom line – though our investment returns were strong, 2020 was one of markets, particularly Brazil. We remain shareholders as we believe the the most challenging years for capital allocation decisions in our company is a long-term winner in both e-commerce and payments across a professional experience. In the midst of a global pandemic, an election year region that remains in the early stage of digitization. unlike any we have seen before, a market rally that left swaths of stocks (and pockets of our portfolio) with unpalatable valuations, and significant CrowdStrike, Inc. is a leading cybersecurity cloud service provider, offering inflows of fresh capital, we often found ourselves in a tricky situation. next-generation endpoint detection and remediation solutions. Shares of CrowdStrike were up 54% in the fourth quarter, closing 2020 with a whopping 327% return, on another strong quarterly report that beat market expectations with revenue growth of 86% year-over-year, driven by taking market share away from legacy vendors, improving cross-selling of newer modules, and expanding internationally. News of a massive cyberattack on federal agencies and other targets also boosted shares as investors expect spending on cybersecurity to accelerate in the short/mid term. Longer term,

53 Baron Fifth Avenue Growth Fund

we believe CrowdStrike remains well positioned with its cloud-first, AI/ML margin of safety), but on the other hand, not investing in China has product approach, growing customer base, and improving data insights. significant opportunity costs – as it is the 2nd largest economy in the world Moreover, we believe CrowdStrike has just scratched the surface of the today at 18% of world GDP (U.S. is #1 at 25%) and growing fast. We have ultimate opportunity with its rapidly growing platform, and we are excited therefore always been overweight China, which will likely continue in the about its future potential to gain wallet share in the cybersecurity space as future, even though we continue demanding significantly higher margins of customers consolidate spending on its platform. safety for our investments, as well as managing risk on a company-specific level (which we define as the probability of a permanent loss of capital). RingCentral, Inc. provides global cloud communications and collaboration Under this framework, Alibaba remains one of the most undervalued solutions across multiple channels (voice, video, and messaging). platform businesses in the world. Its core business remains one of the fastest RingCentral’s stock rose 38% during the quarter, closing 2020 up 125% as growing, highly profitable, e-commerce businesses in the world, while true the company reported a continued acceleration in its business with revenues earnings are masked by a host of earlier stage (and rapidly growing) up 30% year-over-year, while also announcing another distribution deal businesses such as Ali cloud (Alibaba’s “AWS”), logistics, and New Retail. (with Vodafone), bringing the total addressable seats via exclusive Despite that, as of the end of 2020, Alibaba was trading at less than 20 distribution deals to over $200 million. With its distribution advantage and times earnings (which were negatively impacted by all those early-stage the COVID-19 pandemic crystalizing the need for a communications businesses). Note that despite the decline in share price during the fourth platform that is agile, scalable, and global, and with just 2.5 million current quarter, Alibaba ended 2020 up 9.8% (contributing 77bps to our users, RingCentral remains early in the migration from premise-based performance) and it is up more than three times since we originally invested communications solutions to the cloud, which should drive sustainable in the company six years ago. We believe the risk-reward remains favorable growth for years to come. for long-term investors, such as ourselves. ASML Holding N.V. designs and manufactures semiconductor production Splunk, Inc. is a data analytics company that sells software solutions to help equipment, specializing in photolithography, where light sources are used to enterprises run their IT organizations, including security, internet-of-things, photo-reactively create patterns on wafers that ultimately become printed application and business analytics, and infrastructure. Splunk enables integrated circuits. Shares of ASML appreciated 33% during the fourth customers to collect, index, store, and analyze data, generating insights quarter and 66% in 2020 on renewed market confidence that the through a flexible and efficient platform architecture. The stock declined semiconductor cycle has turned, driven by tighter supply and a robust 10% during the fourth quarter (though was still up 13% in 2020) after the demand environment. We maintain conviction in ASML as it is the de-facto company reported a deceleration in contract activity within its large standard in next generation lithography (EUV), which is a required step for customer segment due to longer budgetary approval processes, as a result of semiconductor chip production. COVID-19. We maintain conviction as we expect Splunk’s new cloud offering to drive material growth in annualized recurring revenues, even Table III. though it may take longer to achieve in the pandemic-impacted spending Top detractors from performance for the quarter ended December 31, 2020 environment. Quarter End Market Cap Percent S&P Global Inc. provides credit ratings, indexes, data, and analytics to the (billions) Impact financial and commodities markets. Shares of S&P Global declined 9% in the Alibaba Group Holding Limited $629.7 –0.96% fourth quarter as some investors responded negatively to the announced Splunk, Inc. 27.5 –0.30 merger with IHS Markit (as it dilutes its exposure to financial markets data) S&P Global Inc. 79.1 –0.24 and as bond issuances slowed down in the fourth quarter after a strong first Vertex Pharmaceuticals Incorporated 61.5 –0.21 nine months of the year, with the stock ending 2020 up 22%. Near zero Veeva Systems Inc. 41.2 –0.17 interest rates and stimulus measures from the Federal Reserve drove a strong corporate bond issuance market for most of 2020 while equity Alibaba Group Holding Limited is the largest retailer and e-commerce market appreciation also provided a boost to the Indexes segment. We company in China. Alibaba operates the shopping platforms Taobao and continue to own the stock due to S&P Global’s long runway for growth as it Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest benefits from the secular trends of increasing bond issuance, growth in third-party online payment provider. Shares were down 21% during the passive investing, and demand for data and analytics, while enjoying fourth quarter after a sequence of events that started with Chinese meaningful and durable competitive advantages that, in our view, are only regulators stopping Ant Group’s IPO (which should have been one of the strengthening following the merger with IHS Markit. largest in history) following Jack Ma’s comments at a conference, criticizing Chinese regulators, just weeks prior, and continued with the regulators Vertex Pharmaceuticals Incorporated is a biotechnology company that launching an investigation into Alibaba for suspected monopolistic behavior. has developed a paradigm-shifting treatment for cystic fibrosis, with the This sequence of events put again, front and center, the risks of investing in potential to change it from a life-threatening disease to one a patient can emerging markets in general and China in particular. When considering live with for his or her entire life. Share weakness in the quarter was due to Chinese investments, investors need to decide where to position themselves the negative initial readout of a pipeline asset targeting Alpha-1 antitrypsin on the range of possible approaches, where on the one extreme, one might disease, an inherited disorder that increases the chance of lung and liver consider China un-investible and on the other extreme, one could look at disease. Vertex is now in the middle to late innings of commercializing the Chinese companies via a similar lens as they do domestic ones. Our global cystic fibrosis market while building its pipeline to treat a number of approach is somewhere in the middle. On the one hand, it is clear that other diseases. Given Vertex’s best-in-class growth profile and cash flow, regulatory risks are higher, and so we would demand higher hurdle rates (or and upcoming catalyst flow, we retain long-term conviction in the name.

54 December 31, 2020 Baron Fifth Avenue Growth Fund

Veeva Systems Inc. offers customer relationship management, content, RECENT ACTIVITY collaboration, and data management solutions tailored mostly to the life sciences industry. Investors took some profits during the fourth quarter with During the fourth quarter, we initiated seven new investments: Adobe, GDS shares declining 3%, though still finishing 2020 up 94%. Despite strong third Holdings, Shopify, Dynatrace, argenx, DoorDash, and Airbnb. quarter results with revenues increasing 34% year-over-year with operating We also added to 24 existing positions as we continued to put the Fund’s margins reaching 41%, management described a more cautious 2021 view inflows to work. We liquidated 2 investments – Fidelity National with a potential reduction in sales representatives, suggesting headwinds to Information and CME Group, exiting 2020 with 37 holdings. Those include its commercial business. A new administration is also increasing uncertainty 2 stub positions in DoorDash and Airbnb, in which we invested during their around the regulatory environment for the industry. We retain conviction as respective IPOs but were unable to acquire “real” positions before their we believe COVID-19 has proven to be less of a headwind on Veeva’s life stock prices ran away from us. sciences customer base, leading to the resiliency we see in Veeva’s numbers. The pandemic may also accelerate the industry’s transition to new cloud Table V. and data solutions, areas in which Veeva is already considered a leader or Top net purchases for the quarter ended December 31, 2020 positioned well for expansion. Our conviction in this investment is rooted in Quarter End Amount the ongoing evolution of the Veeva platform, the growth of its Vault Market Cap Purchased (billions) (millions) solution, and the ability to deliver significant value to customers over long periods of time, resulting in an impressive growth and margin profile. We Adobe Inc. $ 239.9 $26.4 believe the company’s long-term opportunity set remains compelling. GDS Holdings Limited 17.5 12.1 Alphabet Inc. 1,185.3 10.9 PORTFOLIO STRUCTURE PayPal Holdings, Inc. 274.4 9.8 ServiceNow, Inc. 107.4 9.3 The Fund’s portfolio is constructed on a bottom-up basis with the quality of ideas and conviction level determining the size of each investment. Sector Our largest investment in the fourth quarter was Adobe Inc. Adobe is a weights are an outcome of the stock selection process and are not meant to leading software company providing solutions for creative and marketing indicate a positive or a negative “view.” As of December 31, 2020, the top professionals, offering products that range from Photoshop to digital 10 positions represented 43.0% of the Fund, the top 20 were 71.3%, and we marketing and analytics, helping companies with digital transformations. exited 2020 with 37 investments. Adobe’s transition to the cloud has been one of the most successful in the history of the software industry, enabling the company to reaccelerate IT, Health Care, Consumer Discretionary, Communication Services, and growth, increase customer retention, and strengthen its competitive moat. Financials made up 95.2% of the Fund. The remaining 4.8% was made up of Adobe is the leader in creative and document clouds (approximately 70% of Equinix, Inc., which is a REIT classified under Real Estate, as well as cash. revenues), and its platform has become the industry standard. Its digital experience offering (around 25% of revenues) is also the most The Fund’s turnover was 10.7% in 2020, compared to average turnover of comprehensive platform, offering solutions from advertising to marketing 15.3% over the last three years, and 14.6% average turnover over the last and analytics, and it remains in the early rounds of creating the experience five years. system of record as it integrates several recent acquisitions including Magento (commerce solution), Marketo (primarily a B2B solution) and Table IV. Workfront (workflow management) together with its organic product Top 10 holdings as of December 31, 2020 innovation such as the Adobe Experience Platform. Adobe’s robust Quarter End opportunity is driven by some of the strongest technological shifts of our Quarter End Investment generation including digitization of content, the growing adoption of online Market Cap Value Percent of advertising, the transition to mobile, and the widespread adoption of video. (billions) (millions) Net Assets Adobe’s access to data with trillions of data points in marketing and web Amazon.com, Inc. $1,634.2 $60.8 8.5% analytics coming from millions of users and the artificial intelligence Alphabet Inc. 1,185.3 32.4 4.5 capabilities it adds on top (via “Sensei”), create a significant moat around its ServiceNow, Inc. 107.4 28.2 4.0 business, with a fly-wheel effect that continuously increases Adobe’s gap Mastercard Incorporated 355.8 27.8 3.9 from competitors. We believe that the opportunity ahead of Adobe is large Twilio Inc. 51.1 27.7 3.9 and expanding with a total addressable market (“TAM”) estimated at over Veeva Systems Inc. 41.2 27.3 3.8 $100 billion. We believe Adobe remains the best positioned company to RingCentral, Inc. 34.0 26.9 3.8 attack that TAM as it benefits from its leadership position in both the Adobe Inc. 239.9 26.4 3.7 creative market as well as the experience market. Facebook, Inc. 778.0 25.3 3.5 During the fourth quarter, we also bought shares in GDS Holdings Limited, Alibaba Group Holding Limited 629.7 24.3 3.4 the leading developer and operator of data centers in China. We have owned the stock for almost two years in our Baron Global Advantage Fund and believe it has matured enough to become attractive for this Fund as well. GDS is benefiting from some strong secular tailwinds including digitization and the adoption of cloud. The Chinese digital economy is in its early growth phase, with still relatively low internet user penetration (around two-thirds) and while global cloud penetration remains low (approximately 6% of global IT spending was on the cloud in 2019), China is even earlier on that penetration curve. GDS is benefiting from those trends as the leading

55 Baron Fifth Avenue Growth Fund

data center provider to the fastest growing companies in China including share of the economics (or take-rate) from about 2.5% currently (Amazon Alibaba, Tencent, and Bytedance (the owner of douyin and TikTok). charges between 10% and 20% on its fulfillment services). Lastly and Additionally, the location of GDS’ data centers are considered excellent. perhaps most importantly, Shopify has a great culture, and it is led by a They are focused on Tier 1 cities including Beijing, Shanghai, Shenzhen, visionary founder, Tobi Lutke. One example of the company’s culture is a Guangzhou, and Chengdu, while more recently expanding to the outskirts of blog post from four years ago titled “Value Creation – Building for The Next those cities as well as to lower tier cities (via JVs). Following several capital 100 Years” (how many CEOs think, let alone talk about the next 100 years raises over the last two years, GDS also has a solid balance sheet, which the of their company?). The post starts with the following paragraph: company can use to support both organic development and acquisitions. We therefore believe that GDS has the opportunity to be a Big Idea over the “At Shopify, value creation is measured not just by growth of dollars and long term, and while we require a higher hurdle rate for a Chinese cents, but also by the growth of small business, computing literacy and investment, especially for this Fund, we believe the risk/reward in this case is personal development. We are building for the long term.” In his latest highly skewed in our favor. shareholder letter (from 2018), Lutke describes Shopify’s mission as follows: “Much has changed since my letter three years ago, but I’m proud of what During the quarter, we also initiated a starter position in Shopify Inc., the leading cloud-based commerce software provider. This is again a company has stayed the same. We’re still motivated by our mission to make we have owned for some time in our Baron Global Advantage Fund, and commerce better for everyone, our ecosystem of third-party partners which we should have added earlier to this Fund as well, but better late than continues to thrive, and we still view revenue growth as a secondary, though never, as Shopify is truly a unique company. Shopify’s value proposition is to encouraging, by-product of our work. Here’s one more thing that hasn’t provide a single, easy to use, operating system for merchants to manage changed: we’re just getting started.” And this is how he explains Shopify’s every aspect of their business including: selling across multiple channels success: “Like all entrepreneurs, we are risk-takers. Fear of failing does not (direct to consumer as well as on third-party marketplaces like Amazon), stop us, because we understand failure for what it is: a successful discovery managing product listings, inventory, orders, payments, shipments, of something that didn’t work. It means we learned something, and it’s marketing, and customer relationships. The company has over 1 million critical that we continue to learn by doing.” merchants, who have processed more than $60 billion of sales during 2019 (and are expected to pass $100 billion in 2020), making Shopify the 2nd In our view, Shopify has all the ingredients necessary to become a core largest “behind-the-scenes” e-commerce player in the U.S. behind only holding and we are excited about its long-term potential. Amazon, and ahead of Apple, Walmart, and eBay! Our other large purchases in the quarter were to put our inflows to work, Shopify has developed a scalable cloud platform that caters to merchants of continuing to build our positions in Alphabet Inc., PayPal Holdings, Inc. all sizes, from a new entrepreneur just starting out to big brands like PepsiCo and ServiceNow, Inc. and Unilever. What we really like about Shopify is the ecosystem that the company built, creating network effects and a virtuous cycle that will be Table VI. very hard for competitors to overcome. The more merchants join, adopt, Top net sales for the quarter ended December 31, 2020 and transact on Shopify’s platform, the more partners are attracted to its Quarter End ecosystem, adding more features and options to the platform (through Market Cap or Shopify’s app store), increasing the company’s moats and value to Market Cap Amount When Sold Sold merchants. One example of how Shopify has become a platform is its recent (billions) (millions) introduction of Shopify Fulfilment Network (“SFN”). Shopify has built Fidelity National Information Services, Inc. $87.7 $12.3 software that connects third-party logistics providers with its 1 million merchants, to solve one of the biggest pain points for small merchants – CME Group, Inc. 64.7 9.9 shipping. Before SFN, the typical route was – you buy something online and Datadog, Inc. 30.0 1.5 by the time you get to the checkout page, you find out that shipping will During the fourth quarter, we sold our cost you $20 and by the way, you will only get the product in 4 to 10 Fidelity National Information business days (unless of course you’re willing to pay $20 more for expedited Services, Inc. (“FIS”) position, and while we continue believing FIS is a solid shipping). For many buyers, the next step was to close the browser and go business that should compound intrinsic value over a long time, its growth to Amazon. Through SFN, Shopify will take advantage of the vast data it has profile is not enough to warrant us holding it in this Big Ideas Fund. We on SKU-level transactions to help merchants optimize their working capital continue to hold it in our Baron Durable Advantage Fund, to which its profile (i.e., store SKUs closer to end customers), while lowering shipping costs and is a better fit. For similar reasons, we sold our CME Group, Inc. position. increasing delivery speeds at the same time. The company’s goal is to We also reduced the size of our Datadog, Inc. investment, after the stock’s deliver to 99% of the U.S. in two days or less. The bigger picture here is that 161% rise during the year. Shopify is quietly building an Amazon competitor (which is still our largest holding, so we believe there is room for both). But unlike Amazon, which Outlook also competes with its merchants (through first-party sales), Shopify is in the background, quietly helping merchants of all sizes to sell more online, The year 2020 was unlike any other. If one had to guess where the market aggregating the scale of the many merchants it has, to enable the benefits would trade during a global pandemic with millions of jobs lost globally, that only the largest merchants could get in the past. The opportunity for entire cities and countries shut down for extended periods of time, a highly Shopify is two-fold. First, it is still early in the adoption curve, with the amount of Gross Merchandise Value transacted on the platform expected to polarized election culminating with a shocking riot on Capitol Hill, few pass $100 billion in 2020 out of $20 trillion TAM (global commerce, would guess record highs. And yet, despite the extreme uncertainty and a ex-China) or 0.5% penetration. Second, as Shopify consistently continues to significantly wider range of possible outcomes throughout the year, markets remove hurdles for merchants to sell online, the company can increase its kept rallying.

56 December 31, 2020 Baron Fifth Avenue Growth Fund

This was especially true for the style and the way in which we invest as Every day we live and invest in an uncertain world. Well-known conditions growth stocks continued to outperform during the year. High-growth and widely anticipated events, such as Federal Reserve interest rate changes, companies enjoy especially high multiples during periods of monetary ongoing trade disputes, government shutdowns, and the unpredictable stimulus and with interest rates near zero the discounted value of their behavior of important politicians the world over, are shrugged off by the future cash flows is higher. In addition, our companies benefited from financial markets one day, and seem to drive them up or down the next. We accelerating disruptive change, which drove significant increases in growth often find it difficult to know why the market participants do what they do rates and profitability. Many of our holdings demonstrated impressive over the short term. The constant challenges we face are real and serious, resilience (not too surprising for capital light, high recurring revenues, low with clearly uncertain outcomes. History would suggest that most will prove churn businesses), and superior competitive positioning. These dynamics passing or manageable. The business of capital allocation (or investing) is drove a significant increase in the intrinsic values of our investments. And the business of taking risk, managing the uncertainty, and taking advantage while intrinsic values grew, prices of some stocks went up even more, and of the long-term opportunities that those risks and uncertainties create. We so, and we ended the year up over 50%. are confident that our process is the right one, and we believe that it will enable us to make good investment decisions over time. Suffice it to say, this is not what we would expect going forward. These returns are plainly, not sustainable. But then again… we said exactly the Sincerely, same thing at the end of last year after a 34% gain. And that brings us to “outlooks.” We don’t think there is much of a point in having one let alone offering one. It is our belief that investing in unique, competitively advantaged businesses at attractive valuations will enable us to earn excess risk-adjusted returns for our shareholders over the long term. Alex Umansky Portfolio Manager January 20, 2021

57 Baron Focused Growth Fund

DEAR BARON FOCUSED GROWTH FUND SHAREHOLDER: PERFORMANCE

Baron Focused Growth Fund (the “Fund”) increased 32.35% (Institutional Shares) in the fourth quarter. The Russell 2500 Growth Index (the “Index”), the benchmark against which we compare the performance of the Fund, increased 25.89%, and the S&P 500 Index increased by 12.15% during the quarter. The S&P 500 Index measures the performance of large-cap companies. For the year ended December 31, 2020, the Fund increased 122.75%, while the Index increased 40.47% and the S&P 500 Index increased 18.40%. Baron Focused Growth Fund has outperformed its benchmarks for the 1-, 3-, 5-, and 10-year periods. Since its inception on May 31, 1996, the Fund has increased 14.68% annualized. This compares favorably to the Index, which has increased 9.42% annualized, and the S&P 500 Index, which has increased 9.32% annualized. Table I. Performance Annualized for periods ended December 31, 2020 Baron Baron DAVID BARON RONALD BARON Retail Shares: BFGFX Focused Focused CO-PORTFOLIO CEO AND LEAD Institutional Shares: BFGIX Growth Growth Russell MANAGER PORTFOLIO MANAGER R6 Shares: BFGUX Fund Fund 2500 S&P Retail Institutional Growth 500 Shares1,2,3 Shares1,2,3,4 Index2 Index2 Three Months5 32.24% 32.35% 25.89% 12.15% One Year 122.21% 122.75% 40.47% 18.40% quarter and are expected to be distributed broadly over the next 6 to Three Years 44.19% 44.56% 19.91% 14.18% 12 months. As a result, our travel and leisure stocks outperformed in the Five Years 30.70% 31.03% 18.68% 15.22% fourth quarter. Hyatt Hotels Corp., with a 4.1% average portfolio weight in Ten Years 18.53% 18.83% 15.00% 13.88% the quarter, and Vail Resorts, Inc., with a 6.4% average portfolio weight in Fifteen Years 15.01% 15.23% 11.79% 9.88% the quarter, increased 39.1% and 30.4%, respectively. Combined with Tesla Since Inception Inc.’s (our largest position at a 36.6% average weight) continued (May 31, 1996) 14.54% 14.68% 9.42% 9.32% exceptional performance, the Fund achieved a strong year-end result. Tesla increased 64.5% in the quarter. Tesla’s planned production capacity Fourth quarter performance for the Fund was led by businesses that will increases with 2021 openings of new plants in Berlin, Germany; Shanghai, benefit most from news of the imminent availability of the COVID vaccine. China; and Austin, Texas. These new facilities should also lower delivery Pfizer and Moderna vaccines with strong efficacy were approved during the costs and tariffs. With the introduction of the Model Y, Tesla anticipates

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, 2019 was 1.39% and 1.11%, but the net annual expense ratio was 1.35% and 1.10% (net of the Adviser’s 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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. BARON FUNDS 5 Not annualized

58 December 31, 2020 Baron Focused Growth Fund

demand for its cars will further boost its share of the electric vehicle market. steadily grow sales and earnings while using excess free cash to return value The company delivered 500,000 cars in 2020 and it believes it should be to shareholders. (Please see Table II.) In the quarter, our Disruptive Growth able to deliver 20 million vehicles per year by 2030. Tesla could exceed companies outperformed, increasing 51.3%, as those companies benefited 800,000 cars in 2021. Management believes its battery storage business from their prior investments and experienced accelerated growth in earnings ultimately could be as large as its automotive business. Ancillary revenue and cash flow. Tesla and Iridium both benefited from previous investments from autonomous driving, insurance, share rides, and solar roofs could and generated strong free cash flow in the process. Tesla used its cash flow to further boost revenues. Tesla’s balance sheet is already robust. strengthen its balance sheet while investing in new manufacturing facilities and Iridium used it to pay down debt. Iridium Communications Inc. represented 2.4% of the Fund’s net assets, and it also generated strong fourth quarter performance with the stock Our Real/Irreplaceable Assets investments also experienced stronger stock increasing 53.7% as the company continued to show strong resiliency performance, increasing 24.4% in the quarter. They were boosted mostly by despite the pandemic. The company continues to benefit from its $3 billion the start of vaccine distribution. This led to strong gains in the quarter for satellite constellation and is generating significant cash flow that it is using Red Rock Resorts Inc., Hyatt Hotels Corp., and Vail Resorts, Inc. to reduce and refinance longer-term debt and repurchase shares. Manchester United plc, the English Premier League professional soccer team’s share price, which represented 1.4% of the Fund’s net assets, Aside from Tesla, two other investments had a significant impact on increased 15.8%. This strength was attributable to strong comparable performance in 2020: Penn National Gaming, Inc. and CoStar Group, Inc., pricing of competitors such as Liverpool as well as the benefits it would which represented 7.8% and 8.6% of net assets, respectively. For the year, receive from reopening its stadium to fans given robust pent-up demand for Penn increased 238.3%, as it benefited from more states legalizing sports sports. Manchester United is also on a strong winning streak following a betting given large state budget deficits brought on by COVID. Penn should year-long team rebuilding effort. benefit through its relationship with Barstool Sports as the company aims to convert its database of 100 million Barstool loyalists into sports betting The Fund’s Core Growth investments increased 11.6% in the quarter, customers using the Barstool app. This growth will be financed from its core slower than the Index’s growth of 25.9% despite continuing to grow their brick and mortar casino business, which is generating profits and cash flow earnings and cash flow. Choice Hotels International, Inc., a global above pre-pandemic levels. The company also completed two equity raises franchisor of economy and upscale hotels, increased 24.2% in the quarter. over the past year, which has strengthened its balance sheet and puts the Choice expects an acceleration in unit growth over the next few years from company in a stronger financial position going forward. its new Cambria and Ascend Collection brands as well as its WoodSpring Suites extended stay brand as it continues to see strong demand for this CoStar, which increased 54.5% for the year, continued to generate strong segment of lodging. Recent renovations at its Comfort hotels should results as bookings increased a strong 53% in the quarter and retention accelerate RevPAR growth from current levels driving a quick return back to rates held steady. The company continues to invest in its core business and pre-pandemic EBITDA and generating strong cash flow for further brand has a strong balance sheet with $4 billion of cash that should allow the expansions. company to continue to pursue its acquisition growth strategy. CoStar has FactSet Research Systems, Inc., a provider of financial intelligence to the benefited from recent acquisitions and we continue to believe the company investment community, which represents 3.8% of the Fund’s net assets, should be able to grow its revenue organically at a mid- to high-teens rate. decreased 0.5% in the quarter. It continued its two-year investment cycle in This, when combined with recent acquisitions, should result in annual new products and services that should accelerate revenue growth once revenue growth of 25% with even stronger annual EBITDA growth over the completed. While we believe these investments will pay off and should long term as it leverages its scale. eventually generate 50% returns on capital, we think FactSet shares will We classify the holdings of the Fund as one of three types: rapid, early-stage continue to underperform until the company experiences a reacceleration in growth businesses that are disruptive to their industries; companies with real, revenue and EBITDA growth. FactSet is a prime example of a business irreplaceable assets with pricing power that provide a hedge against inflation; penalizing its current earnings by investing in new products to become a and finally, foundational, long-term, core growth holdings that continue to significantly larger business.

59 Baron Focused Growth Fund

Table II. Table III. Total returns by category for the quarter ended December 31, 2020 Performance %of Total Contribution Periods Baron Focused Growth Fund underperformed Net Assets Return to Return Baron Growth Stocks (as of 12/31/2020) (%) (%) Internet Underperform Disruptive Growth 50.3 51.33 23.47 Bubble 2014-2016 Annualized Returns Tesla, Inc. 38.4 64.55 21.51 10/8/1998 to 12/31/2013 to Iridium Communications Inc. 2.4 53.73 1.21 3/9/2000 12/31/2016 Schrodinger, Inc. 0.3 47.98 0.13 Spotify Technology S.A. 2.4 30.55 0.80 Baron Focused Growth Fund Guidewire Software, Inc. 2.0 23.46 0.57 (Institutional Shares) 41.77% 0.45% Denali Therapeutics Inc. 1.3 19.46 0.21 Russell 2500 Growth Index 126.53% 5.45% Space Exploration S&P 500 Index 32.29% 8.87% Technologies Corp. 2.6 13.33 0.44 BioNTech SE 0.9 –16.45 –0.16 From 2014 through 2016, the Fund invested in several businesses whose American Well Corporation – –28.04 –0.44 stocks underperformed when they were investing in their businesses. CoStar GoodRx Holdings, Inc. – –32.10 –0.80 Group, Inc. and Tesla, Inc. were among those businesses. Their stocks Russell 2500 Growth Index 25.89 outperformed in 2019 and 2020 as investments they made began to Real/Irreplaceable Assets 21.0 24.40 5.92 generate strong returns. These companies continue to invest in themselves, although now that they are financially stronger, they are better able to Red Rock Resorts, Inc. 0.8 46.43 0.37 Hyatt Hotels Corp. 3.8 39.12 1.83 finance these investments while continuing to grow their core businesses. Vail Resorts, Inc. 5.6 30.37 2.24 We believe the Fund’s underperformance from 2014 through 2016 is Penn National Gaming, Inc. 7.8 18.80 1.11 analogous to instances when after brief periods of underperformance, the Manchester United plc 1.4 15.77 0.27 American Homes 4 Rent 1.0 5.51 0.08 Fund subsequently outperformed for an extended period. For example, in the Americold Realty Trust 0.6 5.03 0.03 18-month period from October 1998 through March 2000, at the height of Core Growth 20.2 11.61 3.27 the Internet Bubble, the Fund, which owned no internet stocks, increased 41.77% annualized while the Index increased 126.53% annualized. This was Adyen N.V. 2.1 25.97 0.53 Choice Hotels International, immediately prior to the Internet Bubble bursting and the Index falling Inc. 2.5 24.16 0.81 materially over the next eight years. The Fund increased in value during the Arch Capital Group Ltd. 1.6 23.32 0.51 period while the Index declined. (Please see Tables III and IV.) GDS Holdings Limited 1.6 14.35 0.32 Analogous to the Fund’s relatively strong performance in the post-Internet CoStar Group, Inc. 8.6 8.93 1.16 FactSet Research Systems, Inc. 3.8 –0.47 –0.06 Bubble period, we expect the Fund to perform well over the next several years. This is despite our expectation that there will be periods when value Cash 8.5 0.01 0.00 stocks outperform the growth stocks in which we have invested. We can Fees – –0.28 –0.34 certainly give no assurance this will be the case. Currently, we believe some Total 100.0 32.33* 32.33* of our growth companies are trading as if they were value stocks despite Sources: FactSet PA, BAMCO, and Russell, Inc. having strong liquidity and balance sheets. They should recover quickly once * Represents the blended return of all share classes of the Fund. a vaccine or therapeutic is fully distributed to combat the virus.

60 December 31, 2020 Baron Focused Growth Fund

Since its inception on May 31, 1996 through December 31, 2020, the Fund’s The Fund’s beta has averaged 0.82 since inception. This means the Fund has 14.68% annualized performance has exceeded that of its Index by 526 bps per been 82% as volatile as the Index. As a result of the Fund’s strong absolute year. This means that a hypothetical $10,000 investment in Baron Focused and relative returns and lower risk, the Fund has achieved 7.09% annual Growth Fund over 24 years ago would now be worth approximately alpha, a measure of risk-adjusted performance since inception. $289,700! If an investor had instead hypothetically invested $10,000 in a fund designed to track the Index, it would be worth approximately $91,500. (Please see Tables I and IV.)

Table IV. Performance Millennium to COVID-19 Pandemic. The Impact of Not Losing Money. Millennium Internet Bubble Financial Panic to COVID-19 Pandemic Millennium Internet Bubble Inception to Financial Panic COVID-19 Pandemic to Present to Present 5/31/1996 to 12/31/1999 to 12/31/2008 12/31/2008 to 12/31/2019 12/31/2019 to 12/31/2020 12/31/1999 to 12/31/2020 12/31/2020 Value Value Value Value Value $10,000 Annualized $10,000 Annualized $10,000 Cumulative $10,000 Annualized $10,000 Annualized Baron Focused Growth Fund (Institutional Shares) $12,732 2.72% $42,333 14.02% $22,275 122.75% $120,057 12.56% $289,701 14.68% Russell 2500 Growth Index 6,931 –3.99 $52,565 16.28 14,047 40.47 51,176 8.08 91,493 9.42 S&P 500 Index 7,188 –3.60 $45,104 14.68 11,840 18.40 38,386 6.61 89,322 9.32

The indexes are unmanaged. The index performance is not fund performance; one cannot invest directly into an index. We did not make much money from the peak of the Internet Bubble on Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar December 31, 1999 through the trough of the Financial Crisis on products, and energy storage solutions. The stock increased on strong financial December 31, 2008. But…we did make something…which gave investors a results, including profitability that exceeded market forecasts and strong much better outcome than if they had invested in a passive index fund growth across different geographies and vehicle programs. Newly released full mirroring either the Index or the S&P 500 Index. Both indexes lost a material self-driving functionality could also lead to improving unit economics and amount of money during that period. (Please see Table IV.) growth opportunities, in our view. Lastly, Tesla joined the S&P 500 Index, a meaningful milestone that expands the potential shareholder base. Due to the “magic” of compounding and of not losing money from the Vail Resorts, Inc., a global operator of ski resorts, contributed in the quarter Millennium Internet Bubble to the Financial Panic period and keeping up on season pass sales that were up 20% from last year despite the pandemic. with the market during upswings from the Financial Panic to the COVID-19 Robust renewal rates demonstrated loyalty in Vail’s pass base while first Pandemic, $10,000 hypothetically invested in Baron Focused Growth Fund time pass sales have the potential to accelerate future growth. We expect at the Fund’s inception on May 31, 1996 was worth $289,701 on Vail to grow recurring revenue given its strong renewal rates, which, December 31, 2020. That is more than three times the value of a combined with a robust balance sheet, should position the company for hypothetical investment of the same amount in funds designed to track the continued growth in the years ahead. S&P 500 and Russell 2500 Indexes. (Please see Table IV.) Global hotelier Hyatt Hotels Corp. contributed to results on investor expectations that travel will increase as several newly developed COVID-19 Table V. vaccines work to help bring an end to the pandemic. While it may take time Top contributors to performance for the quarter ended December 31, 2020 for Hyatt’s business and group customers to return, a strong leisure business Market Quarter Cap End is aiding recovery in revenue per available room. Hyatt has also successfully When Market lowered its breakeven occupancy levels by reducing fixed costs and has cut Year Acquired Cap Total Percent its capital budget to preserve cash. Hyatt’s strong balance sheet is allowing Acquired (billions) (billions) Return Impact it to weather the pandemic-generated disruption. Tesla, Inc. 2014 $31.2 $668.9 64.55% 21.51% Iridium Communications Inc. is the second largest provider of mobile voice Vail Resorts, Inc. 2013 2.3 11.2 30.37 2.24 and data communications services via satellite and the only commercial Hyatt Hotels Corp. 2009 4.2 7.5 39.12 1.83 provider of communications services offering true global coverage. The stock Iridium Communications rose after results revealed resiliency of the business despite exposure to pandemic-impacted verticals. The company also saw strong growth in Inc. 2019 3.1 5.2 53.73 1.21 consumer-facing activity and a growing pipeline of its Certus product line CoStar Group, Inc. 2014 6.2 36.4 8.93 1.16 for its Maritime customers and the Department of Defense, both channels of which should add to growth as Iridium accelerates installations.

61 Baron Focused Growth Fund

Shares of CoStar Group, Inc., a real estate information and marketing INVESTMENT STRATEGY &PORTFOLIO STRUCTURE services company, continued to contribute to performance in the fourth quarter. CoStar has seen accelerated demand for its digital marketplace Despite current market volatility and investor angst, we have continued to businesses as traditionally offline activities are increasingly shifting online. manage the Fund the same way we have historically. In the fourth quarter, This trend is being partially offset by slower trends in its CRE data licensing businesses. CoStar has over $3.6 billion cash on its balance sheet, which we we consolidated recent gains in Tesla while adding to new positions. In the expect it will use for total addressable market-expanding acquisitions, quarter, we sold approximately 10% of our position in Tesla given strong particularly in the residential market. gains in the stock while initiating a position in Spotify Technology S.A. That company continues to grow its subscribers and holds a significant Table VI. share of the music streaming market given continued growth in its library of Top detractors from performance for the quarter ended December 31, 2020 songs, podcasts, and videos. While we have made other modest changes on Market Quarter the margin, the Fund’s strategy remains the same. We continue to invest for Cap End When Market the long term in a focused portfolio of what we believe are appropriately Year Acquired Cap Total Percent capitalized, competitively advantaged and well-managed, small- and Acquired (billions) (billions) Return Impact mid-cap growth businesses at attractive prices. We attempt to create a GoodRx Holdings, Inc. 2020 $ 1.9 $14.1 –32.10% –0.80% portfolio of approximately 20 securities diversified by GICS sectors that will American Well be approximately 80% as volatile (as measured by beta) as the market. Corporation 2020 5.7 5.3 –28.04 –0.44 Since inception, the Fund has generated approximately 97% of the upside BioNTech SE 2020 24.1 19.6 –16.45 –0.16 FactSet Research when the market rises but just 79% of the downside when the market Systems, Inc. 2008 2.5 12.6 –0.47 –0.06 declines. Businesses in which the Fund invests are identified by our analysts and portfolio managers using the Firm’s proprietary research and time- Shares of GoodRx Holdings, Inc., which operates the nation’s largest online tested investment approach. platform providing users free access to drug pricing information and pharmacy discounts, gave back some of its heady post-IPO run on Amazon’s As of December 31, 2020, the Fund held 21 investments. The Fund’s announcement that it has entered the online pharmacy space. We sold the average portfolio turnover for the past three years was 8.16%. This position based on competitive concerns and worries about its growth prospects. means the Fund has an average holding period for its investments of a Shares of American Well Corporation, one of the U.S.’s largest telehealth little over 12 years. This contrasts sharply with the average mid-cap companies for health systems, health plans, employers, and doctors, gave back some post-September IPO gains after reporting third quarter results that beat growth mutual fund, which typically turns over its portfolio every 21 consensus but included some pull forward from the fourth quarter as well as months. From a quality standpoint, the Fund’s investments have stronger the benefit of some nonrecurring service revenues. Full year 2020 guidance sales growth than the holdings in the benchmark, higher EBITDA and beat Street estimates but implied top line and margin deceleration, which we operating margins, stronger returns on invested capital with more robust believe could end up being conservative, given the lack of assumed increase in balance sheets. We believe these metrics are important to limit risk in pandemic-driven volumes despite the current spike. We sold the position given concerns about its growth prospects and competitive positioning. this concentrated portfolio. BioNTech SE is a leader in the emerging field of mRNA drugs and has While focused, the Fund is diversified by sector. The Fund’s weightings are additional programs in engineered cell therapies, antibodies, and significantly different than those of the Index. For example, the Fund is immunomodulators. During the period held, shares pulled back from intra- heavily weighted in Consumer Discretionary businesses with 59.0% of its quarter highs on likely profit taking, but we are looking past short-term valuation fluctuations to focus on long-term potential. The pandemic has net assets in this sector versus 11.8% for the Index. Further, while the Fund been a strong proof point of the speed and efficacy of the mRNA platform, has historically not invested in pharmaceuticals and biotechnology, it has and we believe BioNTech has the potential to disrupt the biopharma space added two biotechnology investments over the past year and now has 2.2% with a pipeline spanning oncology, infectious diseases, and rare diseases. of the total portfolio in two stocks, Denali Therapeutics Inc. and BioNTech Shares of FactSet Research Systems, Inc., a leading provider of investment SE. While there is somewhat greater risk investing in these companies, we management tools, detracted from performance. The company reported think the small positions do not significantly alter the portfolio’s risk profile, in-line, resilient FQ1 ‘21 earnings, but after a strong run during the early and they give us upside potential should either (or both) of these companies stages of the pandemic, the stock lagged during the quarter. We retain discover new medicines and procedures. The Fund is further diversified by conviction in FactSet due to the large addressable market, consistent execution on both new product development and financial results, and investments in businesses at different stages of growth and development as robust free cash flow generation. discussed above and shown below.

62 December 31, 2020 Baron Focused Growth Fund

Table VII. Table IX. Disruptive Growth Companies as of December 31, 2020 Core Growth Investments: Growth, Dividends, and Share Repurchases as of Cumulative December 31, 2020 Return Cumulative Percent Since Return of Net Year Initial Percent Since Assets Acquired Purchase of Net Year Initial Tesla, Inc. 38.4% 2014 1,309.0% Assets Acquired Purchase Space Exploration Technologies Corp. 2.6 2017 97.9 CoStar Group, Inc. 8.6% 2014 331.9% Iridium Communications Inc. 2.4 2019 45.4 FactSet Research Systems, Inc. 3.8 2008 646.3 Spotify Technology S.A. 2.4 2020 31.5 Guidewire Software, Inc. 2.0 2013 178.5 Choice Hotels International, Inc. 2.5 2010 420.0 Denali Therapeutics Inc. 1.3 2020 19.8 Adyen N.V. 2.1 2020 142.6 BioNTech SE 0.9 2020 -18.5 Arch Capital Group Ltd. 1.6 2003 890.6 Schrodinger, Inc. 0.3 2020 50.3 GDS Holdings Limited 1.6 2020 52.3 Disruptive Growth firms accounted for 50.3% of the Fund’s net assets. On current metrics, these businesses may appear expensive; however, we think Core Growth investments, steady growers that continually return excess they will continue to grow significantly and, if we are correct, they have the free cash flow to shareholders, represented 20.2% of net assets. Examples of potential to generate exceptional returns over time. Examples of these these companies include commercial real estate data supplier CoStar companies include electric vehicle leader Tesla, Inc., commercial satellite Group, Inc. and Choice Hotels International, Inc. Choice employs a company Iridium Communications Inc., and systems software provider to capital-light franchise model for its economy and upscale hotel brands. the insurance industry Guidewire Software, Inc. All of these companies Historically, this model has allowed the company to return cash to have large addressable markets relative to the current size of those shareholders through buybacks and dividends while still achieving strong competitively advantaged businesses. revenue and earnings growth. This would be the case regardless of where we are in the lodging cycle. As one of the leading financial intelligence systems Table VIII. for the asset management industry, FactSet Research Systems, Inc. Investments with Real/Irreplaceable Assets as of December 31, 2020 continues to grow into new areas via fixed income, risk management, and, Cumulative Return most recently, wealth management. This should enable the company to Percent Since grow while generating a steady stream of recurring cash flow that it uses for of Net Year Initial Assets Acquired Purchase acquisitions, dividends, and buybacks. Penn National Gaming, Inc. 7.8% 2019 311.5% Vail Resorts, Inc. 5.6 2013 419.4 Portfolio Holdings Hyatt Hotels Corp. 3.8 2009 170.7 Manchester United plc 1.4 2012 28.9 For the quarter ended December 31, 2020, the Fund’s top 10 holdings American Homes 4 Rent 1.0 2018 46.9 represented 77.9% of net assets. A number of these investments have been Red Rock Resorts, Inc. 0.8 2017 18.9 successful and were purchased when they were much smaller businesses. Americold Realty Trust 0.6 2020 10.8 We believe they continue to offer significant further appreciation potential Companies that own what we believe are Real/Irreplaceable Assets although we cannot guarantee that will be the case. represented 21.0% of net assets. Vail Resorts, Inc., owner of the premier ski resort portfolio in the world, upscale lodging brand Hyatt Hotels Corp., and The top five positions in the portfolio, Tesla, Inc., CoStar Group, Inc., Penn storied English Premier League sports franchise Manchester United plc are National Gaming, Inc., Vail Resorts, Inc., and Hyatt Hotels Corp. all have, examples of companies we believe possess meaningful brand equity and in our view, significant competitive advantages due to irreplaceable assets, barriers to entry that equate to pricing power over time. Penn National strong brand awareness, technologically superior know-how, or exclusive Gaming, Inc.’s state-granted licenses for its regional casinos provide data that is integral to their operations. We think these businesses cannot be important protection from competitors. Online sports betting and casino easily duplicated, which enhances their potential for superior earnings gaming offer large opportunities for future growth for the company. growth and returns over time.

63 Baron Focused Growth Fund

Table X. Thank you for investing in Baron Focused Growth Fund. We continue to Top 10 holdings as of December 31, 2020 work hard to justify your confidence and trust in our stewardship of your Market Quarter Quarter family’s hard-earned savings. We also continue to try to provide you with Cap End End information we would like to have if our roles were reversed. This is so you When Market Investment Percent Year Acquired Cap Value of Net can make an informed judgment about whether Baron Focused Growth Acquired (billions) (billions) (millions) Assets Fund remains an appropriate investment for your family. Tesla, Inc. 2014 $31.2 $668.9 $254.7 38.4% CoStar Group, Inc. 2014 6.2 36.4 57.3 8.6 Respectfully, Penn National Gaming, Inc. 2019 2.5 13.4 51.8 7.8 Vail Resorts, Inc. 2013 2.3 11.2 37.4 5.6 Hyatt Hotels Corp. 2009 4.2 7.5 25.2 3.8 FactSet Research Systems, Inc. 2008 2.5 12.6 24.9 3.8 Ronald Baron David Baron Space Exploration CEO and Lead Portfolio Manager Co-Portfolio Manager Technologies Corp. 2017 – – 17.5 2.6 January 20, 2021 January 20, 2021 Choice Hotels International, Inc. 2010 1.9 5.9 16.5 2.5 Iridium Communications Inc. 2019 3.1 5.2 15.8 2.4 Spotify Technology S.A. 2020 45.4 59.7 15.7 2.4

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: 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. Alpha: measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. Upside Capture explains how well a fund performs in time periods where the benchmark’s returns are greater than zero. Downside Capture measures how well a fund performs in time periods where the benchmark’s returns are less than zero. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

64 December 31, 2020 Baron International Growth Fund

DEAR BARON INTERNATIONAL GROWTH FUND SHAREHOLDER: PERFORMANCE

Baron International Growth Fund (the “Fund”) gained 18.56% (Institutional Shares) for the fourth quarter of 2020, while its principal benchmark index, the MSCI ACWI ex USA Index, appreciated 17.01%. The MSCI ACWI ex USA IMI Growth Index gained 14.22% for the quarter. The Fund outperformed its principal benchmark index, while handily exceeding the all-cap growth proxy, in a strong quarter for global equities. For the quarter, international and emerging market (“EM”) equities notably outperformed their U.S. counterparts, with the exception of U.S. small-cap stocks. Market leadership by sector continued to ebb and flow, with more economically cyclical and interest rate sensitive sectors exhibiting a powerful rally following the U.S. Presidential election and promising news regarding the efficacy and timing of multiple COVID-19 vaccines. For the full-year 2020, we were pleased with the Fund’s performance, which at over a 30% gain strongly outperformed its principal and all-cap growth benchmarks. Looking forward, we believe the COVID-19 crisis has pushed global policymakers through the portal of “Modern Monetary Theory,” and that this, concurrent with the transfer of MICHAEL KASS Retail Shares: BIGFX policy/stimulus leadership to politicians and elected officials, suggests to us a Institutional Shares: BINIX sustainable period of dollar weakness and relative outperformance for PORTFOLIO MANAGER R6 Shares: BIGUX international and EM equities. The possibility of debt mutualization and the easing of fiscal constraints in Europe, in addition to the recent Brexit resolution and U.K. trade pact, should further support the relative return Table I. potential of international equities. We reiterate our view that the pivot to Performance value-added economic activity in China, notwithstanding escalating political Annualized for periods ended December 31, 2020 rhetoric and national security concerns, presents compelling opportunity for Baron Baron dedicated long-term and bottom-up fundamental investors. As always, we International International MSCI are confident that we have invested in many well-positioned and well- Growth Growth MSCI ACWI ex Fund Fund ACWI ex USA IMI managed companies on a bottom-up basis, which are poised to benefit from Retail Institutional USA Growth long-term and attractive investment themes. Shares1,2 Shares1,2,3 Index1 Index1 Three Months4 18.50% 18.56% 17.01% 14.22% One Year 30.52% 30.83% 10.65% 22.40% Three Years 11.41% 11.70% 4.88% 9.74% Five Years 13.88% 14.17% 8.93% 11.83% Ten Years 8.54% 8.82% 4.92% 6.94% Since Inception (December 31, 2008) 12.43% 12.71% 8.08% 10.16%

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, 2019 was 1.31% and 1.04%, but the net annual expense ratio was 1.20% and 0.95% (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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and Baron International Growth Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. The index performance is not Fund performance; one cannot invest directly into an index. 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 Performance for the Institutional Shares prior to 5/29/2009 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 5/29/2009 did not reflect this fee, the returns would be higher. BARON FUNDS 4 Not annualized.

65 Baron International Growth Fund

For the full-year 2020, we outperformed our principal benchmark index by a Zai Lab Limited is a leading biotechnology company in the growing Chinese wide margin, while also comfortably outperforming our all-cap international health care market. Although the fourth quarter was relatively quiet, shares growth proxy. During a strong year with over a 30% return, positive relative have continued their strong run alongside the Chinese health care indices. performance was broad based, led by our overweight exposure to and strong We think Zai is well positioned to become a leader in the delivery of drugs stock selection in Information Technology (“IT”). Strength in the sector was to the Chinese market. driven by our digitization/cloud/SaaS software theme investments including Shares of France-based universal bank BNP Paribas S.A. appreciated as RIB Software SE, Wix.com Ltd., Kingdee International Software Group investors gained clarity on the impacts of the pandemic on its business. In Co. Ltd., and NEXTDC Limited. Stock selection in Health Care also its third quarter review, management’s view on potential losses and contributed significantly to relative returns, led by our biotechnology theme additional provisioning needs were less than Street expectations. A more investments Zai Lab Limited and argenx SE. Eurofins Scientific SE, a global benign outlook also fueled optimism that the European Central Bank would bioanalytical testing services provider; Shenzhen Mindray Bio-Medical reverse a ban on dividend payments, driving a sector-wide rally. BNP Electronics Co., Ltd., a leading Chinese medical equipment manufacturer; outperformed the broader index of EU banks due to its solid capital position Agilent Technologies, Inc., a leader in life sciences, diagnostics and applied and its credible plan to improve profitability over the mid-term period. chemical markets; and AstraZeneca PLC also performed well. In addition, S4 Capital plc and Spotify Technology S.A., also related to our digitization CAE Inc. is the leading provider of simulators and pilot training, with 70% theme, but classified in the Communications Services sector, contributed share of global flight simulator production and the largest global network of meaningfully to positive relative performance. Modestly offsetting the above simulators for pilot training. Shares rallied after news of COVID-19 vaccines was adverse stock selection in Consumer Staples, primarily driven by a improved visibility for airline travel recovery. We believe there will be decline in Treasury Wine Estates Limited, a consequence of COVID- increasing demand for pilot training due to post-pandemic fleet reactivation disruption and China levying high import tariffs on Australian wines. In and the return of the 737 MAX to service in the near term and from pilot addition, adverse stock selection in the Energy sector, also in our view retirements over the long term. COVID-related, negatively impacted relative performance. Farfetch Limited, a global luxury fashion e-commerce marketplace, From a country perspective, for calendar year 2020, strong stock selection in contributed to performance following its announced partnership in China the U.K. and China powered a solid majority of relative outperformance, as with Alibaba and Richemont. The deal was well received by investors. The our investment performance in these markets was broad based across company remains focused on expanding its reach in China, which is one of several principal themes, but particularly led by our digitization/cloud/SaaS the world’s most important luxury marketplaces. We retain conviction in software investments. Our underweight position along with poor stock Farfetch’s continued growth as the leading global online luxury marketplace. selection in strong-performing Korea was the largest detractor to relative S4 Capital plc is a global marketing services business founded by Sir Martin results. Our overexposure to declining Brazilian equities, lack of exposure to Sorrell, the founder and former CEO of WPP, the world’s largest ad agency. better performing Taiwanese stocks, and adverse stock selection in Norway S4 encompasses creative production firm MediaMonks and data-driven and Italy also negatively impacted relative performance. media consultancy MightyHive. Shares of S4 were up in the quarter on For the fourth quarter, we outperformed our benchmark in a very strong recovering global ad spend, continued M&A, and increasing investor period for equity returns. We are encouraged with our performance as we awareness. We believe S4 has meaningful potential over the long term to often lag in such periods, during which investors pursue index heavyweights grow revenue north of 25% annually with high-teens EBITDA margins as it and shift towards more economically cyclical stocks. Positive stock selection benefits from digital transformation across industries and geographies. in the Health Care and Industrials sectors were key drivers of relative outperformance in the fourth quarter, while relative performance was Table III. negatively impacted by our cash position in a period of strong market Top detractors from performance for the quarter ended December 31, 2020 returns, as well as by adverse stock selection in the IT and Energy sectors. Percent Impact Table II. Alibaba Group Holding Limited –0.32% Top contributors to performance for the quarter ended December 31, 2020 Reliance Industries Limited –0.20 Percent AstraZeneca PLC –0.13 Impact Square Enix Holdings Co., Ltd. –0.10 Zai Lab Limited 0.94% Arco Platform Limited –0.09 BNP Paribas S.A. 0.91 CAE Inc. 0.90 Alibaba Group Holding Limited is the largest retailer and e-commerce Farfetch Limited 0.77 company in China. Alibaba operates shopping platforms Taobao and Tmall S4 Capital plc 0.62 and owns 33% of Ant Group, which operates Alipay, China’s largest third- party online payment provider. Shares were down on the news that Chinese regulators had suspended the listing of ANT Group and also launched an investigation into Alibaba for potential monopolistic behavior. We continue to believe Alibaba’s core business remains highly profitable, complemented by rapid growth in the cloud business and inflection in the Cainiao logistics and New Retail segments.

66 December 31, 2020 Baron International Growth Fund

Reliance Industries Limited is India’s leading conglomerate, with business Table V. interests in telecommunications, digital services, retail, oil refining, and Top five holdings as of December 31, 2020 – Emerging Countries petrochemical. Shares were negatively impacted due to a retracement of Percent of earlier gains when the company raised over $20 billion from strategic Net Assets (Facebook, Google) and financial investors in its Jio Platforms and Reliance Zai Lab Limited 2.0% Retail business verticals. We retain conviction in Reliance, as it is a key Bajaj Finance Limited 1.6 beneficiary of the “Digital India” theme with immense potential to emerge Tencent Holdings Limited 1.2 as the “Amazon/Facebook/Netflix” of India, in our view. Grupo Mexico, S.A.B. de C.V. 1.1 Alibaba Group Holding Limited 1.1 AstraZeneca PLC is a multi-national pharmaceutical company developing drugs across multiple therapeutic areas such as oncology and respiratory diseases. Shares were impacted by news of AstraZeneca’s joint development Table VI. with Oxford University of a viral-based COVID-19 vaccine. Given a mixed Percentage of securities in Developed Markets as of December 31, 2020 data set due to an unforeseen error in dosing that occurred in the Brazilian Percent of market, the vaccine timelines slipped, hurting share performance. Our Net Assets investment thesis on AstraZeneca is not dependent on COVID-19 but rather United Kingdom 15.9% its best-in-class large-cap growth profile, and we retain conviction. Japan 13.4 France 7.2 Square Enix Holdings Co., Ltd. is a Japanese video game company. Shares Switzerland 4.2 fell during the quarter due to a lack of new titles post the record launch of the remake of Final Fantasy VII and delays in new titles due to Netherlands 3.7 COVID-19-related restrictions. We remain confident in the company’s Germany 3.6 ability to generate sustainable returns for shareholders with its leading IP Sweden 3.5 portfolio and increasing revenue contribution from its high-margin digital United States 2.9 content. Canada 2.7 Israel 2.4 Arco Platform Limited is a Brazilian education technology company Spain 1.7 providing content and software solutions to K-12 private schools. Shares fell Australia 1.5 after bookings guidance for 2021 missed analyst estimates as a result of a Hong Kong 1.3 pandemic-generated delay in its sales cycle. We retain conviction in Arco as Denmark 0.7 it remains in the early stages of disrupting the industry with a modern Norway 0.7 learning platform that generates better results for students and higher rankings for schools and should drive rapid growth at high profitability over the long term. Table VII. Percentage of securities in Emerging Markets as of December 31, 2020 PORTFOLIO STRUCTURE Percent of Net Assets Table IV. China 13.2% Top 10 holdings as of December 31, 2020 – Developed Countries India 7.3 Percent of Brazil 5.4 Net Assets Russia 3.0 BNP Paribas S.A. 2.4% Mexico 1.6 Credit Suisse Group AG 2.3 Korea 0.9 argenx SE 2.1 United Arab Emirates 0.3 S4 Capital plc 1.9 FANUC Corp. 1.7 Exposure by Market Cap: The Fund may invest in companies of any market Keyence Corporation 1.6 capitalization, and we strive to maintain broad diversification by market cap. Telefonaktiebolaget LM Ericsson 1.6 At the end of the fourth quarter of 2020, the Fund’s median market cap was Future plc 1.6 $16.0 billion, and we were invested 68.6% in large- and giant-cap Lloyds Banking Group plc 1.6 companies, 20.3% in mid-cap companies, and 8.2% in small- and micro-cap LVMH Moet Hennessy Louis Vuitton SE 1.5 companies, as defined by Morningstar, with the remainder in cash.

RECENT ACTIVITY

During the fourth quarter of 2020, we added several new positions toward existing themes while also increasing several investments that were established earlier in the year. We continue our endeavor to add concentration to our high conviction ideas.

67 Baron International Growth Fund

We were active in filling out our sustainability/ESG theme, most notably via brand (Martell) in China, and a strong global brand in Jameson, which has three new positions in Europe: Befesa S.A., AMG Advanced Metallurgical grown revenue at double-digit rates for over a decade. Management is Group N.V.,andEpiroc AB. Befesa is a leading environmental services competent as brand owners and incubators, and we believe there is also a provider, as collector of hazardous steel dust and aluminum waste with a margin expansion opportunity over the next three to five years that will 50% market share in Europe. The company recycles EAF steel dust from drive above-industry earnings growth. customers for a fee and recovers valuable by-products such as zinc. Befesa’s scale, technological advantage, and customer retention helps to generate In anticipation of improving prospects of a Brexit resolution, we initiated a very high returns on capital. It is pioneering steel dust recycling in China, with position in Lloyds Banking Group plc, one of Britain’s largest lenders. two plants being commissioned this year that will expand its total recycling Through its subsidiaries, the company provides a wide range of banking capacity by 20%. Befesa has a first mover advantage in the virtually services including retail banking, mortgages, pensions, asset management, untapped Chinese market, which in the longer term could support 10 to 20 and insurance, among others. We believe Lloyds’ earnings are set to rebound times the recycling capacity that the company is building today. We expect after hitting a recent trough, driven by positive trends in mortgage stricter environmental policies in China, and potentially India and other EM underwriting and lower provision requirements. Demand for homes has countries, to help sustain high double-digit growth rates over the next soared in the U.K. since the onset of COVID-19, driving higher real estate decade. AMG is a European specialty metals company producing critical prices and lending spreads on new mortgages. The bank has also built a materials such as vanadium and titanium alloys. AMG also recycles spent comfortable cushion of reserves to contend with potential COVID-related catalysts from oil refinery into ferrovanadium using proprietary technology. credit losses. These factors suggest earnings have troughed and are set to Much like Befesa, the company has a captive customer base with long-term rebound sharply. In addition, we believe the company’s valuation was contracts, and demand for its services grows from environmental regulations heavily discounted due to lingering fears of a failed Brexit resolution and a to reduce hazardous waste. In addition, we like the company’s growth central bank-imposed ban on dividend payments. In our view, the recent opportunity in lithium, an essential metal used in EV batteries and energy Brexit resolution and likely reinstatement of dividends are positive storage. AMG wants to build its own lithium chemical capacity in Europe, catalysts that could propel the stock back to historic valuations at a which we think should lead to a much better margin profile for its lithium minimum. business. Epiroc is a leading global manufacturer of mine drilling and During the quarter, we also added to several existing positions, notably underground loading equipment. The company has a leading position in Credit Suisse Group AG, BNP Paribas S.A., Bajaj Finance Limited, XP Inc., upstream mining capital equipment, a highly concentrated duopoly market. Cellnex Telecom, S.A., FANUC Corp., and Vivendi SA, and exited The company has some of the highest cash margins and premium returns Hangzhou Hikvision Digital Technology Co., Ltd. and Brookfield Asset among European industrials, with attractive exposure to the faster-growing Management, Inc. in favor of higher conviction positions. underground mining segment. Epiroc has been innovating and advancing sustainability goals by reducing carbon emissions through electrification of OUTLOOK mining equipment. We think there is a secular growth rerating opportunity from acceleration of mine digitization and automation which should The year 2020 proved to be unpredictable and unforgettable. It was “the significantly boost higher margin aftermarket sales. worst of times” for many, and at once “the best of times” for many During the quarter, we also initiated a position in Suzano S.A., adding investors. Early in the year, we witnessed the epoch of economic and market further to our sustainability/ESG investments. Headquartered in Brazil, uncertainty, while the year ended in a pinnacle of confidence and optimism. Suzano is the world’s largest and lowest cost producer of pulp, which is In our view, this remarkable year, its challenges and the collective response, primarily used in paper, tissue, and packaging. The company is also are likely to impact the economic and investment environment for several expanding into new, higher-margin sustainability markets with fossil-to-fiber years to come. Indeed, we believe the financial legacy of the COVID-19 substitution across textiles, plastics, fuels, and chemicals. Suzano’s pulp crisis will be that it finally vaulted global policymakers through the portal of production removes more greenhouse gas emissions from the atmosphere Modern Monetary Theory, while also allowing politicians and elected than it emits. The company has a goal to remove 40 million tons of carbon officials to assume the primary levers of policy, leaving central bankers in a dioxide over the next decade and we see an opportunity in the future to supporting, if still substantive role. “Populist QE” will likely be a game monetize these carbon credits. In addition to maintaining a positive view on changer, ultimately challenging consensus expectations for incredibly well- pulp prices, we expect sustainability/ESG factors to drive a higher earnings anchored inflation and interest rates. multiple for Suzano. In early November, the U.S. election coincided with better-than-expected We also made an investment in Pernod Ricard SA, a France-based global news on the timing and efficacy of multiple COVID-19 vaccines, triggering spirits company whose brands include Jameson, Martell, Chivas, and an explosive rally in global financial markets. While the Trump Glenlivet, among many others. Lockdowns across most global markets in administration challenged the surface results of the Presidential election, in 2020 drove a decline in gatherings and travel-related consumption and in our view, perhaps more relevant than reduced election uncertainty was the turn Pernod’s stock price, which in our view offered an attractive entry point absence of a “blue wave,” suggesting low risk of major policy changes for a company whose intermediate-term earnings power is likely unchanged regarding corporate tax rates or unhinged fiscal spending on social and whose results should thus normalize at some point this year as vaccines programs. While the balance of the year was marked by rising COVID cases are deployed and markets reopen. The premium spirits industry is and related risk of curtailment of economic activity, financial markets characterized by secular growth, premiumization and pricing power that remained squarely focused on the longer-term beneficial impact of high drives a high and rising return on capital for superior brands. In addition, vaccine efficacy and the return to economic and social normalcy. If Pernod has assets that offer appealing structural growth, including the best anything, greater near-term COVID-related disruption proved a benefit and most profitable premium whisky business in India, the leading Cognac to equity markets and forward economic growth expectations, as it

68 December 31, 2020 Baron International Growth Fund

necessitated a large and immediate fiscal support package to bridge the gap enthusiastic regarding international and EM equities, as we expect a to anticipated herd immunity by virtue of vaccines. Finally, late in the material improvement in relative earnings and capital flows, and a likely quarter, Great Britain and the E.U. reached a Brexit compromise and trade recovery in relative valuation. In our view, investors and markets remain too pact, defusing the uncertainty and potential chaos of a “Hard Brexit.” skeptical regarding the potential for much-improved relative growth, and particularly, earnings for EM equities vs. U.S./global. We expect multi-year In our previous letter, we remarked that “we remain believers that global catalysts from major reforms in Europe and in countries such as India, China, authorities will continue to underwrite adequate policy support to provide a and Brazil, and further believe the year-end Brexit resolution and trade pact bridge to a full recovery, and that most publicly traded businesses will ultimately arrive at earnings potential without the need for dilutive capital for the U.K. can substantially brighten opportunities for many businesses issuance. In other words, notwithstanding some near-term noise, there. Further, China’s pivot to consumption and value-added economic policymakers have rolled out a shiny bazooka, and we remain optimistic, development, and away from low-value manufacturing, infrastructure and particularly with regard to the companies in which we are invested.” In our export-oriented activity, will drive higher returns domestically while also view, as highlighted in the above paragraph, the recent U.S. election results benefiting its international trading partners. We suspect this pivot may and news on virus efficacy represented the moment when the critical mass simultaneously have an adverse effect on the relative earnings growth of of investor consensus came to recognize a material improvement in many U.S. multi-national corporations that have benefited for years from forward-looking fundamentals must be discounted. We have stated for access to and the growth of demand in China. With relative valuations near several quarters that the profound policy changes taking place suggested to historic lows, and risk-premium on non-dollar assets elevated after years of us that eventual fundamental improvement, and with it escape velocity for U.S. foreign policy aggression, we currently believe we have entered the inflation and growth expectations, and the beginning of a U.S. dollar bear early innings of a typical International/EM relative bull market. market. We now believe we have entered a period of sustainable Thank you for investing in the Baron International Growth Fund. outperformance for equities over fixed income, and for international and EM equities and currencies. Sincerely, To us, the immediate question, post the historic fourth quarter rally, is how much of this good news has already been priced into markets? In our view, while the strong performing areas of the markets in 2020 are likely to sustain gains given solid fundamentals and a reluctance of policymakers to tighten liquidity, several underperforming areas are now likely to deliver significant earnings surprises, potentially sparking a mean reversion in leadership in the more economically cyclical sectors for a temporary period– Michael Kass much as they did in 2016. Irrespective of sector leadership, we are quite Portfolio Manager January 20, 2021

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

69 Baron Real Estate Fund

Dear Baron Real Estate Fund Shareholder:

The Baron Real Estate Fund (the “Fund”) generated exceptionally strong performance in 2020, gaining 44.28% (Institutional Shares) for the year ended December 31, 2020. The Fund’s 44.28% gain in 2020 substantially outperformed both its primary benchmark index, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), that rose only 4.21%, and the MSCI US REIT Index, that declined by 8.70%. For the most recent three-month period ended December 31, 2020, the Baron Real Estate Fund increased 16.79%, exceeding the returns of 10.35% by the MSCI Real Estate Index and 11.16% by the MSCI US REIT Index. Baron Real Estate Fund Cumulative Return Since Inception (December 31, 2009 through December 31, 2020) • Baron Real Estate Fund: 446.66% • MSCI Real Estate Index: 239.73% • MSCI U.S. REIT Index: 149.50% JEFFREY KOLITCH Retail Shares: BREFX The Fund has received special recognition from Morningstar for its Institutional Shares: BREIX achievements: PORTFOLIO MANAGER R6 Shares: BREUX Morningstar Real Estate Category Ratings (as of December 31, 2020) • Morningstar Overall Rating™: • Morningstar 5-Year Ranking: - Baron Real Estate Fund received a 5-star Morningstar Overall - Baron Real Estate Fund ranked in the top 2% of all real estate Morningstar Rating™ funds • Morningstar 10-Year, 5-Year, 3-Year Ratings: We will address the following topics in this letter: - Baron Real Estate Fund received a 5-star Morningstar Rating™ for each of its full 10-year, 5-year, and 3-year performances • A chronicle of our key action steps managing the Fund in 2020 • The investment case for active management of public real estate and Morningstar Real Estate Category Rankings (as of December 31, 2020) the Fund • Morningstar 10-Year, 3-Year, and 1-Year Ranking: • The prospects for real estate in the public markets (preview: we remain - Baron Real Estate Fund ranked as the #1 real estate fund for each bullish!) of its 10-year, 3-year, and 1-year performances • Our 2021 investment themes and portfolio composition • Our concluding thoughts and observations

As of 12/31/2020, the Morningstar Ratings™ were based on 225, 199, 144, and 225 share classes for the 3-year, 5-year, 10-year, and Overall periods, respectively. The Morningstar Ratings are for the Institutional Share Class only; other classes may have different performance characteristics. As of 12/31/2020, the Morningstar Real Estate Category consisted of 248, 225, 199, and 144 share classes for the 1-, 3-, 5-, and 10-year periods. Morningstar ranked Baron Real Estate Fund Institutional Share Class in the 1st, 1st, 2nd, and 1st percentiles, respectively. On an absolute basis, Morningstar ranked Baron Real Estate Fund Institutional Share Class as the 1st, 2nd, 4th, and 1st best performing share class in its Category, for the 1-, 3-, 5-, and 10-year periods, respectively. As of 12/31/2020, the Morningstar Real Estate Category consisted of 248 and 225 share classes for the 1- and 3-year periods. Morningstar ranked Baron Real Estate Fund R6 Share Class in the 1st and 1st percentiles, respectively. On an absolute basis, Morningstar ranked Baron Real Estate Fund R6 Share Class as the 1st and 1st best performing share class in its Category for the 1- and 3-year periods, respectively. Morningstar calculates the Morningstar Real Estate Category Average performance and rankings 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 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 Morningstar Rating does not include any adjustment for sales loads. 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. © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; BARON FUNDS 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. Past performance is no guarantee of future results.

70 December 31, 2020 Baron Real Estate Fund

Table I. Our key action steps (the heavy lifting)–buying and selling securities, raising Performance cash, deploying cash, repositioning the portfolio, and prioritizing certain Annualized for periods ended December 31, 2020 investment themes–occurred earlier in 2020 (February, March, and early April). Baron Baron MSCI Key portfolio repositioning in the early portion of 2020 included the Real Estate Real Estate USA IMI following: Fund Fund Extended MSCI Retail Institutional Real Estate US REIT • Sold a significant portion of the Fund’s travel-related holdings at Shares1,2 Shares1,2 Index1 Index1 favorable prices and raised cash for redeployment. Three Months3 16.70% 16.79% 10.35% 11.16% One Year 43.85% 44.28% 4.21% (8.70)% Upon the emergence of the COVID-19 virus, it became apparent that Three Years 17.26% 17.56% 6.60% 2.25% this outbreak might develop into a global pandemic. We quickly Five Years 15.67% 15.97% 9.13% 3.51% recognized that the Fund’s investments in travel-related real estate Ten Years 15.43% 15.72% 10.53% 6.99% categories, which had accounted for about 25% of the portfolio, should Since Inception be reduced, given the prospects of a significant curtailing of worldwide (December 31, 2009) travel. (Annualized) 16.40% 16.70% 11.76% 8.67% We proactively decreased our investments in travel-related holdings Since Inception (hotel, casinos & gaming, cruise line, and timeshare companies) at (December 31, 2009) favorable prices early in the first quarter and raised cash, representing (Cumulative)3 431.65% 446.66% 239.73% 149.50% approximately 15% to 19% of the Fund’s net assets and the only instance of the Fund’s large cash position since its inception 11 years A CHRONICLE OF OUR KEY ACTION STEPS MANAGING THE FUND IN ago. 2020 By mid-March, following the sharp correction in numerous share prices, we reinvested the bulk of the proceeds at much more favorable prices. 2020 was a notably active year managing the Fund due to the acceleration and emergence of headwinds and tailwinds in certain segments of real Following the reinvestments, cash represented only 4.2% of net assets estate, the unprecedented economic and social lockdown, and the resulting at the end of the first quarter. We maintained a low cash position for stock market volatility. the balance of the year. Our decision to implement a more active and aggressive portfolio • Purchased best-in-class companies that were “on sale.” management playbook (we initially played defense, then we played offense) In our judgment, characteristics of a best-in-class real estate company than our more typical Baron lower turnover approach produced strong are: performance results in an extremely challenging and unpredictable year for numerous categories of public real estate. - Owns unique and well-located real estate assets in markets with high barriers to entry combined with attractive long-term demand In 2020, the Fund’s 44.28% gain, measured against the 8.70% decline of the demographics MSCI US REIT Index, was the Fund’s best annual comparative performance - Enjoys strong long-term growth prospects together with a leading since its inception eleven years ago. The Fund also generated its best annual competitive position performance versus its primary benchmark, the MSCI Real Estate Index. - Maintains a conservative and liquid balance sheet - Employs an intelligent and motivated management team whose interests are aligned with shareholders

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, 2019 was 1.33% and 1.08%, 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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 indexes and the Fund include reinvestment of interest, capital gains and dividends, which positively impact the performance results. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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.

71 Baron Real Estate Fund

Examples of best-in-class real estate companies that we added to Table III. earlier in 2020 at highly attractive prices include: Top net sales for the quarter ended December 31, 2020 Quarter End Amount - Housing-related: Home Depot, Inc., The Sherwin-Williams Market Cap Sold Company, D.R. Horton, Inc., and Lennar Corporation (billions) (millions) - Commercial real estate services companies: CBRE Group, Inc. Zillow Group, Inc. $30.6 $17.7 - Real estate operating companies: Brookfield Asset Management, Penn National Gaming, Inc. 13.4 14.2 Inc. Lennar Corporation 23.3 11.7 - REITs: Prologis, Inc. and American Tower Corp. Wynn Resorts Ltd. 12.2 11.4 Note that these statements represent the manager’s opinion and is not Installed Building Products, Inc. 3.0 10.5 based on a third-party ranking. Following exceptionally strong share price performance in 2020, we • The Fund prudently purchased cyclical stocks that had declined sharply modestly trimmed the Fund’s positions in the companies highlighted above. in the downturn but possess the potential to appreciate significantly We remain positive, however, about the long-term prospects for each of the over the next few years. companies. Upon the resumption of normalized economic activity, we anticipate THE INVESTMENT CASE FOR ACTIVE MANAGEMENT OF PUBLIC REAL that the shares of many beaten down cyclical companies, such as ESTATE AND THE FUND travel and hospitality-related real estate companies and certain REITs, may lead the market higher. The investment case for active management of public real estate • Increased the Fund’s exposure to housing-related companies benefiting We believe the case for investing in an actively managed public real estate from structural tailwinds and the pandemic. mutual fund is compelling – more so than ever. In contrast to our aggressive first quarter re-alignments, we made only In 2020, cross currents developed in real estate – in large part due to the minor adjustments to the portfolio in the second and third quarters of 2020. Coronavirus – some of which may persist in the years ahead. In the most recent fourth quarter, however, we were active, once again, purchasing and trimming stocks in preparation for the year ahead. More on Consequently, the public real estate universe has evolved into a narrower set this topic in the “Key Investment Themes and Portfolio Construction” of compelling investment opportunities. section below. Some segments of real estate are experiencing an acceleration in business fundamentals. These include residential homes for sale, single-family home Table II. rentals, manufactured housing, industrial warehouse and cold storage Top net purchases for the quarter ended December 31, 2020 companies, data center and wireless tower companies, and life science real Quarter End Amount Market Cap Purchased estate. (billions) (millions) Certain segments of real estate are facing headwinds and an expected Douglas Emmett, Inc. $ 5.1 $19.2 slowdown in long-term growth. The shift to e-commerce shopping Six Flags Entertainment Corporation 2.9 16.6 continues to negatively impact retail malls and shopping centers, and this The Howard Hughes Corporation 4.3 15.7 trend should fast-track the pace and number of retail store closings. Opendoor Technologies Inc. 12.4 15.0 Working from home, or anywhere, and the rise of video teleconferencing are American Assets Trust, Inc. 1.7 13.9 likely to pressure occupancy and rents for office and urban apartment landlords and weigh on business travel. In the quarter ended December 31, 2020, we purchased shares in several attractively valued real estate companies that lagged in 2020 in large part A passive real estate strategy replicates a specific real estate benchmark due to temporary operational headwinds caused by COVID-19. Examples or index. It owns the entire universe of public real estate companies – the include the purchase of shares in certain REITs, such as Douglas Emmett, companies benefiting from operating tailwinds and the companies facing Inc. and American Assets Trust, Inc., amusement park operators such as multi-year operating headwinds. Six Flags Entertainment Corporation, and land developer The Howard An actively managed real estate strategy, such as the Baron Real Estate Hughes Corporation. We expect the business prospects and share prices of Fund, can be discerning by prioritizing companies with attractive long- several real estate laggards to recover in 2021 if COVID-19 vaccinations are term prospects while de-emphasizing companies with unappealing long- widely administered and economic activity accelerates. term prospects. We also acquired shares in Opendoor Technologies Inc. Like Zillow Group, The investment case for Baron Real Estate Fund – an actively Inc., another Fund holding, Opendoor provides a digital platform for residential real estate that allows for the purchase and sale of homes on a managed and differentiated real estate fund mobile device. We are quite optimistic about the long-term growth We launched Baron Real Estate Fund eleven years ago on December 31, prospects for Opendoor and Zillow and will have much more to say about 2009. At that time, we noted that we expected the Fund’s more flexible these companies in future shareholder letters. investment approach to be a key competitive advantage over the long term.

72 December 31, 2020 Baron Real Estate Fund

Our investment philosophy and strategy has been to structure and maintain • Additional reasons to be optimistic included historically low interest a more expansive and actively managed real estate fund–one that contains rates, inflation, and gasoline prices, and, in most cases, strong corporate REITs, but also invests in various non-REIT companies that operate within or balance sheets. provide services or products to the real estate industry. • The economic effects of the pandemic crisis would be largely In our opinion, the Fund’s flexibility is a critical competitive advantage. mitigated. Baron Real Estate Fund, unlike passively managed real estate • Medical experts anticipated modern medical advances and a vaccine strategies and most REIT funds, has a greater ability to pick our spots that would be broadly available by the summer of 2021 or sooner. and pivot away from the real estate categories that are likely to face • The start of a new economic cycle. long-term occupancy, rent, and cash flow pressures. • Several segments of residential and commercial real estate had begun We tend to prioritize companies with: to rebound. • Unique competitive advantages that limit competition and enable • The prospects for Baron Real Estate Fund were strong due to the outsized reinvestment returns quality of the Fund’s holdings, the majority of which were “on sale” at • Long runways for non-cyclical cash flow growth exceptionally attractive prices. • Relatively capital efficient business models Our current thoughts regarding the prospects for real estate and the Fund We de-emphasize companies with: At the outset of 2021, we remain optimistic about the prospects for real • Secular growth headwinds estate and the Fund. We do not, however, anticipate replicating the Fund’s • Oversupplied conditions annual gains of 44.44% and 44.28% in 2019 and 2020, respectively. • Highly uncertain medium-term demand prospects We remain bullish due to four key considerations: At times, we may acquire shares opportunistically in companies facing near- to medium-term headwinds if we determine that the return profile is 1. We believe the relative appeal of public real estate stocks is compelling. attractive and risk profile is acceptable. However, opportunistic purchases of companies facing headwinds is not a portfolio management and risk 2. The real estate cycle has reset and most real estate cycles last five to management priority. seven years. Our actively managed approach to investing in real estate has yielded 3. We continue to identify attractively valued segments of the real estate strong results. Since the launch of the Fund eleven years ago on sector. December 31, 2009, the Fund has increased 446.66% cumulatively 4. We expect portions of real estate to be notable beneficiaries of (net of fees) which compares favorably to the performance of the widespread COVID-19 vaccinations. largest real estate passive strategy, the Vanguard Real Estate ETF (“VNQ”), which increased 194.67%. 1. The relative appeal of public real estate If we are correct regarding the evolving real estate landscape, the In our opinion, many public real estate companies remain attractively valued merits of Baron Real Estate Fund’s broader and more flexible relative to equity, bond, and private real estate alternatives. investment approach and actively managed methodology may Public real estate relative to other equity alternatives become even more apparent in the years ahead. In 2020, the S&P 500 Index increased 18.40%, the NASDAQ Composite THE PROSPECTS FOR REAL ESTATE IN THE PUBLIC MARKETS Index increased 44.92%, and global equities (as defined by the MSCI ACWI Index) increased 16.25%. In 2020, we were steadfast in our view that the prospects for real estate and Baron Real Estate Fund were compelling. Much of the real estate sector, however, lagged. In 2020, the MSCI US REIT Index declined 8.70% (with several REITs down 20% to 40%), many At the end of the first quarter, we cited that the dramatic correction in so hospitality-related real estate companies (e.g., hotels, timeshare, and real many share prices presented a once-in-a-generation, perhaps a estate casino gaming companies) down 10% to 20% and leading once-in-a-career, buying opportunity. commercial real estate services companies declined 10% to 20%. In 2020, certain real estate businesses–hotels and other hospitality-related At that time and throughout the balance of 2020, we stated that our companies, apartment, office, retail, and other commercial real estate- optimism was due to the following considerations: related companies–were challenged due to the highly unusual pandemic- • The double barrel of unlimited monetary stimulus and massive fiscal induced economic downturn. In our opinion, the businesses of many of stimulus would bolster the economy and stock market. these companies are cyclically depressed, not secularly challenged, and will recover when economic conditions improve. • Following the sharp correction in share prices, equity valuations were attractive. In fact, we believed that the flight from the market had The valuation disparity between many real estate securities and non-real produced some extraordinary and rare investment opportunities. estate stocks remains, in our opinion, extreme. The MSCI US REIT Index is currently priced at a discount to the S&P 500 Index for the first time • Residential and commercial real estate would rebound as economic since 2009! activity resumes.

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Public real estate relative to bonds Accommodative central bank policy: On September 16, 2020, the Fed signaled that it intends to keep interest rates near zero through at least Following the plunge in bond yields to historic lows, bonds offer investors 2023. negligible yields. Subdued consumer price inflation (“CPI”): CPI is significantly below the Fed’s In the U.S., for example, the 10-year Treasury yield has declined to only 2% inflation target, and it may remain subdued due to technological and 0.9% versus a long-term average of 5.7%. productivity advances. A June 30, 2020 Wall Street Journal article noted that two years ago 36% of Improving economic growth: Recent economic and company business bonds had yields less than 2%. The article went on to state that about 85% results confirm that the U.S. economy bottomed in April. We believe a new of global bonds had yields less than 2%! economic expansion has begun and most economic cycles last five to seven On the other hand, the dividend yield on REITs currently stands at years. approximately 3.5%, and several other real estate securities offer Modest levels of commercial construction activity: Supply growth remains compelling total return potential relative to bonds. low by historical standards. Public real estate relative to real estate in the private market An under-supply of inventory of residential homes: Residential inventory We believe there is a compelling arbitrage opportunity in the public real levels remain low. estate market relative to the private market. Healthy corporate balance sheets: Corporate balance sheets are generally in With the correction in several real estate stocks in 2020, the valuations of solid shape with ample cash, appropriate debt levels, and staggered debt recent private market real estate transactions suggest that it is notably maturities. cheaper to buy certain segments of real estate in the public market The share prices and valuations of several public real estate companies than in the private market. remain depressed: Valuations are reasonable relative to interest rates and Final thought on the relative appeal of real estate many other investment alternatives. We do not have a crystal ball to predict when the stock market will pivot to 3. We continue to identify attractively valued segments of the real laggard areas such as certain segments of real estate. estate sector We do, however, have high conviction that in the next 6 to 12 months – We believe the valuations of several real estate companies–certain REITs, perhaps in response to further medical advances, wide-spread real estate services companies, homebuilders, casino and gaming companies, vaccinations for COVID-19, and a further reopening of the economy – a and many other commercial and residential-related real estate companies– large segment of public real estate will rebound and the recovery in remain “on sale.” As such, we believe the prospective returns in the next few some of the share prices may be sharp. years for several real estate stocks and the Fund remain attractive. And so, we believe now is a compelling time to invest in public real 4. We expect portions of real estate to be notable beneficiaries of estate. widespread COVID-19 vaccinations 2. The real estate cycle has reset Several segments of real estate have been in the cross hairs of the pandemic. Most real estate cycles tend to last five to seven years, then correct for one to two years, and then a new cycle begins. Business results of hotels, office buildings, urban apartment buildings, retail malls and shopping centers, senior housing homes, and real estate casinos Key factors that serve as tailwinds at the onset of a real estate cycle then have been negatively impacted due to the risk of assembling people and become headwinds at later stages of a real estate cycle include interest businesses during the Coronavirus pandemic. rates, mortgage rates, central bank policy, inflation, economic growth, residential and commercial construction activity, corporate balance sheet We expect business performance to improve for many of these real estate liquidity and debt levels, and the credit markets. segments should vaccinations for COVID-19 be broadly disseminated during 2021. Following the sharp decline in global economic activity in 2020, we believe the U.S. real estate cycle has reset and is in the early stages of what we OUR 2021 INVESTMENT THEMES AND PORTFOLIO COMPOSITION anticipate will be a multi-year recovery. In 2020, we prioritized four key investment themes each of which In our opinion, several conditions are in place that should serve as contributed to the Fund’s strong performance. tailwinds and contribute to an improvement in business performance 2020 investment themes for a large swath of commercial and residential real estate in the next few years. A sampling includes: 1. Opportunities in residential real estate 2. The intersection of technology and real estate and the Historically low interest rates: The 10-Year U.S. Treasury yield currently digitalization of real estate stands at 0.9% versus its 50-year average of 6.2%! 3. Hospitality and travel-related real estate companies Record low mortgage rates: The 30-year U.S. fixed mortgage rate of only 4. Tactical opportunities in REITs 2.7% compares favorably to its long-term average rate of 7.9%!

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2021 investment themes Most of the real estate businesses that we are prioritizing are cyclically depressed – not secularly challenged. Consequently, we expect the cash In the last few months of 2020, we made tactical adjustments to the flows of many of these real estate businesses to rebound as people are portfolio and reoriented the prioritization of the Fund’s investment themes. inoculated with COVID-19 vaccines and economic activity resumes. We have chosen to incorporate a more balanced mix between traditional real estate growth companies and real estate value opportunities. Over the course of 2021, we anticipate the release of pent-up consumer and commercial demand for several of the hardest hit segments of real estate – Currently, we believe a barbell approach to the Fund’s investment themes particularly the travel-related segments of real estate. and portfolio construction is prudent because COVID-19 has led to a wide disparity in share price performance and valuations for several real estate Despite a recent rebound in the share prices of many of the “COVID-19 companies. We believe this valuation gap will narrow if economic activity recovery beneficiaries,” we believe several companies remain discounted improves in 2021. to their likely two- to three-year prospective values. If the extreme valuation gap between the 2020 real estate “winners” and Examples include hotel companies (Hilton Worldwide Holdings, Inc. and “laggards” narrows over the course of 2021, we will likely reorient the vast Hyatt Hotels Corp.), casinos & gaming operators (Wynn Resorts Ltd., Las majority of the Fund’s holdings, once again, toward “best-in-class” real Vegas Sands Corporation, Penn National Gaming, Inc., Red Rock estate growth companies. Resorts, Inc., and Boyd Gaming Corporation), vacation timeshare companies (Marriot Vacations Worldwide Corp. and Hilton Grand Importantly, the Fund’s long-term investment philosophy remains the Vacations Inc.), amusement park operators (Six Flags Entertainment prioritization of “best-in-class” real estate growth companies. We do not Corporation and Seaworld Entertainment Inc.), commercial real estate anticipate veering from this strategy. services companies (CBRE Group, Inc. and Jones Lang LaSalle Regarding investment themes for 2021, we continue to believe that multi- Incorporated), real estate operating companies (Brookfield Asset year growth prospects for residential real estate and real estate technology Management, Inc.), land development companies (The Howard Hughes companies remain compelling. Corporation), and certain REITs (Douglas Emmett, Inc., American Assets Trust, Inc., Equity Residential, MGM Growth Properties LLC, and Gaming We also believe there is an exciting near-term investment opportunity for and Leisure Properties, Inc.). real estate companies that lagged in 2020 in large part due to temporary operational headwinds caused by COVID-19. We expect the business On December 31, 2020, COVID-19 recovery beneficiary companies prospects and share prices of several real estate laggards to recover in 2021 represented 42.8% of the Fund’s net assets. as COVID-19 vaccinations are widely administered. Table IV. 2021 investment themes COVID-19 recovery beneficiaries as of December 31, 2020 1. COVID-19 recovery beneficiaries Percent of 2. Opportunities in residential real estate Net Assets 3. The intersection of technology and real estate and the Casinos & gaming operators 18.3% digitalization of real estate Certain REITs 7.6 Commercial real estate services companies 3.9 1. COVID-19 recovery beneficiaries Timeshare companies 3.5 This investment theme encompasses what we call the “epicenter” real Amusement park companies 3.1 estate companies of the 2020 pandemic. Real estate operating companies 2.9 Hotels 1.9 In 2020, certain REITs and other real estate-related businesses that rely on Land development companies 1.6 the assembly of people were severely impacted by COVID-19 as they were forced to shut down all or a large part of operations almost without Total 42.8% exception. The share prices of many of these companies declined last year 2. Opportunities in residential real estate and remain below peak prices. The strength in certain segments of residential real estate was one of the Examples of COVID-19 recovery beneficiaries include the following real major positive economic surprises of 2020. estate companies: Both cyclical and secular tailwinds aided the U.S. housing market, and we - Hotels expect these tailwinds to remain in place. - Timeshare companies - Amusement park companies Cyclical tailwinds - Casinos & gaming operators Cyclically depressed levels of construction activity, low inventory levels, - Cruise lines pent-up demand, historically low mortgage rates, and an eventual rebound - Real estate operating companies in job and economic growth should continue to benefit the U.S. housing - Land development companies market. The current situation is nothing like what occurred during the global - Senior housing operators Financial Crisis when our country’s inventory of homes was significantly - Commercial real estate services companies oversupplied relative to demand. - Certain REITs (i.e., office, apartment, mall, shopping center, hotel, healthcare, and gaming REITs)

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Secular tailwinds December 16, 2020: Stuart Miller, Executive Chairman of Lennar Corporation COVID-19 has also given rise to secular tailwinds that may aid the U.S. housing market for several years. “The confluence of Millennials starting families and creating households of their own, along with the pro-housing effects of the COVID-19 pandemic, Suburban may become the new urban: A portion of U.S. families have been has materially strengthened demand. This surge in demand for housing, moving out of urban areas to more suburban towns. Given the sense of combined with the market’s inability to produce sufficient homes to meet safety that comes with owning a single-family home rather than living in an this demand, has exacerbated the already well-documented undersupply of apartment building (no elevators, no shared spaces, more space, less new and existing homes for sale...The housing market has proven to be very density), we expect demand for single-family homes to remain strong. strong and we expect it to continue to be a significant driver in the The Fund also has investments in REITs that would benefit from this recovery of the overall economy over the next several years.” movement out of urban areas into suburban areas. We expect single-family We remain bullish on the prospects for homebuilders, single-family rental rental REIT Invitation Homes, Inc. to benefit as more people opt for single- REITs, manufactured housing REITs, residential building products/services family home rentals rather than apartment rentals. In the aftermath of the companies, and other residential-related real estate companies. economic impact from the Coronavirus, we expect demand for affordable housing to benefit manufactured housing REIT Equity Lifestyle Properties, We remain cautious, however, about the near-term business prospects for Inc. most apartment REITs, but believe the sharp correction in apartment share prices in 2020 discounts a large portion of the expected near-term business Work from home or anywhere: Should work-from-home arrangements headwinds. Recently, we have begun acquiring shares in Equity Residential, become more permanent, people will have more flexibility to relocate away a leading apartment REIT, at what we believe are favorable prices. We will from urban centers. This should lead to an increase in new home sales and continue to closely monitor this company and the apartment rental real single-family rentals. estate category. Over the long term, we remain bullish on apartment More time at home may lead to more investment in the home: prospects primarily because they are a need-based real estate category (the Homeowners are likely to spend more time at home than ever before as population needs shelter) that should recover over time. more employees work from home and people prioritize social distancing. The Fund’s ability to invest in non-REIT residential-related real estate This trend should contribute to homeowners spending more on home repair companies such as homebuilders, land developers, building products/services and remodeling activity (home office, outdoor decks and living spaces, companies, and home centers is one of the important differentiators that pools, kitchens, and refreshing paint jobs). The Fund currently has affords the Fund the ability to distinguish itself versus REIT funds. investments in several companies that should benefit from this trend including: Home Depot, Inc., Lowe’s Companies, Inc., The Sherwin- On December 31, 2020, residential-related real estate companies Williams Company, Installed Building Products, Inc., Pool Corporation, represented 22.6% of the Fund’s net assets. Fortune Brands Home & Security, Inc., Trex Company, Inc., and AZEK Co Inc. Table V. Residential-related real estate companies as of December 31, 2020 We are mindful of and will continue to monitor the potential risks to the Percent of Fund’s investments in residential real estate-related companies. Many Net Assets residential-related stocks performed well in 2020, certain valuations are not as compelling, year-over-year growth comparisons may be more challenging Building Products/Services 8.4% in the year ahead, and a sharp increase in mortgage rates would make Homebuilders & Land Developers 7.1 homes less affordable. Home Centers 3.7 REITs Should headwinds begin to surface for the housing market, we would expect Manufactured Housing 1.7 any correction in the share prices of residential real estate-related Single-Family Rental 1.7 companies to be relatively shallow given the powerful cyclical and secular Total1 22.6% housing-related tailwinds. 1 Total would be 27.9% if included residential-related technology companies Zillow Recently, we were struck by the notably optimistic commentary by two of Group, Inc., Opendoor Technologies Inc., and Redfin Corporation. the leading executives in the housing industry. 3. The intersection of technology and real estate and the December 7, 2020: Doug Yearley, Chairman and Chief Executive Officer of digitalization of real estate Toll Brothers, Inc. Real estate technology-related companies performed well in 2020. Although “We are currently experiencing the strongest housing market I have seen current valuations are generally less compelling than one year ago and the in my 30 years at Toll Brothers…We attribute the strength in demand to a stocks may underperform in the near term relative to laggard real estate number of factors, including historically low interest rates, an undersupply of categories that should benefit if economic growth accelerates in 2021, we new and resale homes, and a renewed appreciation for the home as a remain bullish about the long-term prospects for several real estate sanctuary. The work-from-home phenomenon is also enabling more buyers technology companies. to live where they want rather than where their jobs previously required…With our highest year-end backlog in 15 years and continued strong demand, we expect to deliver the most homes in our history in FY 2021.”

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The impact of technology on real estate is undeniable. The growth in cloud On December 31, 2020, technology-related real estate companies computing, the internet, mobile data and cellphones, and wireless represented 24.5% of the Fund’s net assets. infrastructure are powerful secular drivers that should continue unabated for years and are impacting real estate, along with many other industries. Table VI. Technology-related real estate companies as of December 31, 2020 If anything, the pandemic has accelerated these secular trends as more Percent of people conduct business, leisure, residential, and commercial activities Net Assets online. Data Centers 7.7% Real estate-related companies that embrace and adopt the latest Real Estate Data Analytics Companies 7.0 technological advances and innovations remain an important focus for us. Wireless Tower Operators 1.6 Key beneficiaries of the technology revolution include data center REITs companies, wireless tower companies, industrial REITs, real estate data Data Center REITs 4.2 analytics companies, among others. Wireless Tower REITs 4.0 Examples of companies we believe are poised to benefit from the impact of Total 24.5% technology on real estate include data center companies GDS Holdings Limited, NEXTDC Limited, and 21Vianet Group, Inc., data center REITs Baron Real Estate Fund currently has investments in REITs, plus eight Equinix, Inc. and Digital Realty Trust, Inc., wireless tower REITs American additional real estate-related categories. Our percentage allocations to these Tower Corp. and SBA Communications Corp., wireless tower company categories vary, and they are based on our research and assessment of Cellnex Telecom, S.A., and industrial logistics REITs Prologis, Inc. and opportunities in each category (See Table VII below). Rexford Industrial Realty, Inc. Table VII. We believe the digitalization of real estate is the most exciting new Fund investments in real estate-related categories as of December 31, 2020 development for real estate. We believe we are in the early innings of a Percent of technology-driven investment cycle centered on data and digitalization that Net Assets allows real estate-related businesses to drive incremental revenue streams REITs 26.1% and lower costs. For example, we anticipate an acceleration in online Casinos & Gaming Operators 18.2 activity for real estate-related transactions in the years ahead. The Real Estate Service Companies 11.0 digitalization of residential real estate, commercial real estate, casino Building Products/Services 10.6 gambling, hotel bookings, and other segments of real estate are a key focus Homebuilders & Land Developers 8.7 for the Fund. We have identified several real estate companies that are well Hotels & Leisure 8.5 positioned to capitalize on this burgeoning secular growth trend. Data Centers1 7.7 Zillow Group, Inc., for example, is the leader in online residential real estate Real Estate Operating Companies 2.9 with approximately 200 million monthly users of its leading residential real Tower Operators 1.6 estate websites. Consumers are seeking streamlined, tech-enabled shopping Cash and Cash Equivalents 4.7 experiences and Zillow is now developing a simpler real estate transaction Total 100.0% that will enable consumers to buy, sell, rent, and finance residential real estate and save consumers time, money, and stress through technology, 1 Total would be 11.9% if included data center REITs Equinix, Inc. and Digital Realty service, and integration. Zillow is a top holding in the Fund. Trust, Inc. Real estate technology companies and the digitalization of real estate OUR CONCLUDING THOUGHTS AND OBSERVATIONS will remain a top priority of the Fund. We expect new real estate We have consistently stated that no one has a crystal ball regarding the technology companies to enter the public market via traditional IPOs and outlook for the stock, bond, or real estate markets. SPACs in 2021 and the years ahead. We will continue to focus on this segment of real estate by researching these companies and building This past year, 2020, was a pointed example of the challenges of predicting relationships with the management teams – at times, well before the the future. companies are public. The surprising breakout of a global pandemic – the Coronavirus – was an unexpected curveball that led to unprecedented health, medical, economic, and humanitarian distress. This human tragedy also triggered stock market turmoil early in 2020. We must remain mindful that the Coronavirus pandemic persists and continues to cause uncertainty for the economic, real estate, and stock market landscape. Additional factors that could weigh on the outlook include political cross currents, interest rate concerns, and geopolitical tensions, to name just a few.

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Yet, despite this lack of clarity regarding the economic and market outlook, D.R. Horton, Inc.: The number one homebuilder by volume in the U.S., and as we peer into 2021, we believe there are valid reasons for optimism. the largest and lowest-cost producer in the entry-level home segment Our “big picture” view is that several key economic and market risks CBRE Group, Inc.: The world’s largest and leading commercial real estate should recede in the year ahead: services company • Many of the key concerns of 2020 – the COVID-19 pandemic, U.S. Hilton Worldwide Holdings, Inc.: One of the largest hotel companies in election controversies, global trade war – should diminish in 2021. the world with premier hotel brands including: Hilton, Waldorf Astoria, DoubleTree, Embassy Suites, Hampton, Canopy, Conrad, and others • Widespread inoculation of COVID-19 vaccines should lead to an easing of mobility restrictions, improvement in employment, and a Alexandria Real Estate Equities, Inc.: A REIT that is the premier landlord continuation of the economic recovery. and developer to the life science industry • Corporate earnings should bounce back, fueled by the release of Prologis, Inc.: This REIT is the world’s largest owner, operator, and developer pent-up demand, improving profitability margins, and an increase in of industrial logistics real estate corporate investment activity such as mergers and acquisitions and The Sherwin-Williams Company: Global leader in the manufacture, share buybacks. development, distribution, and sale of paint, coatings, and related products • The double barrel of exceptionally favorable monetary and fiscal Home Depot, Inc.: The largest and leading home improvement center support should begin to work as the global economy further reopens. company in the world • Many companies and consumers have maintained record cash levels We believe the Fund is structured to capitalize on compelling investment due to the uncertain outlook in 2020. We expect corporations and themes. consumers to spend more cash as economic and employment prospects improve. Various companies are likely to increase capital 1. COVID-19 recovery beneficiaries (hotels, timeshare operators, expenditures, pursue mergers and acquisitions, repay debt, and return amusement park operators, casinos & gaming operators, cruise lines, capital to shareholders in the form of dividends and share buybacks. real estate operating companies, land development companies, commercial real estate services companies, certain REITs, and senior • Additional reasons to be optimistic: Inflation concerns seem well off housing operators) the radar. The U.S. banking system has improved dramatically and is maintaining strong capital ratios. Substantial private capital is in 2. The ongoing recovery of the U.S. housing market with an additional pursuit of real estate and remains supported by widely available debt boost beyond the pandemic (homebuilders, building products/services capital at low interest rates. Fund flows may be directed away from companies, construction material companies, and home centers) bonds to equities given historically low interest rates and unappealing return prospects for most fixed income alternatives. 3. The intersection of technology and real estate and the digitalization of real estate (data centers, wireless tower operators, industrial REITs, real Although there are clear differences in the prospects for various residential estate data analytics companies, and other technology-centric real and commercial real estate companies, we believe conditions are in place estate companies) for much of the real estate sector to perform well in the year ahead. Valuations for several segments of real estate remain compelling. The Baron Real Estate Fund Outlook valuations of a portion of the Fund’s real estate companies–such as certain REITs, real estate service companies, homebuilders, casinos & gaming We remain optimistic about the prospects for the Baron Real Estate operators, and many other commercial and residential-related real estate Fund. companies–remain “on sale” at appealing prices. We believe the benefits of the Fund’s broader approach and flexibility will become even more apparent in the years ahead in part due to the Table VIII. new and evolving real estate landscape. Top 10 holdings as of December 31, 2020 Quarter End We believe the Fund is comprised of quality companies. The businesses that Quarter End Investment we continue to recommend are well managed, have market-leading Market Cap Value Percent of positions, possess quality balance sheets, own well-located real estate, and (billions) (millions) Net Assets grow cash flow at faster rates than most of their peers. Wynn Resorts Ltd. $12.2 $51.1 4.9% GDS Holdings Limited 17.5 49.4 4.7 A sampling of the Fund’s best-in-class companies includes: Penn National Gaming, Inc. 13.4 40.8 3.9 Equinix, Inc.: The world’s leading owner and operator of real estate data Red Rock Resorts, Inc. 2.9 35.0 3.3 centers Boyd Gaming Corporation 4.8 34.5 3.3 American Tower Corp. 99.7 32.6 3.1 American Tower Corp.: A leading owner, operator, and developer of Opendoor Technologies Inc. 12.4 31.7 3.0 communications real estate (i.e., wireless towers) Equinix, Inc. 63.6 31.4 3.0 Brookfield Asset Management, Inc.: A premier global investor, operator, Brookfield Asset Management, and asset manager of high-quality real estate and infrastructure-related Inc. 65.1 30.2 2.9 assets Las Vegas Sands Corporation 45.5 29.8 2.8

78 December 31, 2020 Baron Real Estate Fund

Final thoughts I sincerely thank you, our loyal shareholders, and express my utmost gratitude for your past and continuing support during the past 11 years. I would like to thank our very special real estate team – David Baron, David Kirshenbaum, and George Taras – for their dedication and excellent work in Of course, I proudly continue as a major shareholder of the Baron Real 2020. In a challenging year for several segments of real estate, our team Estate Fund, alongside you. remained focused, clear minded, and energized. Well done. Sincerely, We remain highly determined to diligently research, select and monitor a high-quality portfolio of companies with solid executive management, strong growth prospects, leading competitive positions, liquid balance sheets, and attractive valuations. We are enthusiastic about our investments and are optimistic about prospects for the portfolio.

Jeffrey Kolitch Portfolio Manager January 20, 2021

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

79 Baron Emerging Markets Fund

DEAR BARON EMERGING MARKETS FUND SHAREHOLDER: PERFORMANCE

Baron Emerging Markets Fund (the “Fund”) gained 20.48% (Institutional Shares) for the fourth quarter of 2020, while its principal benchmark index, the MSCI EM Index, appreciated 19.70%. The MSCI EM IMI Growth Index gained 17.18% for the quarter. The Fund modestly outperformed its principal benchmark index, while exceeding the all-cap growth proxy, in a strong quarter for global equities. Emerging market (“EM”) and international equities notably outperformed their U.S. counterparts, with the exception of U.S. small-cap stocks. Market leadership by sector continued to ebb and flow, with more economically cyclical and interest rate sensitive sectors exhibiting a powerful rally following the U.S. Presidential election and promising news regarding the efficacy and timing of multiple COVID vaccines. For the full-year 2020, we were pleased with the Fund’s performance, which, at nearly a 30% gain, strongly outperformed its principal benchmark index. Looking forward, we believe that the COVID-19 crisis has pushed global policymakers through the portal of “Modern Monetary Theory.” We further believe that this, concurrent with the transfer of policy/stimulus leadership to politicians and elected officials, suggests to MICHAEL KASS Retail Shares: BEXFX Institutional Shares: BEXIX us a sustainable period of dollar weakness and relative outperformance for PORTFOLIO MANAGER R6 Shares: BEXUX EM and international equities. We reiterate our view that the pivot to value- added economic activity in China, notwithstanding escalating political rhetoric and national security concerns, presents compelling opportunity for dedicated long-term and bottom-up fundamental investors. As always, we For the year 2020, we significantly outperformed our primary benchmark, are confident that we have invested in many well-positioned and well- the MSCI EM Index, while modestly trailing our all-cap EM growth proxy. managed companies on a bottom-up basis, which are poised to benefit from While we had solid performance and stock selection across the portfolio, long-term and attractive investment themes. from a sector or theme perspective, our digitization/cloud/SaaS software theme (Kingdee International Software Group Co. Ltd., Meituan Inc., Glodon Company Limited, GDS Holdings Limited, Kingsoft Corporation Table I. Ltd., Reliance Industries Limited, Tata Communications Limited) and Performance China value added/localization theme (Zai Lab Limited, China Tourism Annualized for periods ended December 31, 2020 Group Duty Free Corporation Limited, Shenzhen Mindray Bio-Medical Baron Baron Electronics Co., Ltd., Midea Group Co., Ltd., Hua Hong Semiconductor Emerging Emerging Markets Markets MSCI EM Limited, Hangzhou Tigermed Consulting Co., Ltd.) contributed the most. Fund Fund IMI In addition, our fintech/disruption theme (StoneCo Ltd. and PagSeguro Retail Institutional MSCI EM Growth Digital Ltd.) was also a key contributor to relative performance. Offsetting a 1,2 1,2 1 1 Shares Shares Index Index portion of the above was adverse stock selection effect in the Industrials Three Months3 20.37% 20.48% 19.70% 17.18% sector. This was largely attributed to our exposure to Latin American airlines One Year 28.87% 29.22% 18.31% 30.75% such as Azul S.A. and Copa Holdings, S.A. whose earnings were materially Three Years 7.49% 7.78% 6.17% 9.64% impacted due to COVID-19-related travel disruptions. Our modest cash Five Years 12.58% 12.88% 12.81% 15.08% position in a favorable environment for EM equities along with weak stock Ten Years and Since selection in the Consumer Discretionary sector, primarily attributable to Inception Cogna Educacao SA and Guangzhou Automobile Group Company (December 31, 2010) 6.86% 7.13% 3.63% 5.71% Limited, were also notable detractors from relative performance.

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, 2019 was 1.35% and 1.09%, 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and the Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. BARON 2 The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. FUNDS 3 Not annualized. 80 December 31, 2020 Baron Emerging Markets Fund

From a country perspective for the full-year 2020, stock selection effect in Zai Lab Limited is a leading biotechnology company in the growing Chinese China and India powered a solid majority of relative outperformance, as our health care market. Although the fourth quarter was relatively quiet, shares investment performance in these markets was broad based across several have continued their strong run alongside the Chinese health care indexes. principal themes. Gains in China stood out in particular, supporting our view We think Zai is well positioned to become a leader in the delivery of drugs that increasing foreign policy friction and political rhetoric does not diminish to the Chinese market. the attractiveness or potential of domestic Chinese equities. Our Bajaj Finance Limited is a leading data-driven, non-bank financial company underweight positioning in strong-performing Korea and Taiwan resulted in in India. Shares increased on operating profits that beat consensus and adverse allocation effect and detracted the most from relative performance. improved guidance. Bajaj is fast transforming into India’s largest fintech In addition, adverse stock selection in South Africa and Korea also offset a player by leveraging its proprietary technology platform to provide a portion of the relative outperformance noted above for the year. “supermarket of financial products” and is well positioned to benefit from For the fourth quarter, we modestly outperformed our principal MSCI EM growing demand for consumer financial services. We retain conviction in Index and significantly outperformed the EM all-cap growth proxy in a Bajaj due to its best-in-class management, robust growth outlook, and strong period for equity returns. We are encouraged with our performance conservative risk management frameworks. as we often lag the core index in such periods, during which investors pursue Shares of Midea Group Co., Ltd., a China-based global home appliances index heavyweights and shift towards more economically cyclical stocks. manufacturer, increased as the Chinese economy’s recovery from COVID-19 Our underweight exposure to the lagging Consumer Discretionary sector, and the rebound in consumer spending drove solid, double-digit which was hurt by the poor performance of Alibaba Group Holding performance. Midea maintained share in air conditioning while it improved Limited, and positive stock selection effect in Health Care (Zai, Hangzhou its product mixes in its Toshiba-branded high-end appliances. The work- Tigermed, Notre Dame Intermedica Participacoes S.A.) and Materials from-home impact produced strong sales outside of China with increasing (Grupo Mexico, S.A.B. de C.V., Asian Paints Limited, Suzano S.A.) were penetration of Midea’s self-branded products. Lastly, its Toshiba division additive to relative outperformance in the fourth quarter. Partially offsetting benefited from robust sales in Japan and Southeast Asia. the above, relative performance was negatively impacted by a retracement of prior period gains in Reliance Industries Limited, classified in the Energy sector, as well as by our modest cash position amid a strong equity rally. Table III. Top detractors from performance for the quarter ended December 31, 2020 Percent Table II. Impact Top contributors to performance for the quarter ended December 31, 2020 Alibaba Group Holding Limited –1.09% Percent Impact Reliance Industries Limited –0.41 Sino Biopharmaceutical Ltd. –0.14 Samsung Electronics Co., Ltd. 1.84% Hemisphere Properties India Limited –0.08 Taiwan Semiconductor Manufacturing Company Ltd. 1.26 Venustech Group Inc. –0.07 Zai Lab Limited 1.23 Bajaj Finance Limited 0.94 Alibaba Group Holding Limited is the largest retailer and e-commerce Midea Group Co., Ltd. 0.63 company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest third- Shares of South Korea-based conglomerate Samsung Electronics Co., Ltd. party online payment provider. Shares were down on the news that Chinese increased during the quarter as demand recovered heading into 2021, driven regulators had suspended the listing of ANT Group and also launched an by continued strength in smartphone and hyperscale spending. In addition, investigation into Alibaba for potential monopolistic behavior. We continue Samsung gained share from Huawei with the successful launch of its new to believe Alibaba’s core business remains highly profitable, complemented flagship smartphone series while its foundry business is set to accelerate due by rapid growth in the cloud business and inflection in the Cainiao logistics to increasing demand. Potential shareholder returns via share buybacks and and New Retail segments. dividends continued to support investor sentiment. We are confident Samsung will remain a global leader in semiconductor and 5G/6G Reliance Industries Limited is India’s leading conglomerate, with business smartphones. interests in telecommunications, digital services, retail, oil refining, and petrochemical. Shares were negatively impacted due to a retracement of Leading semiconductor manufacturer Taiwan Semiconductor earlier gains when the company raised over $20 billion from strategic Manufacturing Company Ltd. contributed during the quarter as demand (Facebook, Google) and financial investors in its Jio Platforms and Reliance for its 5N processing node remained robust while development for its next Retail business verticals. We retain conviction in Reliance, as it is a key generation nodes progressed smoothly. The market is beginning to price in beneficiary of the “Digital India” theme with immense potential to emerge the additional revenue contribution from Intel’s potential outsourcing, which as the “Amazon/Facebook/Netflix” of India, in our view. further strengthens Taiwan Semi’s market share and competitive moat. We believe the company will deliver above its 5% to 10% growth target in the Sino Biopharmaceutical Ltd. is China’s leading biopharmaceutical player next three to five years. with a key focus on R&D. Performance was adversely impacted after financial results missed analyst estimates due to pandemic-related restrictions in hospital visits that resulted in decreased pharmaceutical sales. We retain conviction as we think the company’s strong R&D capabilities and robust product pipeline should generate double-digit earnings growth for the next three to five years.

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Hemisphere Properties India Limited is a real estate holding company in Exposure by Market Cap: The Fund may invest in companies of any market India that owns over 750 acres of land assets in various regions of the capitalization, and we have generally been broadly diversified across large-, country. The company was recently spun out to shareholders of its parent mid-, and small-cap companies, as we believe developing world companies entity, Tata Communications Limited. Shares were negatively impacted as a of all sizes can exhibit attractive growth potential. At the end of the fourth result of material divestments by key shareholders of the parent entity that quarter of 2020, the Fund’s median market cap was $20.4 billion, and we broadly view Hemisphere as a non-core investment with uncertainty around were invested 49.7% in giant-cap companies, 41.5% in large-cap companies, the monetization of land assets. We are evaluating our investment. 6.9% in mid-cap companies, and 1.0% in small- and micro-cap companies as defined by Morningstar, with the remainder in cash and private securities. Shares of China-based cybersecurity firm Venustech Group Inc. fell during the quarter as government tenders for cybersecurity solutions slowed due to RECENT ACTIVITY COVID-19-related restrictions. We remain confident that the expansion of the total addressable market in the cloud security IT segment in China During the fourth quarter, we added several new investments toward combined with Venustech’s leading position in product and service will drive existing themes while also increasing several investments that were 20%-plus sustainable growth in the next three years. established earlier in the year. We continue our endeavor to add to our highest conviction ideas. Portfolio STRUCTURE We were active in filling out our sustainability/ESG theme, most notably by Table IV. adding Aeris Industria Comercio Equipamentos Geracao Energia SA and Top 10 holdings as of December 31, 2020 Suzano S.A., both of which are domiciled in Brazil. Aeris is a leading global Percent producer of rotor blades for wind energy turbines. Renewable energy is of Net playing an increasing role in the world’s energy mix and is essential in Assets meeting carbon reduction goals. Wind power installation rates are expected Samsung Electronics Co., Ltd. 4.7% to grow at nearly a double-digit rate over the next decade, while rotor blades Tencent Holdings Limited 4.0 are mission critical components of wind turbines with technological barriers Taiwan Semiconductor Manufacturing Company Ltd. 3.9 to entry and an industry consolidated among few leading players. As a result, Alibaba Group Holding Limited 3.7 Aeris enjoys an over 25% return on capital and strong cash margins. The Zai Lab Limited 2.7 company has a dominant share in Brazil controlling roughly 65% of the Reliance Industries Limited 2.3 market and has a rapidly growing presence and market share internationally. Bajaj Finance Limited 2.2 Aeris is a well-managed company that is still majority-owned by its founders GDS Holdings Limited 1.8 and management team. For the next few years, at a minimum, we expect the Midea Group Co., Ltd. 1.7 company to continue to gain market share while growing revenue at 30% Sberbank of Russia PJSC 1.6 and maintaining industry leading margins. Suzano is the world’s largest and lowest cost producer of pulp, which is primarily used in paper, tissue, and Exposure By Country packaging. The company is also expanding into new, higher-margin sustainability markets with fossil-to-fiber substitution across textiles, plastics, Table V. fuels, and chemicals. Suzano’s pulp production removes more greenhouse gas Percentage of securities by country as of December 31, 2020 emissions from the atmosphere than it emits. The company has a goal to Percent remove 40 million tons of carbon dioxide over the next decade and we see an of Net opportunity in the future to monetize these carbon credits. In addition to Assets maintaining a positive view on pulp prices, we expect sustainability/ESG China 41.3% factors to drive a higher-earnings multiple for Suzano. India 21.2 Brazil 11.0 Further adding to our sustainability/ESG theme, and related to our EV supply Korea 5.8 chain investments, we initiated positions in Glencore PLC and China Taiwan 5.5 Molybdenum Co., Ltd. during the quarter. Both companies are large Russia 4.4 producers of key energy metals (copper/cobalt) enabling the electrification Mexico 2.9 of transportation (EV batteries) and growth in energy storage systems. We Hong Kong 1.9 remain bullish on the long-term growth opportunity for copper, evidenced Philippines 1.2 by our previous investment in Grupo Mexico, and expect multi-year supply Japan 1.0 deficits driven by the structural demand increase from electrification. EVs on Hungary 0.8 average require four times the amount of copper compared to ICE vehicles, United Kingdom 0.8 while wind/solar power plants use five times the copper per megawatt Norway 0.5 compared to conventional power plants. We are also positive on the outlook Thailand 0.4 for cobalt, a critical element used in high-performance batteries. Glencore United Arab Emirates 0.4 and China Molybdenum are the world’s largest producers of the metal, together controlling 40% of global cobalt resources. We also like the portfolio transition at both companies with a focus on increasing net share of battery metals in the overall production mix. Glencore also recently became the first major miner to set out goals aligned with the Paris agreement and is targeting net zero emissions by 2050.

82 December 31, 2020 Baron Emerging Markets Fund

As part of our fintech theme, we recently participated in the IPO of Lufax Outlook Holding Ltd., a leading financial technology company based in China. Lufax focuses on lending to underserved small- and medium-sized companies and The year 2020 proved to be unpredictable and unforgettable. It was “the provides wealth management solutions to the middle-income and affluent worst of times” for many, and at once “the best of times” for many segments of the population. As a subsidiary of Ping An Insurance (Group) investors. Early in the year, we witnessed the epoch of economic and market Company of China, Ltd., which we also own, Lufax benefits from the group’s uncertainty, while the year ended in a pinnacle of confidence and optimism. finance and technology DNA. In addition to providing a strong technological In our view, this remarkable year, its challenges and the collective response, backbone, this relationship brings many synergies, including efficient are likely to impact the economic and investment environment for several customer acquisition support, a reliable credit guarantee partner, and access years to come. Indeed, we believe the financial legacy of the COVID-19 to customer insights from the Ping An ecosystem. We believe these crisis will be that it finally vaulted global policymakers through the portal of competitive advantages would be difficult to replicate by smaller Modern Monetary Theory, while also allowing politicians and elected competitors. Lufax has a solid track record in risk management, which makes officials to assume the primary levers of policy, leaving central bankers in a it an attractive partner in the loan facilitation business, where third-party supporting, if still substantive role. “Populist QE” will likely be a game financial institutions fund loans and share underwriting risk. While the sector changer, ultimately challenging consensus expectations for incredibly well- has undergone regulatory scrutiny, we believe Lufax is better positioned anchored inflation and interest rates. than peers to navigate these challenges given its conservative risk sharing In early November, the U.S. election coincided with better-than-expected policies and history of successfully adapting to regulatory changes. news on the timing and efficacy of multiple COVID-19 vaccines, triggering During the quarter, we also participated in the IPO of Ozon Holdings PLC, an explosive rally in global financial markets. While the Trump as part of our digitization theme. Ozon is the second largest domestic administration challenged the surface results of the Presidential election, in e-commerce marketplace operator in Russia. Since successfully transitioning our view, perhaps more relevant than reduced election uncertainty was the from a first-party e-retailer to a hybrid first-party and third-party absence of a “blue wave,” suggesting low risk of major policy changes marketplace in 2018, while layering in logistics and fulfillment capabilities, regarding corporate tax rates or unhinged fiscal spending on social Ozon has grown gross merchandise value by over 100% per year over the programs. While the balance of the year was marked by rising COVID cases last three years and achieved positive contribution margins this year. In our and related risk of curtailment of economic activity, financial markets view, outsized growth will continue over at least the next half decade as remained squarely focused on the longer-term beneficial impact of high Russian e-commerce is underpenetrated at less than 10% of retail, vaccine efficacy and the return to economic and social normalcy. If accelerating, and fragmented. In fact, the top three players currently have anything, greater near-term COVID-related disruption proved a benefit to less than 25% of e-commerce market share compared to 40% to 80% in equity markets and forward economic growth expectations, as it most markets, setting the stage for Ozon to continue aggressively necessitated a large and immediate fiscal support package to bridge the gap consolidating market share. Russia is a particularly large country, which to anticipated herd immunity by virtue of vaccines. Finally, late in the makes it difficult to serve, and we believe Ozon’s large and ongoing quarter, Great Britain and the E.U. reached a Brexit compromise and trade investments to develop its own logistics infrastructure will establish an pact, defusing the uncertainty and potential chaos of a “Hard Brexit.” effective competitive moat once it is built out. Fintech and advertising In our previous letter, we remarked that “we remain believers that global solutions that can ride on top of the marketplace are additional potential authorities will continue to underwrite adequate policy support to provide a sources of long-term growth. bridge to a full recovery, and that most publicly traded businesses will Finally, we added to several of our existing high conviction positions during ultimately arrive at earnings potential without the need for dilutive capital the quarter, most notably Bajaj Finance Limited, Sberbank of Russia PJSC, issuance. In other words, notwithstanding some near-term noise, XP Inc., Housing Development Finance Corporation Limited, ZTO policymakers have rolled out a shiny bazooka, and we remain optimistic, Express (Cayman) Inc., and Ping An Insurance (Group) Company of particularly with regard to the companies in which we are invested.” In our China, Ltd. view, as highlighted in the above paragraph, the recent U.S. election results and news on virus efficacy represented the moment when the critical mass During the quarter, we also exited several positions, most notably China of investor consensus came to recognize a material improvement in Literature Limited, Bid Corporation Ltd., Tencent Music Entertainment forward-looking fundamentals must be discounted. We have stated for Group, and Bidvest Group Ltd. In our endeavor to increase concentration several quarters that the profound policy changes taking place suggested to where we have the highest conviction in quality and return potential, we us that eventual fundamental improvement, and with it escape velocity for also exited positions in Xiaomi Corporation, LexinFintech Holdings Ltd., inflation and growth expectations, and the beginning of a U.S. dollar bear Wizz Air Holdings Plc, and Nongfu Spring Co., Ltd. market. We now believe we have entered a period of sustainable outperformance for equities over fixed income, and for EM and international equities and currencies. We highlight that the benchmark emerging markets ETF (U.S. dollar return) outperformed the S&P 500 Index by over 800 basis points in the second half of 2020.

83 Baron Emerging Markets Fund

To us, the immediate question, post the historic fourth quarter rally, is how benefited for years from access to and the growth of demand for value-added much of this good news has already been priced into markets? In our view, manufactured goods in China, from semiconductors to software to while the strong performing areas of the markets in 2020 are likely to sustain automobiles. With relative valuations near historic lows, and the risk- gains given solid fundamentals and a reluctance of policymakers to tighten premium on non-dollar assets elevated after years of U.S. foreign policy liquidity, several underperforming areas are now likely to deliver significant aggression, we currently believe we have entered the early innings of a earnings surprises, potentially sparking a mean reversion in leadership in more typicalEMrelativebullmarket. economically cyclical sectors for a temporary period – much as they did in Thank you for investing in the Baron Emerging Markets Fund. 2016. Irrespective of sector leadership, we are enthusiastic regarding EM equities, as we expect a material improvement in relative earnings and capital flows, and a likely recovery in relative valuation. In our view, investors and Sincerely, markets remain too skeptical regarding the potential for much-improved relative growth, and particularly, earnings for EM equities vs. U.S./global equities. We expect multi-year catalysts from major reforms in countries such as India, China, and Brazil, as well as from China’s pivot to consumption and value-added economic development, and away from low-value manufacturing, infrastructure, and export-oriented activity. While we believe Michael Kass this pivot can drive higher returns domestically and benefit China’s trading Portfolio Manager partners, we suspect it may simultaneously have an adverse effect on the January 20, 2021 relative earnings growth of many U.S. multi-national corporations that have

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

84 December 31, 2020 Baron Global Advantage Fund

DEAR BARON GLOBAL ADVANTAGE FUND SHAREHOLDER: PERFORMANCE

We had another good quarter and another year of strong returns. Baron Global Advantage Fund (the “Fund”) gained 17.3% (Institutional Shares), exceeding the 14.7% return for the MSCI ACWI Index, and 13.1% gain for the MSCI ACWI Growth Index, the Fund’s benchmarks. For calendar year 2020, the Fund appreciated 79.5%, outperforming the index returns of 16.3% and 33.6%, respectively. This was the best absolute and relative annual performance for the Fund since its inception in April of 2012.

Table I. Performance† Annualized for periods ended December 31, 2020 Baron Baron Global Global Advantage Advantage MSCI Fund Fund MSCI ACWI Retail Institutional ACWI Growth Shares1,2 Shares1,2 Index1 Index1 ALEX UMANSKY Retail Shares: BGAFX Institutional Shares: BGAIX Three Months3 17.24% 17.33% 14.68% 13.09% PORTFOLIO MANAGER R6 Shares: BGLUX One Year 79.01% 79.46% 16.25% 33.60% Three Years 35.65% 35.99% 10.06% 17.66% Five Years 29.85% 30.14% 12.26% 16.94% Since Inception market cycles. Stocks and indexes continued the prior year’s rally (April 30, 2012) 20.82% 21.09% 10.29% 13.45% uninterrupted until the peak of February 12 (Stage 1), suffered an unprecedented decline (-34% for the MSCI ACWI Index) over the next five Amazingly, and despite everything that has happened this year, 2020 turned weeks until the trough on March 23 (Stage 2), and then staged an equally out to be another year in which it was hard to lose money, as long as… one unprecedented recovery (+71% for the MSCI ACWI Index) over the next had the courage to remain invested through the scary downturn. Most nine months, through the end of the year (Stage 3). The Fund outperformed equity indexes were up double digits, both domestically and globally. by 9.9% during Stage 1, 8.2% during Stage 2, and 43.2% during Stage 3. Emerging markets were up, and developed markets were up as well. Bonds As is usually the case, most of our excess returns were derived from stock were up, gold was up, and bitcoin was also up (a lot!). Growth companies selection, which accounted for 50.2% out of 63.2% of outperformance. continued to be in favor, driven by lower interest rates, for longer, and in Investments in Information Technology (IT), Health Care, and Consumer many cases by rapidly improving business fundamentals. COVID-19 proved Discretionary, accounted for the entirety of that. Our investments in IT and to be a strong accelerant for every company that enables modernization and Health Care (56% of the Fund, on average) more than doubled in value over digital transformation, and as we have written over the years, the Fund had 2020, while our holdings in Consumer Discretionary (additional 25% of the invested in many of them. Fund, on average) were up nearly 90%. From a sector allocation perspective, The year 2020 will undoubtedly go down in history for many things. We the Fund also benefited from being underweight Financials, Energy, Real think one of them will be for one of the most compressed and violent Estate, Industrials, Consumer Staples, and Utilities. From a geographical

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, 2019 was 1.25% and 1.00%, respectively, but the net annual expense ratio is 1.15% and 0.90% (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 reimburses certain Baron Fund expensespursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 performancedata quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. † The Fund’s 3- & 5-year 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 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and the Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. The indexes are unmanaged. The index performance is not fund performance; one cannot invest directly into an index. 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. BARON FUNDS 3 Not annualized.

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perspective, performance was stronger in developed markets with a gain of So how do we reconcile taking on a reduced number of “risk units” with 114.7%, while our investments in emerging markets were up 58.4%, what was an objectively strong investment return? We attribute it primarily outperforming the MSCI ACWI Index by 98.4% and 42.2%, respectively. The to four factors: Fund’s aggregate investments more than doubled in value in four countries: 1. We were undoubtedly helped by good luck. Even during the depth of Argentina (+172.1%), Canada (+156.2%), the Netherlands (+105.5%), and the crisis, the investment environment remained favorable to our style the U.S. (+105.0%), and more than tripled in Israel (+265.4%). That was and to the kinds of businesses we favor. Of course, we could have modestly offset by losses in India and the UAE. gotten even luckier had we not sold Tesla and Zoom Video in the Looking under the hood at the performance of individual holdings, the Fund second half of 2019, but the point is that we are cognizant that the again had a large number of outsized gainers. Over the course of the year, environment and our style will not always remain in favor. 27 of our investments more than doubled, 9 of which at least tripled, 5 2. We benefited disproportionately from the good investment decisions quadrupled, and 1 was up more than 8 times. Looked at differently, 33 of made in prior years. Veeva, Okta, Wix, and argenx in 2017; RingCentral, our holdings contributed at least 100bps each to absolute return. The Fund’s MercadoLibre, Adyen, Meituan, Zscaler, and Pinduoduo in 2018; Twilio, top 10 contributors were our usual mix of long-term core holdings, as well Shopify, Fiverr, Acceleron Pharma, 10X Genomics, and Datadog in as a few newcomers: Fiverr, Amazon, Twilio, MercadoLibre, Acceleron 2019–all resulting in an incredible harvest. We are a bit more skeptical Pharma, Wix, CrowdStrike, RingCentral, Schrodinger, and Veeva.We about the 2020 crop, but time will tell. have written about most of them over the years and cover the newcomers later in this letter. We also took some losses and upgraded the quality of the 3. The Baron investment process. The one thing we never lost conviction portfolio, particularly during the sell-off early in the year. in, even during the most challenging times, is that our process works! Invest in unique, competitively advantaged businesses, managed by We have come to the section of the letter where we usually list the Fund’s exceptional people that focus on long-term value creation. Evaluate awards and accolades and tell our shareholders how highly we rank among companies through the disruptive change lens, with an emphasis on our competitors and how much value we have created over the years. But specific characteristics (platform businesses, eco-systems, network this year was unlike any other and so, we think some introspection is in effects, etc.) that enable companies’ growth to be particularly durable. order instead. 2020 was an incredibly difficult, challenging year. The pain, Valuations matter–margin of safety at purchase price is the most the suffering, the human tragedy… it was real, and it was personal. effective risk management tool available to us. And finally… Watching the market and the Fund perform as well as it did was surprising, and it was sort of… embarrassing. We struggled mightily with many 4. Baron Global Advantage’s unconstrained opportunity set. We have long decisions. An environment conducive to good decision-making requires argued that structural flexibility is a competitive advantage. Our ability balance and we couldn’t find it in our economy, in our country, at home, or to allocate capital to businesses regardless of their country of domicile, abroad. As ardent followers of Michael Mauboussin’s probabilistic investing market capitalization, or sector classification proved especially valuable principles, we allocate capital against a range of outcomes and this time the in 2020. In the midst of a global pandemic, an election year unlike any range was not only extremely wide but some of the consequences were we have seen before, a market rally that left swaths of stocks (and really dark. Since we could not find that balance, we tried to postpone as pockets of our portfolio) with unpalatable valuations, and significant many decisions as we could because we thought they were more likely to be cash inflows, we found ourselves in a tricky situation. Having the ability bad than good, and postponing bad decisions was one of the more valuable to adopt on the fly and not having to “force shots” into any particular lessons we learned from past mistakes. So, we focused on doing the little geography or segment of the market proved to be incredibly beneficial, things right, and we focused on risk management. in our view. One specific example follows. Under normal circumstances, we are not risk-averse. Successful investing, as We have been fans of Chamath Palihapitiya, the founder and CEO of Social we see it, is all about risk assessment and the willingness to take on Capital, for a long time. He is one of the few independent and truly original investment risk. It is the only way to generate investment returns that are thinkers, in our view, and we have benefited from his insights in the past. In above risk-free rates. We seek asymmetric risk-reward opportunities where for 2019, he introduced us to Sir Richard Branson as part of the due diligence every unit of risk taken, we believe we are receiving multiple units of return. It process for Social Capital’s merger with Virgin Galactic via a Special Purpose is an oversimplification, but the key assumption here is that we know how to Acquisition Company (“SPAC”). Spending a few hours with Sir Richard, a price risk appropriately. There was no way to do that with any conviction in recommended bucket list item for all, and learning about the overview the midst of a global pandemic, and so we made a conscious decision to effect* (look it up) was an amazing learning experience. Though eager to reduce the number of “risk units” that we would take on under normal invest with Chamath and Sir Richard, we did not have enough knowledge circumstances. All of that was evidenced by the higher number of holdings, about space travel and did not know how to value the company and so, we which diluted the concentration of both our top 10 and top 20 investments, passed. However, the experience opened the door (pun intended) for the and a turnover ratio of below 9%, the lowest since the Fund’s inception. next opportunity.

* The overview effect is a cognitive shift in awareness reported by some astronauts during spaceflight, often while viewing the Earth from outer space. It is the experience of seeing firsthand the reality of the Earth in space, which is immediately understood to be a tiny, fragile ball of life, “hanging in the void,” shielded and nourished by a paper- thin atmosphere. From space, national boundaries vanish, the conflicts that divide people become less important, and the need to create a planetary society with the united will to protect this “pale blue dot” becomes both obvious and imperative.

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In the middle of 2020, we were approached by Social Capital with an offer Shares of Fiverr International Ltd., a two-sided online marketplace for to look at the acquisition candidate for their next SPAC, Opendoor freelance services, were up 40% in the fourth quarter, and closed the year Technologies. Opendoor operates the leading mobile/digital platform for with a staggering 736% return. The company continued experiencing an buying and selling homes in the U.S. Home buyers can tour properties acceleration in its business, reporting third quarter revenue growth of 88% virtually, make offers, apply and obtain financing, while sellers can receive year-over-year, due to the increased pace of digitization, and work-from- express cash offers with flexible closing dates, enabling a vastly superior anywhere arrangements, likely as a result of COVID-19. We believe that buyer and seller experience. From our perspective, Opendoor is digitizing a Fiverr remains early in its growth curve since freelance work is a secularly very large segment of the economy, the $1.3 trillion U.S. residential real growing part of the global economy with a multi-billion dollar total estate market. It is in the early stages of penetrating this large market, and addressable market. Fiverr’s opportunity will continue to increase as we believe the company’s opportunity set is both very large and attractive. millennials and Gen-Zers become a larger part of the population, and as We invested through a Private Investment in Public Equity (“PIPE”) organizations realize they can benefit from reducing inefficiencies associated transaction which closed during the fourth quarter. Unlike a traditional IPO, with searching for, contracting, and collaborating with freelance workers. we were able to allocate a significant amount of capital and acquire a Finally, we believe that the company’s early-mover and scale advantages medium-sized position at the initial PIPE/SPAC price of $10 per share, which and well-known brand lead to a virtuous cycle that reinforces its is rarely possible with IPOs of high-quality businesses. Shares of Opendoor competitive moat. exited 2020 above $21 per share. Pinduoduo Inc. is the second largest online marketplace in China after Alibaba. Rising e-commerce penetration in lower tier cities, and the Table II. company’s effective strategy to acquire incremental, new users and gain Top contributors to performance for the quarter ended December 31, 2020 market share drove the 139% return in the share price during the fourth Quarter End Market Cap Percent quarter, and an impressive 372% gain in 2020. The company was perceived (billions) Impact as a clear beneficiary of the Chinese government’s announcement that it Opendoor Technologies Inc. $ 12.4 1.52% was investigating rival Alibaba for antitrust violations. The action could MercadoLibre, Inc. 83.4 1.36 potentially drive more valuable merchants to the company’s platform and Fiverr International Ltd. 6.9 1.10 further improve and strengthen its eco-system. We think Pinduoduo will Pinduoduo Inc. 218.6 0.93 remain one of the few winners in e-commerce in China for many years to Twilio Inc. 51.1 0.87 come. Twilio Inc. is a leading Communications-Platform-as-a-Service (“CPaaS”) Opendoor Technologies Inc. operates a mobile/digital real estate platform company offering a set of application programming interfaces that help where buyers can tour homes, make offers, and get financing, while sellers developers embed communications into their software through its cloud can receive next-day cash offers with flexible closing dates. Shares rose platform. Shares were up 37% during the quarter, and over 245% over the 112% after the company went public through a merger with a SPAC last 12 months, as Twilio continued to demonstrate broad strength due to sponsored by Social Capital. We believe that Opendoor is a leader in accelerated digital transformation, which drove 50% plus revenue growth. digitizing a very large segment of the economy, the $1.3 trillion U.S. We believe the accelerating pace of digitization is driving businesses to residential real estate market, which is very early in its transformational increasingly embed communications into their software, creating potentially penetration rate (less than 1%). With a long run rate for growth, we think a massive market opportunity for Twilio. the company’s opportunity set is both very large and attractive. Shares of MercadoLibre, Inc., the leading e-commerce and digital payments Table III. platform in Latin America, appreciated 55% during the quarter, gaining Top detractors from performance for the quarter ended December 31, 2020 195% in 2020. While MercadoLibre saw significant benefit from the Quarter End accelerated e-commerce penetration due to COVID-19, the company Market Cap Percent (billions) Impact showed accelerating growth in gross merchandise value after reporting its third quarter results, despite the reopening of physical retail stores over the Alibaba Group Holding Limited $629.7 –1.37% summer, indicating stickiness among recently acquired users and market Splunk, Inc. 27.5 –0.25 share gains in some of its largest segments, particularly in Brazil. Our Afya Limited 2.4 –0.14 investment thesis remains unchanged–that MercadoLibre is a long-term TAL Education Group 42.9 –0.13 winner in both e-commerce and payments across a region that remains in Arco Platform Limited 2.0 –0.12 the early stages of digitization.

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Alibaba Group Holding Limited is the largest retailer and e-commerce Arco Platform Limited is a Brazilian education technology company that company in China. Alibaba operates the shopping platforms Taobao and specializes in providing content and software solutions to K-12 private Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest schools. Shares declined 12.9% during the quarter and were down 13.5% for third-party online payment provider. Shares were down 21% during this the year, after the company’s guidance for 2021 bookings missed consensus quarter after a sequence of events that started with Chinese regulators estimates due to the pandemic-generated delay in its sales cycle. We abruptly preventing Ant Group’s highly anticipated IPO (would have been believe that Arco remains in the early stages of disrupting the industry with one of the largest IPOs in history) following Jack Ma’s comments at a a modern learning platform that generates higher rankings for schools and conference criticizing Chinese regulators just days prior to the opening of more importantly, better results and outcomes for students. We expect that public trading. The sequence continued with the regulators launching a to drive strong growth with high profitability for Arco over the long term. formal investigation into Alibaba for suspected monopolistic practices. It is PORTFOLIO STRUCTURE never good to run afoul of one’s government, particularly in emerging markets, and particularly in China. While we were clearly disappointed, we The portfolio is constructed on a bottom-up basis with the quality of ideas continue to believe that Alibaba owns the most comprehensive ecosystem and conviction level having the most significant roles in determining the size of commerce platforms, logistics, and payments to lead the digital of each individual investment. Sector and country weights are an outcome transformation of the Chinese economy. We find Alibaba’s stock to be of the stock selection process and are not meant to indicate a positive or a particularly mispriced because its core business remains one of the fastest negative “view.” The top 10 positions represented 35.0% of the Fund, and growing and most profitable businesses in the world, with significant the top 20 represented 58.0%. Our investments in the IT, Consumer positive optionality in newer areas such as cloud, groceries, health care, or Discretionary, Health Care, and Communication Services sectors, as logistics, while it trades at the lowest valuation multiples on any metric, classified by GICS, represented 90.8% of the Fund’s net assets. Our relative to its peers. Admittedly, our investment case depends on our belief investments in companies domiciled outside the U.S. represented 42.4% of that the management will find a way to get along with the Chinese net assets and our investments in emerging markets totaled 26.6%. government again. Alternatively, it will once again get replaced. The Fund’s turnover was 8.8% in 2020, compared to average turnover of Splunk, Inc. is a data analytics company that sells software solutions to help 16.0% over the last three years, and 19.5% average over the last five years. enterprises run their IT organizations, including security, internet-of-things, The Fund ended the year with $2.4 billion in net assets. application and business analytics, and infrastructure. Splunk enables customers to collect, index, store, and analyze data, generating insights Table IV. through a flexible and efficient platform architecture. The stock declined Top 10 holdings as of December 31, 2020 10% during the quarter, though it still gained 13% in 2020. The company Quarter End reported a deceleration in contract activity within its large customer Quarter End Investment Percent Market Cap Value of Net segment due to longer budgetary approval processes, which, according to (billions) (millions) Assets Splunk’s management, was a result of COVID-19. We are sticking with it as Amazon.com, Inc. $1,634.2 $119.3 5.0% we expect Splunk’s new cloud offering to drive material growth in Alibaba Group Holding Limited 629.7 112.6 4.7 annualized recurring revenues, even though it looks like it may take longer Alphabet Inc. 1,185.3 92.8 3.9 to achieve in the pandemic-impacted spending environment. We also think RingCentral, Inc. 34.0 82.9 3.4 that Splunk is a unique and scarce asset that will likely become an attractive GDS Holdings Limited 17.5 80.8 3.4 target for a lager software company should they continue to mis-execute on Facebook, Inc. 778.0 80.6 3.3 their own. MercadoLibre, Inc. 83.4 73.7 3.1 Acceleron Pharma Inc. 7.7 71.9 3.0 Afya Limited is the leading medical education group in Brazil, with Fiverr International Ltd. 6.9 63.8 2.6 approximately 20 undergraduate and graduate programs. Afya offers Opendoor Technologies Inc. 12.4 63.4 2.6 courses and residency preparatory and specialization programs. Despite strong quarterly results, Afya’s stock declined 7.1% in the most recent EXPOSURE BY COUNTRY quarter and ended 2020 down 6.2% due to continued concerns regarding the impact of COVID-19 on its business. We remain confident in Afya’s Table V. opportunity to benefit from the highly regulated, limited supply, and rapidly Percentage of securities by country as of December 31, 2020 growing demand dynamics supporting a long runway for growth for the Percent company. Brazil remains severely understaffed with doctors, and COVID-19 of Net is only making that issue all the more obvious. Assets United States 54.7% TAL Education Group is a leading K-12, after-school tutoring, company in China 15.3 China with over 930 learning centers in 91 cities. Shares declined 6.2% in Israel 5.7 the fourth quarter, though it ended 2020 with a 50% gain. The ongoing Brazil 5.3 investments in online offerings resulted in margin pressure, while the offline Netherlands 4.6 business continued to face pandemic-related headwinds. We retain Argentina 3.8 conviction as we believe TAL will benefit from positive secular trends in Canada 3.2 China, including growing competition to gain admission to top universities United Kingdom 2.3 and rising disposable incomes, and we believe it will continue to gain market India 1.6 share in the fragmented private tutoring industry for years to come. Mexico 0.5 Poland 0.1

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RECENT ACTIVITY We exited our investment in Neurocrine Biosciences, Inc., a biotechnology company that is focused on both neurology and endocrinology as the During the fourth quarter, we initiated 11 new investments and added to 32 company reported a slowdown in the commercial launch of its lead asset, existing holdings as we continued to put the Fund’s inflows to work. We also Ingrezza, a treatment for a movement disorder called tardive dyskinesia. We liquidated 5 positions, exiting 2020 with 60 investments. The Fund currently chose to reallocate capital to higher conviction ideas. holds six “stub” positions in DoorDash, BigCommerce, AbCellera Biologics, Allegro, nCino,andAirbnb, in which we attempted to invest during their We also eliminated our stake in Fidelity National Information Services, respective IPOs, but were unable to acquire any meaningful positions before Inc. (“FIS”), which we held onto for a while after the company acquired our their stock prices moved away from us. We retain these investments while investment in Worldpay. While we continue to believe FIS has a solid we await a better buying opportunity. It also includes our four private business that will compound intrinsic value over a long period of time, its investments. We added Resident Home, a leading e-commerce growth profile is not exciting enough to fit into our Big Ideas Fund. We direct-to-consumer retailer of home furnishings, this quarter to our three continue to hold it in our Baron Durable Advantage Fund, for which its other existing private investments – Farmers Business Network, Zymergen, profile is a better fit. We culled our position in Constellation Software, Inc. and Rivian Automotive, with the four companies accounting for just over for the same reason. 1% combined. Lastly, it also includes three new SPAC investments, which Lastly, we sold our small positions in Network International Holdings Ltd. totaled under 2% combined. and Agora, Inc. as we were not able to graduate them into core holdings and decided to reallocate capital to higher conviction investments. Table VI. Top net purchases for the quarter ended December 31, 2020 Outlook Quarter End Amount Market Cap Purchased (billions) (millions) “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge” – Lao Tzu. Bajaj Finance Limited $ 43.7 $33.8 RingCentral, Inc. 34.0 31.1 “I don’t know when to buy stocks, but I know whether to buy stocks” – Opendoor Technologies Inc. 12.4 30.0 Warren Buffett. Alphabet Inc. 1,185.3 29.3 “How many of you would have predicted stock market strength yesterday Amazon.com, Inc. 1,634.2 26.5 and today… if you had been able to predict exactly what happened in the Our new investments include seven public companies: medium-sized election? Me either. Time spent on macro is entertaining. Does not help us positions in Opendoor Technologies and Bajaj Finance, and small make better investment decisions. Studying businesses not stock prices and positions in Arrowhead Pharmaceuticals, DoorDash, AbCellera Biologics, investing in people and businesses for the long term are reasons we Allegro, and Airbnb. outperform.” – Ron Baron, in an email to the research staff, on November 5, 2020. Two days after the U.S. Presidential election. Our largest new investment during the quarter was a return to an old favorite: Bajaj Finance Limited. Bajaj is a leading data-driven, non-bank This summarizes how we feel about outlooks. Could anyone’s outlook prove financial company in India. As part of risk mitigation and our desire to useful or valuable in 2020? reduce the overall risk exposure of the Fund we sold Bajaj in the first quarter A global pandemic with hundreds of millions of jobs lost globally, entire of 2020 as the COVID-19 crisis was unfolding, creating extreme uncertainty cities and countries shut down for extended periods of time. Domestically, a for its business, and increasing the probability of a permanent loss of capital. deeply divided and dangerously polarized nation with an election year unlike As the crisis unfolded, Bajaj demonstrated its resilience and conservative any other, culminating with a shocking riot on Capitol Hill. And yet, despite management approach, by experiencing limited Non-Performing Loans, the extreme uncertainty and a significantly wider range or possible while strengthening its balance sheet. The crisis appears to be shorter than outcomes, the markets keep making new record highs. we expected, and we were surprised to see that Bajaj remained profitable throughout the crisis (March to September 2020) despite excess Sure, we understand the global, coordinated monetary and fiscal easing provisioning for losses. Over the long term, we believe that Bajaj is well response that leads to near zero (or negative) interest rates for longer, positioned to benefit from the growing demand for consumer financial making high-quality, growing businesses increasingly more valuable (the services such as mortgages, personal and credit card loans, vehicle financing, discounted value of future cash flows is higher). Plus, with COVID-19 acting and other related financial products. At the same time, Bajaj is rapidly as a strong accelerant for every company enabling digital transformation, transforming into India’s largest fintech player by leveraging its proprietary the intrinsic values of many of our investments have increased meaningfully, technology platform to create a “supermarket of financial products,” and we expect them to continue to grow. opening an opportunity for it to become a true financial platform of choice.

Table VII. Top net sales for the quarter ended December 31, 2020 Market Cap Amount When Sold Sold (billions) (millions) Neurocrine Biosciences, Inc. $ 9.6 $19.0 Fidelity National Information Services, Inc. 89.6 13.2 Network International Holdings Ltd. 2.4 10.0 Constellation Software, Inc. 24.0 9.9 Agora, Inc. 3.8 0.1

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Personal consumer credit card debt has fallen off a cliff as discretionary the business of taking risk, managing the uncertainty, and taking advantage spending collapsed. At the same time, individual savings have gone up of the long-term opportunities that those risks and uncertainties create. We significantly and the amount of money sitting in money market funds is are confident that our process is the right one, and we believe that it will supposedly at an all-time high! So, there is that… enable us to make good investment decisions over time. Every day we live and invest in an uncertain world. Well-known conditions Sincerely, and widely anticipated events, such as Federal Reserve interest rate changes, ongoing trade disputes, government shutdowns, and the unpredictable behavior of important politicians the world over, are shrugged off by the financial markets one day, and seem to drive them up or down the next. We often find it difficult to know why the market participants do what they do over the short term. The constant challenges we face are real and serious, Alex Umansky with clearly uncertain outcomes. History would suggest that most will prove Portfolio Manager passing or manageable. The business of capital allocation (or investing) is January 20, 2021

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: 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

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Dear Baron Discovery Fund Shareholder: Performance

“If we worked on the assumption that what is accepted as true really is true, then there would be little hope for advance.” – Orville Wright The American Dream is built on the concept that opportunity and innovation is ripe for the taking in our society – if only one can recognize it and dedicate oneself to the perseverance necessary to achieve their goals. While our country is imperfect in so many ways, its uniqueness is that we as a people are continuously striving to become better as individuals, as innovators, and as a societal construct. This has never been more evident than in 2020. The past year will inevitably be defined historically as the year of the COVID pandemic and of the not unrelated bubbling to the surface of so much frustration regarding the inequalities in our country. While it was a painful year for so many people, we expect that much good will come from it as we evolve toward a more perfect union. Our brief, in particular, is to find those individuals in all industries who are driven like the Wright Brothers to move past conventional thinking so that they may create incredible innovations that advance society as a whole. Whereas the invention of air travel compressed space and time in a RANDY GWIRTZMAN AND LAIRD BIEGER Retail Shares: BDFFX way never before dreamed of in the early nineteenth century, the creation Institutional Shares: BDFIX of the internet and everything that rides upon it has compressed “time PORTFOLIO MANAGERS R6 Shares: BDFUX travel” by orders of magnitude more in the twenty-first century. And it has impacted nearly every industry from information technology to health care to consumer products. In the fourth quarter, the Russell 2000 Growth Index was up 29.6%. For all intents and purposes, it was a full year or more worth of performance Table I. jammed into the quarter. While Baron Discovery Fund (the “Fund”) lagged Performance† by 4.1%, our 25.5% (Institutional Shares) absolute performance was Annualized for periods ended December 31, 2020 certainly admirable, and for the full year, our 66.1% absolute return Baron Baron outperformed by over 31%. We believe that the stock market performed Discovery Discovery Russell well in 2020 despite the surrounding chaos, due to the accelerated Fund Fund 2000 advancement of technology throughout society. In many cases innovation Retail Institutional Growth S&P 500 1,2 1,2 1 1 and market adoption moved forward because of the pandemic and the Shares Shares Index Index manner in which people worldwide seamlessly shifted to virtual from Three Months3 25.48% 25.54% 29.61% 12.15% in-person interaction. Examples are telemedicine, cybersecurity, sustainable One Year 65.71% 66.13% 34.63% 18.40% energy and of course, drug and vaccine development and the life sciences Three Years 28.15% 28.48% 16.20% 14.18% tools that enable that. There will be numerous other companies that will hit Five Years 28.20% 28.52% 16.36% 15.22% their stride when the pandemic runs its course and human to human Since Inception interaction becomes a “thing” again. Casinos, travel, autos, restaurants, (September 30, 2013) consumer transactional and experience technology, pharmaceuticals (Annualized) 20.69% 20.99% 12.86% 14.00% (accelerated by increased doctor visits) and elective medical procedures will Since Inception be in focus. We believe many of our portfolio companies are poised to (September 30, 2013) benefit from the post-COVID environment. (Cumulative)3 290.90% 298.02% 140.35% 158.63%

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, 2020 was 1.35% and 1.08%, 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 1-, 3-, and 5-year 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 index performance is not Fund performance; one cannot invest directly into an index. 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. BARON FUNDS 3 Not annualized.

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We invest in young, innovative companies helping them to bring their about the potential for its platform as it lowers sequencing costs and has advancements into reality. We endeavor to make quality investments in the the potential to move beyond its current commercial niche. The recently right way – finding great people who are smart, honest and visionary, and appointed CEO, Christian Henry, had previously served as CFO and Chief then partnering with them through long-term thinking with a judiciously Commercial Officer at Illumina, and we think he is well qualified to risk-managed portfolio. While both our absolute and relative commercially execute on Pacific Biosciences’ differentiated long-read outperformance in 2020 was significant, as always, we humbly respect the platform. vagaries of the market. Our motto is “grind daily and celebrate rarely.” We CareDx, Inc. is the market leader in transplant diagnostics, with presence in had a small video toast over the holidays (where we also celebrated the nearly all U.S. and EU centers. Shares were up 91% in the fourth quarter as Fund’s Morningstar Analyst Rating of Silver) and we are now fully back in the company continued to successfully execute on its growth strategy. The “grind” mode. Looking forward to 2021, we think that the innovation company’s flagship product is DNA oriented testing to determine whether a journey we share with our entrepreneurs is only just beginning and, as a transplanted kidney is being subjected to biological rejection. This is a result, we see many bright years ahead. We are mindful that we will not $2 billion market, and we estimate that for 2020 CareDx did about outperform the market in every period, but aim to outperform over the long $128 million in total kidney testing revenue, up about 72% year-over-year term, matching our investment horizon. from $74 million in 2019. What is astonishing is that CareDx had only $28 million in revenues for this product in 2018. Even with the level of Table II. growth the company had in 2020, we estimate that the company was only Top contributors to performance for the quarter ended December 31, 2020 mid-teens penetrated into the kidney opportunity at year-end. And CareDx Percent also has market opportunities in pre-transplant human leukocyte antigen Impact (HLA) typing (a $500 million market opportunity), heart transplant testing Pacific Biosciences of California, Inc. 2.15% (a $100 million market, which is likely to expand with a new total HeartCare CareDx, Inc. 1.92 product from the company that received favorable CMS reimbursement in TPI Composites, Inc. 1.70 November) and lung transplant (a product with $50 million to $100 million Allegro MicroSystems, Inc. 1.45 in opportunity). Further out on the horizon is a new test called AlloCell, PAR Technology Corporation 1.20 which is a surveillance test for patients who have received engineered-cell transplants made from other peoples’ cells (allogenic) to monitor the Pacific Biosciences of California, Inc. offers a differentiated long-read DNA effectiveness and persistence of the transplanted cells. CareDx believes that sequencing platform for genetic analysis. Shares performed exceedingly well its cell therapy applications have an incremental $5 billion market so it in the quarter, up about 162%. We believe there is increasing excitement would be very exciting if it develops as management expects.

The Morningstar Analyst Rating™ is not a credit or risk rating. It is a subjective evaluation performed by Morningstar’s manager research group, which consists of various Morningstar, Inc. subsidiaries (“Manager Research Group”). In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission. The Manager Research Group evaluates funds based on five key pillars, which are process, performance, people, parent, and price. The Manager Research Group uses this five-pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark over the long term on a risk adjusted basis. They consider quantitative and qualitative factors in their research. For actively managed strategies, people and process each receive a 45% weighting in their analysis, while parent receives a 10% weighting. For passive strategies, process receives an 80% weighting, while people and parent each receive a 10% weighting. For both active and passive strategies, performance has no explicit weight as it is incorporated into the analysis of people and process; price at the share-class level (where applicable) is directly subtracted from an expected gross alpha estimate derived from the analysis of the other pillars. The impact of the weighted pillar scores for people, process and parent on the final Analyst Rating is further modified by a measure of the dispersion of historical alphas among relevant peers. For certain peer groups where standard benchmarking is not applicable, primarily peer groups of funds using alternative investment strategies, the modification by alpha dispersion is not used. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. For active funds, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that an active fund will be able to deliver positive alpha net of fees relative to the standard benchmark index assigned to the Morningstar category. The level of the rating relates to the level of expected positive net alpha relative to Morningstar category peers for active funds. For passive funds, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that a fund will be able to deliver a higher alpha net of fees than the lesser of the relevant Morningstar category median or 0. The level of the rating relates to the level of expected net alpha relative to Morningstar category peers for passive funds. For certain peer groups where standard benchmarking is not applicable, primarily peer groups of funds using alternative investment strategies, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that a fund will deliver a weighted pillar score above a predetermined threshold within its peer group. Analyst Ratings ultimately reflect the Manager Research Group’s overall assessment, are overseen by an Analyst Rating Committee, and are continuously monitored and reevaluated at least every 14 months. For more detailed information about Morningstar’s Analyst Rating, including its methodology, please go to https://shareholders.morningstar.com/investor-relations/ governance/Compliance—Disclosure/default.aspx. The Morningstar Analyst Rating (i) should not be used as the sole basis in evaluating a fund, (ii) involves unknown risks and uncertainties which may cause the Manager Research Group’s expectations not to occur or to differ significantly from what they expected, and (iii) should not be considered an offer or solicitation to buy or sell the fund. © 2021 Morningstar. All Rights Reserved. The 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. Past performance is no guarantee of future results.

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TPI Composites, Inc., a manufacturer of composite blades for electricity issued equity in the quarter to bolster its balance sheet in order to pursue generating wind turbines, and composite bodies for electric buses did very acquisitions to accelerate annual recurring software revenue growth. Given well in the quarter, with shares rising 82.3%. The company reported record PAR’s superior product and limited competition, we believe it is in an revenue that grew 23.5% against a 50% year-over-year comparable, and excellent position for long-term growth as the restaurant industry continues double-digit cash flow margins for the first time in a year. Investors adopting technology, a necessity in the world after COVID. We also believe (including Baron Discovery Fund) have been waiting for this recovery since PAR will have several opportunities for further accretive acquisitions to add the end of 2019, when management took down 2020 numbers due to to its software stack and market opportunity. Given the strong appreciation increased manufacturing line transitions (product retooling). After the of the stock during year, we reduced the position in the fourth quarter. guidance reduction we thought shares at $16 were a bargain, trading at 6.5 times 2020 cash flow and 4.7 times 2021 cash flow. They became more so Table III. after they fully bottomed in the mid-$9 range at the height of the pandemic Top detractors from performance for the quarter ended December 31, 2020 in mid-March 2020 (trading at about 4 times and 3 times the same metrics). Percent But our long-term perspective held and we added on weakness. This proved Impact profitable, as shares ended the year at $52.78. At this price level, shares Vital Farms, Inc. –0.55% trade at about 12 times and 10 times our estimated 2021 and 2022 cash Esperion Therapeutics, Inc. –0.48 flow targets and we still see nice upside. The recovery is even more Emergent BioSolutions Inc. –0.29 remarkable given that it’s been executed during the pandemic illustrating Silk Road Medical, Inc. –0.20 the strength of this management team. Management also hinted in the third TherapeuticsMD, Inc. –0.15 quarter earnings call that it plans to increase its long-term targets based on the increasing expectations for annual wind capacity installations. We like Vital Farms, Inc., a producer of butter and pasture-raised eggs, the setup particularly given some nice macro tailwinds which include global underperformed during the quarter after reaching its post-IPO highs. While stimulus with money earmarked for renewables, extended production tax the company beat Street expectations for the third quarter, investors shifted credits, lowered wind energy production costs and the anticipation that the near-term focus to more immediate beneficiaries of the COVID-19 vaccine. Biden administration will be more friendly to renewable energy. On top of Longer-term, we expect Vital Farms to benefit from increased consumer the strength in the wind industry, we believe the company will continue focus on better-for-you and to grow its platform through category building out its transportation business where it supplies composite parts for expansion and distribution gains in natural and traditional grocery stores. passenger EV and commercial trucking applications. TPI is seeing strong early traction with both production awards and pilot programs with major Esperion Therapeutics, Inc. is a pharmaceutical company that is launching OEMs and we expect additional production contracts in the coming years. a new drug in the cardiovascular space, bempodaic acid (BA), for patients Shares of Allegro MicroSystems, Inc., a fabless designer and manufacturer with elevated LDL cholesterol levels. Upon its approval in February 2020, BA of sensor integrated circuits (“ICs”) and application-specific analog power and BA plus ezetimibe (a combination drug), were the first non-statin-based ICs for automotive and industrial markets, rose after its IPO in the quarter. oral LDL lowering drugs launched in a very long time. The drug is effective – The company is the leading supplier of magnetic sensing ICs to the BA has been shown to lower LDL cholesterol by as much as 30% to 40% on automotive end market, where they are used in internal combustion engine its own (for the combination version of BA). The company estimates that and electric vehicles and advanced safety applications. Its magnetic sensing there are nearly 18 million patients in the U.S. alone who have not achieved ICs are used as position sensors, speed sensors, and current sensors in their LDL lowering goals, many of whom are not on statins at all (potentially applications such as seatbelt detection, automated driver assist system due to adverse reactions). Underperformance in the fourth quarter was the power steering and braking, camshaft and crankshaft position detection, and same as it was in the third quarter. The company launched its drugs right electric vehicle powertrain. The company also sells its analog power into the teeth of the COVID pandemic, and it was forced to pivot to virtual products into automotive, general industrial, and data center end markets, retailing, which no doubt hurt the initial uptake. As the pandemic recedes, with products focusing on motor driver ICs in high-efficiency motor we believe the company will get much better traction, and our diligence applications such as data center cooling, appliances, and robotics. The data indicates that the drug is working as advertised. We maintain conviction in center segment, in particular, is growing very rapidly as Allegro’s solutions the company given the millions of potential patients suffering from elevated allow one power source to power full server racks (instead of needing a cardiovascular risk markers who cannot take a generic statin, do not want to power source for each server) with automated monitoring and controls. This use an injectable drug, or are otherwise in need of alternative options. leads to high energy efficiency which adds up at a giant data center. Shares Emergent BioSolutions Inc. is a pharmaceutical company that provides performed well on expectations of increased near-term earnings due to a vaccines and post-exposure treatments for extreme pathogens, including faster-than-expected recovery in automotive end markets. The company has anthrax and smallpox, and emergency opioid overdose recovery drugs. In the a large opportunity for growth given its leading product performance, in our third quarter of 2020, Emergent was awarded numerous contracts from drug view, as electronic content in its end markets continues growing, driven by companies (Johnson & Johnson, Novavax, Vaxart, and AstraZeneca) and the the key mega trends of automotive electrification, improving safety U.S. Government (BARDA for Operation Warp Speed candidates), to help standards, automation, and increasing data consumption. develop, and then ultimately provide volume production of COVID-19 Shares of PAR Technology Corporation, a leading provider of software, vaccines. In the fourth quarter two competitive vaccines were approved by systems, and service solutions to the restaurant industry, rose during the the U.S. FDA under emergency use authorizations (“EUA”). We still believe quarter as pandemic-driven restaurant investment in technology fueled that Emergent’s COVID-19 vaccine partners are on track for EUA approvals business momentum. This was evident in the company’s third quarter in the first half of 2021, and that the company will benefit for years from earnings report which showed solid bookings momentum. The company also these and other development programs away from COVID.

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Silk Road Medical, Inc. designs and manufactures medical devices used to Recent Activity clear plaque from the carotid arteries of patients at high risk of stroke. The device is minimally invasive, and we believe that over 80% of the current Table V. procedure market, which is about $1 billion ($650 million in currently Top net purchases for the quarter ended December 31, 2020 approved applications), could shift to Silk Road’s device over the next few Quarter End Amount Year Market Cap Purchased years. This has been the pattern when other forms of minimally invasive Acquired (billions) (millions) arterial surgery have entered the market. Shares performed well in the third Fevertree Drinks plc 2020 $4.0 $19.2 quarter as surgical procedures have started to return to more normalized Allegro MicroSystems, Inc. 2020 5.1 14.0 volumes following the virtual shutdown of elective procedures during the Melco International Development depth of the COVID-19 pandemic in the second quarter. However, shares Limited 2020 2.9 14.0 dropped in the fourth quarter with the re-acceleration of COVID cases in the Red Rock Resorts, Inc. 2020 2.9 13.7 winter. We continue to believe in our strategy of investing in medical Eargo, Inc. 2020 1.7 9.3 technology companies that were hurt during the pandemic, with the expectation that the environment will ultimately turn around for the better. During the third quarter, we initiated a position in Fevertree Drinks plc, the #1 global brand of premium cocktail mixers. The company is riding the TherapeuticsMD, Inc. is a developer of hormone-based drugs for women’s trend of premium spirits and cocktails which are growing much faster than health. It has three FDA approved drugs, all of which are being launched. non-premium products. In fact, over the last five years, the company has Shares were down in the fourth quarter as the COVID-19 crisis hampered almost doubled the growth of the rest of the premium mixer segment. As the company’s early launch efforts for all three drugs (similar to Esperion you might expect, Fevertree is currently being negatively impacted by and other pharmaceutical companies that had the bad luck to gain product COVID as its bar and restaurant customers remain closed or severely approval during the pandemic). Because the health crisis is merely delaying capacity constrained. That being said, we believe that post-COVID, the the product launches, we believe shares are drastically undervalued. company will quickly rebound and its pristine balance sheet gives the Portfolio Structure company plenty of cushion to get through the pandemic. Longer term, we like that the business is asset light (it uses third party bottlers to Table IV. manufacture its products) which, in non-COVID periods, affords it high Top 10 holdings as of December 31, 2020 (approximately 50%) gross margins and equally high (approximately 30%) EBITDA margins. We also believe that the fast growing U.S. market has a Quarter End Investment long runway of growth left. An interesting fact, 40% of the spirits in the U.S. Year Value Percent of are premium vs. only 20% in the U.K. Yet only 7% of U.S. mixers are Acquired (millions) Net Assets premium vs. 40% in the UK. As we close that gap, the U.S. is going to TPI Composites, Inc. 2016 $37.3 2.8% eventually be the company’s largest market. CareDx, Inc. 2018 36.2 2.7 We acquired shares of Melco International Development Limited during Kinsale Capital Group, Inc. 2016 35.0 2.7 the quarter. Melco is an integrated resort and casino operator with high Endava plc 2018 34.5 2.6 quality properties in Macau, the Philippines, and Cyprus. We believe shares Floor & Decor Holdings, Inc. 2019 32.5 2.5 are attractively priced given significant year-over-year declines in gaming SiteOne Landscape Supply, Inc. 2016 29.6 2.2 volume being driven by temporary visitation and travel restrictions into Advanced Energy Industries, Inc. 2019 29.1 2.2 Macau from Mainland China and Hong Kong. As visitation restrictions are Mercury Systems, Inc. 2015 27.1 2.0 eased and the company capitalizes on significant pent-up demand for Allegro MicroSystems, Inc. 2020 26.7 2.0 leisure travel and entertainment, of which we are already witnessing early Kratos Defense & Security signs, we believe shares will see meaningful appreciation based on more Solutions, Inc. 2020 26.5 2.0 normalized earnings levels. Furthermore, the recently completed expansion project of a premier property in Macau could add additional growth as the Our top ten holdings comprised 23.7% of the portfolio, at the lower end of property reaches full cash flow potential. our typical 25% to 30% range. Our largest position, TPI Composites, Inc.,is 2.8% of assets, which is well under our practice to limit our largest positions During the quarter we repurchased shares of prior holding, Red Rock to 4% or lower. Our cash position of 6.7% at quarter end was within our Resorts, Inc. The company, an operator of casinos that cater to residents in normal mid- to high-single digit percentages of cash in the portfolio. We the locals Las Vegas market, reported strong third quarter results. Gaming have found that having a small amount of liquidity provides us with great revenue was up year-over-year despite the fact the company had 4 of its 10 flexibility to make new investments, which is well worth the very small casinos closed during the quarter. Significant cost improvements post- performance drag it creates. COVID has also led to significant margin improvement. We believe that

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coming out of COVID, the company will benefit from pent-up demand for tremendous performance, it had become a very large position for an earlier leisure and entertainment combined with a permanently lower cost stage company and we pared our risk. We still maintain a meaningful structure. As a result, we think a stronger and leaner Red Rock will show position as we believe the company has excellent technology and will be on significant profit and free cash flow growth over the next few years. the forefront of genetic sequencing innovation for years to come.

Eargo, Inc. offers a next-generation hearing aid that is well positioned to We sold our investment in Tactile Systems Technology, Inc. in the quarter. penetrate an initial addressable market of over $30 billion. The hearing aid Tactile’s devices use pneumatic compression to manage lymphedema market has historically seen difficulty with consumer adoption due to social (swelling in the extremities). While we believe that the company will stigma, cost, and accessibility. Eargo is aiming to disrupt the industry with a ultimately return to a reasonable growth profile, we felt that we had more hearing aid that is virtually invisible, affordable, and delivered through a promising investments in the medical device sector. telecare-based, direct-to-consumer model. We believe Eargo has a strong We trimmed our positions in Vital Farms, Inc. and UTZ Brands, Inc. as growth story with multiple levers including new product launches, the both companies had appreciated above their near-term price targets. We are continued diversification from cash-pay into insurance markets, and the believers in the long-term prospects of both companies and we still retain opportunity to drive repeat purchases among a growing installed base. smaller positions in both.

Table VI. Outlook Top net sales for the quarter ended December 31, 2020 While markets have moved substantially in the past three quarters, we have Market Quarter End constantly risk-managed the portfolio as part of our process to ensure that Cap Market Cap or When Market Cap Amount we are matching our excitement about the business prospects of our Year Acquired When Sold Sold holdings with their valuations. To the extent we sell or trim positions, we Acquired (billions) (billions) (millions) still have terrific new idea flow into the Fund. With the massive amount of Pacific Biosciences capital markets activity we are seeing (including IPOs, secondary offerings, of California, Inc. 2020 $1.0 $4.8 $11.7 and SPAC mergers) we have some amazing new opportunities on tap for PAR Technology 2021. Thanks again for sharing the journey with us, and we wish you peace, Corporation 2018 0.3 1.4 8.4 Tactile Systems health and happiness in the new year. Technology, Inc. 2019 0.9 0.7 7.8 Vital Farms, Inc. 2020 1.4 1.0 5.5 UTZ Brands, Inc. 2020 1.0 1.3 4.6

We reduced our position in Pacific Biosciences of California, Inc. as the shares appreciated massively (about 162%) in the quarter. At one point, the Randy Gwirtzman & Laird Bieger shares had gained over 500% over our initial purchase at $4.47 in the Portfolio Managers company’s secondary offering done on August 11, 2020. Due to the January 20, 2021

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: 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. Alpha measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

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DEAR BARON DURABLE ADVANTAGE FUND SHAREHOLDER: PERFORMANCE

Despite giving back some of our outperformance during this quarter, Baron Durable Advantage Fund (the “Fund”) had a good year, in our view. The Fund returned 7.6% (Institutional Shares) for the quarter and 20.3% for the year, which compares to gains of 12.2% and 18.4%, respectively, for the S&P 500 Index (the “Index”), the Fund’s benchmark. Since its inception three years ago, the Fund generated an annualized return of 16.3% net of fees and expenses, which compares favorably to an annualized return of 14.2% (including dividends) for the Index.

Table I. Performance Annualized for periods ended December 31, 2020 Baron Baron Durable Durable Advantage Advantage Fund Fund S&P Retail Institutional 500 ALEX UMANSKY Retail Shares: BDAFX 1,2 1,2 1 Shares Shares Index Institutional Shares: BDAIX Three Months3 7.60% 7.62% 12.15% PORTFOLIO MANAGER R6 Shares: BDAUX One Year 20.11% 20.32% 18.40% Three Years and Since Inception (December 29, 2017) 16.09% 16.34% 14.18% In that context, we thought our 7.6% gain in the fourth quarter was satisfactory even though it failed to keep up with the Index’s 12.2% return. Before we dive into performance attribution, we think it is worth reminding We built a good lead over the first two quarters of the year during a period our shareholders what the main goals and objectives of this Fund are. of heightened uncertainty, and though we gave a good chunk of it back over We seek to invest in large-cap companies with durable competitive the last six months, the Fund still came out 192bps ahead of its benchmark advantages that are in the later stages of their growth life cycles. Frequently, in what was an incredibly challenging year. To look at the year from a these companies are the leaders of industries that are highly penetrated and different perspective, the Fund outperformed by 221bps until the market consolidated. While we believe these businesses to be high-quality bottom on March 23, and then was holding on for dear life, gradually giving compounders, most of them no longer have the ability to reinvest excess most of it back during the subsequent run up. free cash flow that they generate at their customary high rates of return, As is typically the case, the Fund’s 2020 outperformance was driven by and so they prudently choose to return it back to their shareholders in the stock selection, which contributed 585bps to relative returns, while the form of dividends or share buybacks. We apply rigorous valuation discipline effect of sector allocation (excluding cash and fees) contributed another and focus on companies with high current free cash flow yield. That means 89bps. Stock selection was strongest in Financials, Health Care, and Real that Tesla, Peloton, Zoom Video, and other super-fast-growing companies Estate, but was somewhat offset by poor performance in Information like these, are not candidates for investment in this portfolio regardless of Technology (“IT”) (largely due to the Fund not owning Apple (which was up whether they get included in the S&P 500 Index or not. This is a strategy 82%) for most of the year). Another headwind was our underweight in focused on hitting consistent singles and doubles and opposed to home runs Consumer Discretionary where Amazon was up more than 76%. We have and strike outs. That also means that we may struggle to keep up during explained in previous letters why we did not believe either company was a periods of time when the market is particularly enamored with home runs. good fit for the Fund. Returns were helped by lack of exposure to Energy and Utilities and an overweight in IT, while our cash position hurt overall returns.

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, 2020 was 2.80% and 2.40%, respectively, but the net annual expense ratio was 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. The index is unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 BARON shares. FUNDS 3 Not annualized.

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We had a large number of significant winners this year, though predictably HEICO Corporation offers alternative aerospace aftermarket parts as well no real home runs, as we exclude early-stage, as well as high-multiple, as system sub-components for the aerospace & defense industry. Shares momentum-driven companies that ended up dominating performance increased 32.0% during the fourth quarter, closing 2020 up 30.9%, on tables in 2020. Still, 25 of our investments were up at least 20% each, with market optimism around COVID-19 vaccines driving a return to normal about half of these in the 20% to 30% range. HEICO Corporation, Agilent travel levels over time, which, in turn, would benefit HEICO’s commercial Technologies, Costco, Texas Instruments, and Charter Communications aerospace business. We continue to hold HEICO shares due to its durable were all up over 30%. Mettler-Toledo, BlackRock, MSCI, Thermo Fisher competitive advantages that are rooted in its innovative culture and highly Scientific, Danaher, and Microsoft were all up over 40%. Fair Isaac, ASML, engineered, vertically integrated manufacturing approach, which enables it and our largest relative contributor Adobe, were up over 50% each. to sell FAA-approved aircraft parts at significantly lower prices than Importantly, we did not have many losers. Only eight of our holdings comparable OEMs. Historically, challenging environments have helped declined in value in 2020, with Disney the only significant loser, largely due HEICO gain market share as customers look to it to help them save costs, to poor timing on our part in executing the exit. and we believe this time will be no different. With only 2% current market share, we believe HEICO’s runway for growth remains long. Table II. IHS Markit Ltd. provides critical information, analytics, and expertise across Top contributors to performance for the quarter ended December 31, 2020 the financial services, natural resources, and transportation markets. The Quarter End Market Cap Percent stock increased 14.7% during the fourth quarter, finishing 2020 up 20.3% as (billions) Impact news of effective vaccines for COVID-19 drove greater optimism for Alphabet Inc. $1,185.3 0.78% improvement in the company’s end-markets. Shares also benefited from the MSCI, Inc. 37.0 0.73 announced acquisition of the company by S&P Global. We continue to hold Accenture plc 172.9 0.55 the stock due to IHS Markit’s steady growth, strong competitive advantages, HEICO Corporation 16.7 0.52 and expected value creation from the pending acquisition. IHS Markit Ltd. 35.6 0.48 Table III. Alphabet Inc. is the parent company of Google, the world’s largest search Top detractors from performance for the quarter ended December 31, 2020 and online advertising company. Shares of Alphabet were up 18.6% in the Quarter End quarter, ending 2020 up 30.0% due to a continued recovery in ad spending, Market Cap Percent (billions) Impact strong cloud revenue growth, and improved cost controls. We maintain high conviction in Alphabet’s merits as it continues to benefit from growth in S&P Global Inc. $ 79.1 –0.42% mobile and online video advertising, which accrues to its core assets of AstraZeneca PLC 131.2 –0.36 search, YouTube, and the Google ad network. We are further encouraged by Fidelity National Information Services, Inc. 87.8 –0.17 Alphabet’s investments in AI, autonomous driving (Waymo), and life Equinix, Inc. 63.6 –0.16 sciences (Verily, Calico), which are yet to be fully appreciated (and valued) S&P Global Inc. provides credit ratings, indexes, data, and analytics to the by market participants, adding a layer of optionality to the story. financial and commodities markets. Shares of S&P Global declined 8.6% in Shares of MSCI, Inc., a leading provider of investment decision support tools, the fourth quarter but ended 2020 up 21.7%, despite the company reporting increased 25.3% during the fourth quarter, ending 2020 up 49.4%. The strong financial results. This was due to a mixed response by investors to the company reported solid third quarter earnings despite the challenging announced merger with IHS Markit (perhaps due to the size and complexity COVID-19 backdrop, and management is continuing to proactively manage of the combined company) and as bond issuances were expected to slow its cost base. MSCI’s asset-based fee revenue also benefited due to strong down in the fourth quarter and 2021 on tough comparisons after near-zero underlying market conditions and inflows. We retain long-term conviction in interest rates and stimulus measures from the Federal Reserve drove a MSCI as the company owns strong, “all weather” franchises and remains strong corporate bond issuance market for most of 2020. We continue to well positioned to benefit from a number of prominent tailwinds in the own the stock due to S&P Global’s long runway for growth as it benefits investment industry such as the continuing development of emerging from the secular trends of increasing bond issuance, growth in passive markets, passive investing, and the adoption of ESG. investing, and demand for data and analytics, while enjoying meaningful and durable competitive advantages that, in our view, are only strengthening Accenture plc provides consulting and technology services to corporate following the merger with IHS Markit. clients around the world. Shares increased 16.0% during the fourth quarter and ended 2020 up 26.3%, as client spending recovered from the pandemic AstraZeneca PLC is a multi-national pharmaceutical company developing faster than analyst forecasts with 25% bookings growth in the most recent drugs across multiple therapeutic areas such as oncology and respiratory quarter. Revenues were up 4% and earnings up 8%, beating consensus diseases. Shares were impacted by news of AstraZeneca’s joint development expectations and leading management to raise full-year guidance. We with Oxford University of a viral-based COVID-19 vaccine. Given a mixed believe Accenture is well equipped to help its clients adapt to the changing data set due to an unforeseen error in dosing that occurred in the Brazilian economic environment and will continue gaining share in a large global market, the vaccine timelines slipped, driving shares down 8.8% during the market as it helps customers digitally transform. fourth quarter (and ending 2020 up 3.3%). Our investment thesis on AstraZeneca is not dependent on COVID-19 however, but rather its best-in-class large-cap growth profile, and we retain conviction.

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Fidelity National Information Services, Inc. provides software to financial Recent Activity institutions and enables merchants to accept electronic payments. The stock underperformed in the fourth quarter and was down 4.3% (though ended During the fourth quarter, we added to 21 existing investments as we put 2020 up 1.9%) due to revenue headwinds from the COVID-19 pandemic as the Fund’s inflows to work. We focused on our highest conviction ideas such declines in travel and spending activity led to lower transaction volumes. as Alphabet and Microsoft, which led to a modest increase in the Fund’s Management believes these headwinds are temporary and expects growth concentration, with the top 10 holdings rising to 48% of the Fund, while the to accelerate next year. We continue to own the stock because we expect top 20 are now 78% (vs. 46% and 74%, respectively, at the end of last earnings growth to quickly return to a mid-teens rate. quarter). We initiated a new position in Intuit, the leading provider of individual tax prep and small business accounting software, as we believe After strong performance earlier in the year, Equinix, Inc. was a detractor that the critical nature of QuickBooks in the day-to-day operation of small during the quarter with its stock down 5.7% (it still ended 2020 up 24.5%) businesses, creates stickiness in the customer base, while providing growth due to market rotation into “laggards” and a slight backup in interest rates opportunities over time as the company expands its platform. that impacted companies with elevated valuations. Equinix is a global operator of network-dense, carrier-neutral colocation data centers. We Table V. retain conviction due to a long demand runway behind cloud adoption and Top net purchases for the quarter ended December 31, 2020 IT outsourcing, its unique position as one of the only operators that can Quarter End Amount offer a global platform, and continued execution on strategic M&A Market Cap Purchased transactions to enhance its moat. (billions) (thousands) Alphabet Inc. $1,185.3 $451.3 Portfolio Structure Microsoft Corporation 1,681.6 381.5 Intuit Inc. 99.8 273.6 The Fund’s portfolio is constructed on a bottom-up basis with the quality of BlackRock Inc. 110.7 270.9 ideas and conviction level (rather than benchmark composition and weights) Constellation Brands, Inc. 42.5 195.2 determining the size of each individual investment. Sector weights tend to be an outcome of the stock selection process and are not meant to indicate We initiated a medium-sized position in Intuit Inc., the leading provider of a positive or a negative “view.” accounting and payroll solutions for small businesses as well as the leading vendor of tax software for consumers and tax professionals. Intuit products As of December 31, 2020, our top 10 positions represented 47.6% of the include tax filing (TurboTax), accounting software for SMBs (QuickBooks), Fund, the top 20 were 77.8%, and we exited 2020 with 34 investments. IT Payroll (QuickBooks Payroll), budgeting (Mint), and more. TurboTax is the and Health Care, our biggest sectors, represented 55.0% of the Fund. leader in the DIY individual tax business, but with just 28% market share of Financials, Communication Services, Consumer Staples, Industrials, and Real total U.S. returns, the company has a long runway for growth. Similarly, Estate represented another 42.5% of the Fund. Cash and Ecolab Inc., which despite being the leader in its space, QuickBooks is used by only 8 million is classified under Materials, were the remaining 2.5%. small businesses (and those self-employed), out of nearly 50 million in the The Fund’s turnover in 2020 was 14.4% compared to the 13.1% average U.S (and an additional 30 million in core markets outside the U.S.). Equally turnover ratio since inception. important, the critical nature of Intuit’s products (source of truth for small businesses) creates stickiness and offers the opportunity for Intuit to build a Table IV. platform and an ecosystem around itself over time (adding more and more Top 10 holdings as of December 31, 2020 solutions such as: payments, payroll, capital, time tracking, and more). Quarter End Quarter End Investment Percent As Intuit expands the platform, its customers benefit from getting an Market Cap Value of Net integrated offering that solves more and more of their needs. At the same (billions) (thousands) Assets time, Intuit benefits from high incremental margins by cross-selling (since Microsoft Corporation $1,681.6 $1,273.4 7.4% the customer acquisition cost was already paid), with lower churn rates and Alphabet Inc. 1,185.3 1,107.2 6.4 expanding customer lifetime values. Furthermore, the recent Credit Karma Adobe Inc. 239.9 820.2 4.8 acquisition expands Intuit’s consumer scale substantially (with Credit Moody’s Corporation 54.5 796.4 4.6 Karma’s over 100 million customers), adding cross-selling optionality along Danaher Corporation 157.8 779.9 4.5 with a significant data asset (Credit Karma has over 2,500 data points per Thermo Fisher Scientific Inc. 184.6 773.2 4.5 member) that can help Intuit offer better personalized financial products to Facebook, Inc. 778.0 760.5 4.4 its customers over time. S&P Global Inc. 79.1 649.9 3.8 Intuit checks all the boxes we look for in an investment. It has durable Accenture plc 172.9 633.2 3.7 competitive moats, an attractive business model with recurring revenues, UnitedHealth Group Incorporated 332.7 601.1 3.5 high margins and limited capital requirements, a long runway for growth, and a great management team that in our view can execute on the vision over the long term.

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Our largest add in the quarter was Alphabet Inc., the parent company of Outlook Google. Alphabet reported strong financial results showing a rapid recovery in advertising spending from the troughs of the pandemic, while also Year 2020 was unlike any other. If one had to guess where the market would disclosing that Google Cloud Platform (“GCP”) is now a $13.5 billion run trade during a global pandemic with millions of jobs lost globally, entire rate business (while growing in the mid-40s). We believe that GCP has cities and countries shut down for extended periods of time, a highly become (and especially since Thomas Kurian took the lead of that business polarized election culminating with a shocking riot on Capitol Hill, few in 2019) a fiercer competitor in the public cloud market, as the company would guess record highs. And yet, despite the extreme uncertainty and a increased its investment in go-to-market direct and through partnerships, significantly wider range of possible outcomes throughout the year, markets while refocusing the product vertically (making it more attractive to large kept rallying. enterprise customers). This was especially true for the high-growth segment of the market, which outperformed significantly. That benefited Baron Funds’ lineup with most of Alphabet has also recently made strategic changes to its commerce offering, our strategies achieving returns that were substantially higher than the 20% opening the platform to third parties like Shopify and enabling merchants to generated by Baron Durable Advantage. High-growth companies enjoy list products for free, which we believe increases the likelihood for success in especially high multiples during the periods of monetary stimulus and with this business. Lastly, Alphabet recently decided to start breaking out interest rates near zero, the discounted value of their future cash flows is profitability by segment, which could, in our view, reduce the relative discount higher. The companies that we target for this Fund tend to be more mature, investors apply to Alphabet’s various earlier-stage businesses (such as GCP). and hence, have a lower percentage of their intrinsic values derived from Despite those positive trends, the stock is trading at only a 25% premium to terminal cash flows. Nevertheless, our businesses have also accrued benefits the average S&P 500 company, the lowest relative multiple in nearly four from this accommodating environment, and we believe that most have years. This is namely because of the recent regulatory news flow, which we experienced considerable increases in their intrinsic values making the 20% wrote about in the past–in short, we believe the concerns are overblown, and return in their stocks – a reasonable outcome. even if regulators decide to break big-tech up (and can get the courts’ approval, which would take years), 1+1 will be greater than 2, in our view. Our goal is to invest in large-cap companies with, in our view, strong and durable competitive advantages, proven track records of successful capital Table VI. allocation, high returns on invested capital, and high free cash flow Top net sales for the quarter ended December 31, 2020 generation, a significant portion of which is regularly returned back to Quarter End shareholders in the form of dividends or share repurchases. It is our belief Market Cap or that investing in great businesses at attractive valuations will enable us to Market Cap Amount When Sold Sold earn excess risk-adjusted returns for our shareholders over the long term. (billions) (thousands) We are optimistic about the prospects of the companies in which we are ASML Holding N.V. $205.5 $255.1 invested and continue to search for new ideas and investment opportunities. Equinix, Inc. 63.6 118.4 Sincerely, We sold our investment in ASML Holding N.V. following the significant rise in the price of the stock. Shares of ASML rose 66% over our ownership period in 2020, which followed a 93% gain 2019. With the valuation at historically high levels, we decided it was no longer a good fit for this Fund. We reduced our investment in Equinix, Inc. essentially for the same reason. Alex Umansky Portfolio Manager January 20, 2021

99 Baron Real Estate Income Fund

Dear Baron Real Estate Income Fund Shareholder:

The Baron Real Estate Income Fund (the “Fund’) generated strong performance in 2020, gaining 22.30% (Institutional Shares) for the year ended December 31, 2020.

The Fund’s 22.30% gain in 2020 substantially outperformed its primary benchmark index, the MSCI US REIT Index (the “REIT Index”), which declined by 8.70%.

For the recent three-month period ended December 31, 2020, the Baron Real Estate Income Fund increased 14.36% (Institutional Shares), exceeding the REIT Index, which generated a 11.16% return.

Three-Year Anniversary

Three years ago, we launched our second real estate fund, the Baron Real Estate Income Fund. This Fund emphasizes real estate dividend-paying securities, with most of the Fund’s investments being REITs.

At that time, we stated that we were optimistic about the long-term JEFFREY KOLITCH Retail Shares: BRIFX prospects for both of our real estate funds – the Baron Real Estate Income Institutional Shares: BRIIX PORTFOLIO MANAGER R6 Shares: BRIUX Fund and the Baron Real Estate Fund.

We also stated that both funds would be highly complementary to each other: its achievements marking its 3-year anniversary on December 31, 2020 as follows: 1. The Baron Real Estate Fund (launched December 31, 2009) Morningstar Real Estate Category Ratings (as of December 31, 2020) • Primary emphasis: Real estate-related equity securities • Morningstar Overall Rating: 2. The Baron Real Estate Income Fund (launched December 29, 2017) • Baron Real Estate Income Fund received a 5-star Overall Morningstar Rating™ among 225 funds. • Primary emphasis: Income-producing REITs • Morningstar 3-Year Rating: In the last three years, our initial real estate fund that was launched eleven • Baron Real Estate Income Fund received a 5-star Morningstar years ago, the Baron Real Estate Fund, has continued to deliver strong Rating™ for its 3-year performance among 225 funds. performance. For the period ended December 31, 2020, it has been awarded Morningstar’s highest five-star rating for its 3-year, 5-year, 10-year, and Morningstar Real Estate Category Ranking (as of December 31, 2020) overall performances. For more on the Baron Real Estate Fund, please see • Morningstar 3-Year, and 1-Year Ranking: our December 31, 2020 shareholder letter. • Baron Real Estate Income Fund ranked in the top 3% of all real We are also pleased to report that our more recently launched real estate estate funds for its’ 3-year and 1-year performances among 225 fund, the Baron Real Estate Income Fund, has earned special recognition for and 248 funds, respectively.

This Morningstar Rating™ is for the Institutional share class only; other classes may have different performance characteristics. Morningstar calculates the Morningstar Real Estate Category Average performance and rankings 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 Rating™ forfunds,or“starrating”,iscalculatedformanagedproducts(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 MorningstarRating does not include any adjustment for sales loads. 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. © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may notbecopied BARON 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 FUNDS losses arising from any use of this information. Past performance is no guarantee of future results.

100 December 31, 2020 Baron Real Estate Income Fund

The Baron Real Estate Income Fund’s cumulative 3-year return of 48.58% Baron Real Estate Income Fund Performance (Institutional Shares) (net of fees) substantially exceeds the 6.90% cumulative return of the REIT Index. The Fund’s average annual return Table I. during this period was 14.11% vs. 2.25% for the REIT Index. Performance For periods ended December 31, 2020 As we embark on the next chapter of the Baron Real Estate Income Fund, we Baron Baron thought it would be an ideal time to illuminate prospective shareholders Real Real about the Fund, provide a refresher to current shareholders, and discuss our Estate Estate Income Income current thoughts regarding various investment opportunities. Fund Fund MSCI Retail Institutional US REIT We will address the following topics in this letter: Shares1,2 Shares1,2 Index1 1. Why we launched the Baron Real Estate Income Fund Three Months3 14.26% 14.36% 11.16% 2. A review of Baron Real Estate Income Fund’s differentiated approach One Year 22.02% 22.30% (8.70)% vs. most other REIT funds Three Years and Since Inception 3. A comparison of Baron Real Estate Income Fund and Baron Real Estate (December 29, 2017) Fund (Annualized) 13.93% 14.11% 2.25% 4. Allocating capital between the two Baron Real Estate Funds Three Years and Since Inception 5. Investing prospects for the Baron Real Estate Income Fund and REITs (December 29, 2017) (preview: we are bullish) (Cumulative) 47.87% 48.58% 6.90% 6. Our 2021 key investment themes and portfolio composition 7. Our concluding thoughts and observations WHY WE LAUNCHED THE BARON REAL ESTATE INCOME FUND Baron has a long and successful history of investing in real estate. Since 1987, Baron has invested billions of dollars in real estate-related securities. We believe that long-term investing in real estate and real estate- related companies with, in our view, well-located and well-positioned assets, attractive long-term growth prospects and strong management teams, is a natural extension of the Baron philosophy of investing.

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, 2019 was 6.87% and 5.63%, respectively, but the net annual expense ratio was 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The index and the Fund include reinvestment of interest, capital gains and dividends, which positively impact the performance results. The index is unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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.

101 Baron Real Estate Income Fund

Strong investor demand for income funds. 5. Other The search for income producing securities, as interest rates and bond yields Our investments include companies of all market capitalizations, have stagnated near historically low levels, has stoked strong investment seeking businesses that we believe have sustainable competitive interest in dividend-focused securities and income funds. advantages, exceptional management, and good opportunities for long- term and sustainable growth, with attractive dividend yields and Our clients have expressed interest in a real estate income fund. valuations. Numerous Baron investors have expressed interest in product offerings With these elements and attributes, we believe we offer a differentiated and beyond equity funds to include an income fund that prioritizes a compelling real estate income fund. combination of capital appreciation and current income. Considering our strong track record of our REIT investments in Baron Real Estate Fund, and in More so than ever, we believe REIT Funds that embrace flexibility and response to numerous client requests, we launched the Baron Real Estate adaptability in their investment approach will be the long-term winners. Income Fund. A COMPARISON OF BARON REAL ESTATE INCOME FUND AND A REVIEW OF BARON REAL ESTATE INCOME FUND’S DIFFERENTIATED BARON REAL ESTATE FUND APPROACH VERSUS MOST OTHER REIT FUNDS Baron Real Estate Income Fund is structured as an attractive complement to Baron Real Estate Income Fund is differentiated from traditional Baron Real Estate Fund. Although both funds focus on real estate, they differ active and passively managed REIT funds as follows: in significant ways, as highlighted in the table below. As such, we believe our two real estate funds further address the broader and more complete real 1. Most REIT funds are 100% invested in REITs estate allocation goals of our clients. In addition to investing in REITs (typically at least 75% to 80% of the Comparison of Baron Real Estate Income Fund and Baron Real Estate Fund), the Baron Real Estate Income Fund also invests in other real Fund estate-related securities. Baron Real Estate Baron Real The Fund’s flexibility allows it to invest approximately 20% to 25% of Income Fund Estate Fund net assets in non-REIT real estate companies. At times, these Investment objective Income & capital Capital companies may present superior growth, income, and/or share price appreciation appreciation appreciation potential. Equity vs. income Greater than 75% Equity 2. The Baron expansive approach to investing within the REIT universe orientation income Many REIT funds limit their REIT investments to companies that are REITs vs. non-REITs Typically, 75% Typically, 25% to 30% included in their comparative REIT benchmark. Our key focus is or more in REITs in REITs identifying compelling REITs and other real estate income companies Real estate category Primarily Commercial & with attractive share price appreciation potential – regardless of focus commercial residential whether the company is part of the REIT benchmark. real estate real estate Examples of our current Fund REIT holdings that are not in the REIT benchmark include: ALLOCATING CAPITAL BETWEEN THE TWO BARON REAL ESTATE FUNDS • Wireless tower REITs such as American Tower Corp., SBA Communications Corp., and Crown Castle International Corp. It is important to note that the Baron Real Estate Income Fund and the Baron Real Estate Fund complement and balance each other. Additional REITs that are also not in the REIT benchmark that may be considered for investment include: Investment goals should be considered in apportioning capital between the two Baron real estate funds. • Timber REITs such as Weyerhaeuser Company and Rayonier Inc. Priorities may include: • Billboard REITs such as Lamar Advertising Company • Dividend yield and/or income; 3. The Fund may invest in real estate debt and preferred securities • Maximizing long-term total return; • Limiting annual return volatility; and The Fund invests primarily in real estate equity income securities, but it • Diversification and lower correlation relative to stocks and bonds. may also include other real estate income vehicles such as real estate debt and preferred securities. Over the long term, we expect Baron Real Estate Income Fund may experience less performance fluctuation due to its orientation to yield/ If we determine that the Fund is likely to generate superior returns and income and should display somewhat less direct correlation to stocks and mitigate risk by investing in real estate debt securities, we may include bond performance. real estate debt purchases as a small component of the Fund’s portfolio. Conversely, we anticipate that our original Baron Real Estate Fund may generate higher returns over the long term, due to its “equity-like” nature 4. The Fund may invest in international companies and growth orientation that prioritizes a broader range of real estate-related U.S. companies are our primary focus, but the Fund may also invest in categories. However, there may be periods when Baron Real Estate Income international real estate companies. Fund may outperform.

102 December 31, 2020 Baron Real Estate Income Fund

Accordingly, we envision that some clients may elect to allocate and We believe segments of commercial real estate may emerge as an balance their total real estate allocation between both Baron real estate attractive surrogate for traditional fixed income investments given funds, as they conclude that the two real estate funds are indeed highly strong demand for income-producing assets and historically low global complementary to each other. Note, there is no guarantee that these goals fixed income rates. will be met. A June 30, 2020 Wall Street Journal article noted that two years ago 36% of bonds had yields of less than 2%. The article went on to state INVESTING PROSPECTS FOR THE BARON REAL ESTATE INCOME FUND that about 85% of global bonds yield less than 2%! AND REITS On the other hand, the dividend yield on REITs currently stands at As we peer into 2021, we believe the previous underperformance of approximately 3.5%, and several other real estate securities offer certain REITs and other real estate-related companies in 2020 may lead compelling total return potential relative to bonds. to outperformance in the year ahead. And, so, REITs, in our opinion, are attractively valued versus bonds. Therefore, we believe now is an attractive time to invest in many REITs and the Fund. Public real estate relative to real estate in the private market 1. Unusual tactical buying opportunity We believe there is a compelling arbitrage opportunity in the public real estate market relative to the private market. In 2020, the REIT Index significantly underperformed the broader market by a wide margin of 27.10% by declining 8.70% while the S&P With last year’s sharp correction in several real estate stocks, the 500 Index gained 18.40%. valuations of recent private market real estate transactions indicate that it is notably cheaper to buy certain segments of real estate in the REITs have now underperformed the S&P 500 Index for five public market than in the private market. consecutive years! 3. We believe the multi-year business prospects for several REIT However, we now believe there is a tactical opportunity to acquire categories are quite promising shares in several quality REITs. The share prices of these companies Several REIT segments are experiencing tailwinds that are resulting in have, in our opinion, overshot to the downside and now offer an acceleration in business fundamentals – industrial warehouse REITs, compelling value. data center and wireless tower REITs, manufactured housing, single- We expect the dislocation in the share prices of several REITs may family home rentals, cold storage companies, and life science real reverse in 2021 if COVID-19 vaccinations are widely administered estate REITs. and economic activity resumes. The growth in online sales as businesses and consumers relentlessly 2. Many REITs are cheap seek faster delivery bodes well for industrial warehouse REITs. We believe many REITs are cheap versus stocks, bonds, and private real The rapid transition to home-based consumer and commercial activity estate alternatives. (online shopping, video streaming, working from home with computer screen meetings and conferencing) should benefit data center and REITs relative to other equity alternatives wireless tower REITs due to the need to store a greater library of data Following the sharp recovery in the stock market in the last nine to conduct and support these virtual online meetings and the need for months of 2020, the S&P 500 Index ended the year up 18%, the a greater number of antennae rental space on towers. NASDAQ Composite Index up 45%, and global equities (as defined by Strong demand for affordable housing should benefit manufactured the MSCI ACWI Index) ended the year up 16%. housing REITs. A desire by households to rent homes in suburbs rather Much of real estate, however, lagged. Several apartment, hotel, office, than rent apartments in cities or purchase homes should benefit single- mall, shopping center, and other REITs declined 20% to 40% this past family rental REITs. The acceleration in “e-grocery” penetration should year in large part due to the pandemic-induced economic downturn. benefit cold storage warehouse REITs, and an increase in funding for health care drug development bodes well for life science office real In our opinion, the businesses of many of these companies are estate. cyclically depressed, not secularly challenged, and will recover when economic conditions improve. 4. The real estate cycle has reset Further, the valuation disparity between several real estate securities Most real estate cycles tend to last five to seven years, then correct for and other non-real estate stocks is, in our opinion, extreme. The REIT one to two years, and then a new cycle begins. Index, for example, is currently priced at a discounted valuation Key factors that often serve as tailwinds at the onset of a real estate multiple relative to the S&P 500 Index for the first time since 2009! cycle and then reverse course and become headwinds during the later As such, we believe the return potential of several segments of real stages of a real estate cycle include: interest rates, mortgage rates, estate is attractive relative to many equity alternatives. central bank policy, inflation, economic growth, residential and commercial construction activity, corporate balance sheet liquidity and Public real estate relative to bonds debt levels, and the credit markets. Following the plunge in bond yields to historic lows, bonds offer Following the sharp decline in economic activity in 2020, we believe investors negligible yield and are unlikely to generate sufficient returns the U.S. real estate cycle has reset and is in the early stages of what for individual and institutional investors. we anticipate will be a multi-year recovery.

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In our opinion, several ingredients are in place that will serve as relative to stocks (0.66 versus S&P 500 Index) and bonds (0.21 versus tailwinds and contribute to an improvement in business performance Bloomberg Barclays U.S. Aggregate Index). for a large segment of both commercial and residential real estate in 7. Significant private equity capital targeted for real estate provides the next few years. A sampling of the ingredients includes: a valuation floor • Historically low interest rates We think real estate merger and acquisition activity may rebound in • The 10-Year U.S. Treasury Yield currently stands at 0.9% 2021. versus its 50-year average of 6.2%! It is estimated that approximately $344 billion of capital has now been • Record low mortgage rates raised by private equity sources to invest in real estate, which equates • The 30-year U.S. fixed mortgage rate of 2.7% compares to approximately $1.1 trillion of total real estate purchasing capacity, favorably to its long-term average rate of 7.9%! assuming reasonable 70% financing. • Accommodative central bank policy 8. Partial inflation hedge • September 16, 2020: Federal Reserve signals that it intends Well-located real estate in supply-constrained geographies is often able to keep interest rates near zero through at least 2023. to provide investors with a partial hedge against inflation and a good protection of value (i.e., ability to raise rents to offset higher operating • Subdued consumer price inflation costs). The price of a property can be measured in relation to the • Significantly below 2% inflation target. May remain subdued replacement value (current cost of land, materials, and labor that due to technological advances. would be required to build a replacement). Since replacement costs tend to rise with inflation, real estate is often viewed as an effective • An improving economic growth outlook hedge against inflation. • Following a sharp economic correction early in 2020, recent 9. Additional favorable REIT considerations economic and company business results confirm that the U.S. economy bottomed in April and has continued to a. Improving and contracted cash flows – We anticipate that the rebound. We believe a new economic expansion has begun following should lead to improving cash flow growth in 2021: and most economic cycles last 5 to 7 years. i. a recovery in operating fundamentals; • Modest levels of commercial construction activity ii. the refinancing of debt at lower interest rates; and, • COVID-19 and the slowdown in economic growth iii. acquisitions and development contributed to a moderation in commercial construction Further, most REITs provide strong earnings visibility due to the activity in 2020. Modest commercial inventory levels should documented nature of cash flows that are under contract or lease. serve to buttress rents and real estate values. b. High-quality real estate portfolios – Over the last decade, REITs • Healthy corporate balance sheets have generally acquired higher-quality real estate assets while • Corporate balance sheets are generally in solid shape with culling out lower-quality assets. ample cash, appropriate debt levels, and staggered debt c. Stronger balance sheets versus a decade ago – Most REITs maturities. maintain suitable levels of debt, have high levels of liquidity, and • The share prices and valuations of several REITs and other real minimal debt maturities in the next few years. estate-related companies remain depressed d. Historically low financing costs – Interest rates are likely to remain • Valuations are reasonable especially relative to interest rates at historically low levels which is unequivocally bullish for real and many other investment alternatives. estate. Low borrowing costs may lead to advantageous refinancing and investment opportunities. 5. Strong Investor appetite for yield e. New construction activity remains at reasonable levels – New As interest rates and bond yields have fallen to historically low levels, construction activity has moderated due to increased we believe the search for income-producing securities will eventually construction and labor costs. This serves to buttress real estate stoke strong investment interest in dividend-focused securities like values. REITs and income funds like REIT funds. The 3.5% dividend yield of the REIT Index far exceeds the 0.9% yield of OUR 2021 INVESTMENT THEMES AND PORTFOLIO COMPOSITION the U.S. 10-year Treasury, the 1.5% yield of the S&P 500 Index, and In 2020, we prioritized four key investment themes each of which numerous other income alternatives. contributed to the Fund’s strong performance. Also, we expect REIT dividends to grow and be reinstated if cash flows 2020 Investment Themes improve in 2021. 1. REITs that specialize in providing technology facilities and services 6. Diversification benefits 2. Niche REITs According to FactSet, over the last 20 years (through 12/31/2020), 3. Investments in non-REIT real estate companies REITs have provided diversification benefits due to their low correlation 4. Tactical opportunities in REITs

104 December 31, 2020 Baron Real Estate Income Fund

2021 Investment Themes • Other REITs • Casinos & Gaming Operators In the last few months of 2020, we made tactical adjustments to the • Real Estate Operating Companies portfolio, and reoriented the Fund’s investment themes. Accordingly, we have incorporated a more balanced mix between traditional real estate Most of the real estate businesses that we are prioritizing are cyclically growth companies and real estate value opportunities. depressed – but not secularly challenged. Consequently, we expect the cash flows of many of these real estate businesses to rebound significantly as Currently, we believe a “barbell approach” to the Fund’s 2021 investment people become inoculated with COVID-19 vaccines and normalized themes and portfolio construction is prudent because COVID-19 has led to economic activity resumes. a wide disparity in share price performance and valuations for several REITs and other real estate-related companies. We expect this valuation gap to Despite a recent rebound in the share prices of many of the “COVID-19 narrow if economic activity improves in 2021. recovery beneficiaries,” we believe several companies remain discounted to their likely two- to three-year prospective values. Examples include: If the extreme valuation gap between the 2020 real estate “winners” and “laggards” narrows over the course of 2021, we will likely reorient a Hotel REITs: Pebblebrook Hotel Trust, Park Hotels & Resorts, Inc., significant majority of the Fund’s holdings, once again, toward and Host Hotels & Resorts, Inc. “best-in-class” REITs and real estate-related growth companies. Office REITs: Douglas Emmett, Inc., Boston Properties, Inc., and Importantly, the Fund’s long-term investment philosophy remains the Vornado Realty Trust prioritization of “best-in-class” real estate growth companies. We anticipate maintaining this time-tested strategy. Apartment REITs: Equity Residential The portfolio manager defines “Best-in-class” as well-managed, Gaming REITs: MGM Growth Properties LLC and Gaming and Leisure competitively advantaged, faster growing companies with higher margins Properties, Inc. and returns on invested capital and lower leverage that are leaders in their respective markets. Note that this statement represents the manager’s Mall REITs: Simon Property Group, Inc. opinion and is not based on a third-party ranking. Other REITs: STORE Capital Corporation and American Assets Regarding investment themes for 2021, we continue to believe that multi- Trust, Inc. year growth prospects for REITs specializing in technology facilities and Casinos & Gaming Operators: Wynn Resorts Ltd., Las Vegas Sands services, niche REITs, and investments in certain non-REIT real estate Corporation, Penn National Gaming, Inc., and Red Rock Resorts, Inc. companies remain compelling. Real Estate Operating Companies: Kennedy-Wilson Holdings, Inc., We also believe there is an exciting near-term investment opportunity for Brookfield Infrastructure Partners L.P., and Brookfield Renewable REITs and certain non-REIT real estate companies that lagged in 2020 from Partners L.P. headwinds caused by COVID-19. We expect the business prospects and share prices of several REITs and other real estate laggards to recover in On December 31, 2020, COVID-19 recovery beneficiary companies 2021 if COVID-19 vaccinations are widely administered. represented 38.0% of the Fund’s net assets. 2021 investment themes Table II. COVID-19 recovery beneficiaries as of December 31, 2020 1. COVID-19 recovery beneficiaries Percent of 2. REITs that specialize in providing technology facilities and services Net Assets 3. Niche REITs Casinos & Gaming Operators 11.5% 1. COVID-19 recovery beneficiaries Real Estate Operating Companies 5.9 Gaming REITs 4.8 This investment theme encompasses what we call the “epicenter” REITs and Hotel REITs 3.8 non-REIT real estate companies of the 2020 pandemic. Office REITs 3.7 In 2020, certain REITs and other real estate-related businesses that rely on Apartment REITs 2.5 the assembly of people were severely impacted by COVID-19 as they were Mall REITs 2.4 forced to shut down all or a large part of operations almost without Other REITs 3.4 exception. The share prices of many of these companies declined in 2020 Total 38.0% and remain well below peak prices. 2. REITs that specialize in providing technology facilities and services Examples of COVID-19 recovery beneficiaries include the following real estate categories: Several technology-related REITs performed well in 2020, and their current valuations may be, at this point, somewhat less compelling than one year • Hotel REITs ago. However, while their share prices may not accelerate in the near term • Office REITs to the same extent as other “2021 catch-up” real estate categories, we • Apartment REITs remain long-term bullish on the prospects for several real estate technology • Gaming REITs companies. • Mall REITs • Shopping Center REITs The impact of technology on real estate is undeniable. The growth in cloud • Health Care REITs computing, the internet, mobile data and cellphones, and wireless

105 Baron Real Estate Income Fund

infrastructure are powerful secular drivers that should continue unabated for 3. Niche REITs years and are impacting real estate, along with many other industries. At The Fund sees opportunities in some “unconventional” or “niche” REITs that Baron, we refer to these types of enduring developments as “megatrends.” we believe have the potential to grow faster than a number of traditional or If anything, the pandemic has accelerated these secular trends as more mainstream REITs (i.e., malls, shopping centers, offices, apartments, self- people conduct business, leisure, residential, and commercial activities storage). online. We believe some niche REITs may benefit from their outsized exposure to Real estate-related companies that embrace and adopt the latest secular demand trends and/or reduced exposure to cyclical weaknesses (i.e., technological advances and innovations remain an important focus for us. elevated construction activity and excess supply) witnessed in some of the Key beneficiaries of the technology revolution include data center REITs, traditional REIT peers. wireless tower REITs, and industrial REITs, among others. Data Center REITs: Niche REITs that we favor include: Our data center REITs (Equinix, Inc., Digital Realty Trust, Inc., and Manufactured Housing REITs: CoreSite Realty Corporation) are benefiting from the meteoric growth in We expect our two premier manufactured housing companies in this niche the outsourcing of information technology, increased cloud computing REIT category (Equity Lifestyle Properties, Inc. and Sun Communities, adoption, and the growth in U.S. mobile data and internet traffic. Inc.) to continue to benefit from favorable demand/supply dynamics. The rapid transition to a world of “computer screen meetings and These companies are the prime beneficiaries of strong demand from budget- conferencing” should also benefit data centers due to the need to store a conscious home buyers such as retirees and millennials. Demand for these greater library of data to conduct and support these virtual online meetings. homes is outstripping supply, in part due to high barriers of entry, such as Wireless Tower REITs: local governmental approvals and certain other factors. Both companies have superior prospects for long-term cash flow growth, plus lower capital Our tower REITs (American Tower Corp., SBA Communications Corp., expenditure needs than most other REIT categories. and Crown Castle International Corp.) are, in our view, positioned to grow for several years as the demand for data intensive devices accelerates, and In the aftermath of the economic impact from the Coronavirus, we expect new wireless technologies continue to emerge and improve. demand for both affordable housing and recreational vehicles to accelerate. New technological innovations and greater data demand require a greater Life Science REITs: number of antennae rental space that will continue to benefit tower Alexandria Real Estate Equities, Inc. is the leading owner, operator, and companies. Like data centers, we expect wireless towers to continue to developer of collaborative life science office real estate campuses. We benefit from increased home-based consumer and commercial activity anticipate that additional life science office space may be required as more (online shopping, video streaming, and working from home). funding is directed towards drug development and pharmaceutical and Industrial REITs: biotechnology companies increase their budgets for research and development. We expect business conditions for the Fund’s industrial REIT holdings (Prologis, Inc., Rexford Industrial Realty, Inc., Terreno Realty Cold Storage REITs: Corporation, and Duke Realty Corporation) to rebound and remain strong Americold Realty Trust is a leading owner, operator, and developer of for several years. temperature-controlled warehouses with the largest portfolio of Each of these companies is expected to continue to benefit from robust temperature-controlled warehouses globally. We believe the company is warehouse demand and increased rents. This is due, in part, to broader well positioned to deliver superior growth versus most REITs because of its e-commerce needs resulting from the accelerated growth of online sales as ability to improve occupancy and rents in its current portfolio, exploit and businesses and consumers relentlessly seek faster delivery. develop its own real estate pipeline, and to acquire additional temperature- controlled warehouses. On December 31, 2020, REITs and non-REIT technology-related real estate companies that we expect to directly benefit from long-term technology Americold is also poised to benefit from an acceleration in “e-grocery” growth currently represent approximately 36.8% of the Fund’s net assets. penetration as grocery stores recognize the increased need for additional automated cold storage facilities to streamline inventory replenishment, largely resulting from the rapid increase in consumer food delivery. Table III. Technology-related real estate companies as of December 31, 2020 Single-Family Rental REITs: Percent of Net Assets We are bullish on the prospects for our investment in the single-family rental REIT category (Invitation Homes, Inc. and American Homes 4 Rent) Industrial REITs 11.3% because we believe the demand outlook for single-family home rentals Wireless Tower REITs 10.5 should continue to outstrip supply, thereby creating a favorable backdrop for Data Center REITs 10.1 strong rent and cash flow growth. Non-REIT Technology-Related Real Estate Companies 4.9 Total 36.8% We expect this niche REIT category to continue to benefit from constrained home ownership affordability, high student debt burdens, the preference for

106 December 31, 2020 Baron Real Estate Income Fund

flexibility with renting, and the possibility that, in the aftermath of the We must remain mindful that the Coronavirus pandemic persists and Coronavirus, more people may opt for single-family rentals rather than continues to cause uncertainty for the economic, real estate, and stock multi-family dwellings. market landscape. Additional factors that could weigh on the outlook Triple Net REITs: include political cross currents, interest rate concerns, and geopolitical tensions, to name just a few. Our gaming REITs (MGM Growth Properties LLC and Gaming and Leisure Properties, Inc.) own quality casino and gaming real estate properties. Both Yet, despite this lack of clarity regarding the economic and market outlook, have attractive and well-covered dividends, accretive acquisition growth as we peer into 2021, we believe there are valid reasons for optimism. opportunities, and are, in our opinion, compelling investments. Our “big picture” view is that several key economic and market risks On December 31, 2020, niche REITs represented approximately 28.5% of should recede in the year ahead: the Fund’s net assets. • Many of the key concerns of 2020 – the COVID-19 pandemic, U.S. Table IV. election controversies, global trade war – should diminish in 2021. Niche REITs as of December 31, 2020 • Widespread inoculation of COVID-19 vaccines should lead to an easing Percent of of mobility restrictions, improvement in employment, and a Net Assets continuation of the economic recovery. Single-Family Rental REITs 7.1% • Corporate earnings should bounce back, fueled by the release of pent-up Triple Net REITs 6.8 demand, improving profitability margins, and an increase in corporate Manufactured Housing REITs 6.1 investment activity such as mergers & acquisitions and share buybacks. Life Sciences REITs 3.2 • The double barrel of exceptionally favorable monetary and fiscal Cold Storage REITs 2.3 support should begin to work as the global economy further reopens. Other REITs 3.0 • Many companies and consumers have maintained record cash levels due to the uncertain outlook in 2020. We expect corporations and Total 28.5% consumers to spend more cash as economic and employment Baron Real Estate Income Fund currently has investments in several REIT prospects improve. Various companies are likely to increase capital categories and non-REIT real estate companies. Our percentage allocations expenditures, pursue mergers and acquisitions, repay debt, and return to these categories vary, and they are based on our research and assessment capital to shareholders in the form of dividends and share buybacks. of opportunities in each category (see Table V. below). • Additional reasons to be optimistic: Inflation concerns seem well off the radar. The U.S. banking system has improved dramatically and is Table V. maintaining strong capital ratios. Substantial private capital is in Fund investments in REIT categories as of December 31, 2020 pursuit of real estate and remains supported by widely available debt Percent of capital at low interest rates. Fund flows may be directed away from Net Assets bonds to equities given historically low interest rates and unappealing Non-REIT Real Estate Companies 23.9% return prospects for most fixed income alternatives. Industrial REITs 11.3 Although there are clear differences in the prospects for various REITs and Wireless Tower REITs 10.5 non-REIT real estate companies, we believe conditions are in place for Data Center REITs 10.1 much of the real estate sector to perform well in the year ahead. Other REITs 10.0 Single-Family Rental REITs 7.1 Baron Real Estate Income Fund Outlook Triple Net REITs 6.8 We remain optimistic about the prospects for the Baron Real Estate Manufactured Housing REITs 6.1 Income Fund. Hotel REITs 3.8 Office REITs 3.7 In addition to the reasons cited above, we are also enthusiastic about the Multi-Family REITs 2.5 prospects for the Fund because: Mall REITs 2.4 • We believe the quality of the Fund’s holdings is as strong as it has ever Cash and Cash Equivalents 1.8 been. Total 100.0% We have carefully and meticulously assembled a portfolio of REITs and non-REIT real estate companies that we believe should provide strong OUR CONCLUDING THOUGHTS AND OBSERVATIONS risk-adjusted returns. We have consistently stated that no one has a crystal ball regarding the outlook for the stock, bond, or real estate markets. The businesses that we continue to emphasize are well managed, have market-leading positions, possess quality balance sheets, own well- This past year, 2020, was a pointed example of the challenges of predicting located real estate, and grow cash flow at a faster rate than most of the future. their peers. The surprising breakout of a global pandemic – the Coronavirus – was an The businesses that we tend to emphasize also have unique competitive unexpected curveball that led to unprecedented health, medical, economic, advantages, deliver compelling acquisition and development returns, and humanitarian distress. This human tragedy also triggered stock market and operate relatively capital efficient business models. turmoil early in 2020.

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• We believe the Fund is structured to capitalize on compelling Final thoughts on the Fund’s three-year anniversary investment themes. Three years ago, we launched our second real estate fund, the Baron Real – COVID-19 recovery beneficiaries (several REIT categories and Estate Income Fund. non-REIT real estate companies) At that time, we stated that we were optimistic about the long-term – REITs that specialize in providing technology facilities and services prospects for both of our real estate funds – the Baron Real Estate Income (data center, wireless tower, and industrial REITs) Fund and the Baron Real Estate Fund. – Niche REITs (single-family rental, manufactured housing, cold We also said that both funds would be highly complementary to each other. storage, life science, and gaming REITs) On our third anniversary, we are pleased that the Fund delivered strong • Valuations for several REITs and non-REIT real estate segments are results and we have continued to be successful in capitalizing on Baron’s compelling. The valuations of a significant portion of the Fund’s real long history of investing in real estate. estate companies remain “on sale” at highly appealing prices. I would like to thank my assistant portfolio manager, David Kirshenbaum, and the other primary members of our real estate research team, David • Classic REIT attributes such as yield will remain in demand. We expect Baron and George Taras, for their excellent work and partnership. investors to continue to search for yield in a low interest rate environment, and this should aid REITs, other dividend-yielding real We remain highly determined to diligently research, select, and monitor a estate companies, and real estate companies broadly. high-quality portfolio of companies with solid executive management, strong growth prospects, leading competitive positions, liquid balance Table VI. sheets, and attractive valuations. We are enthusiastic about our investments Top 10 holdings as of December 31, 2020 and are optimistic about prospects for the portfolio. Quarter End I sincerely thank you, our loyal shareholders, and express my utmost Quarter End Investment Market Cap Value Percent of gratitude for your past and continuing support during the past three years. (billions) (millions) Net Assets Of course, I proudly continue as a major shareholder of the Baron Real American Tower Corp. $99.7 $3.0 6.3% Estate Income Fund, alongside you. Prologis, Inc. 73.6 2.7 5.8 Las Vegas Sands Corporation 45.5 2.4 5.1 Sincerely, Equinix, Inc. 63.6 2.4 5.1 Invitation Homes, Inc. 16.6 2.3 4.9 Equity Lifestyle Properties, Inc. 11.5 1.7 3.6 Alexandria Real Estate Equities, Inc. 24.0 1.5 3.2 Brookfield Infrastructure Partners L.P. 20.6 1.5 3.2 Jeffrey Kolitch CoreSite Realty Corporation 6.1 1.4 3.0 Portfolio Manager Colony Capital, Inc. 2.3 1.4 3.0 January 20, 2021

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: 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. 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. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Real Estate Income Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such an offer or solicitation. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

108 December 31, 2020 Baron WealthBuilder Fund

Dear Baron WealthBuilder Fund Shareholder: Performance

Baron WealthBuilder Fund (the “Fund”) rose considerably in the final quarter of 2020 and outpaced its comparable benchmarks and peer group. The Fund gained 23.11% (Institutional Shares) in the quarter. The S&P 500 Index (the “Index”) and the MSCI ACWI Index were up 12.15% and 14.68%, respectively. The Morningstar Allocation 85%+ Equity Category Average rose 15.58%. The Fund’s quarterly performance capped an excellent year on both an absolute and relative basis. The Fund rebounded significantly from the depths of the COVID-19-induced market panic in March, and that strong performance continued throughout the latter part of the year. The Fund advanced 62.85% in 2020. This performance again compares favorably to its benchmarks and peer group. The S&P 500 Index gained 18.40% for the year, and the MSCI ACWI Index increased 16.25% and the Morningstar Allocation 85%+ Equity Category Average was up 15.41%.

Table I. MICHAEL BARON RONALD BARON Retail Shares: BWBFX CO-PORTFOLIO CEO AND LEAD PORTFOLIO Institutional Shares: BWBIX Performance MANAGER MANAGER TA Shares: BWBTX Annualized for periods ended December 31, 2020 Baron Baron Wealth Wealth Baron Builder Builder Wealth Fund Fund Builder S&P MSCI Retail Institutional Fund TA 500 ACWI underlying investments of varying market caps, geographies, sectors, and Shares1,2 Shares1,2 Shares1,2 Index1 Index1 growth rates. Each underlying Baron Fund portfolio implements the Three Months3 22.99% 23.11% 23.03% 12.15% 14.68% consistent Baron Capital investment process and philosophy. And after three One Year 62.45% 62.85% 62.85% 18.40% 16.25% years, the approach has been successful. The Fund had an annualized average Three Years and return since inception of 27.67%. This compares to an annualized return of Since Inception 14.18% for the S&P 500 Index and 10.06% for the MSCI ACWI Index. While (December 29, 2017) 27.40% 27.67% 27.67% 14.18% 10.06% underlying Baron Funds charge their institutional management fees, there is no management fee for Baron WealthBuilder Fund. The Fund’s annualized We launched Baron WealthBuilder Fund three years ago believing that expensesarecappedat5basispoints.TheFundalsoranksasthe#1fundin allocating among various Baron Funds would provide benefits of its Morningstar category as of 12/31/2020. We are extremely satisfied and diversification without sacrificing returns. We created a single fund with proud of these results.

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares, Institutional Shares, and TA Shares as of December 31, 2019 was 1.57%, 1.33%, and 1.33%, respectively, but the net annual expense ratio was 1.48%, 1.23%, and 1.23% (includes acquired fund fees, 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. BAMCO, Inc. (‘BAMCO” or the “Adviser”) has agreed that, pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term, 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 nest 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, 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 Morningstar Allocation – 85%+ Equity Category consisted of 163 and 154 share classes for the 1-year and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund (Institutional Shares) in the 1st and 1st percentiles, respectively. Morningstar calculates the Morningstar Allocation – 85%+ Equity category average performance and rankings using its Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. 1 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. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. MSCI is a trademark of Russell Investment Group. The indexes and the Fund are with dividends, which positively impact the performance results. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. BARON 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. FUNDS 3 Not annualized.

109 Baron WealthBuilder Fund

We are optimistic that the end of the COVID-19 pandemic is within sight. that had been occurring, and we think they are likely to continue. Scientific research and discovery have led to many viable vaccines, which Telemedicine, cybersecurity, sustainable energy, and drug development are are now in the process of being administered. Governments continue to important themes that are likely to persist even after the pandemic provide financial assistance to their citizens and various industries. And the concludes. Additionally, well-capitalized strategic and financial acquirers incoming new Presidential administration in the U.S. has pledged to make many of these businesses attractive targets. Pacific Biosciences of continue this support while also taking steps to hinder the virus’ spread. California, Inc. is an example of one small-cap stock that contributed to These developments have been well received by investors. performance. This business has been able to significantly reduce DNA sequencing costs by increasing sensor throughputs. The lower cost makes We continue to analyze the Fund’s performance in 2020 during various this technology cost effective for diagnosing, monitoring, and treating periods: Pre-COVID-19, the COVID-19 Panic, and the COVID-19 Temporary cancers. We believe its addressable market could expand significantly to Normal. The Fund’s investments vary across market caps, sectors, other applications in the coming years. geographies, and growth rates, and we explained in previous quarterly reports how each performed in these different environments. Please see Many of our sector funds, including Baron Real Estate and Baron Health Care Table II for our update. Funds, also meaningfully outperformed their respective benchmarks. These funds are positioned in the attractive, higher-growth segments within their We are hopeful that the end of 2020 coincides with the end of this sectors. The flexibility of the Baron Real Estate Fund allowed it to move “COVID-19 Temporary Normal” period. Over the past year, individuals and away from the COVID-19-impacted travel-related businesses. The Baron businesses were forced to adapt many of their practices because of the Real Estate Fund redeployed capital to unique and well-located assets that pandemic. While many mandated restrictions will likely ease throughout the we thought were significantly undervalued. They are real estate businesses upcoming year, we believe many changes made by both businesses and that are capitalizing on an altered economic landscape. Demand for single- individuals will endure. family housing, data centers, and distribution centers should continue. We High-growth Baron portfolios have again had the most sizable impact in the believe this positioning makes Baron Real Estate Fund less cyclical than quarter. They include Baron Partners, Baron Focused Growth, and Baron others in the sector. Baron Health Care Fund favored life science tools and Opportunity Funds. Tesla, Inc., home transaction facilitators Zillow Group, services as well as biotechnology. Those businesses are creating platforms to Inc. and Opendoor Technologies Inc., and Space Exploration enable improved patient outcomes. Baron Health Care Fund owns Technologies Corp. (“SpaceX”) were large contributors. Tesla deliveries companies like Arrowhead Pharmaceuticals, Inc., a developer of RNAi were up 36% in the year despite restrictions that led to factory shutdowns therapeutics. Arrowhead is developing drugs that inhibit disease-causing for brief periods. Zillow’s mortgage business reached an inflection point in genes. We expect the applications for this treatment technique to expand the recently reported period with 114% growth compared to the prior year. rapidly in the coming years to new diseases and organs. And SpaceX had a record number of launches (26) and a record number of The Fund’s holdings in mid- and large-cap portfolios, including Baron Asset, flights (7) using the same booster. Its operational satellites increased nearly Baron Durable Advantage, and Baron Fifth Avenue Growth Funds, 8 times, which enabled it to begin the beta test of Starlink, its internet underperformed their benchmarks in the quarter as well as small-cap service. indexes. The underlying funds were underexposed to the Energy sector and semiconductor sub-industry. Those two sectors reacted favorably to the Not only have these companies exhibited an ability to continue their growth upcoming increased economic activity facilitated by the vaccine. However, despite COVID restrictions, clients are unlikely to fully return to pre-pandemic many of those businesses’ products are commoditized, and these funds have antiquated business practices. Tesla has pioneered over the air vehicle updates tended to avoid them. Instead, higher-growth technology-enabled and eliminated many of the in-person service requirements. These updates businesses are heavily represented in these portfolios. These companies have improved the Tesla vehicle’s functionality and increased its value to performed well in the earlier days of the pandemic, yet they underperformed consumers after purchase. Historically, competitors’ cars drop in value by the more cyclical companies in this current quarter. We anticipate the more than 20% upon leaving the dealership. Zillow and Opendoor have higher-growth and competitively advantaged businesses found in these facilitated home transactions without physically visiting properties. They have funds will do well over the longer term. improved efficiency and transparency throughout this once opaque process. And SpaceX has dramatically reduced the cost to reach orbit through its We are very pleased with the Fund’s performance in the fourth quarter, for largely reusable equipment. The data transmission that its satellites enable the year, and since inception. Most companies held in the underlying funds will be increasingly more important in the future. Incumbent launch continued their growth despite the unprecedented global pandemic and organizations will be unable to attain such cost levels using their outdated hardship. In 2020, there was substantial change in many parts of the disposable rockets. economy. We believe the high-quality growth businesses in the Fund are well positioned to not only benefit from, but also enable much of this Baron funds that invested in smaller-cap growth companies, including Baron continued transformation. Discovery, Baron Small Cap, and Baron Growth Funds, outperformed their larger counterparts in the quarter. These companies are in the earlier stages We encourage you to read the various quarterly letters found in this report of executing their business plans, which could significantly alter their for a deeper understanding of the funds that compose Baron WealthBuilder respective industries. The pandemic accelerated many of the business trends Fund.

110 December 31, 2020 Baron WealthBuilder Fund

Table II. Performance by COVID-19 periods COVID-19 Temporary Pre-COVID-19 COVID-19 Panic Normal 12/31/2019 to Peak Peak to Trough Trough to Cumulative (2/19/2020)† (3/23/2020)† 12/31/2020† 2020 Small Cap Baron Discovery Fund 10.62% –37.33% 139.62% 66.13% Baron Growth Fund 11.65% –41.12% 102.40% 33.06% Baron Small Cap Fund 9.19% –39.42% 112.67% 40.68% Small/Mid Cap Baron Focused Growth Fund 25.88% –41.89% 204.51% 122.75% Mid Cap Baron Asset Fund 8.13% –34.10% 87.10% 32.33% Large Cap Baron Fifth Avenue Growth Fund 12.11% –28.71% 88.69% 50.81% Baron Durable Advantage Fund 8.05% –33.57% 67.63% 20.32% All Cap Baron Opportunity Fund 17.11% –28.68% 126.63% 89.28% Baron Partners Fund 30.87% –50.76% 286.65% 149.18% International Baron Emerging Markets Fund 2.03% –33.62% 90.79% 29.22% Baron Global Advantage Fund 15.52% –27.32% 113.74% 79.46% Baron International Growth Fund 2.17% –32.06% 88.49% 30.83% Sector Baron Real Estate Fund 7.05% –37.85% 116.87% 44.28% Baron Health Care Fund 7.97% –28.32% 90.85% 47.72% Baron FinTech Fund 13.00% –34.34% 98.38% 47.20% Baron WealthBuilder Fund 13.84% –38.48% 132.53% 62.85% S&P 500 Index 5.08% –33.79% 70.18% 18.40% MSCI ACWI Index 2.74% –33.64% 70.51% 16.25%

† Not annualized. The peak and trough dates are based on the S&P 500 Index. An investor cannot invest directly in an index.

111 Baron WealthBuilder Fund

Table III. Baron Funds Performance As of December 31, 2020

Institutional Share Class Data

Annualized Annualized % of Net Assets Fourth Quarter 12/29/17 to Fourth Quarter 12/29/17 to of Fund of 2020* 12/31/20 Primary Benchmark of 2020* 12/31/20 28.1% Small Cap 4.0% Baron Discovery Fund 25.54% 28.48% Russell 2000 Growth Index 29.61% 16.20% 12.2% Baron Growth Fund 21.10% 22.08% 11.9% Baron Small Cap Fund 17.59% 20.78% 4.6% Small/Mid Cap 4.6% Baron Focused Growth Fund 32.35% 44.56% Russell 2500 Growth Index 25.89% 19.91% 13.0% Mid Cap 13.0% Baron Asset Fund 15.21% 22.58% Russell Midcap Growth Index 19.02% 20.50% 7.0% Large Cap 5.7% Baron Fifth Avenue Growth Fund 8.15% 27.09% Russell 1000 Growth Index 11.39% 22.99% 1.3% Baron Durable Advantage Fund 7.62% 15.07%† S&P 500 Index 12.15% 13.73%† 26.8% All Cap 6.4% Baron Opportunity Fund 23.02% 42.34% Russell 3000 Growth Index 12.41% 22.50% 20.4% Baron Partners Fund 42.87% 52.68% Russell Midcap Growth Index 19.02% 20.50% 12.0% International 3.8% Baron Emerging Markets Fund 20.48% 7.78% MSCI EM Index 19.70% 6.17% 5.9% Baron Global Advantage Fund 17.33% 34.24%† MSCI ACWI Index 14.68% 9.08%† 2.3% Baron International Growth Fund 18.56% 11.70% MSCI ACWI ex USA Index 17.01% 4.88% 8.5% Sector 4.6% Baron Real Estate Fund 16.79% 17.56% MSCI USA IMI Extended Real Estate Index 10.35% 6.60% 2.2% Baron Health Care Fund 17.09% 29.95%† Russell 3000 Health Care Index 10.08% 14.59%† 1.7% Baron FinTech Fund 13.67% 46.03%*† S&P 500 Index 12.15% 28.03%*†

* Not annualized. † Performance is calculated from the time the Fund was added to Baron WealthBuilder Fund: Baron Durable Advantage Fund – 3/13/2018; Baron Global Advantage Fund – 1/9/2018; Baron Health Care Fund – 10/18/2018; and Baron FinTech Fund – 2/27/2020. An investor cannot invest directly in an index. Fund of Funds Structure and Investment Strategy

Combining our top performing portfolios into one Fund has not only Baron WealthBuilder Fund closely mimics the way we would incrementally produced category leading returns, but it also has generated 3-year invest across our various funds and strategies. The Fund allows investors to performance characteristics that we believe are stellar. Compared to the diversify across several Baron Funds’ products, gain exposure to various Index, the Fund’s alpha is 9.43%, yet its beta is only 1.23. Its Sharpe ratio, a market caps, sectors, and geographies in a single structure, and have us measure of return per level of risk, is 1.07 compared to the Index’s 0.67. And rebalance the allocations in a tax efficient manner. The portfolio managers its upside capture of 132.55%, we believe, is even more impressive when of each underlying fund abide by the same core investment process and viewed alongside its downside capture of only 96.65%. philosophy, focused on proprietary research to discover competitively advantaged businesses with immense opportunities led by smart and Table IV. honorable executives. Baron Funds has had broad historical success. Our Performance Based Characteristics for the 3-year period ended December 31, 2020 investment approach and process have yielded outstanding results since Baron Morningstar the Firm’s founding in 1982. As of 12/31/2020, 16 of 17 Baron Funds, Wealth Allocation representing 98.3% of Baron Funds’ assets under management (“AUM”), Builder S&P 85%+ Equity Fund 500 Index Category have outperformed their respective passive benchmark since their inceptions. In addition, 14 of those funds, representing 98.2% of Baron Alpha (%) – Annualized 9.43 0.00 -4.56 Beta 1.23 1.00 0.97 Fund’s AUM, rank in the top 22% of their respective Morningstar Sharpe Ratio 1.07 0.67 0.38 categories; and 11 funds, representing 70.9% of AUM, rank in the top 7%. Standard Deviation (%) – Annualized 24.35 18.79 18.55 This strong relative performance has continued. Since their inclusion in Upside Capture (%) 132.55 100.00 85.04 Baron WealthBuilder Fund, all underlying funds have exceeded their Downside Capture (%) 96.65 100.00 100.91 respective benchmarks. We have always strived to provide top performance Source: FactSet SPAR. Except for Standard Deviation and Sharpe Ratio, the performance in various asset categories. Baron WealthBuilder Fund allows individuals to based characteristics above were calculated relative to the S&P 500 Index. gain access to a variety of these strategies in a single fund. We are very The Fund's inception date was 12/31/2017. pleased with the composition and results.

112 December 31, 2020 Baron WealthBuilder Fund

The makeup of the underlying investments looks very different than the Table V. Fund’s key indexes. Therefore, the Fund has a high Active Share when Sector exposures as of December 31, 2020 measured against its benchmarks. We feel the diversity in regions and Percent sectors should dampen risk while still providing strong absolute returns. of Net S&P MSCI Assets 500 Index ACWI Index While holding nearly the same number of securities as its primary benchmark (468 in the underlying Funds vs. 502 in the S&P 500 Index), the Consumer Discretionary 26.3% 12.7% 13.0% similarities end there. The holdings in the underlying funds have a lower Information Technology 21.8 27.6 21.9 dividend yield on average (0.3% vs. 1.5% for the S&P 500 Index), with Health Care 15.3 13.5 11.9 companies electing to reinvest earnings back in their businesses for growth. Industrials 11.5 8.4 9.7 And the approach is working; the projected earnings per share growth rate Financials 10.1 10.4 13.5 over the next three to five years is 21.8% for the Funds’ holdings vs. 12.3% Communication Services 7.4 10.8 9.3 for the S&P 500 Index (or 77.2% higher growth). We think that many of our Real Estate 4.6 2.4 2.6 investments can exceed those stated projections. These businesses have Materials 0.9 2.6 4.9 grown over twice as fast as the Index over the preceding year (the Funds’ Consumer Staples 0.7 6.5 7.4 one-year historical earnings per share growth rate on average was 14.0% vs. Unclassified 0.3 – – the S&P 500 Index’s 6.6%). Yet these companies are only 36.9% more Energy 0.2 2.3 3.0 expensive than the S&P 500 Index’s holdings (the Funds’ trailing Utilities – 2.8 3.0 price-to-earnings ratio on average was 38.2 times vs. 27.9 times for the S&P 500 Index). We feel that this valuation metric is misleading for the Funds’ Table VI. holdings as many have depressed margins as they sacrifice current Country exposures as of December 31, 2020 profitability for more sustainable and higher long-term growth rates. Higher Percent growth for a modest premium in price should, we believe, reward long-term of Net S&P MSCI investors. Assets 500 Index ACWI Index United States 83.7% 100.0% 57.2% The portfolio is also distinct in its sector weightings. The S&P 500 Index has China 4.1 5.2 a higher share of Consumer Staples, Energy, Materials, and Utilities United Kingdom 2.1 3.8 businesses than our Fund. These sectors typically consist of defensive Netherlands 1.5 1.0 companies that have been traditionally important but have limited unique Israel 1.3 0.2 characteristics, future growth prospects, and are heavily reliant on India 1.1 1.2 unpredictable commodity prices. Combined, those sectors represented Canada 1.0 2.7 14.2% of the S&P 500 Index, yet they accounted for only 1.8% of the Fund. Brazil 0.9 0.7 Instead, the Fund favors Consumer Discretionary, Health Care, Industrials, Argentina 0.5 0.1 Real Estate, and segments of Information Technology where companies’ Sweden 0.4 0.9 competitive advantages are more apparent and growth projections more Other 2.5 27.0 robust. Those sectors account for 79.5% of the Fund, yet only 64.6% of the Index. Table VII. Finally, the Fund has exposure to non-U.S. companies unlike the S&P 500 Fund of fund holdings as of December 31, 2020 Index, whose constituents are solely in domestic businesses. We anticipate Percent the diversity to provide benefits, such as lower volatility over time. The Fund of Net is also differentiated from the global coverage of the MSCI ACWI Index. Assets North America was 59.7% of the MSCI ACWI Index compared to 84.7% for Baron Partners Fund 20.4% the Fund. The greater international exposure for the MSCI ACWI Index is Baron Asset Fund 13.0 heavily skewed towards slow growth developed markets, whereas the Fund Baron Growth Fund 12.2 seeks faster growth in emerging economies. Of the Fund’s non-U.S. Baron Small Cap Fund 11.9 investments, 38.6% were in Asia/Pacific ex-Japan. This region represented Baron Opportunity Fund 6.4 32.1% for the MSCI ACWI Index. However, the MSCI ACWI Index had 56.4% Baron Global Advantage Fund 5.9 of its non-U.S. investments in slower growth European and Japanese Baron Fifth Avenue Growth Fund 5.7 companies while these regions only represented 36.1% of the Fund. Baron Focused Growth Fund 4.6 Baron Real Estate Fund 4.6 Baron Discovery Fund 4.0 Baron Emerging Markets Fund 3.8 Baron International Growth Fund 2.3 Baron Health Care Fund 2.2 Baron FinTech Fund 1.7 Baron Durable Advantage Fund 1.3

113 Baron WealthBuilder Fund

Thank you for joining us as fellow shareholders in Baron WealthBuilder Fund. Respectfully, We continue to work hard to justify your confidence and trust in our stewardship of your hard-earned savings. We will also remain dedicated to continuing to provide you with the information we would like to have if our roles were reversed. We hope this letter enables you to make an informed decision about whether this Fund remains an appropriate investment. Ronald Baron Michael Baron CEO and Portfolio Manager Assistant Portfolio Manager January 20, 2021 January 20, 2021 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: 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. Active Share: a term used to describe the share of a portfolio’s holdings that differ from that portfolio’s benchmark index. It is calculated by comparing the weight of each holding in the Fund to that holding’s weight in the benchmark. Positions with either a positive or negative weighting versus the benchmark have Active Share. An Active Share of 100% implies zero overlap with the benchmark. Active Share was introduced in 2006 in a study by Yale academics, M. Cremers and A. Petajisto, as a measure of active portfolio management. 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 is 1.00 by definition. EPS Growth Rate (3-5-year forecast) indicates the long-term forecasted EPS growth of the companies in the portfolio, calculated using the weighted average of the available 3-to-5 year forecasted growth rates for each of thestocksintheportfolio provided by FactSet Estimates. The EPS Growth rate does not forecast the Fund’s performance. Price/Earnings Ratio (trailing 12-months): is a valuation ratio of a company’s current share price compared to its actual earnings per share over the last twelve months. If a company’s actual EPS is negative, it is excluded from the portfolio level calculation. Sharpe Ratio is a risk-adjusted performance statistic that measures reward per unit of risk. The higher the Sharpe ratio, the better a fund’s risk adjusted performance. Upside Capture explains how well a fund performs in time periods where the benchmark’s returns are greater than zero. Downside Capture measures how well a fund performs in time periods where the benchmark’s returns are less than zero. Standard Deviation (Std. Dev) measures the degree to which a fund’s performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a fund’s volatility (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 obligationtoupdatethem. 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 the Retail Share Class and is as of 12/31/2020. 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 average performance and rankings using its Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. The Morningstar Mid-Cap Growth Category consisted of 604, 504, and 383 share classes for the 1-, 5-, and 10-year periods. Morningstar ranked Baron Asset Fund in the 53rd,27th,20th and 22nd percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 6/12/1987, and the category consisted of 20 share classes. Morningstar ranked Baron Growth Fund in the 54th,28th,34th, and 7th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/1994, and the category consisted of 56 share classes. Morningstar ranked Baron Partners Fund in the 1st,1st, 1st, and 1st percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 4/30/2003, and the category consisted of 227 share classes. Morningstar ranked Baron Focused Growth Fund in the 3rd,2nd,5th, and 5th percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 6/30/2008, and the category consisted of 326 share classes. The Morningstar Small Growth Category consisted of 616, 505, and 381 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Small Cap Fund in the 38th,33rd,45th, and 16th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 9/30/1997, and the category consisted of 94 share classes. Morningstar ranked Baron Discovery Fund in the 9th,5th, and 3rd percentiles for the 1-, 5-year, and since inception periods, respectively. The Fund launched 9/30/2013, and the category consisted of 439 share classes. The Morningstar Real Estate Category consisted of 248, 199, and 144 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Real Estate Fund in the 1st,3rd,1st, and 1st percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/2009, and the category consisted of 131 share classes. Morningstar ranked Baron Real Estate Income Fund in the 4th and 4th percentiles for the 1-year and since inception periods, respectively. The Fund launched 12/29/2017, and the category consisted of 225 share classes. The Morningstar Large Growth Category consisted of 1,289, 1,070, 789, and 291 share classes for the 1-, 5-, 10-year, and since inception (2/29/2000) periods. Morningstar ranked Baron Opportunity Fund in the 2nd,2nd,7th, and 4th percentiles, respectively. The Morningstar Foreign Large Growth Category consisted of 447, 313, 226, and 207 share classes for the 1-, 5-, 10-year, and since inception (12/31/2008) periods. Morningstar ranked Baron International Growth Fund in the 21st,18th,26th, and 12th percentiles, respectively. The Morningstar Diversified Emerging Markets Category consisted of 796, 597, and 278 share classes for the 1-, 5-year, and since inception (12/31/2010) periods. Morningstar ranked Baron Emerging Markets Fund in the 17th,35th, and 3rd percentiles, respectively. The Morningstar World Large Stock Category consisted of 867, 631, and 438 share classes for the 1-, 5-year, and since inception (4/30/2012) periods. Morningstar ranked Baron Global Advantage Fund in the 3rd, 1st, and 1st percentiles, respectively. The Morningstar Health Category consisted of 157 and 139 share classes for the 1-year and since inception (4/30/2018) periods. Morningstar ranked Baron Health Care Fund in the 13th and 7th percentiles, respectively. The Morningstar Allocation – 85%+ Equity Category consisted of 163 and 154 share classes for the 1-year and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund in the 2nd and 2nd percentiles, respectively. © 2021 Morningstar. All Rights Reserved. The 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. Past performance is no guarantee of future results. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

114 December 31, 2020 Baron WealthBuilder Fund

Baron Funds (Institutional Shares) and Benchmark Performance 12/31/2020

Annualized Annualized Benchmark Return Since Return Since Inception Average Annualized Returns Annual Fund Primary BenchmarkFund Inception Fund Inception Date 1-Year 3-Year 5-Year 10-Year Expense Ratio Net Assets SMALL CAP Baron Growth Fund Russell 2000 Growth Index 14.16% 9.04% 12/31/1994 33.06% 22.08% 19.76% 15.06% 1.04%(3) $8.66 billion Baron Small Cap Fund Russell 2000 Growth Index 11.49% 7.43% 9/30/1997 40.68% 20.78% 19.88% 14.47% 1.05%(3) $5.08 billion Baron Discovery Fund† Russell 2000 Growth Index 20.99% 12.86% 9/30/2013 66.13% 28.48% 28.52% N/A 1.08%(3) $1.32 billion SMALL/MID CAP Baron Focused Growth Fund(1) Russell 2500 Growth Index 14.68% 9.42% 5/31/1996 122.75% 44.56% 31.03% 18.83% 1.11%/1.10%(4) $662.73 million MID CAP Baron Asset Fund Russell Midcap Growth Index 12.47% 11.03%(2) 6/12/1987 33.33% 22.58% 19.93% 15.64% 1.05%(3) $5.91 billion LARGE CAP Baron Fifth Avenue Growth Fund Russell 1000 Growth Index 11.88% 12.00% 4/30/2004 50.81% 27.09% 23.24% 18.10% 0.78%/0.75%(3)(6) $712.95 million Baron Durable Advantage Fund S&P 500 Index 16.34% 14.18% 12/29/2017 20.32% 16.34% N/A N/A 2.40%/0.70%(3)(7) $17.18 million ALL CAP Baron Partners Fund(1) Russell Midcap Growth Index 16.52% 10.85% 1/31/1992 149.18% 52.68% 37.40% 24.04% 1.96%(4)(5) $6.88 billion Baron Opportunity Fund† Russell 3000 Growth Index 10.73% 6.57% 2/29/2000 89.28% 42.34% 31.13% 19.09% 1.08%(3) $1.41 billion INTERNATIONAL Baron Emerging Markets Fund MSCI EM Index 7.13% 3.63% 12/31/2010 29.22% 7.78% 12.88% 7.13% 1.09%(4) $6.75 billion Baron Global Advantage Fund† MSCI ACWI Index 21.09% 10.29% 4/30/2012 79.46% 35.99% 30.14% N/A 1.00%/0.90%(4)(8) $2.41 billion Baron International Growth Fund MSCI ACWI ex USA Index 12.71% 8.08% 12/31/2008 30.83% 11.70% 14.17% 8.82% 1.04%/0.95%(4)(9) $611.90 million SECTOR Baron Real Estate Fund MSCI USA IMI Extended Real Estate Index 16.70% 11.76% 12/31/2009 44.28% 17.56% 15.97% 15.72% 1.08%(4) $1.05 billion Baron Real Estate Income Fund MSCI US REIT Index 14.11% 2.25% 12/29/2017 22.30% 14.11% N/A N/A 5.63%/0.80%(4)(10) $47.07 million Baron Health Care Fund Russell 3000 Health Care Index 27.43% 17.23% 4/30/2018 47.72% N/A N/A N/A 2.39%/0.85%(4)(11) $70.34 million Baron FinTech Fund S&P 500 Index 47.20% 18.40% 12/31/2019 47.20% N/A N/A N/A 1.62%/0.95%(12) $34.09 million FUND OF FUNDS Baron WealthBuilder Fund S&P 500 Index 27.67% 14.18% 12/29/2017 62.85% 27.67% N/A N/A 1.33%/1.23%(4)(13) $272.62 million

115 Baron Health Care Fund

DEAR BARON HEALTH CARE FUND SHAREHOLDER: PERFORMANCE

In the quarter ended December 31, 2020, Baron Health Care Fund (the “Fund”) advanced 17.09% (Institutional Shares), compared with the 10.08% gain for the Russell 3000 Health Care Index (the “Benchmark”) and the 12.15% gain for the S&P 500 Index. For the full-year 2020, the Fund increased 47.72% (Institutional Shares) compared with the 19.34% increase for the Benchmark and the 18.40% gain for the S&P 500 Index. Since inception (April 30, 2018), the Fund increased 27.43% (Institutional Shares) on an annualized basis compared with the 17.23% gain for the Benchmark and the 16.25% gain for the S&P 500 Index.

Table I. Performance For periods ended December 31, 2020 Baron Baron Health Health Russell Care Care 3000 Fund Fund Health S&P NEAL KAUFMAN Retail Shares: BHCFX Retail Institutional Care 500 Institutional Shares: BHCHX 1,2 1,2 1 1 Shares Shares Index Index PORTFOLIO MANAGER R6 Shares: BHCUX Three Months3 17.01% 17.09% 10.08% 12.15% One Year 47.40% 47.72% 19.34% 18.40% Since Inception Strength in biotechnology came from Arrowhead Pharmaceuticals, Inc.,a (April 30, 2018) 27.10% 27.43% 17.23% 16.25% developer of RNAi therapeutics for a long list of diseases, and BridgeBio Pharma, Inc., which operates a novel decentralized model of drug The Fund meaningfully outperformed the Russell 3000 Health Care Index by development focused on genetic medicine. The companies were among the 701 basis points during the quarter, primarily due to favorable stock selection. three largest contributors to absolute performance after their stock prices The Fund also benefited from exposure to smaller-cap stocks, which each appreciated 79% in the period. Performance in the sub-industry was significantly outperformed their larger-cap counterparts in the sharp market also bolstered by Chinese biotechnology company Zai Lab Limited, which is advance during the quarter. Investments in life sciences tools & services, bringing a portfolio of in-licensed therapies from Western biotechnology, and health care technology contributed the most to relative biopharmaceutical companies to the newly opened and fast-growing health performance. Stock selection in life sciences tools & services accounted for care market in China. Zai’s shares continued to move higher as investors nearly two-thirds of the Fund’s outperformance, driven by long-read DNA believe the company is well positioned to become a leader in the delivery of sequencing systems provider Pacific Biosciences of California, Inc. The drugs to the Chinese health care market. company was the top contributor due to increasing excitement about the potential for its platform as it lowers sequencing costs and seeks to move The Fund’s largest position in health care technology, Schrodinger, Inc., beyond its current commercial niche. Seer, Inc., which develops innovative added the most value. Schrodinger’s shares rebounded following the solutions that act as a gateway to the proteome (the collection of proteins in a announcement of a multi-year, multi-target agreement with Bristol-Myers sample), also performed well after the company’s December IPO was well Squibb Company. We believe the deal provides highly favorable economics received by investors. Higher exposure to life sciences tools & services stocks, and further validates the company’s physics-based computational platform which were up nearly 15% in the index, also added value. for drug discovery.

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, 2019 was 2.80% and 2.39%, respectively, but the net annual expense ratio was 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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 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. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 BARON shares. FUNDS 3 Not annualized.

116 December 31, 2020 Baron Health Care Fund

Cash exposure in a sharp up market and underperformance of investments BridgeBio Pharma, Inc. is a diversified biotechnology company running a in managed health care and pharmaceuticals detracted the most from novel decentralized model of drug development focused on genetic relative results. Weakness in managed health care was related to the medicine. During the period held, shares increased on news that underperformance of for-profit health insurance company Humana Inc. The GlaxoSmithKline had floated a $4.6 billion takeover offer for Eidos company’s shares were flat for the quarter due to the overhang of health Therapeutics, of which BridgeBio owns 60%. We retain conviction in care policy uncertainty as investors waited for the outcome of the Georgia BridgeBio based on four upcoming critical data readouts that we think will Senate runoff which determined the final balance of power in the Senate. help drive share performance. Negative stock selection in pharmaceuticals, coming from AstraZeneca PLC Schrodinger, Inc. offers a suite of software solutions for drug design and is and Sanofi, was mostly offset by the Fund’s meaningfully lower exposure to concomitantly developing drugs on its own. As one of the best performing this lagging sub-industry. AstraZeneca was the second largest detractor stocks of 2020’s IPO class, Schrodinger has offered continual alpha as the given a setback in the company’s vaccine timeline, while Sanofi’s shares broader investment community develops increased awareness of the pulled back as the company’s turnaround story is still in process. uniqueness of its business, which has been accelerated by the COVID-19 Our strategy is to identify competitively advantaged growth companies that environment. Competitor data sets providing promising clinical read-throughs we can own for years. Similar to the other Baron Funds, we remain focused to some of Schrodinger’s assets also helped drive positive share performance. on finding businesses that we believe have open-ended secular growth UnitedHealth Group Incorporated is the largest insurer in the U.S. and a opportunities, durable competitive advantages, and strong management leading provider of health care, IT/analytics, and pharmacy benefit services. teams. We conduct independent research and take a long-term perspective. Shares rose on continued strong financial results. In-line and likely We are particularly focused on businesses that solve problems in health conservative 2021 guidance that incorporates a return to more normalized, care, whether by reducing costs, enhancing efficiency and/or improving pre-pandemic utilization levels was well received by investors as was the patient outcomes. company’s reiteration of its long-term targets of 6%-9% top-line and We continue to think the Health Care sector will offer attractive investment 13%-16% EPS growth. We view UnitedHealth as a core holding that allows opportunities over the next decade and beyond. Health Care is one of the us to participate in the strong secular growth of the health care industry. largest and most complex sectors in the U.S. economy, accounting for approximately 18% of GDP and encompassing a diverse array of Table III. sub-industries. Health Care is also a dynamic industry undergoing changes Top detractors from performance for the quarter ended December 31, 2020 driven by legislation, regulation, and advances in science and technology. Percent We think navigating these changes requires investment experience and Impact sector expertise, which makes the Health Care sector particularly well suited Vertex Pharmaceuticals Incorporated –0.36% for active management. AstraZeneca PLC –0.27 DexCom, Inc. –0.23 Table II. Moderna, Inc. –0.17 Top contributors to performance for the quarter ended December 31, 2020 Silk Road Medical, Inc. –0.16 Percent Impact Vertex Pharmaceutical Incorporated is a pharmaceutical company best Pacific Biosciences of California, Inc. 4.43% known for its commercial products targeting cystic fibrosis. Share weakness Arrowhead Pharmaceuticals, Inc. 1.77 in the quarter was due to the negative initial readout of a pipeline asset BridgeBio Pharma, Inc. 1.26 targeting alpha one antitrypsin disease, an inherited disorder that increases Schrodinger, Inc. 1.18 the chance of lung and liver disease. Given Vertex’s best-in-class growth UnitedHealth Group Incorporated 0.95 profile and cash flow and upcoming catalyst flow, we retain long-term conviction in the name. Pacific Biosciences of California, Inc. provides long-read DNA sequencing systems to help scientists conduct genetic analysis. Shares performed well AstraZeneca PLC is a multinational pharmaceutical company developing for the quarter. We believe there is increasing excitement about the drugs across multiple therapeutic areas such as oncology and respiratory potential for its platform as it lowers sequencing costs and seeks to move diseases. Shares were impacted by news of AstraZeneca’s joint development beyond its current commercial niche. Recently appointed CEO Christian with Oxford University of a viral-based COVID-19 vaccine. Given a mixed Henry previously served as CFO and Chief Commercial Officer at Illumina, data set due to an unforeseen error in dosing that occurred in the Brazilian Inc., and we think he is well-qualified to commercially execute on Pacific market, the vaccine timelines slipped, hurting share performance. Our Biosciences’ differentiated long-read platform. investment thesis on AstraZeneca is not dependent on COVID-19 but rather its best-in-class large-cap growth profile, and we retain conviction. Arrowhead Pharmaceuticals, Inc. is a biotechnology company developing RNAi therapeutics for a long list of diseases. Shares rose given a multitude of DexCom, Inc. sells a continuous glucose monitoring device for people with upcoming data readouts, a large financial deal with Takeda, and the diabetes. The stock fell due to concerns about competition from Abbott prospect of increasing RNAi applications from just the liver to other tissue Laboratories, which received regulatory approval to market its third types (i.e., other diseases). We retain high conviction in Arrowhead and generation Libre device in Europe. We continue to have conviction in expect it to become a large multinational pharmaceutical company over DexCom based on the company’s large addressable under-penetrated time. market and new product pipeline.

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Moderna, Inc. is a leader in the emerging field of mRNA-based vaccines and • Innovative New Drugs: We have investments in companies therapeutics. Shares pulled back from highs on likely profit taking, but we developing innovative new drugs. argenx SE is using its unique are looking past short-term fluctuations to focus on long-term potential. antibody engineering platform based on the Llama immune system to The pandemic has been a strong proof point of Moderna’s platform, with a develop drugs for severe autoimmune diseases and cancer. Acceleron COVID-19 vaccine coming to market in less than a year versus traditional Pharma Inc. is developing a novel new drug for pulmonary arterial vaccines that can take a decade. With this success under its belt, we think hypertension which showed promising results in a Phase 2 clinical trial. Moderna has potential to disrupt the entire biopharma space, from Arrowhead Pharmaceuticals, Inc. is developing drugs that silence infectious disease vaccines to oncology and rare disease treatment. disease-causing genes and has a rich pipeline of drug targets for rare diseases, cardiometabolic disease, cancer and hepatitis B. BridgeBio Silk Road Medical, Inc. offers a new approach for treatment of carotid Pharma, Inc. is developing a portfolio of breakthrough medicines for artery disease. After a strong third quarter, shares detracted from genetic diseases and cancers with genetic drivers. performance on likely profit taking. We continue to believe Silk Road has an opportunity to change the standard of care for treatment of carotid artery • Technology-Enabled Drug Development: We have investments in disease with its innovative medical technology. companies that use technology to help speed drug development and make it more efficient. Schrodinger, Inc. offers a physics-based Portfolio Structure computational platform for drug discovery, enabling scientists to discover high-quality, novel molecules more rapidly, at lower cost and We build the portfolio from the bottom up, one stock at a time, using the with a higher likelihood of success compared with traditional drug Baron investment approach. We do not try to mimic an index, and we expect discovery methods. Veeva Systems Inc. provides cloud-based software the Fund to look very different from the Benchmark. As of December 31, for the life sciences industry that helps clients bring drugs to market 2020, the Fund’s active share was 71.6%. The Fund may invest in stocks of faster and more efficiently. Certara, Inc. offers biosimulation software any market capitalization and may hold both domestic and international which biopharmaceutical companies use to predict how medicines stocks. As of December 31, 2020, the Fund held 54 positions. This compares behave in the human body. AbCellera Biologics Inc. has a full-stack, with 612 positions in the Benchmark. International stocks represented 14.0% artificial intelligence-powered drug discovery platform that searches of the Fund’s net assets. The Fund’s 10 largest holdings represented 38.1% of and analyzes the database of natural immune systems to find net assets. Compared with the Benchmark, the Fund was overweight in life antibodies that can be developed as drugs. sciences tools & services, biotechnology, and health care technology, and underweight in pharmaceuticals and health care equipment. The Fund • Minimally Invasive Surgery: Less invasive surgery is less traumatic for includes a mix of stocks ranging from large, stable growth companies to the patient, enabling a faster recovery and in many cases resulting in small, pre-commercial biotechnology companies. The market cap range of cost savings to the system. We have investments in: Intuitive Surgical, the investments in the Fund was $1.5 billion to $333 billion with a weighted Inc., the pioneer in robotic surgery; Edwards Lifesciences Corp.,a average market cap of $67.8 billion. This compared with the Benchmark’s leader in transcatheter heart valve replacement; Abbott Laboratories, weighted average market cap of $132.0 billion. a leader in transcatheter mitral valve repair; Teleflex Incorporated, which offers a new minimally invasive treatment for benign prostatic We discuss below some examples of investment themes that we are hyperplasia, also known as enlarged prostate; and Silk Road Medical, investing in. We do not intend this list to be exhaustive. We own stocks in Inc., which offers a new minimally invasive approach for the treatment the portfolio that do not fit neatly into the themes below. We evaluate each of carotid artery disease. stock on its own merits. • Diabetes Management: Approximately 34 million Americans have • Genomics: We have an investment in Illumina, Inc., the market leader diabetes and another 88 million have prediabetes. Diabetes was the in DNA sequencing technology. With Illumina sequencers, scientists seventh leading cause of death in the U.S. in 2017, and according to can sequence a human genome for less than $1,000 in less than one the American Diabetes Association, the direct medical costs and day. As a result, the applications for DNA sequencing are rapidly indirect expenditures attributable to diabetes in the U.S. were an expanding. DNA sequencing is being used in cancer diagnosis and estimated $327 billion in 2017. Worldwide, the prevalence of diabetes treatment, diagnosis of rare genetic diseases, non-invasive pre-natal is staggering: over 400 million people globally have diabetes and the testing, population genomics, and consumer genomics. Illumina International Diabetes Federation estimates that by 2045, this number announced the acquisition of Grail, a company developing a blood test could reach 629 million people. We have investments in innovative for early cancer detection using DNA sequencing. We also have medical technology companies which help patients better manage investments in other genomics companies, including: Guardant their diabetes: DexCom, Inc. offers a continuous glucose monitoring Health, Inc., which offers a blood test for cancer therapy selection and system which eliminates the need for fingersticks; Insulet Corp. offers is developing blood tests for cancer recurrence monitoring and early a unique tubeless, disposable insulin pump; and Abbott Laboratories detection of cancer; Adaptive Biotechnologies Corporation, which sells the FreeStyle Libre flash glucose monitoring system. offers ClonoSeq for detection and monitoring of minimal residual disease in blood cancers and is developing early disease detection tests • Tools Providers to Life Sciences Companies: We believe several and other products based on its immune system sequencing platform; companies that provide products and services to life sciences 10X Genomics, Inc., whose technology enables life sciences companies are attractive because they can benefit from the growth in researchers to conduct high throughput single cell and spatial genomic life sciences without the risk inherent in drug development. Our analysis using Illumina sequencers; and Pacific Biosciences of investments in the life sciences tools providers include Thermo Fisher California, Inc., which offers a differentiated long-read sequencing Scientific Inc., Bio-Techne Corporation, West Pharmaceutical platform for genetic analysis. Services, Inc., and Mettler-Toledo International, Inc., among others.

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• Medicare Advantage: Every day, approximately 10,000 people in this Table V. country turn 65 and become eligible for Medicare. Individuals have a Fund investments in GICS sub-industries as of December 31, 2020 choice between enrolling in traditional fee-for-service Medicare Percent (“Original Medicare”) or a Medicare Advantage plan managed by a of Net Assets private sector health insurer. Medicare Advantage is growing rapidly because of its more attractive value proposition to Medicare Biotechnology 25.5% beneficiaries. Medicare Advantage plans cover all the services that Health Care Equipment 19.2 Life Sciences Tools & Services 16.3 Original Medicare covers plus additional benefits such as vision, Managed Health Care 12.9 hearing, dental, and wellness (gym memberships). Some Medicare Pharmaceuticals 7.2 Advantage plans also cover transportation to doctor visits, Health Care Technology 5.3 over-the-counter drugs, adult-day care services, and assistance for Specialized Reits 2.0 daily living. Medicare Advantage plans also have annual out-of-pocket Health Care Services 1.2 spend limits, which provides financial protection against the cost of Health Care Supplies 0.7 catastrophic illness or accident. The Center for Medicare and Medicaid Cash and Cash Equivalents 9.7 Services estimates that Medicare Advantage penetration will rise from 36% of all Medicare beneficiaries in 2020 to 50% in 2025. There is 100.0% strong bipartisan political support for Medicare Advantage. We have investments in UnitedHealth Group Incorporated and Humana Inc., Recent Activity two leading managed care organizations that we believe are well- positioned to benefit from enrollment growth in Medicare Advantage. During the December 2020 quarter, we established 10 new positions and exited 4 positions. Below we discuss some of our top net purchases and • Animal Health: We believe the animal health industry is attractive sales. based on the trends toward greater pet ownership, increased spending on pets, increased consumption of animal protein, and increased focus Table VI. on food safety. Further, compared with drug development for humans, Top net purchases for the quarter ended December 31, 2020 the animal health industry is characterized by lower regulatory barriers, Quarter End Amount shorter and less costly R&D, less generic competition, and lower third- Market Cap Purchased (billions) (millions) party reimbursement risks. We have investments in Dechra Pharmaceuticals PLC and Zoetis Inc., both of which develop and sell UnitedHealth Group Incorporated $332.7 $2.8 medicines for pets and food producing animals; and IDEXX Humana Inc. 54.3 2.4 Laboratories, Inc., the leading provider of diagnostic instruments and Vertex Pharmaceuticals Incorporated 61.5 1.4 Genmab A/S 26.7 1.3 assays used for pet care in veterinarian offices. Thermo Fisher Scientific Inc. 184.6 1.3

Table IV. We initiated a position in Genmab A/S, a Denmark-based biotechnology Top 10 holdings as of December 31, 2020 company focused on the development and commercialization of Market Quarter Quarter differentiated antibody therapeutics for the treatment of cancer. Genmab Cap End End When Market Investment Percent proved its initial success with the drug Darzalex for multiple myeloma Year Acquired Cap Value of Net (partnered with Johnson & Johnson), a drug which has changed the Acquired (billions) (billions) (millions) Assets treatment paradigm for multiple myeloma. Management anticipates UnitedHealth Group recurring revenues from Darzalex and other existing products will grow 2.5 Incorporated 2018 $227.4 $332.7 $5.4 7.7% times over the next five years. Plus, Genmab has an expanding pipeline of Humana Inc. 2019 35.0 54.3 3.7 5.2 highly sophisticated antibodies targeting both solid tumors and blood Acceleron Pharma Inc. 2018 1.6 7.7 2.6 3.7 tumors with potential to drive even stronger revenue growth. We are excited about the Genmab investment as we view the company’s Abbott Laboratories 2018 124.6 194.1 2.5 3.5 proprietary technology and novel pipeline as best-in-class within the Thermo Fisher biotechnology industry. Scientific Inc. 2019 117.6 184.6 2.5 3.5 Vertex Although outside of the top five purchases, we are excited about new Pharmaceuticals addition BridgeBio Pharma, Inc., a biotechnology company developing a Incorporated 2018 39.0 61.5 2.3 3.2 portfolio of breakthrough medicines for genetic diseases and cancers with Pacific Biosciences of genetic drivers. BridgeBio operates with a decentralized corporate structure in which each program is housed in its own subsidiary. Management California, Inc. 2020 1.0 4.8 2.2 3.2 believes this enables a team of experts who are economically incentivized at Arrowhead the program level to make key operational decisions, thereby making the Pharmaceuticals, development process more efficient. In addition, by focusing on drugs that Inc. 2018 1.6 7.9 2.1 2.9 target well-characterized genetic diseases at their source, the company BridgeBio Pharma, Inc. 2020 4.8 8.7 1.8 2.6 increases its probability of success compared with other therapeutic argenx SE 2018 2.8 13.9 1.8 2.6 categories. As evidence of the platform’s ability to deliver, there are four

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late-stage trials and a small commercial opportunity expected to readout or biotechnology companies, hospitals and clinical diagnostic labs, universities, launch in 2021, just six years after the company’s founding. We expect the research institutions and government agencies, as well as environmental, number of key value-creating pipeline candidates to keep increasing every industrial quality and process control settings. Thermo has benefited from year. sales of products and services related to COVID-19, such as diagnostic testing, personal protective equipment and pharmaceutical services, which We added to UnitedHealth Group Incorporated, the nation’s largest we think demonstrates the company’s broad capabilities and critical role in health care company with over $250 billion in estimated 2021 revenues. the life sciences industry. Although some of this revenue will taper off as the United has two divisions: UnitedHealthcare, a health benefits and insurance pandemic subsides, we think Thermo will continue to benefit from long- provider with a leading position in commercial, Medicare and Medicaid term secular tailwinds, including increased investments in life sciences, markets; and Optum, a technology-enabled health services business. Optum, diagnostics, vaccine/therapeutics and health care broadly. We think Thermo a fast-growing and attractive health care business in its own right, has three should be able to generate at least mid-to-high single-digit annual organic segments: OptumHealth focuses on health care delivery, such as through its revenue growth well into the future driven by positive end-market trends ambulatory care services business and over 50,000 affiliated or employed and market share gains. We also expect Thermo to continue to use its physicians; OptumInsight offers data, analytics, research, consulting, strong free cash flow and balance sheet to create shareholder value through technology and managed services to help improve the quality of care and M&A and share repurchases. drive greater efficiency in the health care system; OptumRx provides a diversified array of pharmacy care services. The UnitedHealthcare division Table VII. benefits from the expertise and services of the Optum division, utilizing Top net sales for the quarter ended December 31, 2020 Optum’s capabilities to help coordinate and provide patient care, analyze Amount cost trends, and lower overall health care costs. This creates a significant Sold competitive advantage for the UnitedHealthcare division. United also uses (millions) new technology to improve health care. For example, in 2020 United Roche Holding AG $1.2 launched Level2, a program that combines DexCom’s continuous glucose Pacific Biosciences of California, Inc. 1.1 monitoring technology with customized personal support to help improve Neurocrine Biosciences, Inc. 0.4 the health of people living with Type 2 diabetes. Level2 has helped some HealthEquity, Inc. 0.2 people stabilize their blood sugar levels and even achieve Type 2 diabetes Applied Therapeutics, Inc. 0.1 remission. Another element of the investment thesis is that United generates exceptionally strong free cash flow and has a solid balance sheet, We reduced our position in Pacific Biosciences of California, Inc. based on which provides opportunity to create shareholder value through M&A and the stock’s higher valuation after the stock appreciated significantly in a share repurchases. With multiple avenues to grow, United should be able to short period of time. We continue to believe new markets will become meet its long-term financial goal of generating mid-teens annual earnings available for Pacific Biosciences as the cost of sequencing with its platform growth over the next decade. comes down, providing significant room for future growth. We added to Humana Inc., the second largest Medicare Advantage player We sold Roche Holding AG because of concerns about the impact of after UnitedHealth Group. As discussed earlier, we believe Medicare biosimilars on the company’s revenues. We sold Neurocrine Biosciences, Advantage is an attractive market with enrollment growing in the high Inc. due to concerns about a slowdown in sales of its key product. We sold single digits driven by the aging population and a growing preference among HealthEquity, Inc. to recognize a tax loss. We sold Applied Therapeutics, seniors for the enhanced benefits offered by Medicare Advantage providers. Inc. to reduce risk as we await more clinical data to support the investment With over 70% of its earnings coming from its Medicare Advantage thesis. business, Humana is the closest to a pure play Medicare Advantage business among the large managed care companies and should benefit from these Outlook secular tailwinds. Humana also has differentiated expertise in managing high-cost, high-risk patients and is well positioned to benefit from the We believe we are at the beginning of a transformational era for health care, ongoing shift to value-based care, the health care delivery model which marked by rapid advances in science and medical technology and new rewards hospitals and physicians for better outcomes. We think Humana treatments and cures to diseases. What we just witnessed in 2020 with the should be able to meet its long-term financial goal of generating low to development of safe and effective vaccines for COVID-19 is nothing short of mid-teens annual earnings growth over the long term. amazing. In less than one year, Moderna, Inc. and BioNTech SE (in partnership with Pfizer Inc.) each took the genetic sequence of a novel We added to Vertex Pharmaceuticals Incorporated after the stock fell in coronavirus, developed a vaccine for human use, completed Phase 1, Phase 2, reaction to the company’s discontinuation of a clinical program for one of and a 30,000 participant Phase 3 placebo-controlled clinical trial, received its pipeline drugs because of safety concerns. We believe the sell-off FDA authorization, and commercially launched a novel vaccine. This provided an opportunity to buy the stock at an attractive valuation. We contrasts with the traditional way of developing a vaccine, which in the past believe the company is being valued based on the core cystic fibrosis has taken up to 10 years. Going forward, we believe messenger RNA has now franchise alone with little to no value reflected for the pipeline, which we been validated as a fast, safe, and effective new technology, with potential to think has potential to create additional value. be applied more broadly in other modalities beyond prophylactic vaccines. We added to Thermo Fisher Scientific Inc., the leading global life sciences There are many other examples of disruptive innovation across the Health tools provider. Thermo is a “picks and shovels” company which offers a Care sector, from early-stage cancer screening tests using simple blood draws broad array of products and services (such as instruments, reagents, to medicines that cure rare genetic diseases. In short, we think the long-term consumables, and manufacturing and other services) to pharmaceutical and outlook for the Health Care sector is excellent.

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In the near term, the outlook is also positive. In 2020, the FDA approved the controlling drug prices, and introduction of a public option in health second highest number of new drugs in history with 53 new drug approvals. insurance markets, issues we are monitoring closely. Biotechnology funding in 2020 was up 76% year-over-year to $88.1 billion, beating prior records by a large margin. Medical device companies and We remain optimistic about the long-term growth prospects for our health care services companies, which experienced a negative impact on holdings. We believe the companies in which the Fund invests are unique, procedure volumes during the pandemic, are likely to see a return to more competitively advantaged, well-managed growth companies. We continue normalized procedure volumes and revenue growth as the pandemic to work hard to identify new ideas that meet our investment criteria. subsides. Capital markets activity is robust, with a flood of new and exciting I would like to thank my colleague Josh Riegelhaupt, Assistant Portfolio companies coming public, some of which are in emerging areas, such as Manager of Baron Health Care Fund, for his invaluable contributions to the synthetic biology. Fund. On the health care policy side, with the Presidential and Congressional Thank you for investing in Baron Health Care Fund. I remain an investor in elections finally over, there is potential for some changes, but we expect the Fund, alongside you. incremental changes, rather than radical changes. We believe the Biden administration will focus on strengthening the Affordable Care Act and Sincerely, expansion of Medicare and Medicaid, which would be positive for many companies in the sector. We also think the Biden administration will increase support for scientific research (an area where there is bipartisan support), adopt a more favorable immigration policy (many in the science and engineering workforce are foreign-born nationals), provide more support for higher education, and normalize trade relations with China, all of which we think will benefit the sector. On the other hand, there is potential for Neal Kaufman modestly higher corporate taxes, legislative or executive action on Portfolio Manager January 20, 2021

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. Active Share a term used to describe the share of a portfolio’s holdings that differ from that portfolio’s benchmark index. It is calculated by comparing the weight of each holding in the Fund to that holding’s weight in the benchmark. Positions with either a positive or negative weighting versus the benchmark have Active Share. An Active Share of 100% implies zero overlap with the benchmark. Active Share was introduced in 2006 in a study by Yale academics, M. Cremers and A. Petajisto, as a measure of active portfolio management. 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. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

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Dear Baron FinTech Fund Shareholder: Performance

In the quarter ended December 31, 2020, Baron FinTech Fund (the “Fund”) rose 13.67% (Institutional Shares) compared with a 12.15% gain for the S&P 500 Index (the “Benchmark”) and a 21.35% gain for the FactSet Global FinTech Index. For the full-year 2020 and since inception, the Fund rose 47.20% (Institutional Shares) compared with an 18.40% gain for the Benchmark and a 34.78% gain for the FactSet Global FinTech Index.

Table I. Performance For period ended December 31, 2020 Baron Baron FinTech FinTech FactSet Fund Fund S&P Global Retail Institutional 500 FinTech Shares1,2 Shares1,2 Index1 Index1 Three Months3 13.61% 13.67% 12.15% 21.35% One Year and JOSH SALTMAN Retail Shares: BFINX Since Inception Institutional Shares: BFIIX (December 31, 2019) 46.90% 47.20% 18.40% 34.78% PORTFOLIO MANAGER R6 Shares: BFIUX

Equity markets rose during the quarter as investors looked past the continued spread of COVID-19 and instead focused on the successful All seven of the Fund’s investment themes had positive returns during the development of vaccines and the resolution of the U.S. Presidential election. quarter. Electronic Payments was a big outperformer as vaccine progress Other factors that have been in play for the better part of the last nine gave investors increasing confidence to look past near-term economic months also contributed to market strength late in the year, including the weakness and focus on the light at the end of this pandemic tunnel. Square, ongoing tailwind from central bank liquidity measures, additional monetary Inc. was the top contributor due to strong performance from its Cash App policy accommodation, and stronger-than-expected economic and business and expectations for an improvement in its Seller business as corporate earnings data. Investors shifted away from growth and consumers return to restaurants, coffee shops, and retail stores. Shares of momentum stocks that have been the longstanding market leaders towards Shift4 Payments, Inc. appreciated significantly on expectations that its value and cyclical stocks that benefit from the reopening narrative. Small- customer base comprised largely of restaurants, bars, and hotels will cap stocks, which were out of favor for much of the year, outpaced their disproportionately benefit once the pandemic passes. Our E-commerce large-cap peers in the fourth quarter. investments also outperformed, led by MercadoLibre, Inc., Nuvei During the quarter, the Fund outperformed the Benchmark by 1.52%. The Technologies Corp., and Adyen N.V., as online shopping growth remained Fund’s investments in Information Technology and lack of exposure to the elevated even as physical stores reopened. lagging Health Care and Consumer Staples sectors contributed the most to relative results. The Fund also benefited from exposure to outperforming smaller-cap stocks.

Performance listed in the above table is net of annual operating expenses. Annual estimated expense ratio for the Retail Shares and Institutional Shares is 1.87% and 1.62%, respectively, but the net annual estimated expense ratio is 1.20% and 0.95% (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 reimburses certain Baron Fund expenses pursuant to a contract expiring on August 29, 2031, unless renewed for another 11-year term 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 S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The FactSet Global FinTech Index™ is an unmanaged and equal-weighted index that measures the equity market performance of companies engaged in Financial Technologies, primarily in the areas of software and consulting, data, and analytics, digital payment processing, money transfer, and payment transactional-related hardware across 30 developed and emerging markets. The indexes and the Fund are with dividends, which positively impact the performance results. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 BARON shares. FUNDS 3 Not annualized. 122 December 31, 2020 Baron FinTech Fund

Financials investments, cash exposure in a rising market, and lack of Shares of MSCI, Inc., a leading provider of investment decision support tools, exposure to the Energy sector, which was up sharply alongside the price of contributed to performance. The company reported solid third quarter oil, detracted the most from relative results. Adverse stock selection in earnings despite the challenging COVID-19 backdrop. Asset-based fee Financials, owing largely to the underperformance of credit rating agencies revenue grew due to market appreciation and inflows, while margins S&P Global Inc. and Moody’s Corporation, was somewhat offset by having expanded due to proactive cost management. We retain long-term higher exposure to this strong performing sector. Despite reporting solid conviction as the company owns dominant, “all weather” franchises and financial results, shares of S&P Global and Moody’s were hurt by investor remains well positioned to benefit from significant tailwinds in the expectations that debt issuance will moderate next year due to tough investment industry. comparisons and potentially higher interest rates. Table III. Table II. Top detractors from performance for the quarter ended December 31, 2020 Top contributors to performance for the quarter ended December 31, 2020 Percent Percent Impact Impact Alibaba Group Holding Limited –0.69% Square, Inc. 1.27% S&P Global Inc. –0.42 Adyen N.V. 1.11 Duck Creek Technologies, Inc. –0.18 Nuvei Technologies Corp. 1.00 Fidelity National Information Services, Inc. –0.10 MercadoLibre, Inc. 0.97 Moody’s Corporation –0.03 MSCI, Inc. 0.92 Alibaba Group Holding Limited is the largest retailer and E-commerce Square, Inc. provides point-of-sale technology to small businesses and company in China. Alibaba operates shopping platforms Taobao and Tmall operates the Cash App ecosystem of financial services for individuals. The and owns 33% of Ant Group, which operates Alipay, China’s largest online stock increased after the company reported strong financial results for the payment provider. Shares were down on the news that Chinese regulators most recent quarter. Cash App’s gross profit increased 212%, driven by had launched an investigation into Alibaba for suspected monopolistic record new users and engagement while the Seller business was resilient behavior. We continue to believe Alibaba’s core business remains highly despite headwinds from COVID-19. We continue to own the stock due to, in profitable, complemented by rapid growth in the cloud business and our view, Square’s long runway for growth, sustainable competitive inflection in the Cainiao logistics and New Retail segments. advantages, and unique corporate culture. S&P Global Inc. provides credit ratings, indices, data, and analytics to the Adyen N.V. enables merchants to accept electronic payments. The financial and commodities markets. The company reported strong financial company has been less impacted by pandemic lockdowns than other results due to continued growth in debt issuance. However, the stock payment companies due to its high E-commerce exposure. Shares increased declined on investor expectations that issuance will moderate in 2021 due after the company reported accelerating growth in payment volume and to tough comparisons and potentially higher interest rates. Also, the revenue as economies reopened. The company also restated earnings higher company’s announced acquisition of IHS Markit received a mixed reaction, after mistakenly double counting certain costs, driving an upward revision in potentially due to the size and complexity of the combined company as well earnings estimates. We believe Adyen will be a prime beneficiary of the as overlapping ownership causing some shareholders to reduce secular growth of E-commerce and will continue gaining share in a large concentration. We continue to own the stock as we see a long runway for global market. growth and significant competitive advantages for the company. Nuvei Technologies Corp. is a Canadian-based payment processor that Duck Creek Technologies, Inc. is a leading provider of core systems serves online merchants around the world. The stock increased after the software for the property & casualty (“P&C”) insurance industry. Despite company reported strong financial results for the recent quarter with 36% reporting results that beat analyst forecasts, with subscription revenue up payment volume, a meaningful acceleration from the prior quarter. As a 54% and SaaS annual recurring revenue up 85%, the stock price fell due to a recent IPO, shares likely benefited from increasing investor awareness as rotation away from high-growth stocks. We retain conviction. Insurers are well as optimism about the growth potential for online gambling in the U.S. increasingly recognizing the need for modern, cloud-based software, and we We continue to own the stock due to Nuvei’s numerous growth like the company’s strong product set and long runway for growth. opportunities and founder-led management team. Fidelity National Information Services, Inc. provides software to financial Shares of MercadoLibre, Inc., the largest E-commerce marketplace in Latin institutions and enables merchants to accept electronic payments. The stock America, appreciated during the quarter. The company reported accelerating detracted due to pandemic-related revenue headwinds as declines in travel gross merchandise volume in the third quarter despite the reopening of and spending activity led to lower transaction volumes. We believe these physical retail over the summer, indicating stickiness among recently headwinds are temporary and expect growth to accelerate in 2021. We acquired users and market share gains in some of its largest markets, continue to own the stock because we expect earnings growth to quickly particularly Brazil. We remain shareholders as we believe the company is a return to a mid-teens rate. long-term winner in both E-commerce and payments across a region that remains in the early stages of digitization.

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Moody’s Corporation provides credit ratings, financial intelligence, and 4. Information Services: Financial institutions increasingly rely on analytical tools to assist businesses in making decisions. Moody’s reported information and insights to improve loan pricing, insurance excellent financial results due to continued growth in rated debt issuance. underwriting, marketing efficiency, and investment returns. We have However, the stock detracted on investor expectations that issuance trends several investments in companies that provide critical data to help will moderate into 2021. The announced retirement of long-time CEO Ray financial institutions optimize performance and fulfill regulatory McDaniel may have also weighed on sentiment. We continue to own the requirements. These companies typically have proprietary data and stock due to our views of the company’s long runway for growth and strong analytical tools that become part of users’ daily workflows, resulting in competitive advantages. high client retention, recurring revenue, and pricing power. Rating agencies S&P Global Inc. and Moody’s Corporation provide credit Portfolio Structure ratings that are deeply embedded into the financial ecosystem. TransUnion provides the data and Fair Isaac Corporation provides The Fund seeks to invest in competitively advantaged, growing FinTech the rating methodology used by lenders and other businesses for companies that we can own for years. We conduct independent, consumer credit decisions. The insurance industry relies on Verisk fundamental research and take a long-term perspective. The Fund invests in Analytics, Inc. for underwriting data, and the commercial real estate companies across all market capitalizations and geographies. The quality of industry relies on CoStar Group, Inc. for property data. the ideas and level of conviction determine the position size of each investment. We do not try to mimic an index, and we expect the Fund will 5. Digital IT Services: Many banks, insurers, and other businesses have look very different from the Benchmark. decades-old technology that is difficult to maintain and improve. Disruption from new tech-enabled entrants is forcing incumbents to As of December 31, 2020, the Fund held 45 positions. Non-U.S. stocks either upgrade their legacy systems or risk losing customers. EPAM represented 21.3% of the Fund’s net assets. The Fund’s 10 largest holdings Systems, Inc., Endava plc, Accenture plc, and Grid Dynamics represented 41.5% of net assets, and the 20 largest holdings represented Holdings, Inc. provide consulting and outsourced software 69.1% of net assets. The market capitalization range of the investments in development for business customers to help them modernize their the Fund was $641 million to $630 billion with a weighted average of systems and navigate complex digital transformations. $104 billion. 6. Capital Markets: Investing decisions and trade execution increasingly We segment the Fund holdings into seven investment themes. Some rely on digital solutions to improve efficiency and reduce costs. companies have characteristics that span more than one theme, but we MarketAxess Holdings Inc. and Tradeweb Markets Inc. operate the classify each company by a single theme that we believe is most leading electronic trading platforms for fixed income markets and representative. benefit from the secular shift from voice-based trading to electronic 1. Electronic Payments: The world is increasingly going cashless, but $17 trading. CME Group, Inc. is the world’s largest and most diversified trillion of consumer payments each year are still made with cash or derivatives marketplace whose electronic exchanges are used by check. Visa, Inc. and Mastercard Incorporated operate the leading traders around the world to manage risk. global networks that facilitate electronic payments for consumers, 7. Tech-Enabled Financials: Certain financial institutions are using merchants, and banks. We own several companies that enable technology in particularly innovative ways to better serve their merchants to accept electronic payments, including Square, Inc., customers and operate more efficiently. Kinsale Capital Group, Inc. is Repay Holdings Corporation, Global Payments Inc., Shift4 an insurance company and Rocket Companies, Inc. is a mortgage Payments, Inc., Paya Holding Inc., and Bill.com Holdings, Inc. company that each use proprietary technology to enable faster 2. E-commerce: We have several investments that benefit from the customer turnaround times and create meaningful cost advantages secular growth of E-commerce. Online sales are growing much faster over the competition. than in-store sales, but E-commerce penetration is still low at only As of December 31, 2020, Information Services represented 25.2% of net around 15% of total U.S. retail sales. As payment processors for mostly assets, Electronic Payments represented 20.0%, E-commerce represented online merchants, PayPal Holdings, Inc., Adyen N.V., and Nuvei 19.8%, Enterprise Software represented 13.1%, Digital IT Services Technologies Corp. benefit from the rapid growth of E-commerce represented 11.8%, Capital Markets represented 5.5%, and Tech-Enabled around the world. Alibaba Group Holding Limited and MercadoLibre, Financials represented 3.0%. Inc. operate leading online marketplaces and payment platforms. Shopify Inc. makes it easier for merchants to sell online. 3. Enterprise Software: We have several investments in software companies that help businesses manage their financial processes and operations. Fidelity National Information Services, Inc., Jack Henry & Associates, Inc., and nCino Inc. provide software that enables banks to manage account and transaction data. Intuit Inc. provides accounting and payroll solutions for small businesses as well as tax software for consumers and tax professionals. Guidewire Software, Inc. and Duck Creek Technologies, Inc. are leading providers of core systems software for the global P&C insurance industry.

124 December 31, 2020 Baron FinTech Fund

Table IV. multiple channels, managing inventory, processing orders and payments, Top 10 holdings as of December 31, 2020 fulfillment, shipping, and accessing capital. Shopify’s solutions operate in the Market Quarter Quarter cloud, enabling faster product innovation and the ability to provide unique Cap End End data insights to merchants about demand, pricing, and shipping When Market Investment Percent optimization. The platform integrates with over 5,000 apps from third-party Year Acquired Cap Value of Net Acquired (billions) (billions) (thousands) Assets providers, creating two-sided network effects as the large number of merchants attract more partners and vice versa. About half of the PayPal Holdings, company’s revenue comes from FinTech solutions, including processing Inc. 2020 $130.0 $274.4 $1,569.1 4.6% payments, lending, and business banking services. Intuit Inc. 2020 69.3 99.8 1,538.4 4.5 Endava plc 2020 2.6 4.2 1,496.6 4.4 We expect Shopify will be a prime beneficiary of the secular growth of E- Visa, Inc. 2020 411.0 527.0 1,465.5 4.3 commerce. Gross merchandise volume on the Shopify platform was $100 EPAM Systems, Inc. 2020 11.9 20.1 1,433.4 4.2 billion over the last 12 months, which is large but still only 5% of global Square, Inc. 2020 73.9 98.1 1,403.8 4.1 online sales and 0.5% of global commerce sales (online and offline) Mastercard excluding China, implying a very long runway for growth. We expect Incorporated 2020 306.1 355.8 1,392.1 4.1 Shopify’s sales volume to grow faster than the e-commerce market due to Adyen N.V. 2020 24.9 70.3 1,324.4 3.9 an expanding set of capabilities, geographic expansion, and a singular focus Fair Isaac on helping merchants succeed. We expect Shopify to better monetize the Corporation 2020 11.1 14.9 1,287.8 3.8 sales volume on its platform by increasing penetration of its payments, S&P Global Inc. 2020 67.9 79.1 1,232.7 3.6 lending, business banking, and fulfillment services. Shopify’s take rate and operating margin should meaningfully expand over time as the company provides additional solutions to its merchant customers. Table V. Fund investments in GICS sub-industries as of December 31, 2020 We also invested in MercadoLibre, Inc., the largest E-commerce company in Latin America. The company operates an online marketplace that enables Percent of Net Assets businesses and individuals to sell merchandise through the Mercado Libre website and mobile app. Over one-third of revenue comes from a large and Data Processing & Outsourced Services 33.6% fast-growing FinTech business called Mercado Pago, which was initially Application Software 14.4 developed to enable transactions on the Mercado Libre marketplace but has Financial Exchanges & Data 13.6 since expanded to process payments for off-marketplace merchants as well. IT Consulting & Other Services 11.8 Mercado Pago has a mobile wallet that allows users to make contactless Research & Consulting Services 9.1 payments, pay utility bills, make peer-to-peer money transfers, buy cell Internet & Direct Marketing Retail 5.6 phone top ups, and invest in a money market fund. The company also offers Internet Services & Infrastructure 3.0 loans to merchants and consumers through Mercado Credito. Interactive Media & Services 2.8 Investment Banking & Brokerage 1.5 MercadoLibre benefits from the rapid growth of E-commerce and electronic Insurance Brokers 1.5 payments in some of the least penetrated markets in the world. Latin Property & Casualty Insurance 1.2 America is still very early in E-commerce adoption with a penetration rate of Thrifts & Mortgage Finance 0.3 only 6% compared to 15% in the U.S. and 25% in Asia. MercadoLibre has leading market share, and we estimate that every 1% increase in e- Cash and Cash Equivalents 1.6 commerce penetration across the region would drive 25% growth in the 100.0% company’s gross merchandise volume. The company is investing heavily to widen its competitive moat by migrating more traffic onto its own Recent Activity fulfillment network, reducing delivery times, and targeting underserved categories. We also see huge growth potential for Mercado Pago to become Table VI. the financial “super-app” of Latin America. Almost 60 million people use the Top net purchases for the quarter ended December 31, 2020 service to make payments, including 14 million mobile wallet users that Quarter End Amount have access to a broad array of financial services. We believe this mobile Market Cap Purchased wallet is an attractive solution for Latin America’s unbanked population of (billions) (thousands) 230 million people and serves as a platform for higher-margin services such Shopify Inc. $138.5 $973.1 as lending and asset management. MercadoLibre, Inc. 83.4 957.2 Intuit Inc. 99.8 789.6 Table VII. Visa, Inc. 527.0 767.1 Top net sales for the quarter ended December 31, 2020 EPAM Systems, Inc. 20.1 691.3 Amount Sold During the quarter, we initiated a position in Shopify Inc., a provider of (thousands) commerce and payment solutions for merchants of all sizes. Over one Duck Creek Technologies, Inc. $100.3 million merchants around the world use Shopify’s software to run their businesses through E-commerce websites and apps, physical retail locations, We trimmed Duck Creek Technologies, Inc. to manage the position size and social media storefronts, and marketplaces. The Shopify platform addresses allocate additional capital to its close competitor, Guidewire Software, Inc. many of the challenges of running a retail business, such as selling across

125 Baron FinTech Fund

Outlook been accelerated by the pandemic and will continue growing for many years. A plethora of privately held FinTech companies are also benefiting We start the new year saddened by the suffering from the ongoing from these same trends. After following these companies for years, we pandemic but hopeful that vaccinations will soon bring a return to normal. expect many of them to go public in the months ahead, further expanding Different parts of the economy are at varying stages of recovery, with our investment opportunity set. technology beneficiaries booming and travel and hospitality companies still struggling. We have a new President and Democratic control of Congress, As the Fund starts its second year, I am very grateful for the confidence you and with a shift in political leadership comes the possibility of changing have placed in us. We continue working hard to identify good investment regulations and tax policy. After bottoming in August, long-term interest ideas that we expect will generate attractive returns over the long term. rates have steadily risen, signaling expectations for higher economic growth. Sincerely, We continue to believe the FinTech sector offers attractive investment opportunities. The events of 2020 have vividly demonstrated the need for every business to better incorporate technology to operate in any environment. Many of the companies in the Fund are providing the necessary tools for businesses and consumers to thrive in the digital economy. These tools include business management software, electronic payment services, digital banking, E-commerce marketplaces, trading Josh Saltman platforms, data, and analytics. We believe demand for these tools has only Portfolio Manager January 20, 2021

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 fin tech 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 FinTech Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a limited purpose broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA).

126 Baron Funds

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 The Charles Schwab Corp...... $99,530 1.6% West Pharmaceutical Services, Inc...... $20,944 2.5% Booking Holdings, Inc...... 91,218 0.7 Rollins, Inc...... 19,208 1.1 Airbnb, Inc...... 88,439 0.0 Teleflex Incorporated ...... 19,166 1.3 Fidelity National Information Services, Inc...... 87,777 1.6 TransUnion ...... 18,882 2.5 Equinix, Inc...... 63,635 1.5 CDW Corporation ...... 18,844 0.9 Illumina, Inc...... 54,020 1.9 ZoomInfo Technologies Inc...... 18,777 1.4 DoorDash Inc...... 45,346 0.5 SS&C Technologies Holdings, Inc...... 18,621 1.0 Roper Technologies Inc...... 45,209 2.0 Clarivate Plc ...... 18,003 1.1 IDEXX Laboratories, Inc...... 42,639 7.2 The Cooper Companies, Inc...... 17,848 1.3 Veeva Systems Inc...... 41,237 2.1 GDS Holdings Limited ...... 17,501 1.1 Pinterest, Inc...... 40,731 0.6 GoodRx Holdings, Inc...... 15,787 0.3 Amphenol Corporation ...... 39,121 1.0 Ceridian HCM Holding Inc...... 15,750 3.0 Liberty Broadband Corporation ...... 37,970 1.1 10X Genomics, Inc...... 15,237 0.2 The Trade Desk ...... 37,618 1.1 IDEX Corporation ...... 15,081 1.3 MSCI, Inc...... 37,015 0.2 Fair Isaac Corporation ...... 14,870 0.8 CoStar Group, Inc...... 36,433 3.4 Arch Capital Group Ltd...... 14,645 1.3 DexCom, Inc...... 35,503 1.1 Gartner, Inc...... 14,303 4.3 T. Rowe Price Group, Inc...... 34,280 0.7 Tradeweb Markets Inc...... 14,218 0.3 RingCentral, Inc...... 33,968 1.6 Wix.com Ltd...... 13,908 2.1 Verisk Analytics, Inc...... 33,752 4.0 Guardant Health, Inc...... 12,884 0.7 SBA Communications Corp...... 31,349 2.1 FactSet Research Systems, Inc...... 12,632 2.1 ANSYS, Inc...... 31,245 3.6 Bio-Techne Corporation ...... 12,260 2.2 Zillow Group, Inc...... 30,592 2.8 Vail Resorts, Inc...... 11,229 2.9 Willis Towers Watson Public Limited Company .. 27,158 1.0 Guidewire Software, Inc...... 10,782 3.1 Mettler-Toledo International, Inc...... 27,118 3.8 Bright Horizons Family Solutions, Inc...... 10,477 0.6 First Republic Bank ...... 25,558 0.8 The Toro Company ...... 10,208 0.8 Verisign, Inc...... 24,693 2.2 Aspen Technology, Inc...... 8,829 0.9 Alexandria Real Estate Equities, Inc...... 24,050 0.6 Acceleron Pharma Inc...... 7,709 0.3 FleetCor Technologies, Inc...... 22,755 0.7 Hyatt Hotels Corp...... 7,512 0.7 Farfetch Limited ...... 21,688 1.1 Stitch Fix, Inc...... 6,158 0.6 MarketAxess Holdings Inc...... 21,660 2.5 Choice Hotels International, Inc...... 5,919 1.0 CBRE Group, Inc...... 21,040 0.6 99.4%

127 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 Total Market Cap Total Company (in millions) Investments Company (in millions) Investments IDEXX Laboratories, Inc...... $42,639 4.9% American Well Corporation ...... $5,951 0.1% MSCI, Inc...... 37,015 8.9 Choice Hotels International, Inc...... 5,919 3.7 CoStar Group, Inc...... 36,433 6.6 Marriott Vacations Worldwide Corp...... 5,635 2.0 ANSYS, Inc...... 31,245 5.6 Schrodinger, Inc...... 5,502 0.9 Mettler-Toledo International, Inc...... 27,118 1.3 Primerica, Inc...... 5,264 2.7 Alexandria Real Estate Equities, Inc...... 24,050 1.5 Iridium Communications Inc...... 5,242 4.0 West Pharmaceutical Services, Inc...... 20,944 1.7 Douglas Emmett, Inc...... 5,117 1.3 SS&C Technologies Holdings, Inc...... 18,621 2.4 Dechra Pharmaceuticals PLC ...... 5,102 0.3 Arch Capital Group Ltd...... 14,645 3.8 Essent Group Ltd...... 4,857 0.3 Gartner, Inc...... 14,303 3.0 Boyd Gaming Corporation ...... 4,787 0.2 Wix.com Ltd...... 13,908 0.6 Marel hf...... 4,728 0.3 Penn National Gaming, Inc...... 13,415 6.2 Houlihan Lokey, Inc...... 4,661 0.4 FactSet Research Systems, Inc...... 12,632 4.6 Kinsale Capital Group, Inc...... 4,538 2.3 Bio-Techne Corporation ...... 12,260 3.1 Altair Engineering Inc...... 4,285 0.5 Vail Resorts, Inc...... 11,229 6.4 Neogen Corp...... 4,222 0.5 The Carlyle Group Inc...... 11,107 0.7 Desktop Metal, Inc...... 3,899 0.2 Guidewire Software, Inc...... 10,782 1.5 Cohen & Steers, Inc...... 3,551 1.7 Pegasystems, Inc...... 10,754 1.5 Moelis & Company ...... 3,200 0.4 Bright Horizons Family Solutions, Inc...... 10,477 2.7 Red Rock Resorts, Inc...... 2,937 0.5 Denali Therapeutics Inc...... 10,044 0.7 Manchester United plc ...... 2,728 0.8 Morningstar, Inc...... 9,919 2.9 American Assets Trust, Inc...... 1,741 0.1 Gaming and Leisure Properties, Inc...... 9,748 2.7 BrightView Holdings, Inc...... 1,586 0.2 Trex Company, Inc...... 9,694 2.3 OneSpa World Holdings Limited ...... 862 0.0 Adaptive Biotechnologies Corporation ..... 8,087 0.3 Yucaipa Acquisition Corporation ...... 440 0.1 Littelfuse, Inc...... 6,207 0.3 99.7%

128 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...... $42,639 2.0% Array Technologies, Inc...... $5,479 1.4% Liberty Broadband Corporation ...... 37,970 1.1 HealthEquity, Inc...... 5,367 1.4 The Trade Desk ...... 37,618 2.8 Ollie’s Bargain Outlet Holdings, Inc...... 5,349 1.2 DexCom, Inc...... 35,503 1.6 Certara, Inc...... 5,159 0.4 TransDigm Group, Inc...... 33,688 1.5 Dechra Pharmaceuticals PLC ...... 5,102 0.9 SBA Communications Corp...... 31,349 2.2 Inspire Medical Systems, Inc...... 5,066 1.2 Mettler-Toledo International, Inc...... 27,118 1.3 Mercury Systems, Inc...... 4,932 2.0 Waste Connections, Inc...... 26,965 1.5 Houlihan Lokey, Inc...... 4,661 0.8 DraftKings, Inc...... 18,238 0.9 Kinsale Capital Group, Inc...... 4,538 1.3 Clarivate Plc ...... 18,003 2.3 RBC Bearings Incorporated ...... 4,494 0.7 Ceridian HCM Holding Inc...... 15,750 1.8 Madison Square Garden Sports Corp...... 4,439 0.8 Liberty SiriusXM Group ...... 14,775 0.9 ASGN Incorporated ...... 4,419 2.6 Gartner, Inc...... 14,303 3.2 Fox Factory Holding Corp ...... 4,410 0.2 Cognex Corporation ...... 14,020 1.9 Altair Engineering Inc...... 4,285 1.0 Wix.com Ltd...... 13,908 1.7 Endava plc ...... 4,218 1.2 Penn National Gaming, Inc...... 13,415 2.0 Avient Corporation ...... 3,685 1.4 Guardant Health, Inc...... 12,884 0.6 John Bean Technologies Corporation ...... 3,613 1.6 Guidewire Software, Inc...... 10,782 3.1 Jamf Holding Corp...... 3,489 0.4 Bright Horizons Family Solutions, Inc...... 10,477 2.2 Kratos Defense & Security Solutions, Inc...... 3,367 1.3 ICON Plc ...... 10,290 2.3 Installed Building Products, Inc...... 3,038 3.4 Liberty Media Corporation – Red Rock Resorts, Inc...... 2,937 0.9 Liberty Formula One ...... 9,757 1.0 BRP Group, Inc...... 2,675 1.7 Gaming and Leisure Properties, Inc...... 9,748 0.0 Madison Square Garden Entertainment Corp. .... 2,536 0.5 Trex Company, Inc...... 9,694 1.3 Summit Materials, Inc...... 2,351 0.1 Floor & Decor Holdings, Inc...... 9,656 2.7 Silk Road Medical, Inc...... 2,139 1.4 Americold Realty Trust ...... 9,396 2.1 Repay Holdings Corporation ...... 2,001 1.9 WEX Inc...... 8,982 1.5 Axonics Modulation Technologies, Inc...... 1,987 1.0 Aspen Technology, Inc...... 8,829 2.1 CryoPort, Inc...... 1,740 0.3 Nuvei Technologies Corp...... 8,444 0.9 Hydrofarm Holdings Group, Inc...... 1,736 0.2 PRA Health Sciences, Inc...... 8,047 1.4 The Cheesecake Factory, Inc...... 1,689 1.1 Berry Global Group, Inc...... 7,501 0.9 Paya Holding Inc...... 1,585 0.9 SiteOne Landscape Supply, Inc...... 7,016 3.1 UTZ Brands, Inc...... 1,310 1.8 Fiverr International Ltd...... 6,851 0.4 OneSpa World Holdings Limited ...... 862 0.5 Planet Fitness, Inc...... 6,717 1.2 Grid Dynamics Holdings, Inc...... 641 0.6 Vertiv Holdings, LLC ...... 6,132 2.6 SOC Telemed, Inc...... 602 0.5 Shift4 Payments, Inc...... 6,064 0.6 Whole Earth Brands, Inc...... 419 0.0 AZEK Co Inc...... 5,946 0.8 98.1%

129 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 Microsoft Corporation ...... $1,681,606 6.7% Take-Two Interactive Software, Inc...... $23,900 0.9% Amazon.com, Inc...... 1,634,169 5.5 Farfetch Limited ...... 21,688 1.2 Alphabet Inc...... 1,185,264 3.8 MarketAxess Holdings Inc...... 21,660 0.4 Facebook, Inc...... 778,040 2.4 ZoomInfo Technologies Inc...... 18,777 2.5 Tesla, Inc...... 668,905 3.7 GDS Holdings Limited ...... 17,501 1.6 Alibaba Group Holding Limited ...... 629,683 1.8 Ceridian HCM Holding Inc...... 15,750 1.3 Visa, Inc...... 527,025 1.9 10X Genomics, Inc...... 15,237 0.5 Mastercard Incorporated ...... 355,843 1.7 Gartner, Inc...... 14,303 1.5 NVIDIA Corporation ...... 323,242 1.1 argenx SE ...... 13,923 1.7 PayPal Holdings, Inc...... 274,410 1.8 Wix.com Ltd...... 13,908 1.2 Adobe Inc...... 239,917 1.1 Guardant Health, Inc...... 12,884 0.6 Netflix, Inc...... 238,892 0.9 Opendoor Technologies Inc...... 12,375 2.3 ServiceNow, Inc...... 107,389 1.0 Guidewire Software, Inc...... 10,782 2.0 Square, Inc...... 98,142 0.4 Arrowhead Pharmaceuticals, Inc...... 7,885 1.8 Zoom Video Communications, Inc...... 96,476 0.4 Acceleron Pharma Inc...... 7,709 1.5 Intuitive Surgical, Inc...... 96,172 0.9 Rexford Industrial Realty, Inc...... 6,410 0.8 Airbnb, Inc...... 88,439 0.0 Stitch Fix, Inc...... 6,158 0.8 MercadoLibre, Inc...... 83,387 1.0 Schrodinger, Inc...... 5,502 0.7 Snowflake Inc...... 79,664 1.2 Vroom, Inc...... 5,336 1.0 Snap Inc...... 74,603 2.0 Certara, Inc...... 5,159 0.4 Adyen N.V...... 70,314 0.5 Pacific Biosciences of California, Inc...... 4,826 1.5 Equinix, Inc...... 63,635 0.7 NEXTDC Limited ...... 4,306 0.4 Vertex Pharmaceuticals Incorporated ...... 61,457 0.7 Endava plc ...... 4,218 1.1 Edwards Lifesciences Corp...... 56,859 0.7 PTC Therapeutics ...... 4,164 0.7 Illumina, Inc...... 54,020 0.6 Desktop Metal, Inc...... 3,899 0.6 CrowdStrike, Inc...... 46,868 0.9 CareDx, Inc...... 3,569 1.2 DoorDash Inc...... 45,346 0.4 ShockWave Medical, Inc...... 3,553 1.1 Electronic Arts Inc...... 41,655 0.9 Kratos Defense & Security Solutions, Inc...... 3,367 1.3 Veeva Systems Inc...... 41,237 0.3 Seer, Inc...... 3,333 0.3 Pinterest, Inc...... 40,731 2.1 Installed Building Products, Inc...... 3,038 0.7 The Trade Desk ...... 37,618 0.7 Arco Platform Limited ...... 2,044 0.3 CoStar Group, Inc...... 36,433 1.3 Purple Innovation, Inc...... 2,026 1.2 RingCentral, Inc...... 33,968 2.5 PAR Technology Corporation ...... 1,357 1.3 QuantumScape Corporation ...... 30,737 1.2 Dragoneer Growth Opportunities Corp...... 1,207 0.4 Zillow Group, Inc...... 30,592 1.9 Altimeter Growth Corp...... 801 0.4 Splunk, Inc...... 27,475 1.5 ION Acquisition Corp Ltd...... 391 0.5 Alexandria Real Estate Equities, Inc...... 24,050 0.4 94.3%

130 Baron Funds

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 Tesla, Inc...... $668,905 44.6% Gartner, Inc...... $14,303 1.5% Shopify Inc...... 138,533 1.1 FactSet Research Systems, Inc...... 12,632 3.2 The Charles Schwab Corp...... 99,530 2.9 Vail Resorts, Inc...... 11,229 3.6 Airbnb, Inc...... 88,439 0.0 Guidewire Software, Inc...... 10,782 1.6 Activision Blizzard, Inc...... 71,760 1.0 Gaming and Leisure Properties, Inc...... 9,748 1.1 Adyen N.V...... 70,314 1.9 Hyatt Hotels Corp...... 7,512 3.0 Brookfield Asset Management, Inc...... 65,120 0.6 Virgin Galactic Holdings, Inc...... 5,970 0.0 Spotify Technology S.A...... 59,655 0.9 American Well Corporation ...... 5,951 0.1 IDEXX Laboratories, Inc...... 42,639 5.5 Marriott Vacations Worldwide Corp...... 5,635 1.3 MSCI, Inc...... 37,015 0.8 Iridium Communications Inc...... 5,242 0.8 CoStar Group, Inc...... 36,433 9.4 Douglas Emmett, Inc...... 5,117 0.4 Zillow Group, Inc...... 30,592 5.2 Red Rock Resorts, Inc...... 2,937 0.2 GDS Holdings Limited ...... 17,501 1.2 Manchester United plc ...... 2,728 1.2 HEICO Corporation ...... 16,660 0.4 Atlas Crest Investment Corp...... 648 0.1 GoodRx Holdings, Inc...... 15,787 0.1 97.0% Arch Capital Group Ltd...... 14,645 3.3

131 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 Amazon.com, Inc...... $1,634,169 8.5% Vertex Pharmaceuticals Incorporated ...... $61,457 2.5% Alphabet Inc...... 1,185,264 4.5 Illumina, Inc...... 54,020 2.8 Facebook, Inc...... 778,040 3.5 Twilio Inc...... 51,100 3.9 Alibaba Group Holding Limited ...... 629,683 3.4 CrowdStrike, Inc...... 46,868 2.7 Visa, Inc...... 527,025 3.0 DoorDash Inc...... 45,346 0.4 Mastercard Incorporated ...... 355,843 3.9 Veeva Systems Inc...... 41,237 3.8 PayPal Holdings, Inc...... 274,410 2.5 RingCentral, Inc...... 33,968 3.8 Adobe Inc...... 239,917 3.7 Datadog, Inc...... 29,978 1.7 ASML Holding N.V...... 204,597 2.7 Splunk, Inc...... 27,475 2.7 Shopify Inc...... 138,533 1.2 Slack Technologies Inc...... 24,345 1.2 AstraZeneca PLC ...... 131,240 1.1 EPAM Systems, Inc...... 20,064 3.2 ServiceNow, Inc...... 107,389 4.0 ZoomInfo Technologies Inc...... 18,777 2.0 Intuitive Surgical, Inc...... 96,172 3.4 GDS Holdings Limited ...... 17,501 1.9 Airbnb, Inc...... 88,439 0.0 10X Genomics, Inc...... 15,237 1.8 MercadoLibre, Inc...... 83,387 2.8 argenx SE ...... 13,923 1.0 Snowflake Inc...... 79,664 1.9 Wix.com Ltd...... 13,908 2.5 S&P Global Inc...... 79,092 2.3 Dynatrace Holdings LLC ...... 12,206 1.1 Adyen N.V...... 70,314 2.0 Acceleron Pharma Inc...... 7,709 1.8 Equinix, Inc...... 63,635 2.3 97.5%

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...... $668,905 38.4% Denali Therapeutics Inc...... $10,044 1.3% Adyen N.V...... 70,314 2.0 American Homes 4 Rent ...... 9,488 1.0 Spotify Technology S.A...... 59,655 2.4 Americold Realty Trust ...... 9,396 0.6 CoStar Group, Inc...... 36,433 8.6 Hyatt Hotels Corp...... 7,512 3.8 BioNTech SE ...... 19,629 0.9 Choice Hotels International, Inc...... 5,919 2.5 GDS Holdings Limited ...... 17,501 1.6 Schrodinger, Inc...... 5,502 0.3 Arch Capital Group Ltd...... 14,645 1.6 Iridium Communications Inc...... 5,242 2.4 Penn National Gaming, Inc...... 13,415 7.8 Red Rock Resorts, Inc...... 2,937 0.8 FactSet Research Systems, Inc...... 12,632 3.8 Manchester United plc ...... 2,728 1.4 Vail Resorts, Inc...... 11,229 5.6 88.8% Guidewire Software, Inc...... 10,782 2.0

132 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 Tencent Holdings Limited ...... $689,545 1.2% Eurofins Scientific SE ...... $15,993 1.2% Alibaba Group Holding Limited ...... 629,683 1.1 Suzano S.A...... 15,342 0.8 Nestle S.A...... 339,290 0.8 Advantest Corporation ...... 14,940 1.0 LVMH Moet Hennessy Louis Vuitton SE ...... 315,040 1.5 Arch Capital Group Ltd...... 14,645 1.3 Reliance Industries Limited ...... 178,708 1.0 Glodon Company Limited ...... 14,268 0.5 Linde plc ...... 137,392 1.2 Kingdee International Software Group Co. Ltd. ... 14,129 1.0 Keyence Corporation ...... 136,614 1.6 argenx SE ...... 13,923 2.1 AstraZeneca PLC ...... 131,240 1.2 Wix.com Ltd...... 13,908 1.0 Sony Corporation ...... 127,493 1.1 Rentokil Initial plc ...... 12,922 0.9 HDFC Bank Limited ...... 108,265 0.6 MonotaRO Co., Ltd...... 12,743 1.0 Midea Group Co., Ltd...... 105,695 0.6 Zai Lab Limited ...... 11,913 2.0 Industria de Diseno Textil, S.A...... 99,146 0.7 TeamViewer AG ...... 10,766 1.4 Fidelity National Information Services, Inc...... 87,777 0.6 Notre Dame Intermedica Participacoes S.A...... 9,197 0.8 China Tourism Group Duty Free Kingsoft Corporation Ltd...... 8,854 0.7 Corporation Limited ...... 84,326 0.7 China Conch Venture Holdings Ltd...... 8,777 0.7 Shenzhen Mindray Bio-Medical Cae Inc ...... 7,826 1.4 Electronics Co., Ltd...... 79,190 0.6 Square Enix Holdings Co., Ltd...... 7,429 0.7 Sberbank of Russia PJSC ...... 78,361 0.7 Hua Hong Semiconductor Limited ...... 7,355 0.7 Recruit Holdings Co., Ltd...... 70,972 1.0 Korea Shipbuilding & Offshore Hong Kong Exchanges and Clearing Limited ..... 69,505 0.5 Engineering Co., Ltd...... 7,069 0.9 BNP Paribas S.A...... 65,813 2.4 B&M European Value Retail S.A...... 7,064 1.2 Housing Development Finance Clariant AG ...... 7,057 1.2 Corporation Limited ...... 63,039 0.7 Han’s Laser Technology Industry Group Co., Ltd .. 6,975 0.6 Spotify Technology S.A...... 59,655 1.0 TCS Group Holding PLC ...... 6,557 0.9 Tokyo Electron Limited ...... 58,466 1.1 Winning Health Technology Group Co., Ltd...... 5,710 0.3 Takeda Pharmaceutical Company Limited ...... 57,327 1.4 Dechra Pharmaceuticals PLC ...... 5,102 0.8 Itau Unibanco Banco Holding SA ...... 56,175 0.7 Godrej Properties Limited ...... 4,941 0.8 Kotak Mahindra Bank Ltd...... 54,083 0.6 GRUMA, S.A.B. de C.V...... 4,749 0.5 Novatek PJSC ...... 50,949 0.6 NEXTDC Limited ...... 4,306 1.5 Pernod Ricard SA ...... 50,164 1.0 Endava plc ...... 4,218 1.4 FANUC Corp...... 49,593 1.7 Agora, Inc...... 4,029 0.3 Bajaj Finance Limited ...... 43,670 1.6 S4 Capital plc ...... 3,655 1.9 Telefonaktiebolaget LM Ericsson ...... 40,073 1.6 SMS CO., LTD...... 3,332 1.2 Vivendi SA ...... 38,219 1.2 Max Financial Services Limited ...... 3,188 0.8 Agilent Technologies, Inc...... 36,359 1.0 Trainline Plc ...... 3,050 0.4 Lloyds Banking Group plc ...... 35,300 1.6 Tower Semiconductor Ltd...... 2,777 0.8 Experian plc ...... 34,834 0.9 Nippon Life India Asset Management Limited .... 2,494 0.5 Galaxy Entertainment Group Limited ...... 33,759 0.7 Network International Holdings Ltd...... 2,456 0.3 Grupo Mexico, S.A.B. de C.V...... 32,909 1.1 Afya Limited ...... 2,358 0.8 Credit Suisse Group AG ...... 31,520 2.3 Future plc ...... 2,330 1.6 Koninklijke DSM N.V...... 31,189 0.8 Befesa S.A...... 2,152 1.3 Will Semiconductor Co., Ltd...... 30,659 0.5 Arco Platform Limited ...... 2,044 0.6 Cellnex Telecom, S.A...... 29,206 1.1 J D Wetherspoon plc ...... 1,837 1.1 Constellation Software, Inc...... 27,518 1.2 Jacobio Pharmaceuticals Group Co., Ltd...... 1,388 0.0 NEXON Co., Ltd...... 27,305 0.9 Detsky Mir PJSC ...... 1,354 0.8 Genmab A/S ...... 26,651 0.7 JM Financial Limited ...... 1,101 0.4 Techtronic Industries Co. Ltd...... 26,145 0.8 Golar LNG Ltd...... 1,050 0.7 XP Inc...... 22,193 0.9 AMG Advanced Metallurgical Group N.V...... 937 0.7 Farfetch Limited ...... 21,688 1.2 Edelweiss Financial Services Limited ...... 877 0.4 Epiroc AB ...... 21,572 0.9 Okamoto Industries, Inc...... 751 0.7 PagSeguro Digital Ltd...... 18,654 0.8 ION Acquisition Corp 1 Ltd...... 391 0.6 Symrise AG ...... 17,934 0.8 WANdisco plc ...... 334 0.4 GDS Holdings Limited ...... 17,501 1.0 97.1%

133 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...... $285,967 1.5% Fortune Brands Home & Security, Inc...... $11,909 0.7% Lowe’s Companies, Inc...... 117,609 2.1 Equity Lifestyle Properties, Inc...... 11,546 1.7 American Tower Corp...... 99,708 3.1 MGM Growth Properties LLC ...... 10,222 1.6 Airbnb, Inc...... 88,439 0.0 Gaming and Leisure Properties, Inc...... 9,748 1.3 Prologis, Inc...... 73,607 2.1 Trex Company, Inc...... 9,694 0.7 The Sherwin-Williams Company ...... 66,748 1.1 Americold Realty Trust ...... 9,396 1.6 Brookfield Asset Management, Inc...... 65,120 2.9 Jones Lang LaSalle Incorporated ...... 7,612 2.3 Equinix, Inc...... 63,635 3.0 Hyatt Hotels Corp...... 7,512 0.9 Las Vegas Sands Corporation ...... 45,524 2.8 Redfin Corporation ...... 7,024 0.2 Digital Realty Trust, Inc...... 40,268 1.2 SiteOne Landscape Supply, Inc...... 7,016 1.0 CoStar Group, Inc...... 36,433 1.8 Rexford Industrial Realty, Inc...... 6,410 1.6 SBA Communications Corp...... 31,349 0.9 AZEK Co Inc...... 5,946 1.1 Hilton Worldwide Holdings, Inc...... 30,869 1.0 Marriott Vacations Worldwide Corp...... 5,635 1.8 Zillow Group, Inc...... 30,592 2.0 Toll Brothers, Inc...... 5,427 1.4 Cellnex Telecom, S.A...... 29,206 1.6 Douglas Emmett, Inc...... 5,117 2.3 D.R. Horton, Inc...... 25,130 1.5 Boyd Gaming Corporation ...... 4,787 3.3 Alexandria Real Estate Equities, Inc...... 24,050 1.6 21Vianet Group, Inc...... 4,611 1.5 Lennar Corporation ...... 23,275 1.5 The Howard Hughes Corporation ...... 4,335 1.6 Equity Residential ...... 22,067 1.2 NEXTDC Limited ...... 4,306 1.5 CBRE Group, Inc...... 21,040 1.7 Taylor Morrison Home Corporation ...... 3,333 1.2 Vulcan Materials Company ...... 19,653 1.3 Installed Building Products, Inc...... 3,038 1.5 GDS Holdings Limited ...... 17,501 4.7 Red Rock Resorts, Inc...... 2,937 3.3 Invitation Homes, Inc...... 16,648 1.7 Six Flags Entertainment Corporation ...... 2,898 2.2 Pool Corporation ...... 14,959 1.0 Hilton Grand Vacations Inc...... 2,668 1.7 Penn National Gaming, Inc...... 13,415 3.9 Seaworld Entertainment Inc...... 2,476 0.9 Opendoor Technologies Inc...... 12,375 3.0 American Assets Trust, Inc...... 1,741 1.3 Wynn Resorts Ltd...... 12,171 4.9 95.3%

134 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 Tencent Holdings Limited ...... $689,545 4.0% China Molybdenum Co., Ltd...... $19,445 0.7% Alibaba Group Holding Limited ...... 629,683 3.7 Titan Company Limited ...... 19,041 0.8 Taiwan Semiconductor Manufacturing PagSeguro Digital Ltd...... 18,654 1.3 Company Ltd...... 565,490 3.9 Sino Biopharmaceutical Ltd...... 18,247 0.7 Samsung Electronics Co., Ltd...... 445,137 4.7 GDS Holdings Limited ...... 17,501 1.8 Ping An Insurance (Group) Company CP All Plc...... 17,466 0.4 of China, Ltd...... 235,626 1.4 Suzano S.A...... 15,342 1.1 Meituan Inc...... 223,596 1.0 Glodon Company Limited ...... 14,268 1.1 Reliance Industries Limited ...... 178,708 2.3 Kingdee International Software Group Co. Ltd. ... 14,129 1.4 Keyence Corporation ...... 136,614 1.0 Divi’s Laboratories Ltd...... 13,958 1.3 HDFC Bank Limited ...... 108,265 1.1 Beijing Oriental Yuhong Waterproof Midea Group Co., Ltd...... 105,695 1.7 Technology Co., Ltd...... 13,937 0.9 China Tourism Group Duty Free OTP Bank Plc...... 12,602 0.8 Corporation Limited ...... 84,326 1.5 Ayala Land, Inc...... 12,545 0.7 Shenzhen Mindray Bio-Medical SBI Life Insurance Company Limited ...... 12,376 0.9 Electronics Co., Ltd...... 79,190 1.1 Zai Lab Limited ...... 11,913 2.7 Sberbank of Russia PJSC ...... 78,361 1.6 Dr. Reddy’s Laboratories Ltd...... 11,846 1.2 Hindustan Unilever Limited ...... 77,026 0.7 Britannia Industries Limited ...... 11,790 0.5 Hong Kong Exchanges and Clearing Limited ..... 69,505 0.5 Localiza Rent a Car S.A...... 10,068 1.3 Hangzhou Hikvision Digital Technology Co., Ltd. .. 69,306 1.2 BDO Unibank, Inc...... 9,750 0.5 Housing Development Finance ICICI Lombard General Insurance Corporation Limited ...... 63,039 1.3 Company Limited ...... 9,461 0.7 S. F. Holding Co., Ltd...... 61,472 0.8 Notre Dame Intermedica Participacoes S.A...... 9,197 1.3 Itau Unibanco Banco Holding SA ...... 56,175 1.0 Kingsoft Corporation Ltd...... 8,854 1.3 Kotak Mahindra Bank Ltd...... 54,083 1.2 China Conch Venture Holdings Ltd...... 8,777 1.5 Novatek PJSC ...... 50,949 1.1 Tata Consumer Products Limited ...... 7,440 0.8 Wal-Mart de Mexico, S.A.B. de C.V...... 49,121 0.8 Ozon Holdings PLC ...... 7,422 0.4 Bajaj Finance Limited ...... 43,670 2.2 Hua Hong Semiconductor Limited ...... 7,355 1.0 Glencore PLC ...... 42,455 0.8 Korea Shipbuilding & Offshore Bharti Airtel Limited ...... 38,057 0.7 Engineering Co., Ltd...... 7,069 1.1 Asian Paints Limited ...... 36,291 0.9 Han’s Laser Technology Industry Group Co., Ltd .. 6,975 0.9 Lufax Holding Ltd...... 34,965 0.8 Rumo S.A...... 6,868 0.6 Galaxy Entertainment Group Limited ...... 33,759 0.8 Muthoot Finance Ltd...... 6,646 0.8 Grupo Mexico, S.A.B. de C.V...... 32,909 1.2 Winning Health Technology Group Co., Ltd...... 5,710 0.4 New Oriental Education & GRUMA, S.A.B. de C.V...... 4,749 0.4 Technology Group Inc...... 31,381 0.9 Tata Communications Limited ...... 4,293 1.0 Will Semiconductor Co., Ltd...... 30,659 0.5 Venustech Group Inc...... 4,170 0.5 Shenzhou International Group Holdings Ltd...... 29,473 1.2 Shanghai Henlius Biotech, Inc...... 3,292 0.3 PJSC Polyus ...... 27,432 0.5 Max Financial Services Limited ...... 3,188 1.2 Techtronic Industries Co. Ltd...... 26,145 1.4 Nippon Life India Asset Management Limited .... 2,494 0.6 StoneCo Ltd...... 25,908 1.1 Network International Holdings Ltd...... 2,456 0.4 Li Auto Inc...... 25,878 0.3 Afya Limited ...... 2,358 0.5 Fomento Economico Mexicano, S.A.B. de C.V. .... 25,654 0.3 Aeris Industria Comercio Equipamentos ZTO Express (Cayman) Inc...... 24,744 0.7 Geracao Energia SA ...... 1,475 0.6 B3 S.A.—Brasil, Bolsa, Balcao ...... 24,571 1.1 New Frontier Health Corporation ...... 1,130 0.3 Yandex N.V...... 24,519 0.7 JM Financial Limited ...... 1,101 0.6 Delta Electronics, Inc...... 24,313 1.6 Golar LNG Ltd...... 1,050 0.5 Yum China Holdings Inc...... 24,049 1.0 Edelweiss Financial Services Limited ...... 877 0.4 China Mengniu Dairy Co. Ltd...... 23,829 1.3 Hemisphere Properties India Limited ...... 371 0.1 XP Inc...... 22,193 1.2 DD3 Acquisition Corp. II ...... 129 0.0 Yunnan Baiyao Group Co., Ltd...... 22,189 0.9 99.0% Hangzhou Tigermed Consulting Co., Ltd...... 21,364 1.0

135 Baron Funds

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 Index Net. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Amazon.com, Inc...... $1,634,169 5.0% EPAM Systems, Inc...... $20,064 2.5% Alphabet Inc...... 1,185,264 3.9 ZoomInfo Technologies Inc...... 18,777 2.0 Facebook, Inc...... 778,040 3.3 PagSeguro Digital Ltd...... 18,654 1.2 Alibaba Group Holding Limited ...... 629,683 4.7 GDS Holdings Limited ...... 17,501 3.3 Meituan Inc...... 223,596 2.2 10X Genomics, Inc...... 15,237 1.8 Pinduoduo Inc...... 218,646 1.4 argenx SE ...... 13,923 2.3 ASML Holding N.V...... 204,597 0.8 Wix.com Ltd...... 13,908 2.5 Shopify Inc...... 138,533 1.8 Guardant Health, Inc...... 12,884 1.9 Airbnb, Inc...... 88,439 0.0 Opendoor Technologies Inc...... 12,375 2.6 MercadoLibre, Inc...... 83,387 3.1 Dynatrace Holdings LLC ...... 12,206 1.1 Snowflake Inc...... 79,664 1.8 Zai Lab Limited ...... 11,913 1.9 Adyen N.V...... 70,314 1.6 Bill.com Holdings, Inc...... 11,079 0.8 Illumina, Inc...... 54,020 2.3 AbCellera Biologics Inc...... 10,832 0.2 Twilio Inc...... 51,100 2.6 Globant, S.A...... 8,609 0.7 CrowdStrike, Inc...... 46,868 1.8 Nuvei Technologies Corp...... 8,444 1.2 DoorDash Inc...... 45,346 0.4 Arrowhead Pharmaceuticals, Inc...... 7,885 0.8 Bajaj Finance Limited ...... 43,670 1.6 Acceleron Pharma Inc...... 7,709 3.0 TAL Education Group ...... 42,929 1.8 Fiverr International Ltd...... 6,851 2.6 Veeva Systems Inc...... 41,237 1.7 nCino Inc...... 6,683 0.0 RingCentral, Inc...... 33,968 3.4 Schrodinger, Inc...... 5,502 1.4 Okta, Inc...... 32,918 0.6 BigCommerce Holdings, Inc...... 4,436 0.3 Datadog, Inc...... 29,978 0.7 Endava plc ...... 4,218 2.3 Splunk, Inc...... 27,475 2.4 PTC Therapeutics ...... 4,164 1.6 Zscaler, Inc...... 26,800 1.0 Afya Limited ...... 2,358 1.4 StoneCo Ltd...... 25,908 1.9 Arco Platform Limited ...... 2,044 0.8 Slack Technologies Inc...... 24,345 1.1 ION Acquisition Corp 1 Ltd...... 391 0.6 Cloudflare, Inc...... 23,352 1.1 Sarissa Capital Acquisition Corp...... 253 0.7 Allegro.eu ...... 23,200 0.1 DD3 Acquisition Corp. II ...... 129 0.4 96.0%

136 Baron Funds

Baron Discovery Fund

Baron Discovery 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 DraftKings, Inc...... $18,238 0.3% Red Rock Resorts, Inc...... $2,937 1.0% Penn National Gaming, Inc...... 13,415 1.5 Veracyte, Inc...... 2,834 1.9 Dynatrace Holdings LLC ...... 12,206 1.1 ESCO Technologies, Inc...... 2,688 0.7 Bill.com Holdings, Inc...... 11,079 0.4 BRP Group, Inc...... 2,675 1.6 Liberty Media Corporation – Accolade, Inc...... 2,393 0.8 Liberty Formula One ...... 9,757 0.5 Future plc ...... 2,330 1.3 Trex Company, Inc...... 9,694 1.4 Ping Identity Corporation ...... 2,323 1.5 Floor & Decor Holdings, Inc...... 9,656 2.5 Silk Road Medical, Inc...... 2,139 1.7 Americold Realty Trust ...... 9,396 1.2 Purple Innovation, Inc...... 2,026 1.7 SiteOne Landscape Supply, Inc...... 7,016 2.2 Repay Holdings Corporation ...... 2,001 1.0 Rexford Industrial Realty, Inc...... 6,410 1.3 Nova Measuring Instruments Ltd...... 1,994 1.2 Shift4 Payments, Inc...... 6,064 0.9 Axonics Modulation Technologies, Inc...... 1,987 1.1 Berkeley Lights, Inc...... 5,755 0.3 TPI Composites, Inc...... 1,886 2.8 Array Technologies, Inc...... 5,479 1.2 Revance Therapeutics, Inc...... 1,886 1.6 Ollie’s Bargain Outlet Holdings, Inc...... 5,349 1.4 American Assets Trust, Inc...... 1,741 1.1 Everbridge, Inc...... 5,211 1.5 CryoPort, Inc...... 1,740 0.7 Varonis Systems, Inc...... 5,191 1.5 Hydrofarm Holdings Group, Inc...... 1,736 0.2 Biohaven Pharmaceutical The RealReal, Inc...... 1,731 0.5 Holding Company Ltd...... 5,137 0.9 Eargo, Inc...... 1,712 1.0 Inspire Medical Systems, Inc...... 5,066 0.7 Helios Technologies, Inc...... 1,711 1.4 Allegro MicroSystems, Inc...... 5,050 2.0 The Cheesecake Factory, Inc...... 1,689 1.1 Medallia Inc...... 4,998 1.0 Longview Acquisition Corp...... 1,530 0.7 Mercury Systems, Inc...... 4,932 2.0 PAR Technology Corporation ...... 1,357 1.7 SailPoint Technologies Holdings, Inc...... 4,840 0.5 UTZ Brands, Inc...... 1,310 1.7 Pacific Biosciences of California, Inc...... 4,826 1.9 Raven Industries Inc...... 1,186 1.5 Qualys, Inc...... 4,755 1.4 Cerus Corporation ...... 1,157 1.1 Emergent BioSolutions Inc...... 4,749 1.3 Vital Farms, Inc...... 998 0.6 Kinsale Capital Group, Inc...... 4,538 2.7 Inogen, Inc...... 988 1.6 Inari Medical, Inc...... 4,252 0.6 Ichor Holdings, Ltd...... 841 1.1 Endava plc ...... 4,218 2.6 Acutus Medical, Inc...... 802 1.0 Novanta Inc...... 4,157 0.1 Montrose Environmental Group, Inc...... 773 1.3 Fevertree Drinks plc ...... 4,026 1.7 Esperion Therapeutics, Inc...... 725 0.7 Kornit Digital Ltd...... 4,013 1.3 AxoGen, Inc...... 718 0.7 Wingstop Inc...... 3,935 0.1 ViewRay Incorporated ...... 567 0.6 Advanced Energy Industries, Inc...... 3,711 2.2 Applied Therapeutics, Inc...... 495 0.2 Progyny, Inc...... 3,672 1.9 Laird Superfood, Inc...... 420 0.3 S4 Capital plc ...... 3,655 1.7 TherapeuticsMD, Inc...... 363 0.3 CareDx, Inc...... 3,569 2.7 Sientra, Inc...... 196 0.5 Kratos Defense & Security Solutions, Inc...... 3,367 2.0 Barfresh Food Group, Inc...... 64 0.0 Seer, Inc...... 3,333 0.3 93.3% Melco International Development Limited ...... 2,948 1.0

137 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 Microsoft Corporation ...... $1,681,606 7.4% Fidelity National Information Services, Inc...... $87,777 3.1% Alphabet Inc...... 1,185,264 6.4 S&P Global Inc...... 79,092 3.8 Facebook, Inc...... 778,040 4.4 CME Group, Inc...... 65,354 1.0 Visa, Inc...... 527,025 2.5 Equinix, Inc...... 63,635 1.5 Mastercard Incorporated ...... 355,843 3.1 Ecolab Inc...... 61,759 1.5 UnitedHealth Group Incorporated ...... 332,733 3.5 Moody’s Corporation ...... 54,507 4.6 Adobe Inc...... 239,917 4.8 Constellation Brands, Inc...... 42,459 3.0 Thermo Fisher Scientific Inc...... 184,605 4.5 TE Connectivity Ltd...... 40,043 1.4 Accenture plc ...... 172,946 3.7 MSCI, Inc...... 37,015 3.2 Costco Wholesale Corporation ...... 166,897 1.5 Agilent Technologies, Inc...... 36,359 1.1 Danaher Corporation ...... 157,803 4.5 IHS Markit Ltd...... 35,616 3.2 Charter Communications, Inc...... 153,173 2.2 Iqvia Holdings Inc...... 34,352 3.1 Texas Instruments Incorporated ...... 150,662 1.6 Mettler-Toledo International, Inc...... 27,118 1.2 AstraZeneca PLC ...... 131,240 3.5 Alexandria Real Estate Equities, Inc...... 24,050 1.6 BlackRock Inc...... 110,740 3.0 SS&C Technologies Holdings, Inc...... 18,621 2.5 Intuit Inc...... 99,804 1.7 HEICO Corporation ...... 16,660 1.9 The Estee Lauder Companies Inc...... 96,256 1.1 Fair Isaac Corporation ...... 14,870 1.9 99.0%

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...... $99,708 6.3% Equity Lifestyle Properties, Inc...... $11,546 3.6% Prologis, Inc...... 73,607 5.8 Host Hotels & Resorts, Inc...... 10,319 0.5 Crown Castle International Corp...... 68,658 2.7 MGM Growth Properties LLC ...... 10,222 2.5 Equinix, Inc...... 63,635 5.1 Gaming and Leisure Properties, Inc...... 9,748 2.3 Las Vegas Sands Corporation ...... 45,524 5.1 American Homes 4 Rent ...... 9,488 2.3 Digital Realty Trust, Inc...... 40,268 2.1 Americold Realty Trust ...... 9,396 2.3 SBA Communications Corp...... 31,349 1.5 STORE Capital Corporation ...... 8,923 1.9 Cellnex Telecom, S.A...... 29,206 1.6 Vornado Realty Trust ...... 7,142 1.2 Simon Property Group, Inc...... 27,983 2.4 Rexford Industrial Realty, Inc...... 6,410 2.8 Alexandria Real Estate Equities, Inc...... 24,050 3.2 CoreSite Realty Corporation ...... 6,128 3.0 Equity Residential ...... 22,067 2.5 Douglas Emmett, Inc...... 5,117 1.5 Brookfield Infrastructure Partners L.P...... 20,615 3.2 21Vianet Group, Inc...... 4,611 0.5 GDS Holdings Limited ...... 17,501 2.7 Park Hotels & Resorts Inc...... 4,041 0.6 Invitation Homes, Inc...... 16,648 4.9 Terreno Realty Corporation ...... 4,001 1.0 Sun Communities, Inc...... 16,344 2.4 Red Rock Resorts, Inc...... 2,937 2.9 Duke Realty Corporation ...... 14,867 1.7 Extended Stay America, Inc...... 2,630 1.7 Boston Properties, Inc...... 14,715 1.0 Kennedy-Wilson Holdings, Inc...... 2,536 2.1 Penn National Gaming, Inc...... 13,415 1.4 Pebblebrook Hotel Trust ...... 2,461 2.7 Wynn Resorts Ltd...... 12,171 2.1 Colony Capital, Inc...... 2,320 3.0 Brookfield Renewable Partners L.P...... 17,462 0.6 American Assets Trust, Inc...... 1,741 1.5 98.2%

138 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 form of 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 ...... $332,733 7.7% Guardant Health, Inc...... $12,884 1.6% Abbott Laboratories ...... 194,056 3.5 Bio-Techne Corporation ...... 12,260 1.6 Thermo Fisher Scientific Inc...... 184,605 3.5 Zai Lab Limited ...... 11,913 1.8 AstraZeneca PLC ...... 131,240 1.7 AbCellera Biologics Inc...... 10,832 0.2 Sanofi ...... 122,346 2.6 ICON Plc ...... 10,290 0.5 Intuitive Surgical, Inc...... 96,172 1.4 Denali Therapeutics Inc...... 10,044 0.6 Zoetis Inc...... 78,657 1.4 BridgeBio Pharma, Inc...... 8,725 2.6 Cigna Corporation ...... 75,209 1.2 Adaptive Biotechnologies Corporation ...... 8,087 0.8 Vertex Pharmaceuticals Incorporated ...... 61,457 3.2 Arrowhead Pharmaceuticals, Inc...... 7,885 2.9 Edwards Lifesciences Corp...... 56,859 2.0 Acceleron Pharma Inc...... 7,709 3.7 Humana Inc...... 54,296 5.2 American Well Corporation ...... 5,951 0.3 Illumina, Inc...... 54,020 1.5 Schrodinger, Inc...... 5,502 2.4 IDEXX Laboratories, Inc...... 42,639 0.8 Certara, Inc...... 5,159 0.3 Moderna, Inc...... 41,340 0.6 Biohaven Pharmaceutical Holding Veeva Systems Inc...... 41,237 0.7 Company Ltd...... 5,137 1.6 DexCom, Inc...... 35,503 1.0 Dechra Pharmaceuticals PLC ...... 5,102 1.4 Iqvia Holdings Inc...... 34,352 0.8 Inspire Medical Systems, Inc...... 5,066 1.1 Mettler-Toledo International, Inc...... 27,118 1.2 Pacific Biosciences of California, Inc...... 4,826 3.2 Genmab A/S ...... 26,651 2.0 Inari Medical, Inc...... 4,252 2.0 Alexandria Real Estate Equities, Inc...... 24,050 2.0 PTC Therapeutics ...... 4,164 1.5 West Pharmaceutical Services, Inc...... 20,944 0.7 ShockWave Medical, Inc...... 3,553 1.4 BioNTech SE ...... 19,629 0.7 Seer, Inc...... 3,333 0.5 Teleflex Incorporated ...... 19,166 2.0 Silk Road Medical, Inc...... 2,139 1.0 Insulet Corp...... 16,853 1.0 CryoPort, Inc...... 1,740 1.4 GoodRx Holdings, Inc...... 15,787 1.6 Eargo, Inc...... 1,712 0.2 10X Genomics, Inc...... 15,237 1.1 Dicerna Pharmaceuticals, Inc...... 1,653 1.2 Masimo Corporation ...... 14,776 0.3 Trillium Therapeutics Inc...... 1,481 0.5 argenx SE ...... 13,923 2.6 90.3%

139 Baron Funds

Baron FinTech Fund

Baron FinTech Fund is a non-diversified fund that, under normal circumstances, invests at least 80% of its net assets in securities of companies that develop, use, or rely on innovative technologies or services, in a significant way, for banking, lending, capital markets, financial data analytics, insurance, payments, asset management, or wealth management. The Fund may purchase securities of companies of any market capitalization and may invest in foreign stocks, including emerging market securities. Equity %of Equity %of Market Cap Net Market Cap Net Company (in millions) Assets Company (in millions) Assets Alibaba Group Holding Limited ...... $629,683 2.2% MarketAxess Holdings Inc...... $21,660 2.1% Visa, Inc...... 527,025 4.3 EPAM Systems, Inc...... 20,064 4.2 Mastercard Incorporated ...... 355,843 4.1 TransUnion ...... 18,882 2.8 PayPal Holdings, Inc...... 274,410 4.6 ZoomInfo Technologies Inc...... 18,777 1.0 Accenture plc ...... 172,946 2.2 Ceridian HCM Holding Inc...... 15,750 1.0 Shopify Inc...... 138,533 3.0 Fair Isaac Corporation ...... 14,870 3.8 Intuit Inc...... 99,804 4.5 Tradeweb Markets Inc...... 14,218 0.3 Square, Inc...... 98,142 4.1 Jack Henry & Associates, Inc...... 12,363 1.5 Fidelity National Information Services, Inc...... 87,777 2.5 Bill.com Holdings, Inc...... 11,079 1.6 MercadoLibre, Inc...... 83,387 3.5 Guidewire Software, Inc...... 10,782 2.8 S&P Global Inc...... 79,092 3.6 Nuvei Technologies Corp...... 8,444 2.7 Adyen N.V...... 70,314 3.9 nCino Inc...... 6,683 0.0 CME Group, Inc...... 65,354 0.6 Shift4 Payments, Inc...... 6,064 1.4 Global Payments Inc...... 64,483 1.3 Duck Creek Technologies, Inc...... 5,665 0.7 Moody’s Corporation ...... 54,507 2.5 Houlihan Lokey, Inc...... 4,661 1.5 London Stock Exchange Group PLC ...... 43,307 1.1 Kinsale Capital Group, Inc...... 4,538 1.2 Rocket Companies, Inc...... 40,126 0.3 Endava plc ...... 4,218 4.4 MSCI, Inc...... 37,015 3.4 BRP Group, Inc...... 2,675 1.5 CoStar Group, Inc...... 36,433 2.0 Network International Holdings Ltd...... 2,456 0.6 IHS Markit Ltd...... 35,616 2.2 Repay Holdings Corporation ...... 2,001 1.4 Verisk Analytics, Inc...... 33,752 2.0 Paya Holding Inc...... 1,585 1.0 Zillow Group, Inc...... 30,592 1.8 Grid Dynamics Holdings, Inc...... 641 1.0 FleetCor Technologies, Inc...... 22,755 0.2 98.4%

140 Baron Funds

Baron Asset Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (99.45%) Common Stocks (continued) Communication Services (6.00%) Health Care (24.90%) Cable & Satellite (1.14%) Biotechnology (0.26%) 425,000 Liberty Broadband 121,925 Acceleron Pharma, Inc.1 $ 11,278,062 $ 15,599,084 Corporation, Cl C1 $ 32,000,688 $ 67,307,250 Health Care Equipment (9.62%) Interactive Media & 178,000 DexCom, Inc.1 57,208,055 65,810,160 Services (4.86%) 849,630 IDEXX Laboratories, Inc.1 15,671,864 424,704,548 542,000 Pinterest, Inc., Cl A1 21,216,031 35,717,800 189,644 Teleflex, Inc. 37,305,542 78,051,781 1 1,287,965 Zillow Group, Inc., Cl C 44,039,787 167,177,857 110,185,461 568,566,489 1,755,709 ZoomInfo Technologies Inc., Cl A1 44,675,584 84,677,845 109,931,402 287,573,502 Health Care Supplies (3.78%) 215,418 The Cooper Companies, Inc. 36,713,299 78,265,668 Total Communication Services 141,932,090 354,880,752 513,404 West Pharmaceutical Services, Inc. 22,313,258 145,452,487 Consumer Discretionary (8.07%) 59,026,557 223,718,155 Education Services (0.58%) Health Care Technology (2.38%) 200,000 Bright Horizons Family 382,356 GoodRx Holdings, Inc., Cl A1 15,017,303 15,424,241 Solutions, Inc.1 22,917,264 34,598,000 459,386 Veeva Systems, Inc., Cl A1 27,115,596 125,067,839 Hotels, Resorts & 42,132,899 140,492,080 Cruise Lines (1.69%) Life Sciences Tools & Services (8.86%) 556,442 Choice Hotels International, Inc. 5,979,508 59,389,055 100,682 10X Genomics, Inc., Cl A1 3,926,598 14,256,571 543,233 Hyatt Hotels Corp., Cl A 16,817,762 40,335,050 399,986 Bio-Techne Corporation 39,595,545 127,015,554 22,797,270 99,724,105 336,000 Guardant Health, Inc.1,4 29,804,184 43,303,680 302,552 Illumina, Inc.1 13,002,071 111,944,240 Internet & Direct Marketing 199,117 Mettler-Toledo International, Inc.1 12,014,431 226,929,663 Retail (2.90%) 9,428 Airbnb, Inc., Cl A1,4 641,104 1,384,030 98,342,829 523,449,708 19,759 Booking Holdings, Inc.1 3,141,066 44,008,628 Total Health Care 320,965,808 1,471,825,516 186,454 DoorDash, Inc., Cl A1 19,018,308 26,616,309 1,025,000 Farfetch Limited, Cl A1,2 29,811,176 65,405,250 Industrials (16.12%) 578,000 Stitch Fix, Inc., Cl A1 37,155,623 33,940,160 Agricultural & Farm 89,767,277 171,354,377 Machinery (0.76%) 475,045 The Toro Co. 29,117,085 45,053,268 Leisure Facilities (2.90%) 613,538 Vail Resorts, Inc. 11,879,547 171,152,560 Environmental & Facilities Total Consumer Discretionary 147,361,358 476,829,042 Services (1.09%) 1,643,418 Rollins, Inc. 24,597,483 64,208,341 Financials (10.65%) Industrial Conglomerates (1.99%) Asset Management & 272,192 Roper Technologies, Inc. 31,306,147 117,339,250 Custody Banks (0.74%) 287,514 T. Rowe Price Group, Inc. 9,128,544 43,526,745 Industrial Machinery (1.32%) 390,760 IDEX Corporation 28,326,833 77,839,392 Financial Exchanges & Data (5.17%) Research & Consulting Services (10.96%) 1,2 375,725 FactSet Research Systems, Inc. 20,179,925 124,928,562 2,230,474 Clarivate Analytics Plc 35,903,681 66,267,383 1 257,267 MarketAxess Holdings, Inc. 31,487,484 146,786,260 215,493 CoStar Group, Inc. 42,162,593 199,175,870 30,000 MSCI, Inc. 7,783,774 13,395,900 1,468,500 TransUnion 79,691,638 145,704,570 326,189 Tradeweb Markets, Inc., Cl A 11,978,713 20,370,503 1,141,206 Verisk Analytics, Inc. 28,928,852 236,902,953 71,429,896 305,481,225 186,686,764 648,050,776 Total Industrials 300,034,312 952,491,027 Insurance Brokers (0.96%) 2 269,421 Willis Towers Watson plc 33,140,160 56,761,616 Information Technology (28.85%) Investment Banking & Application Software (14.97%) Brokerage (1.64%) 586,856 ANSYS, Inc.1 23,572,715 213,498,213 1,825,936 The Charles Schwab Corp. 1,609,714 96,847,645 395,300 Aspen Technology, Inc.1 40,628,908 51,487,825 1,636,093 Ceridian HCM Holding, Inc.1 64,026,866 174,342,070 Property & Casualty 88,000 Fair Isaac Corp.1 33,912,009 44,971,520 Insurance (1.34%) 1,421,809 Guidewire Software, Inc.1 77,473,157 183,029,472 2,203,444 Arch Capital Group Ltd.1,2 7,933,936 79,478,225 250,000 RingCentral, Inc., Cl A1 55,551,746 94,742,500 Regional Banks (0.80%) 771,076 SS&C Technologies Holdings, Inc. 20,933,204 56,095,779 320,421 First Republic Bank 8,284,701 47,079,458 83,000 The Trade Desk, Inc., Cl A1 16,471,978 66,483,000 Total Financials 131,526,951 629,174,914 332,570,583 884,650,379

141 Baron Funds

Baron Asset Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (continued) Private Partnerships (0.00%) Information Technology (continued) Financials (0.00%) Data Processing & Outsourced Asset Management & Custody Services (2.33%) Banks (0.00%) 684,217 Fidelity National Information 7,056,223 Windy City Investments Services, Inc. $ 40,047,298 $ 96,789,337 Holdings, L.L.C.1,3,4 $ 0 $ 184,167 149,448 FleetCor Technologies, Inc.1 5,409,936 40,773,898 45,457,234 137,563,235 Principal Amount Electronic Components (0.99%) 450,000 Amphenol Corp., Cl A 42,881,684 58,846,500 Short Term Investments (0.09%) $5,341,808 Repurchase Agreement with Fixed Internet Services & Income Clearing Corp., dated Infrastructure (5.38%) 1,2 12/31/2020, 0.00% due 680,000 GDS Holdings Limited, ADR 40,586,224 63,675,200 1/4/2021; Proceeds at 597,103 Verisign, Inc.1 27,690,138 129,213,089 1,2 maturity - $5,341,808; (Fully 500,000 Wix.com Ltd. 46,031,912 124,980,000 collateralized by $4,894,400 114,308,274 317,868,289 U.S. Treasury Note, 2.25% due 2/15/2027; Market value - IT Consulting & Other $5,448,654) 5,341,808 5,341,808 Services (4.29%) 1,584,323 Gartner, Inc.1 39,586,888 253,792,701 TOTAL INVESTMENTS (99.99%) $1,733,369,619 5,909,669,750

Technology Distributors (0.89%) CASH AND OTHER ASSETS 397,363 CDW Corp. 26,228,965 52,368,470 LESS LIABILITIES (0.01%) 436,408 Total Information Technology 601,033,628 1,705,089,574 NET ASSETS $5,910,106,158

Real Estate (4.86%) RETAIL SHARES (Equivalent to $111.11 per share Real Estate Services (0.60%) based on 25,138,868 shares outstanding) $2,793,174,593 567,323 CBRE Group, Inc., Cl A1 6,349,180 35,582,499 INSTITUTIONAL SHARES (Equivalent to $116.30 per share Specialized REITs (4.26%) based on 25,313,569 shares outstanding) $2,943,940,595 205,000 Alexandria Real Estate Equities, Inc.4 31,042,395 36,535,100 127,416 Equinix, Inc. 10,066,062 90,997,959 R6 SHARES (Equivalent to $116.28 per share 440,856 SBA Communications Corp. 11,715,567 124,378,703 based on 1,487,734 shares outstanding) $ 172,990,970 52,824,024 251,911,762 Total Real Estate 59,173,204 287,494,261 % Represents percentage of net assets. 1 Non-income producing securities. TOTAL COMMON STOCKS 1,702,027,351 5,877,785,086 2 Foreign corporation. 3 At December 31, 2020, the market value of restricted and fair valued securities amounted to $26,542,856 or 0.45% of net assets. These securities are not Private Preferred Stocks (0.45%) deemed liquid. 4 The Adviser has reclassified/classified certain securities in or out of this sub- Industrials (0.45%) industry. Such reclassifications/classifications are not supported by S&P or MSCI (unaudited). Aerospace & Defense (0.45%) ADR 96,298 Space Exploration American Depositary Receipt. Technologies Corp., Cl N1,3,4 26,000,460 26,358,689

142 Baron Funds

Baron Growth Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (99.88%) Common Stocks (continued) Communication Services (4.82%) Health Care (13.82%) Alternative Carriers (4.01%) Biotechnology (0.66%) 8,835,000 Iridium Communications, Inc.1,4 $ 55,571,865 $ 347,436,375 678,051 Denali Therapeutics, Inc.1 $ 12,825,338 $ 56,793,552 Movies & Health Care Equipment (4.92%) Entertainment (0.81%) 852,500 IDEXX Laboratories, Inc.1 12,334,578 426,139,175 4,200,000 Manchester United plc, Cl A2 58,275,334 70,308,000 Health Care Supplies (2.24%) Total Communication Services 113,847,199 417,744,375 573,717 Neogen Corp.1 13,141,411 45,495,758 525,000 West Pharmaceutical Services, Inc. 17,892,374 148,737,750 Consumer Discretionary (21.81%) 31,033,785 194,233,508 Casinos & Gaming (6.94%) 440,000 Boyd Gaming Corporation 11,056,072 18,884,800 Health Care 6,250,000 Penn National Gaming, Inc.1 87,682,607 539,812,500 Technology (0.95%) 1,695,000 Red Rock Resorts, Inc., Cl A 31,634,189 42,442,800 329,169 American Well Corp., Cl A1 5,925,042 8,337,850 932,121 Schrödinger, Inc.1 13,870,880 73,805,341 130,372,868 601,140,100 19,795,922 82,143,191 Education Services (2.74%) 1,370,000 Bright Horizons Family Life Sciences Tools & Solutions, Inc.1 43,400,248 236,996,300 Services (4.73%) 432,655 Adaptive Hotels, Resorts & Cruise Biotechnologies Corporation1 14,268,834 25,582,890 Lines (5.69%) 850,000 Bio-Techne Corporation 44,923,357 269,917,500 3,000,000 Choice Hotels International, Inc.4 72,782,127 320,190,000 100,000 Mettler-Toledo International, Inc.1 4,577,488 113,968,000 1,260,000 Marriott Vacations 63,769,679 409,468,390 Worldwide Corp. 67,382,523 172,897,200 140,164,650 493,087,200 Pharmaceuticals (0.32%) 598,076 Dechra Pharmaceuticals PLC Leisure Facilities (6.44%) (United Kingdom)2 18,422,044 28,167,426 2,000,000 Vail Resorts, Inc. 56,102,209 557,920,000 Total Health Care 158,181,346 1,196,945,242 Total Consumer Discretionary 370,039,975 1,889,143,600 Industrials (9.62%) Financials (28.76%) Building Products (2.27%) Asset Management & Custody 2,350,000 Trex Company, Inc.1 21,287,801 196,742,000 Banks (2.40%) 2,000,000 The Carlyle Group, Inc. 41,736,064 62,880,000 Environmental & Facilities 1,955,000 Cohen & Steers, Inc. 45,702,409 145,256,500 Services (0.21%) 1,220,102 BrightView Holdings, Inc.1 15,117,285 18,447,942 87,438,473 208,136,500 Industrial Machinery (0.55%) Financial Exchanges & 1,275,000 Desktop Metal, Inc1,3 12,750,000 21,012,000 Data (16.48%) 4,275,000 Marel hf (Netherlands)2 18,281,670 26,217,222 1,200,000 FactSet Research Systems, Inc. 59,954,575 399,000,000 31,031,670 47,229,222 1,100,000 Morningstar, Inc. 23,159,632 254,727,000 1,732,500 MSCI, Inc. 32,728,144 773,613,225 Research & Consulting 115,842,351 1,427,340,225 Services (6.59%) 617,500 CoStar Group, Inc.1 25,941,114 570,742,900 Investment Banking & Total Industrials 93,377,870 833,162,064 Brokerage (0.76%) 450,000 Houlihan Lokey, Inc. 19,625,874 30,253,500 Information Technology (15.40%) 760,000 Moelis & Co., Cl A 16,518,301 35,537,600 Application Software (11.54%) 36,144,175 65,791,100 725,000 Altair Engineering, Inc., Cl A1 11,330,019 42,180,500 1,335,000 ANSYS, Inc.1 31,193,630 485,673,000 Life & Health Insurance (2.71%) 1 1,750,000 Primerica, Inc. 37,105,539 234,377,500 1,025,000 Guidewire Software, Inc. 31,789,103 131,948,250 1,000,000 Pegasystems, Inc. 13,997,009 133,260,000 Property & Casualty 2,837,500 SS&C Technologies Holdings, Inc. 22,006,210 206,428,125 Insurance (6.15%) 110,315,971 999,489,875 9,225,000 Arch Capital Group Ltd.1,2 28,835,970 332,745,750 1,000,000 Kinsale Capital Group, Inc. 35,007,763 200,130,000 Electronic Components (0.32%) 110,000 Littelfuse, Inc. 11,860,664 28,012,600 63,843,733 532,875,750 Thrifts & Mortgage Internet Services & Finance (0.26%) Infrastructure (0.58%) 520,000 Essent Group Ltd.2 14,300,211 22,464,000 200,000 Wix.com Ltd.1,2 10,748,573 49,992,000 Total Financials 354,674,482 2,490,985,075 IT Consulting & Other Services (2.96%) 1,600,000 Gartner, Inc.1 22,491,963 256,304,000 Total Information Technology 155,417,171 1,333,798,475

143 Baron Funds

Baron Growth Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (continued) Private Partnerships (0.00%) Real Estate (5.59%) Financials (0.00%) Office REITs (1.24%) Asset Management & Custody 3,700,000 Douglas Emmett, Inc. $ 40,811,196 $ 107,966,000 Banks (0.00%) 2,375,173 Windy City Investments Specialized REITs (4.35%) Holdings, L.L.C.1,3,5 $ 0 $ 61,992 750,000 Alexandria Real Estate Equities, Inc.5 26,366,340 133,665,000 360,000 American Assets Trust, Inc. 6,552,304 10,396,800 Warrants (0.01%) 5,482,137 Gaming and Leisure Properties, Inc. 118,398,478 232,442,609 Consumer Discretionary (0.01%) 151,317,122 376,504,409 Hotels, Resorts & Cruise Lines (0.01%) Total Real Estate 192,128,318 484,470,409 96,515 OneSpaWorld Holdings Ltd. Warrants, Exp 3/19/20241,2,5 0 526,972 Special Purpose Acquisition Company (0.06%) TOTAL INVESTMENTS (100.28%) $1,472,691,352 8,685,562,389 1,2 500,000 Yucaipa Acquisition Corp. 5,000,000 5,100,000 LIABILITIES LESS CASH AND TOTAL COMMON STOCKS 1,442,666,361 8,651,349,240 OTHER ASSETS (-0.28%) (23,871,277) NET ASSETS $8,661,691,112 Private Convertible Preferred Stocks (0.39%) RETAIL SHARES (Equivalent to $104.54 per share Industrials (0.14%) based on 27,584,659 shares outstanding) $2,883,656,210 Electrical Components & INSTITUTIONAL SHARES (Equivalent to $108.85 per share Equipment (0.14%) based on 51,203,195 shares outstanding) $5,573,597,794 59,407,006 Northvolt AB Series E (Sweden)2,3,5 9,374,989 11,800,014 R6 SHARES (Equivalent to $108.87 per share Materials (0.25%) based on 1,877,876 shares outstanding) $ 204,437,108 Fertilizers & Agricultural Chemicals (0.13%) % Represents percentage of net assets. 341,838 Farmers Business Network, Inc., 1 Non-income producing securities. Series F1,3,5 11,300,002 11,509,685 2 Foreign corporation. 3 At December 31, 2020, the market value of restricted and fair valued securities Specialty Chemicals (0.12%) 1,3,5 amounted to $54,698,177 or 0.63% of net assets. These securities are not 1,256,332 Zymergen, Inc., Series D 9,350,000 10,314,486 deemed liquid. Total Materials 20,650,002 21,824,171 4 An “Affiliated” investment may include any company in which the Fund owns 5% or more of its outstanding shares. TOTAL PRIVATE CONVERTIBLE 5 The Adviser has reclassified/classified certain securities in or out of this sub- PREFERRED STOCKS 30,024,991 33,624,185 industry. Such reclassifications/classifications are not supported by S&P or MSCI (unaudited).

144 Baron Funds

Baron Small Cap Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (98.01%) Common Stocks (continued) Communication Services (4.30%) Consumer Staples (1.78%) Cable & Satellite (1.97%) Packaged Foods & 100,000 Liberty Broadband Meats (1.78%) Corporation, Cl A1 $ 404,823 $ 15,758,000 4,100,000 UTZ Brands, Inc. $ 66,994,000 $ 90,446,000 260,000 Liberty Broadband Corporation, Cl C1 1,017,091 41,176,200 Financials (3.80%) 1,000,000 Liberty Media Corp.-Liberty Insurance Brokers (1.69%) SiriusXM, Cl C1 2,168,308 43,510,000 2,873,272 BRP Group, Inc., Cl A1 44,659,800 86,111,962 3,590,222 100,444,200 Investment Banking & Movies & Brokerage (0.83%) Entertainment (2.33%) 625,000 Houlihan Lokey, Inc. 28,909,333 42,018,750 1,250,000 Liberty Media Corporation- Liberty Formula One, Cl C1 22,521,105 53,250,000 Property & Casualty 225,000 Madison Square Garden Insurance (1.28%) Entertainment Corp.1 3,552,159 23,634,000 325,000 Kinsale Capital Group, Inc. 42,779,282 65,042,250 225,000 Madison Square Garden Total Financials 116,348,415 193,172,962 Sports Corp.1 8,416,556 41,422,500 34,489,820 118,306,500 Health Care (16.21%) Total Communication Services 38,080,042 218,750,700 Health Care Equipment (7.32%) Consumer Discretionary (16.65%) 1,000,000 Axonics Modulation Technologies, Inc.1 35,459,918 49,920,000 Auto Parts & 300,000 CryoPort, Inc.1 13,683,573 13,164,000 Equipment (0.21%) 215,000 DexCom, Inc.1 2,852,007 79,489,800 100,000 Fox Factory Holding Corp.1 8,360,558 10,571,000 200,000 IDEXX Laboratories, Inc.1 2,867,537 99,974,000 320,000 Inspire Medical Systems, Inc.1,4 16,558,159 60,188,800 Casinos & Gaming (3.82%) 1,100,000 Silk Road Medical, Inc.1,4 45,930,627 69,278,000 1,000,000 DraftKings, Inc., Cl A1 12,833,717 46,560,000 1,200,000 Penn National Gaming, Inc.1 21,405,754 103,644,000 117,351,821 372,014,600 1,750,000 Red Rock Resorts, Inc., Cl A 33,900,258 43,820,000 Health Care Services (0.50%) 68,139,729 194,024,000 3,250,000 SOC Telemed, Inc.1 32,300,144 25,480,000 Education Services (2.21%) Health Care 650,000 Bright Horizons Family Technology (0.39%) Solutions, Inc.1 20,000,397 112,443,500 579,861 Certara, Inc.1,4 13,336,803 19,552,913 General Merchandise Life Sciences Tools & Stores (1.17%) Services (5.70%) 725,000 Ollie’s Bargain Outlet 250,000 Guardant Health, Inc.1,4 4,953,266 32,220,000 Holdings, Inc.1 46,442,541 59,283,250 600,000 ICON plc1,2 16,994,341 116,988,000 60,000 Mettler-Toledo Home Improvement International, Inc.1 2,924,783 68,380,800 Retail (2.74%) 575,000 PRA Health Sciences, Inc.1 10,350,000 72,128,000 1,500,000 Floor & Decor Holdings, Inc., Cl A1 54,941,906 139,275,000 35,222,390 289,716,800 Homebuilding (3.36%) 1,675,000 Installed Building Products, Inc.1,3 96,796,123 170,732,750 Managed Health Care (1.37%) 1,000,000 HealthEquity, Inc.1 23,274,522 69,710,000 Hotels, Resorts & Cruise Lines (0.45%) Pharmaceuticals (0.93%) 2,250,000 OneSpaWorld Holdings Ltd.2,4 24,000,000 22,815,000 1,000,000 Dechra Pharmaceuticals PLC (United Kingdom)2 28,027,985 47,096,733 Internet & Direct Marketing Retail (0.38%) Total Health Care 249,513,665 823,571,046 100,000 Fiverr International Ltd.1,2 6,000,000 19,510,000 Leisure Facilities (1.22%) 800,000 Planet Fitness, Inc., Cl A1 28,416,504 62,104,000 Restaurants (1.09%) 1,500,000 The Cheesecake Factory, Inc. 38,017,793 55,590,000 Total Consumer Discretionary 391,115,551 846,348,500

145 Baron Funds

Baron Small Cap Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (continued) Common Stocks (continued) Industrials (23.06%) Information Technology (continued)

Aerospace & Defense (4.83%) Electronic Equipment & 2,350,000 Kratos Defense & Security 1 Instruments (1.90%) Solutions, Inc. $ 35,335,984 $ 64,460,500 1,200,000 Cognex Corp. $ 9,420,068 $ 96,342,000 1,175,000 Mercury Systems, Inc.1 37,835,657 103,470,500 125,000 TransDigm Group, Inc.1 0 77,356,250 Internet Services & Infrastructure (1.72%) 73,171,641 245,287,250 350,000 Wix.com Ltd.1,2 18,259,509 87,486,000 Building Products (2.14%) 1,090,609 AZEK Co., Inc.1 25,084,007 41,933,916 IT Consulting & Other 800,000 Trex Company, Inc.1 30,505,505 66,976,000 Services (4.98%) 800,000 Endava plc, ADR1,2 25,722,265 61,400,000 55,589,512 108,909,916 1,000,000 Gartner, Inc.1 14,988,362 160,190,000 2,500,000 Grid Dynamics Holdings, Inc.1 24,881,764 31,500,000 Electrical Components & Equipment (3.95%) 65,592,391 253,090,000 1,624,688 Array Technologies, Inc.1 35,743,136 70,089,040 7,000,000 Vertiv Holdings Co. 69,871,612 130,690,000 Systems Software (0.44%) 750,000 Jamf Holding Corp.1,4 21,449,729 22,440,000 105,614,748 200,779,040 Total Information Technology 336,137,464 1,299,316,318 Environmental & Facilities Services (1.51%) Materials (2.42%) 750,000 Waste Connections, Inc.2 32,750,000 76,927,500 Construction Materials (0.10%) Human Resource & Employment 250,000 Summit Materials, Inc., Cl A1 4,296,315 5,020,000 Services (2.63%) Metal & Glass 1,600,000 ASGN, Inc.1 36,344,971 133,648,000 Containers (0.89%) Industrial Machinery (2.33%) 800,000 Berry Global Group, Inc.1 12,652,147 44,952,000 725,000 John Bean Technologies Corp. 62,999,777 82,555,750 1 Specialty Chemicals (1.43%) 200,000 RBC Bearings, Incorporated 12,713,721 35,808,000 1,809,631 Avient Corp. 57,788,524 72,891,937 75,713,498 118,363,750 Total Materials 74,736,986 122,863,937 Research & Consulting Services (2.34%) Real Estate (4.22%) 4,000,000 Clarivate Analytics Plc1,2 44,078,833 118,840,000 Specialized REITs (4.22%) 2,800,000 Americold Realty Trust4 63,378,545 104,524,000 Trading Companies & 1,053 Gaming and Leisure Distributors (3.33%) 197,959 Hydrofarm Holdings Properties, Inc. 45,685 44,647 390,000 SBA Communications Corp. 1,571,136 110,030,700 Group, Inc.1,4 3,959,180 10,408,684 1,000,000 SiteOne Landscape Supply, Inc.1 26,904,431 158,630,000 Total Real Estate 64,995,366 214,599,347 30,863,611 169,038,684 TOTAL COMMON STOCKS 1,792,048,303 4,980,862,950 Total Industrials 454,126,814 1,171,794,140 Information Technology (25.57%) Warrants (0.06%) Application Software (10.73%) Consumer Discretionary (0.02%) 900,000 Altair Engineering, Inc., Cl A1 14,502,819 52,362,000 Hotels, Resorts & Cruise 800,000 Aspen Technology, Inc.1 29,983,938 104,200,000 1 Lines (0.02%) 850,000 Ceridian HCM Holding, Inc. 23,711,721 90,576,000 260,850 OneSpaWorld Holdings Ltd. 1,225,000 Guidewire Software, Inc. 1 31,269,359 157,694,250 Warrants, Exp 3/19/20241,2,4 0 1,424,241 175,000 The Trade Desk, Inc., Cl A1 6,212,500 140,175,000 105,680,337 545,007,250 Consumer Staples (0.04%) Data Processing & Outsourced Packaged Foods & Services (5.80%) Meats (0.04%) 750,000 Nuvei Corp., 144A (Canada)1,2 20,780,312 45,172,500 1,403,600 Whole Earth Brands, Inc., 3,500,000 Paya Holdings, Inc., (formerly, Exp 6/25/20251 0 1,936,968 Fintech Acquisition TOTAL WARRANTS 0 3,361,209 Corp. III) Cl A1 36,561,336 47,530,000 3,500,000 Repay Holdings Corporation1 33,000,000 95,375,000 405,170 Shift4 Payments, Inc., Cl A1 9,677,975 30,549,818 375,000 WEX, Inc.1 15,715,807 76,323,750 115,735,430 294,951,068

146 Baron Funds

Baron Small Cap Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Principal Amount Cost Value Short Term Investments (1.98%) $100,518,496 Repurchase Agreement with Fixed Income Clearing Corp., dated 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - $100,518,496; (Fully collateralized by $6,872,700 U.S. Treasury Note, 2.25% due 2/15/2027; Market value - $7,650,982) and $95,351,000 U.S. Treasury Note, 0.50% due 6/30/2027; Market value - $94,877,964) $ 100,518,496 $ 100,518,496 TOTAL INVESTMENTS (100.05%) $1,892,566,799 5,084,742,655

LIABILITIES LESS CASH AND OTHER ASSETS (-0.05%) (2,553,609) NET ASSETS $5,082,189,046

RETAIL SHARES (Equivalent to $36.83 per share based on 45,899,345 shares outstanding) $1,690,412,678

INSTITUTIONAL SHARES (Equivalent to $38.97 per share based on 80,544,259 shares outstanding) $3,138,729,951

R6 SHARES (Equivalent to $38.96 per share based on 6,495,721 shares outstanding) $ 253,046,417

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 An “Affiliated” investment may include any company in which the Fund owns 5% or more of its outstanding shares. 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 (unaudited). 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 December 31, 2020, the market value of Rule 144A securities amounted to $45,172,500 or 0.89% of net assets.

147 Baron Funds

Baron Opportunity Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (94.32%) Common Stocks (continued) Communication Services (17.50%) Health Care (15.10%) Interactive Home Biotechnology (6.36%) Entertainment (1.84%) 163,279 Acceleron Pharma, Inc.1 $ 9,747,942 $ 20,889,915 90,000 Electronic Arts, Inc. $ 9,606,565 $ 12,924,000 80,202 argenx SE, ADR1,2 4,004,410 23,586,606 62,500 Take-Two Interactive Software, Inc.1 7,289,993 12,986,875 335,600 Arrowhead Pharmaceuticals, Inc.1 10,892,684 25,750,588 1 16,896,558 25,910,875 152,917 PTC Therapeutics, Inc. 7,597,277 9,332,525 42,800 Vertex Pharmaceuticals Interactive Media & Incorporated1 7,675,015 10,115,352 Services (14.72%) 39,917,328 89,674,986 30,550 Alphabet, Inc., Cl C1 34,987,576 53,519,934 123,200 Facebook, Inc., Cl A1 27,428,488 33,653,312 Health Care Equipment (2.64%) 453,000 Pinterest, Inc., Cl A1 14,206,060 29,852,700 111,100 Edwards Lifesciences Corp.1 5,883,467 10,135,653 573,000 Snap, Inc., Cl A1 9,113,415 28,690,110 14,935 Intuitive Surgical, Inc.1 5,315,217 12,218,323 200,803 Zillow Group, Inc., Cl C1 12,806,582 26,064,230 143,000 Shockwave Medical, Inc.1 7,156,673 14,831,960 738,369 ZoomInfo Technologies Inc., Cl A1 23,975,490 35,611,537 18,355,357 37,185,936 122,517,611 207,391,823 Health Care Technology (1.37%) Movies & Entertainment (0.94%) 154,495 Certara, Inc.1,3 3,553,385 5,209,572 24,425 Netflix, Inc.1 3,966,732 13,207,330 116,374 Schrödinger, Inc.1 2,485,556 9,214,493 17,800 Veeva Systems, Inc., Cl A1 2,595,016 4,846,050 Total Communication Services 143,380,901 246,510,028 8,633,957 19,270,115 Consumer Discretionary (18.90%) Life Sciences Tools & Auto Parts & Equipment (1.16%) Services (4.73%) 200,000 QuantumScape Corp., Cl A1,4 2,000,000 16,394,000 50,419 10X Genomics, Inc., Cl A1 3,006,785 7,139,330 237,500 CareDx, Inc.1,3 7,559,617 17,206,875 Automobile 64,837 Guardant Health, Inc.1,3 4,970,280 8,356,193 Manufacturers (3.73%) 21,715 Illumina, Inc.1 2,606,193 8,034,550 74,500 Tesla, Inc.1 3,091,014 52,572,415 834,685 Pacific Biosciences of Automotive Retail (1.04%) California, Inc.1 4,029,811 21,651,729 358,416 Vroom, Inc.1 8,679,328 14,684,303 75,000 Seer, Inc.1 1,425,000 4,210,500 Education Services (0.34%) 23,597,686 66,599,177 133,236 Arco Platform Limited, Cl A1,2 3,907,403 4,728,546 Total Health Care 90,504,328 212,730,214 Home Furnishings (1.23%) Industrials (3.16%) 525,000 Purple Innovation, Inc.1 11,061,987 17,293,500 Aerospace & Defense (1.25%) Homebuilding (0.68%) 642,969 Kratos Defense & Security 94,000 Installed Building Products, Inc.1 5,732,792 9,581,420 Solutions, Inc.1 10,282,148 17,636,640 Internet & Direct Marketing Industrial Machinery (0.59%) Retail (10.72%) 500,000 Desktop Metal, Inc1,4 5,000,000 8,240,000 2,149 Airbnb, Inc., Cl A1,3 146,132 315,473 106,500 Alibaba Group Holding Research & Consulting Limited, ADR1,2 17,989,617 24,785,745 Services (1.32%) 23,775 Amazon.com, Inc.1 28,080,356 77,433,511 20,233 CoStar Group, Inc.1 2,448,383 18,700,957 41,621 DoorDash, Inc., Cl A1 4,245,342 5,941,398 Total Industrials 17,730,531 44,577,597 255,900 Farfetch Limited, Cl A1,2 11,906,765 16,328,979 8,529 MercadoLibre, Inc.1 4,838,488 14,287,951 Information Technology (33.85%) 202,000 Stitch Fix, Inc., Cl A1 12,508,077 11,861,440 Application Software (10.52%) 79,714,777 150,954,497 29,900 Adobe, Inc.1 5,847,190 14,953,588 Total Consumer Discretionary 114,187,301 266,208,681 175,170 Ceridian HCM Holding, Inc.1 8,903,416 18,666,115 224,100 Guidewire Software, Inc.1 10,970,562 28,848,393 Financials (0.43%) 92,700 RingCentral, Inc., Cl A1 16,398,557 35,130,519 24,300 ServiceNow, Inc.1,3 2,036,994 13,375,449 Financial Exchanges & 122,800 Splunk, Inc.1 18,023,067 20,862,492 Data (0.43%) 13,141 The Trade Desk, Inc., Cl A1 532,056 10,525,941 10,600 MarketAxess Holdings, Inc. 1,129,414 6,047,936 17,207 Zoom Video Communications, Inc., Cl A1 1,087,315 5,804,265 63,799,157 148,166,762

148 Baron Funds

Baron Opportunity Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (continued) Private Convertible Preferred Stocks (1.31%) Information Technology (continued) Consumer Discretionary (0.79%) Data Processing & Outsourced Automobile Services (6.35%) Manufacturers (0.79%) 3,000 Adyen N.V., 144A (Netherlands)1,2 $ 2,422,754 $ 6,970,622 484,183 Rivian Automotive, Inc., Series E1,3,4 $ 7,499,995 $ 11,160,418 68,600 MasterCard Incorporated, Cl A 15,259,466 24,486,084 110,000 PayPal Holdings, Inc.1 15,209,450 25,762,000 Materials (0.52%) 26,000 Square, Inc., Cl A1 3,741,168 5,658,640 Fertilizers & Agricultural 121,300 Visa, Inc., Cl A 19,203,980 26,531,949 Chemicals (0.52%) 55,836,818 89,409,295 219,321 Farmers Business Network, Inc., Series F1,3,4 7,250,006 7,384,538 Electronic Equipment & Instruments (1.25%) TOTAL PRIVATE CONVERTIBLE 280,000 PAR Technology Corp.1 10,511,681 17,581,200 PREFERRED STOCKS 14,750,001 18,544,956 Internet Services & Infrastructure (3.11%) Private Preferred Stocks (0.36%) 188,677 GDS Holdings Limited, ADR1,2 8,207,733 17,667,714 383,270 GDS Holdings Limited, Cl A Industrials (0.36%) (Hong Kong)1,2 4,040,136 4,466,775 Aerospace & Defense (0.36%) 525,000 NEXTDC Limited (Australia)1,2 2,455,361 4,954,101 18,519 Space Exploration 67,043 Wix.com Ltd.1,2 3,803,923 16,758,068 Technologies Corp., Cl N1,3,4 5,000,130 5,069,021 18,507,153 43,846,658 IT Consulting & Other Principal Amount Services (2.64%) 207,368 Endava plc, ADR1,2 7,055,069 15,915,494 Short Term Investments (4.53%) 1 133,187 Gartner, Inc. 6,902,159 21,335,226 $63,760,671 Repurchase Agreement with Fixed 13,957,228 37,250,720 Income Clearing Corp., dated 12/31/2020, 0.00% due Semiconductors (1.13%) 1/4/2021; Proceeds at maturity - 30,600 NVIDIA Corp. 6,428,289 15,979,320 $63,760,671; (Fully collateralized by $58,420,300 Systems Software (8.85%) 1 U.S. Treasury Note, 2.25% due 61,723 Crowdstrike Holdings, Inc., Cl A 3,067,061 13,074,166 2/15/2027; Market value - 423,800 Microsoft Corp. 61,970,466 94,261,596 $65,035,961) 63,760,671 63,760,671 61,708 Snowflake, Inc., Cl A1,3 7,404,960 17,364,631 72,442,487 124,700,393 TOTAL INVESTMENTS (100.52%) $736,022,147 $1,416,194,530 Total Information Technology 241,482,813 476,934,348 LIABILITIES LESS CASH AND OTHER ASSETS (-0.52%) (7,391,409) Real Estate (4.16%) NET ASSETS $1,408,803,121 Industrial REITs (0.79%) 225,985 Rexford Industrial Realty, Inc. 9,155,929 11,098,123 RETAIL SHARES (Equivalent to $40.03 per share Real Estate Services (2.25%) based on 20,586,794 shares outstanding) $ 824,033,992 1,497,230 Opendoor Technologies, Inc.1,4 14,972,300 31,666,414 INSTITUTIONAL SHARES (Equivalent to $42.12 per share Specialized REITs (1.12%) based on 13,128,922 shares outstanding) $ 552,983,425 32,000 Alexandria Real Estate Equities, Inc.3 4,492,589 5,703,040 14,225 Equinix, Inc. 2,122,124 10,159,211 R6 SHARES (Equivalent to $42.17 per share based on 753,829 shares outstanding) $ 31,785,704 6,614,713 15,862,251

Total Real Estate 30,742,942 58,626,788 % Represents percentage of net assets. 1 Non-income producing securities. Special Purpose Acquisition 2 Foreign corporation. Company (1.22%) 3 The Adviser has reclassified/classified certain securities in or out of this sub- 397,909 Altimeter Growth Corp.1,2 3,979,090 5,172,817 industry. Such reclassifications/classifications are not supported by S&P or MSCI (unaudited). 397,990 Dragoneer Growth 4 Opportunities Corp.1,2 3,979,900 5,567,880 At December 31, 2020, the market value of restricted and fair valued securities 1,2 amounted to $79,914,391 or 5.67% of net assets. These securities are not 533,410 ION Acquisition Corp. Limited 5,394,125 6,443,593 deemed liquid. Total Special Purpose Acquisition Company 13,353,115 17,184,290 ADR American Depositary Receipt. 144A Security is exempt from registration pursuant to Rule 144A under the Securities TOTAL COMMON STOCKS 652,511,345 1,328,819,882 Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. At December 31, 2020, the market value of Rule 144A securities amounted to $6,970,622 or 0.49% of net assets.

149 Baron Funds

Baron Partners Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (102.10%) Common Stocks (continued) Communication Services (9.53%) Health Care (6.08%) Alternative Carriers (0.89%) Health Care Equipment (5.82%) 1,560,000 Iridium Communications, Inc.1 $ 36,290,321 $ 61,347,000 800,000 IDEXX Laboratories, Inc.1 $ 35,048,047 $ 399,896,000 Interactive Home Health Care Technology (0.26%) Entertainment (1.07%) 388,138 American Well Corp., Cl A1 11,817,037 9,831,536 790,000 Activision Blizzard, Inc. 46,068,301 73,351,500 204,969 GoodRx Holdings, Inc., Cl A1 11,882,844 8,268,449 Interactive Media & 23,699,881 18,099,985 Services (5.44%) Total Health Care 58,747,928 417,995,985 2,750,000 Zillow Group, Inc., Cl A1 107,616,334 373,835,000 Movies & Industrials (10.37%) Entertainment (2.13%) Aerospace & Defense (0.49%) 5,000,000 Manchester United plc, Cl A2 85,441,639 83,700,000 125,625 HEICO Corp. 9,632,520 16,632,750 200,000 Spotify Technology SA1,2 45,236,405 62,932,000 116,875 HEICO Corp., Cl A 7,586,429 13,681,388 1 130,678,044 146,632,000 150,000 Virgin Galactic Holdings, Inc. 1,560,000 3,559,500 18,778,949 33,873,638 Total Communication Services 320,653,000 655,165,500 Research & Consulting Consumer Discretionary (55.48%) Services (9.88%) Automobile 735,000 CoStar Group, Inc.1 98,974,400 679,345,800 Manufacturers (46.96%) Total Industrials 117,753,349 713,219,438 4,575,000 Tesla, Inc.1 203,665,443 3,228,440,250 Casinos & Gaming (0.22%) Information Technology (7.75%) 600,000 Red Rock Resorts, Inc., Cl A 14,242,756 15,024,000 Application Software (1.73%) 925,000 Guidewire Software, Inc.1 74,997,711 119,075,250 Hotels, Resorts & Cruise Lines (4.53%) Data Processing & Outsourced 2,900,000 Hyatt Hotels Corp., Cl A 84,480,627 215,325,000 Services (2.00%) 700,000 Marriott Vacations 59,246 Adyen N.V. , 144A Worldwide Corp. 81,762,309 96,054,000 (Netherlands)1,2,5 53,544,382 137,660,496 166,242,936 311,379,000 Internet Services & Internet & Direct Marketing Infrastructure (1.28%) 700,000 GDS Holdings Limited, ADR1,2 37,434,005 65,548,000 Retail (0.02%) 1,916,348 GDS Holdings Limited, Cl A 10,553 Airbnb, Inc., Cl A1,4 717,604 1,549,181 (Hong Kong)1,2 20,200,657 22,333,848 Leisure Facilities (3.75%) 57,634,662 87,881,848 925,000 Vail Resorts, Inc. 27,786,371 258,038,000 Total Consumer Discretionary 412,655,110 3,814,430,431 Internet Software & Services (1.11%) 1,2 Financials (11.27%) 67,500 Shopify, Inc., Cl A 48,766,450 76,406,625 Asset Management & Custody IT Consulting & Other Banks (0.63%) Services (1.63%) 1,050,000 Brookfield Asset 700,000 Gartner, Inc.1 83,980,674 112,133,000 Management, Inc., Cl A2 37,695,416 43,333,500 Total Information Technology 318,923,879 533,157,219 Financial Exchanges & Data (4.20%) Real Estate (1.54%) 700,000 FactSet Research Systems, Inc. 46,576,636 232,750,000 Office REITs (0.42%) 125,000 MSCI, Inc. 26,834,524 55,816,250 985,000 Douglas Emmett, Inc. 27,057,206 28,742,300 73,411,160 288,566,250 Specialized REITs (1.12%) 1,819,296 Gaming and Leisure Investment Banking & Properties, Inc. 57,665,613 77,138,150 Brokerage (3.01%) 3,900,000 The Charles Schwab Corp. 86,233,677 206,856,000 Total Real Estate 84,722,819 105,880,450 Property & Casualty Special Purpose Acquisition Insurance (3.43%) 6,550,000 Arch Capital Group Ltd.1,2 30,153,582 236,258,500 Company (0.08%) 500,000 Atlas Crest Investment Corp.1 5,000,000 5,275,000 Total Financials 227,493,835 775,014,250 TOTAL COMMON STOCKS 1,545,949,920 7,020,138,273

150 Baron Funds

Baron Partners Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Private Common Stocks (1.00%) Industrials (1.00%) Aerospace & Defense (1.00%) 221,631 Space Exploration Technologies Corp., Cl A1,3,4 $ 29,920,185 $ 60,664,837 30,221 Space Exploration Technologies Corp., Cl C1,3,4 4,079,835 8,272,092 TOTAL PRIVATE COMMON STOCKS 34,000,020 68,936,929

Private Preferred Stocks (2.21%) Industrials (2.21%) Aerospace & Defense (2.21%) 311,111 Space Exploration Technologies Corp., Cl H1,3,4 41,999,985 85,157,303 131,657 Space Exploration Technologies Corp., Cl I1,3,4 22,250,032 36,037,154 111,111 Space Exploration Technologies Corp., Cl N1,3,4 29,999,970 30,413,303 TOTAL PRIVATE PREFERRED STOCKS 94,249,987 151,607,760

Private Partnerships (0.00%) Financials (0.00%) Asset Management & Custody Banks (0.00%) 7,579,130 Windy City Investments Holdings, L.L.C.1,3,4 0 197,815 TOTAL INVESTMENTS (105.31%) $1,674,199,927 7,240,880,777

LIABILITIES LESS CASH AND OTHER ASSETS (-5.31%) (365,088,858)

NET ASSETS $6,875,791,919

RETAIL SHARES (Equivalent to $164.18 per share based on 19,608,491 shares outstanding) $3,219,382,510

INSTITUTIONAL SHARES (Equivalent to $169.04 per share based on 18,879,474 shares outstanding) $3,191,386,407

R6 SHARES (Equivalent to $169.03 per share based on 2,751,052 shares outstanding) $ 465,023,002

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 At December 31, 2020, the market value of restricted and fair valued securities amounted to $220,742,504 or 3.21% 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 (unaudited). 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 December 31, 2020, the market value of Rule 144A securities amounted to $137,660,496 or 2.00% of net assets.

151 Baron Funds

Baron Fifth Avenue Growth Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (97.50%) Common Stocks (continued) Communication Services (10.14%) Information Technology (continued) Interactive Media & Services (10.14%) Internet Software & Services (1.21%) 8,229 Alphabet, Inc., Cl A1 $ 11,131,169 $ 14,422,474 7,626 Shopify, Inc., Cl A1,2 $ 8,924,391 $ 8,632,251 10,283 Alphabet, Inc., Cl C1 4,420,382 18,014,582 92,593 Facebook, Inc., Cl A1 9,924,329 25,292,704 IT Consulting & Other Services (3.20%) 301,416 ZoomInfo Technologies Inc., Cl A1 9,285,584 14,537,294 63,602 EPAM Systems, Inc.1 9,148,341 22,791,777 Total Communication Services 34,761,464 72,267,054 Semiconductor Equipment (2.68%) 39,157 ASML Holding N.V.2 4,042,938 19,097,652 Consumer Discretionary (15.16%) Systems Software (11.26%) Internet & Direct Marketing Retail (15.16%) 89,272 Crowdstrike Holdings, Inc., Cl A1 5,082,127 18,909,595 1,107 Airbnb, Inc., Cl A1,3 75,276 162,508 126,269 Datadog, Inc., Cl A1,3 3,409,263 12,429,920 104,576 Alibaba Group Holding Limited, ADR1,2 10,970,281 24,337,972 179,821 Dynatrace, Inc.1,3 7,901,930 7,780,855 18,666 Amazon.com, Inc.1 6,762,197 60,793,855 47,896 Snowflake, Inc., Cl A1,3 5,747,520 13,477,934 21,820 DoorDash, Inc., Cl A1 2,225,640 3,114,805 81,789 Twilio, Inc., Cl A1,3 11,034,337 27,685,577 11,730 MercadoLibre, Inc.1 7,042,090 19,650,331 33,175,177 80,283,881 Total Consumer Discretionary 27,075,484 108,059,471 Total Information Technology 191,952,160 352,156,903 Financials (2.26%) Real Estate (2.34%) Financial Exchanges & Data (2.26%) 48,903 S&P Global, Inc. 12,237,858 16,075,883 Specialized REITs (2.34%) 23,396 Equinix, Inc. 6,062,440 16,708,955 Health Care (18.21%) TOTAL COMMON STOCKS 349,931,109 695,119,426 Biotechnology (5.35%) 102,245 Acceleron Pharma, Inc.1 10,552,303 13,081,225 24,064 argenx SE, ADR1,2 7,340,011 7,076,982 Principal Amount 1 75,980 Vertex Pharmaceuticals Incorporated 14,561,581 17,957,113 Short Term Investments (4.56%) 32,453,895 38,115,320 $32,548,605 Repurchase Agreement with Fixed Health Care Equipment (3.36%) Income Clearing Corp., dated 29,324 Intuitive Surgical, Inc.1 11,905,212 23,989,964 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - Health Care Technology (3.83%) $32,548,605; (Fully collateralized 100,453 Veeva Systems, Inc., Cl A1 7,493,347 27,348,329 by $31,261,300 U.S. Treasury Note, 1.75% due 7/31/2024; Life Sciences Tools & Services (4.57%) Market value - $33,199,589) 32,548,605 32,548,605 90,959 10X Genomics, Inc., Cl A1 9,317,473 12,879,795 53,181 Illumina, Inc.1 8,362,363 19,676,970 TOTAL INVESTMENTS (102.06%) $382,479,714 727,668,031 17,679,836 32,556,765 LIABILITIES LESS CASH AND Pharmaceuticals (1.10%) OTHER ASSETS (-2.06%) (14,720,448) 156,847 AstraZeneca PLC, ADR2 8,309,413 7,840,782 NET ASSETS $712,947,583 Total Health Care 77,841,703 129,851,160 RETAIL SHARES (Equivalent to $50.20 per share Information Technology (49.39%) based on 3,895,557 shares outstanding) $195,564,685 Application Software (15.35%) 52,852 Adobe, Inc.1 26,370,292 26,432,342 INSTITUTIONAL SHARES (Equivalent to $51.45 per share 70,867 RingCentral, Inc., Cl A1 14,376,744 26,856,467 based on 9,359,387 shares outstanding) $481,587,113 51,314 ServiceNow, Inc.1,3 19,497,072 28,244,765 208,327 Slack Technologies, Inc., Cl A1 4,742,654 8,799,733 R6 SHARES (Equivalent to $51.47 per share 112,405 Splunk, Inc.1 16,396,868 19,096,485 based on 695,436 shares outstanding) $ 35,795,785 81,383,630 109,429,792 % Represents percentage of net assets. Data Processing & Outsourced 1 Non-income producing securities. Services (11.36%) 2 Foreign corporation. 6,218 Adyen N.V., 144A (Netherlands)1,2 4,711,862 14,447,776 3 The Adviser has reclassified/classified certain securities in or out of this sub- 77,774 MasterCard Incorporated, Cl A 7,508,689 27,760,652 industry. Such reclassifications/classifications are not supported by S&P or 75,361 PayPal Holdings, Inc.1 15,850,110 17,649,546 MSCI (unaudited). 96,752 Visa, Inc., Cl A 5,289,718 21,162,565 ADR American Depositary Receipt. 144A Security is exempt from registration pursuant to Rule 144A under the Securities 33,360,379 81,020,539 Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. At December 31, 2020, Internet Services & Infrastructure (4.33%) the market value of Rule 144A securities amounted to $14,447,776 or 2.03% of 1,149,809 GDS Holdings Limited, Cl A net assets. (Hong Kong)1,2 12,120,397 13,400,311 70,014 Wix.com Ltd.1,2 9,796,907 17,500,700 21,917,304 30,901,011

152 Baron Funds

Baron Focused Growth Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (88.83%) Common Stocks (continued) Communication Services (6.15%) Information Technology (5.58%) Alternative Carriers (2.38%) Application Software (1.98%) 401,472 Iridium Communications, Inc.1 $ 2,949,375 $ 15,787,886 101,870 Guidewire Software, Inc.1 $ 4,816,692 $ 13,113,725 Movies & Entertainment (3.77%) Data Processing & Outsourced 550,000 Manchester United plc, Cl A2 8,719,506 9,207,000 Services (2.05%) 50,000 Spotify Technology SA1,2 12,051,776 15,733,000 5,854 Adyen N.V. (Netherlands), 144A1,2 5,352,874 13,602,008 20,771,282 24,940,000 Internet Services & Total Communication Services 23,720,657 40,727,886 Infrastructure (1.55%) 110,000 GDS Holdings Limited, ADR1,2 6,848,113 10,300,400 Consumer Discretionary (58.96%) Total Information Technology 17,017,679 37,016,133 Automobile Manufacturers (38.44%) 361,000 Tesla, Inc.1 15,826,824 254,746,870 Real Estate (1.67%) Residential REITs (1.02%) Casinos & Gaming (8.58%) 225,000 American Homes 4 Rent, Cl A 4,700,804 6,750,000 600,000 Penn National Gaming, Inc.1 11,565,191 51,822,000 201,100 Red Rock Resorts, Inc., Cl A 1,154,579 5,035,544 Specialized REITs (0.65%) 4 12,719,770 56,857,544 115,000 Americold Realty Trust 3,907,872 4,292,950 Total Real Estate 8,608,676 11,042,950 Hotels, Resorts & Cruise Lines (6.30%) 155,000 Choice Hotels International, Inc. 5,375,923 16,543,150 TOTAL COMMON STOCKS 137,284,193 588,685,933 340,000 Hyatt Hotels Corp., Cl A 12,201,302 25,245,000 17,577,225 41,788,150 Private Common Stocks (0.98%) Leisure Facilities (5.64%) Industrials (0.98%) 134,000 Vail Resorts, Inc. 8,130,896 37,380,640 Aerospace & Defense (0.98%) Total Consumer Discretionary 54,254,715 390,773,204 20,859 Space Exploration Technologies Corp., Cl A1,3,4 2,815,965 5,709,525 Financials (5.40%) 2,844 Space Exploration Financial Exchanges & Data (3.77%) Technologies Corp., Cl C1,3,4 383,940 778,460 75,000 FactSet Research Systems, Inc. 5,828,282 24,937,500 TOTAL PRIVATE COMMON STOCKS 3,199,905 6,487,985 Property & Casualty Insurance (1.63%) 1,2 300,000 Arch Capital Group Ltd. 1,800,056 10,821,000 Private Preferred Stocks (1.67%) Total Financials 7,628,338 35,758,500 Industrials (1.67%) Health Care (2.42%) Aerospace & Defense (1.67%) Biotechnology (2.12%) 29,630 Space Exploration 70,000 BioNTech SE, ADR1,2 6,735,813 5,706,400 Technologies Corp., Cl H1,3,4 4,000,050 8,110,324 100,000 Denali Therapeutics, Inc.1 6,944,880 8,376,000 1,479 Space Exploration Technologies Corp., Cl I1,3,4 249,951 404,832 13,680,693 14,082,400 9,259 Space Exploration 1,3,4 Health Care Technology (0.30%) Technologies Corp., Cl N 2,499,930 2,534,373 25,000 Schrödinger, Inc.1 1,337,718 1,979,500 TOTAL PRIVATE PREFERRED STOCKS 6,749,931 11,049,529 Total Health Care 15,018,411 16,061,900 Industrials (8.65%) Research & Consulting Services (8.65%) 62,000 CoStar Group, Inc.1 11,035,717 57,305,360

153 Baron Funds

Baron Focused Growth Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020

Principal Amount Cost Value Short Term Investments (8.16%) $54,097,681 Repurchase Agreement with Fixed Income Clearing Corp., dated 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - $54,097,681; (Fully collateralized by $50,781,900 U.S. Treasury Note, 2.375% due 8/15/2024; Market value - $55,179,676) $ 54,097,681 $ 54,097,681 TOTAL INVESTMENTS (99.64%) $201,331,710 660,321,128

CASH AND OTHER ASSETS LESS LIABILITIES (0.36%) 2,409,609 NET ASSETS $662,730,737

RETAIL SHARES (Equivalent to $43.36 per share based on 3,638,698 shares outstanding) $157,764,205

INSTITUTIONAL SHARES (Equivalent to $44.56 per share based on 5,244,022 shares outstanding) $233,692,284

R6 SHARES (Equivalent to $44.59 per share based on 6,083,787 shares outstanding) $271,274,248

% Represents percentage of net assets. 1 Non-income producing securities. 2 Foreign corporation. 3 At December 31, 2020, the market value of restricted and fair valued securities amounted to $17,537,514 or 2.65% 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 (unaudited). 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 December 31, 2020, the market value of Rule 144A securities amounted to $13,602,008 or 2.05% of net assets.

154 Baron Funds

Baron International Growth Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (97.12%) Common Stocks (continued) Australia (1.48%) Hong Kong (1.26%) 956,816 NEXTDC Limited1 $ 5,205,918 $ 9,028,882 56,021 Hong Kong Exchanges & Clearing Ltd. $ 2,402,181 $ 3,072,847 324,000 Techtronic Industries Co. Ltd. 2,300,907 4,631,068 Brazil (5.37%) Total Hong Kong 4,703,088 7,703,915 193,670 Afya Ltd., Cl A1 3,801,065 4,899,851 100,934 Arco Platform Limited, Cl A1 3,167,968 3,582,148 India (7.31%) 737,450 Itaú Unibanco Holding SA, ADR 3,442,759 4,491,070 131,002 Bajaj Finance Limited 6,348,471 9,511,437 315,640 Notre Dame Intermedica 2,403,180 Edelweiss Financial Services Ltd.1 1,974,698 2,256,426 Participacoes S.A. 3,645,445 4,784,669 1 1 248,762 Godrej Properties Ltd. 3,192,424 4,881,020 88,686 PagSeguro Digital Ltd., Cl A 2,575,853 5,044,460 179,037 HDFC Bank Ltd.1 2,695,614 3,526,399 420,788 Suzano SA1 3,573,648 4,725,485 1 125,802 Housing Development Finance Corp., Ltd. 3,530,942 4,407,591 134,634 XP, Inc., Cl A 4,942,519 5,340,931 1,866,631 JM Financial Limited 2,226,916 2,155,414 Total Brazil 25,149,257 32,868,614 130,900 Kotak Mahindra Bank Ltd.1 2,293,402 3,577,583 548,081 Max Financial Services Limited1 3,895,199 5,064,381 Canada (2.66%) 681,376 Nippon Life India Asset 316,756 CAE, Inc. 4,537,480 8,776,796 Management Ltd., 144A 2,395,677 2,776,219 5,753 Constellation Software, Inc. 1,761,296 7,470,539 233,839 Reliance Industries Limited 5,093,394 6,362,505 10,699 Topicus.com, Inc.1,2 0 40,431 12,984 Reliance Industries Limited PP 59,095 199,454 33,705,832 44,718,429 Total Canada 6,298,776 16,287,766 Total India China (13.24%) Israel (2.40%) 283,728 ION Acquisition Corp. Limited1 2,866,655 3,427,434 43,971 Agora, Inc., ADR1 1,692,004 1,739,493 189,748 Tower Semiconductor Ltd.1 3,902,692 4,899,293 28,384 Alibaba Group Holding Limited, ADR1 4,689,367 6,605,808 25,560 Wix.com Ltd.1 2,591,121 6,388,978 861,220 China Conch Venture Holdings Ltd. 3,726,751 4,190,750 94,726 China Tourism Group Duty Free Total Israel 9,360,468 14,715,705 Corporation Limited, Cl A 1,381,071 4,099,987 541,105 Galaxy Entertainment Group Ltd. 4,044,596 4,212,252 Japan (13.38%) 43,843 GDS Holdings Limited, ADR1 2,396,001 4,105,459 83,689 Advantest Corporation 4,483,841 6,268,460 153,308 GDS Holdings Limited, Cl A1 1,616,054 1,786,710 42,900 FANUC Corp. 7,524,682 10,589,824 234,707 Glodon Co. Ltd., Cl A 1,228,411 2,829,476 17,843 Keyence Corporation 5,478,737 10,036,984 585,931 Han’s Laser Technology Industry 119,300 MonotaRO Co, Ltd. 2,127,848 6,059,105 Group Co., Ltd., Cl A 3,140,221 3,836,222 181,669 Nexon Co, Ltd. 2,967,249 5,605,376 762,599 Hua Hong Semiconductor 104,365 Okamoto Industries, Inc. 4,791,854 4,003,561 Limited, 144A1 2,125,795 4,341,605 143,200 Recruit Holdings Co, Ltd. 3,322,172 6,014,821 27,900 Jacobio Pharmaceuticals 188,200 SMS Co. Ltd. 5,152,739 7,217,042 Group Co. Ltd., 144A1 50,897 50,960 64,803 Sony Corporation, ADR 3,369,962 6,551,583 1,543,374 Kingdee International Software 69,800 Square Enix Holdings Co, Ltd. 2,545,205 4,232,016 Group Co. Ltd. 1,375,808 6,300,915 234,600 Takeda Pharmaceutical 663,361 Kingsoft Corp. Ltd. 2,590,310 4,289,122 Company Limited 9,522,380 8,490,023 263,756 Midea Group Co., Ltd., Cl A 1,893,533 3,972,270 18,148 Tokyo Electron Limited 4,425,631 6,779,417 57,639 Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Cl A 1,625,815 3,749,539 Total Japan 55,712,300 81,848,212 86,437 Tencent Holdings Limited 3,389,622 6,219,468 17,588 Tencent Holdings Limited, ADR 832,623 1,264,401 Korea, Republic of (0.93%) 83,158 Will Semiconductor Co. Ltd. 56,839 Korea Shipbuilding & Offshore Shanghai, Cl A 2,918,885 2,938,593 Engineering Co. Ltd.1 4,763,070 5,692,540 717,689 Winning Health Technology Group Co. Ltd., Cl A 2,076,953 1,922,556 Mexico (1.58%) 92,583 Zai Lab Limited, ADR1 2,324,589 12,530,183 246,738 GRUMA, S.A.B. de C.V., Cl B 2,162,254 2,940,720 Total China 45,119,306 80,985,769 1,589,934 Grupo México S.A.B. de C.V., Series B 4,318,204 6,742,608 Total Mexico 6,480,458 9,683,328 Denmark (0.74%) 110,760 Genmab A/S, ADR1 4,436,635 4,503,502 Netherlands (3.65%) 148,000 AMG Advanced Metallurgical Group NV 3,830,418 4,419,194 France (7.24%) 43,181 argenx SE, ADR1 1,904,769 12,699,101 276,035 BNP Paribas S.A.1 12,057,001 14,572,493 30,314 Koninklijke DSM NV 3,649,814 5,213,134 91,320 Eurofins Scientific SE 2,327,909 7,656,437 Total Netherlands 9,385,001 22,331,429 14,509 LVMH Moët Hennessy Louis Vuitton SE 4,811,986 9,082,648 30,980 Pernod Ricard SA 5,884,344 5,949,599 Norway (0.69%) 218,710 Vivendi SA 5,883,632 7,054,372 440,708 Golar LNG Ltd.1 6,363,792 4,248,425 Total France 30,964,872 44,315,549 Russia (3.02%) Germany (3.56%) 2,571,069 Detsky Mir PJSC, 144A 3,841,525 4,724,097 124,196 Befesa SA, 144A 5,550,109 7,833,481 24,290 Novatek PJSC, GDR 3,128,374 3,955,567 39,194 Symrise AG 2,651,806 5,210,581 298,657 Sberbank of Russia PJSC, ADR 3,430,965 4,318,048 163,057 TeamViewer AG, 144A1 6,294,803 8,758,997 165,717 TCS Group Holding PLC, GDR 4,196,176 5,452,089 Total Germany 14,496,718 21,803,059 Total Russia 14,597,040 18,449,801

155 Baron Funds

Baron International Growth Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020

Shares Cost Value Principal Amount Cost Value Common Stocks (continued) Short Term Investments (3.26%) Spain (1.74%) $19,948,166 Repurchase Agreement with Fixed Income Clearing Corp., 109,674 Cellnex Telecom S.A., 144A $ 6,913,444 $ 6,586,246 dated 12/31/2020, 0.00% 127,713 Industria de Diseno Textil, S.A. 3,833,010 4,053,586 due 1/4/2021; Proceeds at Total Spain 10,746,454 10,639,832 maturity - $19,948,166; (Fully collateralized by Sweden (3.50%) $18,277,400 U.S. Treasury 295,254 Epiroc AB Cl A 4,449,696 5,366,159 Note, 2.25% due 2/15/2027; 19,316 Spotify Technology SA1 2,790,396 6,077,973 Market value - $20,347,178) $ 19,948,166 $ 19,948,166 832,491 Telefonaktiebolaget LM Ericsson, ADR 7,648,437 9,948,267 TOTAL INVESTMENTS (100.38%) $419,500,486 614,202,605 Total Sweden 14,888,529 21,392,399 LIABILITIES LESS CASH AND Switzerland (4.23%) OTHER ASSETS (-0.38%) (2,299,011) 1 335,177 Clariant AG 6,849,447 7,111,110 NET ASSETS $611,903,594 1,071,354 Credit Suisse Group AG 11,771,492 13,832,112 41,830 Nestle S.A. 4,040,805 4,944,777 RETAIL SHARES (Equivalent to $31.97 per share Total Switzerland 22,661,744 25,887,999 based on 2,674,365 shares outstanding) $ 85,499,652 United Arab Emirates (0.32%) INSTITUTIONAL SHARES (Equivalent to $32.51 per share 434,866 Network International based on 11,163,488 shares outstanding) $362,894,670 Holdings plc, 144A1 2,453,949 1,959,377 R6 SHARES (Equivalent to $32.49 per share United Kingdom (15.88%) based on 5,032,357 shares outstanding) $163,509,272 144,508 AstraZeneca PLC, ADR 5,429,097 7,223,955 1,068,809 B&M European Value Retail S.A. 4,991,624 7,524,159 % Represents percentage of net assets. 98,806 Dechra Pharmaceuticals PLC 3,329,156 4,653,440 1 Non-income producing securities. 113,910 Endava plc, ADR1 3,118,840 8,742,593 2 At December 31, 2020, the market value of restricted and fair valued 152,703 Experian plc 3,184,532 5,800,979 securities amounted to $40,431 or 0.01% of net assets. This security is not 1 deemed liquid. 116,700 Farfetch Limited, Cl A 3,652,896 7,446,627 ADR 407,543 Future PLC 6,708,188 9,660,376 American Depositary Receipt. GDR Global Depositary Receipt. 444,691 J D Wetherspoon PLC1 5,354,936 6,786,567 144A Security is exempt from registration pursuant to Rule 144A under the 29,051 Linde Public Limited Company 4,790,082 7,660,064 1 Securities Act of 1933. This security may be resold in transactions that are 19,279,279 Lloyds Banking Group PLC 7,651,306 9,611,838 exempt from registration, normally to qualified institutional buyers. At 766,374 Rentokil Initial plc1 3,583,819 5,343,290 December 31, 2020, the market value of Rule 144A securities amounted to 1,705,252 S4 Capital PLC1 4,781,248 11,659,667 $39,328,288 or 6.43% of net assets. 361,327 Trainline Plc, 144A1 1,573,489 2,297,306 435,206 WANdisco plc1 3,773,599 2,764,446 Summary of Investments by Percentage of Total United Kingdom 61,922,812 97,175,307 Sector as of December 31, 2020 Net Assets United States (2.94%) Information Technology 19.6% 54,278 Agilent Technologies, Inc. 2,697,622 6,431,400 Financials 16.6% 215,344 Arch Capital Group Ltd.1 4,878,484 7,767,458 Industrials 13.3% 26,974 Fidelity National Information Consumer Discretionary 12.4% Services, Inc. 2,560,195 3,815,742 Health Care 12.2% Total United States 10,136,301 18,014,600 Communication Services 9.5% TOTAL COMMON STOCKS 399,552,320 594,254,439 Materials 7.4% Energy 2.4% Consumer Staples 2.3% Real Estate 0.8% Special Purpose Acquisition Company 0.6% Cash and Cash Equivalents* 2.9% 100.0%

* Includes short term investments.

156 Baron Funds

Baron Real Estate Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (95.27%) Common Stocks (continued) Communication Services (3.61%) Industrials (continued) Integrated Telecommunication Trading Companies & Services (1.58%) Distributors (1.03%) 275,865 Cellnex Telecom S.A., 144A (Spain)2 $ 17,374,585 $ 16,566,503 67,751 SiteOne Landscape Supply, Inc.1 $ 3,096,842 $ 10,747,341 Interactive Media & Services (2.03%) Total Industrials 23,414,940 55,512,033 163,460 Zillow Group, Inc., Cl C1 5,974,746 21,217,108 Information Technology (7.69%) Total Communication Services 23,349,331 37,783,611 Internet Services & Consumer Discretionary (38.42%) Infrastructure (6.21%) 527,450 GDS Holdings Limited, ADR1,2 14,087,910 49,390,418 Casinos & Gaming (18.26%) 1,660,900 NEXTDC Limited (Australia)1,2 8,234,614 15,672,889 803,950 Boyd Gaming Corporation 14,626,021 34,505,534 499,550 Las Vegas Sands Corp. 25,163,395 29,773,180 22,322,524 65,063,307 472,578 Penn National Gaming, Inc.1 2,530,559 40,816,562 Internet Software & Services (1.48%) 1,399,371 Red Rock Resorts, Inc., Cl A 15,598,750 35,040,250 446,289 21Vianet Group, Inc., ADR1,2 9,387,089 15,481,765 453,250 Wynn Resorts Ltd. 29,631,012 51,140,197 Total Information Technology 31,709,613 80,545,072 87,549,737 191,275,723 Distributors (0.96%) Materials (2.42%) 27,100 Pool Corp. 5,445,212 10,094,750 Construction Materials (1.33%) 94,000 Vulcan Materials Co. 10,354,160 13,941,140 Home Improvement Retail (3.67%) 60,850 The Home Depot, Inc. 9,186,679 16,162,977 Specialty Chemicals (1.09%) 138,900 Lowe’s Companies, Inc. 16,445,969 22,294,839 15,450 The Sherwin-Williams Co. 4,657,503 11,354,359 25,632,648 38,457,816 Total Materials 15,011,663 25,295,499 Homebuilding (7.05%) 228,347 D.R. Horton, Inc. 8,766,743 15,737,675 Real Estate (34.95%) 154,973 Installed Building Products, Inc.1 7,890,461 15,796,398 Hotel & Resort REITs (1.57%) 203,650 Lennar Corp., Cl A 7,775,145 15,524,239 524,100 MGM Growth Properties LLC, Cl A 12,494,526 16,404,330 476,347 Taylor Morrison Home Corp.1 7,364,519 12,218,301 333,750 Toll Brothers, Inc. 11,804,624 14,508,113 Industrial REITs (3.74%) 224,750 Prologis, Inc. 14,396,164 22,398,585 43,601,492 73,784,726 340,759 Rexford Industrial Realty, Inc. 14,254,411 16,734,675 Hotels, Resorts & Cruise Lines (5.39%) 28,650,575 39,133,260 571,023 Hilton Grand Vacations, Inc.1 12,954,782 17,901,571 93,150 Hilton Worldwide Holdings, Inc. 6,205,517 10,363,869 Office REITs (2.26%) 127,100 Hyatt Hotels Corp., Cl A 7,537,371 9,437,175 809,700 Douglas Emmett, Inc. 21,731,153 23,627,046 136,300 Marriott Vacations Worldwide Corp. 6,940,321 18,703,086 Real Estate Development (1.62%) 33,637,991 56,405,701 215,650 The Howard Hughes Corp.1 15,653,089 17,021,255 Internet & Direct Marketing Real Estate Services (7.20%) Retail (0.02%) 278,850 CBRE Group, Inc., Cl A1 5,995,174 17,489,472 1,594 Airbnb, Inc., Cl A1,3 108,392 233,999 161,100 Jones Lang LaSalle, Inc.1 18,055,817 23,902,407 1,497,872 Opendoor Technologies, Inc.1,4 14,978,720 31,679,993 Leisure Facilities (3.07%) 33,750 Redfin Corp.1 1,228,077 2,316,262 299,350 SeaWorld Entertainment, Inc.1 5,885,130 9,456,467 664,091 Six Flags Entertainment Corp. 16,614,889 22,645,503 40,257,788 75,388,134 22,500,019 32,101,970 Residential REITs (4.55%) 283,750 Equity LifeStyle Properties, Inc. 15,715,492 17,978,400 Total Consumer Discretionary 218,475,491 402,354,685 206,500 Equity Residential 12,509,075 12,241,320 Financials (2.88%) 586,400 Invitation Homes, Inc. 14,552,297 17,416,080 42,776,864 47,635,800 Asset Management & Custody Banks (2.88%) Specialized REITs (14.01%) 732,057 Brookfield Asset Management, Inc., Cl A2 15,969,188 30,211,992 92,600 Alexandria Real Estate Equities, Inc.3 6,149,667 16,503,172 480,100 American Assets Trust, Inc. 13,929,470 13,865,288 Industrials (5.30%) 145,450 American Tower Corp. 22,830,021 32,647,707 Building Products (2.49%) 454,790 Americold Realty Trust3 12,355,308 16,977,311 302,101 AZEK Co., Inc.1 6,948,323 11,615,784 86,978 Digital Realty Trust, Inc. 11,064,502 12,134,301 81,250 Fortune Brands Home & Security, Inc. 4,256,658 6,964,750 43,990 Equinix, Inc. 10,124,019 31,416,778 90,300 Trex Co., Inc.1 2,685,865 7,559,916 321,148 Gaming and Leisure Properties, Inc. 8,605,351 13,616,675 34,050 SBA Communications Corp. 7,570,230 9,606,526 13,890,846 26,140,450 92,628,568 146,767,758 Research & Consulting Services (1.78%) Total Real Estate 254,192,563 365,977,583 20,150 CoStar Group, Inc.1 6,427,252 18,624,242 TOTAL COMMON STOCKS 582,122,789 997,680,475

157 Baron Funds

Baron Real Estate Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020

Principal Amount Cost Value Short Term Investments (4.10%) $42,927,350 Repurchase Agreement with Fixed Income Clearing Corp., dated 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - $42,927,350; (Fully collateralized by $41,229,600 U.S. Treasury Note, 1.75% due 7/31/2024; Market value - $43,785,951) $ 42,927,350 $ 42,927,350 TOTAL INVESTMENTS (99.37%) $625,050,139 1,040,607,825

CASH AND OTHER ASSETS LESS LIABILITIES (0.63%) 6,597,231 NET ASSETS $1,047,205,056

RETAIL SHARES (Equivalent to $35.21 per share based on 9,136,943 shares outstanding) $ 321,750,862

INSTITUTIONAL SHARES (Equivalent to $36.02 per share based on 19,584,147 shares outstanding) $ 705,409,107

R6 SHARES (Equivalent to $36.02 per share based on 556,488 shares outstanding) $ 20,045,087

% 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 (unaudited). 4 At December 31, 2020, the market value of restricted and fair valued securities amounted to $31,679,993 or 3.03% of net assets. This security is not deemed liquid. 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 December 31, 2020, the market value of Rule 144A securities amounted to $16,566,503 or 1.58% of net assets.

158 Baron Funds

Baron Emerging Markets Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (99.12%) Common Stocks (continued) Brazil (11.03%) China (continued) 20,482,496 Aeris Indústria E Comércio De 903,696 Will Semiconductor Co. Ltd. Equipamentos Para Geração De Shanghai, Cl A $ 31,720,152 $ 31,934,332 Energia SA1 $ 21,206,234 $ 39,433,399 9,338,061 Winning Health Technology 1,420,478 Afya Ltd., Cl A1 38,055,150 35,938,093 Group Co. Ltd., Cl A 27,886,994 25,014,942 6,061,451 B3 S.A. – Brasil, Bolsa, Balcao 32,740,232 72,572,399 657,444 Yum China Holdings, Inc. 35,393,881 37,533,478 10,599,750 Itaú Unibanco Holding SA, ADR 50,236,779 64,552,478 434,176 Yum China Holdings, Inc. 6,599,345 Localiza Rent a Car SA 46,142,751 87,951,933 (Hong Kong) 23,302,993 24,892,131 5,705,464 Notre Dame Intermedica 3,645,806 Yunnan Baiyao Group Co. Ltd., Cl A 51,426,542 63,363,390 Participacoes S.A. 65,795,177 86,487,009 1,322,709 Zai Lab Limited, ADR1 26,871,113 179,015,436 1,529,632 PagSeguro Digital Ltd., Cl A1 34,201,385 87,005,468 1,514,251 ZTO Express Cayman, Inc., ADR1 47,905,820 44,155,559 10,092,136 Rumo S.A.1 35,618,967 37,324,281 910,000 StoneCo Ltd., Cl A1 22,863,692 76,367,200 Total China 1,473,392,738 2,787,139,304 6,696,233 Suzano SA1 57,540,109 75,199,261 2,058,996 XP, Inc., Cl A1 76,613,866 81,680,371 Hong Kong (1.91%) 633,454 Hong Kong Exchanges & Total Brazil 481,014,342 744,511,892 Clearing Ltd. 26,638,687 34,746,026 China (41.29%) 6,598,450 Techtronic Industries Co. Ltd. 27,011,710 94,314,426 1,073,278 Alibaba Group Holding Total Hong Kong 53,650,397 129,060,452 Limited, ADR1 110,361,887 249,783,989 9,715,491 Beijing Oriental Yuhong Waterproof Hungary (0.84%) Technology Co. Ltd., Cl A 39,965,618 57,680,089 1,263,698 OTP Bank Nyrt1 50,350,593 56,948,007 20,767,418 China Conch Venture Holdings Ltd. 80,781,220 101,055,540 India (21.25%) 14,610,732 China Mengniu Dairy Co. Ltd. 31,725,990 88,090,244 1,649,886 Asian Paints Ltd. 39,919,057 62,494,899 35,128,937 China Molybdenum Co. Ltd., Cl A 25,345,506 33,639,602 2,069,031 Bajaj Finance Limited 82,592,896 150,222,571 25,106,763 China Molybdenum Co. Ltd., Cl H 12,682,551 16,427,287 6,509,725 Bharti Airtel Ltd. 47,560,508 45,461,382 2,372,010 China Tourism Group Duty Free 642,853 Britannia Industries Limited 18,132,894 31,523,126 Corporation Limited, Cl A 25,732,015 102,666,753 1,609,651 Divi’s Laboratories Ltd. 17,271,957 84,655,070 7,264,608 Galaxy Entertainment Group Ltd. 53,465,925 56,551,607 838,982 Dr. Reddy’s Laboratories Ltd. 34,261,075 59,733,341 1,045,134 GDS Holdings Limited, ADR1 44,831,415 97,866,348 287,688 Dr. Reddy’s Laboratories Ltd., ADR 11,863,032 20,509,277 2,177,816 GDS Holdings Limited, Cl A1 23,011,860 25,381,096 27,672,653 Edelweiss Financial Services Ltd.1 42,075,863 25,982,781 5,943,487 Glodon Co. Ltd., Cl A 28,954,563 71,650,841 3,807,103 HDFC Bank Ltd.1 58,058,432 74,986,531 9,385,348 Han’s Laser Technology Industry 3,846,048 Hemisphere Properties Group Co., Ltd., Cl A 51,582,326 61,447,989 India Limited1 14,647,473 5,003,139 10,499,615 Hangzhou Hikvision Digital 1,476,471 Hindustan Unilever Ltd. 41,718,924 48,471,096 Technology Co., Ltd., Cl A 42,674,366 77,920,482 2,594,915 Housing Development 2,683,207 Hangzhou Tigermed Finance Corp., Ltd. 68,421,706 90,915,273 Consulting Co. Ltd., CI A 31,002,614 66,254,067 2,255,634 ICICI Lombard General 11,895,165 Hua Hong Semiconductor Insurance Co. Ltd., 144A1 40,222,489 47,021,921 Limited, 144A1 27,175,269 67,721,178 36,495,897 JM Financial Limited 53,765,345 42,142,106 22,809,166 Kingdee International Software 2,879,035 Kotak Mahindra Bank Ltd.1 38,430,982 78,685,925 Group Co. Ltd. 10,134,579 93,119,761 8,896,706 Max Financial Services Ltd.1 75,304,935 82,207,388 14,036,189 Kingsoft Corp. Ltd. 53,479,135 90,754,392 3,093,607 Muthoot Finance Ltd. 46,900,611 51,279,651 680,843 Li Auto Inc., ADR1 7,829,694 19,628,704 10,355,841 Nippon Life India Asset 3,782,524 Lufax Holding Ltd.1 51,122,059 53,711,841 Management Ltd., 144A 35,675,429 42,194,148 1,826,041 Meituan, Cl B1 17,080,161 68,738,490 5,597,043 Reliance Industries Limited 110,672,385 152,289,464 7,582,672 Midea Group Co., Ltd., Cl A 42,136,798 114,198,041 370,459 Reliance Industries Limited PP 1,670,322 5,690,821 2,304,544 New Frontier Health Corp.1 23,796,588 19,819,078 4,644,357 SBI Life Insurance Company 343,164 New Oriental Education & Limited, 144A1 48,903,190 57,508,627 Technology Group, Inc., ADR1 21,427,925 63,763,303 4,423,008 Tata Communications Ltd. 28,580,178 66,833,353 7,936,641 Ping An Insurance (Group) 7,037,581 Tata Consumer Products Ltd. 25,874,579 56,952,695 Company of China, Ltd., CI H 88,262,192 96,585,843 2,391,935 Titan Co. Ltd. 37,807,070 51,384,607 4,231,563 SF Holding Co. Ltd., Cl A 29,214,810 57,096,503 3,756,017 Shanghai Henlius Total India 1,020,331,332 1,434,149,192 Biotech, Inc., Cl H, 144A1 23,855,351 22,759,286 1,183,998 Shenzhen Mindray Bio-Medical Japan (0.98%) Electronics Co. Ltd., Cl A 32,483,590 77,021,585 117,841 Keyence Corporation 42,280,319 66,287,517 4,071,486 Shenzhou International Group Holdings Ltd. 19,151,917 79,793,939 Korea, Republic of (5.80%) 51,997,047 Sino Biopharmaceutical Ltd. 31,813,797 50,145,464 770,985 Korea Shipbuilding & Offshore 3,574,092 Tencent Holdings Limited 103,190,194 257,169,390 Engineering Co. Ltd.1 72,771,667 77,215,692 164,404 Tencent Holdings Limited, ADR 8,227,706 11,819,003 4,209,573 Samsung Electronics Co., Ltd. 143,283,127 314,351,834 6,923,308 Venustech Group, Inc., Cl A 36,385,622 30,968,301 Total Korea, Republic of 216,054,794 391,567,526

159 Baron Funds

Baron Emerging Markets Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020

Shares Cost Value Principal Amount Cost Value Common Stocks (continued) Short Term Investments (1.37%) $92,606,105 Repurchase Agreement with Mexico (2.88%) Fixed Income Clearing Corp., 1,791,760 DD3 Acquisition Corp. II dated 12/31/2020, 0.00% Forward Shares1,2 $ 0 $ 788,374 due 1/4/2021; Proceeds at 358,352 DD3 Acquisition Corp. II maturity - $92,606,105; Founders Shares1,2 3,116 2,741,393 (Fully collateralized by 26,518 DD3 Acquisition Corp. II $94,929,200 U.S. Treasury Private Units1,2 265,181 274,196 Note, 0.50% due 6/30/2027; 297,234 Fomento Económico Mexicano, Market value - $94,458,256) $ 92,606,105 $ 92,606,105 S.A.B. de C.V., ADR 26,200,260 22,521,420 2,521,213 GRUMA, S.A.B. de C.V., Cl B 30,201,054 30,048,800 TOTAL INVESTMENTS (100.49%) $4,135,056,690 6,783,216,301 19,739,979 Grupo México S.A.B. de C.V., Series B 52,273,719 83,713,502 LIABILITIES LESS CASH AND 19,247,221 Wal-Mart de Mexico, OTHER ASSETS (-0.49%) (32,775,799) S.A.B de C.V. 44,507,483 54,067,673 NET ASSETS $6,750,440,502 Total Mexico 153,450,813 194,155,358 RETAIL SHARES (Equivalent to $18.97 per share Norway (0.51%) based on 26,756,742 shares outstanding) $ 507,696,629 3,566,460 Golar LNG Ltd.1 36,892,412 34,380,674 INSTITUTIONAL SHARES (Equivalent to $19.06 per share Philippines (1.20%) based on 326,858,488 shares outstanding) $6,228,805,640 54,321,165 Ayala Land, Inc. 40,771,878 46,287,242 R6 SHARES (Equivalent to $19.07 per share 15,567,466 BDO Unibank, Inc. 32,642,808 34,660,337 based on 730,981 shares outstanding) $ 13,938,233 Total Philippines 73,414,686 80,947,579 Russia (4.39%) % Represents percentage of net assets. 1 Non-income producing securities. 452,731 Novatek PJSC, GDR 61,648,812 73,726,131 2 At December 31, 2020, the market value of restricted and fair valued 655,682 Ozon Holdings PLC, ADR1 23,587,564 27,151,792 securities amounted to $3,803,963 or 0.06% of net assets. These securities 109,453 Polyus PJSC 21,963,126 22,509,878 are not deemed liquid. 156,381 Polyus PJSC, GDR 15,795,970 15,763,205 ADR American Depositary Receipt. 7,412,591 Sberbank of Russia PJSC, ADR 76,911,284 107,172,849 GDR Global Depositary Receipt. 718,125 Yandex N.V., Cl A1 10,907,290 49,967,138 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 Total Russia 210,814,046 296,290,993 exempt from registration, normally to qualified institutional buyers. At December 31, 2020, the market value of Rule 144A securities amounted to Taiwan (5.51%) $261,341,108 or 3.87% of net assets. 11,235,879 Delta Electronics, Inc. 47,362,579 105,369,367 2,443,130 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 71,921,377 266,398,895 Summary of Investments by Percentage of Sector as of December 31, 2020 Net Assets Total Taiwan 119,283,956 371,768,262 Information Technology 22.6% Thailand (0.38%) Financials 19.9% 13,351,034 CP All Plc., Cl F 29,088,021 25,957,868 Consumer Discretionary 13.8% Health Care 11.2% United Arab Emirates (0.36%) Industrials 8.9% 5,356,755 Network International Communication Services 6.4% 1 Holdings plc, 144A 33,672,739 24,135,948 Materials 6.2% United Kingdom (0.79%) Consumer Staples 5.3% Energy 3.9% 16,786,237 Glencore PLC1 48,759,397 53,309,624 Real Estate 0.8% TOTAL COMMON STOCKS 4,042,450,585 6,690,610,196 Special Purpose Acquisition Company 0.1% Cash and Cash Equivalents* 0.9% 100.0%

* Includes short term investments.

160 Baron Funds

Baron Global Advantage Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (96.05%) Common Stocks (continued) Argentina (3.76%) Poland (0.06%) 76,873 Globant S.A.1 $ 5,591,434 $ 16,728,333 62,873 Allegro.eu SA, 144A1 $ 805,513 $ 1,425,528 43,986 MercadoLibre, Inc.1 28,417,004 73,686,227 Total Argentina 34,008,438 90,414,560 United Kingdom (2.32%) 726,800 Endava plc, ADR1 31,977,783 55,781,900 Brazil (5.33%) 1,350,809 Afya Ltd., Cl A1 30,749,275 34,175,468 United States (53.66%) 558,028 Arco Platform Limited, Cl A1 22,843,744 19,804,414 305,555 10X Genomics, Inc., Cl A1 28,039,425 43,266,588 518,345 PagSeguro Digital Ltd., Cl A1 17,909,866 29,483,463 561,945 Acceleron Pharma, Inc.1 43,968,193 71,895,243 535,148 StoneCo Ltd., Cl A1 18,692,727 44,909,620 3,651 Airbnb, Inc., Cl A1 248,268 535,967 52,976 Alphabet, Inc., Cl C1 79,155,879 92,807,595 Total Brazil 90,195,612 128,372,965 36,644 Amazon.com, Inc.1 85,125,573 119,346,943 237,258 Arrowhead Pharmaceuticals, Inc.1 15,277,934 18,204,806 Canada (3.21%) 121,136 BigCommerce Holdings, Inc.1 2,907,264 7,770,874 97,110 AbCellera Biologics, Inc.1 1,942,200 3,907,707 137,887 Bill.Com Holdings, Inc.1 5,238,091 18,821,576 489,196 Nuvei Corp., 144A1 15,145,827 29,464,275 345,988 Cloudflare, Inc., Cl A1 7,173,701 26,291,628 38,837 Shopify, Inc., Cl A1 26,156,374 43,961,542 199,594 Crowdstrike Holdings, Inc., Cl A1 12,870,665 42,278,001 1 Total Canada 43,244,401 77,333,524 180,951 Datadog, Inc., Cl A 6,822,184 17,812,816 71,594 DoorDash, Inc., Cl A1 7,302,588 10,220,044 1 China (15.25%) 640,074 Dynatrace, Inc. 21,390,113 27,696,002 168,765 EPAM Systems, Inc.1 39,932,547 60,476,938 484,022 Alibaba Group Holding 295,248 Facebook, Inc., Cl A1 64,996,076 80,649,944 1 Limited, ADR 101,939,832 112,646,440 350,583 Guardant Health, Inc.1 27,416,295 45,183,137 1 673,206 GDS Holdings Limited, ADR 44,161,310 63,039,010 150,165 Illumina, Inc.1 49,300,735 55,561,050 1 1,526,791 GDS Holdings Limited, Cl A 16,094,249 17,793,803 8,586 nCino, Inc.1 266,166 621,712 1,381,225 Meituan, (formerly Meituan 58,333 Okta, Inc.1 6,160,801 14,831,749 1 Dianping), Cl B 26,631,859 51,994,079 2,995,470 Opendoor Technologies, Inc.1,2 29,954,700 63,354,190 1 189,309 Pinduoduo, Inc., ADR 9,401,277 33,634,530 633,753 PTC Therapeutics, Inc.1 31,035,838 38,677,946 1 590,638 TAL Education Group, ADR 28,958,956 42,236,524 218,810 RingCentral, Inc., Cl A1 57,180,330 82,922,426 1 339,174 Zai Lab Limited, ADR 21,663,045 45,903,809 1,493,774 Sarissa Capital Acquisition Corp.1,3 14,937,740 15,908,693 Total China 248,850,528 367,248,195 422,406 Schrödinger, Inc.1 15,544,854 33,446,107 630,571 Slack Technologies, Inc., Cl A1 18,426,938 26,635,319 India (1.61%) 154,198 Snowflake, Inc., Cl A1 18,503,760 43,391,317 1 534,508 Bajaj Finance Limited 33,760,008 38,808,102 338,161 Splunk, Inc. 55,904,468 57,450,172 183,041 Twilio, Inc., Cl A1 29,578,269 61,959,378 150,396 Veeva Systems, Inc., Cl A1 23,416,298 40,945,311 Israel (5.74%) 1 1 1,000,838 ZoomInfo Technologies Inc., Cl A 32,829,689 48,270,417 326,882 Fiverr International Ltd. 7,503,852 63,774,678 123,983 Zscaler, Inc.1 8,588,946 24,760,645 1,143,741 ION Acquisition Corp. Limited1 11,437,410 13,816,391 242,889 Wix.com Ltd.1 43,240,533 60,712,535 Total United States 839,494,328 1,291,994,534 Total Israel 62,181,795 138,303,604 TOTAL COMMON STOCKS 1,449,348,529 2,312,510,278 Mexico (0.49%) 996,069 DD3 Acquisition Corp. II1,3 9,960,690 10,458,725 Private Convertible Preferred Stocks (1.05%) 584,567 DD3 Acquisition Corp. II United States (1.05%) Forward Shares1,2,3 0 257,209 219,321 Farmers Business Network, Inc., 116,913 DD3 Acquisition Corp. II 1,2 Founders Shares1,2,3 1,017 894,384 Series F 7,250,006 7,384,538 69,926 Resident Home, Inc. Series B11,2 4,999,968 4,068,994 8,652 DD3 Acquisition Corp. II 1,2 Private Units1,2,3 86,516 89,462 484,183 Rivian Automotive, Inc., Series E 7,499,995 11,160,418 302,325 Zymergen, Inc., Series D1,2 2,249,993 2,482,088 Total Mexico 10,048,223 11,699,780 TOTAL PRIVATE CONVERTIBLE Netherlands (4.62%) PREFERRED STOCKS 21,999,962 25,096,038 16,186 Adyen N.V., 144A1 16,437,273 37,608,831 187,052 argenx SE, ADR1 29,949,924 55,010,122 38,227 ASML Holding N.V. 8,394,703 18,508,633 Total Netherlands 54,781,900 111,127,586

161 Baron Funds

Baron Global Advantage Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020

Principal Amount Cost Value Short Term Investments (4.96%) $119,467,118 Repurchase Agreement with Fixed Income Clearing Corp., dated 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - $119,467,118; (Fully collateralized by $45,721,200 U.S. Treasury Note, 1.75% due 7/31/2024; Market value - $48,556,043) and $67,458,500 U.S. Treasury Note, 2.375% due 8/15/2024; Market value - $73,300,490) $ 119,467,118 $ 119,467,118 TOTAL INVESTMENTS (102.06%) $1,590,815,609 2,457,073,434

LIABILITIES LESS CASH AND OTHER ASSETS (-2.06%) (49,484,043) NET ASSETS $2,407,589,391

RETAIL SHARES (Equivalent to $51.34 per share based on 17,952,384 shares outstanding) $ 921,693,835

INSTITUTIONAL SHARES (Equivalent to $52.25 per share based on 28,148,634 shares outstanding) $1,470,888,459

R6 SHARES (Equivalent to $52.28 per share based on 287,031 shares outstanding) $ 15,007,097

% Represents percentage of net assets. 1 Non-income producing securities. 2 At December 31, 2020, the market value of restricted and fair valued securities amounted to $89,691,283 or 3.73% of net assets. These securities are not deemed liquid. 3 An “Affiliated” investment may include any company in which the Fund owns 5% or more of its outstanding shares. 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 December 31, 2020, the market value of Rule 144A securities amounted to $68,498,634 or 2.85% of net assets.

Summary of Investments by Percentage of Sector as of December 31, 2020 Net Assets Information Technology 38.7% Consumer Discretionary 24.1% Health Care 18.8% Communication Services 9.2% Real Estate 2.6% Special Purpose Acquisition Company 1.7% Financials 1.6% Materials 0.4% Cash and Cash Equivalents* 2.9% 100.0%

* Includes short term investments.

162 Baron Funds

Baron Discovery Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (93.33%) Common Stocks (continued) Communication Services (3.56%) Health Care (continued) Advertising (1.68%) Health Care Equipment (9.69%) 3,250,000 S4 Capital PLC (United Kingdom)1,2 $ 8,682,309 $ 22,221,888 465,000 Acutus Medical, Inc.1 $ 10,283,134 $ 13,396,650 505,084 AxoGen, Inc.1 8,267,053 9,041,004 Movies & Entertainment (0.53%) 280,982 Axonics Modulation 185,000 Liberty Media Corporation-Liberty Technologies, Inc.1 9,200,554 14,026,621 Formula One, Cl A1 5,634,811 7,028,150 202,500 CryoPort, Inc.1 5,127,704 8,885,700 Publishing (1.35%) 308,580 Eargo, Inc.1 9,305,920 13,830,555 750,000 Future PLC (United Kingdom)2 13,234,352 17,777,957 89,823 Inari Medical, Inc.1 2,337,837 7,840,650 466,231 Inogen, Inc.1 20,252,205 20,831,201 Total Communication Services 27,551,472 47,027,995 50,000 Inspire Medical Systems, Inc.1,3 2,923,748 9,404,500 365,208 Silk Road Medical, Inc.1,3 12,597,717 23,000,800 Consumer Discretionary (11.15%) 1,985,000 ViewRay, Inc.1 9,544,839 7,582,700 Casinos & Gaming (3.85%) 89,840,711 127,840,381 75,000 DraftKings, Inc., Cl A1 935,795 3,492,000 7,000,000 Melco International Development Ltd. Health Care Supplies (1.60%) (Hong Kong)2 13,991,865 13,632,829 2,029,967 Cerus Corp.1 10,431,841 14,047,372 230,371 Penn National Gaming, Inc.1 4,103,946 19,897,144 1,815,363 Sientra, Inc.1 14,032,382 7,061,762 550,000 Red Rock Resorts, Inc., Cl A 13,671,025 13,772,000 24,464,223 21,109,134 32,702,631 50,793,973 Health Care Technology (0.85%) General Merchandise Stores (1.36%) 258,963 Accolade, Inc.1 6,153,987 11,264,890 220,000 Ollie’s Bargain Outlet Holdings, Inc.1 14,815,546 17,989,400 Life Sciences Tools & Services (7.22%) Home Furnishings (1.75%) 50,000 Berkeley Lights, Inc.1 1,100,000 4,470,500 700,000 Purple Innovation, Inc.1 13,886,064 23,058,000 499,729 CareDx, Inc.1,3 10,068,530 36,205,366 Home Improvement Retail (2.46%) 976,780 Pacific Biosciences of California, Inc.1 4,861,955 25,337,673 350,000 Floor & Decor Holdings, Inc., Cl A1 11,227,099 32,497,500 68,980 Seer, Inc.1 1,310,620 3,872,537 519,190 Veracyte, Inc.1,3 12,884,315 25,409,159 Internet & Direct Marketing Retail (0.52%) 30,225,420 95,295,235 1 350,000 The RealReal, Inc. 5,622,022 6,839,000 Managed Health Care (1.89%) Restaurants (1.21%) 588,279 Progyny, Inc.1 11,541,422 24,937,147 395,000 The Cheesecake Factory, Inc. 9,904,250 14,638,700 Pharmaceuticals (1.95%) 10,000 Wingstop, Inc. 874,199 1,325,500 741,732 Revance Therapeutics, Inc.1 12,687,471 21,020,685 10,778,449 15,964,200 3,831,500 TherapeuticsMD, Inc.1 16,199,094 4,636,115 Total Consumer Discretionary 89,031,811 147,142,073 28,886,565 25,656,800 Consumer Staples (4.25%) Total Health Care 228,511,058 347,699,517 Packaged Foods & Meats (2.55%) Industrials (18.01%) 1,050,000 Barfresh Food Group, Inc.1 597,200 451,500 75,000 Laird Superfood, Inc.1 1,650,000 3,549,000 Aerospace & Defense (4.06%) 1,000,000 UTZ Brands, Inc. 16,340,000 22,060,000 964,870 Kratos Defense & Security 300,000 Vital Farms, Inc.1 6,600,000 7,593,000 Solutions, Inc.1 16,120,727 26,466,384 1 25,187,200 33,653,500 307,680 Mercury Systems, Inc. 12,727,809 27,094,301 28,848,536 53,560,685 Soft Drinks (1.70%) 650,000 Fevertree Drinks PLC (United Kingdom)2 19,183,013 22,461,884 Building Products (1.39%) 1 Total Consumer Staples 44,370,213 56,115,384 220,000 Trex Company, Inc. 7,416,878 18,418,400 Electrical Components & Financials (4.24%) Equipment (1.15%) Insurance Brokers (1.59%) 353,799 Array Technologies, Inc.1 7,783,578 15,262,889 700,007 BRP Group, Inc., Cl A1 13,850,743 20,979,210 Environmental & Facilities Property & Casualty Services (1.29%) Insurance (2.65%) 550,000 Montrose Environmental Group, Inc.1 8,403,000 17,028,000 175,000 Kinsale Capital Group, Inc. 7,660,884 35,022,750 Heavy Electrical Equipment (2.83%) Total Financials 21,511,627 56,001,960 707,000 TPI Composites, Inc.1 15,134,505 37,315,460 Health Care (26.35%) Industrial Conglomerates (1.49%) Biotechnology (3.15%) 595,000 Raven Industries, Inc. 16,001,969 19,688,550 1 127,000 Applied Therapeutics, Inc. 6,307,786 2,795,270 Industrial Machinery (3.36%) 146,000 Biohaven Pharmaceutical 1,2 86,600 ESCO Technologies, Inc. 4,658,024 8,938,852 Holding Co. Ltd. 6,453,537 12,513,660 350,000 Helios Technologies, Inc. 14,644,212 18,651,500 185,000 Emergent BioSolutions, Inc.1 8,374,928 16,576,000 187,500 Kornit Digital Ltd.1,2 2,923,081 16,711,875 373,500 Esperion Therapeutics, Inc.1 16,262,479 9,711,000 37,398,730 41,595,930 22,225,317 44,302,227

163 Baron Funds

Baron Discovery Fund — PORTFOLIO HOLDINGS (Continued) December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (continued) Common Stocks (continued) Industrials (continued) Real Estate (3.54%) Trading Companies & Industrial REITs (1.30%) Distributors (2.44%) 350,000 Rexford Industrial Realty, Inc. $ 12,654,993 $ 17,188,500 49,001 Hydrofarm Holdings Group, Inc.1,3 $ 980,020 $ 2,576,472 186,500 SiteOne Landscape Supply, Inc.1 10,148,112 29,584,495 Specialized REITs (2.24%) 485,000 American Assets Trust, Inc. 13,124,986 14,006,800 11,128,132 32,160,967 415,000 Americold Realty Trust3 8,047,276 15,491,950 Total Industrials 116,941,915 237,737,178 21,172,262 29,498,750 Total Real Estate 33,827,255 46,687,250 Information Technology (21.55%) Application Software (2.88%) Special Purpose Acquisition 35,000 Bill.Com Holdings, Inc.1 1,365,005 4,777,500 Company (0.68%) 135,000 Everbridge, Inc.1 13,126,818 20,124,450 450,000 Longview Acquisition Corp., Cl A1 5,256,448 8,905,500 395,000 Medallia, Inc.1 11,697,793 13,121,900 TOTAL COMMON STOCKS 713,814,050 1,231,645,281 26,189,616 38,023,850 Data Processing & Outsourced Services (1.89%) Principal Amount 1 500,000 Repay Holdings Corporation, Cl A 7,499,309 13,625,000 Short Term Investments (6.67%) 150,000 Shift4 Payments, Inc., Cl A1 3,676,035 11,310,000 $88,072,991 Repurchase Agreement with 11,175,344 24,935,000 Fixed Income Clearing Corp., Electronic Equipment & dated 12/31/2020, 0.00% Instruments (1.76%) due 1/4/2021; Proceeds at 10,431 Novanta, Inc.1,2 272,591 1,233,153 maturity - $88,072,991; 350,000 PAR Technology Corp.1 6,472,283 21,976,500 (Fully collateralized by $82,674,800 U.S. Treasury 6,744,874 23,209,653 Note, 2.375% due 8/15/2024; Market value - $89,834,541) IT Consulting & Other 88,072,991 88,072,991 Services (2.62%) TOTAL INVESTMENTS (100.00%) $801,887,041 1,319,718,272 450,000 Endava plc, ADR1,2 13,125,641 34,537,500 CASH AND OTHER ASSETS Semiconductor Equipment (4.44%) LESS LIABILITIES (0.00%) 15,584 300,000 Advanced Energy Industries, Inc.1 19,498,132 29,091,000 465,000 Ichor Holdings Ltd.1,2 10,273,078 14,017,425 NET ASSETS $1,319,733,856 220,000 Nova Measuring Instruments Ltd.1,2 5,201,368 15,532,000 34,972,578 58,640,425 RETAIL SHARES (Equivalent to $34.17 per share based on 6,554,939 shares outstanding) $ 223,991,033 Semiconductors (2.02%) 1,000,000 Allegro MicroSystems, Inc.1 14,000,000 26,660,000 INSTITUTIONAL SHARES (Equivalent to $34.79 per share based on 30,785,720 shares outstanding) $1,071,109,420 Systems Software (5.94%) 333,775 Dynatrace, Inc.1,3 6,243,606 14,442,444 R6 SHARES (Equivalent to $34.80 per share 672,131 Ping Identity Holding Corp.1 11,961,244 19,249,832 based on 707,939 shares outstanding) $ 24,633,403 150,000 Qualys, Inc.1 8,111,437 18,280,500 120,000 Sailpoint Technologies Holdings, Inc.1 6,847,365 6,388,800 122,000 Varonis Systems, Inc.1 7,440,546 19,960,420 % Represents percentage of net assets. 1 Non-income producing securities. 40,604,198 78,321,996 2 Foreign corporation. 3 Total Information Technology 146,812,251 284,328,424 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 (unaudited). ADR American Depositary Receipt.

164 Baron Funds

Baron Durable Advantage Fund — PORTFOLIO HOLDINGS December 31, 2020 (Unaudited)

Shares Cost Value Shares Cost Value Common Stocks (98.97%) Common Stocks (continued) Communication Services (13.08%) Information Technology (continued) Cable & Satellite (2.21%) Data Processing & Outsourced 574 Charter Communications, Inc., Cl A1 $ 233,119 $ 379,730 Services (8.67%) 3,763 Fidelity National Information Services, Inc. $ 522,722 $ 532,314 Interactive Media & Services (10.87%) 1 1,494 MasterCard Incorporated, Cl A 311,428 533,268 632 Alphabet, Inc., Cl C 931,362 1,107,188 1,938 Visa, Inc., Cl A 412,484 423,899 2,784 Facebook, Inc., Cl A1 612,288 760,477 1,246,634 1,489,481 1,543,650 1,867,665 Total Communication Services 1,776,769 2,247,395 Electronic Manufacturing Services (1.38%) Consumer Staples (5.57%) 1,958 TE Connectivity Ltd.2 186,028 237,055 Distillers & Vintners (2.98%) IT Consulting & Other Services (3.68%) 2,336 Constellation Brands, Inc., Cl A 473,063 511,701 2,424 Accenture plc, Cl A2 450,158 633,173 Hypermarkets & Super Centers (1.53%) Semiconductors (1.60%) 699 Costco Wholesale Corp. 185,293 263,369 1,677 Texas Instruments, Inc. 202,213 275,246 Personal Products (1.06%) Systems Software (7.41%) 681 The Estée Lauder Companies, Inc., Cl A 109,587 181,275 5,725 Microsoft Corp. 920,981 1,273,355 Total Consumer Staples 767,943 956,345 Total Information Technology 4,395,877 5,777,967 Financials (15.68%) Materials (1.49%) Asset Management & Custody Specialty Chemicals (1.49%) Banks (3.01%) 1,180 Ecolab, Inc. 241,378 255,305 716 BlackRock, Inc. 431,463 516,623 Financial Exchanges & Data (12.67%) Real Estate (3.05%) 949 CME Group, Inc. 150,988 172,765 Specialized REITs (3.05%) 2,744 Moody’s Corp. 587,886 796,419 1,501 Alexandria Real Estate Equities, Inc.3 225,447 267,508 1,251 MSCI, Inc. 411,785 558,609 359 Equinix, Inc. 178,765 256,391 1,977 S&P Global, Inc. 462,402 649,899 Total Real Estate 404,212 523,899 1,613,061 2,177,692 TOTAL COMMON STOCKS 13,020,482 17,006,713 Total Financials 2,044,524 2,694,315

Health Care (21.43%) Principal Amount Health Care Equipment (4.54%) 3,511 Danaher Corp. 499,102 779,934 Short Term Investments (4.64%) Life Sciences Tools & Services (9.93%) $797,763 Repurchase Agreement with Fixed Income 1,550 Agilent Technologies, Inc. 107,517 183,659 Clearing Corp., dated 12/31/2020, 2,983 IQVIA Holdings, Inc.1 435,747 534,464 0.00% due 1/4/2021; Proceeds at 189 Mettler-Toledo International, Inc.1 121,918 215,400 maturity - $797,763; (Fully 1,660 Thermo Fisher Scientific, Inc. 563,979 773,195 collateralized by $766,300 U.S. Treasury Note, 1.75% due 7/31/2024; 1,229,161 1,706,718 Market value - $813,813) 797,763 797,763 Managed Health Care (3.50%) TOTAL INVESTMENTS (103.61%) $13,818,245 17,804,476 1,714 UnitedHealth Group, Incorporated 455,552 601,065 Pharmaceuticals (3.46%) LIABILITIES LESS CASH AND 11,910 AstraZeneca PLC, ADR2 571,858 595,381 OTHER ASSETS (-3.61%) (619,735) Total Health Care 2,755,673 3,683,098 NET ASSETS $17,184,741 Industrials (5.05%) RETAIL SHARES (Equivalent to $15.57 per share based on 296,789 shares outstanding) $ 4,620,651 Aerospace & Defense (1.85%) 2,725 HEICO Corp., Cl A 258,043 318,989 INSTITUTIONAL SHARES (Equivalent to $15.67 per share Research & Consulting Services (3.20%) based on 631,915 shares outstanding) $ 9,904,656 6,116 IHS Markit Ltd.2 376,063 549,400 R6 SHARES (Equivalent to $15.67 per share Total Industrials 634,106 868,389 based on 169,680 shares outstanding) $ 2,659,434 Information Technology (33.62%) % Represents percentage of net assets. Application Software (10.88%) 1 1 Non-income producing securities. 1,640 Adobe, Inc. 526,018 820,197 2 1 Foreign corporation. 635 Fair Isaac Corp. 250,649 324,510 3 The Adviser has reclassified/classified certain securities in or out of this 786 Intuit, Inc. 273,555 298,562 sub-industry. Such reclassifications/classifications are not supported by S&P or 5,861 SS&C Technologies Holdings, Inc. 339,641 426,388 MSCI (unaudited). 1,389,863 1,869,657 ADR American Depositary Receipt.

165 Baron Funds

Baron Real Estate Income Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (98.23%) Common Stocks (continued) Communication Services (1.64%) Real Estate (continued) Integrated Telecommunication Specialized REITs (28.58%) Services (1.64%) 8,582 Alexandria Real Estate Equities, Inc.3 $ 1,462,052 $ 1,529,484 12,863 Cellnex Telecom S.A., 144A (Spain)2 $ 791,899 $ 772,461 13,219 American Tower Corp. 2,895,874 2,967,137 29,395 Americold Realty Trust3 970,062 1,097,315 Consumer Discretionary (13.16%) 11,320 CoreSite Realty Corp. 1,380,478 1,418,169 Casinos & Gaming (11.48%) 8,040 Crown Castle International Corp. 1,221,825 1,279,888 40,397 Las Vegas Sands Corp. 2,237,163 2,407,661 6,953 Digital Realty Trust, Inc. 927,266 970,013 7,531 Penn National Gaming, Inc.1 305,059 650,453 3,339 Equinix, Inc. 2,254,649 2,384,647 54,752 Red Rock Resorts, Inc., Cl A 1,196,632 1,370,990 25,802 Gaming and Leisure Properties, Inc. 1,084,202 1,094,005 8,640 Wynn Resorts Ltd. 901,276 974,851 2,517 SBA Communications Corp. 694,743 710,121 4,640,130 5,403,955 12,891,151 13,450,779 34,667,309 35,955,411 Hotels, Resorts & Cruise Lines (1.68%) Total Real Estate 53,196 Extended Stay America, Inc. 727,185 787,833 Utilities (3.82%) Total Consumer Discretionary 5,367,315 6,191,788 Multi-Utilities (3.21%) 2 Information Technology (3.22%) 30,547 Brookfield Infrastructure Partners L.P. 1,502,442 1,509,022 Internet Services & Renewable Electricity (0.61%) Infrastructure (2.68%) 6,674 Brookfield Renewable Partner L.P.2 283,095 287,983 13,465 GDS Holdings Limited, ADR1,2 999,167 1,260,863 Total Utilities 1,785,537 1,797,005 Internet Software & Services (0.54%) TOTAL COMMON STOCKS 43,799,777 46,232,846 7,360 21Vianet Group, Inc., ADR1,2 188,550 255,318 Total Information Technology 1,187,717 1,516,181 Principal Amount Real Estate (76.39%) Short Term Investments (2.44%) Diversified REITs (6.40%) $1,150,917 Repurchase Agreement with Fixed 24,365 American Assets Trust, Inc. 673,169 703,661 Income Clearing Corp., dated 290,347 Colony Capital, Inc. 1,297,201 1,396,569 12/31/2020, 0.00% due 1/4/2021; 26,920 STORE Capital Corp. 840,011 914,742 Proceeds at maturity - $1,150,917; 2,810,381 3,014,972 (Fully collateralized by $1,105,400 U.S. Treasury Note, 1.75% due 7/31/2024; Hotel & Resort REITs (6.30%) Market value - $1,173,938) 1,150,917 1,150,917 16,406 Host Hotels & Resorts, Inc. 210,554 240,020 37,872 MGM Growth Properties LLC, Cl A 1,197,586 1,185,394 TOTAL INVESTMENTS (100.67%) $44,950,694 47,383,763 16,956 Park Hotels & Resorts, Inc. 269,134 290,795 66,480 Pebblebrook Hotel Trust 1,192,132 1,249,824 LIABILITIES LESS CASH AND OTHER ASSETS (-0.67%) (317,390) 2,869,406 2,966,033 NET ASSETS $47,066,373 Industrial REITs (11.25%) 19,847 Duke Realty Corp. 759,846 793,285 RETAIL SHARES (Equivalent to $14.08 per share 27,162 Prologis, Inc. 2,617,650 2,706,965 based on 208,096 shares outstanding) $ 2,929,884 26,958 Rexford Industrial Realty, Inc. 1,279,242 1,323,907 8,043 Terreno Realty Corp. 460,771 470,596 INSTITUTIONAL SHARES (Equivalent to $14.15 per share 5,117,509 5,294,753 based on 3,077,061 shares outstanding) $43,551,505 Office REITs (3.66%) R6 SHARES (Equivalent to $14.14 per share 4,790 Boston Properties, Inc. 434,186 452,799 based on 41,365 shares outstanding) $ 584,984 23,615 Douglas Emmett, Inc. 711,531 689,085 15,517 Vornado Realty Trust 577,371 579,405 % Represents percentage of net assets. 1,723,088 1,721,289 1 Non-income producing securities. 2 Foreign corporation. Real Estate Operating 3 The Adviser has reclassified/classified certain securities in or out of this Companies (2.06%) sub-industry. Such reclassifications/classifications are not supported by S&P 54,350 Kennedy-Wilson Holdings, Inc. 947,660 972,321 or MSCI (unaudited). ADR American Depositary Receipt. Residential REITs (15.74%) 144A Security is exempt from registration pursuant to Rule 144A under the 35,535 American Homes 4 Rent, Cl A 1,046,559 1,066,050 Securities Act of 1933. This security may be resold in transactions that are 26,881 Equity LifeStyle Properties, Inc. 1,651,867 1,703,180 exempt from registration, normally to qualified institutional buyers. At 20,035 Equity Residential 1,178,073 1,187,675 December 31, 2020, the market value of Rule 144A securities amounted to 77,385 Invitation Homes, Inc. 2,202,662 2,298,335 $772,461 or 1.64% of net assets. 7,576 Sun Communities, Inc. 1,084,939 1,151,173 7,164,100 7,406,413 Retail REITs (2.40%) 13,237 Simon Property Group, Inc. 1,144,014 1,128,851

166 Baron Funds

Baron WealthBuilder Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Affiliated Mutual Funds (100.02%) Small Cap Funds (28.10%) 313,999 Baron Discovery Fund – Institutional Shares $ 7,099,602 $ 10,924,041 306,105 Baron Growth Fund – Institutional Shares 25,537,219 33,319,521 830,283 Baron Small Cap Fund – Institutional Shares 26,957,104 32,356,124 Total Small Cap Funds 59,593,925 76,599,686 Small to Mid Cap Funds (4.61%) 282,132 Baron Focused Growth Fund – Institutional Shares 5,600,796 12,571,803 Mid Cap Funds (12.96%) 303,799 Baron Asset Fund – Institutional Shares 26,097,870 35,331,781 Large Cap Funds (7.05%) 235,490 Baron Durable Advantage Fund – Institutional Shares 2,903,505 3,690,125 302,047 Baron Fifth Avenue Growth Fund – Institutional Shares 10,396,654 15,540,300 Total Large Cap Funds 13,300,159 19,230,425 All Cap Funds (26.85%) 417,380 Baron Opportunity Fund – Institutional Shares 10,039,620 17,580,045 329,047 Baron Partners Fund – Institutional Shares 21,434,897 55,622,089 Total All Cap Funds 31,474,517 73,202,134 International Funds (11.95%) 538,283 Baron Emerging Markets Fund – Institutional Shares 7,611,662 10,259,667 306,034 Baron Global Advantage Fund – Institutional Shares 9,784,556 15,993,315 194,465 Baron International Growth Fund – Institutional Shares 4,722,089 6,322,059 Total International Funds 22,118,307 32,575,041 Sector Funds (8.50%) 325,323 Baron FinTech Fund – Institutional Shares 3,932,904 4,788,760 313,769 Baron Health Care Fund – Institutional Shares 4,716,824 5,923,951 345,717 Baron Real Estate Fund – Institutional Shares 10,007,346 12,452,742 Total Sector Funds 18,657,074 23,165,453 TOTAL AFFILIATED INVESTMENTS (100.02%) $176,842,648 272,676,323

LIABILITIES LESS CASH AND OTHER ASSETS (-0.02%) (58,021) NET ASSETS $272,618,302

RETAIL SHARES (Equivalent to $19.57 per share based on 2,274,485 shares outstanding) $ 44,520,544

TA SHARES (Equivalent to $19.70 per share based on 2,232,476 shares outstanding) $ 43,974,666

INSTITUTIONAL SHARES (Equivalent to $19.70 per share based on 9,344,063 shares outstanding) $184,123,092

% Represents percentage of net assets.

167 Baron Funds

Baron Health Care Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (90.34%) Common Stocks (continued) Health Care (88.31%) Health Care (continued)

Biotechnology (25.53%) Managed Health Care (12.88%) 20,451 Acceleron Pharma, Inc.1 $ 1,785,252 $ 2,616,501 1,2 8,950 Humana, Inc. $ 3,408,660 $ 3,671,917 6,200 argenx SE, ADR 1,050,986 1,823,358 15,372 UnitedHealth Group, Incorporated 4,710,967 5,390,653 26,853 Arrowhead Pharmaceuticals, Inc.1 1,225,104 2,060,431 12,675 Biohaven Pharmaceutical Holding Co. Ltd.1,2 831,299 1,086,374 8,119,627 9,062,570 6,300 BioNTech SE, ADR1,2 591,896 513,576 25,876 Bridgebio Pharma, Inc.1 1,154,908 1,840,042 Pharmaceuticals (7.17%) 2 5,200 Denali Therapeutics, Inc.1 352,518 435,552 24,288 AstraZeneca PLC, ADR 1,064,787 1,214,157 37,962 Dicerna Pharmaceuticals, Inc.1 919,756 836,303 21,422 Dechra Pharmaceuticals PLC 2 34,514 Genmab A/S, ADR1,2 1,347,081 1,403,339 (United Kingdom) 860,777 1,008,906 2 3,800 Moderna, Inc.1 510,612 396,986 37,394 Sanofi, ADR 1,775,158 1,816,975 16,897 PTC Therapeutics, Inc.1 892,110 1,031,224 6,078 Zoetis, Inc. 908,423 1,005,909 25,671 Trillium Therapeutics, Inc.1,2 302,638 377,621 4,609,145 5,045,947 9,545 Vertex Pharmaceuticals Incorporated1 1,989,644 2,255,865 9,436 Zai Lab Limited, ADR1,2 505,108 1,277,068 Total Health Care 46,569,923 62,115,392 13,458,912 17,954,240 Real Estate (2.03%) Health Care Equipment (19.19%) Specialized REITs (2.03%) 22,628 Abbott Laboratories 2,069,332 2,477,540 8,029 Alexandria Real Estate Equities, Inc.3 1,250,128 1,430,928 1 22,191 CryoPort, Inc. 764,574 973,741 TOTAL COMMON STOCKS 47,820,051 63,546,320 1,947 DexCom, Inc.1 420,701 719,845 3,416 Eargo, Inc.1 61,488 153,105 1 15,651 Edwards Lifesciences Corp. 1,144,909 1,427,841 Principal Amount 1,145 IDEXX Laboratories, Inc.1 276,772 572,351 16,128 Inari Medical, Inc.1 1,113,126 1,407,813 Short Term Investments (11.86%) 3,935 Inspire Medical Systems, Inc.1,3 218,891 740,134 2,715 Insulet Corp.1 410,862 694,035 $8,341,447 Repurchase Agreement with Fixed 1,211 Intuitive Surgical, Inc.1 642,005 990,719 Income Clearing Corp., dated 900 Masimo Corporation1 134,241 241,542 12/31/2020, 0.00% due 1/4/2021; 9,700 Shockwave Medical, Inc.1 593,204 1,006,084 Proceeds at maturity - $8,341,447; 10,662 Silk Road Medical, Inc.1,3 332,294 671,493 (Fully collateralized by $8,011,600 U.S. 3,449 Teleflex, Inc. 1,150,283 1,419,505 Treasury Note, 1.75% due 7/31/2024; Market value - $8,508,342) 8,341,447 8,341,447 9,332,682 13,495,748 TOTAL INVESTMENTS (102.20%) $56,161,498 71,887,767 Health Care Services (1.21%) 4,100 Cigna Corp. 773,558 853,538 LIABILITIES LESS CASH AND OTHER ASSETS (-2.20%) (1,547,360) Health Care Supplies (0.72%) 1,784 West Pharmaceutical Services, Inc. 286,973 505,425 NET ASSETS $70,340,407

Health Care Technology (5.27%) RETAIL SHARES (Equivalent to $18.75 per share 1 6,783 American Well Corp., Cl A 153,710 171,813 based on 1,430,564 shares outstanding) $26,823,451 6,738 Certara, Inc.1,3 154,974 227,205 28,264 GoodRx Holdings, Inc., Cl A1 1,172,586 1,140,170 INSTITUTIONAL SHARES (Equivalent to $18.88 per share 21,319 Schrödinger, Inc.1 772,331 1,688,038 based on 2,046,639 shares outstanding) $38,637,558 1,754 Veeva Systems, Inc., Cl A1 331,070 477,527 2,584,671 3,704,753 R6 SHARES (Equivalent to $18.87 per share based on 258,539 shares outstanding) $ 4,879,398 Life Sciences Tools & Services (16.34%) 5,440 10X Genomics, Inc., Cl A1 523,182 770,304 1,2,3 % Represents percentage of net assets. 2,511 AbCellera Biologics, Inc. 50,220 101,043 1 1 Non-income producing securities. 10,033 Adaptive Biotechnologies Corporation 428,803 593,251 2 3,430 Bio-Techne Corporation 864,070 1,089,196 Foreign corporation. 3 The Adviser has reclassified/classified certain securities in or out of this 8,754 Guardant Health, Inc.1,3 758,217 1,128,216 1,2 sub-industry. Such reclassifications/classifications are not supported by S&P or 1,623 ICON plc 239,045 316,453 MSCI (unaudited). 2,837 Illumina, Inc.1 848,377 1,049,690 ADR American Depositary Receipt. 3,302 IQVIA Holdings, Inc.1 483,678 591,619 730 Mettler-Toledo International, Inc.1 560,873 831,966 All securities are Level 1, unless otherwise noted. 85,401 Pacific Biosciences of California, Inc.1 454,238 2,215,302 6,020 Seer, Inc.1 114,380 337,963 5,299 Thermo Fisher Scientific, Inc. 2,079,272 2,468,168 7,404,355 11,493,171

168 Baron Funds

Baron FinTech Fund — PORTFOLIO HOLDINGS December 31, 2020

Shares Cost Value Shares Cost Value Common Stocks (98.37%) Common Stocks (continued) Communication Services (2.82%) Information Technology (continued) Interactive Media & Services (2.82%) Data Processing & Outsourced 4,800 Zillow Group, Inc., Cl C1 $ 573,316 $ 623,040 Services (continued) 1 7,000 ZoomInfo Technologies, Inc., Cl A 230,378 337,610 25,000 Paya Holdings, Inc., (formerly, FinTech Total Communication Services 803,694 960,650 Acquisition Corp. III) Cl A1 $ 281,291 $ 339,500 6,700 PayPal Holdings, Inc.1 1,078,132 1,569,140 Consumer Discretionary (5.62%) 17,000 Repay Holdings Corporation, Cl A1 320,579 463,250 6,400 Shift4 Payments, Inc., Cl A1 267,429 482,560 Internet & Direct Marketing Retail (5.62%) 6,450 Square, Inc., Cl A1 1,131,131 1,403,778 3,200 Alibaba Group Holding Limited, ADR1,2 775,204 744,736 6,700 Visa, Inc., Cl A 1,353,547 1,465,491 700 MercadoLibre, Inc.1 957,241 1,172,654 8,991,837 11,433,681 Total Consumer Discretionary 1,732,445 1,917,390 Internet Software & Services (2.99%) Financials (18.10%) 900 Shopify, Inc., Cl A1,2 973,134 1,018,755 IT Consulting & Other Services Financial Exchanges & Data (13.57%) (11.81%) 1,000 CME Group, Inc. 189,521 182,050 2,900 Accenture plc, Cl A2 643,073 757,509 3,000 London Stock Exchange Group plc 1,2 (United Kingdom)2 336,035 370,310 19,500 Endava plc, ADR 1,086,314 1,496,625 4,000 EPAM Systems, Inc.1 1,116,482 1,433,400 1,260 MarketAxess Holdings, Inc. 578,129 718,906 1 2,950 Moody’s Corp. 791,569 856,208 27,000 Grid Dynamics Holdings, Inc. 318,946 340,200 2,600 MSCI, Inc. 881,980 1,160,978 3,164,815 4,027,734 3,750 S&P Global, Inc. 1,205,416 1,232,737 1,700 Tradeweb Markets, Inc., Cl A 100,414 106,165 Total Information Technology 17,258,071 21,402,069 4,083,064 4,627,354 TOTAL COMMON STOCKS 27,932,848 33,535,294

Insurance Brokers (1.50%) 17,000 BRP Group, Inc., Cl A1 497,848 509,490 Principal Amount Investment Banking & Brokerage (1.50%) Short Term Investments (15.84%) 7,600 Houlihan Lokey, Inc. 464,034 510,948 $5,400,281 Repurchase Agreement with Fixed Property & Casualty Insurance (1.23%) Income Clearing Corp., dated 2,100 Kinsale Capital Group, Inc. 271,854 420,273 12/31/2020, 0.00% due 1/4/2021; Proceeds at maturity - $5,400,281; Thrifts & Mortgage Finance (0.30%) (Fully collateralized by $5,186,700 U.S. 5,000 Rocket Cos., Inc., Cl A1 95,523 101,100 Treasury Note, 1.75% due 7/31/2024; Total Financials 5,412,323 6,169,165 Market value - $5,508,290) 5,400,281 5,400,281 TOTAL INVESTMENTS (114.21%) $33,333,129 38,935,575 Industrials (9.05%) LIABILITIES LESS CASH AND Research & Consulting Services (9.05%) OTHER ASSETS (-14.21%) (4,843,286) 740 CoStar Group, Inc.1 594,927 683,967 8,400 IHS Markit Ltd.2 668,665 754,572 NET ASSETS $34,092,289 9,700 TransUnion 881,245 962,434 3,300 Verisk Analytics, Inc. 581,478 685,047 RETAIL SHARES (Equivalent to $14.69 per share Total Industrials 2,726,315 3,086,020 based on 437,560 shares outstanding) $ 6,429,355 Information Technology (62.78%) INSTITUTIONAL SHARES (Equivalent to $14.72 per share based on 1,626,491 shares outstanding) $23,946,782 Application Software (14.44%) 4,000 Bill.Com Holdings, Inc.1 427,992 546,000 3,200 Ceridian HCM Holding, Inc.1 290,650 340,992 R6 SHARES (Equivalent to $14.73 per share 5,500 Duck Creek Technologies, Inc.1 148,500 238,150 based on 252,331 shares outstanding) $ 3,716,152 2,520 Fair Isaac Corp.1 1,094,855 1,287,821 7,500 Guidewire Software, Inc.1 867,675 965,475 % Represents percentage of net assets. 4,050 Intuit, Inc. 1,296,443 1,538,392 1 Non-income producing securities. 70 nCino, Inc.1 2,170 5,069 2 Foreign corporation. 4,128,285 4,921,899 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 Data Processing & Outsourced exempt from registration, normally to qualified institutional buyers. At Services (33.54%) 1,2 December 31, 2020, the market value of Rule 144A securities amounted to 570 Adyen N.V., 144A (Netherlands) 670,295 1,324,418 $2,435,130 or 7.14% of net assets. 6,100 Fidelity National Information Services, Inc. 863,039 862,906 180 FleetCor Technologies, Inc.1 51,949 49,110 2,100 Global Payments, Inc. 403,725 452,382 3,200 Jack Henry & Associates, Inc. 520,220 518,368 3,900 MasterCard Incorporated, Cl A 1,266,539 1,392,066 46,000 Network International Holdings plc, 144A (United Kingdom)1,2 236,341 207,262 15,000 Nuvei Corp., 144A (Canada)1,2 547,620 903,450

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December 31