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Baron Funds® December 31, 2019 Quarterly Report “Don’t...Stop...Thinking About Tomorrow”. inventions with issued patents provided barriers satisfied that you get it. We try to get MIT Fleetwood Mac. 28th Annual Baron that protected businesses against predators. As students to do that.” I told Dan that it was so Investment Conference. October 25th, 2019. investors, we are trying to find barriers to interesting for me to speak with him...and Metropolitan Opera House, NYC. competition, “moats,” whether they are patents “questioning, which leads to understanding is or anything else. We believe “moats” enable exactly how we train our analysts to think.” Christine McVie of Fleetwood Mac wrote those businesses to become sustainably profitable. iconic lyrics. Fleetwood Mac is one of the most “Summer of ‘69” successful rock bands of all time and another “Question Everything” I moved from Washington, D.C. to New York Rock ‘n Roll Hall of Fame inductee to appear as In law school, I learned to be skeptical, City in the Summer of 1969. After several the surprise entertainment at a Baron Funds’ methodical, open minded, and to “question unpleasant months as one of the faceless Conference. everything.” The objective of our “question unemployed during a tough recession, I The perspective of those lyrics is persuaded Tony Tabell to hire me as an remarkably consistent with our optimistic analyst at stock brokerage firm Janney investment outlook...and are on point with Montgomery Scott...my first job on Wall the “What’s Next?” theme of the 2019 Street. To most, 1969 probably seemed Baron Conference. like the worst of times to begin a career on Wall Street. My parents were especially Again, more than 5,000 Baron Funds’ upset when I left law school with one shareholders, Baron institutional clients, semester to go and changed my career service providers to our Firm, and path from law to finance. executives of businesses in which Baron has invested attended our annual meeting. 1969 marked the end to one of the most As has been the case for the past 14 years, turbulent decades in America’s history. the 2019 Baron Conference was held at Although the theme of Baron’s 2019 the Metropolitan Opera House at Lincoln Annual Conference was “What’s Next?”, in Center in New York City. Since demand to 1969 many were concerned there wouldn’t attend has continued to grow, we now even be a “next!” And yet...chaotic, occupy several venues on the Lincoln “The face you make when you’ve just been told you’re going to be the disruptive times have always been Center Campus for “breakouts” and lunch, first portfolio manager in space!” Ron interviews Gwynn Shotwell, the best times to invest! We believe now President and COO of SpaceX at the 28th Annual Baron Investment including David Geffen Hall, David Koch like 1969 is such a time. This was the Conference. Theatre, and Alice Tully Hall. principle message of my Baron Conference speech last fall. In general, few individuals Baron focuses on the future. Our view that the everything” stratagem is not just to attempt to I know are as optimistic about America, its future will be better than the past drives our understand a business, but to continue to institutions, and our adherence to the Rule of investment process. When choosing businesses in question and probe...and probe some more...until Law as I am. In fact, I have never been more which to invest, we rely on exhaustive, proprietary, we are certain that is the case. optimistic about the long-term opportunities for primary research conducted by our talented team Dean Dan Huttenlocker of the MIT Schwarzman our nation as I am now. of analysts and portfolio managers. We seek to School of Computing visited me for breakfast in answer the question “What’s Next?” by focusing early January. He told me that he learns a lot “Conference Day” on what we think matters most…long-term about people from their questions. In fact, Dan For two hours beginning at 6 a.m. on growth opportunities...durable competitive said that he actually learns more about someone October 25, 2019, before our conference began, advantages...and management values. from the questions they ask him than from their Becky Quick, co-anchor of CNBC’s Squawk Box, Those are lessons I learned even before I began my answers to questions he asks! interviewed me and then she and I spoke with several CEOs of businesses in which Baron has career as a professional investor. In fact, I believe “You are an extremely inquisitive person,” he invested. Then, Baron shareholders heard from my foundational concepts about investments were told me. “The level of detail in which you are really formed from 1966 to 1969. That was during interested is something that as a teacher I don’t Robyn Denholm, Tesla’s Chairwoman; Rachel my 3.5 years as a U.S. Patent Office examiner by often see. As a teacher I am always interested in Stern, VP and General Counsel day...and as a George Washington University Law how do people know if they understand of FactSet Research Systems; School scholarship student by night. something. Your style is to try to build a deep Bruce Flatt, CEO of Brookfield level of understanding. If something seems Asset Management; and “Competitive Advantages” sensible to most, they think they understand. Gwynne Shotwell, President In the Patent Office, I learned to evaluate big You’re different. You keep questioning and and COO of Elon Musk’s Space ideas...and learned that unique, non-obvious probing to test your understanding until you are Exploration Technologies Letter from Ron Corporation (SpaceX). All spoke candidly and privately owned management company, not by followed. Linda Martinson, our Firm’s President answered questions, no holds barred. We you or Baron Funds. and COO, followed the panel with her own thought it was a fitting tribute to women that, inimitable take on our “What’s Next?” theme Our special end of day entertainment draws for the 100th anniversary of Women’s Suffrage, that is reprinted in this report. My speech, which Baron shareholders from virtually every state…as women’s right to vote, three of our four highlighted “What’s Next?”, was next and is also well as from other countries. We think, though, executive speakers were female business reprinted following this “Letter from Ron.” You that the conversations with Baron executives leaders…and three of our four entertainment can watch my presentation as well as Linda’s and leaders of businesses in which Baron Funds acts featured female singers and a ballet and our portfolio manager panel invests keep our shareholders coming dancer!!! at www.baronfunds.com. We are pretty sure you back…even though our entertainment is not will not find them boring. Finally, at 2:45 p.m., The companies these executives represent are all exactly “chopped liver” …as they say… the time came for some rock ‘n roll! Fleetwood important holdings of Baron Funds and most This year was no exception. During lunch, Baron Mac with Stevie Nicks, a musical act known, like have appreciated significantly since our Funds’ shareholders were entertained in three we are, for “Going Their Own Way,” left our purchases…and, we think, will continue to grow Lincoln Center Campus venues. In David Geffen audience cheering. By the way, I think Fleetwood substantially. The executives’ presentations were Hall, we reunited two of the funniest names in Mac and Stevie enjoyed playing for our streamed live and can still be viewed on our comedy (one name actually… “Steve”). Stephen enthusiastic crowd as much as we enjoyed website, www.baronfunds.com. Just click on the Colbert and Steve Carell, “The Daily Show“ hearing them. 2019 Baron Investment Conference link. correspondent alums, entertained with If you didn’t have a chance to join us at our Before lunch, we raffled two 2020 Tesla Model nonpolitical humor. In David Koch Theater, we 28th annual conference, we hope you will visit 3s to two lucky Baron Funds’ shareholders. The switched things up and featured an incredible us next fall at our 29th on October 30, 2020. first person whose name we randomly called was dance performance by sensational ballet dancer Registration begins on August 1, 2020. Thank in the restroom when her name was announced Misty Copeland and her amazing ensemble. you for joining us as fellow shareholders in Baron and wasn’t able to respond when her name was Finally, in Alice Tully Hall, shareholders were Funds. We will continue to work hard to justify called. We felt badly about that…so we made an dazzled by R&B icon and five-time Grammy your confidence in us. exception to our rule this year and gave away award winner Mariah Carey. two Tesla Model 3’s!!! After lunch, our afternoon at The Met was very Respectfully, One more thing. Tesla wants to be sure you cool as well…as seven-time Tony Award know that the two Tesla Model 3 prizes given nominated actress and singer Kelli O’Hara were paid for by our privately owned investment opened our afternoon program with Leonard management company, Baron Capital Cohen’s “Hallelujah” followed by Irving Berlin’s Group, not by Tesla. We also want you to know “God Bless America,” our traditional opening for that the ”door prize” gifts to our shareholders, the Conference’s afternoon session. Ronald Baron the lunchtime and end of day entertainment, CEO and Chief Investment Officer A Baron portfolio manager panel moderated by and all other expenses incurred for our annual January 9, 2020 Amy Chasen, Baron’s Director of Research, meeting were once again paid for by us, by our You should consider the investment objectives, risks, charges, and expenses of the Baron Funds carefully before investing.