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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-21296
BARON SELECT FUNDS
(Exact Name of Registrant as Specified in Charter)
767 Fifth Avenue, 49th Floor
New York, NY 10153
(Address of Principal Executive Offices) (Zip Code)
Patrick M. Patalino, General Counsel
c/o Baron Select Funds
767 Fifth Avenue, 49th Floor
New York, NY 10153
(Name and Address of Agent for Service)
(Registrant’s Telephone Number, including Area Code):212-583-2000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2019
FormN-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule30e-1 under the Investment Company Act of 1940 (17CRF270.30e-1). The Commission may use the information provided on FormN-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by FormN-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in FormN-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 5th Street, NW, Washington, D.C. 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507.
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
SEC 2569(5-07)
Item 1. Reports to Stockholders.
Table of Contents
Baron Partners Fund
Baron Focused Growth Fund
Baron International Growth Fund
Baron Real Estate Fund
Baron Emerging Markets Fund
Baron Global Advantage Fund
Baron Real Estate Income Fund
Baron Health Care Fund
June 30, 2019
Baron Funds®
Baron Select Funds
Semi-Annual Financial Report
DEAR BARON SELECT FUNDS SHAREHOLDER:
In this report, you will find unaudited financial statements for Baron Partners Fund, Baron Focused Growth Fund, Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund, and Baron Health Care Fund (the “Funds”) for the six months ended June 30, 2019. The U.S. Securities and Exchange Commission (the “SEC”) requires mutual funds to furnish these statements semi-annually to their shareholders. We hope you find these statements informative and useful.
We thank you for choosing to join us as fellow shareholders in Baron Funds. We will continue to work hard to justify your confidence.
Sincerely,
Ronald Baron Chief Executive Officer and Chief Investment Officer August 29, 2019 | Linda S. Martinson Chairman, President and Chief Operating Officer August 29, 2019 | Peggy Wong Treasurer and Chief Financial Officer August 29, 2019 |
This Semi-Annual Financial Report is for the following eight series of Baron Select Funds: Baron Partners Fund, Baron Focused Growth Fund, Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund, and Baron Health Care Fund. Baron WealthBuilder Fund is included in a separate Financial Report. If you are interested in Baron WealthBuilder Fund or Baron Investment Funds Trust, which contains the Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund, Baron Fifth Avenue Growth Fund, Baron Discovery Fund, and Baron Durable Advantage Fund, please visit the Funds’ website at www.BaronFunds.com or contact us at 1-800-99BARON.
The Funds’ Proxy Voting Policy is available without charge and can be found on the Funds’ website at www.BaronFunds.com, by clicking on the “Legal Notices” link at the bottom left corner of the homepage or by calling 1-800-99BARON and on the SEC’s website at www.sec.gov. The Funds’ most current proxy voting record, Form N-PX, is also available on the Funds’ website and on the SEC’s website.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Funds’ Form N-PORT reports are available on the SEC’s website at www.sec.gov. Schedules of portfolio holdings current to the most recent quarter are also available on the Funds’ website.
Some of the comments contained in this report are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as “estimate,” “may,” “expect,” “should,” “could,” “believe,” “plan”, and other similar terms. We cannot promise future returns and our opinions are a reflection of our best judgment at the time this report is compiled.
The views expressed in this report reflect those of BAMCO, Inc. (“BAMCO” or the “Adviser”) only through the end of the period stated in this report. The views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time without notice based on market and other conditions.
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds’ shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from Baron Funds (“Baron”) or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Baron website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from Baron or your financial intermediary electronically by contacting your financial intermediary or going toicsdelivery.com/baronfunds.
You may elect to receive all future reports in paper free of charge. You can inform Baron or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions included on the envelope or slip inserted with this disclosure. Your election to receive reports in paper will apply to all funds held with Baron or your financial intermediary.
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. For more complete information about Baron Funds, including charges and expenses, call, write or go to www.BaronFunds.com for a prospectus or summary prospectus. Read them carefully before you invest or send money. This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds, unless accompanied or preceded by the Funds’ current prospectus or summary prospectus.
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Baron Partners Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON PARTNERS FUND (RETAIL SHARES)
IN RELATIONTOTHE RUSSELL MIDCAP GROWTH INDEXANDTHE S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Ten Years | Since Inception (January 31, 1992) | |||||||||||||||||||
Baron Partners Fund — Retail Shares (BPTRX)1,2,3 | 25.41% | 6.54% | 18.77% | 10.40% | 16.82% | 12.94% | ||||||||||||||||||
Baron Partners Fund — Institutional Shares (BPTIX)1,2,3,4 | 25.56% | 6.81% | 19.07% | 10.69% | 17.13% | 13.05% | ||||||||||||||||||
Baron Partners Fund — R6 Shares (BPTUX)1,2,3,4 | 25.58% | 6.82% | 19.08% | 10.69% | 17.13% | 13.05% | ||||||||||||||||||
Russell Midcap Growth Index1 | 26.08% | 13.94% | 16.49% | 11.10% | 16.02% | 9.95% | ||||||||||||||||||
S&P 500 Index1 | 18.54% | 10.42% | 14.19% | 10.71% | 14.70% | 9.67% |
* | Not Annualized. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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. |
2 | 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 regulated investment companies, which, if it were, might have adversely affected its performance. |
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. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
4 | Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares. Performance for the R6 Shares prior to August 31, 2016 is based on the performance of the Institutional Shares, and prior to May 29, 2009 is based on the Retail Shares. The Retail Shares have a distribution fee, but Institutional Shares and R6 Shares do not. If the annual returns for the Institutional Shares and R6 Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. |
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June 30, 2019 (Unaudited) | Baron Partners Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Total Investments | ||||
CoStar Group, Inc. | 15.7% | |||
Arch Capital Group Ltd. | 8.4% | |||
IDEXX Laboratories, Inc. | 8.1% | |||
Tesla, Inc. | 8.0% | |||
FactSet Research Systems, Inc. | 7.2% | |||
Vail Resorts, Inc. | 6.8% | |||
Hyatt Hotels Corp. | 6.5% | |||
Space Exploration Technologies Corp. | 5.1% | |||
Gartner, Inc. | 4.5% | |||
Guidewire Software, Inc. | 4.0% | |||
74.3% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of total investments)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Partners Fund1 increased 25.41%, underperforming the Russell Midcap Growth Index, which increased 26.08%.
The Fund has performed well since its conversion into an open-end mutual fund on April 30, 2003. In the period since conversion through June 30, 2019, the Fund gained an annualized 13.60% versus 11.86% for the Russell Midcap Growth Index. The Fund also has meaningfully outperformed the Russell Midcap Growth Index since its inception on January 31, 1992, gaining an annualized 12.94%* compared to 9.95% for its index.
Baron Partners Fund invests primarily in U.S. companies of any size with, in our view, significant long-term growth potential. We believe our process can identify investment opportunities that are attractively priced relative to future prospects. The Fund isnon-diversified, so its top 10 holdings are expected to comprise a significant percentage of the portfolio, and the Fund uses leverage, both of which increase risk. Of course, there can be no assurance that we will be successful in achieving the Fund’s investment goals.
After a rough end to 2018, U.S. equity indexes increased meaningfully in the first six months of 2019, with most major indexes reaching new record highs. Investors appeared to shrug off concerns of a global macro slowdown along with mixed signals from the U.S. economy, and focus instead on attractive stock valuations and indications of a more dovish Federal Reserve. Although the market was periodically unnerved by ongoing trade tensions with China and Mexico, eventual signs of easing tensions also helped lead the market higher.
At the sector level, investments in Industrials, Financials, and Health Care contributed the most to performance. Consumer Discretionary holdings detracted.
CoStar Group, Inc., a real estate information and marketing services company, was the top contributor on the strength of continued robust financial results. Business trends are excellent, and we are excited about the successful integration of ForRent into the Apartments.com network. We foresee sustained 20% growth in the multi-family market and expect CoStar to begin raising prices given its unique competitive position in commercial real estate data. CoStar has over $1.2 billion of cash, which we expect it to use for acquisitions.
Tesla, Inc., which manufactures electric vehicles, solar products, and energy storage solutions, detracted the most. Shares declined due to a variety of factors, including disappointing first quarter results, price changes, changes in Tesla’s go-to-market approach, and headcount reduction. However, Tesla raised $2.7 billion, and CEO Elon Musk noted strong demand trends. We remain confident that Tesla’s first mover advantage and its focus on electric vehicle architecture position it to capture significant growth in coming years.
We remain optimistic about the long-term environment for U.S. equities. While we always monitor macro developments that may have a short-term impact on the markets, we remain focused on the long term. We expect to continue to establish long positions in securities that, in our opinion, have favorable price-to-value characteristics based on our assessment of their prospects for future growth and profitability.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
* | Please see Footnote 2 on page 2. |
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Baron Focused Growth Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON FOCUSED GROWTH FUND (RETAIL SHARES)
INRELATIONTOTHE RUSSELL 2500 GROWTH INDEXANDTHE S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Ten Years | Since Inception (May 31, 1996) | |||||||||||||||||||
Baron Focused Growth Fund — Retail Shares (BFGFX)1,2,3 | 13.22% | 3.30% | 14.18% | 7.87% | 12.41% | 10.96% | ||||||||||||||||||
Baron Focused Growth Fund — Institutional Shares (BFGIX)1,2,3,4 | 13.37% | 3.57% | 14.48% | 8.14% | 12.69% | 11.08% | ||||||||||||||||||
Baron Focused Growth Fund — R6 Shares (BFGUX)1,2,3,4 | 13.30% | 3.57% | 14.48% | 8.14% | 12.69% | 11.08% | ||||||||||||||||||
Russell 2500 Growth Index1 | 23.92% | 6.13% | 16.14% | 9.98% | 15.67% | 8.14% | ||||||||||||||||||
S&P 500 Index1 | 18.54% | 10.42% | 14.19% | 10.71% | 14.70% | 8.66% |
* | Not Annualized. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 | 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 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 regulated investment companies, which, if it were, might have adversely affected its performance. |
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. The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
4 | Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares. Performance for the R6 Shares prior to August 31, 2016 is based on the performance of the Institutional Shares, and prior to May 29, 2009 is based on the Retail Shares. The Retail Shares have a distribution fee, but Institutional Shares and R6 Shares do not. If the annual returns for the Institutional Shares and R6 Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. |
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June 30, 2019 (Unaudited) | Baron Focused Growth Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
CoStar Group, Inc. | 16.2% | |||
Vail Resorts, Inc. | 13.1% | |||
Hyatt Hotels Corp. | 11.3% | |||
FactSet Research Systems, Inc. | 9.4% | |||
Tesla, Inc. | 8.8% | |||
Choice Hotels International, Inc. | 5.7% | |||
Space Exploration Technologies Corp. | 5.4% | |||
Arch Capital Group Ltd. | 4.9% | |||
Guidewire Software, Inc. | 4.5% | |||
Manchester United plc | 4.4% | |||
83.7% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Focused Growth Fund1 increased 13.22%, underperforming the Russell 2500 Growth Index, which increased 23.92%.
Since its inception on May 31, 1996, through June 30, 2019, the Fund has outperformed the Russell 2500 Growth Index, gaining an annualized 10.96%,* compared to an annualized 8.14% for its index.
Baron Focused Growth Fund invests in a non-diversified portfolio of companies that we believe are well capitalized and have exceptional management, significant growth potential, and sustainable barriers to competition. The Fund is non-diversified, which is a riskier investment strategy. Of course, there can be no assurance that we will be successful in achieving the Fund’s investment goals.
After a rough end to 2018, U.S. equity indexes gained meaningfully in the first six months of 2019, with most major indexes reaching new record highs. Investors appeared to shrug off concerns of a global macro slowdown along with mixed signals from the U.S. economy, and focus instead on attractive stock valuations and indications that the Federal Reserve was becoming more dovish. Although the market was periodically unnerved by the prospect of additional tariffs on Chinese and Mexican imports, eventual signs of easing trade tensions also helped lead the market higher.
At the sector level, the Fund’s investments in Industrials, Financials, and Communication Services contributed the most to performance. Consumer Discretionary and Information Technology holdings detracted.
CoStar Group, Inc., a real estate information and marketing services company, was the top contributor in the six-month period. Share appreciation was driven by consistently robust financial results. Business trends are excellent, and we are excited about the successful integration of ForRent into the Apartments.com network. We foresee sustained 20% growth in the multi-family market, and we expect the company to begin raising prices given its unique competitive position in commercial real estate data. The company has over $1.2 billion of cash on its balance sheet, which we expect it to use for acquisitions.
Tesla, Inc., which designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions, detracted the most in the period. Shares declined due to a variety of factors, including disappointing first quarter financials, news surrounding complexities in new geographies, price changes, changes in Tesla’s go-to-market approach, and additional headcount reduction. However, Tesla raised $2.7 billion in equity, and CEO Elon Musk noted strong demand trends. We remain confident that Tesla’s first mover advantage and its focus on electric vehicle architecture position it to capture significant growth in the coming years.
We remain optimistic about the long-term environment for U.S. equities. While we always monitor geopolitical and other developments that may have a short-term impact on the markets, we remain focused on the long term. We expect to continue to establish positions in small- and mid-sized businesses that, in our opinion, have favorable price-to-value characteristics based on our assessment of prospects for future growth and profitability.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
* | Please see Footnote 2 on page 4. |
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Baron International Growth Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON INTERNATIONAL GROWTH FUND† (RETAIL SHARES)
INRELATIONTOTHE MSCI ACWIEX USA INDEXANDTHE MSCI ACWIEX USA IMI GROWTH INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Ten Years | Since Inception (December 31, 2008)^ | |||||||||||||||||||
Baron International Growth Fund — Retail Shares (BIGFX)1,2 | 19.74% | (1.36)% | 10.74% | 5.01% | 10.10% | 10.67% | ||||||||||||||||||
Baron International Growth Fund — Institutional Shares (BINIX)1,2,3 | 19.85% | (1.17)% | 11.01% | 5.28% | 10.38% | 10.94% | ||||||||||||||||||
Baron International Growth Fund — R6 Shares (BIGUX)1,2,3 | 19.85% | (1.17)% | 11.01% | 5.28% | 10.38% | 10.94% | ||||||||||||||||||
MSCI ACWI ex USA Index1 | 13.60% | 1.29% | 9.39% | 2.16% | 6.54% | 7.55% | ||||||||||||||||||
MSCI ACWI ex USA IMI Growth Index1 | 16.72% | 1.36% | 9.52% | 3.93% | 7.75% | 8.69% |
* | Not Annualized. |
^ | Commencement of investment operations was January 2, 2009. |
† | The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. The MSCI ACWI ex USA Index Net USD is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of large- and mid-cap securities across developed and emerging markets, excluding the United States. The MSCI ACWI ex USA IMI Growth Index Net USD is a free float-adjusted market capitalization weighted index that is designed to measure the performance of large-, mid-, and small-cap growth securities across developed and emerging markets, excluding the United States. The indexes and Baron International Growth Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. |
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. The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
3 | Performance for the Institutional Shares prior to May 29, 2009 is based on the performance of the Retail Shares. Performance for the R6 Shares prior to August 31, 2016 is based on the performance of the Institutional Shares, and prior to May 29, 2009 is based on the Retail Shares. The Retail Shares have a distribution fee, but Institutional Shares and R6 Shares do not. If the annual returns for the Institutional Shares and R6 Shares prior to May 29, 2009 did not reflect this fee, the returns would be higher. |
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June 30, 2019 (Unaudited) | Baron International Growth Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
argenx SE | 2.6% | |||
RIB Software SE | 2.2% | |||
Constellation Software, Inc. | 2.2% | |||
Trainline Plc | 2.1% | |||
AstraZeneca PLC | 2.1% | |||
Takeda Pharmaceutical Company Limited | 2.0% | |||
Arco Platform Limited | 1.9% | |||
Endava plc | 1.8% | |||
Experian plc | 1.8% | |||
Nestle S.A. | 1.8% | |||
20.5% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron International Growth Fund1 increased 19.74%, outperforming the MSCI ACWI ex USA Index, which increased 13.60%.
Baron International Growth Fund is a diversified fund that invests for the long term primarily in securities of non-U.S. growth companies. The Fund expects to diversify among several developed countries and developing countries throughout the world, although the Fund’s total exposure to developing countries will not exceed 35%. The Fund may purchase securities of companies of any size. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
After a challenging 2018, international equities staged an impressive rally at the start of 2019, as geopolitical and monetary policy risks receded. Slowing global growth and inflation, as well as trade uncertainties, allowed the U.S. Federal Reserve to complete its pivot to an easing cycle, in turn providing cover for coincident easing measures by central bankers worldwide. On the other hand, geopolitical risks remained heightened. In our view, these factors may offset and could possibly overwhelm central bank accommodation as the year progresses. We believe whether and how the U.S./China trade and strategic confrontation progresses is likely the most important variable in the near term.
On a country basis, holdings in the U.K., Brazil, and Japan contributed the most to performance. Investments in Ireland and Finland detracted.
On a sector basis, Information Technology, Consumer Discretionary, and Health Care contributed the most. No sector detracted in the period.
Arco Platform Limited, a Brazilian education technology company providing educational content and software solutions to K-12 private schools, contributed the most. Arco has grown rapidly and currently serves more than 4,500 schools throughout Brazil. Shares appreciated after the company announced the transformative Positivo acquisition, more than doubling its scale. We remain excited about Arco’s future, as it remains in the early stages of disrupting legacy book publishers with a modern learning platform, generating better results for students and higher rankings for schools.
InflaRx N.V., a German biotechnology company developing a drug to treat a painful skin disease called hidradenitis suppurativa, detracted the most. Shares fell sharply after reports of a failure of InflaRx’s asset in Phase 2 trials that called into question the thesis for future investments in the development of the drug. We exited our position.
We believe we are nearing the end of a protracted period of international underperformance and are confident that we own a portfolio of quality growth companies poised to benefit from competitive advantages and long-term tailwinds. We continue to believe that our forward-looking and bottom-up fundamental approach positions us to discover exciting long-term investment opportunities regardless of the market environment.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Baron Real Estate Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON REAL ESTATE FUND (RETAIL SHARES)
INRELATIONTOTHE MSCI USA IMI EXTENDED REAL ESTATE INDEX, MSCI US REIT INDEXANDTHE S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 31, 2009)^ | ||||||||||||||||
Baron Real Estate Fund — Retail Shares (BREFX)1,2 | 23.98% | 0.82% | 8.89% | 4.72% | 12.95% | |||||||||||||||
Baron Real Estate Fund — Institutional Shares (BREIX)1,2 | 24.12% | 1.08% | 9.17% | 4.98% | 13.23% | |||||||||||||||
Baron Real Estate Fund — R6 Shares (BREUX)1,2,3 | 24.12% | 1.05% | 9.17% | 4.99% | 13.23% | |||||||||||||||
MSCI USA IMI Extended Real Estate Index1 | 19.91% | 7.82% | 8.22% | 8.79% | 12.27% | |||||||||||||||
MSCI US REIT Index1 | 17.07% | 9.66% | 2.81% | 6.44% | 10.46% | |||||||||||||||
S&P 500 Index1 | 18.54% | 10.42% | 14.19% | 10.71% | 13.08% |
* | Not Annualized. |
^ | Commencement of investment operations was January 4, 2010. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 representation 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 U.S. equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. The indexes and Baron Real Estate Fund are with dividends, which positively impact the performance results. |
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. The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
3 | Performance for the R6 Shares prior to January 29, 2016 is based on the performance of the Institutional Shares. |
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June 30, 2019 (Unaudited) | Baron Real Estate Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
CBRE Group, Inc. | 7.5% | |||
MGM Resorts International | 5.5% | |||
Equinix, Inc. | 5.5% | |||
GDS Holdings Limited | 4.8% | |||
Norwegian Cruise Line Holdings, Ltd. | 4.6% | |||
InterXion Holding N.V. | 4.1% | |||
Masco Corporation | 3.9% | |||
Royal Caribbean Cruises Ltd. | 3.7% | |||
Brookfield Asset Management, Inc. | 3.6% | |||
Boyd Gaming Corporation | 3.1% | |||
46.3% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Real Estate Fund1 increased 23.98%, outperforming the MSCI USA IMI Extended Real Estate Index, which gained 19.91%.
Baron Real Estate Fund is a diversified fund that under normal circumstances, invests 80% of its net assets in real estate and real estate-related companies of all sizes, and in companies which, in the opinion of the Adviser, own significant real estate assets at the time of investment. The Fund seeks to invest in well-managed companies that we believe have significant long-term growth opportunities. The Fund’s investment universe extends beyond real estate investment trusts (REITs) to include hotel & leisure, casinos and gaming operators, building products/services, data centers, real estate service companies, real estate operating companies, homebuilders & land developers, and tower operators. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
After a challenging 2018, real estate and real estate-related equities staged an impressive rally in the first half of 2019. Gains were propelled by earnings results that exceeded market forecasts, slow but steady economic growth, modest inflation, and most importantly for the real estate sector, lower interest rates. The U.S. Federal Reserve and central banks globally pivoted to a more dovish stance. Although the market was periodically unnerved by the prospect of additional tariffs on Chinese and Mexican imports, tensions appeared to cool as the period drew to a close.
Holdings in REITs, hotels & leisure, and data centers contributed the most to performance. No category detracted in the period.
Equinix, Inc., a global operator of network-dense, carrier-neutral colocation data centers, was the top contributor. Shares increased on robust results and a full-year guidance increase combined with a lower interest rate environment that benefited REITs broadly. We retain conviction due to a long demand runway behind cloud adoption and IT outsourcing, Equinix’s unique position as one of the only operators with a global platform, and continued execution on strategic M&A transactions to enhance its moat.
The top detractor was CyrusOne Inc., a provider of large footprint data center space to enterprises and cloud service providers. Shares fell on disappointing leasing results and negative earnings per share growth driven by financing dilution and continued equity overhang to existing financing needs. We exited our position due to concerns regarding management and capital allocation decisions.
Factors that have fueled the resurgence in real estate generally remain in place, with demand outstripping supply and credit available at historically low rates. Business conditions appear reasonable, and substantial private capital is still pursuing real estate ownership. We also think this real estate cycle will last longer than most because we are not seeing the excesses that typically characterize the end of most cycles. Finally, we continue to identify real estate-related companies with attractive valuations, in our view. While we would not expect to replicate our strong first half returns of 2019 in the remainder of this year, we remain optimistic about the potential for further gains.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Baron Emerging Markets Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON EMERGING MARKETS FUND† (RETAIL SHARES)
INRELATIONTOTHE MSCI EM INDEXANDTHE MSCI EM IMI GROWTH INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 31, 2010)^ | ||||||||||||||||
Baron Emerging Markets Fund — Retail Shares (BEXFX)1,2 | 12.13% | (0.08)% | 7.97% | 2.40% | 4.26% | |||||||||||||||
Baron Emerging Markets Fund — Institutional Shares (BEXIX)1,2 | 12.27% | 0.11% | 8.23% | 2.66% | 4.51% | |||||||||||||||
Baron Emerging Markets Fund — R6 Shares (BEXUX)1,2,3 | 12.26% | 0.11% | 8.22% | 2.68% | 4.52% | |||||||||||||||
MSCI EM Index1 | 10.59% | 1.21% | 10.66% | 2.49% | 1.42% | |||||||||||||||
MSCI EM IMI Growth Index1 | 11.59% | (3.12)% | 10.10% | 3.17% | 2.20% |
* | Not Annualized. |
^ | Commencement of investment operations was January 3, 2011. |
† | The Fund’s historical performance was impacted by gains from IPOs and/or secondary offerings. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs and secondary offerings will be the same in the future. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. The MSCI EM (Emerging Markets) Index and the MSCI EM (Emerging Markets) IMI Growth Index are free float-adjusted market capitalization weighted indexes. The MSCI EM (Emerging Markets) Index Net USD and the MSCI EM (Emerging Markets) IMI Growth Index Net USD are designed to measure the equity market performance of large-, mid-, and small-cap securities in the emerging markets. The MSCI EM (Emerging Markets) IMI Growth Index Net USD screens for growth-style securities. The indexes and the Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. |
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. The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
3 | Performance for the R6 Shares prior to January 29, 2016 is based on the performance of the Institutional Shares. |
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June 30, 2019 (Unaudited) | Baron Emerging Markets Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
Alibaba Group Holding Limited | 3.8% | |||
Tencent Holdings Limited | 3.8% | |||
Sberbank of Russia PJSC | 2.2% | |||
Samsung Electronics Co., Ltd. | 2.1% | |||
Petroleo Brasileiro S.A. Petrobras | 1.8% | |||
PagSeguro Digital Ltd. | 1.8% | |||
B3 S.A. — Brasil, Bolsa, Balcao | 1.7% | |||
Rumo S.A. | 1.6% | |||
China Mobile Ltd. | 1.6% | |||
Taiwan Semiconductor Manufacturing Company Ltd. | 1.5% | |||
21.9% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Emerging Markets Fund1 increased 12.13%, outperforming the MSCI EM Index, which increased 10.59%.
Baron Emerging Markets Fund is a diversified fund that invests for the long term primarily in companies of any size that have their principal business activities or trading markets in developing countries. The Fund may invest up to 20% of its net assets in developed and frontier countries. The Fund seeks to invest in companies that have significant long-term growth prospects and to purchase them at prices we believe to be favorable. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
After a challenging 2018, emerging market equities staged an impressive rally at the start of 2019, as geopolitical and monetary policy risks receded. Slowing global growth and inflation, as well as trade uncertainties, allowed the U.S. Federal Reserve to complete its pivot to an easing cycle, in turn providing cover for coincident easing measures by central bankers worldwide. On the other hand, geopolitical risks remained heightened. In our view, these factors may offset and could possibly overwhelm central bank accommodation as the year progresses. We believe whether and how the U.S./China trade and strategic confrontation progresses is likely the most important variable in the near term.
On a country basis, holdings in China, Brazil, and Russia contributed the most to performance. Investments in India and Finland detracted the most.
On a sector basis, Consumer Discretionary, Information Technology, and Financials contributed the most. Materials was the only detractor.
Shares of PagSeguro Digital Ltd., a payment processor and merchant acquirer, contributed the most due to improving sentiment in Brazil and minimal competitive intensity among the company’s micro-merchant customer base. We retain conviction, as we believe PagSeguro will continue to build out a product ecosystem allowing it to offer digital banking products to customers.
The largest detractor was India-based battery company Exide Industries Ltd. Shares fell as local currency weakness led to margin pressure on earnings. We continue to believe Exide’s dominant distribution network will allow it to gain share in a highly fragmented sector, which, along with a cost containment program and value from an insurance subsidiary, should create value for long-term shareholders, in our view.
We believe we are nearing the end of a protracted period of emerging markets underperformance and are confident that we own a portfolio of quality growth companies poised to benefit from competitive advantages and long-term tailwinds. We continue to believe that our forward-looking and bottom-up fundamental approach positions us to discover exciting long-term investment opportunities regardless of the market environment.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Baron Global Advantage Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON GLOBAL ADVANTAGE FUND† (RETAIL SHARES)
INRELATIONTOTHE MSCI ACWI INDEXANDTHE MSCI ACWI GROWTH INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (April 30, 2012) | ||||||||||||||||
Baron Global Advantage Fund — Retail Shares (BGAFX)1,2 | 34.65% | 14.79% | 25.87% | 13.25% | 14.69% | |||||||||||||||
Baron Global Advantage Fund — Institutional Shares (BGAIX)1,2 | 34.87% | 15.14% | 26.13% | 13.48% | 14.93% | |||||||||||||||
Baron Global Advantage Fund — R6 Shares (BGLUX)1,2,3 | 34.85% | 15.13% | 26.16% | 13.50% | 14.95% | |||||||||||||||
MSCI ACWI Index Net1 | 16.23% | 5.74% | 11.62% | 6.16% | 8.93% | |||||||||||||||
MSCI ACWI Growth Index Net1 | 20.09% | 7.16% | 13.82% | 8.51% | 10.32% |
* | 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. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. The Fund has changed its primary benchmark to the MSCI ACWI Index given its broad acceptance as the standard benchmark measuring global markets equity performance. The Fund will maintain the MSCI ACWI Growth Index as a secondary benchmark. The MSCI ACWI Index and the MSCI ACWI Growth Index are 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. The indexes and Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. |
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. The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
3 | Performance for the R6 Shares prior to August 31, 2016 is based on the performance of the Institutional Shares. |
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June 30, 2019 (Unaudited) | Baron Global Advantage Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
Amazon.com, Inc. | 5.7% | |||
Illumina, Inc. | 4.8% | |||
Alibaba Group Holding Limited | 4.5% | |||
Alphabet Inc. | 4.0% | |||
Facebook, Inc. | 3.8% | |||
EPAM Systems, Inc. | 3.1% | |||
Endava plc | 3.1% | |||
Veeva Systems Inc. | 3.0% | |||
argenx SE | 3.0% | |||
Mellanox Technologies Ltd. | 3.0% | |||
38.0% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Global Advantage Fund1 increased 34.65%, outperforming the MSCI ACWI Index, which increased 16.23%.
Baron Global Advantage Fund is a diversified fund that under normal circumstances, invests primarily in equity securities in the form of common stock of established and emerging markets
companies located throughout the world, with capitalizations within the range of companies included in the MSCI ACWI Index Net. At all times, the Fund will have investments in equity securities of companies in at least three countries outside of the U.S. Under normal conditions, at least 40% of the Fund’s net assets will be invested in stocks of companies outside the U.S. (at least 30% if foreign market conditions are not favorable). The Fund seeks to invest in businesses it believes have significant opportunities for growth, sustainable competitive advantages, exceptional management, and an attractive valuation.
After experiencing broad-based declines at the end of last year, the global equity markets reversed course in the first half of 2019, largely due to the Federal Reserve’s decision to put further tightening of monetary policy on an indefinite hold. With rates remaining squarely in an “accommodative” range, the investing public was free again to focus on the longer-term company-specific fundamentals. Growth investors once again could focus on finding big ideas. This is an environment in which we tend to do well.
On a country basis, the U.S., China, and the Netherlands were the largest contributors. Investments in Germany detracted.
On a sector basis, Information Technology, Health Care, and Consumer Discretionary contributed the most to performance. No sector detracted.
The top contributor was Veeva Systems Inc., which offers customer relationship management, content, collaboration, and data management solutions to the life sciences industry. Shares rose on financial results that significantly beat expectations on revenue and profitability. The company achieved robust results across all segments, with solid guidance for revenue growth in both the Commercial and Vault segments. With Vault exceeding 50% of revenue, we expect accelerated growth and additional leverage in a business that already offers a unique combination of growth and profitability.
InflaRx N.V., a German biotechnology company developing a drug to treat a painful skin disease called hidradenitis suppurativa, detracted the most. Shares fell sharply after reports of a failure of InflaRx’s asset in Phase 2 trials that called into question the thesis for future investments in the development of the drug.
The digitization phenomenon that we believe will continue for years to come is starting to reach inflection points in many new areas where not only media and retail, but health care, transportation, and consumer banking are in a midst of full blown disruptions. We believe this should continue to favor many of the companies in which we are invested. Our goal remains to maximize long-term returns without taking significant risks of permanent loss of capital. We are optimistic about the long-term prospects of the companies in which we are invested and continue to search for new ideas and investment opportunities.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Baron Real Estate Income Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON REAL ESTATE INCOME FUND (RETAIL SHARES)
INRELATIONTOTHE MSCI US REIT INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||
Six Months* | One Year | Since Inception December 29, 2017)^ | ||||||||||
Baron Real Estate Income Fund — Retail Shares (BRIFX)1,2 | 20.61% | 7.21% | 4.58% | |||||||||
Baron Real Estate Income Fund — Institutional Shares (BRIIX)1,2 | 20.65% | 7.51% | 4.84% | |||||||||
Baron Real Estate Income Fund — R6 Shares (BRIUX)1,2 | 20.77% | 7.50% | 4.91% | |||||||||
MSCI US REIT Index Net1 | 17.07% | 9.66% | 6.72% |
* | Not Annualized. |
^ | Commencement of investment operations was January 2, 2018. |
1 | The index is unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. The MSCI US REIT Index is a free float-adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index and Baron Real Estate Income Fund are with dividends, which positively impact the performance results. |
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.The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
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June 30, 2019 (Unaudited) | Baron Real Estate Income Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
Invitation Homes, Inc. | 6.0% | |||
Americold Realty Trust | 6.0% | |||
Equinix, Inc. | 5.8% | |||
MGM Resorts International | 5.5% | |||
Prologis, Inc. | 4.6% | |||
Kilroy Realty Corporation | 4.4% | |||
GDS Holdings Limited | 4.3% | |||
Hudson Pacific Properties, Inc. | 4.2% | |||
Alexandria Real Estate Equities, Inc. | 3.7% | |||
Rexford Industrial Realty, Inc. | 2.9% | |||
47.4% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Real Estate Income Fund1 increased 20.61%, outperforming the MSCI US REIT Index, which gained 17.07%.
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. The Fund is likely to maintain a significant portion of its assets in real estate investment trusts (“REITs”). The Fund may also invest up to 35% of its total assets in debt securities that have a rating of, or equivalent to, at least “BBB” by Standard & Poor’s Corporation or “Baa” by Moody’s Investors Services, Inc., or if unrated, are judged by the Adviser to be of comparable quality. The Fund may invest up to 35% of its total assets in such securities. Some debt securities purchased by the Fund may have very long maturities. The length of time remaining until maturity is one factor that the Adviser considers in purchasing a particular debt security. Of course, there is no guarantee we will succeed in achieving the Fund’s investment goals.
REITs and other real estate related equities staged a strong rally in the first half of 2019. Gains were propelled by earnings results that exceeded market forecasts, slow but steady economic growth, modest inflation, and most importantly for REITs, the U.S. Federal Reserve’s pivot toward easier monetary policy. Additional factors that contributed to solid performance included generally steady and growing commercial real estate fundamentals; a slowdown in new construction activity that lessened concerns of possible oversupply; low leveraged balance sheets and wide access to low-cost debt and equity capital; substantial private capital looking to buy and finance real estate; and attractive valuations.
Holdings in non-REIT real estate companies, industrial REITs, and data center REITS contributed the most. No category materially detracted in the period.
Equinix, Inc., a global operator of network-dense, carrier-neutral colocation data centers, was the top contributor. Shares increased on robust results and a full-year guidance increase combined with a lower interest rate environment that benefited REITs broadly. We retain conviction due to a long demand runway behind cloud adoption and IT outsourcing, Equinix’s unique position as one of the only operators with a global platform, and continued execution on strategic M&A transactions to enhance its moat.
Extended Stay America, Inc., the largest owner and operator of mid-scale extended stay hotels in North America, was the top detractor, primarily due to investor perception that a corporate restructuring may take longer than expected or be scrapped altogether, combined with soft industry data. We retain conviction in Extended Stay America due to its high operating margins, acceleration of non-core asset sales, franchise growth opportunity, and well-respected CEO.
We support the merits of a diversified investment strategy incorporating allocations to equity-like real estate securities and dividend-yield real estate securities such as REITs. We remain bullish about the prospects for many income-oriented real estate securities and the Fund.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects the results of Retail Shares. |
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Baron Health Care Fund(Unaudited) | June 30, 2019 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON HEALTH CARE FUND (RETAIL SHARES)
INRELATIONTOTHE RUSSELL 3000 HEALTH CARE INDEXANDTHE S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||
Six Months* | One Year | Since Inception April 30, 2018) | ||||||||||
Baron Health Care Fund — Retail Shares (BHCFX)1,2 | 22.19% | 10.88% | 13.73% | |||||||||
Baron Health Care Fund — Institutional Shares (BHCHX)1,2 | 22.25% | 11.06% | 13.99% | |||||||||
Baron Health Care Fund — R6 Shares (BHCUX)1,2 | 22.37% | 11.16% | 13.99% | |||||||||
Russell 3000 Health Care Index Net1 | 10.23% | 11.80% | 13.21% | |||||||||
S&P 500 Index Net1 | 18.54% | 10.42% | 11.69% |
* | Not Annualized. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. The Russell 3000 Health Care Index is a free float-adjusted market capitalization index that measures the performance of all equity in the US equity market. 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. |
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.The Adviser reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2030, 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. |
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June 30, 2019 (Unaudited) | Baron Health Care Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2019
Percent of Net Assets | ||||
UnitedHealth Group Incorporated | 6.9% | |||
argenx SE | 5.2% | |||
Abbott Laboratories | 4.8% | |||
DexCom, Inc. | 4.5% | |||
Sage Therapeutics, Inc. | 4.3% | |||
Bio-Techne Corporation | 3.8% | |||
Vertex Pharmaceuticals Incorporated | 3.5% | |||
Humana Inc. | 3.3% | |||
Insulet Corp. | 3.2% | |||
CareDx, Inc. | 3.2% | |||
42.7% |
SECTOR BREAKDOWNASOF JUNE 30, 2019
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2019, Baron Health Care Fund1 increased 22.19%, outperforming the Russell 3000 Health Care Index, which rose 10.23%.
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. The Fund’s allocation among the different subsectors of
the health care industry will vary depending upon the relative potential the Fund sees within each area. The Adviser seeks to invest in businesses it believes have significant growth opportunities, sustainable competitive advantages, exceptional management, and attractive valuations. The Fund may purchase securities of companies of any market capitalization and may invest in foreign stocks. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
Health Care underperformed the broader equity markets in the period because of investor concerns about the upcoming Presidential election and the increased political rhetoric about proposed structural changes to the health care system. We continue to believe expansion of Medicare coverage could ultimately happen, but we think a transformational shift to a single payor system with no private health insurance companies is highly unlikely.
Life sciences tools & services, biotechnology, and health care equipment were the largest contributing sub-industries to performance. Investments in health care distributors and managed health care detracted.
Sage Therapeutics, Inc., a biotechnology company developing novel medications in neurology, was the top contributor, mostly due to general tailwinds from the company’s success in early 2019 with the positive read out of its oral medication for depression. While we await the results of a research and development initiative that promises to help shed light on future development goals, we retain conviction in Sage and its ability to change the treatment paradigm in neurology.
The top detractor was Covetrus, Inc., a newly formed global animal health technology and services company comprised of Vet’s First Choice and Henry Schein Animal Health. The company’s stock has been pressured since its launch in early February of this year, and shares declined further after a first quarter revenue and EBITDA miss of 3% and 15%, respectively, and a modest guidance reset. We retain conviction. Vets are rapidly embracing Covetrus’ technology, which drives higher utilization through increased prescription compliance, and we believe this unique company has the opportunity to become a leading veterinary health platform.
As the health care industry grows, it is undergoing transformative change driven by fluctuating governmental policies and regulatory oversight, population demographics, and revolutionary advancements in technologies and treatment of disease. We believe the long-term secular trends impacting health care are giving rise to promising opportunities for investment professionals with an expert understanding of the technology, science, and regulatory landscapes involved, and we believe changes in the industry are opening doors to the types of bottom-up, fundamental investment opportunities we seek.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Baron Partners Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (121.29%) | ||||||||||||
Communication Services (11.74%) | ||||||||||||
Alternative Carriers (0.39%) |
| |||||||||||
400,000 | Iridium Communications, Inc.1 | $ | 10,564,810 | $ | 9,304,000 | |||||||
Interactive Home |
| |||||||||||
165,000 | Activision Blizzard, Inc. | 7,749,539 | 7,788,000 | |||||||||
Interactive Media & |
| |||||||||||
2,250,000 | Zillow Group, Inc., Cl A1 | 88,163,901 | 102,960,000 | |||||||||
Movies & Entertainment (6.72%) |
| |||||||||||
5,200,000 | Manchester United plc, Cl A2 | 88,699,761 | 94,016,000 | |||||||||
455,000 | Spotify Technology SA1,2 | 62,787,604 | 66,530,100 | |||||||||
|
|
|
| |||||||||
151,487,365 | 160,546,100 | |||||||||||
|
|
|
| |||||||||
Total Communication Services | 257,965,615 | 280,598,100 | ||||||||||
|
|
|
| |||||||||
Consumer Discretionary (32.56%) | ||||||||||||
Automobile |
| |||||||||||
1,100,000 | Tesla, Inc.1 | 235,289,421 | 245,806,000 | |||||||||
Casinos & Gaming (0.83%) |
| |||||||||||
925,000 | Red Rock Resorts, Inc., Cl A | 21,933,713 | 19,869,000 | |||||||||
Hotels, Resorts & Cruise |
| |||||||||||
2,600,000 | Hyatt Hotels Corp., Cl A | 72,054,423 | 197,938,000 | |||||||||
835,989 | Marriott Vacations | 93,458,017 | 80,589,340 | |||||||||
510,000 | Norwegian Cruise Line | 24,081,839 | 27,351,300 | |||||||||
|
|
|
| |||||||||
189,594,279 | 305,878,640 | |||||||||||
Leisure Facilities (8.65%) |
| |||||||||||
925,800 | Vail Resorts, Inc. | 27,801,851 | 206,620,044 | |||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 474,619,264 | 778,173,684 | ||||||||||
|
|
|
| |||||||||
Financials (25.36%) | ||||||||||||
Financial Exchanges & |
| |||||||||||
770,000 | FactSet Research Systems, Inc. | 50,187,585 | 220,651,200 | |||||||||
55,000 | MSCI, Inc. | 7,701,455 | 13,133,450 | |||||||||
|
|
|
| |||||||||
57,889,040 | 233,784,650 | |||||||||||
Investment Banking & |
| |||||||||||
2,900,000 | The Charles Schwab Corp. | 50,169,841 | 116,551,000 | |||||||||
Property & Casualty |
| |||||||||||
6,900,000 | Arch Capital Group Ltd.1,2 | 31,138,235 | 255,852,000 | |||||||||
|
|
|
| |||||||||
Total Financials | 139,197,116 | 606,187,650 | ||||||||||
|
|
|
| |||||||||
Health Care (11.80%) | ||||||||||||
Health Care Equipment (10.37%) |
| |||||||||||
900,000 | IDEXX Laboratories, Inc.1 | 39,330,858 | 247,797,000 | |||||||||
Health Care Supplies (1.43%) |
| |||||||||||
125,000 | Align Technology, Inc.1 | 31,475,409 | 34,212,500 | |||||||||
|
|
|
| |||||||||
Total Health Care | 70,806,267 | 282,009,500 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Industrials (22.71%) | ||||||||||||
Aerospace & Defense (1.21%) |
| |||||||||||
125,625 | HEICO Corp. | $ | 9,632,520 | $ | 16,809,881 | |||||||
116,875 | HEICO Corp., Cl A | 7,586,429 | 12,081,369 | |||||||||
|
|
|
| |||||||||
17,218,949 | 28,891,250 | |||||||||||
Research & Consulting |
| |||||||||||
865,000 | CoStar Group, Inc.1 | 103,964,389 | 479,261,900 | |||||||||
Trading Companies & |
| |||||||||||
600,000 | Air Lease Corp. | 19,363,657 | 24,804,000 | |||||||||
300,000 | Fastenal Co. | 6,616,562 | 9,777,000 | |||||||||
|
|
|
| |||||||||
25,980,219 | 34,581,000 | |||||||||||
|
|
|
| |||||||||
Total Industrials | 147,163,557 | 542,734,150 | ||||||||||
|
|
|
| |||||||||
Information Technology (11.73%) | ||||||||||||
Application Software (6.01%) |
| |||||||||||
774,629 | Benefitfocus, Inc.1 | 25,012,214 | 21,031,177 | |||||||||
1,210,000 | Guidewire Software, Inc.1 | 95,464,320 | 122,669,800 | |||||||||
|
|
|
| |||||||||
120,476,534 | 143,700,977 | |||||||||||
IT Consulting & Other |
| |||||||||||
850,000 | Gartner, Inc.1 | 94,205,471 | 136,799,000 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 214,682,005 | 280,499,977 | ||||||||||
|
|
|
| |||||||||
Real Estate (5.39%) | ||||||||||||
Hotel & Resort REITs (0.49%) |
| |||||||||||
382,727 | MGM Growth Properties LLC, Cl A | 7,799,495 | 11,730,582 | |||||||||
Office REITs (1.64%) |
| |||||||||||
985,000 | Douglas Emmett, Inc. | 27,670,142 | 39,242,400 | |||||||||
Specialized REITs (3.26%) |
| |||||||||||
2,000,000 | Gaming and Leisure Properties, Inc. | 60,598,528 | 77,960,000 | |||||||||
|
|
|
| |||||||||
Total Real Estate | 96,068,165 | 128,932,982 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 1,400,501,989 | 2,899,136,043 | ||||||||||
|
|
|
| |||||||||
Private Common Stocks (2.38%) | ||||||||||||
Industrials (2.38%) | ||||||||||||
Aerospace & Defense (2.38%) |
| |||||||||||
221,631 | Space Exploration | 29,920,185 | 50,070,876 | |||||||||
30,221 | Space Exploration | 4,079,835 | 6,827,528 | |||||||||
|
|
|
| |||||||||
Total Private Common Stocks | 34,000,020 | 56,898,404 | ||||||||||
|
|
|
| |||||||||
Private Preferred Stocks (4.18%) | ||||||||||||
Industrials (4.18%) | ||||||||||||
Aerospace & Defense (4.18%) |
| |||||||||||
311,111 | Space Exploration | 41,999,985 | 70,286,197 | |||||||||
131,657 | Space Exploration | 22,250,032 | 29,743,950 | |||||||||
|
|
|
| |||||||||
Total Private Preferred Stocks | 64,250,017 | 100,030,147 | ||||||||||
|
|
|
| |||||||||
18 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Partners Fund |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Private Partnerships (0.01%) | ||||||||||||
Financials (0.01%) | ||||||||||||
Asset Management & Custody Banks (0.01%) |
| |||||||||||
7,579,130 | Windy City Investments | $ | 0 | $ | 204,636 | |||||||
|
|
|
| |||||||||
Total Investments (127.86%) | $ | 1,498,752,026 | 3,056,269,230 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets(-27.86%) | (666,032,125 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 2,390,237,105 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $59.91 per share | $ | 1,213,458,113 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $61.35 per share | $ | 1,021,499,635 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $61.36 per share | $ | 155,279,357 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | At June 30, 2019, the market value of restricted and fair valued securities amounted to $157,133,187 or 6.57% of net assets. These securities are not deemed liquid. See Note 6 regarding Restricted Securities. |
4 | The Adviser has reclassified/classified certain securities in or out of thissub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
5 | Level 3 security. See Note 7 regarding Fair Value Measurements. |
All securities are Level 1, unless otherwise noted.
See Notes to Financial Statements. | 19 |
Table of Contents
Baron Focused Growth Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (92.14%) | ||||||||||||
Communication Services (8.43%) | ||||||||||||
Alternative Carriers (4.08%) |
| |||||||||||
401,472 | Iridium Communications, Inc.1 | $ | 2,949,375 | $ | 9,338,239 | |||||||
Movies & Entertainment (4.35%) |
| |||||||||||
550,000 | Manchester United plc, Cl A2 | 8,719,506 | 9,944,000 | |||||||||
|
|
|
| |||||||||
Total Communication Services | 11,668,881 | 19,282,239 | ||||||||||
|
|
|
| |||||||||
Consumer Discretionary (43.64%) | ||||||||||||
Automobile Manufacturers (8.79%) |
| |||||||||||
90,000 | Tesla, Inc.1 | 20,342,221 | 20,111,400 | |||||||||
Casinos & Gaming (4.74%) |
| |||||||||||
250,000 | Penn National Gaming, Inc.1 | 5,089,522 | 4,815,000 | |||||||||
279,939 | Red Rock Resorts, Inc., Cl A | 6,354,805 | 6,013,090 | |||||||||
|
|
|
| |||||||||
11,444,327 | 10,828,090 | |||||||||||
Hotels, Resorts & |
| |||||||||||
150,000 | Choice Hotels International, Inc. | 5,080,139 | 13,051,500 | |||||||||
340,000 | Hyatt Hotels Corp., Cl A | 12,201,302 | 25,884,200 | |||||||||
|
|
|
| |||||||||
17,281,441 | 38,935,700 | |||||||||||
Leisure Facilities (13.08%) |
| |||||||||||
134,000 | Vail Resorts, Inc. | 8,130,896 | 29,906,120 | |||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 57,198,885 | 99,781,310 | ||||||||||
|
|
|
| |||||||||
Financials (14.26%) | ||||||||||||
Financial Exchanges & |
| |||||||||||
75,000 | FactSet Research Systems, Inc. | 5,828,282 | 21,492,000 | |||||||||
Property & Casualty Insurance (4.86%) |
| |||||||||||
300,000 | Arch Capital Group Ltd.1,2 | 1,800,056 | 11,124,000 | |||||||||
|
|
|
| |||||||||
Total Financials | 7,628,338 | 32,616,000 | ||||||||||
|
|
|
| |||||||||
Industrials (16.23%) | ||||||||||||
Research & |
| |||||||||||
67,000 | CoStar Group, Inc.1 | 12,103,628 | 37,122,020 | |||||||||
|
|
|
| |||||||||
Information Technology (7.19%) | ||||||||||||
Application Software (7.19%) |
| |||||||||||
225,000 | Benefitfocus, Inc.1 | 5,980,203 | 6,108,750 | |||||||||
101,870 | Guidewire Software, Inc.1 | 4,816,691 | 10,327,580 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 10,796,894 | 16,436,330 | ||||||||||
|
|
|
| |||||||||
Real Estate (2.39%) | ||||||||||||
Residential REITs (2.39%) |
| |||||||||||
225,000 | American Homes 4 Rent, Cl A | 4,700,804 | 5,469,750 | |||||||||
|
|
|
| |||||||||
Total Common Stocks | 104,097,430 | 210,707,649 | ||||||||||
|
|
|
| |||||||||
Shares | Cost | Value | ||||||||||
Private Common Stocks (2.34%) | ||||||||||||
Industrials (2.34%) | ||||||||||||
Aerospace & Defense (2.34%) |
| |||||||||||
20,859 | Space Exploration | $ | 2,815,965 | $ | 4,712,465 | |||||||
2,844 | Space Exploration | 383,940 | 642,517 | |||||||||
|
|
|
| |||||||||
Total Private Common Stocks | 3,199,905 | 5,354,982 | ||||||||||
|
|
|
| |||||||||
Private Preferred Stocks (3.08%) | ||||||||||||
Industrials (3.08%) | ||||||||||||
Aerospace & Defense (3.08%) |
| |||||||||||
29,630 | Space Exploration | 4,000,050 | 6,694,009 | |||||||||
1,479 | Space Exploration | 249,951 | 334,136 | |||||||||
|
|
|
| |||||||||
Total Private Preferred Stocks | 4,250,001 | 7,028,145 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (2.36%) | ||||||||||||
$5,404,221 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/28/2019, 0.50% due 7/1/2019; Proceeds at maturity - $5,404,446; (Fully collateralized by $5,185,000 U.S. Treasury Note, 0.75% due 7/15/2028; Market value - $5,515,207)5 | 5,404,221 | 5,404,221 | |||||||||
|
|
|
| |||||||||
Total Investments (99.92%) | $ | 116,951,557 | 228,494,997 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.08%) | 179,907 | |||||||||||
|
| |||||||||||
Net Assets | $ | 228,674,904 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $17.90 per share | $ | 45,278,761 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $18.31 per share | $ | 77,679,924 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $18.31 per share | $ | 105,716,219 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | At June 30, 2019, the market value of restricted and fair valued securities amounted to $12,383,127 or 5.42% of net assets. These securities are not deemed liquid. See Note 6 regarding Restricted Securities. |
4 | The Adviser has reclassified/classified certain securities in or out of thissub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
5 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
6 | Level 3 security. See Note 7 regarding Fair Value Measurements. |
All securities are Level 1, unless otherwise noted.
20 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron International Growth Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (95.56%) | ||||||||||||
Argentina (1.16%) | ||||||||||||
100,117 | Bolsas y Mercados Argentinos S.A. | $ | 923,767 | $ | 876,745 | |||||||
1,267 | MercadoLibre, Inc.1 | 608,160 | 775,113 | |||||||||
96,949 | YPF S.A., ADR | 1,986,793 | 1,765,441 | |||||||||
|
|
|
| |||||||||
Total Argentina | 3,518,720 | 3,417,299 | ||||||||||
|
|
|
| |||||||||
Australia (2.24%) | ||||||||||||
49,108 | Domino’s Pizza Enterprises Ltd.2 | 748,183 | 1,297,819 | |||||||||
140,000 | Newcrest Mining Limited2 | 2,813,225 | 3,145,269 | |||||||||
475,608 | NEXTDC Limited1,2 | 2,265,199 | 2,171,009 | |||||||||
|
|
|
| |||||||||
Total Australia | 5,826,607 | 6,614,097 | ||||||||||
|
|
|
| |||||||||
Belgium (0.92%) | ||||||||||||
41,131 | KBC Group NV2 | 3,196,985 | 2,699,234 | |||||||||
|
|
|
| |||||||||
Brazil (4.47%) | ||||||||||||
127,966 | Arco Platform Limited, Cl A1 | 2,422,840 | 5,602,352 | |||||||||
105,576 | PagSeguro Digital Ltd., Cl A1 | 2,463,140 | 4,114,297 | |||||||||
222,006 | Petroleo Brasileiro S.A. Petrobras, ADR | 3,375,167 | 3,456,633 | |||||||||
|
|
|
| |||||||||
Total Brazil | 8,261,147 | 13,173,282 | ||||||||||
|
|
|
| |||||||||
Canada (4.73%) | ||||||||||||
217,714 | BlackBerry Limited1 | 2,189,175 | 1,624,146 | |||||||||
6,775 | Constellation Software, Inc. | 1,543,012 | 6,385,433 | |||||||||
537,153 | Encana Corp. | 4,797,819 | 2,755,595 | |||||||||
186,070 | The Stars Group Inc.1 | 5,033,500 | 3,176,215 | |||||||||
|
|
|
| |||||||||
Total Canada | 13,563,506 | 13,941,389 | ||||||||||
|
|
|
| |||||||||
China (9.36%) | ||||||||||||
17,991 | Alibaba Group Holding Limited, ADR1 | 2,227,250 | 3,048,575 | |||||||||
130,000 | China International Travel Service Limited, Cl A2 | 1,479,415 | 1,680,065 | |||||||||
5,462,000 | China Tower Corporation | 804,757 | 1,434,715 | |||||||||
182,354 | Futu Holdings Limited, ADR1 | 2,188,248 | 1,927,482 | |||||||||
32,654 | GDS Holdings Limited, ADR1 | 1,129,476 | 1,226,811 | |||||||||
1,111,371 | Haitong Securities Co., Ltd., Cl H2 | 1,607,822 | 1,246,657 | |||||||||
739,029 | Hua Hong Semiconductor | 1,553,122 | 1,433,164 | |||||||||
1,187,374 | Kingdee International | 762,369 | 1,286,264 | |||||||||
212,189 | Midea Group Co., Ltd. Cl A2 | 1,522,947 | 1,608,172 | |||||||||
24,397 | Momo Inc., ADR1 | 792,370 | 873,413 | |||||||||
28,337 | Tencent Holdings Limited2 | 41,611 | 1,281,949 | |||||||||
25,451 | Tencent Holdings Limited, ADR | 1,194,968 | 1,151,912 | |||||||||
3,107,500 | WH Group Limited, 144A2 | 2,638,758 | 3,152,226 | |||||||||
1,175,565 | Xiaomi Corporation, CI B, 144A1,2 | 1,754,766 | 1,507,756 | |||||||||
15,000 | YY Inc., ADR1 | 1,033,592 | 1,045,350 | |||||||||
106,554 | Zai Lab Limited, ADR1 | 2,391,984 | 3,715,538 | |||||||||
|
|
|
| |||||||||
Total China | 23,123,455 | 27,620,049 | ||||||||||
|
|
|
| |||||||||
Finland (1.18%) | ||||||||||||
695,692 | Nokia Corporation, ADR | 4,037,380 | 3,485,417 | |||||||||
|
|
|
| |||||||||
France (6.67%) | ||||||||||||
46,751 | BNP Paribas S.A.2 | 2,792,611 | 2,216,244 | |||||||||
45,601 | Danone SA2 | 3,595,391 | 3,861,137 | |||||||||
6,680 | Eurofins Scientific SE2 | 659,871 | 2,947,624 | |||||||||
9,787 | LVMH Moët Hennessy | 2,625,708 | 4,160,702 | |||||||||
32,900 | Sodexo S.A. | 3,555,264 | 3,845,809 | |||||||||
96,582 | Vivendi SA2 | 2,322,579 | 2,650,468 | |||||||||
|
|
|
| |||||||||
Total France | 15,551,424 | 19,681,984 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Germany (5.73%) | ||||||||||||
24,801 | Fresenius Medical | $ | 2,103,705 | $ | 1,947,702 | |||||||
25,674 | Linde Public Limited Company2 | 3,826,233 | 5,156,779 | |||||||||
313,925 | RIB Software SE2 | 3,744,416 | 6,447,741 | |||||||||
34,919 | Symrise AG2 | 2,085,172 | 3,362,356 | |||||||||
|
|
|
| |||||||||
Total Germany | 11,759,526 | 16,914,578 | ||||||||||
|
|
|
| |||||||||
India (4.88%) | ||||||||||||
22,000 | Britannia Industries Limited2 | 916,969 | 874,399 | |||||||||
99,000 | Godrej Properties Limited1,2 | 1,247,015 | 1,438,001 | |||||||||
69,594 | HDFC Bank Limited2 | 2,209,052 | 2,465,104 | |||||||||
1,067,162 | JM Financial Limited2 | 1,440,547 | 1,187,143 | |||||||||
90,551 | Kotak Mahindra Bank Limited2 | 1,695,595 | 1,937,704 | |||||||||
307,000 | Max Financial Services Limited1,2 | 2,011,468 | 1,814,143 | |||||||||
158,609 | RBL Bank Limited, 144A2 | 1,445,996 | 1,467,436 | |||||||||
102,000 | Reliance Industries Limited.1,2 | 1,983,377 | 1,851,004 | |||||||||
422,000 | Reliance Nippon Life Asset Management Limited, 144A | 1,351,687 | 1,352,919 | |||||||||
|
|
|
| |||||||||
Total India | 14,301,706 | 14,387,853 | ||||||||||
|
|
|
| |||||||||
Indonesia (0.24%) | ||||||||||||
2,582,500 | PT Tower Bersama Infrastructure, Tbk.2 | 1,066,896 | 693,211 | |||||||||
|
|
|
| |||||||||
Ireland (2.14%) | ||||||||||||
3,507,170 | Glenveagh Properties PLC, 144A1 | 4,378,951 | 2,919,219 | |||||||||
53,025 | Ryanair Holdings plc, ADR1 | 3,437,340 | 3,401,023 | |||||||||
|
|
|
| |||||||||
Total Ireland | 7,816,291 | 6,320,242 | ||||||||||
|
|
|
| |||||||||
Israel (2.93%) | ||||||||||||
36,566 | Mellanox Technologies Ltd.1 | 1,489,275 | 4,046,759 | |||||||||
32,404 | Wix.com Ltd.1 | 1,656,177 | 4,604,609 | |||||||||
|
|
|
| |||||||||
Total Israel | 3,145,452 | 8,651,368 | ||||||||||
|
|
|
| |||||||||
Japan (11.12%) | ||||||||||||
14,900 | FANUC Corp.2 | 2,116,507 | 2,768,609 | |||||||||
7,274 | Keyence Corporation2 | 3,894,302 | 4,486,039 | |||||||||
6,000 | KOSÉ Corporation2 | 642,145 | 1,012,691 | |||||||||
64,493 | Mercari Inc.1,2 | 1,722,055 | 1,718,016 | |||||||||
98,400 | MonotaRO Co., Ltd.2 | 1,247,408 | 2,410,431 | |||||||||
257,000 | Nexon Co., Ltd.1,2 | 3,891,946 | 3,754,677 | |||||||||
54,000 | Okamoto Industries, Inc.2 | 2,799,510 | 2,430,293 | |||||||||
134,400 | Recruit Holdings Co., Ltd.2 | 2,673,770 | 4,499,965 | |||||||||
32,223 | Sony Corporation., ADR | 1,008,417 | 1,688,163 | |||||||||
69,900 | Square Enix Holdings Co., Ltd.2 | 2,276,714 | 2,246,044 | |||||||||
163,100 | Takeda Pharmaceutical Company Limited2 | 7,219,721 | 5,801,926 | |||||||||
|
|
|
| |||||||||
Total Japan | 29,492,495 | 32,816,854 | ||||||||||
|
|
|
| |||||||||
Korea, Republic of (1.10%) | ||||||||||||
28,975 | KB Financial Group, Inc.2 | 1,438,261 | 1,148,545 | |||||||||
55,025 | KIA Motors Corporation2 | 1,696,021 | 2,099,139 | |||||||||
|
|
|
| |||||||||
Total Korea, Republic of | 3,134,282 | 3,247,684 | ||||||||||
|
|
|
| |||||||||
Mexico (1.17%) | ||||||||||||
775,000 | Grupo Lala, S.A.B. de C.V. | 932,394 | 950,492 | |||||||||
4,041,932 | Telesites, S.A.B. de C.V.1 | 2,953,177 | 2,497,548 | |||||||||
|
|
|
| |||||||||
Total Mexico | 3,885,571 | 3,448,040 | ||||||||||
|
|
|
| |||||||||
Netherlands (4.24%) | ||||||||||||
53,405 | argenx SE, ADR1 | 2,012,719 | 7,561,080 | |||||||||
20,634 | InterXion Holding N.V.1 | 682,420 | 1,570,041 | |||||||||
73,000 | Koninklijke Vopak N.V.2 | 3,681,864 | 3,361,699 | |||||||||
|
|
|
| |||||||||
Total Netherlands | 6,377,003 | 12,492,820 | ||||||||||
|
|
|
|
See Notes to Financial Statements. | 21 |
Table of Contents
Baron International Growth Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Nigeria (0.03%) | ||||||||||||
1,672,685 | Lekoil, Ltd.1 | $ | 571,534 | $ | 79,658 | |||||||
|
|
|
| |||||||||
Norway (2.29%) | ||||||||||||
168,500 | Golar LNG Ltd. | 4,099,626 | 3,113,880 | |||||||||
348,359 | Opera Limited., ADR1 | 2,544,003 | 3,636,868 | |||||||||
|
|
|
| |||||||||
Total Norway | 6,643,629 | 6,750,748 | ||||||||||
|
|
|
| |||||||||
Panama (1.18%) | ||||||||||||
35,688 | Copa Holdings, S.A., Cl A | 2,996,186 | 3,482,078 | |||||||||
|
|
|
| |||||||||
Russia (2.74%) | ||||||||||||
226,106 | Sberbank of Russia PJSC, ADR2 | 2,896,109 | 3,483,401 | |||||||||
142,000 | TCS Group Holding PLC, GDR | 2,767,352 | 2,783,200 | |||||||||
47,972 | Yandex N.V., Cl A1 | 1,725,577 | 1,822,936 | |||||||||
|
|
|
| |||||||||
Total Russia | 7,389,038 | 8,089,537 | ||||||||||
|
|
|
| |||||||||
Spain (2.36%) | ||||||||||||
23,663 | Aena SME, S.A., 144A2 | 3,548,972 | 4,690,075 | |||||||||
75,745 | Industria de Diseno Textil, S.A.2 | 2,218,318 | 2,278,961 | |||||||||
|
|
|
| |||||||||
Total Spain | 5,767,290 | 6,969,036 | ||||||||||
|
|
|
| |||||||||
Sweden (1.32%) | ||||||||||||
411,000 | Telefonaktiebolaget LM Ericsson, ADR | 3,722,315 | 3,904,500 | |||||||||
|
|
|
| |||||||||
Switzerland (2.51%) | ||||||||||||
49,982 | Julius Baer Group Ltd.2 | 1,942,757 | 2,226,901 | |||||||||
50,000 | Nestle S.A.2 | 4,238,697 | 5,176,111 | |||||||||
|
|
|
| |||||||||
Total Switzerland | 6,181,454 | 7,403,012 | ||||||||||
|
|
|
| |||||||||
United Arab Emirates (0.59%) | ||||||||||||
230,021 | Network International | 1,441,356 | 1,732,242 | |||||||||
|
|
|
| |||||||||
United Kingdom (14.44%) | ||||||||||||
118,721 | Abcam plc | 793,975 | 2,222,345 | |||||||||
172,669 | Adaptimmune Therapeutics plc, ADR1 | 1,459,561 | 694,129 | |||||||||
147,500 | AstraZeneca PLC, ADR | 5,318,439 | 6,088,800 | |||||||||
674,000 | B&M European Value Retail S.A.2 | 3,188,355 | 2,854,784 | |||||||||
35,000 | Blue Prism Group plc1,2 | 854,501 | 614,067 | |||||||||
103,500 | Dechra Pharmaceuticals PLC2 | 3,600,572 | 3,612,393 | |||||||||
135,423 | Endava plc, ADR1 | 3,170,311 | 5,449,421 | |||||||||
171,158 | Experian plc2 | 3,398,968 | 5,184,299 | |||||||||
883,049 | Horizon Discovery Group plc1,2 | 2,095,042 | 1,738,153 | |||||||||
650,000 | Rentokil Initial plc2 | 2,766,779 | 3,281,644 | |||||||||
1,195,239 | Trainline plc, 144A1 | 5,331,244 | 6,255,996 | |||||||||
1,148,151 | Tullow Oil plc2 | 3,189,936 | 3,071,473 | |||||||||
270,000 | WANdisco plc1 | 2,599,708 | 1,542,988 | |||||||||
|
|
|
| |||||||||
Total United Kingdom | 37,767,391 | 42,610,492 | ||||||||||
|
|
|
| |||||||||
United States (3.82%) | ||||||||||||
45,103 | Agilent Technologies, Inc. | 1,873,431 | 3,367,841 | |||||||||
110,567 | Arch Capital Group Ltd.1 | 1,862,627 | 4,099,825 | |||||||||
31,004 | Worldpay, Inc., Cl A1 | 2,484,232 | 3,799,540 | |||||||||
|
|
|
| |||||||||
Total United States | 6,220,290 | 11,267,206 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 236,758,929 | 281,893,910 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (4.07%) | ||||||||||||
$12,018,286 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/28/2019, 0.50% due 7/1/2019; Proceeds at maturity - $12,018,786; | $ | 12,018,286 | $ | 12,018,286 | |||||||
|
|
|
| |||||||||
Total Investments (99.63%) | $ | 248,777,215 | 293,912,196 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.37%) | 1,097,927 | |||||||||||
|
| |||||||||||
Net Assets | $ | 295,010,123 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $22.75 per share | $ | 76,334,715 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $23.12 per share | $ | 202,842,695 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $23.12 per share | $ | 15,832,713 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
ADR | American Depositary Receipt. |
GDR | Global 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 June 30, 2019, the market value of Rule 144A securities amounted to $25,945,748 or 8.79% of net assets. These securities have been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. |
All securities are Level 1, unless otherwise noted.
Summary of Investments by Sector as of June 30, 2019 | Percentage of Net Assets | |||
Information Technology | 22.0 | % | ||
Consumer Discretionary | 15.3 | |||
Health Care | 13.4 | |||
Financials | 11.2 | |||
Industrials | 10.1 | |||
Energy | 6.6 | |||
Communication Services | 6.6 | |||
Consumer Staples | 5.1 | |||
Materials | 4.8 | |||
Real Estate | 0.5 | |||
Cash and Cash Equivalents* | 4.4 | |||
100.0 | % |
* | Includes short term investments. |
22 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Real Estate Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (98.12%) | ||||||||||||
Communication Services (1.14%) | ||||||||||||
Integrated Telecommunication Services (1.14%) |
| |||||||||||
25,447,800 | China Tower Corporation Limited, CI H, 144A (Hong Kong)2,4 | $ | 4,518,381 | $ | 6,684,428 | |||||||
|
|
|
| |||||||||
Consumer Discretionary (31.79%) | ||||||||||||
Casinos & Gaming (12.91%) |
| |||||||||||
667,450 | Boyd Gaming Corp. | 14,240,218 | 17,981,103 | |||||||||
1,135,050 | MGM Resorts International | 24,380,222 | 32,428,379 | |||||||||
787,555 | Penn National Gaming, Inc.1 | 20,245,985 | 15,168,309 | |||||||||
478,104 | Red Rock Resorts, Inc., Cl A | 10,707,926 | 10,269,674 | |||||||||
|
|
|
| |||||||||
69,574,351 | 75,847,465 | |||||||||||
Home Improvement Retail (1.40%) |
| |||||||||||
30,500 | Home Depot, Inc. | 2,367,092 | 6,343,085 | |||||||||
18,350 | Lowe’s Companies, Inc. | 1,682,137 | 1,851,698 | |||||||||
|
|
|
| |||||||||
4,049,229 | 8,194,783 | |||||||||||
Homebuilding (5.92%) |
| |||||||||||
348,900 | D.R. Horton, Inc. | 15,240,442 | 15,048,057 | |||||||||
131,236 | Installed Building Products, Inc.1 | 7,212,035 | 7,771,796 | |||||||||
247,200 | Lennar Corp., Cl A | 11,988,358 | 11,979,312 | |||||||||
|
|
|
| |||||||||
34,440,835 | 34,799,165 | |||||||||||
Hotels, Resorts & Cruise Lines (11.56%) |
| |||||||||||
60,337 | Hilton Grand Vacations, Inc.1 | 1,368,114 | 1,919,923 | |||||||||
6,825 | Hilton Worldwide Holdings, Inc. | 310,506 | 667,076 | |||||||||
31,700 | Hyatt Hotels Corp., Cl A | 2,425,733 | 2,413,321 | |||||||||
145,450 | Marriott Vacations Worldwide Corp. | 13,016,411 | 14,021,380 | |||||||||
508,390 | Norwegian Cruise Line | 18,871,120 | 27,264,956 | |||||||||
178,250 | Royal Caribbean Cruises Ltd.2 | 16,234,719 | 21,605,682 | |||||||||
|
|
|
| |||||||||
52,226,603 | 67,892,338 | |||||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 160,291,018 | 186,733,751 | ||||||||||
|
|
|
| |||||||||
Financials (3.62%) | ||||||||||||
Asset Management & Custody Banks (3.62%) |
| |||||||||||
445,150 | Brookfield Asset | 10,618,625 | 21,269,267 | |||||||||
|
|
|
| |||||||||
Industrials (10.65%) | ||||||||||||
Building Products (7.22%) |
| |||||||||||
588,350 | Masco Corp. | 22,868,095 | 23,086,854 | |||||||||
128,557 | Owens Corning | 6,459,106 | 7,482,018 | |||||||||
164,950 | Trex Co., Inc.1 | 10,110,271 | 11,826,915 | |||||||||
|
|
|
| |||||||||
39,437,472 | 42,395,787 | |||||||||||
Research & Consulting Services (1.53%) |
| |||||||||||
16,150 | CoStar Group, Inc.1 | 2,947,422 | 8,948,069 | |||||||||
Trading Companies & Distributors (1.90%) |
| |||||||||||
161,201 | SiteOne Landscape Supply, Inc.1 | 7,502,447 | 11,171,229 | |||||||||
|
|
|
| |||||||||
Total Industrials | 49,887,341 | 62,515,085 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Information Technology (9.68%) | ||||||||||||
Internet Services & |
| |||||||||||
750,837 | GDS Holdings Ltd., ADR1,2,3 | $ | 21,833,733 | $ | 28,208,946 | |||||||
316,450 | InterXion Holding N.V.1,2,3 | 9,080,445 | 24,078,681 | |||||||||
1,004,779 | NEXTDC Ltd. (Australia)1,2,4 | 3,428,890 | 4,586,516 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 34,343,068 | 56,874,143 | ||||||||||
|
|
|
| |||||||||
Materials (3.22%) | ||||||||||||
Construction Materials (2.08%) |
| |||||||||||
88,850 | Vulcan Materials Co. | 9,381,618 | 12,199,993 | |||||||||
Specialty Chemicals (1.14%) |
| |||||||||||
14,650 | The Sherwin-Williams Co. | 3,961,194 | 6,713,949 | |||||||||
|
|
|
| |||||||||
Total Materials | 13,342,812 | 18,913,942 | ||||||||||
|
|
|
| |||||||||
Real Estate (38.02%) | ||||||||||||
Hotel & Resort REITs (2.78%) |
| |||||||||||
471,300 | MGM Growth Properties LLC, Cl A | 9,759,941 | 14,445,345 | |||||||||
67,850 | Park Hotels & Resorts, Inc. | 1,817,694 | 1,869,946 | |||||||||
|
|
|
| |||||||||
11,577,635 | 16,315,291 | |||||||||||
Industrial REITs (2.01%) |
| |||||||||||
147,100 | Prologis, Inc. | 7,303,567 | 11,782,710 | |||||||||
Office REITs (5.42%) |
| |||||||||||
162,900 | Douglas Emmett, Inc. | 3,037,502 | 6,489,936 | |||||||||
344,100 | Hudson Pacific Properties, Inc. | 11,153,507 | 11,448,207 | |||||||||
184,200 | JBG SMITH Properties | 6,959,970 | 7,246,428 | |||||||||
89,850 | Kilroy Realty Corp. | 6,816,866 | 6,631,829 | |||||||||
|
|
|
| |||||||||
27,967,845 | 31,816,400 | |||||||||||
Real Estate Development (0.57%) |
| |||||||||||
172,175 | Forestar Group, Inc.1 | 3,228,196 | 3,366,021 | |||||||||
Real Estate Services (7.48%) |
| |||||||||||
856,500 | CBRE Group, Inc., Cl A1 | 25,509,771 | 43,938,450 | |||||||||
Residential REITs (2.92%) |
| |||||||||||
57,350 | Equity LifeStyle Properties, Inc. | 5,674,827 | 6,958,849 | |||||||||
382,550 | Invitation Homes, Inc. | 9,091,490 | 10,225,562 | |||||||||
|
|
|
| |||||||||
14,766,317 | 17,184,411 | |||||||||||
Specialized REITs (16.84%) |
| |||||||||||
106,500 | Alexandria Real Estate Equities, Inc.3 | 7,828,311 | 15,026,085 | |||||||||
77,100 | American Tower Corp. | 5,662,009 | 15,763,095 | |||||||||
440,240 | Americold Realty Trust3 | 10,794,822 | 14,272,581 | |||||||||
64,091 | Equinix, Inc. | 11,979,869 | 32,320,450 | |||||||||
321,219 | Gaming and Leisure Properties, Inc. | 8,268,068 | 12,521,117 | |||||||||
49,579 | QTS Realty Trust, Inc., Cl A | 2,057,529 | 2,289,558 | |||||||||
29,850 | SBA Communications Corp.1 | 1,494,102 | 6,711,474 | |||||||||
|
|
|
| |||||||||
48,084,710 | 98,904,360 | |||||||||||
|
|
|
| |||||||||
Total Real Estate | 138,438,041 | 223,307,643 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 411,439,286 | 576,298,259 | ||||||||||
|
|
|
| |||||||||
See Notes to Financial Statements. | 23 |
Table of Contents
Baron Real Estate Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2019
|
Principal Amount | Cost | Value | ||||||||||
Short Term Investments (2.24%) | ||||||||||||
$13,161,625 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/28/2019, 0.50% due 7/1/2019; Proceeds at maturity - $13,162,174; | $ | 13,161,625 | $ | 13,161,625 | |||||||
|
|
|
| |||||||||
Total Investments (100.36%) | $ | 424,600,911 | 589,459,884 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets(-0.36%) | (2,098,679 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 587,361,205 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $25.75 per share | $ | 234,592,304 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $26.19 per share | $ | 341,391,003 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $26.19 per share | $ | 11,377,898 | |||||||||
|
|
% | 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 thissub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
4 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
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 June 30, 2019, the market value of Rule 144A securities amounted to $6,684,428 or 1.14% of net assets. This security has been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. |
All securities are Level 1, unless otherwise noted.
24 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Emerging Markets Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (96.38%) | ||||||||||||
Argentina (1.96%) | ||||||||||||
1,152,093 | Loma Negra Compania Industrial Argentina Sociedad Anonima, ADR1 | $ | 23,881,978 | $ | 13,479,488 | |||||||
63,704 | MercadoLibre, Inc.1 | 29,802,981 | 38,972,196 | |||||||||
2,681,468 | YPF S.A., ADR | 52,273,284 | 48,829,532 | |||||||||
|
|
|
| |||||||||
Total Argentina | 105,958,243 | 101,281,216 | ||||||||||
|
|
|
| |||||||||
Brazil (9.96%) | ||||||||||||
9,196,458 | B3 S.A. - Brasil, Bolsa, Balcao | 45,660,140 | 89,714,532 | |||||||||
2,786,921 | Banco do Brasil S.A. | 34,573,849 | 39,148,041 | |||||||||
18,677,182 | Kroton Educacional SA | 56,164,246 | 53,357,124 | |||||||||
1,416,749 | Notre Dame Intermedica Participacoes S.A. | 14,650,839 | 14,876,058 | |||||||||
2,408,723 | Pagseguro Digital Ltd., Cl A1 | 59,299,592 | 93,867,935 | |||||||||
6,139,342 | Petroleo Brasileiro S.A.-Petrobras, ADR | 66,715,024 | 95,589,555 | |||||||||
15,606,624 | Rumo S.A.1 | 58,008,218 | 84,252,481 | |||||||||
1,500,093 | StoneCo Ltd., Cl A1 | 41,597,489 | 44,372,751 | |||||||||
|
|
|
| |||||||||
Total Brazil | 376,669,397 | 515,178,477 | ||||||||||
|
|
|
| |||||||||
China (32.21%) | ||||||||||||
1,173,853 | Alibaba Group Holding | 124,042,727 | 198,909,391 | |||||||||
15,666,517 | China Everbright Ltd.3 | 38,518,428 | 23,156,192 | |||||||||
5,801,301 | China International Travel Service Limited, Cl A3 | 62,305,397 | 74,973,580 | |||||||||
18,858,732 | China Mengniu Dairy Co. Ltd.3 | 39,038,075 | 73,117,656 | |||||||||
9,046,189 | China Mobile Ltd.3 | 100,203,548 | 82,353,434 | |||||||||
289,446,680 | China Tower Corporation Limited, CI H, 144A3 | 43,740,365 | 76,029,580 | |||||||||
1,036,064 | GDS Holdings Limited, ADR1 | 36,288,317 | 38,924,924 | |||||||||
52,241,946 | Guangzhou Automobile Group | 61,795,605 | 55,819,092 | |||||||||
25,344,546 | Haitong Securities Co., Ltd., Cl H3 | 39,653,534 | 28,429,711 | |||||||||
3,154,329 | Hangzhou Hikvision Digital Technology Co., Ltd., Cl A3 | 9,228,746 | 12,712,901 | |||||||||
6,178,683 | Han’s Laser | 28,148,346 | 31,027,019 | |||||||||
16,956,316 | Hua Hong Semiconductor Limited, 144A3 | 36,400,850 | 32,882,590 | |||||||||
22,301,166 | Kingdee International Software Group Co. Ltd.3 | 8,546,946 | 24,158,509 | |||||||||
29,539,346 | KunLun Energy | 32,789,505 | 25,791,664 | |||||||||
56,559,660 | Lenovo Group Limited3 | 41,520,973 | 43,793,245 | |||||||||
1,739,580 | LexinFintech Holdings Ltd., ADR1 | 21,798,885 | 19,413,713 | |||||||||
8,104,816 | Midea Group Co., Ltd., Cl A3 | 43,415,567 | 61,426,084 | |||||||||
689,308 | Momo Inc., ADR1 | 21,893,409 | 24,677,226 | |||||||||
294,125 | New Oriental Education & Technology Group Inc., ADR1 | 16,210,059 | 28,406,592 | |||||||||
5,888,775 | Ping An Insurance (Group) Company of China, Ltd., CI H3 | 63,985,654 | 70,811,768 | |||||||||
2,524,314 | Qudian Inc., ADR1 | 19,177,637 | 18,932,355 | |||||||||
4,889,486 | Shenzhou International Group Holdings Ltd.3 | 22,711,899 | 67,449,026 | |||||||||
19,576,365 | Sino Biopharmaceutical Ltd.3 | 10,751,547 | 20,028,095 | |||||||||
10,305,750 | Sinopharm Group Co. Ltd., Cl H3 | 40,693,022 | 36,287,501 | |||||||||
1,091,592 | Sunny Optical | 2,463,188 | 11,301,560 | |||||||||
3,520,992 | Tencent Holdings Limited3 | 83,728,385 | 159,287,521 | |||||||||
793,621 | Tencent Holdings Limited, ADR | 37,121,295 | 35,919,286 | |||||||||
1,081,693 | Tencent Music Entertainment Group, ADR1 | 14,705,946 | 16,214,578 | |||||||||
145,805,183 | Tongda Group Holdings Limited3 | 36,836,233 | 11,184,949 | |||||||||
73,760,312 | WH Group Limited, 144A3 | 61,451,846 | 74,821,946 | |||||||||
36,328,766 | Xiaomi | 51,322,100 | 46,594,548 | |||||||||
4,600,386 | Yunnan Baiyao | 66,262,455 | 55,933,759 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
China (continued) | ||||||||||||
344,040 | YY Inc., ADR1 | $ | 23,041,064 | $ | 23,976,148 | |||||||
1,772,732 | Zai Lab Limited, ADR1 | 37,629,236 | 61,815,165 | |||||||||
|
|
|
| |||||||||
Total China | 1,377,420,789 | 1,666,561,308 | ||||||||||
|
|
|
| |||||||||
Finland (1.14%) | ||||||||||||
11,759,598 | Nokia Corporation, ADR | 67,714,622 | 58,915,586 | |||||||||
|
|
|
| |||||||||
Hong Kong (1.22%) | ||||||||||||
8,215,950 | Techtronic Industries Co. Ltd.3 | 35,284,347 | 62,940,961 | |||||||||
2,852,319 | Tongda Hong Tai | 893,167 | 416,253 | |||||||||
|
|
|
| |||||||||
Total Hong Kong | 36,177,514 | 63,357,214 | ||||||||||
|
|
|
| |||||||||
Hungary (0.52%) | ||||||||||||
616,627 | Wizz Air Holdings Plc, 144A1,3 | 20,421,317 | 26,705,406 | |||||||||
|
|
|
| |||||||||
India (15.51%) | ||||||||||||
557,360 | Bajaj Finance Limited3 | 18,228,441 | 29,715,743 | |||||||||
3,656,746 | Bandhan Bank Limited, 144A3 | 31,584,156 | 28,533,257 | |||||||||
1,059,720 | Britannia Industries Limited3 | 30,485,425 | 42,119,019 | |||||||||
1,959,612 | Divi’s Laboratories Ltd.3 | 22,927,575 | 45,349,598 | |||||||||
793,008 | Dr. Reddy’s Laboratories Ltd.3 | 31,794,242 | 29,380,067 | |||||||||
269,780 | Dr. Reddy’s Laboratories Ltd., ADR | 11,070,248 | 10,108,657 | |||||||||
9,259,262 | Edelweiss Financial | 25,156,849 | 22,760,245 | |||||||||
8,357,171 | Exide Industries Ltd.3 | 21,829,311 | 24,370,084 | |||||||||
1,835,972 | HDFC Bank Limited3 | 58,829,624 | 65,032,357 | |||||||||
1,605,421 | Housing Development Finance Corporation Limited3 | 42,719,171 | 50,977,141 | |||||||||
20,890,049 | JM Financial Limited3 | 38,441,519 | 23,238,713 | |||||||||
2,938,757 | Kotak Mahindra Bank Ltd.3 | 36,194,184 | 62,886,575 | |||||||||
3,987,492 | Manpasand Beverages Ltd. | 20,506,045 | 2,047,830 | |||||||||
7,744,808 | Max Financial Services Limited1,3 | 67,609,611 | 45,766,085 | |||||||||
907,647 | Piramal Enterprises Limited3 | 33,066,700 | 25,611,663 | |||||||||
3,491,962 | RBL Bank Limited, 144A3 | 32,148,853 | 32,307,305 | |||||||||
3,603,695 | Reliance Industries Limited1,3 | 70,093,099 | 65,396,610 | |||||||||
7,400,000 | Reliance Nippon Life Asset Management Limited, 144A | 23,702,578 | 23,724,168 | |||||||||
5,377,693 | SBI Life Insurance Company Limited, 144A3 | 57,410,268 | 56,382,534 | |||||||||
3,664,959 | Sun Pharmaceuticals | 31,286,220 | 21,300,525 | |||||||||
3,426,574 | Tata Chemicals Limited3 | 38,359,401 | 31,108,134 | |||||||||
3,461,044 | Tata Communications Limited3 | 34,704,499 | 24,318,420 | |||||||||
10,284,783 | Tata Global Beverages Limited3 | 36,586,245 | 40,167,556 | |||||||||
|
|
|
| |||||||||
Total India | 814,734,264 | 802,602,286 | ||||||||||
|
|
|
| |||||||||
Indonesia (0.36%) | ||||||||||||
8,187,806 | PT Telkom Indonesia | 2,418,264 | 2,399,400 | |||||||||
61,321,905 | PT Tower Bersama | 31,124,502 | 16,460,420 | |||||||||
|
|
|
| |||||||||
Total Indonesia | 33,542,766 | 18,859,820 | ||||||||||
|
|
|
| |||||||||
Korea, Republic of (5.14%) | ||||||||||||
933,646 | KB Financial Group, Inc.3 | 36,799,370 | 37,008,975 | |||||||||
1,796,837 | KIA Motors Corporation3 | 54,621,770 | 68,547,207 | |||||||||
2,654,376 | Samsung Electronics Co., Ltd.3 | 74,170,839 | 108,087,044 | |||||||||
360,048 | Samsung Life Insurance Co., Ltd.3 | 35,442,785 | 26,088,615 | |||||||||
116,152 | SK Telecom Co., Ltd. | 24,555,118 | 26,054,101 | |||||||||
|
|
|
| |||||||||
Total Korea, Republic of | 225,589,882 | 265,785,942 | ||||||||||
|
|
|
| |||||||||
Malaysia (0.31%) | ||||||||||||
44,168,893 | MyEG Services Berhad3 | 14,032,835 | 15,837,698 | |||||||||
|
|
|
|
See Notes to Financial Statements. | 25 |
Table of Contents
Baron Emerging Markets Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Mexico (3.42%) | ||||||||||||
532,613 | Fomento Economico Mexicano, S.A.B. de C.V., ADR | $ | 48,929,615 | $ | 51,530,308 | |||||||
3,303,929 | GRUMA, S.A.B. de C.V., Cl B | 44,996,597 | 31,079,095 | |||||||||
12,945,961 | Grupo Lala, S.A.B. de C.V. | 24,781,735 | 15,877,456 | |||||||||
6,523,578 | Infraestructura Energetica Nova S.A.B. de C.V. | 28,413,159 | 25,671,161 | |||||||||
19,302,909 | Wal-Mart de Mexico, | 44,549,470 | 52,687,953 | |||||||||
|
|
|
| |||||||||
Total Mexico | 191,670,576 | 176,845,973 | ||||||||||
|
|
|
| |||||||||
Nigeria (0.03%) | ||||||||||||
32,312,623 | Lekoil, Ltd.1,2 | 14,494,003 | 1,538,827 | |||||||||
|
|
|
| |||||||||
Panama (1.18%) | ||||||||||||
628,600 | Copa Holdings, S.A., Cl A | 46,934,737 | 61,332,502 | |||||||||
|
|
|
| |||||||||
Philippines (2.80%) | ||||||||||||
69,132,865 | Ayala Land, Inc.3 | 54,035,894 | 68,586,006 | |||||||||
23,221,786 | BDO Unibank, Inc.3 | 52,853,995 | 63,483,518 | |||||||||
139,373,735 | Metro Pacific Investments Corp.3 | 15,200,378 | 13,056,655 | |||||||||
|
|
|
| |||||||||
Total Philippines | 122,090,267 | 145,126,179 | ||||||||||
|
|
|
| |||||||||
Russia (3.04%) | ||||||||||||
7,367,959 | Sberbank of Russia PJSC, ADR3 | 79,361,865 | 113,511,167 | |||||||||
1,152,375 | Yandex N.V., Cl A1 | 24,130,652 | 43,790,250 | |||||||||
|
|
|
| |||||||||
Total Russia | 103,492,517 | 157,301,417 | ||||||||||
|
|
|
| |||||||||
South Africa (6.20%) | ||||||||||||
1,534,980 | AngloGold Ashanti Limited, ADR | 22,468,793 | 27,337,994 | |||||||||
3,219,862 | Bid Corporation Ltd.3 | 66,346,852 | 70,115,078 | |||||||||
4,177,860 | Bidvest Group Ltd.3 | 48,232,341 | 56,220,272 | |||||||||
9,409,399 | FirstRand Limited3 | 36,707,505 | 45,828,254 | |||||||||
4,834,670 | Gold Fields Ltd., ADR | 24,827,682 | 26,155,565 | |||||||||
1,233,605 | Mr Price Group Limited3 | 18,824,352 | 17,372,744 | |||||||||
22,342,657 | Pepkor Holdings Limited, 144A | 32,709,372 | 28,552,916 | |||||||||
1,272,986 | Sasol Limited3 | 42,724,915 | 31,653,284 | |||||||||
699,228 | Sasol Limited, ADR | 22,855,400 | 17,375,816 | |||||||||
|
|
|
| |||||||||
Total South Africa | 315,697,212 | 320,611,923 | ||||||||||
|
|
|
| |||||||||
Taiwan, Province of China (7.23%) | ||||||||||||
14,886,879 | Delta Electronics, Inc.3 | 66,043,110 | 75,661,646 | |||||||||
4,148,439 | Eclat Textile Co., Ltd.3 | 49,195,857 | 53,152,035 | |||||||||
20,166,000 | Far EasTone Telecommunications Co., Ltd.3 | 46,466,574 | 50,819,230 | |||||||||
3,052,065 | Ginko International Co., Ltd.3 | 37,944,740 | 19,168,459 | |||||||||
5,646,936 | Makalot Industrial Co., Ltd.3 | 26,239,351 | 38,208,295 | |||||||||
15,156,000 | Taiwan Mobile Co., Ltd. | 53,494,018 | 59,775,914 | |||||||||
1,981,526 | Taiwan Semiconductor Manufacturing Company, Ltd., ADR | 46,059,284 | 77,616,374 | |||||||||
|
|
|
| |||||||||
Total Taiwan, Province of China | 325,442,934 | 374,401,953 | ||||||||||
|
|
|
| |||||||||
Thailand (2.38%) | ||||||||||||
3,878,929 | Bangkok Bank | 24,544,838 | 25,185,773 | |||||||||
3,836,364 | Bangkok Bank | 20,304,820 | 24,656,564 | |||||||||
1,885,500 | CP All Plc. Cl C3 | 4,926,100 | 5,292,208 | |||||||||
24,361,634 | CP All Plc. Cl F3 | 54,770,469 | 68,211,842 | |||||||||
|
|
|
| |||||||||
Total Thailand | 104,546,227 | 123,346,387 | ||||||||||
|
|
|
| |||||||||
United Arab Emirates (0.66%) | ||||||||||||
4,518,691 | Network International Holdings Limited, 144A1 | 28,351,618 | 34,029,356 | |||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
United Kingdom (1.11%) | ||||||||||||
21,551,835 | Tullow Oil plc3 | $ | 56,788,865 | $ | 57,654,326 | |||||||
|
|
|
| |||||||||
Total Common Stocks | 4,381,770,585 | 4,987,273,796 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (3.38%) | ||||||||||||
$174,675,889 | Repurchase Agreement with Fixed Income Clearing Corp., | 174,675,889 | 174,675,889 | |||||||||
|
|
|
| |||||||||
Total Investments (99.76%) | $ | 4,556,446,474 | 5,161,949,685 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.24%) | 12,555,276 | |||||||||||
|
| |||||||||||
Net Assets | $ | 5,174,504,961 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $13.96 per share | $ | 702,812,409 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $14.00 per share | $ | 4,462,486,798 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $14.01 per share | $ | 9,205,754 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | See Note 10 regarding “Affiliated” companies. |
3 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
ADR | American Depositary Receipt. |
NVDR | Non-Voting 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 June 30, 2019, the market value of Rule 144A securities amounted to $460,563,606 or 8.90% of net assets. These securities have been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. |
All securities are Level 1, unless otherwise noted.
Summary of Investments by Sector as of June 30, 2019 | Percentage of Net Assets | |||
Financials | 20.9 | % | ||
Consumer Discretionary | 15.7 | |||
Information Technology | 14.1 | |||
Communication Services | 12.4 | |||
Consumer Staples | 10.2 | |||
Health Care | 6.6 | |||
Industrials | 6.2 | |||
Energy | 5.2 | |||
Materials | 2.8 | |||
Real Estate | 1.3 | |||
Utilities | 1.0 | |||
Cash and Cash Equivalents* | 3.6 | |||
100.0 | % |
* | Includes short term investments. |
26 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Global Advantage Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (94.73%) | ||||||||||||
Argentina (4.05%) | ||||||||||||
35,781 | Globant, S.A.1 | $ | 1,655,746 | $ | 3,615,670 | |||||||
8,442 | MercadoLibre, Inc.1 | 3,578,550 | 5,164,562 | |||||||||
|
|
|
| |||||||||
Total Argentina | 5,234,296 | 8,780,232 | ||||||||||
|
|
|
| |||||||||
Brazil (4.53%) | ||||||||||||
50,228 | Arco Platform Limited, Cl A1 | 984,440 | 2,198,982 | |||||||||
101,899 | PagSeguro Digital Ltd., Cl A1 | 2,567,036 | 3,971,004 | |||||||||
123,148 | StoneCo Ltd., Cl A1 | 3,954,066 | 3,642,718 | |||||||||
|
|
|
| |||||||||
Total Brazil | 7,505,542 | 9,812,704 | ||||||||||
|
|
|
| |||||||||
Canada (2.59%) | ||||||||||||
5,948 | Constellation Software, Inc. | 3,659,873 | 5,605,986 | |||||||||
|
|
|
| |||||||||
China (10.48%) | ||||||||||||
58,029 | Alibaba Group Holding Limited, ADR1 | 8,645,968 | 9,833,014 | |||||||||
87,546 | Ctrip.com International, Ltd., ADR1 | 3,578,744 | 3,231,323 | |||||||||
57,930 | GDS Holdings Limited, ADR1 | 1,987,227 | 2,176,430 | |||||||||
188,518 | Meituan Dianping, Cl B1,2 | 1,367,265 | 1,655,811 | |||||||||
75,667 | Pinduoduo Inc., ADR1 | 1,778,836 | 1,561,010 | |||||||||
111,216 | TAL Education Group, ADR1 | 2,619,468 | 4,237,330 | |||||||||
|
|
|
| |||||||||
Total China | 19,977,508 | 22,694,918 | ||||||||||
|
|
|
| |||||||||
Germany (0.06%) | ||||||||||||
39,617 | InflaRx N.V.1 | 1,346,402 | 125,190 | |||||||||
|
|
|
| |||||||||
India (6.02%) | ||||||||||||
34,764 | HDFC Bank Limited, ADR | 3,668,921 | 4,520,710 | |||||||||
134,245 | Housing Development Finance Corporation Limited2 | 3,720,211 | 4,262,699 | |||||||||
198,925 | Kotak Mahindra Bank, Ltd.2 | 3,547,033 | 4,256,804 | |||||||||
|
|
|
| |||||||||
Total India | 10,936,165 | 13,040,213 | ||||||||||
|
|
|
| |||||||||
Israel (6.13%) | ||||||||||||
85,526 | Fiverr International Ltd.1 | 1,796,046 | 2,540,122 | |||||||||
57,983 | Mellanox Technologies Ltd.1 | 4,544,492 | 6,416,979 | |||||||||
30,420 | Wix.com Ltd.1 | 2,755,631 | 4,322,682 | |||||||||
|
|
|
| |||||||||
Total Israel | 9,096,169 | 13,279,783 | ||||||||||
|
|
|
| |||||||||
Netherlands (5.65%) | ||||||||||||
3,395 | Adyen B.V., 144A1,2 | 2,530,707 | 2,618,854 | |||||||||
45,940 | argenx SE, ADR1 | 2,613,212 | 6,504,185 | |||||||||
14,997 | ASML Holding N.V.2 | 2,476,055 | 3,120,723 | |||||||||
|
|
|
| |||||||||
Total Netherlands | 7,619,974 | 12,243,762 | ||||||||||
|
|
|
| |||||||||
South Africa (2.43%) | ||||||||||||
21,775 | Naspers Limited, Cl N2 | 5,197,407 | 5,270,640 | |||||||||
|
|
|
| |||||||||
United Arab Emirates (0.92%) | ||||||||||||
264,275 | Network International Holdings Ltd., 144A1 | 1,820,535 | 1,990,202 | |||||||||
|
|
|
| |||||||||
United Kingdom (5.18%) | ||||||||||||
168,233 | Endava plc, ADR1 | 4,157,577 | 6,769,696 | |||||||||
847,635 | Trainline plc, 144A1 | 3,780,791 | 4,436,603 | |||||||||
|
|
|
| |||||||||
Total United Kingdom | 7,938,368 | 11,206,299 | ||||||||||
|
|
|
| |||||||||
United States (46.69%) | ||||||||||||
107,521 | Acceleron Pharma Inc.1 | 4,520,715 | 4,416,963 | |||||||||
30,089 | Adaptive Biotechnologies Corporation1 | 1,078,030 | 1,453,299 | |||||||||
100,926 | Aerie Pharmaceuticals, Inc.1 | 4,643,094 | 2,982,363 | |||||||||
7,987 | Alphabet Inc., Cl C1 | 8,385,135 | 8,633,228 | |||||||||
6,519 | Amazon.com, Inc.1 | 8,689,848 | 12,344,574 | |||||||||
22,138 | Anaplan Inc.1 | 410,288 | 1,117,305 | |||||||||
8,079 | Crowdstrike, Inc., Cl A1 | 274,686 | 551,715 | |||||||||
14,472 | Elastic N.V.1 | 1,040,677 | 1,080,480 | |||||||||
39,116 | EPAM Systems, Inc.1 | 4,616,453 | 6,770,980 | |||||||||
43,055 | Facebook, Inc., Cl A1 | 6,916,692 | 8,309,615 | |||||||||
28,834 | Guardant Health, Inc.1 | 764,879 | 2,489,239 | |||||||||
27,962 | Illumina, Inc.1 | 7,658,354 | 10,294,210 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
United States (continued) | ||||||||||||
10,881 | Lyft, Inc., Cl A1 | $ | 674,953 | $ | 714,990 | |||||||
18,540 | Okta, Inc.1 | 390,056 | 2,289,875 | |||||||||
20,626 | RingCentral, Inc., Cl A1 | 1,935,670 | 2,370,340 | |||||||||
23,826 | Sage Therapeutics, Inc.1 | 3,110,476 | 4,362,302 | |||||||||
47,205 | Splunk, Inc.1 | 5,049,761 | 5,936,029 | |||||||||
42,107 | Take-Two Interactive Software, Inc.1 | 4,200,368 | 4,780,408 | |||||||||
3,638 | Tesla, Inc.1 | 1,048,764 | 812,947 | |||||||||
31,739 | Twilio Inc.1 | 4,209,766 | 4,327,613 | |||||||||
40,354 | Veeva Systems Inc., Cl A1 | 3,033,559 | 6,541,787 | |||||||||
34,503 | Worldpay, Inc., Cl A1 | 2,802,704 | 4,228,343 | |||||||||
133,111 | Yext, Inc.1 | 1,885,244 | 2,674,200 | |||||||||
6,414 | Zoom Video | 230,904 | 569,499 | |||||||||
14,027 | Zscaler, Inc.1 | 316,275 | 1,075,029 | |||||||||
|
|
|
| |||||||||
Total United States | 77,887,351 | 101,127,333 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 158,219,590 | 205,177,262 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (10.15%) | ||||||||||||
Repurchase Agreement (10.15%) | ||||||||||||
$21,981,314 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/28/2019, 0.50% due 7/1/2019; Proceeds at maturity - $21,982,230; | 21,981,314 | 21,981,314 | |||||||||
|
|
|
| |||||||||
Total Investments (104.88%) | $ | 180,200,904 | 227,158,576 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets(-4.88%) | (10,566,768 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 216,591,808 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $26.62 per share | $ | 87,036,643 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $27.00 per share | $ | 123,731,273 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $27.01 per share | $ | 5,823,892 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
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 June 30, 2019, the market value of Rule 144A securities amounted to $9,045,659 or 4.18% of net assets. These securities have been deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. |
All securities are Level 1, unless otherwise noted.
Summary of Investments by Sector as of June 30, 2019 | Percentage of Net Assets | |||
Information Technology | 35.7 | % | ||
Consumer Discretionary | 24.6 | |||
Health Care | 18.1 | |||
Communication Services | 10.0 | |||
Financials | 6.0 | |||
Industrials | 0.3 | |||
Cash and Cash Equivalents* | 5.3 | |||
100.0 | % |
* | Includes short term investments. |
See Notes to Financial Statements. | 27 |
Table of Contents
Baron Real Estate Income Fund | June 30, 2019 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (97.40%) | ||||||||||||
Consumer Discretionary (14.47%) | ||||||||||||
Casinos & Gaming (9.86%) |
| |||||||||||
7,205 | MGM Resorts International | $ | 212,306 | $ | 205,847 | |||||||
4,944 | Penn National Gaming, Inc.1 | 112,267 | 95,221 | |||||||||
3,051 | Red Rock Resorts, Inc., Cl A | 72,120 | 65,536 | |||||||||
|
|
|
| |||||||||
396,693 | 366,604 | |||||||||||
Hotels, Resorts & Cruise Lines (4.61%) |
| |||||||||||
4,950 | Extended Stay America, Inc. | 89,643 | 83,605 | |||||||||
912 | Marriott Vacations Worldwide Corp. | 74,301 | 87,917 | |||||||||
|
|
|
| |||||||||
163,944 | 171,522 | |||||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 560,637 | 538,126 | ||||||||||
|
|
|
| |||||||||
Information Technology (5.04%) | ||||||||||||
Internet Services & Infrastructure (5.04%) |
| |||||||||||
4,294 | GDS Holdings Ltd., ADR1,2,3 | 124,346 | 161,326 | |||||||||
5,738 | NEXTDC Ltd. (Australia)1,2,4 | 30,189 | 26,192 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 154,535 | 187,518 | ||||||||||
|
|
|
| |||||||||
Real Estate (75.02%) | ||||||||||||
Health Care REITs (1.02%) |
| |||||||||||
481 | HCP, Inc. | 13,816 | 15,383 | |||||||||
603 | Medical Properties Trust, Inc. | 9,929 | 10,516 | |||||||||
146 | Welltower, Inc. | 10,401 | 11,903 | |||||||||
|
|
|
| |||||||||
34,146 | 37,802 | |||||||||||
Hotel & Resort REITs (6.39%) |
| |||||||||||
3,106 | Host Hotels & Resorts, Inc. | 60,493 | 56,591 | |||||||||
3,527 | MGM Growth Properties LLC, Cl A | 102,616 | 108,103 | |||||||||
1,316 | Park Hotels & Resorts, Inc. | 37,869 | 36,269 | |||||||||
1,304 | Pebblebrook Hotel Trust | 45,338 | 36,747 | |||||||||
|
|
|
| |||||||||
246,316 | 237,710 | |||||||||||
Industrial REITs (9.82%) |
| |||||||||||
2,708 | Duke Realty Corp. | 72,744 | 85,600 | |||||||||
2,126 | Prologis, Inc. | 138,104 | 170,293 | |||||||||
2,706 | Rexford Industrial Realty, Inc. | 86,687 | 109,241 | |||||||||
|
|
|
| |||||||||
297,535 | 365,134 | |||||||||||
Office REITs (12.47%) |
| |||||||||||
381 | Boston Properties, Inc. | 48,378 | 49,149 | |||||||||
1,042 | Douglas Emmett, Inc. | 40,713 | 41,513 | |||||||||
4,672 | Hudson Pacific Properties, Inc. | 149,170 | 155,437 | |||||||||
1,385 | JBG SMITH Properties | 53,146 | 54,486 | |||||||||
2,213 | Kilroy Realty Corp. | 162,464 | 163,342 | |||||||||
|
|
|
| |||||||||
453,871 | 463,927 | |||||||||||
Real Estate Operating Companies (2.32%) |
| |||||||||||
1,251 | Brookfield Property Partners LP2 | 24,509 | 23,681 | |||||||||
3,044 | Kennedy-Wilson Holdings, Inc. | 52,713 | 62,615 | |||||||||
|
|
|
| |||||||||
77,222 | 86,296 | |||||||||||
Residential REITs (18.56%) |
| |||||||||||
454 | AvalonBay Communities, Inc. | 74,773 | 92,244 | |||||||||
850 | Equity LifeStyle Properties, Inc. | 78,218 | 103,139 | |||||||||
1,200 | Equity Residential | 72,817 | 91,104 | |||||||||
268 | Essex Property Trust, Inc. | 66,469 | 78,237 | |||||||||
8,409 | Invitation Homes, Inc. | 199,724 | 224,773 | |||||||||
785 | Sun Communities, Inc. | 74,854 | 100,629 | |||||||||
|
|
|
| |||||||||
566,855 | 690,126 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Real Estate (continued) | ||||||||||||
Specialized REITs (24.44%) |
| |||||||||||
978 | Alexandria Real Estate Equities, Inc.3 | $ | 125,868 | $ | 137,986 | |||||||
460 | American Tower Corp. | 65,384 | 94,047 | |||||||||
6,882 | Americold Realty Trust3 | 138,944 | 223,115 | |||||||||
480 | Crown Castle International Corp. | 51,277 | 62,568 | |||||||||
428 | Equinix, Inc. | 187,363 | 215,836 | |||||||||
1,985 | Gaming and Leisure Properties, Inc. | 71,517 | 77,375 | |||||||||
1,767 | QTS Realty Trust, Inc., Cl A | 73,154 | 81,600 | |||||||||
627 | Weyerhaeuser Co. | 16,725 | 16,515 | |||||||||
|
|
|
| |||||||||
730,232 | 909,042 | |||||||||||
|
|
|
| |||||||||
Total Real Estate | 2,406,177 | 2,790,037 | ||||||||||
|
|
|
| |||||||||
Utilities (2.87%) | ||||||||||||
Multi-Utilities (2.87%) |
| |||||||||||
2,482 | Brookfield Infrastructure Partners L.P.2 | 100,031 | 106,577 | |||||||||
|
|
|
| |||||||||
Total Common Stocks | 3,221,380 | 3,622,258 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (4.14%) | ||||||||||||
$154,044 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/28/2019, 0.50% due 7/1/2019; Proceeds atmaturity - $154,050; (Fully collateralized by $150,000 U.S. Treasury Note, | 154,044 | 154,044 | |||||||||
|
|
|
| |||||||||
Total Investments (101.54%) | $ | 3,375,424 | 3,776,302 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets(-1.54%) | (57,443 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 3,718,859 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $10.34 per share | $ | 861,067 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $10.38 per share | $ | 2,466,408 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $10.39 per share | $ | 391,384 | |||||||||
|
|
% | 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 thissub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
4 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
ADR | American Depositary Receipt. |
All securities are Level 1, unless otherwise noted.
28 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Health Care Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
|
Shares | Cost | Value | ||||||||||
Common Stocks (96.34%) | ||||||||||||
Health Care (94.63%) | ||||||||||||
Biotechnology (19.56%) |
| |||||||||||
6,701 | Acceleron Pharma, Inc.1 | $ | 300,388 | $ | 275,277 | |||||||
3,532 | Alector, Inc.1 | 75,605 | 67,108 | |||||||||
4,222 | argenx SE, ADR1,2 | 382,145 | 597,751 | |||||||||
3,794 | Arrowhead Pharmaceuticals, Inc.1 | 60,506 | 100,541 | |||||||||
497 | Ligand Pharmaceuticals, Inc.1 | 54,757 | 56,733 | |||||||||
1,703 | Neurocrine Biosciences, Inc.1 | 154,050 | 143,784 | |||||||||
2,692 | Sage Therapeutics, Inc.1 | 387,632 | 492,878 | |||||||||
2,175 | Vertex Pharmaceuticals, Inc.1 | 364,341 | 398,852 | |||||||||
3,530 | Zai Lab Ltd., ADR1,2 | 87,553 | 123,091 | |||||||||
|
|
|
| |||||||||
1,866,977 | 2,256,015 | |||||||||||
Health Care Distributors (2.00%) |
| |||||||||||
9,415 | Covetrus, Inc.1 | 297,624 | 230,291 | |||||||||
Health Care Equipment (26.18%) |
| |||||||||||
6,596 | Abbott Laboratories | 480,363 | 554,724 | |||||||||
3,475 | DexCom, Inc.1 | 425,932 | 520,694 | |||||||||
1,014 | Edwards Lifesciences Corp.1 | 144,561 | 187,326 | |||||||||
1,147 | IDEXX Laboratories, Inc.1 | 225,648 | 315,804 | |||||||||
2,970 | Inspire Medical Systems, Inc.1,3 | 160,507 | 180,130 | |||||||||
3,112 | Insulet Corp.1 | 253,044 | 371,511 | |||||||||
558 | Intuitive Surgical, Inc.1 | 273,263 | 292,699 | |||||||||
3,913 | Silk Road Medical, Inc.1 | 123,035 | 189,624 | |||||||||
810 | Teleflex, Inc. | 203,367 | 268,231 | |||||||||
15,809 | ViewRay, Inc.1 | 116,906 | 139,277 | |||||||||
|
|
|
| |||||||||
2,406,626 | 3,020,020 | |||||||||||
Health Care Facilities (2.32%) |
| |||||||||||
1,985 | HCA Healthcare, Inc. | 264,011 | 268,312 | |||||||||
Health Care Supplies (5.82%) |
| |||||||||||
4,679 | Alcon, Inc.1,2 | 267,494 | 290,332 | |||||||||
203 | Align Technology, Inc.1 | 44,905 | 55,561 | |||||||||
656 | The Cooper Companies, Inc. | 163,139 | 221,000 | |||||||||
831 | West Pharmaceutical Services, Inc. | 85,869 | 104,000 | |||||||||
|
|
|
| |||||||||
561,407 | 670,893 | |||||||||||
Health Care Technology (1.44%) |
| |||||||||||
1,022 | Veeva Systems, Inc., Cl A1 | 83,633 | 165,676 | |||||||||
Life Sciences Tools & Services (17.78%) |
| |||||||||||
282 | Adaptive Biotechnologies Corp.1 | 5,640 | 13,620 | |||||||||
2,122 | Bio-Techne Corporation | 338,744 | 442,416 | |||||||||
10,085 | CareDx, Inc.1,3 | 229,752 | 362,959 | |||||||||
800 | Exact Sciences Corp.1,3 | 76,224 | 94,432 | |||||||||
680 | Guardant Health, Inc.1,3 | 13,227 | 58,704 | |||||||||
1,078 | ICON plc1,2 | 156,883 | 165,980 | |||||||||
959 | Illumina, Inc.1 | 273,097 | 353,056 | |||||||||
1,113 | IQVIA Holdings, Inc.1 | 156,221 | 179,082 | |||||||||
213 | Mettler-Toledo International, Inc.1 | 122,027 | 178,920 | |||||||||
7,064 | Veracyte, Inc.1,3 | 169,793 | 201,395 | |||||||||
|
|
|
| |||||||||
1,541,608 | 2,050,564 | |||||||||||
Managed Health Care (11.16%) |
| |||||||||||
1,665 | HealthEquity, Inc.1 | 115,401 | 108,891 | |||||||||
1,450 | Humana, Inc. | 373,088 | 384,685 | |||||||||
3,254 | UnitedHealth Group, Inc. | 821,986 | 794,009 | |||||||||
|
|
|
| |||||||||
1,310,475 | 1,287,585 | |||||||||||
Pharmaceuticals (8.37%) |
| |||||||||||
8,074 | AstraZeneca PLC, ADR2 | 305,562 | 333,295 | |||||||||
1,500 | Catalent, Inc.1 | 79,353 | 81,315 | |||||||||
6,632 | Dechra Pharmaceuticals plc (United Kingdom)2,4 | 207,200 | 231,472 | |||||||||
3,805 | Merck & Co., Inc. | 318,701 | 319,049 | |||||||||
|
|
|
| |||||||||
910,816 | 965,131 | |||||||||||
|
|
|
| |||||||||
Total Health Care | 9,243,177 | 10,914,487 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Real Estate (1.71%) | ||||||||||||
Specialized REITs (1.71%) |
| |||||||||||
1,397 | Alexandria Real Estate Equities, Inc.3 | $ | 175,826 | $ | 197,103 | |||||||
|
|
|
| |||||||||
Total Common Stocks | 9,419,003 | 11,111,590 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (3.47%) | ||||||||||||
$400,322 | Repurchase Agreement with | 400,322 | 400,322 | |||||||||
|
|
|
| |||||||||
Total Investments (99.81%) | $ | 9,819,325 | 11,511,912 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.19%) | 21,667 | |||||||||||
|
| |||||||||||
Net Assets | $ | 11,533,579 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $11.62 per share | $ | 4,735,149 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $11.65 per share | $ | 5,840,346 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $11.65 per share | $ | 958,084 | |||||||||
|
|
% | 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 thissub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
4 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
ADR | American Depositary Receipt. |
All securities are Level 1, unless otherwise noted.
See Notes to Financial Statements. | 29 |
Table of Contents
Baron Select Funds | June 30, 2019 |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2019
|
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | Baron Real Estate Fund | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities, at value* | ||||||||||||||||
Unaffiliated investments | $ | 3,056,269,230 | $ | 223,090,776 | $ | 281,893,910 | $ | 576,298,259 | ||||||||
“Affiliated” investments | — | — | — | — | ||||||||||||
Repurchase agreements, at value** | — | 5,404,221 | 12,018,286 | 13,161,625 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at value | 3,056,269,230 | 228,494,997 | 293,912,196 | 589,459,884 | ||||||||||||
Foreign currency, at value† | — | — | 172,387 | 8,216 | ||||||||||||
Cash | 62,443 | — | 7,764 | — | ||||||||||||
Receivable for securities sold | 8,217,553 | — | 655,133 | — | ||||||||||||
Dividends and interest receivable | 2,159,408 | 247,315 | 444,127 | 838,613 | ||||||||||||
Receivable for shares sold | 980,759 | 166 | 761,338 | 311,965 | ||||||||||||
Prepaid expenses | 170,556 | 1,491 | 1,760 | 4,148 | ||||||||||||
Other assets | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
3,067,859,949 | 228,743,969 | 295,954,705 | 590,622,826 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Payable for borrowings against line of credit | 673,500,000 | — | — | — | ||||||||||||
Payable for shares redeemed | 1,454,714 | �� | 204,463 | 510,673 | ||||||||||||
Payable for securities purchased | 535,410 | — | 630,000 | 2,628,593 | ||||||||||||
Distribution fees payable (Note 4) | 757 | 218 | 60 | 415 | ||||||||||||
Investment advisory fees payable (Note 4) | 499 | 474 | 507 | 482 | ||||||||||||
Due to custodian bank | — | — | — | — | ||||||||||||
Accrued capital gains taxes | — | — | — | — | ||||||||||||
Accrued expenses and other payables | 2,131,464 | 68,373 | 109,552 | 121,458 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
677,622,844 | 69,065 | 944,582 | 3,261,621 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 2,390,237,105 | $ | 228,674,904 | $ | 295,010,123 | $ | 587,361,205 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets consist of: | ||||||||||||||||
Paid-in capital | $ | 835,950,500 | $ | 111,086,602 | $ | 257,326,800 | $ | 363,993,401 | ||||||||
Distributable earnings/(losses) | 1,554,286,605 | 117,588,302 | 37,683,323 | 223,367,804 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 2,390,237,105 | $ | 228,674,904 | $ | 295,010,123 | $ | 587,361,205 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Retail Shares: | ||||||||||||||||
Net Assets | $ | 1,213,458,113 | $ | 45,278,761 | $ | 76,334,715 | $ | 234,592,304 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 20,254,988 | 2,529,059 | 3,355,679 | 9,111,558 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 59.91 | $ | 17.90 | $ | 22.75 | $ | 25.75 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Shares: | ||||||||||||||||
Net Assets | $ | 1,021,499,635 | $ | 77,679,924 | $ | 202,842,695 | $ | 341,391,003 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 16,649,539 | 4,243,182 | 8,772,281 | 13,036,258 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 61.35 | $ | 18.31 | $ | 23.12 | $ | 26.19 | ||||||||
|
|
|
|
|
|
|
| |||||||||
R6 Shares: | ||||||||||||||||
Net Assets | $ | 155,279,357 | $ | 105,716,219 | $ | 15,832,713 | $ | 11,377,898 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 2,530,735 | 5,772,292 | 684,684 | 434,430 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 61.36 | $ | 18.31 | $ | 23.12 | $ | 26.19 | ||||||||
|
|
|
|
|
|
|
| |||||||||
*Investments in securities, at cost | ||||||||||||||||
Unaffiliated investments | $ | 1,498,752,026 | $ | 111,547,336 | $ | 236,758,929 | $ | 411,439,286 | ||||||||
“Affiliated” investments | — | — | — | — | ||||||||||||
**Repurchase agreements, at cost | — | 5,404,221 | 12,018,286 | 13,161,625 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at cost | $ | 1,498,752,026 | $ | 116,951,557 | $ | 248,777,215 | $ | 424,600,911 | ||||||||
|
|
|
|
|
|
|
| |||||||||
†Foreign currency, at cost: | $ | — | $ | — | $ | 172,450 | $ | 8,212 | ||||||||
|
|
|
|
|
|
|
|
30 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) (Continued)
JUNE 30, 2019
|
Baron Emerging Markets Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities, at value* | ||||||||||||||||
Unaffiliated investments | $ | 4,985,734,969 | $ | 205,177,262 | $ | 3,622,258 | $ | 11,111,590 | ||||||||
“Affiliated” investments | 1,538,827 | — | — | — | ||||||||||||
Repurchase agreements, at value** | 174,675,889 | 21,981,314 | 154,044 | 400,322 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at value | 5,161,949,685 | 227,158,576 | 3,776,302 | 11,511,912 | ||||||||||||
Foreign currency, at value† | 7,190,833 | — | — | — | ||||||||||||
Cash | 326 | — | — | — | ||||||||||||
Receivable for securities sold | 1,579,526 | — | — | 140,925 | ||||||||||||
Dividends and interest receivable | 11,061,658 | 27,380 | 12,751 | 2,866 | ||||||||||||
Receivable for shares sold | 7,544,597 | 1,579,159 | — | 18,570 | ||||||||||||
Prepaid expenses | 34,627 | 835 | 21 | 64 | ||||||||||||
Other assets | 399,247 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
5,189,760,499 | 228,765,950 | 3,789,074 | 11,674,337 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Payable for borrowings against line of credit | — | — | — | — | ||||||||||||
Payable for shares redeemed | 6,775,834 | 354,663 | — | — | ||||||||||||
Payable for securities purchased | 5,591,905 | 11,645,982 | 10,820 | 71,496 | ||||||||||||
Distribution fees payable (Note 4) | 491 | 775 | 745 | 448 | ||||||||||||
Investment advisory fees payable (Note 4) | 394 | 244 | — | 18 | ||||||||||||
Due to custodian bank | — | — | 7,349 | 14,446 | ||||||||||||
Accrued capital gains taxes | 1,685,091 | 86,433 | — | — | ||||||||||||
Accrued expenses and other payables | 1,201,823 | 86,045 | 51,301 | 54,350 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
15,255,538 | 12,174,142 | 70,215 | 140,758 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 5,174,504,961 | $ | 216,591,808 | $ | 3,718,859 | $ | 11,533,579 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets consist of: | ||||||||||||||||
Paid-in capital | $ | 4,734,648,905 | $ | 176,236,317 | $ | 3,521,581 | $ | 10,349,082 | ||||||||
Distributable earnings/(losses) | 439,856,056 | 40,355,491 | 197,278 | 1,184,497 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 5,174,504,961 | $ | 216,591,808 | $ | 3,718,859 | $ | 11,533,579 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Retail Shares: | ||||||||||||||||
Net Assets | $ | 702,812,409 | $ | 87,036,643 | $ | 861,067 | $ | 4,735,149 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 50,352,074 | 3,269,179 | 83,287 | 407,490 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 13.96 | $ | 26.62 | $ | 10.34 | $ | 11.62 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Shares: | ||||||||||||||||
Net Assets | $ | 4,462,486,798 | $ | 123,731,273 | $ | 2,466,408 | $ | 5,840,346 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 318,713,885 | 4,583,368 | 237,523 | 501,104 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 14.00 | $ | 27.00 | $ | 10.38 | $ | 11.65 | ||||||||
|
|
|
|
|
|
|
| |||||||||
R6 Shares: | ||||||||||||||||
Net Assets | $ | 9,205,754 | $ | 5,823,892 | $ | 391,384 | $ | 958,084 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 657,125 | 215,610 | 37,667 | 82,242 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 14.01 | $ | 27.01 | $ | 10.39 | $ | 11.65 | ||||||||
|
|
|
|
|
|
|
| |||||||||
*Investments in securities, at cost: | ||||||||||||||||
Unaffiliated investments | $ | 4,367,276,582 | $ | 158,219,590 | $ | 3,221,380 | $ | 9,419,003 | ||||||||
“Affiliated” investments | 14,494,003 | — | — | — | ||||||||||||
**Repurchase agreements, at cost | 174,675,889 | 21,981,314 | 154,044 | 400,322 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at cost | $ | 4,556,446,474 | $ | 180,200,904 | $ | 3,375,424 | $ | 9,819,325 | ||||||||
|
|
|
|
|
|
|
| |||||||||
†Foreign currency, at cost: | $ | 7,190,440 | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 31 |
Table of Contents
Baron Select Funds | June 30, 2019 |
STATEMENTS OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2019
|
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | Baron Real Estate Fund | |||||||||||||
Investment income: | ||||||||||||||||
Income: | ||||||||||||||||
Dividends — Unaffiliated investments | $ | 12,100,059 | $ | 1,134,542 | $ | 2,827,680 | $ | 4,366,312 | ||||||||
Interest | 797 | 5,689 | 37,332 | 25,777 | ||||||||||||
Securities lending income, net | — | — | — | — | ||||||||||||
Foreign taxes withheld on dividends | — | — | (289,655 | ) | (23,725 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total income | 12,100,856 | 1,140,231 | 2,575,357 | 4,368,364 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Expenses: | ||||||||||||||||
Investment advisory fees (Note 4) | 11,095,866 | 1,098,489 | 1,174,576 | 2,994,639 | ||||||||||||
Distribution fees — Retail Shares (Note 4) | 1,428,480 | 54,768 | 90,700 | 292,915 | ||||||||||||
Shareholder servicing agent fees and expenses — Retail Shares | 69,420 | 10,190 | 10,602 | 15,940 | ||||||||||||
Shareholder servicing agent fees and expenses — Institutional Shares | 28,010 | 6,612 | 10,273 | 15,370 | ||||||||||||
Shareholder servicing agent fees and expenses — R6 Shares | 3,189 | 2,267 | 337 | 250 | ||||||||||||
Line of credit fees | 271,407 | 827 | 1,013 | 1,358 | ||||||||||||
Reports to shareholders | 156,820 | 4,406 | 30,968 | 72,630 | ||||||||||||
Registration and filing fees | 64,630 | 32,640 | 41,180 | 23,570 | ||||||||||||
Trustee fees and expenses | 62,520 | 6,268 | 7,426 | 17,424 | ||||||||||||
Professional fees | 61,180 | 35,562 | 38,894 | 22,910 | ||||||||||||
Custodian and fund accounting fees | 45,094 | 18,898 | 72,387 | 36,934 | ||||||||||||
Administration fees | 27,658 | 22,635 | 22,641 | 23,465 | ||||||||||||
Insurance expense | 12,004 | 1,169 | 1,317 | 3,939 | ||||||||||||
Miscellaneous expenses | 2,157 | 2,157 | 2,157 | 2,157 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 13,328,435 | 1,296,888 | 1,504,471 | 3,523,501 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Interest expense on borrowings | 10,816,550 | 10,459 | — | 1,403 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total expenses | 24,144,985 | 1,307,347 | 1,504,471 | 3,524,904 | ||||||||||||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | — | (13,122 | ) | (44,293 | ) | — | ||||||||||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | — | (11,487 | ) | (93,974 | ) | — | ||||||||||
Reimbursement of expenses by Adviser — R6 Shares (Note 4) | — | (9,172 | ) | (7,336 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net expenses | 24,144,985 | 1,273,566 | 1,358,868 | 3,524,904 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net investment income (loss) | (12,044,129 | ) | (133,335 | ) | 1,216,489 | 843,460 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Realized and unrealized gain (loss) on investments: | ||||||||||||||||
Net realized gain (loss) on investments sold — Unaffiliated investments | 24,969,153 | 7,430,013 | (5,619,105 | ) | 59,559,226 | |||||||||||
Net realized gain (loss) on investments sold — “Affiliated” investments | — | — | — | — | ||||||||||||
Net realized gain (loss) on foreign currency transactions | — | — | (72,655 | ) | (2,475 | ) | ||||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||||||
Investments — Unaffiliated investments | 482,534,234 | 19,836,415 | 49,929,839 | 66,914,516 | ||||||||||||
Investments — “Affiliated” investments | — | — | — | — | ||||||||||||
Foreign currency translations | — | — | 209 | 1,465 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net gain (loss) on investments | 507,503,387 | 27,266,428 | 44,238,288 | 126,472,732 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 495,459,258 | $ | 27,133,093 | $ | 45,454,777 | $ | 127,316,192 | ||||||||
|
|
|
|
|
|
|
|
32 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
STATEMENTS OF OPERATIONS (Unaudited) (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 2019
|
Baron Emerging Markets Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||
Investment income: | ||||||||||||||||
Income: | ||||||||||||||||
Dividends — Unaffiliated investments | $ | 49,991,102 | $ | 182,640 | $ | 48,349 | $ | 23,159 | ||||||||
Interest | 666,481 | 31,921 | 173 | 1,696 | ||||||||||||
Securities lending income, net | — | 6,198 | — | — | ||||||||||||
Foreign taxes withheld on dividends | (4,766,933 | ) | (22,655 | ) | (63 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total income | 45,890,650 | 198,104 | 48,459 | 24,855 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Expenses: | ||||||||||||||||
Investment advisory fees (Note 4) | 25,340,466 | 613,599 | 12,550 | 36,649 | ||||||||||||
Distribution fees — Retail Shares (Note 4) | 924,562 | 68,209 | 810 | 4,708 | ||||||||||||
Shareholder servicing agent fees and expenses — Retail Shares | 37,235 | 7,680 | 6,245 | 6,835 | ||||||||||||
Shareholder servicing agent fees and expenses — Institutional Shares | 100,090 | 7,535 | 4,864 | 4,912 | ||||||||||||
Shareholder servicing agent fees and expenses — R6 Shares | 189 | 116 | 9 | 19 | ||||||||||||
Line of credit fees | 20,235 | 598 | 11 | — | ||||||||||||
Reports to shareholders | 492,900 | 16,720 | 93 | 551 | ||||||||||||
Registration and filing fees | 175,900 | 51,120 | 17,480 | 40,990 | ||||||||||||
Trustee fees and expenses | 144,972 | 3,650 | 93 | 267 | ||||||||||||
Professional fees | 113,510 | 29,992 | 21,192 | 21,666 | ||||||||||||
Custodian and fund accounting fees | 1,617,440 | 32,271 | 20,018 | 19,735 | ||||||||||||
Administration fees | 34,787 | 22,316 | 22,045 | 22,046 | ||||||||||||
Insurance expense | 28,117 | 578 | 16 | 39 | ||||||||||||
Miscellaneous expenses | 23,637 | 2,157 | 2,153 | 2,269 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 29,054,040 | 856,541 | 107,579 | 160,686 | ||||||||||||
Interest expense on borrowings | — | 68 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total expenses | 29,054,040 | 856,609 | 107,579 | 160,686 | ||||||||||||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | — | (53,834 | ) | (21,837 | ) | (46,380 | ) | |||||||||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | — | (80,119 | ) | (62,088 | ) | (59,099 | ) | |||||||||
Reimbursement of expenses by Adviser — R6 Shares (Note 4) | — | (4,637 | ) | (9,457 | ) | (8,964 | ) | |||||||||
|
|
|
|
| �� |
|
| |||||||||
Net expenses | 29,054,040 | 718,019 | 14,197 | 46,243 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net investment income (loss) | 16,836,610 | (519,915 | ) | 34,262 | (21,388 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Realized and unrealized gain (loss) on investments: | ||||||||||||||||
Net realized gain (loss) on investments sold — Unaffiliated investments | (112,578,054 | )1 | (2,045,039 | ) | (22,655 | ) | (164,186 | ) | ||||||||
Net realized gain (loss) on investments sold — “Affiliated “investments | (358,124 | ) | — | — | — | |||||||||||
Net realized gain (loss) on foreign currency transactions | (2,083,981 | ) | 255 | (13 | ) | (883 | ) | |||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||||||
Investments — Unaffiliated investments | 666,446,160 | 2 | 40,633,019 | 3 | 574,238 | 2,126,591 | ||||||||||
Investments — “Affiliated” investments | (1,291,339 | ) | — | — | — | |||||||||||
Foreign currency translations | (25,947 | ) | (1,198 | ) | 2 | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net gain (loss) on investments | 550,108,715 | 38,587,037 | 551,572 | 1,961,522 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 566,945,325 | $ | 38,067,122 | $ | 585,834 | $ | 1,940,134 | ||||||||
|
|
|
|
|
|
|
|
1 | Net of realized foreign capital gains tax of $11,648. |
2 | Increase in accrued foreign capital gains tax payable of $1,253,472. |
3 | Increase in accrued foreign capital gains tax payable of $85,955. |
See Notes to Financial Statements. | 33 |
Table of Contents
Baron Select Funds | June 30, 2019 |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
|
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | ||||||||||||||||||||||
For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | |||||||||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) | $ | (12,044,129 | ) | $ | (22,090,669 | ) | $ | (133,335 | ) | $ | (616,876 | ) | $ | 1,216,489 | $ | 439,867 | ||||||||
Net realized gain (loss) | 24,969,153 | 15,081,645 | 7,430,013 | (452,569 | ) | (5,691,760 | ) | 3,571,665 | ||||||||||||||||
Change in net unrealized appreciation (depreciation) | 482,534,234 | (40,849,029 | ) | 19,836,415 | 8,560,274 | 49,930,048 | (56,982,737 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets resulting from operations | 495,459,258 | (47,858,053 | ) | 27,133,093 | 7,490,829 | 45,454,777 | (52,971,205 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions to shareholders from: | ||||||||||||||||||||||||
Distributable earnings — Retail Shares | — | — | — | (431,996 | ) | — | (2,152,374 | ) | ||||||||||||||||
Distributable earnings — Institutional Shares | — | — | — | (712,211 | ) | — | (5,328,219 | ) | ||||||||||||||||
Distributable earnings — R6 Shares | — | — | — | (944,300 | ) | — | (421,535 | ) | ||||||||||||||||
Return of capital — Retail Shares | — | — | — | — | — | — | ||||||||||||||||||
Return of capital — Institutional Shares | — | — | — | — | — | — | ||||||||||||||||||
Return of capital — R6 Shares | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Decrease in net assets from distributions to shareholders | — | — | — | (2,088,507 | ) | — | (7,902,128 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions: | ||||||||||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 34,138,779 | 155,925,276 | 902,942 | 3,162,803 | 19,135,902 | 73,609,482 | ||||||||||||||||||
Proceeds from the sale of shares — Institutional Shares | 75,315,493 | 314,519,421 | 6,180,386 | 12,083,506 | 53,014,828 | 186,489,970 | ||||||||||||||||||
Proceeds from the sale of shares — R6 Shares | 435,631 | 119,688,432 | 1,195,934 | 70,752,895 | 1,322,558 | 15,256,024 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | — | — | 421,927 | — | 2,122,207 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | — | — | — | 704,835 | — | 5,272,168 | ||||||||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | — | — | — | 944,300 | — | 421,536 | ||||||||||||||||||
Cost of shares redeemed — Retail Shares | (92,026,319 | ) | (219,787,541 | ) | (1,853,226 | ) | (6,467,613 | ) | (14,751,566 | ) | (56,403,653 | ) | ||||||||||||
Cost of shares redeemed — Institutional Shares | (78,165,861 | ) | (339,332,670 | ) | (8,689,611 | ) | (75,949,660 | ) | (35,068,290 | ) | (107,486,270 | ) | ||||||||||||
Cost of shares redeemed — R6 Shares | (77,449 | ) | (52,377 | ) | (367 | ) | (57,736 | ) | (546,340 | ) | (32,907 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets derived from capital share transactions | (60,379,726 | ) | 30,960,541 | (2,263,942 | ) | 5,595,257 | 23,107,092 | 119,248,557 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in net assets | 435,079,532 | (16,897,512 | ) | 24,869,151 | 10,997,579 | 68,561,869 | 58,375,224 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of period | 1,955,157,573 | 1,972,055,085 | 203,805,753 | 192,808,174 | 226,448,254 | 168,073,030 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
End of period | $ | 2,390,237,105 | $ | 1,955,157,573 | $ | 228,674,904 | $ | 203,805,753 | $ | 295,010,123 | $ | 226,448,254 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Retail Shares | ||||||||||||||||||||||||
Shares sold | 632,826 | 2,763,676 | 51,783 | 185,094 | 884,395 | 3,157,981 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | — | — | 23,221 | — | 102,161 | ||||||||||||||||||
Shares redeemed | (1,652,645 | ) | (4,088,270 | ) | (107,261 | ) | (383,305 | ) | (676,690 | ) | (2,477,734 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,019,819 | ) | (1,324,594 | ) | (55,478 | ) | (174,990 | ) | 207,705 | 782,408 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||||||||||
Shares sold | 1,347,027 | 5,677,101 | 346,642 | 700,376 | 2,395,630 | 7,855,375 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | — | — | 38,017 | — | 250,659 | ||||||||||||||||||
Shares redeemed | (1,391,087 | ) | (6,172,617 | ) | (485,399 | ) | (4,517,080 | ) | (1,616,318 | ) | (4,691,537 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (44,060 | ) | (495,516 | ) | (138,757 | ) | (3,778,687 | ) | 779,312 | 3,414,497 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — R6 Shares | ||||||||||||||||||||||||
Shares sold | 7,755 | 2,213,681 | 66,766 | 4,217,821 | 64,063 | 594,888 | ||||||||||||||||||
Shares issued in reinvestment of dividends | — | — | — | 50,906 | — | 20,056 | ||||||||||||||||||
Shares redeemed | (1,333 | ) | (955 | ) | (20 | ) | (3,343 | ) | (24,493 | ) | (1,596 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | 6,422 | 2,212,726 | 66,746 | 4,265,384 | 39,570 | 613,348 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
34 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
|
Baron Real Estate Fund | Baron Emerging Markets Fund | Baron Global Advantage Fund | ||||||||||||||||||||||
For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | |||||||||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) | $ | 843,460 | $ | 640,121 | $ | 16,836,610 | $ | 30,304,500 | $ | (519,915 | ) | $ | (677,924 | ) | ||||||||||
Net realized gain (loss) | 59,556,751 | 57,057,483 | (115,020,159 | ) | 56,128,263 | (2,044,784 | ) | (2,940,241 | ) | |||||||||||||||
Change in net unrealized appreciation (depreciation) | 66,915,981 | (258,447,830 | ) | 665,128,874 | (1,212,613,253 | ) | 40,631,821 | (5,968,126 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets resulting from operations | 127,316,192 | (200,750,226 | ) | 566,945,325 | (1,126,180,490 | ) | 38,067,122 | (9,586,291 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions to shareholders from: | ||||||||||||||||||||||||
Distributable earnings — Retail Shares | — | (26,442,877 | ) | — | (1,117,756 | ) | — | — | ||||||||||||||||
Distributable earnings — Institutional Shares | — | (44,416,235 | ) | — | (19,835,537 | ) | — | — | ||||||||||||||||
Distributable earnings — R6 Shares | — | (1,041,760 | ) | — | (35,277 | ) | — | — | ||||||||||||||||
Return of capital — Retail Shares | — | — | — | — | — | — | ||||||||||||||||||
Return of capital — Institutional Shares | — | — | — | — | — | — | ||||||||||||||||||
Return of capital — R6 Shares | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Decrease in net assets from distributions to shareholders | — | (71,900,872 | ) | — | (20,988,570 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions: | ||||||||||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 8,412,780 | 46,383,253 | 97,015,134 | 437,158,440 | 45,943,487 | 48,440,480 | ||||||||||||||||||
Proceeds from the sale of shares — Institutional Shares | 43,216,655 | 157,251,123 | 792,292,112 | 2,493,450,504 | 59,962,066 | 60,517,660 | ||||||||||||||||||
Proceeds from the sale of shares — R6 Shares | 817,859 | 9,119,192 | 1,499,971 | 5,761,844 | 123,608 | 4,427,176 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | 25,858,417 | — | 1,105,010 | — | — | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | — | 39,636,583 | — | 14,691,205 | — | — | ||||||||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | — | 1,041,760 | — | 35,277 | — | — | ||||||||||||||||||
Cost of shares redeemed — Retail Shares | (36,357,773 | ) | (183,064,021 | ) | (232,112,791 | ) | (589,651,543 | ) | (9,226,607 | ) | (27,107,071 | ) | ||||||||||||
Cost of shares redeemed — Institutional Shares | (98,201,800 | ) | (367,687,032 | ) | (661,451,936 | ) | (1,571,656,493 | ) | (7,436,350 | ) | (31,083,207 | ) | ||||||||||||
Cost of shares redeemed — R6 Shares | (1,037,967 | ) | (342,264 | ) | (468,378 | ) | (1,703,944 | ) | (1,932 | ) | (56,714 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets derived from capital share transactions | (83,150,246 | ) | (271,802,989 | ) | (3,225,888 | ) | 789,190,300 | 89,364,272 | 55,138,324 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in net assets | 44,165,946 | (544,454,087 | ) | 563,719,437 | (357,978,760 | ) | 127,431,394 | 45,552,033 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of period | 543,195,259 | 1,087,649,346 | 4,610,785,524 | 4,968,764,284 | 89,160,414 | 43,608,381 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
End of period | $ | 587,361,205 | $ | 543,195,259 | $ | 5,174,504,961 | $ | 4,610,785,524 | $ | 216,591,808 | $ | 89,160,414 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Retail Shares | ||||||||||||||||||||||||
Shares sold | 347,772 | 1,650,560 | 7,150,612 | 29,805,250 | 1,837,099 | 2,140,868 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | 1,095,758 | — | 86,127 | — | — | ||||||||||||||||||
Shares redeemed | (1,493,520 | ) | (6,912,902 | ) | (17,323,197 | ) | (42,512,468 | ) | (374,813 | ) | (1,229,922 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,145,748 | ) | (4,166,584 | ) | (10,172,585 | ) | (12,621,091 | ) | 1,462,286 | 910,946 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||||||||||
Shares sold | 1,787,556 | 5,584,334 | 58,361,529 | 174,281,858 | 2,429,509 | 2,682,700 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | 1,646,864 | — | 1,143,284 | — | — | ||||||||||||||||||
Shares redeemed | (3,960,192 | ) | (13,937,485 | ) | (48,339,651 | ) | (116,693,326 | ) | (304,906 | ) | (1,416,631 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (2,172,636 | ) | (6,706,287 | ) | 10,021,878 | 58,731,816 | 2,124,603 | 1,266,069 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — R6 Shares | ||||||||||||||||||||||||
Shares sold | 33,877 | 299,573 | 108,525 | 393,021 | 4,845 | 193,795 | ||||||||||||||||||
Shares issued in reinvestment of dividends | — | 43,450 | — | 2,743 | — | — | ||||||||||||||||||
Shares redeemed | (41,713 | ) | (12,444 | ) | (34,691 | ) | (126,452 | ) | (78 | ) | (2,549 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (7,836 | ) | 330,579 | 73,834 | 269,312 | 4,767 | 191,246 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 35 |
Table of Contents
Baron Select Funds | June 30, 2019 |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
|
Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||||
For the Six Months Ended June 30, 2019 | For the Period Ended December 31, 20181 | For the Six Months Ended June 30, 2019 | For the Period Ended December 31, 20182 | |||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 34,262 | $ | 47,741 | $ | (21,388 | ) | $ | (15,585 | ) | ||||||
Net realized gain (loss) | (22,668 | ) | (193,314 | ) | (165,069 | ) | (321,493 | ) | ||||||||
Change in net unrealized appreciation (depreciation) | 574,240 | (173,362 | ) | 2,126,591 | (434,004 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets resulting from operations | 585,834 | (318,935 | ) | 1,940,134 | (771,082 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions to shareholders from: | ||||||||||||||||
Distributable earnings — Retail Shares | (4,820 | ) | (5,824 | ) | — | — | ||||||||||
Distributable earnings — Institutional Shares | (15,778 | ) | (34,663 | ) | — | — | ||||||||||
Distributable earnings — R6 Shares | (2,543 | ) | (6,188 | ) | — | — | ||||||||||
Return of capital — Retail Shares | — | (3,850 | ) | — | — | |||||||||||
Return of capital — Institutional Shares | — | (22,912 | ) | — | — | |||||||||||
Return of capital — R6 Shares | — | (4,091 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Decrease in net assets from distributions to shareholders | (23,141 | ) | (77,528 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 326,925 | 950,100 | 1,713,555 | 4,202,417 | ||||||||||||
Proceeds from the sale of shares — Institutional Shares | 86,886 | 2,223,055 | 489,342 | 4,913,431 | ||||||||||||
Proceeds from the sale of shares — R6 Shares | — | 444,807 | 70,962 | 792,587 | ||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | 4,517 | 8,610 | — | — | ||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | 15,777 | 57,574 | — | — | ||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | 2,543 | 10,278 | — | — | ||||||||||||
Cost of shares redeemed — Retail Shares | (17,498 | ) | (450,951 | ) | (518,759 | ) | (1,115,304 | ) | ||||||||
Cost of shares redeemed — Institutional Shares | — | (20,650 | ) | (183,303 | ) | (401 | ) | |||||||||
Cost of shares redeemed — R6 Shares | (39,434 | ) | (49,910 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets derived from capital share transactions | 379,716 | 3,172,913 | 1,571,797 | 8,792,730 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets | 942,409 | 2,776,450 | 3,511,931 | 8,021,648 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets: | ||||||||||||||||
Beginning of period | 2,776,450 | — | 8,021,648 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 3,718,859 | $ | 2,776,450 | $ | 11,533,579 | $ | 8,021,648 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — Retail Shares | ||||||||||||||||
Shares sold | 32,277 | 97,663 | 160,983 | 401,745 | ||||||||||||
Shares issued in reinvestment of distributions | 443 | 903 | — | — | ||||||||||||
Shares redeemed | (1,784 | ) | (46,215 | ) | (48,340 | ) | (106,898 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 30,936 | 52,351 | 112,643 | 294,847 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||
Shares sold | 9,029 | 223,106 | 46,354 | 472,023 | ||||||||||||
Shares issued in reinvestment of distributions | 1,543 | 5,999 | — | — | ||||||||||||
Shares redeemed | — | (2,154 | ) | (17,233 | ) | (40 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 10,572 | 226,951 | 29,121 | 471,983 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — R6 Shares | ||||||||||||||||
Shares sold | — | 45,420 | 6,350 | 75,892 | ||||||||||||
Shares issued in reinvestment of dividends | 249 | 1,069 | — | — | ||||||||||||
Shares redeemed | (4,070 | ) | (5,001 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | (3,821 | ) | 41,488 | 6,350 | 75,892 | |||||||||||
|
|
|
|
|
|
|
|
1 | For the period January 2, 2018 (commencement of operations) to December 31, 2018. |
2 | For the period April 30, 2018 (commencement of operations) to December 31, 2018. |
36 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
STATEMENT OF CASH FLOWS (Unaudited)
FORTHE SIX MONTHS ENDED JUNE 30, 2019
|
Baron Partners Fund | ||||
Increase (Decrease) in Cash: | ||||
Cash Provided (Used) from Operating Activities | ||||
Net increase (decrease) in net assets resulting from operations | $ | 495,459,258 | ||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided (used) by operating activities: | ||||
Purchases of portfolio securities | (107,757,850 | ) | ||
Proceeds from sales of portfolio securities | 102,215,205 | |||
Net purchases, sales and maturities of short term investments | 439,881 | |||
Decrease in dividends and interest receivable | 710,394 | |||
Decrease in prepaid expenses | 182,080 | |||
Increase in accrued expenses | 116,939 | |||
Net realized gain on investments | (24,969,153 | ) | ||
Change in net unrealized appreciation of investments | (482,534,234 | ) | ||
|
| |||
Net cash provided (used) by operating activities | $ | (16,137,480 | ) | |
|
| |||
Cash Provided in Financing Activities | ||||
Proceeds from shares sold | 116,073,596 | |||
Payment for shares redeemed | (171,873,673 | ) | ||
Increase in payable for borrowings against line of credit | 72,000,000 | |||
|
| |||
Net cash provided (used) in financing activities | 16,199,923 | |||
|
| |||
Net increase in cash | 62,443 | |||
Cash at beginning of period | — | |||
|
| |||
Cash at end of period | 62,443 | |||
|
| |||
Supplemental cash flow information: | ||||
Interest paid | $ | 10,676,919 | ||
|
|
See Notes to Financial Statements. | 37 |
Table of Contents
Baron Select Funds | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. ORGANIZATION
Baron Select Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company established as a Delaware statutory trust on April 30, 2003, and accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The Trust currently offers nine series (individually, a “Fund” and collectively, the “Funds”): Baron Partners Fund, Baron Focused Growth Fund, Baron Real Estate Income Fund, Baron Health Care Fund, and Baron WealthBuilder Fund, which arenon-diversified; and Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, and Baron Global Advantage Fund, which are diversified. Baron WealthBuilder Fund is presented in a separate report. The Funds’ investment objective is to seek capital appreciation. Baron Partners Fund may employ “leverage” by borrowing money and using it to purchase additional securities. Borrowing for investment increases both investment opportunity and investment risk. Baron International Growth Fund, Baron Emerging Markets Fund, and Baron Global Advantage Fund invest their assets primarily innon-U.S. companies. Baron Real Estate Fund invests its assets primarily in U.S. andnon-U.S. real estate and real estate-related companies. Baron Real Estate Income Fund invests its assets in U.S. andnon-U.S. real estate income-producing securities and other real estate securities. Baron Health Care Fund invests its assets primarily in equity securities engaged in the research, development, production, sale, delivery or distribution of products and services related to the health care industry. On April 29, 2019, Baron Energy and Resources Fund ceased operations and liquidated all remaining assets on a pro rata basis to shareholders.
Each Fund offers Retail Shares, Institutional Shares, and R6 Shares. Each class of shares differs only in its ongoing fees, expenses, and eligibility requirements. Retail Shares are offered to all investors. Institutional Shares are for investments in the amount of $1 million or more per Fund. Institutional Shares are intended for certain financial intermediaries that offer shares of Baron Funds throughfee-based platforms, retirement platforms, or other platforms. R6 Shares are for investments in the amount of $5 million or more per Fund. R6 Shares are available only to qualified 401(a) plans (including 401(k) plans, Keogh plans, profit sharing plans, money purchase pension plans, target benefit plans, defined benefit pension plans, and Taft-Hartley multi-employer pension plans), endowment funds and foundations, any state, county or city, or its instrumentality, department, authority, or agency, 457 plans, including 457(a) governmental entity plans andtax-exempt plans, accounts registered to insurance companies, trust companies and bank trust departments, investment companies, both affiliated and not affiliated with BAMCO, Inc. (the “Adviser”), and any entity that is considered a corporation for tax purposes, including corporatenon-qualified deferred compensation plans of such corporations. Each class of shares has equal rights to earnings and assets, except that each class bears different expenses for distribution and shareholder servicing. Each Fund’s investment income, realized and unrealized gains or losses on investments and foreign currency, and expenses other than those attributable to a specific class are allocated to each class based on its relative net assets. Each class of shares has exclusive voting rights with respect to matters that affect just that class.
Baron Partners Fund was organized originally as a limited partnership in January 1992 under the laws of the State of Delaware. Effective as of the close of business on April 30, 2003, the predecessor partnership was reorganized into a series of the Trust. Baron Partners Fund commenced operations on April 30, 2003 with a contribution of assets and liabilities, includingsecurities-in-kind, from the predecessor partnership.
Baron Focused Growth Fund was organized originally as a limited partnership in May 1996 under the laws of the State of Delaware. Effective as of the close of business on June 30, 2008, the predecessor partnership was reorganized into a series of the Trust. Baron Focused Growth Fund commenced operations on June 30, 2008 with a contribution of assets and liabilities, includingsecurities-in-kind, from the predecessor partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the period. Actual results could differ from those estimates. Events occurring subsequent to the date of the Statements of Assets and Liabilities and through the date of issuance of the financial statements have been evaluated for adjustment to or disclosure in the financial statements.
a) Security Valuation. The Funds’ share prices or net asset values (“NAV”) are calculated as of the scheduled close of the regular trading session (usually 4 p.m. E.T. or such other time as of which the Funds’ NAVs are calculated (the “NAV Calculation Time”)) on the New York Stock Exchange (the “Exchange”) on any day the Exchange is scheduled to be open. Portfolio securities traded on any national stock exchange are valued based on the last sale price on the exchange where such shares are principally traded. For securities traded on NASDAQ, the Funds use the NASDAQ Official Closing Price. If there are no sales on a given day, the value of the security may be the average of the most recent bid and asked quotations on such exchange or the last sale price from a prior day. Where market quotations are not readily available, or, if in the Adviser’s judgment, they do not accurately reflect the fair value of a security, or an event occurs after the market close but before the Funds are priced that materially affects the value of a security, the security will be valued by the Adviser using policies and procedures approved by the Board of Trustees (the “Board”). Some of the more common reasons that may necessitate that a security be valued using “fair value” pricing may include, but are not limited to: trading of the security has been halted or suspended; or the security has not been traded for an extended period of time. The Adviser has a Fair Valuation Committee (the “Committee”) comprised of senior management representatives and the Committee reports to the Board every quarter. Factors the Committee may consider when valuing a security include whether a current price is stale, there is recent news, the security is thinly traded, transactions are infrequent or quotations are genuine. There can be no guarantee, however, that a fair valuation used by the Funds on any given day will more accurately reflect the market value of an investment than the closing price of such investment in its market. U.S. Government obligations, money market instruments, and other debt instruments held by the Funds with a remaining maturity of 60 days or less are generally valued at amortized cost, which approximates fair value. Debt instruments having a greater remaining maturity will be valued on the basis of prices obtained from a pricing service approved by the Board or at the mean of the bid and ask prices from the dealer maintaining an active market in that security. The value of the Funds’ investments in convertible bonds/convertible preferred stocks is determined primarily by obtaining valuations from independent pricing services based on readily available bid quotations or, if quotations are not available, by methods which include various considerations such as yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Other inputs used by an independent pricing service to value convertible bonds/convertible preferred stocks generally include underlying stock data, conversion premiums, listed bond and preferred stock prices and other market information which may include benchmark
38
Table of Contents
June 30, 2019 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
curves, trade execution data, sensitivity analysis, when available, or intrinsic value, which is calculated as the price of the common share on the valuation date adjusted for accrued and unpaid dividends.Open-end investment companies, including securities lending collateral invested in registered investment company money market funds, are valued at their NAV each day.
Non-U.S. equity securities traded on foreign securities exchanges are generally valued using an independent pricing vendor that provides model prices derived by applying daily fair value factors based on information such as local closing price, relevant general and sector indexes, currency fluctuations, and depositary receipts, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post-closing market movements up to the time the Funds are valued and translated into U.S. dollars. If the vendor does not provide an evaluated price, securities are valued based on their most recent closing prices and translated into U. S. dollars. The Adviser may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open. Other mutual funds may adjust the prices of their securities by different amounts.
b) Securities Transactions, Investment Income and Expense Allocation. Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on an identified cost basis for financial reporting and federal income tax purposes. Dividend income is recognized on theex-dividend date and interest income is recognized on an accrual basis, which includes the accretion of discounts and amortization of premiums.Non-cash dividends received in the form of stock, if any, are recognized on theex-dividend date and recorded asnon-cash dividend income at fair value. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to theex-dividend date. Distributions received from certain investments held by the Funds may be comprised of dividends, realized gains and returns of capital. The Funds originally estimate the expected classification of such payments. The amounts may subsequently be reclassified upon receipt of information from the issuer. The Funds are charged for those expenses of the Trust that are directly attributable to each Fund, such as advisory and custodian fees. Expenses that are not directly attributable to a Fund are typically allocated among the Funds in proportion to their respective net assets.
c) Foreign Currency Translations. Values of assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the price of such currencies at the time the NAV is determined. Purchases and sales of investments and dividend income are converted at the prevailing rate of exchange on the respective dates of such transactions. Net realized gain (loss) on foreign currency transactions includes gain (loss) arising from the fluctuation in the exchange rates between trade and settlement dates on security transactions and currency gain (loss) between the accrual and payment dates on dividends and foreign withholding taxes. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currency transactions on the Statements of Operations. The Funds may invest in foreign securities and foreign currency transactions that may involve risks not associated with domestic investments as a result of the level of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability, among others.
Pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are generally treated as ordinary income for U.S. federal income tax purposes.
d) Securities Lending. The Funds may lend securities to certain brokers under the terms of a master netting agreement. Upon such loans, the Funds receive collateral which is maintained by the custodian. The Funds may pay fees to the custodian for administering the securities lending program. The Funds earn interest on such collateral and earn income in the form of negotiated lenders’ fees, both of which are included in securities lending income in the Statements of Operations. Securities loaned are required to be secured at all times by collateral equal to at least 102% of the market value of the securities loaned. Risks may arise upon entering into securities lending to the extent that the value of the collateral is less than the value of the securities loaned due to the changes in the value of collateral or the loaned securities. The collateral ismarked-to-market daily and settled on the next business day. The Funds may receive collateral in the form of cash or other eligible securities, such as a letter of credit issued by a U.S. bank or securities issued or guaranteed by the U.S. government. Securities purchased with cash collateral are subject to the risks inherent in investing in these securities.
Baron Global Advantage Fund participated in securities lending activities during the six months ended June 30, 2019; however there were no securities on loan at June 30, 2019.
e) Repurchase Agreements. The Funds may invest in repurchase agreements, which are short term investments whereby the Funds acquire ownership of a debt security and the seller agrees to repurchase the security at a future date at a specified price. When entering into repurchase agreements, it is the Funds’ policy that their custodian take possession of the underlying collateral securities, the market value of which, at all times, equals at least 102% of the principal amount of the repurchase transaction. To the extent that any repurchase transaction exceeds one business day, the value of the collateral ismarked-to-market to ensure the adequacy of the collateral. If the seller defaults and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Funds may be delayed or limited. The information required to be disclosed by FASB Accounting Standards UpdateNo. 2011-11 for the Funds’ investments in repurchase agreements at June 30, 2019, including the fair value of the repurchase agreement and the amount of collateral, can be found in each respective Fund’s Statement of Net Assets.
f) Master Limited Partnerships. The Funds may invest in master limited partnerships (“MLPs”). MLPs are limited partnerships or limited liability companies, whose partnership units or limited liability interests are listed and traded on a U.S. securities exchange, and are treated as publicly traded partnerships for federal income tax purposes. To qualify to be treated as a partnership for tax purposes, an MLP must receive at least 90% of its income from qualifying sources as set forth in Section 7704(d) of the Internal Revenue Code of 1986, as amended. These qualifying sources include interest, dividend, real property rent, gain from sale or other disposition of real property and income from activities such as the exploration, development, mining, production, processing, refining, transportation, storage and marketing of mineral or natural resources.
g) Federal and Foreign Income Taxes. The Trust treats each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. None of the Funds will be subject to federal or state income taxes to the extent that they qualify as regulated investment companies and substantially all of their income is distributed.
39
Table of Contents
Baron Select Funds | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Funds may be subject to foreign taxes on income and gains on investments that are accrued based upon the Funds’ understanding of the tax rules and regulations that exist in the countries in which the Funds invest. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable.
h) Restricted Securities. The Funds may invest in securities that are restricted as to public sale in accordance with the Securities Act of 1933. Such assets are valued by the Adviser pursuant to policies and procedures approved by the Board.
i) Distributions to Shareholders. Income and capital gain distributions to shareholders are determined in accordance with income tax regulations which may differ from GAAP. These differences are primarily due to differing treatments for net investment loss, foreign currency gains and losses, non-deductible interest expense, reclassification of distributions, partnership basis adjustments, income from passive foreign investment companies, late-year loss deferral, post-October loss deferral, and wash sale loss deferral.
j) Commitments and Contingencies. In the normal course of business, the Funds may enter into contracts and agreements that contain a variety of representations and warranties, which provide general indemnification. The maximum exposure to the Funds under these agreements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
k) Cash and Cash Equivalents. The Funds consider all short term liquid investments with a maturity of three months or less when purchased to be cash equivalents.
l) Fund Diversification and Concentration. Certain of the Funds holdnon-diversified or concentrated portfolios that may contain fewer securities or invest in fewer industries than the portfolios of other mutual funds. This may increase the risk that the value of a Fund could decrease because of the poor performance of one or a few investments or of a particular industry. Additionally,non-diversified funds may encounter difficulty liquidating securities.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short term securities, for the six months ended June 30, 2019 were as follows:
Fund | Purchases | Sales | ||||||
Baron Partners Fund | $ | 104,431,692 | $ | 110,430,555 | ||||
Baron Focused Growth Fund | 5,661,002 | 12,706,470 | ||||||
Baron International Growth Fund | 94,813,441 | 73,317,476 | ||||||
Baron Real Estate Fund | 209,654,304 | 304,715,035 | ||||||
Baron Emerging Markets Fund | 1,634,392,939 | 1,604,061,379 | ||||||
Baron Global Advantage Fund | 87,014,497 | 8,595,452 | ||||||
Baron Real Estate Income Fund | 1,323,642 | 954,597 | ||||||
Baron Health Care Fund | 4,281,176 | 2,886,538 |
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
a) Investment Advisory Fees. The Adviser, a wholly owned subsidiary of Baron Capital Group, Inc. (“BCG”), serves as investment adviser to the Funds. As compensation for services rendered, the Adviser receives a fee payable monthly from Baron Partners Fund, Baron Focused Growth Fund, Baron Real Estate Fund, and Baron Emerging Markets Fund equal to 1% per annum of the average daily net assets of the respective Fund. The Adviser receives a fee payable monthly from Baron International Growth Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund, and Baron Health Care Fund equal to 0.88%, 0.85%, 0.75% and 0.75%, respectively, per annum of the average daily net assets of the respective Fund. The Adviser has contractually agreed to reduce its fee, to the extent required to limit the net annual operating expense ratio (excluding portfolio transaction costs, interest, dividend and extraordinary expenses), as follows:
Annual Operating Expense Ratio Cap | ||||||||||||
Fund | Retail Shares | Institutional Shares | R6 Shares | |||||||||
Baron Partners Fund | 1.45 | % | 1.20 | % | 1.20 | % | ||||||
Baron Focused Growth Fund | 1.35 | % | 1.10 | % | 1.10 | % | ||||||
Baron International Growth Fund | 1.20 | % | 0.95 | % | 0.95 | % | ||||||
Baron Real Estate Fund | 1.35 | % | 1.10 | % | 1.10 | % | ||||||
Baron Emerging Markets Fund | 1.50 | % | 1.25 | % | 1.25 | % | ||||||
Baron Global Advantage Fund | 1.15 | % | 0.90 | % | 0.90 | % | ||||||
Baron Real Estate Income Fund | 1.05 | % | 0.80 | % | 0.80 | % | ||||||
Baron Health Care Fund | 1.10 | % | 0.85 | % | 0.85 | % |
b) Distribution Fees. Baron Capital, Inc. (“BCI”), a wholly owned subsidiary of BCG, is a registered limited purpose broker-dealer and the distributor of the Funds’ shares. The Funds are authorized to pay BCI a distribution fee payable monthly pursuant to a distribution plan under Rule12b-1 of the 1940 Act equal to 0.25% per annum of the Retail Shares’ average daily net assets of the respective Funds.
c) Trustee Fees. Certain Trustees of the Trust may be deemed to be affiliated with, or interested persons (as defined by the 1940 Act) of the Funds’ Adviser or of BCI. None of the Trustees so affiliated received compensation for his or her services as a Trustee of the Trust. None of the Funds’ officers received compensation from the Funds for their services as an officer.
40
Table of Contents
June 30, 2019 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (Continued)
d) Fund Accounting and Administration Fees. The Funds have entered into an agreement with State Street Bank and Trust Company (“State Street”) to perform accounting and certain administrative services. State Street is compensated for fund accounting services based on a percentage of the Funds’ net assets, subject to certain minimums plus fixed annual fees for the administrative services.
e) Cross Trades. The Funds are permitted to purchase securities from, or sell securities to, other Funds within the Trust, other funds in the Baron Investment Funds Trust and other entities advised or subadvised by the Adviser, pursuant to “Cross-Trading Procedures” adopted by the Board. These procedures have been designed to ensure that any cross-trade of securities by the respective Baron Fund from or to another fund/other entity that is or could be considered an affiliate of a Fund under certain limited circumstances by virtue of having a common investment adviser, common officers, or common trustees complies with Rule17a-7 under the 1940 Act. Further, as defined under these procedures, each cross-trade is effected at the current market price and with no commissions. Pursuant to these procedures, for the six months ended June 30, 2019, the Funds engaged in the following cross-trades:
Purchases | Sales | Net Realized Gains (Losses) | ||||||||||
Baron Emerging Markets Fund | $ | 611,252 | $ | 781,980 | $ | (194,773 | ) | |||||
Baron Global Advantage Fund | — | 281,360 | 629 | |||||||||
Baron Real Estate Fund | — | 336,499 | (41,617 | ) | ||||||||
Baron Real Estate Income Fund | — | 5,205 | (936 | ) |
5. LINE OF CREDIT
Baron Partners Fund participates in a committed syndicated line of credit agreement with State Street in the amount of $750 million. Depending on the outstanding loan amount, a commitment fee of 0.15% or 0.25% per annum is incurred on the unused portion of the line of credit. The line of credit is used for investment purposes and expires on October 30, 2019. Baron Partners Fund may borrow up to the lesser of $750 million or the maximum amount Baron Partners Fund may borrow under the 1940 Act, the limitations included in Baron Partners Fund’s prospectus, or any limit or restriction under any law or regulation to which Baron Partners Fund is subject or any agreement to which Baron Partners Fund is a party. Interest is charged to Baron Partners Fund, based on its borrowings, at a rate per annum equal to the higher of the Federal Funds Effective Rate or the one month LIBOR Rate plus a margin of 0.85%. An upfront fee of 0.05% is incurred on the commitment amount. For the six months ended June 30, 2019, interest expense incurred on these loans amounted to $10,816,550. During the six months ended June 30, 2019, Baron Partners Fund had an average daily balance on the line of credit of $ 648.3 million at a weighted average interest rate of 3.36%. At June 30, 2019, Baron Partners Fund had an outstanding balance in the amount of $673,500,000.
The Funds, (except Baron Partners Fund), together with the funds in Baron Investment Funds Trust, participate in a committed line of credit agreement with State Street to be used for temporary purposes, primarily for financing redemptions. Each fund may borrow up to the lesser of $100 million or the maximum amount each fund may borrow under the 1940 Act, the limitations included in each fund’s prospectus, or any limit or restriction under any law or regulation to which each fund is subject or any agreement to which each fund is a party; provided that the aggregate outstanding principal amount of all loans to any of the funds may not exceed $100 million. Interest is charged to each fund, based on its borrowings, at a rate per annum equal to the higher of the Federal Funds Effective Rate or the one month LIBOR Rate plus a margin of 1.00%. An upfront fee of 0.05% is incurred on the commitment amount and a commitment fee of 0.20% per annum is incurred on the unused portion of the line of credit. Both fees are allocated to the participating funds based on their relative net assets. During the six months ended June 30, 2019, Baron Focused Growth Fund, Baron Real Estate Fund, and Baron Global Advantage Fund had borrowings under the line of credit and incurred interest expense of $10,459, $1,403, and $68, respectively. For the 32 days during which there were borrowings, Baron Focused Growth Fund had an average daily balance on the line of credit of $3.4 million at a weighted average interest rate of 3.54%. For the 3 days during which there were borrowings, Baron Real Estate Fund had an average daily balance on the line of credit of $4.8 million at a weighted average interest rate of 3.56%. For the 1 day during which there were borrowings, Baron Global Advantage Fund had a balance on the line of credit of $0.7 million at an interest rate of 3.50%.
41
Table of Contents
Baron Select Funds | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
6. RESTRICTED SECURITIES
At June 30, 2019, investments in securities included securities that are restricted and/or illiquid. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale and are valued pursuant to the policies and procedures for fair value pricing approved by the Board. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Funds may receive more or less than this valuation in an actual sale and that difference could be material. At June 30, 2019, the Funds held investments in restricted and/or illiquid securities that were valued pursuant to policies and procedures for fair value pricing as follows:
Baron Partners Fund | ||||||||
Name of Issuer | Acquisition Date(s) | Value | ||||||
Private Common Stocks | ||||||||
Space Exploration Technologies Corp. | 9/13/2017 | $ | 56,898,404 | |||||
Private Preferred Stocks |
| |||||||
Space Exploration Technologies Corp. | 11/15/2017, 4/5/2018 | 100,030,147 | ||||||
Private Partnerships |
| |||||||
Windy City Investments Holdings, L.L.C. | 11/13/2007-1/27/2011 | 204,636 | ||||||
|
| |||||||
Total Restricted Securities: |
| $ | 157,133,187 | |||||
|
| |||||||
(Cost $98,250,037)†(6.57% of Net Assets) | ||||||||
Baron Focused Growth Fund | ||||||||
Name of Issuer | Acquisition Date(s) | Value | ||||||
Private Common Stocks | ||||||||
Space Exploration Technologies Corp. | 9/13/2017 | $ | 5,354,982 | |||||
Private Preferred Stocks | ||||||||
Space Exploration Technologies Corp. | 11/15/2017, 4/5/2018 | 7,028,145 | ||||||
|
| |||||||
Total Restricted Securities: | $ | 12,383,127 | ||||||
|
| |||||||
(Cost $7,449,906)†(5.42% of Net Assets) |
† | See Statements of Net Assets for cost of individual securities. |
7. FAIR VALUE MEASUREMENTS
Fair value is defined by GAAP as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. GAAP provides a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Funds. Unobservable inputs are inputs that reflect the Funds’ own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
• | Level 1 — quoted prices in active markets for identical assets or liabilities; |
• | Level 2 — prices determined using other inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); |
• | Level 3 — prices determined using unobservable inputs when quoted prices or observable inputs are unavailable, such as when there is little or no market activity for an asset or liability (unobservable inputs reflect each Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk or liquidity associated with investing in those securities. For example,non-U.S. securities, with markets that close hours before the Funds value their holdings, may require revised valuations to more accurately reflect their fair value. Since these values obtained from quoted prices in an active market are adjusted, such securities are reflected as Level 2.
The Funds have procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available or which may not be reliably priced. Under these procedures, the Funds primarily employ a market-based approach that may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine its fair value. The Funds may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed.
42
Table of Contents
June 30, 2019 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
The following is a summary of the inputs used as of June 30, 2019 in valuing the Funds’ investments carried at fair value:
Baron Partners Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 2,899,136,043 | $ | — | $ | — | $ | 2,899,136,043 | ||||||||
Private Common Stocks | — | — | 56,898,404 | 56,898,404 | ||||||||||||
Private Preferred Stocks | — | — | 100,030,147 | 100,030,147 | ||||||||||||
Private Partnerships | — | — | 204,636 | 204,636 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 2,899,136,043 | $ | — | $ | 157,133,187 | $ | 3,056,269,230 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron Focused Growth Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 210,707,649 | $ | — | $ | — | $ | 210,707,649 | ||||||||
Private Common Stocks | — | — | 5,354,982 | 5,354,982 | ||||||||||||
Private Preferred Stocks | — | — | 7,028,145 | 7,028,145 | ||||||||||||
Short Term Investments | — | 5,404,221 | — | 5,404,221 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 210,707,649 | $ | 5,404,221 | $ | 12,383,127 | $ | 228,494,997 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron International Growth Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 135,520,377 | $ | 146,373,533 | $ | — | $ | 281,893,910 | ||||||||
Short Term Investments | — | 12,018,286 | — | 12,018,286 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 135,520,377 | $ | 158,391,819 | $ | — | $ | 293,912,196 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron Real Estate Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Inputs | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 565,027,315 | $ | 11,270,944 | $ | — | $ | 576,298,259 | ||||||||
Short Term Investments | — | 13,161,625 | — | 13,161,625 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 565,027,315 | $ | 24,432,569 | $ | — | $ | 589,459,884 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron Emerging Markets Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 1,761,666,553 | $ | 3,225,607,243 | $ | — | $ | 4,987,273,796 | ||||||||
Short Term Investments | — | 174,675,889 | — | 174,675,889 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 1,761,666,553 | $ | 3,400,283,132 | $ | — | $ | 5,161,949,685 | ||||||||
|
|
|
|
|
|
|
|
† | See Statements of Net Assets for additional detailed categorizations. |
43
Table of Contents
Baron Select Funds | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
Baron Global Advantage Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 183,991,731 | $ | 21,185,531 | $ | — | $ | 205,177,262 | ||||||||
Short Term Investments | — | 21,981,314 | — | 21,981,314 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 183,991,731 | $ | 43,166,845 | $ | — | $ | 227,158,576 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron Real Estate Income Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 3,596,066 | $ | 26,192 | $ | — | $ | 3,622,258 | ||||||||
Short Term Investments | — | 154,044 | — | 154,044 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 3,596,066 | $ | 180,236 | $ | — | $ | 3,776,302 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Baron Health Care Fund | ||||||||||||||||
Description | Quoted Prices in Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 10,880,118 | $ | 231,472 | $ | — | $ | 11,111,590 | ||||||||
Short Term Investments | — | 400,322 | — | 400,322 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 10,880,118 | $ | 631,794 | $ | — | $ | 11,511,912 | ||||||||
|
|
|
|
|
|
|
|
† | See Statements of Net Assets for additional detailed categorizations. |
The following is a reconciliation of investments in which unobservable inputs (Level 3) were used in determining fair value:
Baron Partners Fund | ||||||||||||||||||||||||||||||||||||||||
Investments in Securities | Balance as of December 31, 2018 | Accrued Premiums/ Discounts | Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | Purchases | Sales/ Distributions | Transfers Into Level 3 | Transfers Out of Level 3 | Balance as of June 30, 2019 | Change in Net Unrealized Appreciation (Depreciation) from Investments still held at June 30, 2019 | ||||||||||||||||||||||||||||||
Private Common Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | $ | 46,723,583 | $ | — | $ | — | $ | 10,174,821 | $ | — | $ | — | $ | — | $ | — | $ | 56,898,404 | $ | 10,174,821 | ||||||||||||||||||||
Private Preferred Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | 82,142,319 | — | — | 17,887,828 | — | — | — | — | 100,030,147 | 17,887,828 | ||||||||||||||||||||||||||||||
Private Partnerships |
| |||||||||||||||||||||||||||||||||||||||
Financials | 197,058 | — | — | 7,578 | — | — | — | 204,636 | 7,578 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | $ | 129,062,960 | $ | — | $ | — | $ | 28,070,227 | $ | — | $ | — | $ | — | $ | — | $ | 157,133,187 | $ | 28,070,227 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
Table of Contents
June 30, 2019 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
Baron Focused Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Investments in Securities | Balance as of December 31, 2018 | Accrued Premiums/ Discounts | Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | Purchases | Sales/ Distributions | Transfers Into Level 3 | Transfers Out of Level 3 | Balance as of June 30, 2019 | Change in Net Unrealized Appreciation (Depreciation) from Investments still held at June 30, 2019 | ||||||||||||||||||||||||||||||
Private Common Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | $ | 4,397,380 | $ | — | $ | — | $ | 957,602 | $ | — | $ | — | $ | — | $ | — | $ | 5,354,982 | $ | 957,602 | ||||||||||||||||||||
Private Preferred Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | 5,771,342 | — | — | 1,256,803 | — | — | — | — | 7,028,145 | 1,256,803 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | $ | 10,168,722 | $ | — | $ | — | $ | 2,214,405 | $ | — | $ | — | $ | — | $ | — | $ | 12,383,127 | $ | 2,214,405 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unobservable valuation inputs developed by the Adviser for significant (greater than 1% of net assets) Level 3 investments as of June 30, 2019 were as follows:
Baron Partners Fund | ||||||||||||
Sector | Company | Fair Value as of June 30, 2019 | Valuation Technique | Unobservable Input | Weighted Average used on June 30, 2019 | Range used on June 30, 2019 | ||||||
Private Common Stocks and Industrials | Space Exploration Technologies Corp. | $156,928,551* | Combination of discounted cash flow analysis, current value via comparable companies, option- pricing, and arms- length transaction methods | Change in the composite equity index of comparable companies | 2.21% | (1.22)% - 4.16% | ||||||
Discount for lack of marketability | 3.49% | 3.49% | ||||||||||
Estimated volatility of the returns of equity1 | 30.55% | 21.52% - 66.37% | ||||||||||
Baron Focused Growth Fund | ||||||||||||
Sector | Company | Fair Value as of June 30, 2019 | Valuation Technique | Unobservable Input | Weighted Average used on June 30, 2019 | Range used on June 30, 2019 | ||||||
Private Common Stocks and Industrials | Space Exploration Technologies Corp. | $12,383,127* | Combination of discounted cash flow analysis, current value via comparable companies, option- pricing, and arms- length transaction methods | Change in the composite equity index of comparable companies | 2.21% | (1.22)% - 4.16% | ||||||
Discount for lack of marketability | 3.49% | 3.49% | ||||||||||
Estimated volatility of the returns of equity1 | 30.55% | 21.52% - 66.37% |
1 | The volatility was calculated as a weighted-average of the volatilities used for the two business segments of the company. Each business segment’s volatility was calculated as the simple average volatilities of comparable companies relevant to that business segment. |
* | The fair value as of June 30, 2019 includes a third party transaction price. |
A significant change in the EV/EBITDA multiple ratio may result in a directionally similar significant change in the fair value measurement, while a significant change in the discount for lack of marketability and equity index of comparable companies may not result in a materially higher or lower fair value measurement.
45
Table of Contents
Baron Select Funds | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS
Federal income tax regulations differ from GAAP. Therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and net realized gain for financial reporting purposes. Net investment income (loss) and net realized and unrealized gain (loss) differ for financial statement and tax purposes due to differing treatments of net investment loss, foreign currency gains and losses,non-deductible interest expense, reclassification of distributions, partnership basis adjustments, income from passive foreign investment companies, late year loss deferral, post-October loss deferral, and wash sale loss deferral. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences.
As of June 30, 2019, the components of net assets on a tax basis were as follows:
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | Baron Real Estate Fund | |||||||||||||
Cost of investments | $ | 1,498,752,026 | $ | 116,951,557 | $ | 248,777,215 | $ | 424,600,911 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross tax unrealized appreciation | 1,577,692,440 | 112,390,498 | 62,645,223 | 170,773,781 | ||||||||||||
Gross tax unrealized depreciation | (20,175,236 | ) | (847,058 | ) | (17,510,242 | ) | (5,914,808 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net tax unrealized appreciation (depreciation) | 1,557,517,204 | 111,543,440 | 45,134,981 | 164,858,973 | ||||||||||||
Net tax unrealized currency appreciation (depreciation) | — | — | 489 | 2 | ||||||||||||
Accumulated net investment income (loss) | (27,228,994 | ) | (806,008 | ) | 1,949,930 | 2,983,574 | ||||||||||
Accumulated net realized gain (loss) | 23,998,395 | 6,850,870 | (9,402,077 | ) | 55,525,255 | |||||||||||
Paid-in capital | 835,950,500 | 111,086,602 | 257,326,800 | 363,993,401 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 2,390,237,105 | $ | 228,674,904 | $ | 295,010,123 | $ | 587,361,205 | ||||||||
|
|
|
|
|
|
|
|
Baron Emerging Markets Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||
Cost of investments | $ | 4,556,446,474 | $ | 180,200,904 | $ | 3,375,424 | $ | 9,819,325 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross tax unrealized appreciation | 952,072,299 | 51,055,780 | 456,477 | 1,838,282 | ||||||||||||
Gross tax unrealized depreciation | (346,569,088 | ) | (4,098,108 | ) | (55,599 | ) | (145,695 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net tax unrealized appreciation (depreciation) | 605,503,211 | 46,957,672 | 400,878 | 1,692,587 | ||||||||||||
Net tax unrealized currency appreciation (depreciation) | (1,676,651 | ) | (87,474 | ) | — | — | ||||||||||
Accumulated net investment income (loss) | 48,846,276 | (1,192,084 | ) | 12,667 | (37,113 | ) | ||||||||||
Accumulated net realized gain (loss) | (212,816,780 | ) | (5,322,623 | ) | (216,267 | ) | (470,977 | ) | ||||||||
Paid-in capital | 4,734,648,905 | 176,236,317 | 3,521,581 | 10,349,082 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 5,174,504,961 | $ | 216,591,808 | $ | 3,718,859 | $ | 11,533,579 | ||||||||
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As of December 31, 2018, the Funds had capital loss carryforwards expiring as follows:
Baron Partners Fund | Baron Focused Growth Fund | Baron International | Baron Real Estate Fund | |||||||||||||
Short term: |
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No expiration date | $ | — | $ | 40,867 | $ | — | $ | — | ||||||||
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Long term: |
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No expiration date | $ | — | $ | 1,210,949 | $ | — | $ | — | ||||||||
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Baron Emerging Markets Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||
Short term: |
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No expiration date | $ | 20,243,458 | $ | 3,835,504 | $ | 122,398 | $ | 211,654 | ||||||||
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Long term: |
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No expiration date | $ | — | $ | 80,673 | $ | — | $ | — | ||||||||
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46
Table of Contents
June 30, 2019 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS (Continued)
The tax character of distributions paid during the six months ended June 30, 2019 and for the year ended December 31, 2018 was as follows:
Six Months Ended June 30, 2019 | Year Ended December 31, 2018 | |||||||||||||||||||||||
Fund | Ordinary1 | Long Term Capital Gain | Return of Capital | Ordinary1 | Long Term Capital Gain | Return of Capital | ||||||||||||||||||
Baron Partners Fund | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Baron Focused Growth Fund | — | — | — | — | 2,088,507 | — | ||||||||||||||||||
Baron International Growth Fund | — | — | — | 617,685 | 7,284,443 | — | ||||||||||||||||||
Baron Real Estate Fund | — | — | — | 1,388,009 | 70,512,863 | — | ||||||||||||||||||
Baron Emerging Markets Fund | — | — | — | 20,988,570 | — | — | ||||||||||||||||||
Baron Global Advantage Fund | — | — | — | — | — | — | ||||||||||||||||||
Baron Real Estate Income Fund | 23,141 | — | — | 46,675 | — | 30,853 | ||||||||||||||||||
Baron Health Care Fund | — | — | — | — | — | — |
1 | For tax purposes, short-term capital gains are considered ordinary income distributions. |
The Funds follow the provisions of FASB Codification Section 740 (“ASC Section 740”) “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in tax positions taken or expected to be taken on a tax return. ASC Section 740 sets forth a threshold for financial statement recognition, measurement and disclosure of tax positions taken or expected to be taken on a tax return. The Funds are required to recognize the tax effects of certain tax positions under a “more likely than not” standard, that based on their technical merits, have more than 50 percent likelihood of being sustained upon examination. Management has analyzed the tax positions taken on the Funds’ federal income tax returns for all open years (current and prior three years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. At December 31, 2018, the Funds did not have any uncertain tax benefits that require recognition,de-recognition or disclosure. The Funds’ federal, state and local income and federal excise tax returns for which the applicable statutes of limitations have not expired (current and prior three years) are subject to examination by the Internal Revenue Service and state departments of revenue.
9. OWNERSHIP CONCENTRATION
As of June 30, 2019, the officers, trustees and portfolio managers owned, directly or indirectly, 55.28% of Baron Focused Growth Fund, 62.50% of Baron Real Estate Income Fund, and 39.60% of Baron Health Care Fund. As a result of their ownership, these investors may be able to materially affect the outcome of matters presented to Baron Focused Growth Fund, Baron Real Estate Income Fund, and Baron Health Care Fund shareholders.
10. TRANSACTIONS IN “AFFILIATED” COMPANIES1
BARON EMERGING MARKETS FUND
Name of Issuer | Value at December 31, 2018 | Purchase Cost | Sales Proceeds | Change in Net Unrealized Appreciation (Depreciation) | Realized (Losses) | Dividend Income | Shares Held at June 30, 2019 | Value at June 30, 2019 | % of Net Assets at June 30, 2019 | |||||||||||||||||||||||||||
“Affiliated” Company as of June 30, 2019: |
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Lekoil Ltd. | $ | 3,217,929 | $ | — | $ | 29,639 | $ | (1,291,339 | ) | $ | (358,124 | ) | $ | — | 32,312,623 | $ | 1,538,827 | 0.03 | % | |||||||||||||||||
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1 | An “Affiliated” Company (“affiliated person” as defined in the 1940 Act) is a company in which a Fund held 5% or more of the company’s outstanding voting securities at any time during the six months ended June 30, 2019. |
11. RECENT ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards UpdateNo. 2018-13, “Fair Value Measurement (Topic 820: Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU2018-13”). ASU2018-13 eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements.ASU 2018-13 does not eliminate the requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements and the changes in unrealized gains and losses for recurring Level 3 fair value measurements. ASU2018-13 requires that information is provided about the measurement uncertainty of Level 3 fair value measurements as of the reporting date. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Management has elected to early adopt this guidance and the amendments are reflected in the current financial statements.
47
Table of Contents
Baron Select Funds | June 30, 2019 |
FINANCIAL HIGHLIGHTS (Unaudited)
BARON PARTNERS FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) on investments ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Total expenses (%) | Less: interest expense (%) | Net Operating expenses (%) | Net (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30 |
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2019 | 47.77 | (0.33 | )1 | 12.47 | 12.14 | 0.00 | 0.00 | 0.00 | 59.91 | 25.41 | 2 | 2.30 | 3 | (0.97 | )3 | 1.33 | 3 | (1.21 | )3 | 1,213.4 | 3.64 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 48.75 | (0.61 | )1 | (0.37 | ) | (0.98 | ) | 0.00 | 0.00 | 0.00 | 47.77 | (2.01 | ) | 2.03 | (0.71 | ) | 1.32 | (1.13 | ) | 1,016.2 | 8.09 | |||||||||||||||||||||||||||||||||||||||
2017 | 37.06 | (0.38 | )1 | 12.07 | 11.69 | 0.00 | 0.00 | 0.00 | 48.75 | 31.54 | 1.79 | (0.45 | ) | 1.34 | (0.84 | ) | 1,101.7 | 26.19 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 35.62 | (0.11 | )1 | 1.55 | 1.44 | 0.00 | 0.00 | 0.00 | 37.06 | 4.04 | 1.78 | (0.43 | ) | 1.35 | (0.31 | ) | 913.9 | 15.59 | ||||||||||||||||||||||||||||||||||||||||||
2015 | 36.74 | (0.05 | )1 | (0.95 | ) | (1.00 | ) | (0.12 | ) | 0.00 | (0.12 | ) | 35.62 | (2.71 | ) | 1.52 | (0.20 | ) | 1.32 | (0.13 | ) | 1,107.5 | 17.08 | |||||||||||||||||||||||||||||||||||||
2014 | 33.32 | 0.23 | 1 | 3.19 | 3.42 | 0.00 | 0.00 | 0.00 | 36.74 | 10.26 | 1.51 | (0.19 | ) | 1.32 | 0.66 | 1,256.3 | 30.82 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 22.56 | (0.19 | )1 | 10.95 | 10.76 | 0.00 | 0.00 | 0.00 | 33.32 | 47.69 | 1.67 | (0.29 | ) | 1.38 | (0.66 | ) | 1,125.6 | 18.57 | ||||||||||||||||||||||||||||||||||||||||||
2012 | 19.39 | (0.04 | )1 | 3.21 | 3.17 | 0.00 | 0.00 | 0.00 | 22.56 | 16.35 | 1.74 | (0.34 | ) | 1.40 | (0.18 | ) | 653.7 | 13.04 | ||||||||||||||||||||||||||||||||||||||||||
2011 | 20.57 | (0.14 | )1 | (1.04 | ) | (1.18 | ) | 0.00 | 0.00 | 0.00 | 19.39 | (5.74 | ) | 1.71 | (0.36 | ) | 1.35 | (0.69 | ) | 970.4 | 16.96 | |||||||||||||||||||||||||||||||||||||||
2010 | 15.64 | (0.09 | )1 | 5.02 | 4.93 | 0.00 | 0.00 | 0.00 | 20.57 | 31.52 | 1.71 | (0.34 | ) | 1.37 | (0.51 | ) | 1,251.9 | 15.85 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2019 | 48.86 | (0.27 | )1 | 12.76 | 12.49 | 0.00 | 0.00 | 0.00 | 61.35 | 25.56 | 2 | 2.04 | 3 | (0.97 | )3 | 1.07 | 3 | (0.95 | )3 | 1,021.5 | 3.64 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 49.73 | (0.49 | )1 | (0.38 | ) | (0.87 | ) | 0.00 | 0.00 | 0.00 | 48.86 | (1.75 | ) | 1.77 | (0.71 | ) | 1.06 | (0.88 | ) | 815.6 | 8.09 | |||||||||||||||||||||||||||||||||||||||
2017 | 37.70 | (0.27 | )1 | 12.30 | 12.03 | 0.00 | 0.00 | 0.00 | 49.73 | 31.91 | 1.53 | (0.45 | ) | 1.08 | (0.58 | ) | 854.9 | 26.19 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 36.15 | (0.02 | )1 | 1.57 | 1.55 | 0.00 | 0.00 | 0.00 | 37.70 | 4.29 | 1.52 | (0.43 | ) | 1.09 | (0.05 | ) | 645.3 | 15.59 | ||||||||||||||||||||||||||||||||||||||||||
2015 | 37.28 | 0.04 | 1 | (0.95 | ) | (0.91 | ) | (0.22 | ) | 0.00 | (0.22 | ) | 36.15 | (2.43 | ) | 1.26 | (0.20 | ) | 1.06 | 0.11 | 793.3 | 17.08 | ||||||||||||||||||||||||||||||||||||||
2014 | 33.72 | 0.25 | 1 | 3.31 | 3.56 | 0.00 | 0.00 | 0.00 | 37.28 | 10.56 | 1.26 | (0.20 | ) | 1.06 | 0.69 | 681.5 | 30.82 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 22.78 | (0.12 | )1 | 11.06 | 10.94 | 0.00 | 0.00 | 0.00 | 33.72 | 48.02 | 1.41 | (0.30 | ) | 1.11 | (0.41 | ) | 349.0 | 18.57 | ||||||||||||||||||||||||||||||||||||||||||
2012 | 19.52 | 0.04 | 1 | 3.22 | 3.26 | 0.00 | 0.00 | 0.00 | 22.78 | 16.70 | 1.48 | (0.35 | ) | 1.13 | 0.18 | 146.5 | 13.04 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 20.66 | (0.08 | )1 | (1.06 | ) | (1.14 | ) | 0.00 | 0.00 | 0.00 | 19.52 | (5.52 | ) | 1.45 | (0.36 | ) | 1.09 | (0.41 | ) | 123.7 | 16.96 | |||||||||||||||||||||||||||||||||||||||
2010 | 15.66 | (0.06 | )1 | 5.06 | 5.00 | 0.00 | 0.00 | 0.00 | 20.66 | 31.93 | 1.45 | (0.34 | ) | 1.11 | (0.36 | ) | 119.9 | 15.85 | ||||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2019 | 48.86 | (0.27 | )1 | 12.77 | 12.50 | 0.00 | 0.00 | 0.00 | 61.36 | 25.58 | 2 | 2.04 | 3 | (0.97 | )3 | 1.07 | 3 | (0.95 | )3 | 155.3 | 3.64 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 49.73 | (0.46 | )1 | (0.41 | ) | (0.87 | ) | 0.00 | 0.00 | 0.00 | 48.86 | (1.75 | ) | 1.79 | (0.73 | ) | 1.06 | (0.82 | ) | 123.4 | 8.09 | |||||||||||||||||||||||||||||||||||||||
2017 | 37.71 | (0.26 | )1 | 12.28 | 12.02 | 0.00 | 0.00 | 0.00 | 49.73 | 31.88 | 1.52 | (0.45 | ) | 1.07 | (0.55 | ) | 15.5 | 26.19 | ||||||||||||||||||||||||||||||||||||||||||
20164 | 38.61 | (0.01 | )1 | (0.89 | ) | (0.90 | ) | 0.00 | 0.00 | 0.00 | 37.71 | (2.33 | )2 | 1.62 | 3 | (0.53 | )3 | 1.09 | 3 | (0.04 | )3 | 8.3 | 15.59 |
1 | Based on average shares outstanding. |
2 | Not Annualized. |
3 | Annualized. |
4 | For the period August 31, 2016 (initial offering of R6 shares) to December 31, 2016. |
48 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON FOCUSED GROWTH FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Return of capital ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Total expenses (%) | Less: Interest expense | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 15.81 | (0.03 | )1 | 2.12 | 2.09 | 0.00 | 0.00 | 0.00 | 0.00 | 17.90 | 13.22 | 3,4 | 1.42 | 5 | (0.01 | )5 | 1.41 | 5 | (0.06 | )5 | 1.35 | 5 | (0.32 | )5 | 45.3 | 2.59 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 15.38 | (0.08 | )1 | 0.68 | 0.60 | 0.00 | (0.17 | ) | 0.00 | (0.17 | ) | 15.81 | 3.75 | 3 | 1.39 | 0.00 | 8 | 1.39 | (0.04 | ) | 1.35 | (0.49 | ) | 40.9 | 1.85 | |||||||||||||||||||||||||||||||||||||||||||||||
2017 | 12.43 | (0.09 | )1 | 3.36 | 3.27 | (0.00 | )2 | (0.32 | ) | 0.00 | (0.32 | ) | 15.38 | 26.36 | 3 | 1.40 | 0.00 | 1.40 | (0.05 | ) | 1.35 | (0.64 | ) | 42.4 | 11.48 | |||||||||||||||||||||||||||||||||||||||||||||||
2016 | 13.09 | 0.01 | 1 | 0.08 | 0.09 | 0.00 | (0.75 | ) | 0.00 | (0.75 | ) | 12.43 | 0.67 | 3 | 1.43 | 0.00 | 1.43 | (0.08 | ) | 1.35 | 0.11 | 37.7 | 14.31 | |||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 14.21 | (0.01 | )1 | (0.35 | ) | (0.36 | ) | (0.02 | ) | (0.74 | ) | 0.00 | (0.76 | ) | 13.09 | (2.42 | )3 | 1.39 | 0.00 | 1.39 | (0.04 | ) | 1.35 | (0.10 | ) | 43.7 | 12.18 | |||||||||||||||||||||||||||||||||||||||||||||
2014 | 13.97 | 0.04 | 1 | 0.29 | 0.33 | 0.00 | (0.09 | ) | 0.00 | (0.09 | ) | 14.21 | 2.35 | 3 | 1.39 | 0.00 | 1.39 | (0.04 | ) | 1.35 | 0.31 | 46.1 | 36.92 | |||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 11.26 | (0.07 | )1 | 2.95 | 2.88 | (0.17 | ) | 0.00 | 0.00 | (0.17 | ) | 13.97 | 25.69 | 3 | 1.42 | 0.00 | 1.42 | (0.07 | ) | 1.35 | (0.53 | ) | 47.6 | 33.67 | ||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 9.71 | 0.24 | 1 | 1.31 | 1.55 | 0.00 | 0.00 | 0.00 | 0.00 | 11.26 | 15.96 | 3 | 1.48 | 0.00 | 1.48 | (0.13 | ) | 1.35 | 2.30 | 31.4 | 38.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 9.85 | (0.07 | )1 | (0.07 | ) | (0.14 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 9.71 | (1.42 | )3 | 1.48 | 0.00 | 1.48 | (0.13 | ) | 1.35 | (0.69 | ) | 28.3 | 44.58 | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | 8.14 | (0.01 | )1 | 2.05 | 2.04 | (0.33 | ) | 0.00 | 0.00 | (0.33 | ) | 9.85 | 25.17 | 3 | 1.47 | 0.00 | 1.47 | (0.12 | ) | 1.35 | (0.16 | ) | 46.4 | 24.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2019 | 16.15 | (0.01 | )1 | 2.17 | 2.16 | 0.00 | 0.00 | 0.00 | 0.00 | 18.31 | 13.37 | 3,4 | 1.14 | 5 | (0.01 | )5 | 1.13 | 5 | (0.03 | )5 | 1.10 | 5 | (0.08 | )5 | 77.7 | 2.59 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 15.66 | (0.05 | )1 | 0.71 | 0.66 | 0.00 | (0.17 | ) | 0.00 | (0.17 | ) | 16.15 | 4.07 | 1.09 | 0.00 | 8 | 1.09 | 0.00 | 1.09 | (0.30 | ) | 70.7 | 1.85 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 12.63 | (0.06 | )1 | 3.41 | 3.35 | (0.00 | )2 | (0.32 | ) | 0.00 | (0.32 | ) | 15.66 | 26.59 | 3 | 1.12 | 0.00 | 1.12 | (0.02 | ) | 1.10 | (0.39 | ) | 127.8 | 11.48 | |||||||||||||||||||||||||||||||||||||||||||||||
2016 | 13.25 | 0.05 | 1 | 0.08 | 0.13 | 0.00 | (0.75 | ) | 0.00 | (0.75 | ) | 12.63 | 0.97 | 3 | 1.13 | 0.00 | 1.13 | (0.03 | ) | 1.10 | 0.37 | 128.9 | 14.31 | |||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 14.37 | 0.02 | 1 | (0.34 | ) | (0.32 | ) | (0.06 | ) | (0.74 | ) | 0.00 | (0.80 | ) | 13.25 | (2.12 | ) | 1.09 | 0.00 | 1.09 | 0.00 | 1.09 | 0.16 | 140.5 | 12.18 | |||||||||||||||||||||||||||||||||||||||||||||||
2014 | 14.10 | 0.08 | 1 | 0.28 | 0.36 | 0.00 | (0.09 | ) | 0.00 | (0.09 | ) | 14.37 | 2.54 | 1.09 | 0.00 | 1.09 | 0.00 | 1.09 | 0.56 | 149.2 | 36.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 11.35 | (0.04 | )1 | 2.99 | 2.95 | (0.20 | ) | 0.00 | 0.00 | (0.20 | ) | 14.10 | 26.09 | 3 | 1.12 | 0.00 | 1.12 | (0.02 | ) | 1.10 | (0.28 | ) | 148.4 | 33.67 | ||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 9.77 | 0.26 | 1 | 1.32 | 1.58 | 0.00 | 0.00 | 0.00 | 0.00 | 11.35 | 16.17 | 3 | 1.16 | 0.00 | 1.16 | (0.06 | ) | 1.10 | 2.53 | 87.9 | 38.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 9.88 | (0.04 | )1 | (0.07 | ) | (0.11 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 9.77 | (1.11 | )3 | 1.18 | 0.00 | 1.18 | (0.08 | ) | 1.10 | (0.40 | ) | 63.6 | 44.58 | ||||||||||||||||||||||||||||||||||||||||||||||||
2010 | 8.15 | 0.01 | 1 | 2.05 | 2.06 | (0.33 | ) | 0.00 | 0.00 | (0.33 | ) | 9.88 | 25.39 | 3 | 1.19 | 0.00 | 1.19 | (0.09 | ) | 1.10 | 0.08 | 44.3 | 24.08 | |||||||||||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2019 | 16.16 | (0.01 | )1 | 2.16 | 2.15 | 0.00 | 0.00 | 0.00 | 0.00 | 18.31 | 13.30 | 3,4 | 1.13 | 5 | (0.01 | )5 | 1.12 | 5 | (0.02 | )5 | 1.10 | 5 | (0.07 | )5 | 105.7 | 2.59 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 15.67 | (0.03 | )1 | 0.69 | �� | 0.66 | 0.00 | (0.17 | ) | 0.00 | (0.17 | ) | 16.16 | 4.07 | 3 | 1.10 | 0.00 | 8 | 1.10 | (0.00 | )7 | 1.10 | (0.18 | ) | 92.2 | 1.85 | ||||||||||||||||||||||||||||||||||||||||||||||
2017 | 12.63 | (0.06 | )1 | 3.42 | 3.36 | (0.00 | )2 | (0.32 | ) | 0.00 | (0.32 | ) | 15.67 | 26.67 | 3 | 1.10 | 0.00 | 1.10 | (0.00 | )7 | 1.10 | (0.38 | ) | 22.6 | 11.48 | |||||||||||||||||||||||||||||||||||||||||||||||
20166 | 13.87 | 0.02 | 1 | (0.51 | ) | (0.49 | ) | 0.00 | (0.75 | ) | 0.00 | (0.75 | ) | 12.63 | (3.55 | )3,4 | 1.14 | 5 | 0.00 | 1.14 | 5 | (0.04 | )5 | 1.10 | 5 | 0.53 | 5 | 8.6 | 14.31 |
1 | Based on average shares outstanding. |
2 | Less than $0.01 per share. |
3 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
4 | Not Annualized. |
5 | Annualized. |
6 | For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. |
7 | Less than 0.01% |
8 | Interest expense rounds to less than 0.01% |
See Notes to Financial Statements. | 49 |
Table of Contents
Baron Select Funds | June 30, 2019 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON INTERNATIONAL GROWTH FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 19.00 | 0.08 | 1 | 3.67 | 3.75 | 0.00 | 0.00 | 0.00 | 22.75 | 19.74 | 3,4 | 1.32 | 5 | (0.12 | )5 | 1.20 | 5 | 0.75 | 5 | 76.3 | 29.03 | 4 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 23.90 | (0.01 | )1 | (4.21 | ) | (4.22 | ) | 0.00 | (0.68 | ) | (0.68 | ) | 19.00 | (17.90 | )3 | 1.34 | 7 | (0.14 | ) | 1.20 | (0.03 | ) | 59.8 | 50.83 | ||||||||||||||||||||||||||||||||||||
2017 | 18.09 | (0.06 | )1 | 6.72 | 6.66 | 0.00 | (0.85 | ) | (0.85 | ) | 23.90 | 36.94 | 3 | 1.51 | (0.14 | ) | 1.37 | (0.28 | ) | 56.5 | 31.44 | |||||||||||||||||||||||||||||||||||||||
2016 | 18.05 | (0.03 | )1 | 0.24 | 0.21 | (0.01 | ) | (0.16 | ) | (0.17 | ) | 18.09 | 1.14 | 3 | 1.65 | (0.15 | ) | 1.50 | (0.16 | ) | 41.8 | 38.90 | ||||||||||||||||||||||||||||||||||||||
2015 | 17.94 | 0.03 | 1 | 0.19 | 0.22 | (0.08 | ) | (0.03 | ) | (0.11 | ) | 18.05 | 1.23 | 3 | 1.59 | (0.09 | ) | 1.50 | 0.15 | 44.9 | 42.85 | |||||||||||||||||||||||||||||||||||||||
2014 | 18.91 | 0.03 | 1 | (0.46 | ) | (0.43 | ) | (0.00 | )2 | (0.54 | ) | (0.54 | ) | 17.94 | (2.33 | )3 | 1.63 | (0.13 | ) | 1.50 | 0.14 | 53.0 | 34.67 | |||||||||||||||||||||||||||||||||||||
2013 | 15.55 | (0.01 | )1 | 3.37 | 3.36 | 0.00 | 0.00 | 0.00 | 18.91 | 21.61 | 3 | 1.74 | (0.24 | ) | 1.50 | (0.05 | ) | 17.0 | 40.60 | |||||||||||||||||||||||||||||||||||||||||
2012 | 13.20 | (0.02 | )1 | 2.37 | 2.35 | 0.00 | 0.00 | 0.00 | 15.55 | 17.80 | 3 | 1.78 | (0.28 | ) | 1.50 | (0.16 | ) | 15.6 | 39.02 | |||||||||||||||||||||||||||||||||||||||||
2011 | 17.29 | (0.01 | )1 | (2.78 | ) | (2.79 | ) | (0.04 | ) | (1.26 | ) | (1.30 | ) | 13.20 | (16.35 | )3 | 1.73 | (0.23 | ) | 1.50 | (0.05 | ) | 11.7 | 53.20 | ||||||||||||||||||||||||||||||||||||
2010 | 14.11 | 0.01 | 1 | 3.38 | 3.39 | 0.00 | (0.21 | ) | (0.21 | ) | 17.29 | 24.22 | 3 | 1.76 | (0.26 | ) | 1.50 | 0.07 | 15.3 | 32.70 | ||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 19.29 | 0.11 | 1 | 3.72 | 3.83 | 0.00 | 0.00 | 0.00 | 23.12 | 19.85 | 3,4 | 1.05 | 5 | (0.10 | )5 | 0.95 | 5 | 0.97 | 4 | 202.9 | 29.03 | 4 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 24.19 | 0.06 | 1 | (4.28 | ) | (4.22 | ) | 0.00 | (0.68 | ) | (0.68 | ) | 19.29 | (17.68 | )3 | 1.07 | 7 | (0.12 | ) | 0.95 | 0.26 | 154.2 | 50.83 | |||||||||||||||||||||||||||||||||||||
2017 | 18.25 | (0.01 | )1 | 6.80 | 6.79 | 0.00 | (0.85 | ) | (0.85 | ) | 24.19 | 37.33 | 3 | 1.23 | (0.12 | ) | 1.11 | (0.06 | ) | 110.8 | 31.44 | |||||||||||||||||||||||||||||||||||||||
2016 | 18.17 | 0.01 | 1 | 0.24 | 0.25 | (0.01 | ) | (0.16 | ) | (0.17 | ) | 18.25 | 1.35 | 3 | 1.36 | (0.11 | ) | 1.25 | 0.07 | 45.4 | 38.90 | |||||||||||||||||||||||||||||||||||||||
2015 | 18.09 | 0.08 | 1 | 0.19 | 0.27 | (0.16 | ) | (0.03 | ) | (0.19 | ) | 18.17 | 1.48 | 3 | 1.31 | (0.06 | ) | 1.25 | 0.41 | 53.7 | 42.85 | |||||||||||||||||||||||||||||||||||||||
2014 | 19.05 | 0.12 | 1 | (0.50 | ) | (0.38 | ) | (0.04 | ) | (0.54 | ) | (0.58 | ) | 18.09 | (2.07 | )3 | 1.34 | (0.09 | ) | 1.25 | 0.64 | 52.3 | 34.67 | |||||||||||||||||||||||||||||||||||||
2013 | 15.63 | 0.03 | 1 | 3.39 | 3.42 | (0.00 | )2 | 0.00 | (0.00 | )2 | 19.05 | 21.89 | 3 | 1.37 | (0.12 | ) | 1.25 | 0.20 | 45.4 | 40.60 | ||||||||||||||||||||||||||||||||||||||||
2012 | 13.25 | 0.01 | 1 | 2.40 | 2.41 | (0.03 | ) | 0.00 | (0.03 | ) | 15.63 | 18.17 | 3 | 1.40 | (0.15 | ) | 1.25 | 0.09 | 39.0 | 39.02 | ||||||||||||||||||||||||||||||||||||||||
2011 | 17.36 | 0.03 | 1 | (2.79 | ) | (2.76 | ) | (0.09 | ) | (1.26 | ) | (1.35 | ) | 13.25 | (16.13 | )3 | 1.38 | (0.13 | ) | 1.25 | 0.19 | 30.5 | 53.20 | |||||||||||||||||||||||||||||||||||||
2010 | 14.13 | 0.05 | 1 | 3.39 | 3.44 | 0.00 | (0.21 | ) | (0.21 | ) | 17.36 | 24.54 | 3 | 1.40 | (0.15 | ) | 1.25 | 0.31 | 37.4 | 32.70 | ||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2019 | 19.29 | 0.11 | 1 | 3.72 | 3.83 | 0.00 | 0.00 | 0.00 | 23.12 | 19.85 | 3,4 | 1.05 | 5 | (0.10 | )5 | 0.95 | 5 | 0.96 | 5 | 15.8 | 29.03 | 4 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 24.19 | 0.07 | 1 | (4.29 | ) | (4.22 | ) | 0.00 | (0.68 | ) | (0.68 | ) | 19.29 | (17.68 | )3 | 1.06 | 7 | (0.11 | ) | 0.95 | 0.31 | 12.4 | 50.83 | |||||||||||||||||||||||||||||||||||||
2017 | 18.25 | (0.02 | )1 | 6.81 | 6.79 | 0.00 | (0.85 | ) | (0.85 | ) | 24.19 | 37.33 | 3 | 1.22 | (0.12 | ) | 1.10 | (0.10 | ) | 0.8 | 31.44 | |||||||||||||||||||||||||||||||||||||||
20166 | 19.15 | (0.02 | )1 | (0.71 | ) | (0.73 | ) | (0.01 | ) | (0.16 | ) | (0.17 | ) | 18.25 | (3.83 | )3,4 | 1.38 | 5 | (0.14 | )5 | 1.24 | 5 | (0.31 | )5 | 0.4 | 38.90 |
1 | Based on average shares outstanding. |
2 | Less than $0.01 per share. |
3 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
4 | Not Annualized. |
5 | Annualized. |
6 | For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. |
7 | Interest expense rounds to less than 0.01%. |
50 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Real Estate Fund |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON REAL ESTATE FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net of period | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Return of capital ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | |||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 20.77 | 0.02 | 1 | 4.96 | 4.98 | 0.00 | 0.00 | 0.00 | 0.00 | 25.75 | 23.98 | 5 | 1.33 | 6,8 | 0.00 | 1.33 | 6 | 0.13 | 6 | 234.6 | 35.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 29.58 | (0.03 | )1 | (6.28 | ) | (6.31 | ) | 0.00 | (2.50 | ) | 0.00 | (2.50 | ) | 20.77 | (22.22 | ) | 1.32 | 8 | 0.00 | 1.32 | (0.10 | ) | 213.0 | 56.47 | ||||||||||||||||||||||||||||||||||||||||
2017 | 23.67 | 0.00 | 1,3 | 7.32 | 7.32 | 0.00 | (1.41 | ) | 0.00 | (1.41 | ) | 29.58 | 31.04 | 1.32 | 0.00 | 1.32 | 0.01 | 426.7 | 44.56 | |||||||||||||||||||||||||||||||||||||||||||||
2016 | 24.24 | (0.02 | )1 | (0.47 | ) | (0.49 | ) | 0.00 | (0.08 | ) | 0.00 | (0.08 | ) | 23.67 | (2.01 | ) | 1.33 | 0.00 | 1.33 | (0.07 | ) | 434.0 | 55.50 | |||||||||||||||||||||||||||||||||||||||||
2015 | 25.92 | (0.06 | )1 | (1.14 | ) | (1.20 | ) | (0.01 | ) | (0.47 | ) | 0.00 | (0.48 | ) | 24.24 | (4.65 | ) | 1.31 | 0.00 | 1.31 | (0.23 | ) | 788.9 | 50.50 | ||||||||||||||||||||||||||||||||||||||||
2014 | 22.25 | 0.04 | 1 | 3.66 | 3.70 | (0.03 | ) | 0.00 | 0.00 | (0.03 | ) | 25.92 | 16.61 | 1.32 | 0.00 | 1.32 | 0.17 | 782.8 | 24.40 | |||||||||||||||||||||||||||||||||||||||||||||
2013 | 17.52 | (0.05 | )1 | 4.80 | 4.75 | 0.00 | (0.02 | ) | 0.00 | (0.02 | ) | 22.25 | 27.12 | 1.35 | 0.00 | 1.35 | (0.23 | ) | 539.5 | 19.36 | ||||||||||||||||||||||||||||||||||||||||||||
2012 | 12.51 | 0.01 | 1 | 5.31 | 5.32 | 0.00 | (0.31 | ) | 0.00 | (0.31 | ) | 17.52 | 42.60 | 4 | 1.76 | (0.41 | ) | 1.35 | 0.07 | 53.6 | 30.14 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 12.66 | (0.01 | )1 | 0.07 | 2 | 0.06 | (0.00 | )3 | (0.21 | ) | 0.00 | (0.21 | ) | 12.51 | 0.63 | 4 | 2.33 | (0.98 | ) | 1.35 | (0.08 | ) | 10.9 | 70.99 | ||||||||||||||||||||||||||||||||||||||||
2010 | 10.00 | 0.02 | 1 | 2.64 | 2.66 | 0.00 | 0.00 | 0.00 | 0.00 | 12.66 | 26.60 | 4 | 4.35 | (3.00 | ) | 1.35 | 0.14 | 5.5 | 58.03 | |||||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2019 | 21.10 | 0.05 | 1 | 5.04 | 5.09 | 0.00 | 0.00 | 0.00 | 0.00 | 26.19 | 24.12 | 5 | 1.08 | 6,8 | 0.00 | 1.08 | 6 | 0.38 | 6 | 341.4 | 35.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 30.01 | 0.05 | 1 | (6.39 | ) | (6.34 | ) | (0.07 | ) | (2.50 | ) | 0.00 | (2.57 | ) | 21.10 | (22.04 | ) | 1.06 | 8 | 0.00 | 1.06 | 0.17 | 320.9 | 56.47 | ||||||||||||||||||||||||||||||||||||||||
2017 | 23.93 | 0.07 | 1 | 7.42 | 7.49 | 0.00 | (1.41 | ) | 0.00 | (1.41 | ) | 30.01 | 31.42 | 1.06 | 0.00 | 1.06 | 0.26 | 657.6 | 44.56 | |||||||||||||||||||||||||||||||||||||||||||||
2016 | 24.51 | 0.04 | 1 | (0.47 | ) | (0.43 | ) | 0.00 | (0.08 | ) | (0.07 | ) | (0.15 | ) | 23.93 | (1.75 | ) | 1.07 | 0.00 | 1.07 | 0.19 | 514.6 | 55.50 | |||||||||||||||||||||||||||||||||||||||||
2015 | 26.14 | 0.01 | 1 | (1.16 | ) | (1.15 | ) | (0.01 | ) | (0.47 | ) | 0.00 | (0.48 | ) | 24.51 | (4.42 | ) | 1.06 | 0.00 | 1.06 | 0.04 | 992.8 | 50.50 | |||||||||||||||||||||||||||||||||||||||||
2014 | 22.43 | 0.11 | 1 | 3.68 | 3.79 | (0.08 | ) | 0.00 | 0.00 | (0.08 | ) | 26.14 | 16.93 | 1.06 | 0.00 | 1.06 | 0.44 | 919.7 | 24.40 | |||||||||||||||||||||||||||||||||||||||||||||
2013 | 17.64 | 0.03 | 1 | 4.81 | 4.84 | (0.00 | )3 | (0.02 | ) | (0.03 | ) | (0.05 | ) | 22.43 | 27.48 | 1.09 | 0.00 | 1.09 | 0.15 | 486.1 | 19.36 | |||||||||||||||||||||||||||||||||||||||||||
2012 | 12.56 | 0.06 | 1 | 5.33 | 5.39 | 0.00 | (0.31 | ) | 0.00 | (0.31 | ) | 17.64 | 42.99 | 4 | 1.44 | (0.34 | ) | 1.10 | 0.36 | 35.5 | 30.14 | |||||||||||||||||||||||||||||||||||||||||||
2011 | 12.69 | 0.02 | 1 | 0.07 | 2 | 0.09 | (0.01 | ) | (0.21 | ) | 0.00 | (0.22 | ) | 12.56 | 0.80 | 4 | 2.14 | (1.04 | ) | 1.10 | 0.17 | 4.9 | 70.99 | |||||||||||||||||||||||||||||||||||||||||
2010 | 10.00 | 0.04 | 1 | 2.65 | 2.69 | 0.00 | 0.00 | 0.00 | 0.00 | 12.69 | 26.90 | 4 | 4.26 | (3.16 | ) | 1.10 | 0.36 | 3.2 | 58.03 | |||||||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 21.10 | 0.05 | 1 | 5.04 | 5.09 | 0.00 | 0.00 | 0.00 | 0.00 | 26.19 | 24.12 | 5 | 1.07 | 6,8 | 0.00 | 1.07 | 6 | 0.41 | 6 | 11.4 | 35.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 30.01 | 0.09 | 1 | (6.43 | ) | (6.34 | ) | (0.07 | ) | (2.50 | ) | 0.00 | (2.57 | ) | 21.10 | (22.03 | ) | 1.07 | 8 | 0.00 | 1.07 | 0.31 | 9.3 | 56.47 | ||||||||||||||||||||||||||||||||||||||||
2017 | 23.93 | 0.07 | 1 | 7.42 | 7.49 | 0.00 | (1.41 | ) | 0.00 | (1.41 | ) | 30.01 | 31.42 | 1.06 | 0.00 | 1.06 | 0.26 | 3.3 | 44.56 | |||||||||||||||||||||||||||||||||||||||||||||
20167 | 21.80 | 0.02 | 1 | 2.26 | 2.28 | 0.00 | (0.08 | ) | (0.07 | ) | (0.15 | ) | 23.93 | 10.47 | 5 | 1.07 | 6 | 0.00 | 1.07 | 6 | 0.08 | 6 | 2.0 | 55.50 |
1 | Based on average shares outstanding. |
2 | The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of Fund shares in relation to fluctuating market values of investments of the Fund. |
3 | Less than $0.01 per share. |
4 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
5 | Not Annualized. |
6 | Annualized. |
7 | For the period January 29, 2016 (initial offering of R6 Shares) to December 31, 2016. |
8 | Interest expense rounds to less than 0.01%. |
See Notes to Financial Statements. | 51 |
Table of Contents
Baron Select Funds | June 30, 2019 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON EMERGING MARKETS FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Return of capital ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | |||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 12.45 | 0.03 | 1 | 1.48 | 1.51 | 0.00 | 0.00 | 0.00 | 0.00 | 13.96 | 12.13 | 3 | 1.36 | 4 | 0.00 | 1.36 | 4 | 0.39 | 4 | 702.8 | 33.37 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.33 | 0.05 | 1 | (2.91 | ) | (2.86 | ) | (0.02 | ) | 0.00 | 0.00 | (0.02 | ) | 12.45 | (18.67 | ) | 1.36 | 0.00 | 1.36 | 0.36 | 753.5 | 43.27 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 10.95 | 0.03 | 1 | 4.39 | 4.42 | (0.04 | ) | 0.00 | (0.00 | )6 | (0.04 | ) | 15.33 | 40.34 | 1.36 | 0.00 | 1.36 | 0.23 | 1,121.4 | 30.75 | ||||||||||||||||||||||||||||||||||||||||||||
2016 | 10.57 | 0.04 | 1 | 0.36 | 0.40 | (0.02 | ) | 0.00 | 0.00 | (0.02 | ) | 10.95 | 3.75 | 1.38 | 0.00 | 1.38 | 0.33 | 768.5 | 25.31 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 11.91 | 0.03 | 1 | (1.36 | ) | (1.33 | ) | (0.01 | ) | 0.00 | 0.00 | (0.01 | ) | 10.57 | (11.16 | ) | 1.45 | 0.00 | 1.45 | 0.25 | 665.5 | 26.34 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 11.54 | 0.07 | 1 | 0.33 | 0.40 | (0.03 | ) | 0.00 | 0.00 | (0.03 | ) | 11.91 | 3.47 | 2 | 1.52 | (0.02 | ) | 1.50 | 0.56 | 649.7 | 23.38 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 10.06 | (0.06 | )1 | 1.54 | 1.48 | 0.00 | 0.00 | 0.00 | 0.00 | 11.54 | 14.71 | 2 | 1.90 | (0.40 | ) | 1.50 | (0.53 | ) | 259.6 | 14.68 | ||||||||||||||||||||||||||||||||||||||||||||
2012 | 8.28 | (0.04 | )1 | 1.94 | 1.90 | (0.12 | ) | 0.00 | 0.00 | (0.12 | ) | 10.06 | 22.98 | 2 | 4.01 | (2.51 | ) | 1.50 | (0.39 | ) | 2.9 | 42.68 | ||||||||||||||||||||||||||||||||||||||||||
2011 | 10.00 | (0.03 | )1 | (1.69 | ) | (1.72 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 8.28 | (17.20 | )2 | 4.49 | (2.99 | ) | 1.50 | (0.32 | ) | 2.0 | 45.86 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
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2019 | 12.47 | 0.05 | 1 | 1.48 | 1.53 | 0.00 | 0.00 | 0.00 | 0.00 | 14.00 | 12.27 | 3 | 1.11 | 4 | 0.00 | 1.11 | 4 | 0.71 | 4 | 4,462.5 | 33.37 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.37 | 0.09 | 1 | (2.93 | ) | (2.84 | ) | (0.06 | ) | 0.00 | 0.00 | (0.06 | ) | 12.47 | (18.49 | ) | 1.10 | 0.00 | 1.10 | 0.62 | 3,850.0 | 43.27 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 10.98 | 0.06 | 1 | 4.40 | 4.46 | (0.07 | ) | 0.00 | (0.00 | )6 | (0.07 | ) | 15.37 | 40.63 | 1.10 | 0.00 | 1.10 | 0.47 | 3,842.5 | 30.75 | ||||||||||||||||||||||||||||||||||||||||||||
2016 | 10.59 | 0.06 | 1 | 0.37 | 0.43 | (0.04 | ) | 0.00 | 0.00 | (0.04 | ) | 10.98 | 4.08 | 1.13 | 0.00 | 1.13 | 0.57 | 1,832.8 | 25.31 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 11.94 | 0.06 | 1 | (1.37 | ) | (1.31 | ) | (0.04 | ) | 0.00 | 0.00 | (0.04 | ) | 10.59 | (10.97 | ) | 1.20 | 0.00 | 1.20 | 0.49 | 1,040.9 | 26.34 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 11.56 | 0.09 | 1 | 0.34 | 0.43 | (0.05 | ) | 0.00 | 0.00 | (0.05 | ) | 11.94 | 3.75 | 2 | 1.27 | (0.02 | ) | 1.25 | 0.76 | 697.8 | 23.38 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 10.05 | 0.01 | 1 | 1.50 | 1.51 | 0.00 | 0.00 | 0.00 | 0.00 | 11.56 | 15.02 | 2 | 1.80 | (0.55 | ) | 1.25 | 0.05 | 116.0 | 14.68 | |||||||||||||||||||||||||||||||||||||||||||||
2012 | 8.30 | (0.01 | )1 | 1.93 | 1.92 | (0.17 | ) | 0.00 | 0.00 | (0.17 | ) | 10.05 | 23.22 | 2 | 3.37 | (2.12 | ) | 1.25 | (0.14 | ) | 6.0 | 42.68 | ||||||||||||||||||||||||||||||||||||||||||
2011 | 10.00 | (0.01 | )1 | (1.69 | ) | (1.70 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 8.30 | (17.00 | )2 | 3.83 | (2.58 | ) | 1.25 | (0.07 | ) | 4.3 | 45.86 | ||||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2019 | 12.48 | 0.05 | 1 | 1.48 | 1.53 | 0.00 | 0.00 | 0.00 | 0.00 | 14.01 | 12.26 | 3 | 1.11 | 4 | 0.00 | 1.11 | 4 | 0.75 | 4 | 9.2 | 33.37 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.38 | 0.10 | 1 | (2.94 | ) | (2.84 | ) | (0.06 | ) | 0.00 | 0.00 | (0.06 | ) | 12.48 | (18.47 | ) | 1.11 | 0.00 | 1.11 | 0.69 | 7.3 | 43.27 | ||||||||||||||||||||||||||||||||||||||||||
2017 | 10.99 | 0.07 | 1 | 4.39 | 4.46 | (0.07 | ) | 0.00 | (0.00 | )6 | (0.07 | ) | 15.38 | 40.59 | 1.11 | 0.00 | 1.11 | 0.49 | 4.9 | 30.75 | ||||||||||||||||||||||||||||||||||||||||||||
20165 | 9.94 | 0.05 | 1 | 1.04 | 1.09 | (0.04 | ) | 0.00 | 0.00 | (0.04 | ) | 10.99 | 10.99 | 3 | 1.13 | 4 | 0.00 | 1.13 | 4 | 0.48 | 4 | 0.7 | 25.31 |
1 | Based on average shares outstanding. |
2 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
3 | Not Annualized. |
4 | Annualized. |
5 | For the period January 29, 2016 (initial offering of R6 Shares) to December 31, 2016. |
6 | Less than $0.01 per share. |
52 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON GLOBAL ADVANTAGE FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Total expenses (%) | Less: Interest expense (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 19.77 | (0.11 | )2 | 6.96 | 6.85 | 0.00 | 0.00 | 0.00 | 26.62 | 34.65 | 4,6 | 1.35 | 8 | 0.00 | 11 | 1.35 | 8 | (0.20 | )8 | 1.15 | 8 | (0.88 | ) | 87.1 | 6.26 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 20.56 | (0.21 | )2 | (0.58 | ) | (0.79 | ) | 0.00 | 0.00 | 0.00 | 19.77 | (3.84 | )4 | 1.45 | 0.00 | 11 | 1.45 | (0.30 | ) | 1.15 | (0.94 | ) | 35.7 | 19.77 | ||||||||||||||||||||||||||||||||||||||||||||
2017 | 13.75 | (0.18 | )2 | 6.99 | 6.81 | 0.00 | 0.00 | 0.00 | 20.56 | 49.53 | 4 | 2.07 | (0.01 | ) | 2.06 | (0.70 | ) | 1.36 | (1.01 | ) | 18.4 | 27.98 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 13.91 | (0.18 | )2 | 0.02 | 10 | (0.16 | ) | 0.00 | 0.00 | 0.00 | 13.75 | (1.15 | )4 | 3.86 | 0.00 | 3.86 | (2.36 | ) | 1.50 | (1.30 | ) | 5.0 | 21.48 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 14.20 | (0.11 | )2 | (0.14 | ) | (0.25 | ) | (0.02 | ) | (0.02 | ) | (0.04 | ) | 13.91 | (1.72 | )4 | 3.19 | 0.00 | 3.19 | (1.69 | ) | 1.50 | (0.75 | ) | 6.2 | 25.88 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.51 | 0.02 | 2 | 0.67 | 0.69 | 0.00 | (0.00 | )3 | 0.00 | 14.20 | 5.11 | 4,5 | 3.61 | 0.00 | 3.61 | (2.11 | ) | 1.50 | 0.18 | 3.9 | 123.51 | |||||||||||||||||||||||||||||||||||||||||||||||
2013 | 10.41 | (0.02 | )2 | 3.12 | 3.10 | 0.00 | 0.00 | 0.00 | 13.51 | 29.78 | 4 | 5.51 | 0.00 | 5.51 | (4.01 | ) | 1.50 | (0.20 | ) | 2.3 | 32.78 | |||||||||||||||||||||||||||||||||||||||||||||||
20121 | 10.00 | (0.02 | )2 | 0.43 | 0.41 | 0.00 | 0.00 | 0.00 | 10.41 | 4.10 | 4,6 | 8.35 | 7,8 | 0.00 | 7,8 | 8.35 | 7,8 | (6.85 | )7,8 | 1.50 | 7,8 | (0.38 | )7,8 | 1.5 | 24.64 | 6 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
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2019 | 20.02 | (0.08 | )2 | 7.06 | 6.98 | 0.00 | 0.00 | 0.00 | 27.00 | 34.87 | 4,6 | 1.09 | 8 | 0.00 | 11 | 1.09 | 8 | (0.19 | )8 | 0.90 | 8 | (0.62 | ) | 123.7 | 6.26 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 20.77 | (0.16 | )2 | (0.59 | ) | (0.75 | ) | 0.00 | 0.00 | 0.00 | 20.02 | (3.61 | )4 | 1.18 | 0.00 | 11 | 1.18 | (0.28 | ) | 0.90 | (0.71 | ) | 49.2 | 19.77 | ||||||||||||||||||||||||||||||||||||||||||||
2017 | 13.87 | (0.14 | )2 | 7.04 | 6.90 | 0.00 | 0.00 | 0.00 | 20.77 | 49.75 | 4 | 1.70 | (0.01 | ) | 1.69 | (0.61 | ) | 1.08 | (0.77 | ) | 24.8 | 27.98 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 14.00 | (0.14 | )2 | 0.01 | 10 | (0.13 | ) | 0.00 | 0.00 | 0.00 | 13.87 | (0.93 | )4 | 3.55 | 0.00 | 3.55 | (2.30 | ) | 1.25 | (1.06 | ) | 4.6 | 21.48 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 14.28 | (0.07 | )2 | (0.15 | ) | (0.22 | ) | (0.04 | ) | (0.02 | ) | (0.06 | ) | 14.00 | (1.51 | )4 | 2.89 | 0.00 | 2.89 | (1.64 | ) | 1.25 | (0.47 | ) | 5.3 | 25.88 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 13.56 | 0.07 | 2 | 0.65 | 0.72 | 0.00 | (0.00 | )3 | 0.00 | 14.28 | 5.32 | 4,5 | 2.92 | 0.00 | 2.92 | (1.67 | ) | 1.25 | 0.48 | 4.1 | 123.51 | |||||||||||||||||||||||||||||||||||||||||||||||
2013 | 10.42 | 0.00 | 2,3 | 3.14 | 3.14 | 0.00 | 0.00 | 0.00 | 13.56 | 30.13 | 4 | 4.91 | 0.00 | 4.91 | (3.66 | ) | 1.25 | 0.02 | 3.3 | 32.78 | ||||||||||||||||||||||||||||||||||||||||||||||||
20121 | 10.00 | (0.02 | )2 | 0.44 | 0.42 | 0.00 | 0.00 | 0.00 | 10.42 | 4.20 | 4,6 | 7.33 | 7,8 | 0.00 | 7,8 | 7.33 | 7,8 | (6.08 | )7,8 | 1.25 | 7,8 | (0.30 | )7,8 | 1.6 | 24.64 | 6 | ||||||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2019 | 20.03 | (0.08 | )2 | 7.06 | 6.98 | 0.00 | 0.00 | 0.00 | 27.01 | 34.85 | 4,6 | 1.08 | 8 | 0.00 | 11 | 1.08 | 8 | (0.18 | )8 | 0.90 | 8 | (0.63 | ) | 5.8 | 6.26 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 20.79 | (0.15 | )2 | (0.61 | ) | (0.76 | ) | 0.00 | 0.00 | 0.00 | 20.03 | (3.66 | )4 | 1.16 | 0.00 | 11 | 1.16 | (0.26 | ) | 0.90 | (0.69 | ) | 4.3 | 19.77 | ||||||||||||||||||||||||||||||||||||||||||||
2017 | 13.87 | (0.14 | )2 | 7.06 | 6.92 | 0.00 | 0.00 | 0.00 | 20.79 | 49.89 | 4 | 1.69 | (0.01 | ) | 1.68 | (0.59 | ) | 1.09 | (0.75 | ) | 0.4 | 27.98 | ||||||||||||||||||||||||||||||||||||||||||||||
20169 | 14.37 | (0.07 | )2 | (0.43 | ) | (0.50 | ) | 0.00 | 0.00 | 0.00 | 13.87 | (3.48 | )4,6 | 4.11 | 8 | 0.00 | 4.11 | 8 | (2.87 | )8 | 1.24 | 8 | (1.52 | )8 | 0.1 | 21.48 |
1 | For the period April 30, 2012 (commencement of operations) to December 31, 2012. |
2 | Based on average shares outstanding. |
3 | Less than $0.01 per share. |
4 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
5 | The Adviser made a voluntary payment to the Fund in the amount of $47,291 to compensate the Fund for a loss incurred due to a shareholder activity processing error. The impact of this payment increased the Fund’s total return by 0.54%. |
6 | Not Annualized. |
7 | Certain fixed expenses incurred by the Fund were not annualized for the period ended December 31, 2012. |
8 | Annualized. |
9 | For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. |
10 | The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of Fund shares in relation to fluctuating market values of investments of the Fund. |
11 | Interest expense rounds to less than 0.01%. |
See Notes to Financial Statements. | 53 |
Table of Contents
Baron Select Funds | June 30, 2019 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON REAL ESTATE INCOME FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratio to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income ($) | Net realized and unrealized gain ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 8.63 | 0.10 | 2 | 1.68 | 1.78 | (0.07 | ) | 0.00 | (0.07 | ) | 10.34 | 20.61 | 3,4 | 7.79 | 5 | (6.74 | )5 | 1.05 | 5 | 1.96 | 5 | 0.8 | 29.21 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | 0.14 | 2 | (1.25 | ) | (1.11 | ) | (0.26 | ) | 0.00 | (0.26 | ) | 8.63 | (11.33 | )3 | 10.47 | (9.42 | ) | 1.05 | 1.43 | 0.4 | 67.39 | ||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 8.66 | 0.10 | 2 | 1.69 | 1.79 | (0.07 | ) | 0.00 | (0.07 | ) | 10.38 | 20.65 | 3,4 | 6.16 | 5 | (5.36 | )5 | 0.80 | 5 | 2.08 | 5 | 2.5 | 29.21 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | 0.16 | 2 | (1.24 | ) | (1.08 | ) | (0.26 | ) | 0.00 | (0.26 | ) | 8.66 | (11.03 | )3 | 7.18 | (6.38 | ) | 0.80 | 1.71 | 2.0 | 67.39 | ||||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 8.66 | 0.10 | 2 | 1.70 | 1.80 | (0.07 | ) | 0.00 | (0.07 | ) | 10.39 | 20.77 | 3,4 | 5.75 | 5 | (4.95 | )5 | 0.80 | 5 | 2.03 | 5 | 0.4 | 29.21 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | 0.20 | 2 | (1.28 | ) | (1.08 | ) | (0.26 | ) | 0.00 | (0.26 | ) | 8.66 | (11.03 | )3 | 7.05 | (6.25 | ) | 0.80 | 2.07 | 0.4 | 67.39 |
1 | For the period January 2, 2018 (commencement of operations) to December 31, 2018. |
2 | Based on average shares outstanding. |
3 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
4 | Not Annualized. |
5 | Annualized. |
54 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON HEALTH CARE FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 9.51 | (0.03 | )2 | 2.14 | 2.11 | 0.00 | 0.00 | 0.00 | 11.62 | 22.19 | 3,4 | 3.56 | 5 | (2.46 | )5 | 1.10 | 5 | (0.59 | )5 | 4.7 | 31.35 | 4 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | (0.04 | )2 | (0.45 | ) | (0.49 | ) | 0.00 | 0.00 | 0.00 | 9.51 | (4.90 | )3,4 | 4.94 | 5 | (3.84 | )5 | 1.10 | 5 | (0.60 | )5 | 2.8 | 27.30 | 4 | ||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 9.53 | (0.02 | )2 | 2.14 | 2.12 | 0.00 | 0.00 | 0.00 | 11.65 | 22.25 | 3,4 | 3.14 | 5 | (2.29 | )5 | 0.85 | 5 | (0.34 | )5 | 5.8 | 31.35 | 4 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | (0.02 | )2 | (0.45 | ) | (0.47 | ) | 0.00 | 0.00 | 0.00 | 9.53 | (4.70 | )3,4 | 4.06 | 5 | (3.21 | )5 | 0.85 | 5 | (0.33 | )5 | 4.5 | 27.30 | 4 | ||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 9.52 | (0.02 | )2 | 2.15 | 2.13 | 0.00 | 0.00 | 0.00 | 11.65 | 22.37 | 3,4 | 2.98 | 5 | (2.13 | )5 | 0.85 | 5 | (0.34 | )5 | 1.0 | 31.35 | 4 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20181 | 10.00 | (0.02 | )2 | (0.46 | ) | (0.48 | ) | 0.00 | 0.00 | 0.00 | 9.52 | (4.80 | )3,4 | 3.14 | 5 | (2.29 | )5 | 0.85 | 5 | (0.32 | )5 | 0.7 | 27.30 | 4 |
1 | For the period April 30, 2018 (commencement of operations) to December 31, 2018. |
2 | Based on average shares outstanding. |
3 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
4 | Not Annualized. |
5 | Annualized. |
See Notes to Financial Statements. | 55 |
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Baron Select Funds | June 30, 2019 |
As a shareholder of the Funds, you may incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include advisory fees, distribution and service(12b-1) fees and other Fund expenses. Due to the payment of Rule12b-1 fees, long-term shareholders may indirectly pay more than the maximum permittedfront-end sales charge. The information on this page is intended to help you understand your ongoing costs of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The information in the following table is based on an investment of $1,000 invested on January 1, 2019 and held for the six months ended June 30, 2019.
ACTUAL EXPENSES
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading titled “Expenses Paid During the Period”.
BASED ON ACTUAL TOTAL RETURN FOR THE SIX MONTHS ENDED JUNE 30, 20191
Actual Total Return | Beginning Account Value January 1, 2019 | Ending Account Value June 30, 2019 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron Partners Fund — Retail Shares | 25.41 | % | $ | 1,000.00 | $ | 1,254.10 | 2.30 | %2 | $ | 12.85 | ||||||||||
Baron Partners Fund — Institutional Shares | 25.56 | % | $ | 1,000.00 | $ | 1,255.60 | 2.04 | %2 | $ | 11.41 | ||||||||||
Baron Partners Fund — R6 Shares | 25.58 | % | $ | 1,000.00 | $ | 1,255.80 | 2.04 | %2 | $ | 11.41 | ||||||||||
Baron Focused Growth Fund — Retail Shares | 13.22 | % | $ | 1,000.00 | $ | 1,132.20 | 4 | 1.36 | %5 | $ | 7.19 | |||||||||
Baron Focused Growth Fund — Institutional Shares | 13.37 | % | $ | 1,000.00 | $ | 1,133.70 | 4 | 1.11 | %5 | $ | 5.87 | |||||||||
Baron Focused Growth Fund — R6 Shares | 13.30 | % | $ | 1,000.00 | $ | 1,133.00 | 4 | 1.11 | %5 | $ | 5.87 | |||||||||
Baron International Growth Fund — Retail Shares | 19.74 | % | $ | 1,000.00 | $ | 1,197.40 | 4 | 1.20 | %5 | $ | 6.54 | |||||||||
Baron International Growth Fund — Institutional Shares | 19.85 | % | $ | 1,000.00 | $ | 1,198.50 | 4 | 0.95 | %5 | $ | 5.18 | |||||||||
Baron International Growth Fund — R6 Shares | 19.85 | % | $ | 1,000.00 | $ | 1,198.50 | 4 | 0.95 | %5 | $ | 5.18 | |||||||||
Baron Real Estate Fund — Retail Shares | 23.98 | % | $ | 1,000.00 | $ | 1,239.80 | 1.33 | % | $ | 7.39 | ||||||||||
Baron Real Estate Fund — Institutional Shares | 24.12 | % | $ | 1,000.00 | $ | 1,241.20 | 1.08 | % | $ | 6.00 | ||||||||||
Baron Real Estate Fund — R6 Shares | 24.12 | % | $ | 1.000.00 | $ | 1,241.20 | 1.07 | % | $ | 5.95 | ||||||||||
Baron Emerging Markets Fund — Retail Shares | 12.13 | % | $ | 1,000.00 | $ | 1,121.30 | 1.36 | % | $ | 7.15 | ||||||||||
Baron Emerging Markets Fund — Institutional Shares | 12.27 | % | $ | 1,000.00 | $ | 1,122.70 | 1.11 | % | $ | 5.84 | ||||||||||
Baron Emerging Markets Fund — R6 Shares | 12.26 | % | $ | 1,000.00 | $ | 1,122.60 | 1.11 | % | $ | 5.84 | ||||||||||
Baron Global Advantage Fund — Retail Shares | 34.65 | % | $ | 1,000.00 | $ | 1,346.50 | 4 | 1.15 | %5 | $ | 6.69 | |||||||||
Baron Global Advantage Fund — Institutional Shares | 34.87 | % | $ | 1,000.00 | $ | 1,348.70 | 4 | 0.90 | %5 | $ | 5.24 | |||||||||
Baron Global Advantage Fund — R6 Shares | 34.85 | % | $ | 1,000.00 | $ | 1,348.50 | 4 | 0.90 | %5 | $ | 5.24 | |||||||||
Baron Real Estate Income Fund — Retail Shares | 20.61 | % | $ | 1,000.00 | $ | 1,206.10 | 4 | 1.05 | %5 | $ | 5.74 | |||||||||
Baron Real Estate Income Fund — Institutional Shares | 20.65 | % | $ | 1,000.00 | $ | 1,206.50 | 4 | 0.80 | %5 | $ | 4.38 | |||||||||
Baron Real Estate Income Fund — R6 Shares | 20.77 | % | $ | 1,000.00 | $ | 1,207.70 | 4 | 0.80 | %5 | $ | 4.38 | |||||||||
Baron Health Care Fund — Retail Shares | 22.19 | % | $ | 1,000.00 | $ | 1,221.90 | 4 | 1.10 | %5 | $ | 6.06 | |||||||||
Baron Health Care Fund — Institutional Shares | 22.25 | % | $ | 1,000.00 | $ | 1,222.50 | 4 | 0.85 | %5 | $ | 4.68 | |||||||||
Baron Health Care Fund — R6 Shares | 22.37 | % | $ | 1,000.00 | $ | 1,223.70 | 4 | 0.85 | %5 | $ | 4.69 |
1 | Assumes reinvestment of all dividends and capital gain distributions, if any. |
2 | Annualized expense ratio for Baron Partners Fund for the six months ended June 30, 2019, includes 1.33%, 1.07% and 1.07% for net operating expenses and 0.97%, 0.97% and 0.97% for interest expense for the Retail, Institutional and R6 Shares, respectively. |
3 | Expenses are equal to each share class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
4 | Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived. |
5 | Annualized expense ratios are adjusted to reflect fee waiver. |
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June 30, 2019 | Baron Select Funds |
FUND EXPENSES (Unaudited) (Continued)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account values and expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Funds and other funds. To do so, compare the 5% hypothetical example relating to the Funds with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table below are meant to highlight your ongoing costs and do not reflect any transactional costs, such as redemption fees, if any. Therefore, the table is useful in comparing ongoing costs only and will not help you determine your relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs would have been higher.
BASED ON HYPOTHETICAL TOTAL RETURN FOR THE SIX MONTHS ENDED JUNE 30, 2019
Hypothetical Annualized Total Return | Beginning Account Value January 1, 2019 | Ending Account Value June 30, 2019 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron Partners Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,013.39 | 2.30 | %2 | $ | 11.48 | ||||||||||
Baron Partners Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,014.68 | 2.04 | %2 | $ | 10.19 | ||||||||||
Baron Partners Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,014.68 | 2.04 | %2 | $ | 10.19 | ||||||||||
Baron Focused Growth Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.05 | 4 | 1.36 | %5 | $ | 6.80 | |||||||||
Baron Focused Growth Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.29 | 4 | 1.11 | %5 | $ | 5.56 | |||||||||
Baron Focused Growth Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.29 | 4 | 1.11 | %5 | $ | 5.56 | |||||||||
Baron International Growth Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.84 | 4 | 1.20 | %5 | $ | 6.01 | |||||||||
Baron International Growth Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.08 | 4 | 0.95 | %5 | $ | 4.76 | |||||||||
Baron International Growth Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.08 | 4 | 0.95 | %5 | $ | 4.76 | |||||||||
Baron Real Estate Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.20 | 1.33 | % | $ | 6.66 | ||||||||||
Baron Real Estate Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.44 | 1.08 | % | $ | 5.41 | ||||||||||
Baron Real Estate Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.49 | 1.07 | % | $ | 5.36 | ||||||||||
Baron Emerging Markets Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.05 | 1.36 | % | $ | 6.80 | ||||||||||
Baron Emerging Markets Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.29 | 1.11 | % | $ | 5.56 | ||||||||||
Baron Emerging Markets Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.29 | 1.11 | % | $ | 5.56 | ||||||||||
Baron Global Advantage Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.09 | 4 | 1.15 | %5 | $ | 5.76 | |||||||||
Baron Global Advantage Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.33 | 4 | 0.90 | %5 | $ | 4.51 | |||||||||
Baron Global Advantage Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.33 | 4 | 0.90 | %5 | $ | 4.51 | |||||||||
Baron Real Estate Income Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.59 | 4 | 1.05 | %5 | $ | 5.26 | |||||||||
Baron Real Estate Income Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.83 | 4 | 0.80 | %5 | $ | 4.01 | |||||||||
Baron Real Estate Income Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.83 | 4 | 0.80 | %5 | $ | 4.01 | |||||||||
Baron Health Care Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.34 | 4 | 1.10 | %5 | $ | 5.51 | |||||||||
Baron Health Care Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.58 | 4 | 0.85 | %5 | $ | 4.26 | |||||||||
Baron Health Care Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,020.58 | 4 | 0.85 | %5 | $ | 4.26 |
1 | Assumes reinvestment of all dividends and capital gain distributions, if any. |
2 | Annualized expense ratio for Baron Partners Fund for the six months ended June 30, 2019, includes 1.33%, 1.07% and 1.07% for net operating expenses and 0.97%, 0.97% and 0.97% for interest expense for the Retail, Institutional and R6 Shares, respectively. |
3 | Expenses are equal to each share class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
4 | Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived. |
5 | Annualized expense ratios are adjusted to reflect fee waiver. |
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Baron Select Funds | June 30, 2019 |
DISCLOSURE REGARDING THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS FOR EACH OF THE SERIES BY THE BOARD OF TRUSTEES (Unaudited)
The Board of Trustees (the “Board”) of Baron Select Funds (the “Trust”) met on May 23, 2019 to discuss the selection of BAMCO, Inc. (the “Adviser”) as the investment adviser and the approval of the investment advisory agreements for Baron Partners Fund, Baron Focused Growth Fund, Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund, and Baron Health Care Fund (each, a “Fund” and collectively, the “Funds”). The members of the Board who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Trust (the “Independent Trustees”) met in a separate session to discuss and consider the renewal of the investment advisory agreements for the Funds. Representatives of Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, provided reports to the Board and attended the Board meeting. The Trustees received a substantial amount of information from the Adviser and from Broadridge, and were advised by independent legal counsel. Based on its evaluation of this and other information, the Board, including a majority of the Independent Trustees, approved the continuation of the investment advisory agreements for the Funds for an additional one-year period.
In reaching its determination, the Board considered various factors that it deemed relevant, including the factors listed below.
1. NATURE, EXTENT AND QUALITY OF SERVICES
As part of their consideration of the nature, extent and quality of services provided by the Adviser, the Independent Trustees considered the information provided, including their experience and knowledge gained from their service as Trustees and their experience generally, including the following, which they had considered in past years and remained, in their thinking, material to their consideration:
• | Their confidence in the senior personnel, portfolio management, the financial condition of the Adviser and its affiliates and the Adviser’s available resources; |
• | The nature, extent and quality of the services provided by the Adviser, including: intensive devotion to research, selection of broker/dealers for Fund portfolio transactions, relationships with and supervision of third party service providers, such as the Funds’ custodian and transfer agent, the quality of shareholder reports, the ability to monitor adherence to investment guidelines and restrictions, the legal, accounting and compliance services provided to the Funds and the support services provided to the Board; |
• | The Adviser’s investment principles and processes and the historical performance of the Funds as compared to similar funds managed by other advisers and other funds managed by the Adviser over comparable periods; |
• | The advisory fees, total expense ratios of the Funds and comparisons to similar funds managed by other advisers over comparable periods. They observed that, for most of the Funds, while the advisory fee was comparatively higher, the net operating expenses paid by the Funds (total expense ratio) were within the range of those of the funds in their respective peer groups; and |
• | Additional services provided by the Adviser. |
Based on the considerations as described above, the Board concluded that the nature, extent and quality of the services the Adviser provides to each Fund, including performance consistent with its investing principles as discussed below, supported approval of the investment advisory agreement for each Fund.
2. INVESTMENT PERFORMANCE OF THE FUNDS AND THE ADVISER
As part of its consideration of the investment performance of the Funds and the Adviser, the Board took into account the analyses performed by and discussed with representatives of Broadridge. The Board considered for each Fund, among other information, Broadridge’s comparisons of the expense ratio and contractual advisory fee with those of peer group (comparable) funds selected by Broadridge and Morningstar category medians. The Board also considered, among other performance information, Broadridge’s comparisons of each Fund’s annualized total return and related risk metrics over one-, three- and five-year periods, where applicable, against peer group funds and Morningstar category medians. After considering all the information, the Board concluded that the Adviser continued to invest in accordance with its long-standing principles and that each Fund’s performance remained consistent with expectations for the Adviser’s investment style, in light of recent market conditions.
3. COSTS OF SERVICES PROVIDED AND PROFITS TO BE REALIZED BY THE ADVISER
The Board considered comparisons of the advisory fees charged and services provided by the Adviser and its investment adviser affiliate to sub-advised accounts and separately managed accounts. The Board considered that, while the advisory fees for the other clients are the same as, or lower than, the fees for the Funds, the Adviser or its affiliate performs significantly fewer services for those clients compared with those provided by the Adviser to the Funds. The Board also considered a profitability analysis prepared by the Adviser and discussed with the representatives of the Adviser that the Adviser has continued to invest in quality personnel, systems and facilities, and otherwise continued to invest in its business, irrespective of fund flows.
The Board also considered benefits that accrue to the Adviser and its affiliates from their relationship with the Funds. The Board considered the costs of portfolio management, including the types of investments made for the Funds, the personnel and systems necessary for implementation of investment strategies, and the pre-tax profits realized by the Adviser and its affiliates from their relationship with the Funds.
The Board concluded that the advisory fee for each Fund was supportable in light of the services provided as discussed at this meeting.
4. ECONOMIES OF SCALE AND BENEFITS TO INVESTORS
The Board considered the extent to which each Fund’s advisory fee reflected economies of scale for the benefit of Fund shareholders, appreciating that the economies of scale analysis is predicated on generally predictable increasing assets and noting the small size of certain Funds and the significant fluctuation in assets in recent years. The Board considered that small- and mid-cap investment strategies require more attention by the Adviser than a strategy that involves other types of investing, particularly as asset size increases. The Board considered that the Adviser was continuing to grow and upgrade its staff and invest in its business. The Board members reiterated their intention to continue to consider the extent of economies of scale, asset growth and the Adviser’s plans to invest further to support the Funds.
After due consideration of the above-enumerated factors and other factors it deemed relevant, the Board, including a majority of the Independent Trustees, approved the continuance of each Fund’s investment advisory agreement.
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Table of Contents
JUNE 19
Table of Contents
June 30, 2019
Baron Funds
Baron WealthBuilder Fund
Semi-Annual Financial Report
Ticker Symbols: | ||||
Retail Shares: BWBFX | ||||
TA Shares: BWBTX | ||||
Institutional Shares: BWBIX | ||||
Performance | 3 | |||
Country Exposures | 4 | |||
Sector Exposures | 4 | |||
Management’s Discussion of Fund Performance | 4 | |||
Financial Statements | ||||
Statement of Net Assets | 5 | |||
Statement of Assets and Liabilities | 6 | |||
Statement of Operations | 7 | |||
Statement of Changes in Net Assets | 8 | |||
Notes to Financial Statements | 9 | |||
Financial Highlights | 13 | |||
Fund Expenses | 14 | |||
Disclosure Regarding the Approval of the | 15 |
DEAR BARON WEALTHBUILDER FUND SHAREHOLDER:
In this report, you will find unaudited financial statements for Baron WealthBuilder Fund® (the “Fund”) for the six months ended June 30, 2019. The U.S. Securities and Exchange Commission (the “SEC”) requires mutual funds to furnish these statements semi-annually to their shareholders. We hope you find these statements informative and useful.
We thank you for choosing to join us as fellow shareholders in Baron Funds. We will continue to work hard to justify your confidence.
Sincerely,
Ronald Baron Chief Executive Officer and Chief Investment Officer August 29, 2019 | Linda S. Martinson Chairman, President and Chief Operating Officer August 29, 2019 | Peggy Wong Treasurer and Chief Financial Officer August 29, 2019 |
This Semi-Annual Financial Report is for the Baron WealthBuilder Fund. If you are interested in the other series of Baron Select Funds, which contains the Baron Partners Fund, Baron Focused Growth Fund, Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund, and Baron Health Care Fund, or Baron Investment Funds Trust, which contains the Baron Asset Fund, Baron Growth Fund, Baron Small Cap Fund, Baron Opportunity Fund, Baron Fifth Avenue Growth Fund, Baron Discovery Fund, and Baron Durable Advantage Fund, please visit the Funds’ website at www.BaronFunds.com or contact us at 1-800-99BARON.
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds’ shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from Baron Funds (“Baron”) or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Baron website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from Baron or your financial intermediary electronically by contacting your financial intermediary or going to icsdelivery.com/baronfunds.
You may elect to receive all future reports in paper free of charge. You can inform Baron or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions included on the envelope or slip inserted with this disclosure. Your election to receive reports in paper will apply to all funds held with Baron or your financial intermediary.
The Funds’ Proxy Voting Policy is available without charge and can be found on the Funds’ website at www.BaronFunds.com, by clicking on the “Legal Notices” link at the bottom left corner of the homepage or by calling 1-800-99BARON and on the SEC’s website at www.sec.gov. The Funds’ most current proxy voting record, Form N-PX, is also available on the Funds’ website and on the SEC’s website.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT. The Funds’ Form N-PORT reports are available on the SEC’s website at www.sec.gov. Schedules of portfolio holdings current to the most recent quarter are also available on the Funds’ website.
Some of the comments contained in this report are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as “estimate,” “may,” “expect,” “should,” “could,” “believe,” “plan”, and other similar terms. We cannot promise future returns and our opinions are a reflection of our best judgment at the time this report is compiled.
The views expressed in this report reflect those of BAMCO, Inc. (“BAMCO” or the “Adviser”) only through the end of the period stated in this report. The views are not intended as recommendations or investment advice to any person
reading this report and are subject to change at any time without notice based on market and other conditions.
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. For more complete information about Baron Funds, including charges and expenses, call, write or go to www.BaronFunds.com for a prospectus or summary prospectus. Read them carefully before you invest or send money. This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund, unless accompanied or preceded by the Fund’s current prospectus or summary prospectus.
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
Baron WealthBuilder Fund is an open end,no-load mutual fund that invests only in Baron Funds. Long-term capital appreciation is its objective. It is not a target date fund.
1. | Baron WealthBuilder Fund’s objective is to provide investors with a diversified portfolio of Baron mutual funds that will outperform its benchmark index over the long term, although we cannot guarantee it will meet its objective. |
2. | Baron WealthBuilder Fund’s minimum initial investment is $2,000, making it suitable for periodic purchases. |
3. | Baron WealthBuilder Fund has no management fee, but it will indirectly bear its pro-rata share of the expenses of the Baron Funds in which it invests (acquired funds). |
4. | Baron WealthBuilder Fund’s annual operating expenses are capped at 5 bps per year for Institutional Shares and TA Shares (available directly through Baron Funds). Retail Shares operating expenses are capped at 30 bps per year. Portfolio transaction costs, interest, dividend, acquired fund fees and expenses are not subject to the operating expense limitation. |
Several criteria, including our qualitative assessments, are used to continually determine Baron WealthBuilder Fund allocations among Baron Funds.
Among the criteria are: (a) absolute performance; (b) excess performance vs benchmark; (c) performance standard deviation (a measure of risk); (d) Sharpe ratio (a measure of performance per unit of risk); (e) beta (a measure of a fund’s sensitivity to market movements); (f) alpha (a measure of excess return given level of risk as measured by beta); (g) portfolio turnover; (h) growth rates of portfolio investments; (i) fund size; and (j) manager tenure.
As of June 30, 2019, the five largest Baron mutual funds represented 68.8% of Baron WealthBuilder Fund’s net assets.
Ronald Baron, CEO and CIO of Baron Capital is the portfolio manager of Baron WealthBuilder Fund. Michael Baron, Vice President, is the assistant portfolio manager.
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June 30, 2019 (Unaudited) | Baron WealthBuilder Fund |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON WEALTHBUILDER FUND (RETAIL SHARES)
INRELATIONTOTHE S&P 500 INDEXANDTHE MSCI ACWI INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2019 |
| |||||||||||
Six Months* | One Year | Since Inception (December 29, 2017) | ||||||||||
Baron WealthBuilder Fund — Retail Shares1, 2 | 25.72% | 9.36% | 11.32% | |||||||||
Baron WealthBuilder Fund — TA Shares1, 2 | 25.78% | 9.64% | 11.51% | |||||||||
Baron WealthBuilder Fund — Institutional Shares1, 2 | 25.78% | 9.64% | 11.51% | |||||||||
S&P 500 Index1 | 18.54% | 10.42% | 8.71% | |||||||||
MSCI ACWI Index Net1 | 16.23% | 5.74% | 3.49% |
* | Not Annualized. |
1 | The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index. 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 U.S. dollars that measures the equity market performance of large- and mid-cap securities across developed and emerging markets. The Indexes and Baron WealthBuilder Fund are with dividends, which positively impact the performance results. |
2 | 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. BAMCO, Inc. (“BAMCO” or the “Adviser”) has agreed that, pursuant to a contract expiring on August 29, 2030, unless renewed for another11-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 expense are not subject to the operating expense limitation) to 0.30% of average daily net assets of Retail Shares, 0.05% of average daily net assets of Institutional shares and 0.05% of average daily net assets of TA shares, without which performance would have been lower. |
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Baron WealthBuilder Fund(Unaudited) | June 30, 2019 |
COUNTRY EXPOSURESASOF JUNE 30, 2019
Percent of Total Investments | ||||
United States | 85.3% | |||
China | 3.2% | |||
Israel | 1.5% | |||
United Kingdom | 1.5% | |||
India | 1.3% | |||
Brazil | 1.2% | |||
Netherlands | 1.0% | |||
South Africa | 0.6% | |||
Sweden | 0.5% | |||
Canada | 0.4% | |||
Other | 3.5% | |||
100.0% |
SECTOR EXPOSURESASOF JUNE 30, 2019†
(as a percent of total investments)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For thesix-month period ended June 30, 2019, Baron WealthBuilder Fund1 increased 25.72%, outperforming the S&P 500 Index, which increased 18.54%, and the MSCI ACWI Index, which rose 16.23%.
Baron WealthBuilder Fund is anon-diversified fund that invests exclusively in other Baron mutual funds. At any given time, it invests in the securities of a select number of Baron mutual funds representing specific investment strategies. The Fund can invest in funds holding U.S. and international stocks;small-cap,small-to-mid-cap,mid-cap,large-cap,all-cap stocks; and sector stocks. Baron WealthBuilder Fund normally invests in a variety of domestic and international equity funds. It seeks to invest in businesses it believes have significant opportunities for growth, sustainable competitive advantages, exceptional management, and an attractive valuation.
After a rough end to 2018, equities reversed course in the first six months of 2019, as the market shrugged off concerns of a global macro slowdown along with mixed signals from the U.S. economy, and investors started pricing in the more dovish interest rate stance telegraphed by the Federal Reserve, which indicated there was a growing probability for rate cuts throughout the second half of the year. Although volatility did increase toward the end of the period, the market maintained the solid momentum it showed earlier in the year, and several major indexes hit record highs.
On a country basis, the United States, China, and Brazil contributed the most to performance; no country materially detracted.
On a sector basis, Information Technology, Industrials, and Health Care contributed the most to performance; no sector detracted.
Baron Asset Fund contributed the most to performance; no Fund detracted in the period.
While we believe the U.S. Federal Reserve’s policy shift to a more accommodative stance coupled with what appears to be easing trade tensions with China bodes well for many of our investments, we remain focused on the long term. We remain confident that our forward-looking andbottom-up fundamental approach positions us to discover exciting long-term investment opportunities regardless of the market environment.
† | Sector levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. and Standard & Poor’s Financial Services LLC, unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties. |
1 | Performance information reflects results of the Retail Shares. |
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Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2019
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Shares | Cost | Value | ||||||||||
Affiliated Mutual Funds (103.47%) | ||||||||||||
Small Cap Funds (34.30%) | ||||||||||||
212,438 | Baron Discovery Fund — Institutional Shares | $ | 4,384,298 | $ | 4,393,213 | |||||||
170,837 | Baron Growth Fund — Institutional Shares | 12,629,051 | 14,053,019 | |||||||||
438,601 | Baron Small Cap Fund — Institutional Shares | 13,426,363 | 14,144,878 | |||||||||
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Total Small Cap Funds | 30,439,712 | 32,591,110 | ||||||||||
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Small to Mid Cap Funds (4.10%) | ||||||||||||
212,658 | Baron Focused Growth Fund — Institutional Shares | 3,696,569 | 3,893,762 | |||||||||
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Mid Cap Funds (16.83%) | ||||||||||||
182,288 | Baron Asset Fund — Institutional Shares | 13,839,299 | 15,997,568 | |||||||||
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Large Cap Funds (7.56%) | ||||||||||||
87,621 | Baron Durable Advantage Fund — Institutional Shares | 927,383 | 1,004,133 | |||||||||
185,900 | Baron Fifth Avenue Growth Fund — Institutional Shares | 5,377,199 | 6,179,302 | |||||||||
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Total Large Cap Funds | 6,304,582 | 7,183,435 | ||||||||||
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All Cap Funds (22.26%) | ||||||||||||
275,066 | Baron Opportunity Fund — Institutional Shares | 5,714,456 | 6,461,296 | |||||||||
239,526 | Baron Partners Fund — Institutional Shares | 13,023,776 | 14,694,915 | |||||||||
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Total All Cap Funds | 18,738,232 | 21,156,211 | ||||||||||
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International Funds (13.10%) | ||||||||||||
370,316 | Baron Emerging Markets Fund — Institutional Shares | 4,879,934 | 5,184,423 | |||||||||
158,007 | Baron Global Advantage Fund — Institutional Shares | 3,565,476 | 4,264,613 | |||||||||
129,585 | Baron International Growth Fund — Institutional Shares | 2,931,090 | 2,996,007 | |||||||||
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Total International Funds | 11,376,500 | 12,445,043 | ||||||||||
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Specialty Funds (5.32%) | ||||||||||||
56,078 | Baron Health Care Fund — Institutional Shares | 588,360 | 653,304 | |||||||||
168,011 | Baron Real Estate Fund — Institutional Shares | 4,447,364 | 4,400,195 | |||||||||
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Total Specialty Funds | 5,035,724 | 5,053,499 | ||||||||||
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Total Affiliated Investments (103.47%) | $ | 89,430,618 | 98,320,628 | |||||||||
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Liabilities Less Cash and Other Assets(-3.47%) | (3,295,377 | ) | ||||||||||
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�� | Net Assets | $ | 95,025,251 | |||||||||
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Retail Shares (Equivalent to $11.73 per share based on 290,107 shares outstanding) | $ | 3,402,717 | ||||||||||
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TA Shares (Equivalent to $11.76 per share based on 1,128,001 shares outstanding) | $ | 13,269,823 | ||||||||||
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Institutional Shares (Equivalent to $11.76 per share based on 6,662,486 shares outstanding) | $ | 78,352,711 | ||||||||||
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% | Represents percentage of net assets. |
All Affiliated Mutual Funds are Level 1.
See Notes to Financial Statements. | 5 |
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2019
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Assets: | ||||
Investments in Affiliated Mutual Funds, at value* | $ | 98,320,628 | ||
Cash | 66,259 | |||
Receivable for shares sold | 13,662 | |||
Prepaid expenses | 735 | |||
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98,401,284 | ||||
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Liabilities: | ||||
Payable for borrowings against line of credit | 3,300,000 | |||
Distribution fees payable (Note 4) | 913 | |||
Accrued expenses and other payables | 75,120 | |||
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3,376,033 | ||||
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Net Assets | $ | 95,025,251 | ||
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Net Assets consist of: | ||||
Paid-in capital | $ | 84,442,068 | ||
Distributable earnings/(losses) | 10,583,183 | |||
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Net Assets | $ | 95,025,251 | ||
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Retail Shares: | ||||
Net Assets | $ | 3,402,717 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 290,107 | |||
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Net Asset Value and Offering Price Per Share | $ | 11.73 | ||
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TA Shares: | ||||
Net Assets | $ | 13,269,823 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 1,128,001 | |||
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Net Asset Value and Offering Price Per Share | $ | 11.76 | ||
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Institutional Shares: | ||||
Net Assets | $ | 78,352,711 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 6,662,486 | |||
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Net Asset Value and Offering Price Per Share | $ | 11.76 | ||
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*Investments in Affiliated Mutual Funds, at cost | $ | 89,430,618 | ||
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6 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
STATEMENT OF OPERATIONS (Unaudited)
JUNE 30, 2019
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For the Six Months Ended June 30, 2019 | ||||
Investment income: | ||||
Expenses: | ||||
Registration and filing fees | $ | 32,609 | ||
Custodian and fund accounting fees | 26,608 | |||
Administration fees | 14,813 | |||
Distribution fees — Retail Shares (Note 4) | 3,526 | |||
Trustee fees and expenses | 3,082 | |||
Professional fees | 2,424 | |||
Shareholder servicing agent fees and expenses — Retail Shares | 110 | |||
Shareholder servicing agent fees and expenses — TA Shares | 287 | |||
Shareholder servicing agent fees and expenses — Institutional Shares | 1,595 | |||
Insurance expense | 466 | |||
Line of credit fees | 403 | |||
Reports to shareholders | 110 | |||
Miscellaneous expenses | 4,181 | |||
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Total operating expenses | 90,214 | |||
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Interest expense on borrowings | 13,445 | |||
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Total expenses | 103,659 | |||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | (1,566 | ) | ||
Reimbursement of expenses by Adviser — TA Shares (Note 4) | (6,562 | ) | ||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | (51,880 | ) | ||
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Net expenses | 43,651 | |||
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Net investment income (loss) | (43,651 | ) | ||
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Realized and unrealized gain (loss) on investments: | ||||
Net realized gain (loss) on Affiliated Mutual Funds | (2,128,143 | ) | ||
Change in net unrealized appreciation (depreciation) of Affiliated Mutual Funds | 25,385,091 | |||
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Net gain (loss) on investments | 23,256,948 | |||
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Net increase (decrease) in net assets resulting from operations | $ | 23,213,297 | ||
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See Notes to Financial Statements. | 7 |
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
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For the Six Months Ended June 30, 2019 | For the Year Ended December 31, 2018 | |||||||
Increase (Decrease) in Net Assets: | ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (43,651 | ) | $ | 46,897 | |||
Net realized gain (loss) on Affiliated Mutual Funds sold | (2,128,143 | ) | 3,948,554 | |||||
Change in net unrealized appreciation (depreciation) of Affiliated Mutual Funds | 25,385,091 | (16,495,081 | ) | |||||
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Increase (decrease) in net assets resulting from operations | 23,213,297 | (12,499,630 | ) | |||||
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Distributions to shareholders from: | ||||||||
Distributable earnings — Retail Shares | — | (2,877 | ) | |||||
Distributable earnings — TA Shares | — | (12,405 | ) | |||||
Distributable earnings — Institutional Shares | — | (115,202 | ) | |||||
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Decrease in net assets from distributions to shareholders | — | (130,484 | ) | |||||
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Capital share transactions: | ||||||||
Proceeds from the sale of shares — Retail Shares | 1,627,230 | 3,144,063 | ||||||
Proceeds from the sale of shares — TA Shares | 1,155,538 | 10,573,045 | ||||||
Proceeds from the sale of shares — Institutional Shares | 5,599,295 | 90,838,603 | ||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | 2,860 | ||||||
Net asset value of shares issued in reinvestment of distributions — TA Shares | — | 12,338 | ||||||
Net asset value of shares issues in reinvestment of distribution — Institutional Shares | — | 114,741 | ||||||
Cost of shares redeemed — Retail Shares | (929,831 | ) | (809,302 | ) | ||||
Cost of shares redeemed — TA Shares | (233,490 | ) | (803,316 | ) | ||||
Cost of shares redeemed — Institutional Shares | (30,255,445 | ) | (38,595 | ) | ||||
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Increase (decrease) in net assets derived from capital share transactions | (23,036,703 | ) | 103,034,437 | |||||
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Net increase (decrease) in net assets | 176,594 | 90,404,323 | ||||||
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Net Assets: | ||||||||
Beginning of period | 94,848,657 | 4,444,334 | ||||||
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End of period | $ | 95,025,251 | $ | 94,848,657 | ||||
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Capital share transactions — Retail Shares | ||||||||
Shares sold | 150,246 | 295,564 | ||||||
Shares issued in reinvestment of distributions | — | 282 | ||||||
Shares redeemed | (82,453 | ) | (76,836 | ) | ||||
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Net increase (decrease) | 67,793 | 219,010 | ||||||
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Capital share transactions TA Shares | ||||||||
Shares sold | 109,184 | 1,020,035 | ||||||
Shares issued in reinvestment of distributions | — | 1,214 | ||||||
Shares redeemed | (22,102 | ) | (80,334 | ) | ||||
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Net increase (decrease) | 87,082 | 940,915 | ||||||
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Capital share transactions — Institutional Shares | ||||||||
Shares sold | 508,019 | 8,535,421 | ||||||
Shares issued in reinvestment of distributions | — | 11,294 | ||||||
Shares redeemed | (2,729,744 | ) | (3,631 | ) | ||||
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Net increase (decrease) | (2,221,725 | ) | 8,543,084 | |||||
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8 | See Notes to Financial Statements. |
Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. ORGANIZATION
Baron Select Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company established as a Delaware statutory trust on April 30, 2003, and accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The Trust currently offers nine series. This report covers only the Baron WealthBuilder Fund (the “Fund”). The Fund’s investment objective is capital appreciation. The Fund is anon-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. However, included in the Underlying Funds are diversified funds (with the exception of Baron Partners Fund, Baron Focused Growth Fund, Baron Real Estate Income Fund, and Baron Health Care Fund). The Fund normally invests in a variety of Baron domestic and international equity funds managed by BAMCO, Inc. (“BAMCO” or the “Adviser”). The Fund can invest in Underlying Funds holding U.S. and international stocks;small-cap, small- tomid-cap,large-cap,all-cap stocks; and specialty stocks. The Adviser decides how much of the Fund’s assets to allocate to Underlying Funds based on the outlook for, and on the relative valuations of, the Underlying Funds and the various markets in which they invest. For information on the Underlying Funds, please refer to the Prospectuses and Statements of Additional Information of the Underlying Funds. Also, information on the Underlying Funds is available at www.baronfunds.com.
The Fund offers Retail Shares, TA Shares, and Institutional Shares. Each class of shares differs only in its ongoing fees, expenses and eligibility requirements. Retail Shares are offered to all investors but are not available through the Fund’s transfer agent. TA Shares are available only to investors who purchase shares directly through the Fund’s transfer agent. TA Shares do not charge a12b-1 fee or make revenue sharing payments, to include payments tosub-transfer agency or record-keeping services. Institutional Shares are for investments in the amount of $1 million or more. Institutional Shares are intended for certain financial intermediaries that offer shares of the Fund throughfee-based platforms, retirement platforms or other platforms. Each class of shares has equal rights to earnings and assets, except that each class bears different expenses for distribution and shareholder servicing. The Fund’s investment income, realized and unrealized gains or losses on investments, and expenses other than those attributable to a specific class are allocated to each class based on its relative net assets. Each class of shares has exclusive voting rights with respect to matters that affect just that class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the period. Actual results could differ from those estimates. Events occurring subsequent to the date of the Statement of Assets and Liabilities and through the date of issuance of the financial statements have been evaluated for adjustment to or disclosure in the financial statements.
a) Security Valuation. The Fund’s share price or net asset value (“NAV”) is calculated as of the scheduled close of the regular trading session (usually 4 p.m. E.T. or such other time as of which the Fund’s NAV is calculated (the “NAV Calculation Time”) on the New York Stock Exchange (the “Exchange”) on any day the Exchange is scheduled to be open. Investments in the Underlying Funds are valued at their closing NAV per share on the day of valuation.
Portfolio securities held by the Underlying Funds traded on any national stock exchange are valued based on the last sale price on the exchange where such shares are principally traded. For securities traded on NASDAQ, the Underlying Funds use the NASDAQ Official Closing Price. If there are no sales on a given day, the value of the security may be the average of the most recent bid and asked quotations on such exchange or the last sale price from a prior day. Where market quotations are not readily available, or, if in the Adviser’s judgment, they do not accurately reflect the fair value of a security held by one of the Underlying Funds, or an event occurs after the market close but before the Underlying Funds are priced that materially affects the value of a security, the security will be valued by the Adviser using policies and procedures approved by the Board of Trustees (the “Board”). Some of the more common reasons that may necessitate that a security held by one of the Underlying Funds be valued using “fair value” pricing may include, but are not limited to: trading of the security has been halted or suspended; or the security has not been traded for an extended period of time. The Adviser has a Fair Valuation Committee (the “Committee”) comprised of senior management representatives and the Committee reports to the Board every quarter. Factors the Committee may consider when valuing a security include whether a current price is stale, there is recent news, the security is thinly traded, transactions are infrequent, or quotations are genuine. There can be no guarantee, however, that a fair valuation used by the Underlying Funds on any given day will more accurately reflect the market value of an investment than the closing price of such investment in its market. U.S. Government obligations, money market instruments, and other debt instruments held by the Underlying Funds with a remaining maturity of 60 days or less are generally valued at amortized cost, which approximates fair value. Debt instruments having a greater remaining maturity will be valued on the basis of prices obtained from a pricing service approved by the Board or at the mean of the bid and ask prices from the dealer maintaining an active market in that security. The value of the Underlying Funds’ investments in convertible bonds/convertible preferred stocks is determined primarily by obtaining valuations from independent pricing services based on readily available bid quotations or, if quotations are not available, by methods which include various considerations such as yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Other inputs used by an independent pricing service to value convertible bonds/convertible preferred stocks generally include underlying stock data, conversion premiums, listed bond and preferred stock prices and other market information which may include benchmark curves, trade execution data, and sensitivity analysis, when available, or intrinsic value, which is calculated as the price of the common share on the valuation date adjusted for accrued and unpaid dividends.Open-end investment companies, including securities lending collateral invested in registered investment company money market funds, are valued at their NAV each day.
Non-U.S. equity securities held by the Underlying Funds traded on foreign securities exchanges are generally valued using an independent pricing vendor that provides model prices derived by applying daily fair value factors based on information such as local closing price, relevant general and sector indexes, currency fluctuations, and depositary receipts, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post-closing market movements up to the time the Underlying Funds are valued and translated into U.S. dollars. If the vendor does not provide an evaluated price, securities are valued based on their most recent closing prices and translated into U. S. dollars. The Adviser may also fair value securities in other situations, for example, when a particular foreign market is closed but the Underlying Funds are open. Other mutual funds may adjust the prices of their securities by different amounts.
9
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Securities Transactions, Investment Income and Expenses. Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on an identified cost basis for financial reporting and federal income tax purposes. Dividend income and capital gain distributions from the Underlying Funds are recognized on theex-dividend date and interest income is recognized on an accrual basis. Dividends received from Underlying Funds are reflected as dividend income; capital gain distributions as realized gains. The Fund is charged for those expenses directly attributable to the Fund, such as distribution and transfer agency fees.
Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses associated with the Underlying Funds. Because Underlying Funds have varied expenses and fee levels and the Fund may own different proportion of Underlying Funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary.
c) Repurchase Agreements. The Fund may invest in repurchase agreements, which are short term investments whereby the Fund acquires ownership of a debt security and the seller agrees to repurchase the security at a future date at a specified price. When entering into repurchase agreements, it is the Fund’s policy that its custodian takes possession of the underlying collateral securities, the market value of which, at all times, equals at least 102% of the principal amount of the repurchase transaction. To the extent that any repurchase transaction exceeds one business day, the value of the collateral ismarked-to-market to ensure the adequacy of the collateral. If the seller defaults and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. The Fund did not own any repurchase agreements at June 30, 2019.
d) Federal and Foreign Income Taxes. The Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. The Fund will not be subject to federal or state income taxes to the extent that it qualifies as regulated investment companies and substantially all of its income is distributed.
e) Distributions to Shareholders. Income and capital gain distributions to shareholders are determined in accordance with income tax regulations which may differ from GAAP. These differences are primarily due to differing treatments for net investment loss and wash sale losses deferred.
f) Commitments and Contingencies. In the normal course of business, the Fund may enter into contracts and agreements that contain a variety of representations and warranties, which provide general indemnification. The maximum exposure to the Fund under these agreements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.
g) Cash and Cash Equivalents. The Fund considers all short term liquid investments with a maturity of three months or less when purchased to be cash equivalents.
h) Diversification and Concentration of Underlying Funds. Certain of the Underlying Funds holdnon-diversified or concentrated portfolios that may contain fewer securities or invest in fewer industries than the portfolios of other mutual funds. This may increase the risk that the value of an Underlying Fund could decrease because of the poor performance of one or a few investments or of a particular industry. Additionally,non-diversified funds may encounter difficulty liquidating securities.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short term securities, for the six months ended June 30, 2019 were as follows:
Fund | Purchases | Sales | ||||||
Baron WealthBuilder Fund | $ | 6,176,973 | $ | 25,932,224 |
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
a) Investment Advisory Fees. The Adviser, a wholly owned subsidiary of Baron Capital Group, Inc. (“BCG”), serves as investment adviser to the Fund and the Underlying Funds. The Adviser will not be paid a management fee for performing investment management services for the Fund. However, the Adviser receives management fees for managing the Underlying Funds. See the Underlying Funds’ Prospectuses or Statements of Additional Information for specific fees. The Adviser is contractually obligated to reimburse certain expenses of the Fund so that its net annual operating expenses (excluding acquired fund fees and expenses, portfolio transaction costs, interest, dividend and extraordinary expenses) are limited to 0.30% of average daily net assets of Retail Shares, 0.05% of average daily net assets of TA Shares and 0.05% of average daily net assets of Institutional Shares.
b) Distribution Fees. Baron Capital, Inc. (“BCI”), a wholly owned subsidiary of BCG, is a registered limited purpose broker-dealer and the distributor of the Fund’s shares. The Fund is authorized to pay BCI a distribution fee payable monthly pursuant to a distribution plan under Rule12b-1 of the 1940 Act equal to 0.25% per annum of the Retail Shares’ average daily net assets.
c) Trustee Fees. Certain Trustees of the Fund may be deemed to be affiliated with, or interested persons (as defined by the 1940 Act) of the Fund’s Adviser or of BCI. None of the Trustees so affiliated received compensation for his or her services as a Trustee of the Fund. None of the Fund’s officers received compensation from the Fund for their services as an officer.
d) Fund Accounting and Administration Fees. The Fund has entered into an agreement with State Street Bank and Trust Company (“State Street”) to perform accounting and certain administrative services. State Street is compensated for fund accounting services based on a percentage of the Fund’s net assets, subject to certain minimums plus fixed annual fees for the administrative services.
5. LINE OF CREDIT
Baron WealthBuilder Fund, together with other funds in Baron Select Funds (except Baron Partners Fund) and Baron Investment Funds Trust, participate in a committed line of credit agreement with State Street to be used for temporary purposes, primarily for financing redemptions. Each fund may borrow up to the lesser of $100 million or the
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Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
5. LINE OF CREDIT (Continued)
maximum amount each fund may borrow under the 1940 Act, the limitations included in each fund’s prospectus, or any limit or restriction under any law or regulation to which each fund is subject or any agreement to which each fund is a party; provided that the aggregate outstanding principal amount of all loans to any of the funds may not exceed $100 million. Interest is charged to each fund, based on its borrowings, at a rate per annum equal to the higher of the Federal Funds Effective Rate or the one month LIBOR Rate plus a margin of 1.00%. An upfront fee of 0.05% is incurred on the commitment amount and a commitment fee of 0.20% per annum is incurred on the unused portion of the line of credit. Both fees are allocated to the participating funds based on their relative net assets.
During the six months ended June 30, 2019, Baron WealthBuilder Fund had borrowings under the line of credit and incurred interest expense of $13,445. For the 38 days during which there were borrowings, Baron WealthBuilder Fund had an average daily balance on the line of credit of $3.7 million at a weighted average interest rate of 3.46%. At June 30, 2019, Baron WealthBuilder Fund had an outstanding balance in the amount of $3,300,000.
6. ASSET ALLOCATION AND RISKS OF INVESTING IN THE UNDERLYING FUNDS
The Fund’s ability to meet its investment objective depends largely upon selecting the best mix of Underlying Funds. The selection of the Underlying Funds and the allocation of the Fund’s assets among the various market sectors could cause the Fund to underperform in comparison to other funds with a similar investment objective. In addition, each of the Underlying Funds has its own investment risks, and those risks can affect the value of the Fund’s investments. 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.
7. FAIR VALUE MEASUREMENTS
Fair value is defined by GAAP as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. GAAP provides a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Fund. Unobservable inputs are inputs that reflect the Fund’s own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
• | Level 1 — quoted prices in active markets for identical assets or liabilities; |
• | Level 2 — prices determined using other inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); |
• | Level 3 — prices determined using unobservable inputs when quoted prices or observable inputs are unavailable, such as when there is little or no market activity for an asset or liability (unobservable inputs reflect each Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available). |
Investments inopen-end registered investment companies are valued at NAV and are classified in the fair value hierarchy as Level 1.
8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS
Federal income tax regulations differ from GAAP. Therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and net realized gain for financial reporting purposes. Net investment income (loss) and net realized and unrealized gain (loss) differ for financial statement and tax purposes due to differing treatments of net investment loss, and wash sale losses deferred. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences.
As of June 30, 2019, the components of net assets on a tax basis were as follows:
Cost of investments | $ | 89,430,618 | ||
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Gross tax unrealized appreciation | 8,937,178 | |||
Gross tax unrealized depreciation | (47,168 | ) | ||
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Net tax unrealized appreciation (depreciation) | 8,890,010 | |||
Accumulated net investment income (loss) | 3,246 | |||
Accumulated net realized gain (loss) | 1,689,927 | |||
Paid-in capital | 84,442,068 | |||
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Net Assets | $ | 95,025,251 | ||
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The Tax Character of distributions paid during the six months ended June 30, 2019 and for the year ended December 31, 2018 was as follows:
Six Months Ended June 30, 2019 | Year Ended December 31, 2018 | |||||||||||||||||||||||
Ordinary1 | Long Term Capital Gain | Return of Capital | Ordinary1 | Long Term Capital Gain | Return of Capital | |||||||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | 130,484 | $ | — |
1 | For tax purposes, short-term capital gains are considered ordinary income distributions. |
11
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
8. INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS (Continued)
The Fund follows the provisions of FASB Codification Section 740 (“ASC Section 740”) “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in tax positions taken or expected to be taken on a tax return. ASC Section 740 sets forth a threshold for financial statement recognition, measurement and disclosure of tax positions taken or expected to be taken on a tax return. The Fund is required to recognize the tax effects of certain tax positions under a “more likely than not” standard, that based on their technical merits, have more than 50 percent likelihood of being sustained upon examination. Management has analyzed the tax positions taken on the Fund’s federal income tax returns for the current year and prior year, and has concluded that no provision for federal income tax is required in the Fund’s financial statements. At December 31, 2018, the Fund did not have any uncertain tax benefits that require recognition,de-recognition or disclosure. The Fund’s federal, state and local income and federal excise tax returns for which the applicable statutes of limitations have not expired (current year and prior year) are subject to examination by the Internal Revenue Service and state departments of revenue.
9. OWNERSHIP CONCENTRATION
As of June 30, 2019 the officers, trustees and portfolio managers owned, directly or indirectly, 14.48% of the Fund. As a result of their ownership, these investors may be able to materially affect the outcome of matters presented to the Fund’s shareholders.
10. TRANSACTIONS IN “AFFILIATED” COMPANIES
The Fund invests primarily in the Institutional Shares of the Underlying Funds which are considered to be affiliated with the Fund.
Name of Issuer | Value at December 31, 2018 | Purchase Cost | Sales Proceeds | Change in Net Unrealized Appreciation (Depreciation) | Realized (Losses) | Dividend Income | Other Distributions | Shares Held at June 30, 2019 | Value at June 30, 2019 | % of Net Assets at June 30, 2019 | ||||||||||||||||||||||||||||||
“Affiliated” Company as of June 30, 2019: |
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Baron Asset Fund, Institutional Shares | $ | 14,241,715 | $ | 710,403 | $ | 3,439,850 | $ | 4,553,205 | $ | (67,905 | ) | $ | — | $ | — | 182,288 | $ | 15,997,568 | 16.83 | % | ||||||||||||||||||||
Baron Discovery Fund, Institutional Shares | 3,666,454 | 488,059 | 526,519 | 885,409 | (120,190 | ) | — | — | 212,438 | 4,393,213 | 4.62 | % | ||||||||||||||||||||||||||||
Baron Durable Advantage Fund, Institutional Shares | 906,382 | 47,356 | 160,000 | 210,580 | (185 | ) | — | — | 87,621 | 1,004,133 | 1.06 | % | ||||||||||||||||||||||||||||
Baron Emerging Markets Fund, Institutional Shares | 11,615,571 | 460,757 | 7,794,117 | 1,592,467 | (690,256 | ) | — | — | 370,316 | 5,184,422 | 5.46 | % | ||||||||||||||||||||||||||||
Baron Fifth Avenue Growth Fund, Institutional Shares | 5,059,245 | 236,802 | 456,705 | 1,345,303 | (5,343 | ) | — | — | 185,900 | 6,179,302 | 6.50 | % | ||||||||||||||||||||||||||||
Baron Focused Growth Fund, Institutional Shares | 3,646,119 | 349,984 | 577,215 | 524,372 | (49,498 | ) | — | — | 212,658 | 3,893,762 | 4.10 | % | ||||||||||||||||||||||||||||
Baron Global Advantage Fund, Institutional Shares | 2,874,138 | 450,108 | 93,911 | 1,036,170 | (1,892 | ) | — | — | 158,007 | 4,264,613 | 4.49 | % | ||||||||||||||||||||||||||||
Baron Growth Fund, Institutional Shares | 12,850,792 | 639,363 | 3,225,889 | 4,042,823 | (254,070 | ) | — | — | 170,837 | 14,053,019 | 14.79 | % | ||||||||||||||||||||||||||||
Baron Health Care Fund, Institutional Shares | 303,932 | 291,489 | 33,304 | 92,087 | (900 | ) | — | — | 56,078 | 653,304 | 0.69 | % | ||||||||||||||||||||||||||||
Baron International Growth Fund, Institutional Shares | 3,921,185 | 202,916 | 1,837,215 | 867,912 | (158,791 | ) | — | — | 129,585 | 2,996,007 | 3.15 | % | ||||||||||||||||||||||||||||
Baron Opportunity Fund, Institutional Shares | 5,465,449 | 555,321 | 1,120,474 | 1,595,955 | (34,955 | ) | — | — | 275,066 | 6,461,296 | 6.80 | % | ||||||||||||||||||||||||||||
Baron Partners Fund, Institutional Shares | 13,789,365 | 763,920 | 3,239,557 | 3,632,879 | (251,691 | ) | — | — | 239,526 | 14,694,916 | 15.46 | % | ||||||||||||||||||||||||||||
Baron Real Estate Fund, Institutional Shares | 4,053,338 | 296,213 | 911,867 | 1,090,203 | (127,692 | ) | — | — | 168,011 | 4,400,195 | 4.63 | % | ||||||||||||||||||||||||||||
Baron Small Cap Fund, Institutional Shares | 12,425,246 | 684,282 | 2,515,601 | 3,915,726 | (364,775 | ) | — | — | 438,601 | 14,144,878 | 14.89 | % | ||||||||||||||||||||||||||||
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$ | 94,818,931 | $ | 6,176,973 | $ | 25,932,224 | $ | 25,385,091 | $ | (2,128,143 | ) | $ | — | $ | — | $ | 98,320,628 | ||||||||||||||||||||||||
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12
Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
FINANCIAL HIGHLIGHTS (Unaudited)
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Total expenses (%) | Less: Interest expense (%) | Operating expenses (%) | Less: Reimbursement of expenses by Adviser (%) | Net operating expenses (%) | Net investment income (loss) (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2019 | 9.33 | (0.02 | )2 | 2.42 | 2.40 | 0.00 | 0.00 | 0.00 | 11.73 | 25.72 | 4,7 | 0.44 | 6 | (0.03 | )6 | 0.41 | 6 | (0.11 | )6 | 0.30 | 6 | (0.33 | )6 | 3.4 | 5.85 | 7 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 10.00 | (0.01 | )2 | (0.65 | ) | (0.66 | ) | 0.00 | (0.01 | ) | (0.01 | ) | 9.33 | (6.58 | )4 | 0.90 | 0.00 | 0.90 | (0.60 | ) | 0.30 | (0.13 | ) | 2.1 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||
20171 | 10.00 | (0.00 | )2,3 | 0.00 | (0.00 | )3 | 0.00 | 0.00 | 0.00 | 10.00 | 0.00 | 4,7 | 0.59 | 5,6 | 0.00 | 0.59 | 5,6 | (0.29 | )5,6 | 0.30 | 5,6 | (0.30 | )5,6 | 0.0 | 0.00 | 7 | ||||||||||||||||||||||||||||||||||||||||||
TA SHARES |
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Six Months Ended June 30, |
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2018 | 9.35 | (0.00 | )2,3 | 2.41 | 2.41 | 0.00 | 0.00 | 0.00 | 11.76 | 25.78 | 4,7 | 0.19 | 6 | (0.03 | )6 | 0.16 | 6 | (0.11 | )6 | 0.05 | 6 | (0.08 | )6 | 13.3 | 5.85 | 7 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 10.00 | 0.01 | 2 | (0.65 | ) | (0.64 | ) | 0.00 | (0.01 | ) | (0.01 | ) | 9.35 | (6.38 | )4 | 0.59 | 0.00 | 0.59 | (0.54 | ) | 0.05 | 0.05 | 9.7 | 1.24 | ||||||||||||||||||||||||||||||||||||||||||||
20171 | 10.00 | (0.00 | )2,3 | 0.00 | (0.00 | )3 | 0.00 | 0.00 | 0.00 | 10.00 | 0.00 | 4,7 | 0.34 | 5,6 | 0.00 | 0.34 | 5,6 | (0.29 | )5,6 | 0.05 | 5,6 | (0.05 | )5,6 | 3.4 | 0.00 | 7 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2018 | 9.35 | (0.00 | )2,3 | 2.41 | 2.41 | 0.00 | 0.00 | 0.00 | 11.76 | 25.78 | 4,7 | 0.19 | 6 | (0.03 | )6 | 0.16 | 6 | (0.11 | )6 | 0.05 | 6 | (007 | )6 | 78.3 | 5.85 | 7 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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2018 | 10.00 | 0.01 | 2 | (0.65 | ) | (0.64 | ) | 0.00 | (0.01 | ) | (0.01 | ) | 9.35 | (6.38 | )4 | 0.49 | 0.00 | 0.49 | (0.44 | ) | 0.05 | 0.12 | 83.0 | 1.24 | ||||||||||||||||||||||||||||||||||||||||||||
20171 | 10.00 | (0.00 | )2,3 | 0.00 | (0.00 | )3 | 0.00 | 0.00 | 0.00 | 10.00 | 0.00 | 4,7 | 0.34 | 5,6 | 0.00 | 0.34 | 5,6 | (0.29 | )5,6 | 0.05 | 5,6 | (0.05 | )5,6 | 1.0 | 0.00 | 7 |
1 | For the period December 29, 2017 (commencement of operations) to December 31, 2017. |
2 | Based on average shares outstanding. |
3 | Less than $0.01 per share. |
4 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
5 | Certain fixed expenses incurred by the Fund were not annualized for the period ended December 31, 2017. |
6 | Annualized. |
7 | Not Annualized |
See Notes to Financial Statements. | 13 |
Table of Contents
Baron WealthBuilder Fund | June 30, 2019 |
As a shareholder of the Fund, you may incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include distribution and service(12b-1) fees and other Fund expenses. Due to the payment of Rule12b-1 fees, long-term shareholders may indirectly pay more than the maximum permittedfront-end sales charge. The information on this page is intended to help you understand your ongoing costs of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The information in the following table is based on an investment of $1,000 invested on January 1, 2019 and held for the six months ended June 30, 2019.
ACTUAL EXPENSES
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading titled “Expenses Paid During the Period.”
BASED ON ACTUAL TOTAL RETURN FOR THE SIX MONTHS ENDED JUNE 30, 20191
Actual Total Return | Beginning Account Value January 1, 2019 | Ending Account Value June 30, 2019 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron WealthBuilder Fund — Retail Shares | 25.72 | % | $ | 1,000.00 | $ | 1,257.20 | 4 | 0.33 | 2,5 | $ | 1.85 | |||||||||
Baron WealthBuilder Fund — TA Shares | 25.78 | % | $ | 1,000.00 | $ | 1,257.80 | 4 | 0.08 | 2,5 | $ | 0.45 | |||||||||
Baron WealthBuilder Fund — Institutional Shares | 25.78 | % | $ | 1,000.00 | $ | 1,257.80 | 4 | 0.08 | 2,5 | $ | 0.45 |
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account values and expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example relating to the Fund with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table below are meant to highlight your ongoing costs and do not reflect any transactional costs, such as redemption fees, if any. Therefore, the table is useful in comparing ongoing costs only and will not help you determine your relative total costs of owning different mutual funds. In addition, if these transactional costs were included, your costs would have been higher.
BASED ON HYPOTHETICAL TOTAL RETURN FOR THE SIX MONTHS ENDED JUNE 30, 2019
Hypothetical Annualized Total Return | Beginning Account Value January 1, 2019 | Ending Account Value June 30, 2019 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron WealthBuilder Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,023.16 | 4 | 0.33 | 2,5 | $ | 1.66 | |||||||||
Baron WealthBuilder Fund — TA Shares | 5.00 | % | $ | 1,000.00 | $ | 1,024.40 | 4 | 0.08 | 2,5 | $ | 0.40 | |||||||||
Baron WealthBuilder Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,024.40 | 4 | 0.08 | 2,5 | $ | 0.40 |
1 | Assumes reinvestment of all dividends and capital gain distributions, if any. |
2 | Annualized expense ratio for Baron WealthBuilder Fund for the six months ended June 30, 2019, includes 0.30%, 0.05% and 0.05% for net operating expenses and 0.03%, 0.03% and 0.03% for interest expense for the Retail, TA and Institutional Shares, respectively. |
3 | Expenses are equal to each share class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
4 | Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived. |
5 | Annualized expense ratios are adjusted to reflect fee waiver. |
14
Table of Contents
June 30, 2019 | Baron WealthBuilder Fund |
DISCLOSURE REGARDING THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT FOR BARON WEALTHBUILDER FUND BY THE BOARD OF TRUSTEES (Unaudited)
The Board of Trustees (the “Board”) of Baron Select Funds (the “Trust”) met on May 23, 2019 to discuss the selection of BAMCO, Inc. (the “Adviser”) as the investment adviser and the approval of the investment advisory agreement for Baron WealthBuilder Fund (the “Fund”). The members of the Board who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Trust (the “Independent Trustees”) met in a separate session to discuss and consider the renewal of the investment advisory agreement for the Fund. Representatives of Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, provided reports to the Board and attended the Board meeting. The Trustees received a substantial amount of information from the Adviser and from Broadridge, and were advised by independent legal counsel. Based on its evaluation of this and other information, the Board, including a majority of the Independent Trustees, approved the continuation of the investment advisory agreements for the Fund for an additionalone-year period.
In reaching its determination, the Board considered various factors that it deemed relevant, including the factors listed below.
1. NATURE, EXTENT AND QUALITY OF SERVICES
As part of their consideration of the nature, extent and quality of services provided by the Adviser, the Independent Trustees considered the information provided, including their experience and knowledge gained from their service as Trustees and their experience generally, including the following, which they had considered in past years and remained, in their thinking, material to their consideration:
• | Their confidence in the senior personnel, portfolio management, the financial condition of the Adviser and its affiliates and the Adviser’s available resources; |
• | The nature, extent and quality of the services provided by the Adviser, including: intensive devotion to research, selection of broker/dealers for Fund portfolio transactions, relationships with and supervision of third party service providers, such as the Fund’s custodian and transfer agent, the quality of shareholder reports, the ability to monitor adherence to investment guidelines and restrictions, the legal, accounting and compliance services provided to the Fund and the support services provided to the Board; |
• | The Adviser’s investment principles and processes and the historical performance of the Fund as compared to similar funds managed by other advisers and other funds managed by the Adviser over comparable periods; |
• | The advisory fees, total expense ratios of the Fund and comparisons to similar funds managed by other advisers over comparable periods. They observed that while the advisory fee was comparatively higher, the net operating expenses paid by the Fund (total expense ratio) were within the range of those of the funds in its respective peer group; and |
• | Additional services provided by the Adviser. |
Based on the considerations as described above, the Board concluded that the nature, extent and quality of the services the Adviser provides to the Fund, including performance consistent with its investing principles as discussed below, supported approval of the investment advisory agreement for the Fund.
2. INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISER
As part of its consideration of the investment performance of the Fund and the Adviser, the Board took into account the analyses performed by and discussed with representatives of Broadridge. The Board considered, among other information, Broadridge’s comparisons of the expense ratio and contractual advisory fee with those of peer group (comparable) funds selected by Broadridge and Morningstar category medians. The Board also considered, among other performance information, Broadridge’s comparisons of the Fund’s annualized total return and related risk metrics overone-, three- and five-year periods, where applicable, against peer group funds and Morningstar category medians. After considering all the information, the Board concluded that the Adviser continued to invest in accordance with its long-standing principles and that the Fund’s performance remained consistent with expectations for the Adviser’s investment style, in light of recent market conditions.
3. COSTS OF SERVICES PROVIDED AND PROFITS TO BE REALIZED BY THE ADVISER
The Board considered comparisons of the advisory fees charged and services provided by the Adviser and its investment adviser affiliate tosub-advised accounts and separately managed accounts. The Board considered that, while the advisory fees for the other clients are the same as, or lower than, the fees for the Fund, the Adviser or its affiliate performs significantly fewer services for those clients compared with those provided by the Adviser to the Fund. The Board also considered a profitability analysis prepared by the Adviser and discussed with the representatives of the Adviser that the Adviser has continued to invest in quality personnel, systems and facilities, and otherwise continued to invest in its business, irrespective of fund flows.
The Board also considered benefits that accrue to the Adviser and its affiliates from their relationship with the Fund. The Board considered the costs of portfolio management, including the types of investments made for the Fund, the personnel and systems necessary for implementation of investment strategies, and thepre-tax profits realized by the Adviser and its affiliates from their relationship with the Fund.
The Board concluded that the advisory fee for the Fund was supportable in light of the services provided as discussed at this meeting.
4. ECONOMIES OF SCALE AND BENEFITS TO INVESTORS
The Board considered the extent to which the Fund’s advisory fee reflected economies of scale for the benefit of Fund shareholders, appreciating that the economies of scale analysis is predicated on generally predictable increasing assets. The Board considered that small- andmid-cap investment strategies require more attention by the Adviser than a strategy that involves other types of investing, particularly as asset size increases. The Board considered that the Adviser was continuing to grow and upgrade its staff and invest in its business. The Board members reiterated their intention to continue to consider the extent of economies of scale, asset growth and the Adviser’s plans to invest further to support the Fund.
After due consideration of the above-enumerated factors and other factors it deemed relevant, the Board, including a majority of the Independent Trustees, approved the continuance of the Fund’s investment advisory agreement.
15
Table of Contents
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Table of Contents
JUNE 19
Table of Contents
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included herein under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers ofClosed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities forClosed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(2) Certification of each of the principal executive officers and principal financial officers of the Registrant as required by Rule30a-2 under the Act (17 CFR270.30a-2) is attached hereto as a part ofEX-99.CERT.
(b) Certification of each of the principal executive officers and principal financial officers of the Registrant as required by Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as a part ofEX-99.906CERT.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BARON SELECT FUNDS | ||
By: | /s/ Ronald Baron | |
Ronald Baron | ||
Chief Executive Officer | ||
Date: September 5, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Ronald Baron | |
Ronald Baron | ||
Chief Executive Officer | ||
Date: September 5, 2019 | ||
By: | /s/ Peggy Wong | |
Peggy Wong | ||
Treasurer and Chief Financial Officer | ||
Date: September 5, 2019 |