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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-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, 2018
Form N-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 Rule 30e-1 under the Investment Company Act of 1940 (17CRF 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-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 Energy and Resources Fund
Baron Global Advantage Fund
Baron Real Estate Income Fund
Baron Health Care Fund
June 30, 2018
Baron 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 Energy and Resources Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund and Baron Health Care Fund (the “Funds”) for the six months ended June 2018. 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 24, 2018 | Linda S. Martinson Chairman, President and Chief Operating Officer August 24, 2018 | Peggy Wong Treasurer and Chief Financial Officer August 24, 2018 |
This Semi-Annual Financial Report is for the following nine 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 Energy and Resources 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 series, 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 on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC; information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-202-551-8090. A copy of the Funds’ Forms N-Q may also be obtained upon request by calling 1-800-99BARON. 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 Funds, unless accompanied or preceded by the Funds’ current prospectus or summary prospectus.
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Baron Partners Fund (Unaudited) | June 30, 2018 |
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, 2018 |
| |||||||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Ten Years | Since Inception (January 31, 1992) | |||||||||||||||||||
Baron Partners Fund — Retail Shares1,2,3 | 15.34% | 18.16% | 13.21% | 15.66% | 11.28% | 13.19% | ||||||||||||||||||
Baron Partners Fund — Institutional Shares1,2,3,4 | 15.50% | 18.46% | 13.51% | 15.96% | 11.55% | 13.29% | ||||||||||||||||||
Baron Partners Fund — R6 Shares1,2,3,4 | 15.50% | 18.46% | 13.51% | 15.96% | 11.55% | 13.29% | ||||||||||||||||||
Russell Midcap Growth Index1 | 5.40% | 18.52% | 10.73% | 13.37% | 10.45% | 9.80% | ||||||||||||||||||
S&P 500 Index1 | 2.65% | 14.37% | 11.93% | 13.42% | 10.17% | 9.64% |
* | Not Annualized. |
1 | The indexes are unmanaged. The Russell Midcap® Growth Index measures the performance of medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and Baron 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, 2018 (Unaudited) | Baron Partners Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Total Investments | ||||
Tesla, Inc. | 13.4% | |||
CoStar Group, Inc. | 12.7% | |||
Vail Resorts, Inc. | 9.0% | |||
Hyatt Hotels Corp. | 7.1% | |||
IDEXX Laboratories, Inc. | 6.9% | |||
Arch Capital Group Ltd. | 6.7% | |||
FactSet Research Systems, Inc. | 5.4% | |||
The Charles Schwab Corp. | 5.2% | |||
Zillow Group, Inc. | 4.2% | |||
Space Exploration Technologies Corp. | 4.0% | |||
74.6% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of total investments)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron Partners Fund1 gained 15.34%, outperforming the Russell Midcap Growth Index, which gained 5.40%.
The Fund has performed well since its conversion into an open-end mutual fund on April 30, 2003. In the period since the Fund’s conversion through June 30, 2018, the Fund gained an annualized 14.08% versus an annualized 11.72% 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 13.19%* compared to an annualized 9.80% 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 is non-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 an exceptionally strong 2017 that carried through the first month of 2018, volatility returned in late January on concerns around inflation, interest rates, and the potential for a trade war. Although volatility continued, the markets ended up for the six-month period, driven in part by strong corporate earnings and continued solid economic conditions in the U.S., as well as speculation that interest rates would remain relatively low for the time being and the impact of a trade war would be more modest than initially anticipated.
At the sector level, the Fund’s investments in Industrials, Consumer Discretionary, and Information Technology contributed the most to performance. Financials and Real Estate detracted in the period.
The largest individual contributor was CoStar Group, Inc., a real estate information and marketing services company. Shares rose on excellent business trends, with the company announcing for both fourth quarter and first quarter earnings that bookings jumped approximately 50% year-over-year. We are excited about the upsell of Loopnet Premium Searcher customers to the flagship CoStar product, which we believe can contribute an incremental $150 million to $200 million of recurring revenue. CoStar has a large opportunity to optimize its Premium Lister product, and we expect the recent acquisition of ForRent to be meaningfully accretive beginning next year.
The largest detractor was Arch Capital Group Ltd., a specialty insurance company based in Bermuda. The stock declined as industry pricing trends remained challenging. Freddie Mac introduced a new pilot program for distributing mortgage insurance and a competitor cut premium rates, raising investor concerns about increased competition and pricing pressure. We continue to own the stock due to Arch’s strong management team and underwriting discipline.
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 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, 2018 |
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, 2018 |
| |||||||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Ten Years | Since Inception (May 31, 1996) | |||||||||||||||||||
Baron Focused Growth Fund — Retail Shares1,2,3 | 13.72% | 20.36% | 9.83% | 10.83% | 8.81% | 11.32% | ||||||||||||||||||
Baron Focused Growth Fund — Institutional Shares1,2,3,4 | 13.92% | 20.71% | 10.11% | 11.11% | 9.05% | 11.43% | ||||||||||||||||||
Baron Focused Growth Fund — R6 Shares1,2,3,4 | 13.85% | 20.71% | 10.11% | 11.11% | 9.05% | 11.43% | ||||||||||||||||||
Russell 2500 Growth Index1 | 8.04% | 21.53% | 10.86% | 13.87% | 11.38% | 8.23% | ||||||||||||||||||
S&P 500 Index1 | 2.65% | 14.37% | 11.93% | 13.42% | 10.17% | 8.58% |
* | Not Annualized. |
1 | The indexes are unmanaged. The Russell 2500™ Growth Index measures the performance of small to medium-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and Baron Focused Growth Fund are with dividends, which positively impact the performance results. |
2 | 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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, 2018 (Unaudited) | Baron Focused Growth Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
Vail Resorts, Inc. | 17.0% | |||
Tesla, Inc. | 14.0% | |||
CoStar Group, Inc. | 13.1% | |||
Hyatt Hotels Corp. | 11.9% | |||
FactSet Research Systems, Inc. | 6.8% | |||
Iridium Communications Inc. | 5.5% | |||
Choice Hotels International, Inc. | 5.2% | |||
Manchester United plc | 5.1% | |||
Guidewire Software, Inc. | 4.1% | |||
Space Exploration Technologies Corp. | 4.0% | |||
86.7% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2018, Baron Focused Growth Fund1 increased 13.72%, outperforming the Russell 2500 Growth Index, which returned 8.04%.
Since its inception on May 31, 1996, through June 30, 2018, the Fund has outperformed the Russell 2500 Growth Index, gaining an annualized 11.32%*, compared to an annualized 8.23% 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 an exceptionally strong 2017 that carried through the first month of 2018, volatility returned in late January on concerns around inflation, interest rates, and the potential for a trade war. Although volatility continued, the markets ended up for the six-month period, driven in part by strong corporate earnings and continued solid economic conditions in the U.S., as well as speculation that interest rates would remain relatively low for the time being and the impact of a trade war would be more modest than initially anticipated.
At the sector level, the Fund’s investments in Consumer Discretionary, Industrials, and Information Technology were the largest contributors to performance. Financials and Health Care detracted in the period.
The largest individual contributor was Vail Resorts, Inc., a global operator of ski resorts. Shares appreciated on a strong end to the ski season. Earlier in the period, the company increased its dividend by 40% thanks to strong season pass sales, and demonstrated consistency in its earnings and free cash flow. Management reported an increase in the upcoming season’s pass sales of almost 20%, despite increased competition. The company also struck agreements to acquire four additional resorts that we think should help boost sales in the East Coast and Northern Pacific markets. Vail continues to maintain a strong balance sheet and generates significant cash flow that will allow it to make additional acquisitions, invest in its resorts, and return capital to shareholders, in our view.
The largest detractor was Arch Capital Group Ltd., a specialty insurance company based in Bermuda. The stock declined on challenging industry pricing trends. Freddie Mac introduced a new pilot program for distributing mortgage insurance and a competitor cut premium rates, raising investor concerns about increased competition and pricing pressure. We continue to own the stock due to Arch’s strong management team and underwriting discipline.
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, 2018 |
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, 2018 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 31, 2008) | ||||||||||||||||
Baron International Growth Fund — Retail Shares | (0.33)% | 15.97% | 9.13% | 10.05% | 12.02% | |||||||||||||||
Baron International Growth Fund — Institutional Shares1,2,3 | (0.17)% | 16.27% | 9.41% | 10.35% | 12.30% | |||||||||||||||
Baron International Growth Fund — R6 Shares1,2,3 | (0.17)% | 16.27% | 9.41% | 10.35% | 12.30% | |||||||||||||||
MSCI ACWI ex USA Index1 | (3.77)% | 7.28% | 5.07% | 5.99% | 8.23% | |||||||||||||||
MSCI ACWI ex USA IMI Growth Index1 | (2.07)% | 10.43% | 6.84% | 7.51% | 9.50% |
* | Not Annualized. |
1 | The Fund has changed its primary benchmark to the MSCI ACWI ex USA Index given its broad acceptance as the standard benchmark measuring international markets equity performance. The Fund will maintain the MSCI ACWI ex USA IMI Growth Index as a secondary benchmark. The MSCI ACWI ex USA Index Net USD is an unmanaged, free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of large- and mid-cap securities across developed and emerging markets, excluding the United States. The MSCI ACWI ex USA IMI Growth Index Net USD is an unmanaged, free float-adjusted market capitalization weighted index that is designed to measure the performance of large-, mid-, and small-cap growth securities across developed and emerging markets, excluding the United States. The indexes and Baron International Growth Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. |
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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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, 2018 (Unaudited) | Baron International Growth Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
Wix.com Ltd. | 2.6% | |||
Constellation Software, Inc. | 2.4% | |||
argenx SE | 2.0% | |||
Mellanox Technologies Ltd. | 2.0% | |||
TechnoPro Holdings, Inc. | 1.9% | |||
Domino's Pizza Enterprises Ltd. | 1.8% | |||
Danone SA | 1.8% | |||
AstraZeneca PLC | 1.8% | |||
Golar LNG Ltd. | 1.7% | |||
Abcam plc | 1.6% | |||
19.6% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron International Growth Fund1 declined 0.33%, outperforming the MSCI ACWI ex US Index, which fell 3.77%.
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 powerful, year-long advance, international equities reversed course in late January due primarily to headwinds generated by the ongoing withdrawal of liquidity and change in tone of U.S. trade policy and threatened protectionism. The broad withdrawal of liquidity, particularly in the form of cheap dollar funding in non-U.S. markets which has continued to slowly recede, while money growth and financial conditions in Europe and China have reached recent lows, has served as an undertow that is slowly exposing the weakest links. More recently, the risk of more aggressive protectionist measures has served to amplify the existing tightening of financial conditions in several international markets.
On a country basis, holdings in Israel, Japan, and the Netherlands contributed the most to performance. Investments in India, Argentina, and Germany were the biggest detractors.
On a sector basis, investments in Information Technology and Industrials contributed to performance. Investments in Financials, Consumer Staples, and Telecommunication Services detracted the most in the period.
The top contributor was Wix.com Ltd., an Israeli internet company helping micro businesses build and maintain websites and streamline business operations. With over 125 million registered users and over 3 million premium subscribers, Wix demonstrated rapid revenue growth, conversion rate improvements, and database collections expansion. As a leader in its industry, Wix enjoys a recognized brand name, innovative culture, large market opportunity, and strong cohort economics, in our view.
RIB Software SE was the largest detractor in the six-month period. Shares of this German software company servicing the construction industry dropped on poorly coordinated and communicated equity offering after the announcement of its partnership with Microsoft, and on the subsequent downgrade of the stock by analysts. We retain conviction. RIB offers 3D modeling with time and cost management, which competitors do not provide end-to-end.
While we currently believe the scope of the correction may be larger than we had anticipated, we are beginning to see value and opportunity emerging. We also suspect conditions could improve quickly should trade tensions de-escalate and/or the U.S. Fed temper expectations of future tightening measures. We stand prepared to take advantage of ongoing market volatility in the coming months and remain optimistic that our differentiated discipline and process position us well over the long term.
† | 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, 2018 |
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, 2018 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 31, 2009) | ||||||||||||||||
Baron Real Estate Fund — Retail Shares1,2 | (4.36)% | 8.38% | 5.19% | 9.68% | 14.47% | |||||||||||||||
Baron Real Estate Fund — Institutional Shares1,2 | (4.27)% | 8.69% | 5.46% | 9.96% | 14.75% | |||||||||||||||
Baron Real Estate Fund — R6 Shares1,2,3 | (4.23)% | 8.73% | 5.48% | 9.97% | 14.76% | |||||||||||||||
MSCI USA IMI Extended Real Estate Index1 | (0.72)% | 7.44% | 9.37% | 10.43% | 12.80% | |||||||||||||||
MSCI US REIT Index1 | 0.54% | 2.22% | 6.65% | 6.90% | 10.56% | |||||||||||||||
S&P 500 Index1 | 2.65% | 14.37% | 11.93% | 13.42% | 13.40% |
* | Not Annualized. |
1 | The indexes are unmanaged. The MSCI USA IMI Extended Real Estate Index is a custom index calculated by MSCI for, and as requested by, BAMCO, Inc. The index includes real estate and real estate-related GICS classification securities. MSCI makes no express or implied warranties or 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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, 2018 (Unaudited) | Baron Real Estate Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
American Tower Corp. | 6.5% | |||
Vulcan Materials Company | 6.1% | |||
Home Depot, Inc. | 5.0% | |||
Equinix, Inc. | 4.7% | |||
InterXion Holding N.V. | 3.8% | |||
MGM Resorts International | 3.3% | |||
Penn National Gaming, Inc. | 2.9% | |||
Extended Stay America, Inc. | 2.7% | |||
Eagle Materials Inc. | 2.5% | |||
Martin Marietta Materials, Inc. | 2.5% | |||
40.0% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six-month period ended June 30, 2018, Baron Real Estate Fund1 declined 4.36%, trailing the MSCI USA IMI Extended Real Estate Index, which fell 0.72%. Since its inception on December 31, 2009 through June 30, 2018, the Fund has outperformed its index, generating an annualized return of 14.47%, compared with an annualized return of 12.80% for the index.
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 hotels, senior housing operators, casino and gaming operators, tower operators, infrastructure-related companies and master limited partnerships (MLPs), data centers, building products companies, real estate service companies, and real estate operating companies. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
Real estate-related equities had a mixed first half of 2018, in part due to concerns around higher interest rates and potentially slowing growth in the commercial real estate markets. Senior housing operators & health care facilities produced strong year-to-date returns against a backdrop of aging population and growing demand for outpatient care. Real estate operating companies and real estate service companies were also noteworthy performers.
Our investments in data centers, real estate service companies, and REITs contributed the most to returns in the first half of 2018. Holdings in building products/services, infrastructure related companies, and hotels & leisure categories were the largest detractors.
The top contributor was CoStar Group, Inc., a real estate information and marketing services company. Shares rose on excellent business trends, with the company announcing that bookings jumped approximately 50% year-over-year. We are excited about the upsell of Loopnet Premium Searcher customers to the flagship CoStar product, which we believe can contribute an incremental $150 million to $200 million of recurring revenue. CoStar has a large opportunity to optimize its Premium Lister product, and we expect the recent acquisition of ForRent to be meaningfully accretive beginning next year.
The top detractor was Macquarie Infrastructure Corporation, which owns a diversified group of U.S. infrastructure assets. Shares fell during the period held following a 30% dividend cut and projected declines in free cash flow in 2018 after several contract cancellations within its liquid storage segment. We exited our position in February due to the impairment of growth visibility and uncertainty surrounding contract cancellations.
We believe the factors that have fueled a resurgence in real estate remain in place. Demand outweighs supply in most U.S. markets, balance sheets are generally in good shape, and credit remains available at attractive interest rate levels. We see solid business conditions for the Fund’s companies, and the outlook does not portend a recession.
† | 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, 2018 |
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, 2018 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 31, 2010) | ||||||||||||||||
Baron Emerging Markets Fund — Retail Shares1,2 | (8.74)% | 6.56% | 5.57% | 6.85% | 4.85% | |||||||||||||||
Baron Emerging Markets Fund — Institutional Shares1,2 | (8.59)% | 6.85% | 5.86% | 7.14% | 5.12% | |||||||||||||||
Baron Emerging Markets Fund — R6 Shares1,2,3 | (8.58)% | 6.92% | 5.88% | 7.15% | 5.13% | |||||||||||||||
MSCI EM Index1 | (6.66)% | 8.20% | 5.60% | 5.01% | 1.45% | |||||||||||||||
MSCI EM IMI Growth Index1 | (6.06)% | 11.26% | 7.21% | 6.64% | 2.93% |
* | Not Annualized. |
1 | The Fund has changed its primary benchmark to the MSCI EM (Emerging Markets) Index given its broad acceptance as the standard benchmark measuring emerging markets equity performance. The Fund will maintain the MSCI EM (Emerging Markets) IMI Growth Index as a secondary benchmark. The MSCI EM (Emerging Markets) Index and the MSCI EM (Emerging Markets) IMI Growth Index are unmanaged, free float-adjusted market capitalization weighted indexes. The MSCI EM (Emerging Markets) Index Net USD and the MSCI EM (Emerging Markets) IMI Growth Index Net USD are designed to measure the equity market performance of large-, mid-, and small-cap securities in the emerging markets. The MSCI EM (Emerging Markets) IMI Growth Index Net USD screens for growth-style securities. The indexes and 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent without which performance would have been lower. |
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, 2018 (Unaudited) | Baron Emerging Markets Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
Tencent Holdings, Ltd. | 4.2% | |||
Alibaba Group Holding Limited | 3.8% | |||
Sberbank of Russia PJSC | 2.3% | |||
Samsung Electronics Co., Ltd. | 2.2% | |||
China Construction Bank Corporation | 1.9% | |||
Baidu, Inc. | 1.8% | |||
Housing Development Finance Corporation Limited | 1.8% | |||
KB Financial Group, Inc. | 1.8% | |||
Kotak Mahindra Bank Ltd. | 1.6% | |||
CSPC Pharmaceutical Group Limited | 1.6% | |||
23.0% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron Emerging Markets Fund1 declined 8.74%, underperforming the MSCI EM Index, which fell 6.66%.
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 powerful year-long advance, emerging markets reversed course in late January, pressured by several macro headwinds. First, the broad withdrawal of liquidity, particularly cheap dollar funding in non-U.S. markets, is slowly exposing the weaker links in the EM chain. Second, the risk of more aggressive protectionist measures has served to amplify the existing tightening of financial conditions in several emerging markets. Finally, the reversal of macroeconomic and liquidity conditions in countries that are early in addressing fiscal or current account imbalances has threatened positive political and reform momentum in such markets. Nonetheless, we regard the year-to-date volatility as normal in historical context, particularly given the abrupt change in liquidity conditions.
On a country basis, China and the U.K. contributed the most to performance, while India, Argentina, and Brazil were the biggest detractors.
On a sector basis, Health Care was the sole contributing sector, while Financials, Consumer Discretionary, and Consumer Staples detracted the most.
The top contributor was Chinese enterprise management software provider Kingdee International Software Group Co. Ltd. Shares rose on solid cloud software sales and news that the company signed a strategic agreement with China Greatwall to cooperate on marketing, product integration and innovation, and design and consultation services. The company was also added in May to the MSCI China Index, an illustration of market recognition of the stock.
YPF S.A., an oil and gas company developing hydrocarbon fields in Argentina, was the top detractor. Shares declined due to Argentina’s challenging macroeconomic conditions, devaluation of its currency, and YPF’s plans to temporarily freeze fuel prices to help address inflation. We think Argentina remains committed to fuel price liberalization, which we think creates an attractive growth opportunity for its energy sector.
We are not revising our view that many major EM countries have undergone a positive and supportive evolution of political direction that suggests the likelihood of improved relative earnings growth and equity performance. While we believe the scope of the anticipated correction may be larger than we had anticipated, we are beginning to see value and opportunity arising in countries such as Brazil, Mexico, Indonesia, and Thailand. We stand prepared to take advantage of market volatility and remain optimistic that our differentiated discipline and process position us well over the long term.
† | 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 Energy and Resources Fund (Unaudited) | June 30, 2018 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON ENERGYAND RESOURCES FUND† (RETAIL SHARES)
INRELATIONTOTHE S&P NORTH AMERICAN NATURAL RESOURCES SECTOR INDEXANDTHE S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2018 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (December 30, 2011) | ||||||||||||||||
Baron Energy and Resources Fund — Retail Shares1,2 | 5.74% | 12.01% | (6.22)% | (2.79)% | (2.14)% | |||||||||||||||
Baron Energy and Resources Fund — Institutional Shares1,2 | 5.90% | 12.23% | (5.98)% | (2.56)% | (1.92)% | |||||||||||||||
Baron Energy and Resources Fund — R6 Shares1,2,3 | 5.90% | 12.37% | (5.98)% | (2.56)% | (1.92)% | |||||||||||||||
S&P North American Natural Resources Sector Index1 | 5.29% | 19.80% | 3.29% | 1.74% | 1.96% | |||||||||||||||
S&P 500 Index1 | 2.65% | 14.37% | 11.93% | 13.42% | 14.99% |
* | 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 S&P North American Natural Resources Sector Index measures the performance of U.S.-traded natural resources-related stocks, including mining, energy, paper and forest products, and plantation owning companies. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. The indexes and Baron Energy and Resources Fund are with dividends, which positively impact the performance results. |
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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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, 2018 (Unaudited) | Baron Energy and Resources Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
Tesla, Inc. | 8.0% | |||
RSP Permian, Inc. | 7.4% | |||
Parsley Energy, Inc. | 7.1% | |||
Encana Corp. | 6.4% | |||
Concho Resources, Inc. | 6.4% | |||
Aspen Technology, Inc. | 4.8% | |||
Golar LNG Ltd. | 4.3% | |||
TPI Composites, Inc. | 4.0% | |||
Halliburton Co. | 3.6% | |||
Andeavor | 3.6% | |||
55.6% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron Energy and Resources Fund1 appreciated 5.74%, outperforming the S&P 500 North American Natural Resources Sector Index, which rose 5.29%, and the S&P 500 Index, which rose 2.65%.
Baron Energy and Resources Fund is a diversified fund that, under normal circumstances, invests 80% of its net assets in equity securities in the form of common stock of U.S. and non-U.S. energy and resources companies and related companies and energy and resources master limited partnerships (“MLPs”) of any market capitalization. The Fund seeks to invest in businesses it believes have significant opportunities for growth, sustainable competitive advantages, exceptional management, and an attractive valuation. The Fund will invest more than 25% of its net assets in the energy and resources industries.
While energy related shares generally outperformed the broader market in the first half of the year, their performance could still be considered disappointing for equity investors since U.S. oil prices rose significantly through the end of the second quarter. Global economic growth remains strong despite fears of a potential trade war and rising interest rates. Individual company prospects for solid earnings and cash flow growth, combined with spending restraint, are leading to attractive valuations for most oil & gas related equities, and a clear and growing preference by managements and boards of directors to return cash to shareholders should be good for equity returns.
On a sector basis, Energy, Information Technology, Industrials, and Consumer Discretionary contributed the most to performance, while Materials and Utilities were the top detractors.
The top contributor was oilfield equipment supplier Cactus, Inc. Shares appreciated following its successful IPO early in the first quarter. Cactus has an experienced management team that has sold two wellhead companies to large oil field services equipment providers, and has 27% market share in the U.S. onshore production wellhead equipment market since it was founded in 2011. We expect Cactus to maintain its leadership position in the production wellhead segment and grow its market share in the completion equipment segment while generating significant free cash flow.
Drilling and production products and services provider Flotek Industries, Inc. was the top detractor. Shares slumped due to sales that missed analyst expectations and lower gross margins in the energy chemicals segment. We believe the issues are transitory, and we think the market undervalues Flotek’s consumer and industrial chemistry technology segment and progress made on cost structure.
While we believe oil markets are likely to be volatile in the coming months as investors contend with competing narratives on the supply side, we continue to view the outlook for investing in energy related stocks as favorable. We remain convinced that the improvement in underlying industry fundamentals should enable companies to post improved earnings, cash flows, and returns. We are also increasingly convinced that trends within the alternative/renewable energy industry, such as wind power, battery storage, and distributed generation, also offer interesting investment opportunities. We believe the Fund is very well positioned to capture these 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 Global Advantage Fund (Unaudited) | June 30, 2018 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON GLOBAL ADVANTAGE FUND† (RETAIL SHARES)
INRELATIONTOTHE MSCI ACWI GROWTH INDEXANDTHE MSCI ACWI INDEX
AVERAGE ANNUAL TOTAL RETURNSFORTHEPERIODSENDED JUNE 30, 2018 |
| |||||||||||||||||||
Six Months* | One Year | Three Years | Five Years | Since Inception (April 30, 2012) | ||||||||||||||||
Baron Global Advantage Fund — Retail Shares1,2 | 12.74% | 33.58% | 15.71% | 16.92% | 14.68% | |||||||||||||||
Baron Global Advantage Fund — Institutional Shares1,2 | 12.85% | 33.92% | 15.93% | 17.14% | 14.91% | |||||||||||||||
Baron Global Advantage Fund — R6 Shares1,2,3 | 12.84% | 33.90% | 15.95% | 17.15% | 14.92% | |||||||||||||||
MSCI ACWI Growth Index Net1 | 2.95% | 16.06% | 10.22% | 11.55% | 10.84% | |||||||||||||||
MSCI ACWI Index Net1 | (0.43)% | 10.73% | 8.19% | 9.41% | 9.46% |
* | 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 MSCI ACWI indexes cited are unmanaged, free float-adjusted market capitalization weighted indexes reflected in US dollars. The MSCI ACWI Growth Index Net USD measures the equity market performance of large- and mid-cap growth securities across developed and emerging markets. The MSCI ACWI Index Net USD measures the equity market performance of large- and mid-cap securities across developed and emerging markets. The indexes and Baron Global Advantage Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. |
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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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, 2018 (Unaudited) | Baron Global Advantage Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
Naspers Limited | 6.4% | |||
Amazon.com, Inc. | 4.9% | |||
Facebook, Inc. | 4.8% | |||
Alibaba Group Holding Limited | 4.5% | |||
Alphabet Inc. | 4.3% | |||
Constellation Software, Inc. | 3.8% | |||
EPAM Systems, Inc. | 3.4% | |||
Housing Development Finance Corporation Limited | 3.4% | |||
Activision Blizzard, Inc. | 3.2% | |||
Mellanox Technologies Ltd. | 3.0% | |||
41.7% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron Global Advantage Fund1 appreciated 12.74%, outperforming the MSCI ACWI Growth Index, which rose 2.95%, and the MSCI ACWI Index, which declined 0.43%.
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 Growth Index. 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.
The global markets were volatile in the first half of 2018, buffeted by trade tensions, credit tightening, and other macro-economic and geopolitical concerns. Nevertheless, with performance up almost 13% during the period, it has been a favorable environment for the companies held by Baron Global Advantage Fund.
On a country basis, the U.S., Netherlands, and Israel contributed the most to performance, while South Africa and Argentina were the biggest detractors.
On a sector basis, Information Technology, Health Care, and Consumer Discretionary contributed the most to performance, while Financials and Industrials detracted the most.
The largest individual contributor was Amazon.com, Inc. Amazon is an e-commerce pioneer, innovator, and market share leader, and continued to benefit from the flywheel strategy, in which growing participation from Prime members, now exceeding 100 million households, drives further activity on Amazon.com. We believe Amazon could build a $20 billion plus advertising business in the next four years, increasing revenues and improving core margins. We think Amazon could potentially become the world’s most valuable company.
The largest detractor was Naspers Limited, a South African company that operates pay television, print media, and an internet division. Its stock fell due to a widening gap between the value of its Tencent investment and the total net asset value of Naspers, resulting in losses posted by late-stage venture investments, which comprise Naspers’ business outside of Tencent. We retain conviction.
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 the midst of full blown disruptions now. 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, 2018 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON REAL ESTATE INCOME FUND (RETAIL SHARES)
INRELATIONTOTHE MSCI US REIT INDEX
TOTAL RETURNSFORTHEPERIODENDED JUNE 30, 2018 |
| |||
Six Months and Since Inception (December 29, 2017)* | ||||
Baron Real Estate Income Fund — Retail Shares1,2 | (0.25)% | |||
Baron Real Estate Income Fund — Institutional Shares1,2 | (0.15)% | |||
Baron Real Estate Income Fund — R6 Shares1,2 | (0.05)% | |||
MSCI US REIT Index1 | 0.54% |
* | Not Annualized. |
1 | The index is unmanaged. The MSCI US REIT Index is a free float-adjusted market capitalization index that measures the performance of all equity REITs in the US equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index and 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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June 30, 2018 (Unaudited) | Baron Real Estate Income Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
American Tower Corp. | 7.1% | |||
Equinix, Inc. | 6.1% | |||
Extended Stay America, Inc. | 4.4% | |||
Americold Realty Trust | 3.7% | |||
Park Hotels & Resort Inc. | 3.5% | |||
Host Hotels & Resorts, Inc. | 3.5% | |||
Prologis, Inc. | 3.3% | |||
MGM Resorts International | 3.3% | |||
Kennedy-Wilson Holdings, Inc. | 3.2% | |||
Hudson Pacific Properties, Inc. | 3.0% | |||
41.1% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
Since its inception on December 29, 2017, through June 30, 2018, Baron Real Estate Income Fund1 declined 0.25%, trailing the MSCI US REIT Index, which gained 0.54%.
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. The Adviser seeks to invest in businesses it believes have sustainable competitive advantages, exceptional management, opportunities for growth, and an attractive valuation. Of course, there can be no guarantee that we will be successful in achieving the Fund’s investment goals.
After a rough start to 2018 due to pressures from rising interest rates and modest growth prospects for some segments of commercial real estate, REITs rebounded sharply to regain all of their losses from the first half of the period. Stabilizing interest rates, several REIT merger and acquisition announcements, mildly better-than-expected business fundamentals, and international trade war fears that led to a risk averse mentality and a corresponding shift into “bond-like” securities such as REITs all contributed to performance.
Our investments in hotel REITs, other REITs, and industrial REITs contributed the most to returns in the first half of 2018. Holdings in the non-REIT real estate companies, mall REITs, and data center REITs categories were the largest detractors.
The top contributor was Americold Realty Trust, the world’s largest owner and operator of temperature-controlled warehouses. Strong performance resulted from positive 2017 and first quarter 2018 financial results and a rosy outlook for the remainder of the year. We remain excited about our investment in Americold because of a compelling fundamental backdrop for the cold storage industry and Americold’s differentiated growth strategy.
The top detractor was Macquarie Infrastructure Corporation, which owns a diversified group of U.S. infrastructure assets. Shares fell during the period held following a 30% dividend cut and projected declines in free cash flow in 2018 after several contract cancellations within its liquid storage segment. We exited our position in February due to the impairment of growth visibility and uncertainty surrounding contract cancellations.
Our view is that no one knows with clarity how macroeconomic changes, political events, and central bank actions may unfold, and it is virtually impossible to predict what the market’s reaction will be to these possible scenarios. We support the merits of a diversified investment strategy that incorporates allocations to both 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, 2018 |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON HEALTH CARE FUND (RETAIL SHARES)
INRELATIONTOTHE RUSSELL 3000 HEALTH CARE INDEXANDTHE S&P 500 INDEX
TOTAL RETURNSFORTHEPERIODENDED JUNE 30, 2018 |
| |||
Since Inception (April 30, 2018)* | ||||
Baron Health Care Fund — Retail Shares1,2 | 4.80% | |||
Baron Health Care Fund — Institutional Shares1,2 | 4.90% | |||
Baron Health Care Fund — R6 Shares1,2 | 4.80% | |||
Russell 3000 Health Care Index1 | 3.38% | |||
S&P 500 Index1 | 3.04% |
* | Not Annualized. |
1 | The indexes are unmanaged. 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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June 30, 2018 (Unaudited) | Baron Health Care Fund |
TOP TEN HOLDINGSASOF JUNE 30, 2018
Percent of Net Assets | ||||
UnitedHealth Group Incorporated | 6.3% | |||
Vertex Pharmaceuticals Incorporated | 5.0% | |||
argenx SE | 4.9% | |||
Teleflex Incorporated | 4.8% | |||
Medtronic Public Limited Company | 4.7% | |||
Sage Therapeutics, Inc. | 4.6% | |||
Illumina, Inc. | 3.8% | |||
Mettler-Toledo International, Inc. | 3.6% | |||
Intuitive Surgical, Inc. | 3.5% | |||
Edwards Lifesciences Corp. | 3.5% | |||
44.7% |
SECTOR BREAKDOWNASOF JUNE 30, 2018†
(as a percentage of net assets)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the period April 30, 2018 to June 30, 2018, Baron Health Care Fund1 appreciated 4.80%, outperforming the Russell 3000 Health Care Index, which rose 3.38%, and the S&P 500 Index, which rose 3.04%.
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. These companies may include, among others, pharmaceutical companies, biotechnology companies, life sciences tools and services companies, health care equipment
companies, health care supplies companies, managed health care companies, health care services companies, health care facilities, health care distributors, and health care technology companies. The Fund’s allocation among the different sub-industries of the Health Care sector 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.
The return of market volatility due to concerns over interest rates and the potential for a trade war sparked a rotation into defensive sectors, contributing to strong performance in the Health Care sector. Demand continued to rise for health care products and services, and we believe the market is beginning to take note of revolutionary breakthroughs that have introduced a wide range of new treatment options for many prevalent diseases. Changes in the approval process at the FDA, along with advances in knowledge surrounding DNA sequencing and genomics, continued to paint an encouraging picture of the future of health care.
Health care equipment, biotechnology, and health care supplies contributed the most to performance. No categories detracted from performance.
The largest individual contributor was Align Technology, Inc., maker of Invisalign clear aligners for straightening teeth. Shares rose on a 5% increase in 2018 top-line growth and multiple new products introduced at an upbeat Investor Day. We remain positive on Align given the shift away from traditional braces, a vastly underpenetrated market, strong brand recognition, and continuing product innovation.
The largest detractor was argenx SE, a Netherlands-based biotech company focused on cancer and autoimmune disorder treatments. Shares corrected moderately after a strong run following the announcement of positive clinical trial results of the company’s product for treating a rare autoimmune disorder. We retain conviction and expect the stock to resume rallying as results from trials of products for treating immune thrombocytopenic purpura, a blood disorder, and pemphigus vulgaris, a skin and mucus membrane disease, become available.
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. |
19
Table of Contents
Baron Partners Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (120.50%) | ||||||||||||
Consumer Discretionary (48.32%) | ||||||||||||
Automobile Manufacturers (16.84%) | ||||||||||||
1,110,000 | Tesla, Inc.1 | $ | 236,819,490 | $ | 380,674,500 | |||||||
Casinos & Gaming (0.69%) | ||||||||||||
100,000 | MGM Resorts International | 3,619,896 | 2,903,000 | |||||||||
380,787 | Red Rock Resorts, Inc., Cl A | 9,150,312 | 12,756,365 | |||||||||
|
|
|
| |||||||||
12,770,208 | 15,659,365 | |||||||||||
Hotels, Resorts & Cruise Lines (12.42%) | ||||||||||||
2,600,000 | Hyatt Hotels Corp., Cl A | 72,054,423 | 200,590,000 | |||||||||
500,000 | Marriott Vacations | 58,889,765 | 56,480,000 | |||||||||
500,000 | Norwegian Cruise Line Holdings Ltd.1,2 | 23,556,905 | 23,625,000 | |||||||||
|
|
|
| |||||||||
154,501,093 | 280,695,000 | |||||||||||
Internet & Direct Marketing Retail (2.26%) | ||||||||||||
30,000 | Amazon.com, Inc.1 | 41,825,342 | 50,994,000 | |||||||||
Leisure Facilities (11.23%) | ||||||||||||
925,800 | Vail Resorts, Inc. | 27,801,851 | 253,845,102 | |||||||||
Movies & Entertainment (4.88%) | ||||||||||||
5,350,000 | Manchester United plc, Cl A2 | 91,115,472 | 110,210,000 | |||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 564,833,456 | 1,092,077,967 | ||||||||||
|
|
|
| |||||||||
Financials (21.65%) | ||||||||||||
Financial Exchanges & Data (6.75%) |
| |||||||||||
770,000 | FactSet Research Systems, Inc. | 50,187,585 | 152,537,000 | |||||||||
Investment Banking & Brokerage (6.56%) | ||||||||||||
2,900,000 | The Charles Schwab Corp. | 50,169,841 | 148,190,000 | |||||||||
Property & Casualty Insurance (8.34%) | ||||||||||||
7,125,000 | Arch Capital Group Ltd.1,2 | 31,733,011 | 188,527,500 | |||||||||
|
|
|
| |||||||||
Total Financials | 132,090,437 | 489,254,500 | ||||||||||
|
|
|
| |||||||||
Health Care (9.36%) | ||||||||||||
Health Care Equipment (8.68%) | ||||||||||||
900,000 | IDEXX Laboratories, Inc.1 | 39,330,858 | 196,146,000 | |||||||||
Health Care Supplies (0.68%) | ||||||||||||
45,000 | Align Technology, Inc.1 | 14,515,502 | 15,396,300 | |||||||||
|
|
|
| |||||||||
Total Health Care | 53,846,360 | 211,542,300 | ||||||||||
|
|
|
| |||||||||
Industrials (19.73%) | ||||||||||||
Aerospace & Defense (0.17%) | ||||||||||||
38,125 | HEICO Corp. | 2,786,896 | 2,780,457 | |||||||||
19,375 | HEICO Corp., Cl A | 1,182,313 | 1,180,906 | |||||||||
|
|
|
| |||||||||
3,969,209 | 3,961,363 | |||||||||||
Research & Consulting Services (15.97%) | ||||||||||||
875,000 | CoStar Group, Inc.1 | 104,342,327 | 361,051,250 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Industrials (continued) | ||||||||||||
Trading Companies & Distributors (3.59%) | ||||||||||||
900,000 | Air Lease Corp. | $ | 28,803,158 | $ | 37,773,000 | |||||||
900,000 | Fastenal Co. | 39,285,653 | 43,317,000 | |||||||||
|
|
|
| |||||||||
68,088,811 | 81,090,000 | |||||||||||
|
|
|
| |||||||||
Total Industrials | 176,400,347 | 446,102,613 | ||||||||||
|
|
|
| |||||||||
Information Technology (16.01%) | ||||||||||||
Application Software (4.57%) | ||||||||||||
1,165,000 | Guidewire Software, Inc.1 | 91,281,465 | 103,428,700 | |||||||||
Internet Software & Services (6.44%) | ||||||||||||
774,629 | Benefitfocus, Inc.1 | 25,012,214 | 26,027,534 | |||||||||
2,000,000 | Zillow Group, Inc., Cl A1 | 80,261,469 | 119,500,000 | |||||||||
|
|
|
| |||||||||
105,273,683 | 145,527,534 | |||||||||||
IT Consulting & Other Services (5.00%) | ||||||||||||
850,000 | Gartner, Inc.1 | 94,205,470 | 112,965,000 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 290,760,618 | 361,921,234 | ||||||||||
|
|
|
| |||||||||
Real Estate (5.43%) | ||||||||||||
Hotel & Resort REITs (0.51%) | ||||||||||||
382,727 | MGM Growth Properties LLC, Cl A | 7,926,651 | 11,657,864 | |||||||||
Office REITs (1.75%) | ||||||||||||
985,000 | Douglas Emmett, Inc. | 28,168,798 | 39,577,300 | |||||||||
Specialized REITs (3.17%) | ||||||||||||
2,000,000 | Gaming and Leisure Properties, Inc. | 61,015,366 | 71,600,000 | |||||||||
|
|
|
| |||||||||
Total Real Estate | 97,110,815 | 122,835,164 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 1,315,042,033 | 2,723,733,778 | ||||||||||
|
|
|
| |||||||||
Private Common Stocks (1.82%) | ||||||||||||
Industrials (1.82%) | ||||||||||||
Aerospace & Defense (1.82%) | ||||||||||||
221,631 | Space Exploration | 29,920,185 | 36,176,828 | |||||||||
30,221 | Space Exploration | 4,079,835 | 4,932,974 | |||||||||
|
|
|
| |||||||||
Total Private Common Stocks | 34,000,020 | 41,109,802 | ||||||||||
|
|
|
| |||||||||
Private Preferred Stocks (3.20%) | ||||||||||||
Industrials (3.20%) | ||||||||||||
Aerospace & Defense (3.20%) | ||||||||||||
311,111 | Space Exploration | 41,999,985 | 50,782,649 | |||||||||
131,657 | Space Exploration | 22,250,032 | 21,490,372 | |||||||||
|
|
|
| |||||||||
Total Private Preferred Stocks | 64,250,017 | 72,273,021 | ||||||||||
|
|
|
| |||||||||
20 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Partners Fund |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Private Partnerships (0.01%) | ||||||||||||
Financials (0.01%) | ||||||||||||
Asset Management & Custody Banks (0.01%) | ||||||||||||
7,579,130 | Windy City Investments Holdings, L.L.C.1,3,4,6 | $ | 0 | $ | 197,057 | |||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (0.01%) | ||||||||||||
$258,345 | Repurchase Agreement with Fixed Income Clearing Corp., dated 06/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $258,353; (Fully collateralized by $280,000 U.S. Treasury Note, 2.25% due 11/15/2027; Market value - $266,915)5 | 258,345 | 258,345 | |||||||||
|
|
|
| |||||||||
Total Investments (125.54%) | $ | 1,413,550,415 | 2,837,572,003 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets (-25.54%) | (577,306,985 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 2,260,265,018 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $56.23 per share | $ | 1,188,123,573 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $57.44 per share | $ | 927,164,500 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $57.44 per share | $ | 144,976,945 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | At June 30, 2018, the market value of restricted and fair valued securities amounted to $113,579,880 or 5.03% 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 this sub-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.
See Notes to Financial Statements. | 21 |
Table of Contents
Baron Focused Growth Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (90.38%) | ||||||||||||
Consumer Discretionary (57.09%) | ||||||||||||
Automobile Manufacturers (14.02%) | ||||||||||||
90,000 | Tesla, Inc.1 | $ | 20,342,221 | $ | 30,865,500 | |||||||
Casinos & Gaming (3.88%) | ||||||||||||
254,939 | Red Rock Resorts, Inc., Cl A | 5,783,325 | 8,540,456 | |||||||||
Hotels, Resorts & Cruise Lines (17.07%) | ||||||||||||
150,000 | Choice Hotels International, Inc. | 5,080,139 | 11,340,000 | |||||||||
340,000 | Hyatt Hotels Corp., Cl A | 12,201,302 | 26,231,000 | |||||||||
|
|
|
| |||||||||
17,281,441 | 37,571,000 | |||||||||||
Leisure Facilities (16.97%) | ||||||||||||
136,230 | Vail Resorts, Inc. | 8,272,836 | 37,352,904 | |||||||||
Movies & Entertainment (5.15%) | ||||||||||||
550,000 | Manchester United plc, Cl A2 | 8,719,506 | 11,330,000 | |||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 60,399,329 | 125,659,860 | ||||||||||
|
|
|
| |||||||||
Financials (10.36%) | ||||||||||||
Financial Exchanges & Data (6.75%) | ||||||||||||
75,000 | FactSet Research Systems, Inc. | 5,828,282 | 14,857,500 | |||||||||
Property & Casualty Insurance (3.61%) |
| |||||||||||
300,000 | Arch Capital Group Ltd.1,2 | 1,800,055 | 7,938,000 | |||||||||
|
|
|
| |||||||||
Total Financials | 7,628,337 | 22,795,500 | ||||||||||
|
|
|
| |||||||||
Industrials (13.12%) | ||||||||||||
Research & Consulting Services (13.12%) | ||||||||||||
70,000 | CoStar Group, Inc.1 | 12,744,374 | 28,884,100 | |||||||||
|
|
|
| |||||||||
Information Technology (7.54%) | ||||||||||||
Application Software (4.11%) | ||||||||||||
101,870 | Guidewire Software, Inc.1 | 4,816,691 | 9,044,019 | |||||||||
Internet Software & Services (3.43%) | ||||||||||||
225,000 | Benefitfocus, Inc.1 | 5,980,203 | 7,560,000 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 10,796,894 | 16,604,019 | ||||||||||
|
|
|
| |||||||||
Real Estate (2.27%) | ||||||||||||
Residential REITs (2.27%) | ||||||||||||
225,000 | American Homes 4 Rent, Cl A | 4,700,804 | 4,990,500 | |||||||||
|
|
|
| |||||||||
Total Common Stocks | 96,269,738 | 198,933,979 | ||||||||||
|
|
|
| |||||||||
Private Common Stocks (1.76%) | ||||||||||||
Industrials (1.76%) | ||||||||||||
Aerospace & Defense (1.76%) | ||||||||||||
20,859 | Space Exploration | 2,815,965 | 3,404,815 | |||||||||
2,844 | Space Exploration | 383,940 | 464,226 | |||||||||
|
|
|
| |||||||||
Total Private Common Stocks | 3,199,905 | 3,869,041 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Preferred Stocks (5.48%) | ||||||||||||
Telecommunication Services (5.48%) | ||||||||||||
Alternative Carriers (5.48%) | ||||||||||||
22,300 | Iridium Communications, Inc., | $ | 5,814,082 | $ | 12,069,206 | |||||||
|
|
|
| |||||||||
Private Preferred Stocks (2.31%) | ||||||||||||
Industrials (2.31%) | ||||||||||||
Aerospace & Defense (2.31%) | ||||||||||||
29,630 | Space Exploration | 4,000,050 | 4,836,505 | |||||||||
1,479 | Space Exploration | 249,951 | 241,417 | |||||||||
|
|
|
| |||||||||
Total Private Preferred Stocks | 4,250,001 | 5,077,922 | ||||||||||
|
|
|
| |||||||||
Total Investments (99.93%) | $ | 109,533,726 | 219,950,148 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.07%) | 152,185 | |||||||||||
|
| |||||||||||
Net Assets | $ | 220,102,333 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $17.49 per share | $ | 45,968,782 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $17.84 per share | $ | 74,843,199 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $17.84 per share | $ | 99,290,352 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | At June 30, 2018, the market value of restricted and fair valued securities amounted to $8,946,963 or 4.07% 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 this sub-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.
22 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron International Growth Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (88.37%) | ||||||||||||
Argentina (1.26%) | ||||||||||||
118,517 | Bolsas y Mercados Argentinos SA | $ | 1,227,235 | $ | 1,425,892 | |||||||
134,402 | YPF SA, ADR | 2,935,091 | 1,825,179 | |||||||||
|
|
|
| |||||||||
Total Argentina | 4,162,326 | 3,251,071 | ||||||||||
|
|
|
| |||||||||
Australia (2.92%) | ||||||||||||
122,608 | Domino’s Pizza Enterprises Ltd | 3,290,478 | 4,738,237 | |||||||||
502,608 | NEXTDC Ltd.1 | 2,457,609 | 2,811,980 | |||||||||
|
|
|
| |||||||||
Total Australia | 5,748,087 | 7,550,217 | ||||||||||
|
|
|
| |||||||||
Belgium (0.75%) | ||||||||||||
25,131 | KBC Group NV | 2,015,344 | 1,940,489 | |||||||||
|
|
|
| |||||||||
Brazil (1.36%) | ||||||||||||
73,237 | Pagseguro Digital Ltd., Cl A1 | 1,574,595 | 2,032,327 | |||||||||
111,007 | Smiles Fidelidade SA | 1,594,885 | 1,489,354 | |||||||||
|
|
|
| |||||||||
Total Brazil | 3,169,480 | 3,521,681 | ||||||||||
|
|
|
| |||||||||
Canada (4.61%) | ||||||||||||
129,714 | BlackBerry Ltd.1 | 1,468,849 | 1,251,740 | |||||||||
7,925 | Constellation Software, Inc. | 2,357,066 | 6,146,072 | |||||||||
244,653 | Encana Corp. | 2,674,252 | 3,192,722 | |||||||||
32,304 | Suncor Energy, Inc. | 1,086,873 | 1,314,127 | |||||||||
|
|
|
| |||||||||
Total Canada | 7,587,040 | 11,904,661 | ||||||||||
|
|
|
| |||||||||
China (8.58%) | ||||||||||||
17,145 | Alibaba Group Holding Ltd., ADR1 | 1,540,924 | 3,180,912 | |||||||||
8,126 | Baidu, Inc., ADR1 | 1,512,006 | 1,974,618 | |||||||||
2,739,046 | China Construction Bank Corp., CI H | 2,895,123 | 2,531,111 | |||||||||
1,211,371 | Haitong Securities Co., Ltd., Cl H | 1,908,835 | 1,224,402 | |||||||||
560,396 | Kangde Xin Composite Material | 1,827,046 | 1,425,245 | |||||||||
1,251,374 | Kingdee International Software | 232,375 | 1,280,786 | |||||||||
242,924 | Midea Group Co. Ltd., Cl A | 2,090,366 | 1,914,704 | |||||||||
66,000 | Momo, Inc., ADR1 | 3,175,099 | 2,871,000 | |||||||||
71,900 | Tencent Holdings Ltd. | 665,731 | 3,608,930 | |||||||||
92,441 | Zai Lab Ltd., ADR1 | 2,139,392 | 2,149,253 | |||||||||
|
|
|
| |||||||||
Total China | 17,986,897 | 22,160,961 | ||||||||||
|
|
|
| |||||||||
Finland (1.46%) | ||||||||||||
654,550 | Nokia Corporation, ADR | 4,036,222 | 3,763,662 | |||||||||
|
|
|
| |||||||||
France (5.71%) | ||||||||||||
24,551 | BNP Paribas SA | 1,603,317 | 1,524,992 | |||||||||
63,001 | Danone SA | 5,030,333 | 4,625,507 | |||||||||
7,330 | Eurofins Scientific SE | 852,055 | 4,077,972 | |||||||||
8,587 | LVMH Moet Hennessy Louis Vuitton SE | 2,187,513 | 2,859,957 | |||||||||
67,582 | Vivendi SA | 1,594,891 | 1,657,368 | |||||||||
|
|
|
| |||||||||
Total France | 11,268,109 | 14,745,796 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Germany (4.64%) | ||||||||||||
37,501 | Fresenius Medical Care Ag & Co. | $ | 3,399,258 | $ | 3,782,897 | |||||||
13,089 | Linde AG | 2,926,106 | 3,124,322 | |||||||||
140,925 | RIB Software SE | 1,090,974 | 3,274,987 | |||||||||
20,419 | Symrise AG | 707,955 | 1,790,783 | |||||||||
|
|
|
| |||||||||
Total Germany | 8,124,293 | 11,972,989 | ||||||||||
|
|
|
| |||||||||
India (5.06%) | ||||||||||||
15,000 | Britannia Industries Ltd. | 1,250,412 | 1,360,377 | |||||||||
49,574 | Divi’s Laboratories Ltd. | 587,586 | 751,479 | |||||||||
150,000 | Godrej Properties Ltd.1 | 1,943,255 | 1,574,217 | |||||||||
1,141,160 | JM Financial Ltd. | 1,588,401 | 1,927,888 | |||||||||
125,657 | Kotak Mahindra Bank Ltd. | 2,240,735 | 2,462,980 | |||||||||
12,236 | Maruti Suzuki India Ltd. | 993,418 | 1,576,152 | |||||||||
450,408 | Tata Global Beverages Ltd. | 2,092,602 | 1,770,669 | |||||||||
128,714 | Titan Co. Ltd. | 1,852,893 | 1,650,372 | |||||||||
|
|
|
| |||||||||
Total India | 12,549,302 | 13,074,134 | ||||||||||
|
|
|
| |||||||||
Indonesia (0.32%) | ||||||||||||
2,357,500 | PT Tower Bersama Infrastructure Tbk | 1,003,085 | 820,930 | |||||||||
|
|
|
| |||||||||
Ireland (1.12%) | ||||||||||||
25,325 | Ryanair Holdings plc, ADR1 | 1,397,112 | 2,892,875 | |||||||||
|
|
|
| |||||||||
Israel (4.63%) | ||||||||||||
60,866 | Mellanox Technologies Ltd.1 | 3,207,598 | 5,131,004 | |||||||||
68,104 | Wix.com Ltd.1 | 4,390,187 | 6,830,831 | |||||||||
|
|
|
| |||||||||
Total Israel | 7,597,785 | 11,961,835 | ||||||||||
|
|
|
| |||||||||
Japan (15.30%) | ||||||||||||
11,100 | FANUC Corp. | 1,560,568 | 2,206,164 | |||||||||
5,674 | KEYENCE CORPORATION | 3,109,355 | 3,206,119 | |||||||||
11,500 | KOSÉ Corporation | 1,250,822 | 2,479,384 | |||||||||
25,993 | Mercari, Inc.1 | 709,255 | 1,064,700 | |||||||||
517,288 | Mitsubishi UFJ Financial | 3,509,183 | 2,922,677 | |||||||||
79,600 | MonotaRO Co. Ltd. | 2,270,410 | 3,522,919 | |||||||||
140,800 | Recruit Holdings Co. Ltd. | 2,778,996 | 3,899,136 | |||||||||
161,200 | SMS Co. Ltd. | 2,271,378 | 2,945,469 | |||||||||
53,723 | Sony Corp., ADR | 2,009,079 | 2,753,841 | |||||||||
60,100 | Square Enix Holdings Co. Ltd. | 2,013,288 | 2,953,023 | |||||||||
75,720 | START TODAY CO., LTD. | 2,604,778 | 2,745,931 | |||||||||
94,900 | Takeda Pharmaceutical Co. Ltd. | 4,631,924 | 4,009,775 | |||||||||
78,200 | TechnoPro Holdings, Inc. | 3,715,132 | 4,810,026 | |||||||||
|
|
|
| |||||||||
Total Japan | 32,434,168 | 39,519,164 | ||||||||||
|
|
|
| |||||||||
Korea, Republic of (1.90%) | ||||||||||||
10,526 | Amorepacific Corp. | 3,349,546 | 3,045,881 | |||||||||
39,394 | KB Financial Group, Inc. | 2,019,620 | 1,866,311 | |||||||||
|
|
|
| |||||||||
Total Korea, Republic of | 5,369,166 | 4,912,192 | ||||||||||
|
|
|
| |||||||||
Mexico (1.90%) | ||||||||||||
135,114 | América Móvil S.A.B. de C.V., Series L ADR | 2,520,486 | 2,250,999 | |||||||||
3,646,932 | Telesites SAB de CV1 | 2,659,890 | 2,660,795 | |||||||||
|
|
|
| |||||||||
Total Mexico | 5,180,376 | 4,911,794 | ||||||||||
|
|
|
|
See Notes to Financial Statements. | 23 |
Table of Contents
Baron International Growth Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Netherlands (4.18%) | ||||||||||||
63,905 | argenx SE, ADR1 | $ | 3,022,946 | $ | 5,295,168 | |||||||
17,707 | Cimpress NV1 | 1,827,161 | 2,566,807 | |||||||||
47,121 | InterXion Holding N.V.1 | 1,902,407 | 2,941,293 | |||||||||
|
|
|
| |||||||||
Total Netherlands | 6,752,514 | 10,803,268 | ||||||||||
|
|
|
| |||||||||
Nigeria (0.15%) | ||||||||||||
1,572,685 | Lekoil Ltd.1 | 548,298 | 373,599 | |||||||||
|
|
|
| |||||||||
Norway (2.36%) | ||||||||||||
149,000 | Golar LNG Ltd. | 3,696,592 | 4,389,540 | |||||||||
811,535 | Komplett Bank ASA1 | 1,844,843 | 1,703,911 | |||||||||
|
|
|
| |||||||||
Total Norway | 5,541,435 | 6,093,451 | ||||||||||
|
|
|
| |||||||||
Russia (2.09%) | ||||||||||||
200,262 | Sberbank of Russia PJSC, ADR | 2,933,046 | 2,890,782 | |||||||||
69,500 | Yandex N.V., Cl A1 | 2,268,603 | 2,495,050 | |||||||||
|
|
|
| |||||||||
Total Russia | 5,201,649 | 5,385,832 | ||||||||||
|
|
|
| |||||||||
Spain (2.55%) | ||||||||||||
22,163 | Aena SME SA, 144A | 3,338,216 | 4,024,643 | |||||||||
74,745 | Industria de Diseño Textil SA | 2,339,512 | 2,554,024 | |||||||||
|
|
|
| |||||||||
Total Spain | 5,677,728 | 6,578,667 | ||||||||||
|
|
|
| |||||||||
Switzerland (2.12%) | ||||||||||||
46,982 | Julius Baer Group Ltd. | 1,896,235 | 2,764,931 | |||||||||
38,953 | Landis & Gyr Group AG1 | 3,125,735 | 2,712,117 | |||||||||
|
|
|
| |||||||||
Total Switzerland | 5,021,970 | 5,477,048 | ||||||||||
|
|
|
| |||||||||
United Kingdom (9.54%) | ||||||||||||
240,721 | Abcam plc | 2,222,241 | 4,238,007 | |||||||||
75,669 | Adaptimmune Therapeutics PLC, ADR1 | 995,027 | 898,191 | |||||||||
130,500 | AstraZeneca PLC, ADR | 4,674,059 | 4,581,855 | |||||||||
119,158 | Experian plc | 2,054,766 | 2,947,817 | |||||||||
848,049 | Horizon Discovery Group plc1 | 1,990,037 | 1,846,701 | |||||||||
40,037 | Intertek Group plc | 1,846,883 | 3,020,269 | |||||||||
650,000 | Rentokil Initial PLC | 2,766,778 | 3,009,295 | |||||||||
924,450 | Tullow Oil plc1 | 2,471,665 | 2,989,106 | |||||||||
75,000 | WANdisco PLC1 | 1,109,929 | 1,103,641 | |||||||||
|
|
|
| |||||||||
Total United Kingdom | 20,131,385 | 24,634,882 | ||||||||||
|
|
|
| |||||||||
United States (3.86%) | ||||||||||||
35,603 | Agilent Technologies, Inc. | 1,139,806 | 2,201,689 | |||||||||
97,567 | Arch Capital Group Ltd.1 | 1,496,747 | 2,581,623 | |||||||||
73,070 | The Stars Group, Inc.1 | 2,776,660 | 2,652,441 | |||||||||
31,304 | Worldpay, Inc., Cl A1 | 2,471,015 | 2,545,736 | |||||||||
|
|
|
| |||||||||
Total United States | 7,884,228 | 9,981,489 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 186,387,999 | 228,232,687 | ||||||||||
|
|
|
|
Principal Amount | Cost | Value | ||||||||||
Short Term Investments (10.97%) | ||||||||||||
$28,341,743 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $28,342,570; (Fully collateralized by $30,165,000 U.S. Treasury | $ | 28,341,743 | $ | 28,341,743 | |||||||
|
|
|
| |||||||||
Total Investments (99.34%) | $ | 214,729,742 | 256,574,430 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.66%) | 1,709,528 | |||||||||||
|
| |||||||||||
Net Assets | $ | 258,283,958 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $23.82 per share | $ | 66,181,523 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $24.15 per share | $ | 177,860,650 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $24.15 per share | $ | 14,241,785 | |||||||||
|
|
% | 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, 2018, the market value of Rule 144A securities amounted to $4,024,643 or 1.56% 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.
Summary of Investments by Sector as of June 30, 2018 | Percentage of Net Assets | |||
Information Technology | 25.6 | % | ||
Health Care | 13.1 | |||
Industrials | 12.7 | |||
Financials | 10.8 | |||
Consumer Discretionary | 10.3 | |||
Energy | 5.5 | |||
Consumer Staples | 5.1 | |||
Materials | 2.5 | |||
Telecommunication Services | 2.2 | |||
Real Estate | 0.6 | |||
Cash and Cash Equivalents* | 11.6 | |||
100.0 | % |
* | Includes short term investments. |
24 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Real Estate Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (96.96%) | ||||||||||||
Consumer Discretionary (36.72%) | ||||||||||||
Casinos & Gaming (9.45%) | ||||||||||||
422,750 | Boyd Gaming Corp. | $ | 9,347,849 | $ | 14,652,515 | |||||||
1,093,700 | MGM Resorts International | 24,633,882 | 31,750,111 | |||||||||
835,855 | Penn National Gaming, Inc.1 | 23,930,059 | 28,076,369 | |||||||||
498,201 | Red Rock Resorts, Inc., Cl A | 12,109,870 | 16,689,734 | |||||||||
|
|
|
| |||||||||
70,021,660 | 91,168,729 | |||||||||||
Home Furnishings (2.38%) | ||||||||||||
106,957 | Mohawk Industries, Inc.1 | 13,731,137 | 22,917,676 | |||||||||
Home Improvement Retail (5.03%) | ||||||||||||
248,900 | Home Depot, Inc. | 21,184,143 | 48,560,390 | |||||||||
Homebuilding (3.20%) | ||||||||||||
10,000,000 | Glenveagh Properties PLC, 144A (United Kingdom)1,2 | 12,165,974 | 13,429,700 | |||||||||
308,984 | Installed Building Products, Inc.1 | 17,888,886 | 17,473,046 | |||||||||
|
|
|
| |||||||||
30,054,860 | 30,902,746 | |||||||||||
Hotels, Resorts & Cruise Lines (16.66%) | ||||||||||||
1,219,194 | Extended Stay America, Inc. | 22,900,537 | 26,346,782 | |||||||||
366,450 | Hilton Grand Vacations, Inc.1 | 8,999,800 | 12,715,815 | |||||||||
293,375 | Hilton Worldwide Holdings, Inc. | 14,604,797 | 23,223,565 | |||||||||
306,900 | Hyatt Hotels Corp., Cl A | 24,518,441 | 23,677,335 | |||||||||
106,650 | Marriott International, Inc., Cl A | 8,517,207 | 13,501,890 | |||||||||
392,390 | Norwegian Cruise Line | 13,811,190 | 18,540,428 | |||||||||
157,550 | Royal Caribbean Cruises Ltd.2 | 14,299,066 | 16,322,180 | |||||||||
266,700 | Wyndham Hotels & Resorts, Inc. | 13,357,566 | 15,689,961 | |||||||||
241,700 | Wyndham Destinations, Inc. (formerly, Wyndham Worldwide Corp.) | 9,032,675 | 10,700,059 | |||||||||
|
|
|
| |||||||||
130,041,279 | 160,718,015 | |||||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 265,033,079 | 354,267,556 | ||||||||||
|
|
|
| |||||||||
Financials (3.19%) | ||||||||||||
Asset Management & Custody Banks (2.47%) | ||||||||||||
588,200 | Brookfield Asset | 14,282,256 | 23,845,628 | |||||||||
Thrifts & Mortgage Finance (0.72%) | ||||||||||||
249,450 | Housing Development | 6,648,633 | 6,947,027 | |||||||||
|
|
|
| |||||||||
Total Financials | 20,930,889 | 30,792,655 | ||||||||||
|
|
|
| |||||||||
Industrials (6.15%) | ||||||||||||
Building Products (2.55%) | ||||||||||||
105,000 | Fortune Brands Home & Security, Inc. | 6,077,947 | 5,637,450 | |||||||||
507,050 | Masco Corp. | 17,515,679 | 18,973,811 | |||||||||
|
|
|
| |||||||||
23,593,626 | 24,611,261 | |||||||||||
Research & Consulting Services (1.76%) | ||||||||||||
41,150 | CoStar Group, Inc.1 | 7,528,555 | 16,979,725 | |||||||||
Trading Companies & Distributors (1.84%) | ||||||||||||
251,384 | Beacon Roofing Supply, Inc.1 | 11,268,066 | 10,713,986 | |||||||||
83,301 | SiteOne Landscape Supply, Inc.1 | 3,296,771 | 6,994,785 | |||||||||
|
|
|
| |||||||||
14,564,837 | 17,708,771 | |||||||||||
|
|
|
| |||||||||
Total Industrials | 45,687,018 | 59,299,757 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Information Technology (7.13%) | ||||||||||||
Data Processing & Outsourced Services (1.34%) | ||||||||||||
322,525 | GDS Holdings Ltd., ADR1,2 | $ | 9,961,667 | $ | 12,930,027 | |||||||
IT Consulting & Services (1.96%) | ||||||||||||
3,370,896 | NEXTDC Ltd. (Australia)1,2,3 | 13,818,630 | 18,859,416 | |||||||||
IT Consulting & Other Services (3.83%) | ||||||||||||
592,050 | InterXion Holding N.V.1,2 | 17,178,428 | 36,955,761 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 40,958,725 | 68,745,204 | ||||||||||
|
|
|
| |||||||||
Materials (15.99%) | ||||||||||||
Construction Materials (13.52%) |
| |||||||||||
233,921 | Eagle Materials, Inc. | 24,319,872 | 24,554,687 | |||||||||
107,450 | Martin Marietta Materials, Inc. | 14,818,768 | 23,996,808 | |||||||||
889,718 | Summit Materials, Inc., Cl A1 | 25,373,333 | 23,355,098 | |||||||||
453,900 | Vulcan Materials Co. | 55,545,440 | 58,580,334 | |||||||||
|
|
|
| |||||||||
120,057,413 | 130,486,927 | |||||||||||
Specialty Chemicals (2.47%) |
| |||||||||||
58,400 | The Sherwin-Williams Co. | 14,734,427 | 23,802,088 | |||||||||
|
|
|
| |||||||||
Total Materials | 134,791,840 | 154,289,015 | ||||||||||
|
|
|
| |||||||||
Real Estate (27.78%) | ||||||||||||
Hotel & Resort REITs (2.79%) |
| |||||||||||
476,000 | MGM Growth Properties LLC, Cl A | 9,821,032 | 14,498,960 | |||||||||
404,200 | Park Hotels & Resorts, Inc. | 11,517,592 | 12,380,646 | |||||||||
|
|
|
| |||||||||
21,338,624 | 26,879,606 | |||||||||||
Industrial REITs (1.55%) |
| |||||||||||
227,100 | Prologis, Inc. | 11,400,585 | 14,918,199 | |||||||||
Office REITs (2.82%) |
| |||||||||||
40,878 | Boston Properties, Inc. | 5,006,315 | 5,126,919 | |||||||||
292,950 | Douglas Emmett, Inc. | 5,907,463 | 11,770,731 | |||||||||
102,450 | SL Green Realty Corp. | 10,367,846 | 10,299,298 | |||||||||
|
|
|
| |||||||||
21,281,624 | 27,196,948 | |||||||||||
Real Estate Development (0.47%) |
| |||||||||||
14,664 | Forestar Group, Inc.1 | 319,942 | 304,278 | |||||||||
406,951 | Godrej Properties Ltd. (India)1,2 | 5,099,242 | 4,270,862 | |||||||||
|
|
|
| |||||||||
5,419,184 | 4,575,140 | |||||||||||
Real Estate Services (2.41%) |
| |||||||||||
486,250 | CBRE Group, Inc., Cl A1 | 9,934,510 | 23,213,575 | |||||||||
Residential REITs (1.49%) |
| |||||||||||
623,500 | Invitation Homes, Inc. | 12,411,137 | 14,377,910 | |||||||||
Specialized REITs (16.25%) |
| |||||||||||
87,950 | Alexandria Real Estate Equities, Inc.3 | 5,442,992 | 11,096,652 | |||||||||
431,950 | American Tower Corp. | 40,729,448 | 62,274,231 | |||||||||
117,165 | Digital Realty Trust, Inc. | 12,834,847 | 13,073,271 | |||||||||
105,691 | Equinix, Inc. | 20,984,942 | 45,435,504 | |||||||||
350,119 | Gaming and Leisure Properties, Inc. | 9,119,254 | 12,534,260 | |||||||||
75,000 | SBA Communications Corp.1 | 4,620,366 | 12,384,000 | |||||||||
|
|
|
| |||||||||
93,731,849 | 156,797,918 | |||||||||||
|
|
|
| |||||||||
Total Real Estate | 175,517,513 | 267,959,296 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 682,919,064 | 935,353,483 | ||||||||||
|
|
|
| |||||||||
See Notes to Financial Statements. | 25 |
Table of Contents
Baron Real Estate Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2018
|
Principal Amount | Cost | Value | ||||||||||
Short Term Investments (2.87%) | ||||||||||||
$27,651,407 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $27,652,214; (Fully collateralized by $29,430,000 U.S. Treasury Note, 2.00% due 2/15/2025; Market value - $28,206,183)4 | $ | 27,651,407 | $ | 27,651,407 | |||||||
|
|
|
| |||||||||
Total Investments (99.83%) | $ | 710,570,471 | 963,004,890 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.17%) | 1,605,746 | |||||||||||
|
| |||||||||||
Net Assets | $ | 964,610,636 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $28.29 per share | $ | 367,226,474 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $28.73 per share | $ | 586,265,999 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $28.74 per share | $ | 11,118,163 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
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, 2018, the market value of Rule 144A securities amounted to $13,429,700 or 1.39% 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.
26 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Emerging Markets Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (90.25%) | ||||||||||||
Argentina (1.94%) | ||||||||||||
482,523 | Banco Macro SA, ADR | $ | 42,076,876 | $ | 28,367,527 | |||||||
2,384,762 | Loma Negra Cia Industrial Argentina SA, ADR1 | 49,673,994 | 24,467,658 | |||||||||
3,876,840 | YPF SA, ADR | 80,093,389 | 52,647,488 | |||||||||
|
|
|
| |||||||||
Total Argentina | 171,844,259 | 105,482,673 | ||||||||||
|
|
|
| |||||||||
Brazil (5.52%) | ||||||||||||
8,129,026 | B3 SA - Brasil Bolsa Balcao | 40,708,235 | 42,891,977 | |||||||||
6,571,087 | Kroton Educacional SA | 23,012,385 | 15,801,466 | |||||||||
2,083,431 | Localiza Rent a Car SA | 13,585,979 | 12,756,194 | |||||||||
1,916,798 | Pagseguro Digital Ltd., Cl A1 | 50,132,952 | 53,191,144 | |||||||||
5,934,832 | Petroleo Brasileiro SA, ADR | 63,609,889 | 59,526,365 | |||||||||
18,394,955 | Rumo SA1 | 70,507,682 | 66,920,948 | |||||||||
3,549,958 | Smiles Fidelidade SA | 55,495,984 | 47,628,928 | |||||||||
184,465 | TOTVS SA | 1,224,438 | 1,294,575 | |||||||||
|
|
|
| |||||||||
Total Brazil | 318,277,544 | 300,011,597 | ||||||||||
|
|
|
| |||||||||
China (32.27%) | ||||||||||||
1,097,170 | Alibaba Group Holding | 96,285,120 | 203,557,950 | |||||||||
403,824 | Baidu, Inc., ADR1 | 75,738,380 | 98,129,232 | |||||||||
112,363,336 | China Construction | 109,719,928 | 103,833,255 | |||||||||
16,096,517 | China Everbright Ltd. | 40,061,832 | 29,543,928 | |||||||||
25,371,732 | China Mengniu Dairy Co. Ltd. | 55,573,083 | 86,021,218 | |||||||||
7,551,189 | China Mobile Ltd. | 85,627,548 | 67,084,464 | |||||||||
28,733,617 | CSPC Pharmaceutical | 68,361,059 | 86,798,553 | |||||||||
29,436,546 | Haitong Securities Co., | 47,253,172 | 29,753,213 | |||||||||
3,914,889 | Han’s Laser Technology Industry Group Co. Ltd., Cl A | 31,084,006 | 31,429,965 | |||||||||
10,701,184 | Hangzhou Hikvision Digital Technology Co. Ltd., Cl A | 34,186,532 | 59,972,373 | |||||||||
86,470,110 | Industrial & Commercial Bank of China Ltd., Cl H | 73,510,464 | 64,696,078 | |||||||||
21,922,610 | Kangde Xin Composite Material Group Co. Ltd., Cl A1,3 | 74,000,773 | 55,755,359 | |||||||||
36,747,166 | Kingdee International Software Group Co. Ltd. | 14,312,151 | 37,610,857 | |||||||||
8,966,199 | Midea Group Co. Ltd., Cl A | 48,538,302 | 70,670,749 | |||||||||
1,427,408 | Momo, Inc., ADR1 | 55,399,955 | 62,092,248 | |||||||||
5,466,304 | Shenzhou International Group Holdings Ltd. | 26,729,304 | 67,478,783 | |||||||||
56,390,961 | Sino Biopharmaceutical Ltd. | 32,790,338 | 86,538,591 | |||||||||
12,328,950 | Sinopharm Group Co. Ltd., Cl H | 50,325,553 | 49,579,175 | |||||||||
2,525,592 | Sunny Optical Technology Group Co., Ltd. | 6,719,959 | 46,999,137 | |||||||||
902,120 | TAL Education Group, ADR1 | 3,787,598 | 33,198,016 | |||||||||
4,553,014 | Tencent Holdings Ltd. | 126,199,765 | 228,532,797 | |||||||||
143,569,583 | Tongda Group Holdings Ltd. | 36,830,198 | 29,096,008 | |||||||||
73,610,312 | WH Group Limited, 144A | 64,425,432 | 59,953,336 | |||||||||
4,035,891 | Yunnan Baiyao | 61,413,938 | 65,156,129 | |||||||||
|
|
|
| |||||||||
Total China | 1,318,874,390 | 1,753,481,414 | ||||||||||
|
|
|
| |||||||||
Hong Kong (0.82%) | ||||||||||||
7,926,950 | Techtronic Industries Co. Ltd. | 32,888,582 | 44,203,638 | |||||||||
2,879,303 | Tongda Hong Tai Holdings Ltd.1 | 901,617 | 535,814 | |||||||||
|
|
|
| |||||||||
Total Hong Kong | 33,790,199 | 44,739,452 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
India (17.21%) | ||||||||||||
400,000 | Bajaj Finance Ltd. | $ | 13,982,876 | $ | 13,406,407 | |||||||
857,320 | Britannia Industries Ltd. | 53,557,995 | 77,751,911 | |||||||||
6,369,247 | Coal India Ltd. | 32,561,438 | 24,574,333 | |||||||||
2,563,761 | Divi’s Laboratories Ltd. | 27,696,704 | 38,863,346 | |||||||||
7,166,423 | Edelweiss Financial Services Ltd. | 19,973,645 | 30,803,643 | |||||||||
14,386,850 | Exide Industries Ltd. | 43,140,862 | 54,238,099 | |||||||||
3,483,817 | Housing Development | 82,777,105 | 97,022,130 | |||||||||
20,302,025 | JM Financial Ltd. | 38,207,252 | 34,298,466 | |||||||||
8,438,612 | JSW Steel Ltd. | 37,903,575 | 40,250,141 | |||||||||
4,462,883 | Kotak Mahindra Bank Ltd. | 59,056,555 | 87,476,155 | |||||||||
4,025,216 | Manpasand Beverages Ltd. | 20,732,185 | 8,733,100 | |||||||||
581,435 | Maruti Suzuki India Ltd. | 50,102,571 | 74,896,194 | |||||||||
6,283,339 | Max Financial Services Ltd.1 | 57,722,813 | 39,668,077 | |||||||||
2,999,994 | Motherson Sumi Systems Ltd. | 8,834,502 | 12,465,858 | |||||||||
355,000 | Piramal Enterprises Ltd. | 13,362,698 | 13,141,451 | |||||||||
5,197,490 | SBI Life Insurance Co. Ltd., 144A | 56,026,193 | 51,155,621 | |||||||||
4,428,288 | Sun TV Network Ltd. | 45,408,366 | 50,561,916 | |||||||||
4,816,895 | Tata Chemicals Ltd. | 54,449,364 | 49,061,814 | |||||||||
2,955,898 | Tata Communications Ltd.1 | 30,610,639 | 25,572,627 | |||||||||
11,066,357 | Tata Global Beverages Ltd. | 39,618,641 | 43,504,682 | |||||||||
2,945,937 | Titan Co. Ltd. | 42,222,766 | 37,772,833 | |||||||||
3,803,745 | Zee Entertainment | 21,647,174 | 30,198,454 | |||||||||
|
|
|
| |||||||||
Total India | 849,595,919 | 935,417,258 | ||||||||||
|
|
|
| |||||||||
Indonesia (0.40%) | ||||||||||||
61,902,105 | PT Tower Bersama | 31,519,830 | 21,555,583 | |||||||||
|
|
|
| |||||||||
Korea, Republic of (7.08%) | ||||||||||||
243,873 | Amorepacific Corp. | 77,542,559 | 70,568,903 | |||||||||
2,018,856 | KB Financial Group, Inc. | 93,044,239 | 95,644,322 | |||||||||
2,416,000 | KIA Motors Corp. | 75,237,090 | 66,876,268 | |||||||||
2,806,000 | Samsung Electronics Co., Ltd. | 86,056,322 | 117,451,682 | |||||||||
387,314 | Samsung Life Insurance Co., Ltd. | 39,718,428 | 34,196,229 | |||||||||
|
|
|
| |||||||||
Total Korea, Republic of | 371,598,638 | 384,737,404 | ||||||||||
|
|
|
| |||||||||
Malaysia (0.39%) | ||||||||||||
87,886,493 | My EG Services Bhd | 33,827,226 | 20,995,288 | |||||||||
|
|
|
| |||||||||
Mexico (5.53%) | ||||||||||||
3,503,933 | América Móvil S.A.B. | 64,456,298 | 58,375,524 | |||||||||
790,825 | Fomento Económico Mexicano, S.A.B. de C.V., ADR | 74,050,768 | 69,426,527 | |||||||||
2,850,443 | GRUMA S.A.B. de C.V., Cl B | 39,487,415 | 34,813,431 | |||||||||
13,070,961 | Grupo Lala S.A.B. de C.V. | 25,303,050 | 13,492,010 | |||||||||
13,920,044 | Infraestructura Energetica Nova S.A.B. de C.V. | 67,045,960 | 62,387,086 | |||||||||
23,487,020 | Wal-Mart de Mexico | 55,017,766 | 61,992,653 | |||||||||
|
|
|
| |||||||||
Total Mexico | 325,361,257 | 300,487,231 | ||||||||||
|
|
|
| |||||||||
Nigeria (0.14%) | ||||||||||||
32,618,323 | Lekoil Ltd.1,2 | 14,881,766 | 7,748,648 | |||||||||
|
|
|
|
See Notes to Financial Statements. | 27 |
Table of Contents
Baron Emerging Markets Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited) (Continued)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Panama (0.42%) | ||||||||||||
243,953 | Copa Holdings, S.A., Cl A | $ | 12,948,029 | $ | 23,082,833 | |||||||
|
|
|
| |||||||||
Philippines (1.94%) | ||||||||||||
64,703,065 | Ayala Land, Inc. | 50,813,142 | 45,950,179 | |||||||||
20,323,556 | BDO Unibank, Inc. | 45,846,397 | 47,793,250 | |||||||||
138,168,735 | Metro Pacific Investments Corp. | 15,125,467 | 11,909,424 | |||||||||
|
|
|
| |||||||||
Total Philippines | 111,785,006 | 105,652,853 | ||||||||||
|
|
|
| |||||||||
Russia (3.76%) | ||||||||||||
8,636,641 | Sberbank of Russia PJSC, ADR | 109,791,938 | 124,669,913 | |||||||||
2,223,815 | Yandex N.V., Cl A1 | 48,203,976 | 79,834,958 | |||||||||
|
|
|
| |||||||||
Total Russia | 157,995,914 | 204,504,871 | ||||||||||
|
|
|
| |||||||||
South Africa (4.82%) | ||||||||||||
3,310,622 | Bid Corp. Ltd. | 69,089,407 | 66,444,129 | |||||||||
4,551,367 | Bidvest Group Ltd. | 56,711,450 | 65,366,489 | |||||||||
11,216,792 | FirstRand Ltd. | 44,517,298 | 52,242,817 | |||||||||
1,173,641 | Sasol Ltd. | 39,319,847 | 43,023,664 | |||||||||
614,897 | Sasol Ltd., ADR | 19,982,671 | 22,468,336 | |||||||||
10,150,000 | Steinhoff Africa Retail Ltd., 144A1 | 17,290,744 | 12,356,844 | |||||||||
|
|
|
| |||||||||
Total South Africa | 246,911,417 | 261,902,279 | ||||||||||
|
|
|
| |||||||||
Taiwan, Province of China (6.09%) | ||||||||||||
7,466,879 | Delta Electronics, Inc. | 37,286,024 | 26,817,431 | |||||||||
3,264,700 | Eclat Textile Co., Ltd. | 38,231,584 | 38,816,398 | |||||||||
24,830,000 | Far EasTone Telecommunications Co., Ltd. | 59,144,636 | 64,175,148 | |||||||||
3,175,065 | Ginko International Co., Ltd. | 39,134,743 | 25,930,800 | |||||||||
5,846,936 | Makalot Industrial Co. Ltd. | 27,633,092 | 26,273,192 | |||||||||
18,216,000 | Taiwan Mobile Co., Ltd. | 65,102,377 | 66,020,565 | |||||||||
2,263,035 | Taiwan Semiconductor Manufacturing Co., Ltd., ADR | 56,179,036 | 82,736,560 | |||||||||
|
|
|
| |||||||||
Total Taiwan, Province of China | 322,711,492 | 330,770,094 | ||||||||||
|
|
|
| |||||||||
Thailand (0.72%) | ||||||||||||
2,673,829 | Bangkok Bank PCL, Cl F3 | 16,733,985 | 16,020,376 | |||||||||
3,872,664 | Bangkok Bank PCL, NVDR | 20,554,524 | 22,852,575 | |||||||||
|
|
|
| |||||||||
Total Thailand | 37,288,509 | 38,872,951 | ||||||||||
|
|
|
| |||||||||
United Kingdom (1.20%) | ||||||||||||
20,088,364 | Tullow Oil plc1 | 52,676,362 | 64,953,488 | |||||||||
|
|
|
| |||||||||
Total Common Stocks | 4,411,887,757 | 4,904,395,917 | ||||||||||
|
|
|
| |||||||||
Preferred Stocks (0.01%) | ||||||||||||
India (0.01%) | ||||||||||||
3,098,340 | Zee Entertainment Enterprises Ltd., 6.00% due 3/5/2022 | 367,971 | 348,657 | |||||||||
|
|
|
|
Principal Amount | Cost | Value | ||||||||||
Short Term Investments (9.21%) | ||||||||||||
$500,563,596 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $500,578,196; (Fully collateralized by $532,140,000 U.S. Treasury Note, 2.125% due 5/15/2025; Market value - $510,575,027)3 | $ | 500,563,596 | $ | 500,563,596 | |||||||
|
|
|
| |||||||||
Total Investments (99.47%) | $ | 4,912,819,324 | 5,405,308,170 | |||||||||
|
| |||||||||||
Cash and Other Assets Less Liabilities (0.53%) | 28,601,010 | |||||||||||
|
| |||||||||||
Net Assets | $ | 5,433,909,180 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $13.99 per share | $ | 1,079,181,735 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $14.05 per share | $ | 4,346,893,191 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $14.06 per share | $ | 7,834,254 | |||||||||
|
|
% | 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, 2018, the market value of Rule 144A securities amounted to $123,465,801 or 2.27% 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, 2018 | Percentage of Net Assets | |||
Information Technology | 21.1 | % | ||
Financials | 19.5 | |||
Consumer Discretionary | 12.6 | |||
Consumer Staples | 10.9 | |||
Health Care | 6.7 | |||
Telecommunication Services | 5.6 | |||
Materials | 4.3 | |||
Energy | 3.9 | |||
Industrials | 3.7 | |||
Utilities | 1.2 | |||
Real Estate | 0.8 | |||
Cash and Cash Equivalents* | 9.7 | |||
100.0 | % |
* | Includes short term investments. |
28 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Energy and Resources Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (97.27%) | ||||||||||||
Consumer Discretionary (8.01%) | ||||||||||||
Automobile Manufacturers (8.01%) | ||||||||||||
14,100 | Tesla, Inc.1 | $ | 3,242,964 | $ | 4,835,595 | |||||||
|
|
|
| |||||||||
Energy (73.44%) | ||||||||||||
Integrated Oil & Gas (1.52%) | ||||||||||||
91,100 | Petroleo Brasileiro SA, ADR (Brazil)1,2 | 950,490 | 913,733 | |||||||||
Oil & Gas Equipment & Services (10.01%) | ||||||||||||
61,400 | Cactus, Inc., Cl A1,5 | 1,166,600 | 2,074,706 | |||||||||
48,296 | Halliburton Co. | 1,807,731 | 2,176,218 | |||||||||
68,100 | NCS Multistage Holdings, Inc.1 | 1,195,067 | 989,493 | |||||||||
31,100 | U.S. Silica Holdings, Inc. | 802,962 | 798,959 | |||||||||
|
|
|
| |||||||||
4,972,360 | 6,039,376 | |||||||||||
Oil & Gas Exploration & Production (41.13%) | ||||||||||||
27,700 | Concho Resources, Inc.1 | 2,562,344 | 3,832,295 | |||||||||
24,000 | Devon Energy Corp. | 846,547 | 1,055,040 | |||||||||
296,300 | Encana Corp.2 | 1,896,724 | 3,866,715 | |||||||||
14,768 | EOG Resources, Inc. | 1,128,903 | 1,837,582 | |||||||||
20,834 | EQT Corp. | 506,264 | 1,149,620 | |||||||||
1,823,454 | Lekoil Ltd. (Nigeria)1,2 | 571,211 | 433,171 | |||||||||
50,400 | Marathon Oil Corp. | 1,084,350 | 1,051,344 | |||||||||
141,700 | Parsley Energy, Inc., Cl A1 | 2,266,637 | 4,290,676 | |||||||||
101,400 | RSP Permian, Inc.1 | 2,281,789 | 4,463,628 | |||||||||
39,100 | SM Energy Co. | 817,736 | 1,004,479 | |||||||||
101,500 | WPX Energy, Inc.1 | 1,217,568 | 1,830,045 | |||||||||
|
|
|
| |||||||||
15,180,073 | 24,814,595 | |||||||||||
Oil & Gas Refining & Marketing (5.86%) | ||||||||||||
16,300 | Andeavor | 1,352,399 | 2,138,234 | |||||||||
12,600 | Valero Energy Corporation | 710,257 | 1,396,458 | |||||||||
|
|
|
| |||||||||
2,062,656 | 3,534,692 | |||||||||||
Oil & Gas Storage & Transportation (14.92%) | ||||||||||||
83,500 | Energy Transfer Equity L.P. | 516,197 | 1,440,375 | |||||||||
88,735 | Golar LNG Ltd.2 | 1,605,912 | 2,614,133 | |||||||||
21,800 | MPLX LP | 660,163 | 744,252 | |||||||||
31,638 | Noble Midstream Partners LP | 711,855 | 1,615,436 | |||||||||
108,800 | Sanchez Midstream Partners LP | 1,196,800 | 1,283,840 | |||||||||
26,300 | Targa Resources Corp. | 661,209 | 1,301,587 | |||||||||
|
|
|
| |||||||||
5,352,136 | 8,999,623 | |||||||||||
|
|
|
| |||||||||
Total Energy | 28,517,715 | 44,302,019 | ||||||||||
|
|
|
| |||||||||
Industrials (5.35%) | ||||||||||||
Heavy Electrical Equipment (5.35%) | ||||||||||||
62,600 | Siemens Gamesa Renewable | 919,052 | 841,065 | |||||||||
81,600 | TPI Composites, Inc.1 | 1,398,368 | 2,385,984 | |||||||||
|
|
|
| |||||||||
Total Industrials | 2,317,420 | 3,227,049 | ||||||||||
|
|
|
| |||||||||
Information Technology (6.02%) | ||||||||||||
Application Software (4.77%) |
| |||||||||||
31,000 | Aspen Technology, Inc.1 | 1,182,386 | 2,874,940 | |||||||||
Electronic Equipment & Instruments (1.25%) | ||||||||||||
10,850 | Landis & Gyr Group AG (Switzerland)1,2 | 887,151 | 755,435 | |||||||||
|
|
|
| |||||||||
Total Information Technology | 2,069,537 | 3,630,375 | ||||||||||
|
|
|
|
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Materials (1.79%) | ||||||||||||
Specialty Chemicals (1.79%) |
| |||||||||||
333,539 | Flotek Industries, Inc.1 | $ | 3,663,555 | $ | 1,077,331 | |||||||
|
|
|
| |||||||||
Unclassified (1.53%) | ||||||||||||
Unclassified (1.53%) |
| |||||||||||
84,900 | TPG Pace Energy Holdings Corp., Cl A1 | 896,911 | 922,863 | |||||||||
|
|
|
| |||||||||
Utilities (1.13%) | ||||||||||||
Gas Utilities (1.13%) |
| |||||||||||
152,866 | Infraestructura Energetica Nova | 642,193 | 685,118 | |||||||||
|
|
|
| |||||||||
Total Common Stocks | 41,350,295 | 58,680,350 | ||||||||||
|
|
|
| |||||||||
Private Common Stocks (2.74%) | ||||||||||||
Energy (2.74%) | ||||||||||||
Oil & Gas Equipment & Services (2.74%) |
| |||||||||||
127,500 | Gravity Oilfield | 1,498,125 | 1,651,125 | |||||||||
|
|
|
| |||||||||
Total Investments (100.01%) | $ | 42,848,420 | 60,331,475 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets (-0.01%) | (4,455 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 60,327,020 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $8.66 per share | $ | 41,017,803 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $8.80 per share | $ | 18,713,881 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $8.80 per share | $ | 595,336 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | At June 30, 2018, the market value of restricted and fair valued securities amounted to $1,651,125 or 2.74% of net assets. This security is not deemed liquid. See Note 6 regarding Restricted Securities. |
4 | The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
5 | Level 3 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, 2018, the market value of Rule 144A securities amounted to $1,651,125 or 2.74% of net assets. This security is not deemed liquid pursuant to policies and procedures approved by the Board of Trustees, unless otherwise noted. |
All securities are Level 1, unless otherwise noted.
See Notes to Financial Statements. | 29 |
Table of Contents
Baron Global Advantage Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (99.13%) | ||||||||||||
Argentina (3.39%) | ||||||||||||
91,000 | Bolsas y Mercados Argentinos SA | $ | 1,550,678 | $ | 1,094,832 | |||||||
32,747 | Globant SA1 | 1,458,318 | 1,859,702 | |||||||||
|
|
|
| |||||||||
Total Argentina | 3,008,996 | 2,954,534 | ||||||||||
|
|
|
| |||||||||
Australia (0.65%) | ||||||||||||
101,343 | NEXTDC Ltd.1 | 536,070 | 566,992 | |||||||||
|
|
|
| |||||||||
Brazil (2.19%) | ||||||||||||
68,661 | Pagseguro Digital Ltd., Cl A1 | 1,863,720 | 1,905,343 | |||||||||
|
|
|
| |||||||||
Canada (3.78%) | ||||||||||||
4,240 | Constellation Software, Inc. | 2,299,292 | 3,288,245 | |||||||||
|
|
|
| |||||||||
China (12.77%) | ||||||||||||
21,210 | Alibaba Group Holding Ltd., ADR1 | 2,460,423 | 3,935,091 | |||||||||
7,630 | Baidu, Inc., ADR1 | 1,628,600 | 1,854,090 | |||||||||
39,296 | Ctrip.com International Ltd., ADR1 | 1,677,502 | 1,871,669 | |||||||||
51,436 | JD.com, Inc., ADR1 | 2,052,624 | 2,003,432 | |||||||||
39,624 | TAL Education Group, ADR1 | 213,310 | 1,458,163 | |||||||||
|
|
|
| |||||||||
Total China | 8,032,459 | 11,122,445 | ||||||||||
|
|
|
| |||||||||
India (8.15%) | ||||||||||||
14,765 | HDFC Bank Ltd., ADR | 1,371,799 | 1,550,620 | |||||||||
105,600 | Housing Development | 2,854,644 | 2,940,894 | |||||||||
398,000 | JM Financial Ltd. | 876,273 | 672,386 | |||||||||
98,500 | Kotak Mahindra Bank Ltd. | 1,579,636 | 1,930,680 | |||||||||
|
|
|
| |||||||||
Total India | 6,682,352 | 7,094,580 | ||||||||||
|
|
|
| |||||||||
Israel (5.02%) | ||||||||||||
30,766 | Mellanox Technologies Ltd.1 | 1,760,222 | 2,593,574 | |||||||||
17,683 | Wix.com Ltd.1 | 1,423,855 | 1,773,605 | |||||||||
|
|
|
| |||||||||
Total Israel | 3,184,077 | 4,367,179 | ||||||||||
|
|
|
| |||||||||
Japan (2.37%) | ||||||||||||
3,000 | KEYENCE CORPORATION | 1,769,267 | 1,695,163 | |||||||||
8,883 | Mercari, Inc.1 | 242,385 | 363,857 | |||||||||
|
|
|
| |||||||||
Total Japan | 2,011,652 | 2,059,020 | ||||||||||
|
|
|
| |||||||||
Netherlands (4.98%) | ||||||||||||
18 | Adyen NV, 144A1 | 5,091 | 9,917 | |||||||||
30,521 | argenx SE, ADR1 | 1,152,337 | 2,528,970 | |||||||||
9,070 | ASML Holding N.V. | 1,356,327 | 1,797,453 | |||||||||
|
|
|
| |||||||||
Total Netherlands | 2,513,755 | 4,336,340 | ||||||||||
|
|
|
| |||||||||
South Africa (6.35%) | ||||||||||||
21,775 | Naspers Limited, Cl N | 5,360,091 | 5,532,048 | |||||||||
|
|
|
| |||||||||
Taiwan, Province of China (1.39%) | ||||||||||||
33,084 | Taiwan Semiconductor | 1,297,429 | 1,209,551 | |||||||||
|
|
|
| |||||||||
United States (48.09%) | ||||||||||||
36,822 | Activision Blizzard, Inc. | 2,598,674 | 2,810,255 | |||||||||
25,068 | Aerie Pharmaceuticals, Inc.1 | 1,307,388 | 1,693,343 | |||||||||
3,341 | Alphabet, Inc., Cl C1 | 3,055,046 | 3,727,387 | |||||||||
2,519 | Amazon.com, Inc.1 | 1,564,019 | 4,281,796 | |||||||||
28,069 | AxoGen, Inc.1 | 628,709 | 1,410,467 | |||||||||
439 | Booking Holdings, Inc.1 | 627,992 | 889,893 | |||||||||
1,787 | Carbon Black, Inc.1 | 33,953 | 46,462 | |||||||||
24,146 | EPAM Systems, Inc.1 | 2,181,489 | 3,002,072 | |||||||||
21,652 | Facebook, Inc., Cl A1 | 3,115,997 | 4,207,417 | |||||||||
130,871 | Gemphire Therapeutics, Inc.1 | 1,091,111 | 1,333,576 | |||||||||
8,162 | Illumina, Inc.1 | 1,554,029 | 2,279,565 | |||||||||
18,540 | Okta, Inc.1 | 390,056 | 933,860 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
United States (continued) | ||||||||||||
12,295 | Sage Therapeutics, Inc.1 | $ | 1,376,840 | $ | 1,924,536 | |||||||
22,573 | Splunk, Inc.1 | 1,988,191 | 2,237,210 | |||||||||
34,547 | The Stars Group, Inc.1 | 1,312,786 | 1,254,056 | |||||||||
17,489 | Take-Two Interactive Software, Inc.1 | 1,774,071 | 2,069,998 | |||||||||
3,638 | Tesla, Inc.1 | 1,048,764 | 1,247,652 | |||||||||
13,912 | Varonis Systems, Inc.1 | 405,714 | 1,036,444 | |||||||||
30,050 | Veeva Systems, Inc., Cl A1 | 2,125,132 | 2,309,643 | |||||||||
16,098 | Worldpay, Inc., Cl A1 | 1,158,613 | 1,316,494 | |||||||||
72,963 | Yext, Inc.1 | 949,341 | 1,411,104 | |||||||||
12,506 | Zscaler, Inc.1 | 200,096 | 447,090 | |||||||||
|
|
|
| |||||||||
Total United States | 30,488,011 | 41,870,320 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 67,277,904 | 86,306,597 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (1.00%) | ||||||||||||
Repurchase Agreement (1.00%) | ||||||||||||
$871,497 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $871,522; (Fully collateralized by $935,000 U.S. Treasury Note, 2.25% due 11/15/2027; Market value - $891,307)2 | 871,497 | 871,497 | |||||||||
|
|
|
| |||||||||
Total Investments (100.13%) | $ | 68,149,401 | $ | 87,178,094 | ||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets (-0.13%) | (111,094 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 87,067,000 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $23.19 per share | $ | 43,910,211 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $23.45 per share | $ | 38,205,059 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $23.46 per share | $ | 4,951,730 | |||||||||
|
|
% | 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, 2018, the market value of Rule 144A securities amounted to $9,917 or 0.01% 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.
Summary of Investments by Sector as of June 30, 2018 | Percentage of Net Assets | |||
Information Technology | 52.9 | % | ||
Consumer Discretionary | 21.3 | |||
Health Care | 15.5 | |||
Financials | 9.4 | |||
Cash and Cash Equivalents* | 0.9 | |||
100.0 | % |
* | Includes short term investments. |
30 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Real Estate Income Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (95.05%) | ||||||||||||
Consumer Discretionary (12.15%) | ||||||||||||
Advertising (0.53%) | ||||||||||||
461 | JC Decaux SA (France)2 | $ | 18,746 | $ | 15,429 | |||||||
Casinos & Gaming (7.25%) | ||||||||||||
3,323 | MGM Resorts International | 110,667 | 96,467 | |||||||||
2,040 | Penn National Gaming, Inc.1 | 54,654 | 68,524 | |||||||||
1,465 | Red Rock Resorts, Inc., Cl A | 42,207 | 49,077 | |||||||||
|
|
|
| |||||||||
207,528 | 214,068 | |||||||||||
Hotels, Resorts & Cruise Lines (4.37%) | ||||||||||||
5,972 | Extended Stay America, Inc. | 117,801 | 129,055 | |||||||||
|
|
|
| |||||||||
Total Consumer Discretionary | 344,075 | 358,552 | ||||||||||
|
|
|
| |||||||||
Information Technology (1.45%) | ||||||||||||
IT Consulting & Other Services (1.45%) | ||||||||||||
7,653 | NEXTDC Ltd. (Australia)1,2,3 | 40,416 | 42,817 | |||||||||
|
|
|
| |||||||||
Real Estate (81.45%) | ||||||||||||
Diversified Real Estate Activities (0.25%) | ||||||||||||
653 | Five Point Holdings LLC, Cl A1 | 9,112 | 7,346 | |||||||||
Diversified REITs (0.88%) | ||||||||||||
17,938 | Fibra Uno Administracion SA de CV (Mexico)2 | 26,979 | 26,148 | |||||||||
Hotel & Resort REITs (11.56%) | ||||||||||||
4,909 | Host Hotels & Resorts, Inc. | 97,165 | 103,433 | |||||||||
1,518 | MGM Growth Properties LLC, Cl A | 43,859 | 46,238 | |||||||||
3,389 | Park Hotels & Resorts, Inc. | 97,841 | 103,805 | |||||||||
1,191 | Pebblebrook Hotel Trust | 43,879 | 46,211 | |||||||||
2,499 | Sunstone Hotel Investors, Inc. | 41,725 | 41,533 | |||||||||
|
|
|
| |||||||||
324,469 | 341,220 | |||||||||||
Industrial REITs (10.35%) | ||||||||||||
4,922 | Americold Realty Trust | 89,646 | 108,382 | |||||||||
2,476 | Duke Realty Corp. | 66,099 | 71,878 | |||||||||
1,488 | Prologis, Inc. | 95,748 | 97,747 | |||||||||
874 | Rexford Industrial Realty, Inc. | 25,506 | 27,435 | |||||||||
|
|
|
| |||||||||
276,999 | 305,442 | |||||||||||
Office REITs (13.90%) | ||||||||||||
478 | Boston Properties, Inc. | 60,940 | 59,951 | |||||||||
686 | Douglas Emmett, Inc. | 28,392 | 27,563 | |||||||||
2,512 | Hudson Pacific Properties, Inc. | 82,693 | 89,000 | |||||||||
1,093 | Kilroy Realty Corp. | 79,829 | 82,674 | |||||||||
703 | SL Green Realty Corp. | 70,099 | 70,673 | |||||||||
1,089 | Vornado Realty Trust | 81,136 | 80,499 | |||||||||
|
|
|
| |||||||||
403,089 | 410,360 | |||||||||||
Real Estate Operating Companies (3.24%) | ||||||||||||
4,522 | Kennedy-Wilson Holdings, Inc. | 80,429 | 95,640 | |||||||||
Residential REITs (13.86%) | ||||||||||||
3,076 | American Homes 4 Rent, Cl A | 62,898 | 68,226 | |||||||||
436 | AvalonBay Communities, Inc. | 71,656 | 74,944 | |||||||||
488 | Equity LifeStyle Properties, Inc. | 42,893 | 44,847 | |||||||||
1,124 | Equity Residential | 67,962 | 71,588 | |||||||||
89 | Essex Property Trust, Inc. | 21,503 | 21,277 | |||||||||
3,582 | Invitation Homes, Inc. | 83,424 | 82,601 | |||||||||
467 | Sun Communities, Inc. | 42,633 | 45,710 | |||||||||
|
|
|
| |||||||||
392,969 | 409,193 |
Shares | Cost | Value | ||||||||||
Common Stocks (continued) | ||||||||||||
Real Estate (continued) | ||||||||||||
Retail REITs (2.21%) | ||||||||||||
1,157 | GGP, Inc. | $ | 27,070 | $ | 23,638 | |||||||
244 | Simon Property Group, Inc. | 41,231 | 41,526 | |||||||||
|
|
|
| |||||||||
68,301 | 65,164 | |||||||||||
Specialized REITs (25.20%) | ||||||||||||
228 | Alexandria Real Estate Equities, Inc.3 | 29,760 | 28,767 | |||||||||
1,446 | American Tower Corp. | 205,187 | 208,470 | |||||||||
824 | Crown Castle International Corp. | 90,421 | 88,844 | |||||||||
773 | Digital Realty Trust, Inc. | 84,104 | 86,251 | |||||||||
416 | Equinix, Inc. | 182,842 | 178,834 | |||||||||
1,040 | Gaming & Leisure Properties, Inc. | 38,233 | 37,232 | |||||||||
95 | Lamar Advertising Co., Cl A | 6,925 | 6,490 | |||||||||
1,303 | Rayonier, Inc. | 41,551 | 50,413 | |||||||||
1,605 | Weyerhaeuser Co. | 56,522 | 58,518 | |||||||||
|
|
|
| |||||||||
735,545 | 743,819 | |||||||||||
|
|
|
| |||||||||
Total Real Estate | 2,317,892 | 2,404,332 | ||||||||||
|
|
|
| |||||||||
Total Common Stocks | 2,702,383 | 2,805,701 | ||||||||||
|
|
|
| |||||||||
Principal Amount | ||||||||||||
Short Term Investments (5.71%) | ||||||||||||
$168,624 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018; Proceeds at maturity - $168,629; (Fully collateralized by $185,000 U.S. Treasury Note, 2.25% due 11/15/2027; Market value - $176,355)4 | 168,624 | 168,624 | |||||||||
|
|
|
| |||||||||
Total Investments (100.76%) | $ | 2,871,007 | 2,974,325 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets (-0.76%) | (22,315 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 2,952,010 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $9.87 per share | $ | 301,828 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $9.88 per share | $ | 2,206,548 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $9.89 per share | $ | 443,634 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | The Adviser has reclassified/classified certain securities in or out of this sub-industry. Such reclassifications/classifications are not supported by S&P or MSCI. |
4 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
All securities are Level 1, unless otherwise noted.
See Notes to Financial Statements. | 31 |
Table of Contents
Baron Health Care Fund | June 30, 2018 |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Common Stocks (94.98%) | ||||||||||||
Health Care (94.98%) | ||||||||||||
Biotechnology (26.05%) | ||||||||||||
1,921 | Abcam plc (United Kingdom)2 | $ | 32,741 | $ | 33,820 | |||||||
759 | Acceleron Pharma, Inc.1 | 29,869 | 36,827 | |||||||||
3,616 | Adaptimmune Therapeutics plc, ADR1,2 | 46,712 | 42,922 | |||||||||
331 | AnaptysBio, Inc.1 | 30,394 | 23,514 | |||||||||
2,159 | argenx SE, ADR1,2 | 195,702 | 178,895 | |||||||||
2,922 | CareDx, Inc. 1 | 34,503 | 35,765 | |||||||||
6,537 | Gemphire Therapeutics, Inc.1 | 45,768 | 66,612 | |||||||||
2,084 | Myovant Sciences Ltd.1,2 | 43,237 | 47,661 | |||||||||
1,211 | Neurocrine Biosciences, Inc.1 | 104,533 | 118,969 | |||||||||
1,093 | Sage Therapeutics, Inc.1 | 168,617 | 171,087 | |||||||||
1,077 | Vertex Pharmaceuticals, Inc.1 | 164,955 | 183,047 | |||||||||
844 | Zai Lab Ltd., ADR1,2 | 20,472 | 19,623 | |||||||||
|
|
|
| |||||||||
917,503 | 958,742 | |||||||||||
Health Care Equipment (26.18%) | ||||||||||||
792 | AxoGen, Inc.1 | 30,109 | 39,798 | |||||||||
742 | Cantel Medical Corp. | 81,942 | 72,983 | |||||||||
389 | DexCom, Inc.1 | 36,614 | 36,947 | |||||||||
873 | Edwards Lifesciences Corp.1 | 115,983 | 127,082 | |||||||||
284 | IDEXX Laboratories, Inc.1 | 56,025 | 61,895 | |||||||||
730 | Insulet Corp.1 | 63,426 | 62,561 | |||||||||
1,000 | IntriCon Corp.1 | 32,091 | 40,300 | |||||||||
268 | Intuitive Surgical, Inc.1 | 121,136 | 128,233 | |||||||||
574 | iRhythm Technologies, Inc.1 | 39,592 | 46,569 | |||||||||
2,002 | Medtronic plc2 | 168,848 | 171,391 | |||||||||
656 | Teleflex, Inc. | 175,570 | 175,946 | |||||||||
|
|
|
| |||||||||
921,336 | 963,705 | |||||||||||
Health Care Supplies (4.62%) | ||||||||||||
358 | Align Technology, Inc.1 | 103,634 | 122,486 | |||||||||
477 | West Pharmaceutical Services, Inc. | 43,545 | 47,362 | |||||||||
|
|
|
| |||||||||
147,179 | 169,848 | |||||||||||
Health Care Technology (1.77%) | ||||||||||||
847 | Veeva Systems, Inc., Cl A1 | 65,555 | 65,100 | |||||||||
Life Sciences Tools & Services (18.34%) | ||||||||||||
1,550 | Agilent Technologies, Inc. | 102,330 | 95,852 | |||||||||
854 | Bio-Techne Corporation | 129,696 | 126,349 | |||||||||
149 | Eurofins Scientific SE (France)2 | 80,046 | 82,895 | |||||||||
505 | Illumina, Inc.1 | 130,899 | 141,041 | |||||||||
230 | Mettler-Toledo International, Inc.1 | 131,058 | 133,085 | |||||||||
494 | Waters Corp.1 | 96,571 | 95,634 | |||||||||
|
|
|
| |||||||||
670,600 | 674,856 | |||||||||||
Managed Health Care (10.01%) | ||||||||||||
348 | HealthEquity, Inc.1 | 24,219 | 26,135 | |||||||||
367 | Humana, Inc. | 108,470 | 109,230 | |||||||||
950 | UnitedHealth Group, Inc. | 229,803 | 233,073 | |||||||||
|
|
|
| |||||||||
362,492 | 368,438 | |||||||||||
Pharmaceuticals (8.01%) | ||||||||||||
1,474 | Aerie Pharmaceuticals, Inc.1 | 86,507 | 99,569 | |||||||||
3,387 | AstraZeneca plc, ADR2 | 122,245 | 118,918 | |||||||||
863 | Dechra Pharmaceuticals plc (United Kingdom)2 | 32,494 | 31,685 | |||||||||
1,194 | Intersect ENT, Inc.1 | 49,300 | 44,715 | |||||||||
|
|
|
| |||||||||
290,546 | 294,887 | |||||||||||
|
|
|
| |||||||||
Total Common Stocks | 3,375,211 | 3,495,576 | ||||||||||
|
|
|
|
Principal Amount | Cost | Value | ||||||||||
Short Term Investments (8.04%) | ||||||||||||
$295,898 | Repurchase Agreement with Fixed Income Clearing Corp., dated 6/29/2018, 0.35% due 7/2/2018, Proceeds at maturity - $295,907; (Fully collateralized by $315,000 U.S. Treasury Note, 2.00% due 2/15/2025; Market value - $301,901)3 | $ | 295,898 | $ | 295,898 | |||||||
|
|
|
| |||||||||
Total Investments (103.02%) | $ | 3,671,109 | 3,791,474 | |||||||||
|
| |||||||||||
Liabilities Less Cash and Other Assets (-3.02%) | (110,975 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 3,680,499 | ||||||||||
|
| |||||||||||
| Retail Shares (Equivalent to $10.48 per share | $ | 1,802,702 | |||||||||
|
| |||||||||||
| Institutional Shares (Equivalent to $10.49 per share | $ | 1,637,461 | |||||||||
|
| |||||||||||
| R6 Shares (Equivalent to $10.48 per share | $ | 240,336 | |||||||||
|
|
% | Represents percentage of net assets. |
1 | Non-income producing securities. |
2 | Foreign corporation. |
3 | Level 2 security. See Note 7 regarding Fair Value Measurements. |
ADR | American Depositary Receipt. |
All securities are Level 1, unless otherwise noted.
32 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2018
|
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | Baron Real Estate Fund | Baron Emerging Markets Fund | ||||||||||||||||
Assets: | ||||||||||||||||||||
Investments in securities, at value* | ||||||||||||||||||||
Unaffiliated investments | $ | 2,837,313,658 | $ | 219,950,148 | $ | 228,232,687 | $ | 935,353,483 | $ | 4,896,995,926 | ||||||||||
“Affiliated” investments | — | — | — | — | 7,748,648 | |||||||||||||||
Repurchase agreements, at value** | 258,345 | — | 28,341,743 | 27,651,407 | 500,563,596 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total investments, at value | 2,837,572,003 | 219,950,148 | 256,574,430 | 963,004,890 | 5,405,308,170 | |||||||||||||||
Foreign currency, at value† | — | — | 88,838 | — | 9,710,168 | |||||||||||||||
Cash | — | — | 3,119 | — | — | |||||||||||||||
Receivable for securities sold | 2,803,885 | — | 194,689 | 494,304 | 16,993,468 | |||||||||||||||
Dividends and interest receivable | 1,861,754 | 243,758 | 335,829 | 1,295,447 | 9,211,095 | |||||||||||||||
Receivable for shares sold | 1,672,901 | 13,216 | 1,588,002 | 946,022 | 24,379,067 | |||||||||||||||
Prepaid expenses | 129,782 | 1,366 | 1,290 | 7,480 | 36,938 | |||||||||||||||
Other assets | — | — | — | — | 14,895 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2,844,040,325 | 220,208,488 | 258,786,197 | 965,748,143 | 5,465,653,801 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities: | ||||||||||||||||||||
Payable for borrowings against line of credit | 569,000,000 | — | — | — | — | |||||||||||||||
Payable for securities purchased | 12,338,191 | — | 167,443 | — | 24,759,505 | |||||||||||||||
Payable for shares redeemed | 861,933 | 230 | 261,085 | 999,926 | 5,684,301 | |||||||||||||||
Investment advisory fees payable (Note 4) | 825 | 677 | 639 | 959 | 185 | |||||||||||||||
Distribution fees payable (Note 4) | 558 | 555 | 451 | 455 | 970 | |||||||||||||||
Due to custodian bank | — | 49,193 | — | — | — | |||||||||||||||
Accrued capital gains taxes | — | — | — | 23,168 | 292,689 | |||||||||||||||
Accrued expenses and other payables | 1,573,800 | 55,500 | 72,621 | 112,999 | 1,006,971 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
583,775,307 | 106,155 | 502,239 | 1,137,507 | 31,744,621 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Assets | $ | 2,260,265,018 | $ | 220,102,333 | $ | 258,283,958 | $ | 964,610,636 | $ | 5,433,909,180 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Assets consist of: | ||||||||||||||||||||
Paid-in capital | $ | 852,539,284 | $ | 108,843,966 | $ | 208,303,496 | $ | 643,176,576 | $ | 4,936,215,830 | ||||||||||
Undistributed (accumulated) net investment income (loss) | (9,473,552 | ) | (23,389 | ) | 523,272 | 2,306,140 | 6,439,327 | |||||||||||||
Undistributed (accumulated) net realized gain (loss) on investments | (6,822,302 | ) | 865,334 | 7,612,792 | 66,716,669 | (886,514 | ) | |||||||||||||
Net unrealized appreciation on investments, foreign capital gains tax | 1,424,021,588 | 110,416,422 | 41,844,398 | 252,411,251 | 492,140,537 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Assets | $ | 2,260,265,018 | $ | 220,102,333 | $ | 258,283,958 | $ | 964,610,636 | $ | 5,433,909,180 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retail Shares: | ||||||||||||||||||||
Net Assets | $ | 1,188,123,573 | $ | 45,968,782 | $ | 66,181,523 | $ | 367,226,474 | $ | 1,079,181,735 | ||||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 21,129,782 | 2,628,194 | 2,777,929 | 12,978,753 | 77,124,562 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Asset Value and Offering Price Per Share | $ | 56.23 | $ | 17.49 | $ | 23.82 | $ | 28.29 | $ | 13.99 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Institutional Shares: | ||||||||||||||||||||
Net Assets | $ | 927,164,500 | $ | 74,843,199 | $ | 177,860,650 | $ | 586,265,999 | $ | 4,346,893,191 | ||||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 16,142,157 | 4,196,208 | 7,366,112 | 20,402,586 | 309,424,329 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Asset Value and Offering Price Per Share | $ | 57.44 | $ | 17.84 | $ | 24.15 | $ | 28.73 | $ | 14.05 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
R6 Shares: | ||||||||||||||||||||
Net Assets | $ | 144,976,945 | $ | 99,290,352 | $ | 14,241,785 | $ | 11,118,163 | $ | 7,834,254 | ||||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 2,523,931 | 5,564,341 | 589,781 | 386,889 | 557,364 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Asset Value and Offering Price Per Share | $ | 57.44 | $ | 17.84 | $ | 24.15 | $ | 28.74 | $ | 14.06 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
*Investments in securities, at cost | ||||||||||||||||||||
Unaffiliated investments | $ | 1,413,292,070 | $ | 109,533,726 | $ | 186,387,999 | $ | 682,919,064 | $ | 4,397,373,962 | ||||||||||
“Affiliated” investments | — | — | — | — | 14,881,766 | |||||||||||||||
**Repurchase agreements, at cost | 258,345 | — | 28,341,743 | 27,651,407 | 500,563,596 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total investments, at cost | $ | 1,413,550,415 | $ | 109,533,726 | $ | 214,729,742 | $ | 710,570,471 | $ | 4,912,819,324 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
†Foreign currency, at cost: | $ | — | $ | — | $ | 88,838 | $ | — | $ | 9,701,051 | ||||||||||
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 33 |
Table of Contents
Baron Select Funds | June 30, 2018 |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) (Continued)
JUNE 30, 2018
|
Baron Energy and Resources Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities, at value* | ||||||||||||||||
Unaffiliated investments | $ | 60,331,475 | $ | 86,306,597 | $ | 2,805,701 | $ | 3,495,576 | ||||||||
“Affiliated” investments | — | — | — | — | ||||||||||||
Repurchase agreements, at value** | — | 871,497 | 168,624 | 295,898 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at value | 60,331,475 | 87,178,094 | 2,974,325 | 3,791,474 | ||||||||||||
Foreign currency, at value† | — | 11,376 | — | — | ||||||||||||
Cash | — | — | — | — | ||||||||||||
Receivable for securities sold | 369,309 | — | — | — | ||||||||||||
Dividends and interest receivable | 57,810 | 53,636 | 12,295 | 544 | ||||||||||||
Receivable for shares sold | 25,827 | 248,624 | — | 5,000 | ||||||||||||
Prepaid expenses | 386 | 377 | 17 | — | ||||||||||||
Other assets | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
60,784,807 | 87,492,107 | 2,986,637 | 3,797,018 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Payable for borrowings against line of credit | — | — | — | — | ||||||||||||
Payable for securities purchased | — | 273,842 | — | 85,704 | ||||||||||||
Payable for shares redeemed | 57,791 | 35,797 | — | — | ||||||||||||
Investment advisory fees payable (Note 4) | 488 | 2,302 | 7 | — | ||||||||||||
Distribution fees payable (Note 4) | 861 | 97 | 448 | 674 | ||||||||||||
Due to custodian bank | 285,569 | — | — | — | ||||||||||||
Accrued capital gains taxes | — | 47,549 | — | — | ||||||||||||
Accrued expenses and other payables | 113,078 | 65,520 | 34,172 | 30,141 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
457,787 | 425,107 | 34,627 | 116,519 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 60,327,020 | $ | 87,067,000 | $ | 2,952,010 | $ | 3,680,499 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets consist of: | ||||||||||||||||
Paid-in capital | $ | 80,019,891 | $ | 69,066,896 | $ | 2,966,827 | $ | 3,568,405 | ||||||||
Undistributed (accumulated) net investment income (loss) | 1,068,820 | (251,189 | ) | 1,933 | (3,054 | ) | ||||||||||
Undistributed (accumulated) net realized gain (loss) on investments | (38,244,746 | ) | (729,685 | ) | (120,067 | ) | (5,220 | ) | ||||||||
Net unrealized appreciation on investments, foreign capital gains tax | 17,483,055 | 18,980,978 | 103,317 | 120,368 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets | $ | 60,327,020 | $ | 87,067,000 | $ | 2,952,010 | $ | 3,680,499 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Retail Shares: | ||||||||||||||||
Net Assets | $ | 41,017,803 | $ | 43,910,211 | $ | 301,828 | $ | 1,802,702 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 4,738,522 | 1,893,864 | 30,593 | 171,991 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 8.66 | $ | 23.19 | $ | 9.87 | $ | 10.48 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Shares: | ||||||||||||||||
Net Assets | $ | 18,713,881 | $ | 38,205,059 | $ | 2,206,548 | $ | 1,637,461 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 2,126,670 | 1,629,151 | 223,246 | 156,147 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 8.80 | $ | 23.45 | $ | 9.88 | $ | 10.49 | ||||||||
|
|
|
|
|
|
|
| |||||||||
R6 Shares: | ||||||||||||||||
Net Assets | $ | 595,336 | $ | 4,951,730 | $ | 443,634 | $ | 240,336 | ||||||||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 67,688 | 211,030 | 44,859 | 22,926 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Asset Value and Offering Price Per Share | $ | 8.80 | $ | 23.46 | $ | 9.89 | $ | 10.48 | ||||||||
|
|
|
|
|
|
|
| |||||||||
*Investments in securities, at cost: | ||||||||||||||||
Unaffiliated investments | $ | 42,848,420 | $ | 67,277,904 | $ | 2,702,383 | $ | 3,375,211 | ||||||||
“Affiliated” investments | — | — | — | — | ||||||||||||
**Repurchase agreements, at cost | — | 871,497 | 168,624 | 295,898 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments, at cost | $ | 42,848,420 | $ | 68,149,401 | $ | 2,871,007 | $ | 3,671,109 | ||||||||
|
|
|
|
|
|
|
| |||||||||
†Foreign currency, at cost: | $ | — | $ | 11,408 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
34 | See Notes to Financial Statements. |
Table of Contents
Baron Select Funds | June 30, 2018 |
STATEMENTS OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2018
|
Baron Partners Fund | Baron Focused Growth Fund | Baron International Growth Fund | Baron Real Estate Fund | Baron Emerging Markets Fund | ||||||||||||||||
Investment income: | ||||||||||||||||||||
Income: | ||||||||||||||||||||
Dividends — Unaffiliated investments | $ | 9,835,327 | $ | 1,145,067 | $ | 1,794,598 | $ | 6,776,117 | $ | 45,328,701 | ||||||||||
Interest | 324 | 1,468 | 22,758 | 51,531 | 398,732 | |||||||||||||||
Foreign taxes withheld on dividends | — | — | (209,274 | ) | (27,144 | ) | (4,127,714 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total income | 9,835,651 | 1,146,535 | 1,608,082 | 6,800,504 | 41,599,719 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Expenses: | ||||||||||||||||||||
Investment advisory fees (Note 4) | 10,480,448 | 1,017,118 | 931,198 | 5,091,254 | 27,417,536 | |||||||||||||||
Distribution fees — Retail Shares (Note 4) | 1,424,414 | 53,704 | 76,023 | 487,735 | 1,473,136 | |||||||||||||||
Shareholder servicing agent fees and expenses — Retail Shares | 79,530 | 11,425 | 11,675 | 31,828 | 52,310 | |||||||||||||||
Shareholder servicing agent fees and expenses — Institutional Shares | 27,600 | — | 8,411 | 20,292 | 86,194 | |||||||||||||||
Shareholder servicing agent fees and expenses — R6 Shares | 2,479 | 1,771 | 275 | 215 | 153 | |||||||||||||||
Line of credit fees | 243,781 | 427 | 690 | 2,705 | 19,672 | |||||||||||||||
Reports to shareholders | 112,070 | 4,103 | 29,360 | 84,820 | 401,000 | |||||||||||||||
Registration and filing fees | 62,030 | 35,390 | 44,330 | 33,640 | 241,500 | |||||||||||||||
Professional fees | 51,100 | 25,836 | 20,966 | 29,785 | 121,150 | |||||||||||||||
Trustee fees and expenses | 45,547 | 4,418 | 4,359 | 22,963 | 119,363 | |||||||||||||||
Custodian and fund accounting fees | 44,900 | 16,656 | 69,250 | 51,750 | 1,782,230 | |||||||||||||||
Administration fees | 15,309 | 15,117 | 15,309 | 15,170 | 15,385 | |||||||||||||||
Insurance expense | 11,520 | 1,157 | 946 | 6,327 | 27,294 | |||||||||||||||
Miscellaneous expenses | 1,800 | 1,858 | 3,124 | 1,973 | 5,315 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total operating expenses | 12,602,528 | 1,188,980 | 1,215,916 | 5,880,457 | 31,762,238 | |||||||||||||||
Interest expense on borrowings | 6,699,472 | — | 306 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total expenses | 19,302,000 | 1,188,980 | 1,216,222 | 5,880,457 | 31,762,238 | |||||||||||||||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | — | (11,980 | ) | (44,008 | ) | — | — | |||||||||||||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | — | — | (82,075 | ) | — | — | ||||||||||||||
Reimbursement of expenses by Adviser — R6 Shares (Note 4) | — | (7,076 | ) | (7,272 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net expenses | 19,302,000 | 1,169,924 | 1,082,867 | 5,880,457 | 31,762,238 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net investment income (loss) | (9,466,349 | ) | (23,389 | ) | 525,215 | 920,047 | 9,837,481 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Realized and unrealized gain (loss) on investments: | ||||||||||||||||||||
Net realized gain (loss) on investments sold — Unaffiliated investments | 1,899,593 | (479,723 | ) | 6,835,901 | 1 | 55,821,309 | 128,648,174 | 4 | ||||||||||||
Net realized gain (loss) on foreign currency transactions | (2,079 | ) | — | (138,772 | ) | (30,433 | ) | (1,701,694 | ) | |||||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||||||||||
Investments — Unaffiliated investments | 308,190,501 | 27,269,671 | (10,341,844 | )2 | (103,979,551 | )3 | (659,706,990 | )5 | ||||||||||||
Investments — “Affiliated” investments | — | — | — | — | 592,204 | |||||||||||||||
Foreign currency translations | (912 | ) | — | (1,917 | ) | (22 | ) | (55,616 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net gain (loss) on investments | 310,087,103 | 26,789,948 | (3,646,632 | ) | (48,188,697 | ) | (532,223,922 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 300,620,754 | $ | 26,766,559 | $ | (3,121,417 | ) | $ | (47,268,650 | ) | $ | (522,386,441 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
1 | Net of realized foreign capital gains tax of $26,082. |
2 | Net change in accrued foreign capital gains tax payable of $(523,862). |
3 | Net change in accrued foreign capital gains tax payable of $23,168. |
4 | Net of realized foreign capital gains tax of $406,594. |
5 | Net change in accrued foreign capital gains tax payable of $(14,709,962). |
See Notes to Financial Statements. | 35 |
Table of Contents
June 30, 2018 | Baron Select Funds |
STATEMENTS OF OPERATIONS (Unaudited) (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 2018
|
Baron Energy and Resources Fund | Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund2 | |||||||||||||
Investment income: | ||||||||||||||||
Income: | ||||||||||||||||
Dividends — Unaffiliated investments | $ | 374,893 | $ | 122,850 | $ | 42,411 | $ | 1,684 | ||||||||
Interest | 52,510 | 4,413 | 198 | 175 | ||||||||||||
Foreign taxes withheld on dividends | (1,333 | ) | (13,572 | ) | (337 | ) | (62 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total income | 426,070 | 113,691 | 42,272 | 1,797 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Expenses: | ||||||||||||||||
Investment advisory fees (Note 4) | 291,901 | 294,375 | 9,815 | 3,685 | ||||||||||||
Distribution fees — Retail Shares (Note 4) | 48,214 | 41,229 | 448 | 674 | ||||||||||||
Shareholder servicing agent fees and expenses — Retail Shares | 10,802 | 9,121 | 6,076 | 2,013 | ||||||||||||
Shareholder servicing agent fees and expenses — Institutional Shares | 5,597 | 5,479 | 4,417 | 1,525 | ||||||||||||
Shareholder servicing agent fees and expenses — R6 Shares | 12 | 84 | 5 | — | ||||||||||||
Line of credit fees | — | 171 | 8 | — | ||||||||||||
Reports to shareholders | 26,118 | 12,228 | 510 | 336 | ||||||||||||
Registration and filing fees | 28,920 | 53,515 | 9,173 | 5,490 | ||||||||||||
Professional fees | 45,305 | 15,333 | 21,314 | 9,690 | ||||||||||||
Trustee fees and expenses | 1,273 | 1,380 | 48 | 9 | ||||||||||||
Custodian and fund accounting fees | 22,391 | 29,075 | 18,692 | 8,982 | ||||||||||||
Administration fees | 15,385 | 15,132 | 14,210 | 5,097 | ||||||||||||
Insurance expense | 428 | 246 | 11 | — | ||||||||||||
Miscellaneous expenses | 1,857 | 1,890 | 2,169 | 50 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 498,203 | 479,258 | 86,896 | 37,551 | ||||||||||||
Interest expense on borrowings | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total expenses | 498,203 | 479,258 | 86,896 | 37,551 | ||||||||||||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | (85,141 | ) | (62,096 | ) | (14,902 | ) | (17,851 | ) | ||||||||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | (42,731 | ) | (57,808 | ) | (54,130 | ) | (14,278 | ) | ||||||||
Reimbursement of expenses by Adviser — R6 Shares (Note 4) | (1,051 | ) | (6,401 | ) | (6,948 | ) | (571 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net expenses | 369,280 | 352,953 | 10,916 | 4,851 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net investment income (loss) | 56,790 | (239,262 | ) | 31,356 | (3,054 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Realized and unrealized gain (loss) on investments: | ||||||||||||||||
Net realized gain (loss) on investments sold — Unaffiliated investments | 887,289 | 315,065 | (119,662 | ) | (5,679 | ) | ||||||||||
Net realized gain (loss) on foreign currency transactions | 516 | (20,855 | ) | (405 | ) | 459 | ||||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||||||
Investments — Unaffiliated investments | 2,231,385 | 6,772,950 | 1 | 103,318 | 120,365 | |||||||||||
Investments — “Affiliated” investments | — | — | — | — | ||||||||||||
Foreign currency translations | — | 1,525 | (1 | ) | 3 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net gain (loss) on investments | 3,119,190 | 7,068,685 | (16,750 | ) | 115,148 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 3,175,980 | $ | 6,829,423 | $ | 14,606 | $ | 112,094 | ||||||||
|
|
|
|
|
|
|
|
1 | Net change in accrued foreign capital gains tax payable of $14,917. |
2 | For the period April 30, 2018 (commencement of operations) to June 30, 2018. |
36 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
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, 2018 | For the Year Ended December 31, 2017 | For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | |||||||||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) | $ | (9,466,349 | ) | $ | (14,034,659 | ) | $ | (23,389 | ) | $ | (839,831 | ) | $ | 525,215 | $ | (185,782 | ) | |||||||
Net realized gain (loss) | 1,897,514 | 161,556,501 | (479,723 | ) | 4,443,485 | 6,697,129 | 6,463,190 | |||||||||||||||||
Change in net unrealized appreciation (depreciation) | 308,189,589 | 342,753,599 | 27,269,671 | 40,385,685 | (10,343,761 | ) | 32,367,624 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets resulting from operations | 300,620,754 | 490,275,441 | 26,766,559 | 43,989,339 | (3,121,417 | ) | 38,645,032 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions to shareholders from: | ||||||||||||||||||||||||
Net investment income — Retail Shares | — | — | — | (260 | ) | — | — | |||||||||||||||||
Net investment income — Institutional Shares | — | — | — | (15,567 | ) | — | — | |||||||||||||||||
Net investment income — R6 Shares | — | — | — | (2,689 | ) | — | — | |||||||||||||||||
Net realized gain on investments — Retail Shares | — | — | — | (887,768 | ) | — | (1,934,983 | ) | ||||||||||||||||
Net realized gain on investments — Institutional Shares | — | — | — | (2,620,589 | ) | — | (3,562,276 | ) | ||||||||||||||||
Net realized gain on investments — R6 Shares | — | — | — | (460,142 | ) | — | (26,022 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Decrease in net assets from distributions to shareholders | — | — | — | (3,987,015 | ) | — | (5,523,281 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions: | ||||||||||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 44,824,125 | 222,009,007 | 1,337,332 | 3,008,092 | 33,672,402 | 14,331,143 | ||||||||||||||||||
Proceeds from the sale of shares — Institutional Shares | 149,138,211 | 186,023,573 | 3,339,351 | 3,581,892 | 105,669,639 | 53,836,213 | ||||||||||||||||||
Proceeds from the sale of shares — R6 Shares | 119,624,454 | 4,422,315 | 69,052,895 | 10,965,359 | 14,474,616 | 222,236 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | — | — | 870,815 | — | 1,910,917 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | — | — | — | 2,573,055 | — | 3,517,622 | ||||||||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | — | — | — | 462,858 | — | 26,022 | ||||||||||||||||||
Cost of shares redeemed — Retail Shares | (121,633,113 | ) | (318,331,141 | ) | (3,426,749 | ) | (7,636,878 | ) | (23,546,172 | ) | (15,034,207 | ) | ||||||||||||
Cost of shares redeemed — Institutional Shares | (204,349,914 | ) | (179,824,490 | ) | (69,734,326 | ) | (36,214,295 | ) | (36,938,130 | ) | (11,479,128 | ) | ||||||||||||
Cost of shares redeemed — R6 Shares | (14,584 | ) | (1,300 | ) | (40,903 | ) | — | (10 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets derived from capital share transactions | (12,410,821 | ) | (85,702,036 | ) | 527,600 | (22,389,102 | ) | 93,332,345 | 47,330,818 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in net assets | 288,209,933 | 404,573,405 | 27,294,159 | 17,613,222 | 90,210,928 | 80,452,569 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of period | 1,972,055,085 | 1,567,481,680 | 192,808,174 | 175,194,952 | 168,073,030 | 87,620,461 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
End of period | $ | 2,260,265,018 | $ | 1,972,055,085 | $ | 220,102,333 | $ | 192,808,174 | $ | 258,283,958 | $ | 168,073,030 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Undistributed net investment income (accumulated net investment loss) at end of period | $ | (9,473,552 | ) | $ | (7,203 | ) | $ | (23,389 | ) | $ | — | $ | 523,272 | $ | (1,943 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Retail Shares | ||||||||||||||||||||||||
Shares sold | 842,273 | 4,888,267 | 81,579 | 204,928 | 1,370,423 | 662,537 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | — | — | 56,707 | — | 82,221 | ||||||||||||||||||
Shares redeemed | (2,311,892 | ) | (6,951,061 | ) | (212,912 | ) | (533,149 | ) | (958,060 | ) | (693,846 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,469,619 | ) | (2,062,794 | ) | (131,333 | ) | (271,514 | ) | 412,363 | 50,912 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||||||||||
Shares sold | 2,749,561 | 4,028,476 | 205,427 | 233,512 | 4,248,242 | 2,456,126 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | — | — | 164,730 | — | 149,548 | ||||||||||||||||||
Shares redeemed | (3,796,519 | ) | (3,954,884 | ) | (4,169,845 | ) | (2,446,408 | ) | (1,460,602 | ) | (513,638 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,046,958 | ) | 73,592 | (3,964,418 | ) | (2,048,166 | ) | 2,787,640 | 2,092,036 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — R6 Shares | ||||||||||||||||||||||||
Shares sold | 2,212,622 | 92,466 | 4,126,615 | 731,458 | 558,015 | 10,195 | ||||||||||||||||||
Shares issued in reinvestment of dividends | — | — | — | 29,602 | — | 1,107 | ||||||||||||||||||
Shares redeemed | (278 | ) | (26 | ) | (2,436 | ) | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | 2,212,344 | 92,440 | 4,124,179 | 761,060 | 558,015 | 11,302 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 37 |
Table of Contents
Baron Select Funds | June 30, 2018 |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
|
Baron Real Estate Fund | Baron Emerging Markets Fund | Baron Energy and Resources Fund | ||||||||||||||||||||||
For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | |||||||||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) | $ | 920,047 | $ | 1,516,324 | $ | 9,837,481 | $ | 15,197,129 | $ | 56,790 | $ | (4,075 | ) | |||||||||||
Net realized gain (loss) | 55,790,876 | 93,853,708 | 126,946,480 | 89,764,536 | 887,805 | (5,501,035 | ) | |||||||||||||||||
Change in net unrealized appreciation (depreciation) | (103,979,573 | ) | 171,979,121 | (659,170,402 | ) | 1,110,157,983 | 2,231,385 | (6,307,045 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets resulting from operations | (47,268,650 | ) | 267,349,153 | (522,386,441 | ) | 1,215,119,648 | 3,175,980 | (11,812,155 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions to shareholders from: | ||||||||||||||||||||||||
Net investment income — Retail Shares | — | — | — | (2,477,009 | ) | — | (42,458 | ) | ||||||||||||||||
Net investment income — Institutional Shares | — | — | — | (15,761,419 | ) | — | (20,747 | ) | ||||||||||||||||
Net investment income — R6 Shares | — | — | — | (19,953 | ) | — | (458 | ) | ||||||||||||||||
Net realized gain on investments — Retail Shares | — | (19,586,974 | ) | — | — | — | — | |||||||||||||||||
Net realized gain on investments — Institutional Shares | — | (29,765,405 | ) | — | — | — | — | |||||||||||||||||
Net realized gain on investments — R6 Shares | — | (150,609 | ) | — | — | — | — | |||||||||||||||||
Return of capital — Retail Shares | — | — | — | (97,705 | ) | — | — | |||||||||||||||||
Return of capital — Institutional Shares | — | — | — | (668,030 | ) | — | — | |||||||||||||||||
Return of capital — R6 Shares | — | — | — | (849 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Decrease in net assets from distributions to shareholders | — | (49,502,988 | ) | — | (19,024,965 | ) | — | (63,663 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions: | ||||||||||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 32,088,332 | 52,297,183 | 287,395,402 | 576,492,989 | 7,812,820 | 15,864,355 | ||||||||||||||||||
Proceeds from the sale of shares — Institutional Shares | 95,022,132 | 151,031,484 | 1,366,301,812 | 1,535,106,695 | 5,330,366 | 16,689,985 | ||||||||||||||||||
Proceeds from the sale of shares — R6 Shares | 8,576,219 | 788,278 | 3,955,943 | 3,948,649 | 187,053 | 93,188 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | 19,130,055 | — | 2,554,113 | — | 42,127 | ||||||||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | — | 26,676,931 | — | 13,281,533 | — | 20,747 | ||||||||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | — | 150,609 | — | 20,802 | — | 458 | ||||||||||||||||||
Cost of shares redeemed — Retail Shares | (73,053,371 | ) | (169,935,360 | ) | (220,984,072 | ) | (531,964,452 | ) | (6,550,818 | ) | (43,006,844 | ) | ||||||||||||
Cost of shares redeemed — Institutional Shares | (138,268,195 | ) | (160,776,671 | ) | (448,951,901 | ) | (427,891,569 | ) | (4,529,994 | ) | (26,748,316 | ) | ||||||||||||
Cost of shares redeemed — R6 Shares | (135,177 | ) | (126,052 | ) | (185,847 | ) | (872,502 | ) | (41,590 | ) | (34,866 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Increase (decrease) in net assets derived from capital share transactions | (75,770,060 | ) | (80,763,543 | ) | 987,531,337 | 1,170,676,258 | 2,207,837 | (37,079,166 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) in net assets | (123,038,710 | ) | 137,082,622 | 465,144,896 | 2,366,770,941 | 5,383,817 | (48,954,984 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of period | 1,087,649,346 | 950,566,724 | 4,968,764,284 | 2,601,993,343 | 54,943,203 | 103,898,187 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
End of period | $ | 964,610,636 | $ | 1,087,649,346 | $ | 5,433,909,180 | $ | 4,968,764,284 | $ | 60,327,020 | $ | 54,943,203 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Undistributed net investment income (accumulated net investment loss) at end of period | $ | 2,306,140 | $ | 1,386,093 | $ | 6,439,327 | $ | (3,398,154 | ) | $ | 1,068,820 | $ | 1,012,030 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Retail Shares | ||||||||||||||||||||||||
Shares sold | 1,106,460 | 1,896,505 | 18,517,455 | 43,874,157 | 915,364 | 1,960,005 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | 658,295 | — | 171,603 | — | 5,429 | ||||||||||||||||||
Shares redeemed | (2,551,597 | ) | (6,466,757 | ) | (14,538,643 | ) | (41,055,180 | ) | (772,921 | ) | (5,457,480 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,445,137 | ) | (3,911,957 | ) | 3,978,812 | 2,990,580 | 142,443 | (3,492,046 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||||||||||
Shares sold | 3,267,501 | 5,485,149 | 88,997,734 | 114,280,220 | 622,928 | 1,970,176 | ||||||||||||||||||
Shares issued in reinvestment of distributions | — | 905,223 | — | 887,345 | — | 2,636 | ||||||||||||||||||
Shares redeemed | (4,780,096 | ) | (5,982,634 | ) | (29,533,596 | ) | (32,127,885 | ) | (528,462 | ) | (3,312,908 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (1,512,595 | ) | 407,738 | 59,464,138 | 83,039,680 | 94,466 | (1,340,096 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital share transactions — R6 Shares | ||||||||||||||||||||||||
Shares sold | 279,893 | 29,771 | 255,631 | 312,694 | 21,601 | 12,162 | ||||||||||||||||||
Shares issued in reinvestment of dividends | — | 5,111 | — | 1,390 | — | 58 | ||||||||||||||||||
Shares redeemed | (4,691 | ) | (4,460 | ) | (12,246 | ) | (63,196 | ) | (4,777 | ) | (4,373 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | 275,202 | 30,422 | 243,385 | 250,888 | 16,824 | 7,847 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
38 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
|
Baron Global Advantage Fund | Baron Real Estate Income Fund | Baron Health Care Fund | ||||||||||||||
For the Six Months Ended June 30, 2018 | For the Year Ended December 31, 2017 | For the Six Months Ended June 30, 2018 | For the Period Ended June 30, 20181 | |||||||||||||
Increase (Decrease) in Net Assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (239,262 | ) | $ | (247,055 | ) | $ | 31,356 | $ | (3,054 | ) | |||||
Net realized gain (loss) | 294,210 | (110,191 | ) | (120,067 | ) | (5,220 | ) | |||||||||
Change in net unrealized appreciation (depreciation) | 6,774,475 | 10,073,146 | 103,317 | 120,368 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets resulting from operations | 6,829,423 | 9,715,900 | 14,606 | 112,094 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions to shareholders from: | ||||||||||||||||
Net investment income — Retail Shares | — | — | (3,521 | ) | — | |||||||||||
Net investment income — Institutional Shares | — | — | (22,107 | ) | — | |||||||||||
Net investment income — R6 Shares | — | — | (3,795 | ) | — | |||||||||||
Net realized gain on investments — Retail Shares | — | — | — | — | ||||||||||||
Net realized gain on investments — Institutional Shares | — | — | — | — | ||||||||||||
Net realized gain on investments — R6 Shares | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Decrease in net assets from distributions to shareholders | — | — | (29,423 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from the sale of shares — Retail Shares | 32,611,021 | 21,524,300 | 737,000 | 1,969,987 | ||||||||||||
Proceeds from the sale of shares — Institutional Shares | 25,887,960 | 15,744,158 | 2,223,055 | 1,591,460 | ||||||||||||
Proceeds from the sale of shares — R6 Shares | 4,373,678 | 142,827 | 435,240 | 241,720 | ||||||||||||
Net asset value of shares issued in reinvestment of distributions — Retail Shares | — | — | 3,134 | — | ||||||||||||
Net asset value of shares issued in reinvestment of distributions — Institutional Shares | — | — | 22,107 | — | ||||||||||||
Net asset value of shares issues in reinvestment of distribution — R6 Shares | — | — | 3,795 | — | ||||||||||||
Cost of shares redeemed — Retail Shares | (10,100,786 | ) | (12,898,122 | ) | (436,844 | ) | (234,762 | ) | ||||||||
Cost of shares redeemed — Institutional Shares | (16,142,078 | ) | (337,797 | ) | (20,650 | ) | — | |||||||||
Cost of shares redeemed — R6 Shares | (599 | ) | — | (10 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets derived from capital share transactions | 36,629,196 | 24,175,366 | 2,966,827 | 3,568,405 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets | 43,458,619 | 33,891,266 | 2,952,010 | 3,680,499 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets: | ||||||||||||||||
Beginning of period | 43,608,381 | 9,717,115 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 87,067,000 | $ | 43,608,381 | $ | 2,952,010 | $ | 3,680,499 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (accumulated net investment loss) at end of period | $ | (251,189 | ) | $ | (11,927 | ) | $ | 1,933 | $ | (3,054 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — Retail Shares | ||||||||||||||||
Shares sold | 1,449,722 | 1,256,722 | 75,047 | 194,121 | ||||||||||||
Shares issued in reinvestment of distributions | — | — | 326 | — | ||||||||||||
Shares redeemed | (451,805 | ) | (721,991 | ) | (44,780 | ) | (22,130 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 997,917 | 534,731 | 30,593 | 171,991 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — Institutional Shares | ||||||||||||||||
Shares sold | 1,129,966 | 880,482 | 223,105 | 156,147 | ||||||||||||
Shares issued in reinvestment of distributions | — | — | 2,294 | — | ||||||||||||
Shares redeemed | (693,511 | ) | (18,648 | ) | (2,153 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 436,455 | 861,834 | 223,246 | 156,147 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — R6 Shares | ||||||||||||||||
Shares sold | 191,457 | 7,954 | 44,468 | 22,926 | ||||||||||||
Shares issued in reinvestment of dividends | — | — | 392 | — | ||||||||||||
Shares redeemed | (24 | ) | — | (1 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 191,433 | 7,954 | 44,859 | 22,926 | ||||||||||||
|
|
|
|
|
|
|
|
1 | For the period April 30, 2018 (commencement of operations) to June 30, 2018. |
See Notes to Financial Statements. | 39 |
Table of Contents
Baron Select Funds | June 30, 2018 |
STATEMENT OF CASH FLOWS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2018
|
Baron Partners Fund | ||||
Increase (Decrease) in Cash: | ||||
Cash Provided from Operating Activities | ||||
Net increase in net assets resulting from operations | $ | 300,620,754 | ||
Adjustments to reconcile net increase in net assets resulting from operations to net cash used by operating activities: | ||||
Purchases of portfolio securities | (159,306,615 | ) | ||
Proceeds from sales of portfolio securities | 32,799,086 | |||
Net purchases, sales and maturities of short-term investments | 126,614 | |||
Decrease in dividends and interest receivable | 91,615 | |||
Decrease in prepaid expenses | 154,897 | |||
Increase in accrued expenses | 319,800 | |||
Net realized gain on investments | (1,899,593 | ) | ||
Change in net unrealized appreciation of investments | (308,190,501 | ) | ||
|
| |||
Net cash used by operating activities | $ | (135,283,943 | ) | |
|
| |||
Cash Provided in Financing Activities | ||||
Proceeds from shares sold | 317,503,281 | |||
Payment for shares redeemed | (329,515,520 | ) | ||
Increase in payable for borrowings against line of credit | 143,500,000 | |||
|
| |||
Net cash provided in financing activities | 131,487,761 | |||
|
| |||
Net decrease in cash | (3,796,182 | ) | ||
Cash at beginning of period | 3,796,182 | |||
|
| |||
Cash at end of period | $ | — | ||
|
| |||
Supplemental cash flow information: | ||||
Interest paid | $ | 6,267,781 | ||
|
|
40 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
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 an open-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 ten 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 are non-diversified; and Baron International Growth Fund, Baron Real Estate Fund, Baron Emerging Markets Fund, Baron Energy and Resources 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 in non-U.S. companies. Baron Real Estate Fund invests its assets primarily in U.S. and non-U.S. real estate and real estate-related companies. Baron Energy and Resources Fund invests its assets primarily in U.S. and non-U.S. energy and resources companies and related companies and energy and resources master limited partnerships (“MLPs”) of any market capitalization. Baron Real Estate Income Fund invests its assets in U.S. and non-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.
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 through fee-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 and tax-exempt plans, accounts registered to insurance companies, trust companies and bank trust departments, investment companies, both affiliated and not affiliated with the adviser, and any entity that is considered a corporation for tax purposes, including corporate non-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 Real Estate Income Fund and Baron Health Care Fund commenced investment operations on January 2, 2018 and April 30, 2018, respectively.
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, including securities-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, including securities-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 BAMCO, Inc.’s (the “Adviser”) 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”). 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 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
41
Table of Contents
Baron Select Funds | June 30, 2018 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
convertible bonds 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. 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 are valued on the basis of their most recent closing market prices and translated into U.S. dollars at the NAV Calculation Time, except under the circumstances described below. Most foreign markets close before the NAV Calculation Time. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at the NAV Calculation Time. As a result, the Adviser may use a third-party pricing service to assist in determining fair value of foreign securities. This service utilizes a systematic methodology in making fair value estimates. The Adviser may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open. The Adviser cannot predict how often it will use closing prices or how often it will adjust those prices. As a means of evaluating its fair value process, the Adviser routinely compares closing market prices, the next day’s opening prices in the same markets, and the adjusted prices. 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 the ex-dividend date and interest income is recognized on an accrual basis, which includes the accretion of discounts and amortization of premiums. 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 the ex-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 is marked-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.
The Funds did not participate in securities lending/borrowing activities at June 30, 2018.
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 is marked-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 ASU No. 2011-11 for the Funds’ investments in repurchase agreements at June 30, 2018, 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.
42
Table of Contents
June 30, 2018 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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, 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 hold non-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, 2018 were as follows:
Fund | Purchases | Sales | ||||||
Baron Partners Fund | $ | 166,848,634 | $ | 29,729,483 | ||||
Baron Focused Growth Fund | 9,339,868 | 3,908,974 | ||||||
Baron International Growth Fund | 126,641,274 | 56,380,440 | ||||||
Baron Real Estate Fund | 230,334,409 | 316,447,435 | ||||||
Baron Emerging Markets Fund | 1,754,795,468 | 1,031,876,324 | ||||||
Baron Energy and Resources Fund | 7,861,576 | 6,208,801 | ||||||
Baron Global Advantage Fund | 43,434,210 | 5,524,185 | ||||||
Baron Real Estate Income Fund | 3,599,545 | 777,501 | ||||||
Baron Health Care Fund | 3,565,907 | 185,018 |
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, Baron Emerging Markets Fund and Baron Energy and Resources 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 Energy and Resources Fund | 1.35 | % | 1.10 | % | 1.09 | % | ||||||
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 | % |
43
Table of Contents
Baron Select Funds | June 30, 2018 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (Continued)
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 Rule 12b-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.
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 Rule 17a-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, 2018, the Funds engaged in the following cross-trades:
Purchases | Sales | Net Realized Gains (Losses) | ||||||||||
Baron Partners Fund | $ | 1,681,590 | $ | — | $ | — |
5. LINE OF CREDIT
Baron Partners Fund participates in a committed syndicated line of credit agreement with State Street in the amount of $600 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 November 1, 2018. Baron Partners Fund may borrow up to the lesser of $600 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 Overnight Federal Funds 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, 2018, interest expense incurred on these loans amounted to $6,669,472. During the six months ended June 30, 2018, Baron Partners Fund had an average daily balance on the line of credit of $497.0 million at a weighted average interest rate of 2.72%. At June 30, 2018, Baron Partners Fund had an outstanding balance in the amount of $569,000,000.
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 Overnight Federal Funds 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, 2018, Baron International Growth Fund had borrowings under the line of credit and incurred interest expense of $306. For the 4 days during which there were borrowings, Baron International Growth Fund had an average daily balance on the line of credit of $1.0 million at a weighted average interest rate of 2.73%.
6. RESTRICTED SECURITIES
At June 30, 2018, 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, 2018, 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 | $ | 41,109,802 | |||||
Private Preferred Stocks | ||||||||
Space Exploration Technologies Corp. | 11/15/2017 | 72,273,021 | ||||||
Private Partnerships | ||||||||
Windy City Investments Holdings, L.L.C. | 11/13/2007-1/27/2011 | 197,057 | ||||||
|
| |||||||
Total Restricted Securities: | $ | 113,579,880 | ||||||
|
| |||||||
(Cost $98,250,037)† (5.03% of Net Assets) |
† | See Statements of Net Assets for cost of individual securities. |
44
Table of Contents
June 30, 2018 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
6. RESTRICTED SECURITIES (Continued)
Baron Focused Growth Fund | ||||||||
Name of Issuer | Acquisition Date(s) | Value | ||||||
Private Common Stocks | ||||||||
Space Exploration Technologies Corp. | 9/13/2017 | $ | 3,869,041 | |||||
Private Preferred Stocks | ||||||||
Space Exploration Technologies Corp. | 11/15/2017 | 5,077,922 | ||||||
|
| |||||||
Total Restricted Securities: | $ | 8,946,963 | ||||||
|
| |||||||
(Cost $7,449,906)† (4.07% of Net Assets) | ||||||||
Baron Energy and Resources Fund | ||||||||
Name of Issuer | Acquisition Date(s) | Value | ||||||
Private Common Stocks | ||||||||
Gravity Oilfield Services, Inc. | 2/15/2017 | $ | 1,651,125 | |||||
|
| |||||||
(Cost $1,498,125) (2.74% 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 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 due to significant movement in the U.S. markets. Since these values are not obtained from quoted prices in an active market, 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.
45
Table of Contents
Baron Select Funds | June 30, 2018 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
The following is a summary of the inputs used as of June 30, 2018 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† | $ | 2,723,733,778 | $ | — | $ | — | $ | 2,723,733,778 | ||||||||
Private Common Stocks | — | — | 41,109,802 | 41,109,802 | ||||||||||||
Private Preferred Stocks | — | — | 72,273,021 | 72,273,021 | ||||||||||||
Private Partnerships | — | — | 197,057 | 197,057 | ||||||||||||
Short Term Investments | — | 258,345 | — | 258,345 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 2,723,733,778 | $ | 258,345 | $ | 113,579,880 | $ | 2,837,572,003 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
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† | $ | 198,933,979 | $ | — | $ | — | $ | 198,933,979 | ||||||||
Private Common Stocks | — | — | 3,869,041 | 3,869,041 | ||||||||||||
Preferred Stocks | — | �� | 12,069,206 | — | 12,069,206 | |||||||||||
Private Preferred Stocks | — | — | 5,077,922 | 5,077,922 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 198,933,979 | $ | 12,069,206 | $ | 8,946,963 | $ | 219,950,148 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
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† | $ | 226,807,442 | $ | 1,425,245 | $ | — | $ | 228,232,687 | ||||||||
Short Term Investments | — | 28,341,743 | — | 28,341,743 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 226,807,442 | $ | 29,766,988 | $ | — | $ | 256,574,430 | ||||||||
|
|
|
|
|
|
|
|
$1,866,311 was transferred out of Level 2 into Level 1 at June 30, 2018 as a result of no longer adjusting closing prices for certain securities (as described in Note 2a) due to significant market movements between the time at which the Fund valued its securities and the earlier closing of foreign markets.
Baron Real Estate Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Inputs | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 935,353,483 | $ | — | $ | — | $ | 935,353,483 | ||||||||
Short Term Investments | — | 27,651,407 | — | 27,651,407 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 935,353,483 | $ | 27,651,407 | $ | — | $ | 963,004,890 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
† | See Statements of Net Assets for additional detailed categorizations. |
46
Table of Contents
June 30, 2018 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
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† | $ | 4,832,620,182 | $ | 71,775,735 | $ | — | $ | 4,904,395,917 | ||||||||
Preferred Stocks | 348,657 | — | — | 348,657 | ||||||||||||
Short Term Investments | — | 500,563,596 | — | 500,563,596 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 4,832,968,839 | $ | 572,339,331 | $ | — | $ | 5,405,308,170 | ||||||||
|
|
|
|
|
|
|
|
$372,906,624 was transferred out of Level 2 into Level 1 at June 30, 2018 as a result of no longer adjusting closing prices for certain securities (as described in Note 2a), due to significant market movements between the time at which the Fund valued its securities and the earlier closing of foreign markets. $55,755,359 was transferred out of Level 1 into Level 2 at June 30, 2018 as a result of adjusting closing prices for certain securities (as described in Note 2a) due to significant market movements between the time at which the Fund valued its securities and the earlier closing of foreign markets.
Baron Energy and Resources Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Inputs | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 58,680,350 | $ | — | $ | — | $ | 58,680,350 | ||||||||
Private Common Stocks | — | — | 1,651,125 | 1,651,125 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 58,680,350 | $ | — | $ | 1,651,125 | $ | 60,331,475 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
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† | $ | 86,306,597 | $ | — | $ | — | $ | 86,306,597 | ||||||||
Short Term Investments | — | 871,497 | — | 871,497 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 86,306,597 | $ | 871,497 | $ | — | $ | 87,178,094 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
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† | $ | 2,805,701 | $ | — | $ | — | $ | 2,805,701 | ||||||||
Short Term Investments | — | 168,624 | — | 168,624 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 2,805,701 | $ | 168,624 | $ | — | $ | 2,974,325 | ||||||||
|
|
|
|
|
|
|
|
Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the six months ended June 30, 2018.
† | See Statements of Net Assets for additional detailed categorizations. |
47
Table of Contents
Baron Select Funds | June 30, 2018 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
Baron Health Care Fund | ||||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | ||||||||||||
Common Stocks† | $ | 3,495,576 | $ | — | $ | — | $ | 3,495,576 | ||||||||
Short Term Investments | — | 295,898 | — | 295,898 | ||||||||||||
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Total Investments | $ | 3,495,576 | $ | 295,898 | $ | — | $ | 3,791,474 | ||||||||
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Transfers between Levels 1, 2 or 3, if any, are recognized at ending value on June 30, 2018. There have been no transfers in and out of Level 1, 2 or 3 fair value measurements for the Fund for the period April 30, 2018 to June 30, 2018.
† | 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, 2017 | 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, 2018 | Change in Net Unrealized Appreciation (Depreciation) from Investments still held at June 30, 2018 | ||||||||||||||||||||||||||||||
Private Common Stocks |
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Industrials | $ | 34,654,835 | $ | — | $ | — | $ | 6,454,967 | $ | — | $ | — | $ | — | $ | — | $ | 41,109,802 | $ | 6,454,967 | ||||||||||||||||||||
Private Preferred Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | 42,808,873 | — | — | 7,214,116 | 22,250,032 | — | — | — | 72,273,021 | 7,214,116 | ||||||||||||||||||||||||||||||
Private Partnerships |
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Financials | 735,176 | — | 1,518,524 | (538,119 | ) | — | (1,518,524 | ) | — | — | 197,057 | (538,119 | ) | |||||||||||||||||||||||||||
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Total | $ | 78,198,884 | $ | — | $ | 1,518,524 | $ | 13,130,964 | $ | 22,250,032 | $ | (1,518,524 | ) | $ | — | $ | — | $ | 113,579,880 | $ | 13,130,964 | |||||||||||||||||||
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Baron Focused Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Investments in Securities | Balance as of December 31, 2017 | 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, 2018 | Change in Net Unrealized Appreciation (Depreciation) from Investments still held at June 30, 2018 | ||||||||||||||||||||||||||||||
Private Common Stocks |
| |||||||||||||||||||||||||||||||||||||||
Industrials | $ | 3,261,533 | $ | — | $ | — | $ | 607,508 | $ | — | $ | — | $ | — | $ | — | $ | 3,869,041 | $ | 607,508 | ||||||||||||||||||||
Private Preferred Stocks |
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Industrials | 4,077,088 | — | — | 750,883 | 249,951 | — | — | — | 5,077,922 | 750,883 | ||||||||||||||||||||||||||||||
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Total | $ | 7,338,621 | $ | — | $ | — | $ | 1,358,391 | $ | 249,951 | $ | — | $ | — | $ | — | $ | 8,946,963 | $ | 1,358,391 | ||||||||||||||||||||
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Baron Energy and Resources Fund | ||||||||||||||||||||||||||||||||||||||||
Investments in Securities | Balance as of December 31, 2017 | 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, 2018 | Change in Net Unrealized Appreciation (Depreciation) from Investments still held at June 30, 2018 | ||||||||||||||||||||||||||||||
Private Common Stocks |
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Energy | $ | 1,721,250 | $ | — | $ | — | $ | (70,125 | ) | $ | — | $ | — | $ | — | $ | — | $ | 1,651,125 | $ | (70,125 | ) | ||||||||||||||||||
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48
Table of Contents
June 30, 2018 | Baron Select Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
Unobservable valuation inputs developed by the Adviser for significant (greater than 1% of net assets) Level 3 investments as of June 30, 2018 were as follows:
Baron Partners Fund | ||||||||||||||||||||||||
Sector | Company | Fair Value as of June 30, 2018 | Valuation Technique | Unobservable Input | Weighted Average used on June 30, 2018 | Range used on June 30, 2018 | ||||||||||||||||||
Private Common Stocks and Private Preferred Stocks: Industrials | | Space Exploration Technologies Corp. | | $113,382,823 | | Combination of recent transactions, current value via comparable companies, and option-pricing methods | | | Change in the composite equity index of comparable companies |
| (0.16)% | (1.17)% - 0.73% | ||||||||||||
| Discount for lack of marketability |
| 3.23% | 3.23% | ||||||||||||||||||||
| Estimated volatility of the returns of equity1 | | 28.31% | 18.38% - 91.93% | ||||||||||||||||||||
Baron Focused Growth Fund | ||||||||||||||||||||||||
Sector | Company | Fair Value as of June 30, 2018 | Valuation Technique | Unobservable Input | Weighted Average used on June 30, 2018 | Range used on June 30, 2018 | ||||||||||||||||||
Private Common Stocks and Private Preferred Stocks: Industrials | | Space Exploration Technologies Corp. | | $8,946,963 | | Combination of recent transactions, current value via comparable companies, and option- |
| | Change in the composite equity index of comparable companies |
| (0.16)% | (1.17)% - 0.73% | ||||||||||||
| Discount for lack of marketability |
| 3.23% | 3.23% | ||||||||||||||||||||
| Estimated volatility of the returns of equity1 | | 28.31% | 18.38% - 91.93% | ||||||||||||||||||||
Baron Energy and Resources Fund | ||||||||||||||||||||||||
Sector | Company | Fair Value as of June 30, 2018 | Valuation Technique | Unobservable Input | Weighted Average used on June 30, 2018 | Range used on June 30, 2018 | ||||||||||||||||||
Private Common Stocks: Energy | | Gravity Oilfield Services, Inc. |
| $1,651,125 | | Combination of scenario analysis, current value via comparable companies, and option-pricing methods | | EV/EBITDA Multiple2 | 5.74X | 5.20X - 6.40X | ||||||||||||||
Scenario Probabilities | 16.67% | 5.00% - 45.00% | ||||||||||||||||||||||
| Change in the composite equity index of comparable companies |
| (1.14)% | (5.25)% - 2.29% | ||||||||||||||||||||
| Discount for lack of marketability |
| 12.16% | 9.20% - 15.79% | ||||||||||||||||||||
| Estimated volatility of the returns of equity3 |
| 49.44% | 40.42% - 61.92% |
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. |
2 | The multiple was derived as a simple average of the multiples of comparable companies. |
3 | The volatility was calculated as a weighted-average of the volatilities used in six valuation scenarios. Each scenario’s volatility was calculated as the simple average of the volatilities of comparable companies. |
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.
49
Table of Contents
Baron Select Funds | June 30, 2018 |
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, 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, 2018, the components of net assets on a tax basis were as follows:
Baron Fund | Baron Fund | Baron Fund | Baron Fund | Baron Fund | ||||||||||||||||
Cost of investments | $ | 1,413,550,415 | $ | 109,533,726 | $ | 214,729,742 | $ | 710,570,471 | $ | 4,912,819,324 | ||||||||||
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Gross tax unrealized appreciation | 1,427,915,755 | 110,424,955 | 50,282,968 | 257,616,770 | 861,806,265 | |||||||||||||||
Gross tax unrealized depreciation | (3,894,167 | ) | (8,533 | ) | (8,438,280 | ) | (5,182,351 | ) | (369,317,419 | ) | ||||||||||
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Net tax unrealized appreciation | 1,424,021,588 | 110,416,422 | 41,844,688 | 252,434,419 | 492,488,846 | |||||||||||||||
Net tax unrealized currency depreciation | — | — | (290 | ) | (23,168 | ) | (348,309 | ) | ||||||||||||
Undistributed (accumulated) net investment income (loss) | (9,473,552 | ) | (23,389 | ) | 523,272 | 2,306,140 | 6,439,327 | |||||||||||||
Undistributed (accumulated) net realized gain (loss) | (6,822,302 | ) | 865,334 | 7,612,792 | 66,716,669 | (886,514 | ) | |||||||||||||
Paid-in capital | 852,539,284 | 108,843,966 | 208,303,496 | 643,176,576 | 4,936,215,830 | |||||||||||||||
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Net Assets | $ | 2,260,265,018 | $ | 220,102,333 | $ | 258,283,958 | $ | 964,610,636 | $ | 5,433,909,180 | ||||||||||
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Baron Energy and Resources Fund | Baron Global Advantage Fund | Baron Fund | Baron Health Care Fund | |||||||||||||
Cost of investments | $ | 42,848,420 | $ | 68,149,401 | $ | 2,871,007 | $ | 3,671,109 | ||||||||
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Gross tax unrealized appreciation | 20,696,361 | 19,958,330 | 138,574 | 178,454 | ||||||||||||
Gross tax unrealized depreciation | (3,213,306 | ) | (929,637 | ) | (35,256 | ) | (58,089 | ) | ||||||||
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Net tax unrealized appreciation (depreciation) | 17,483,055 | 19,028,693 | 103,318 | 120,365 | ||||||||||||
Net tax unrealized currency appreciation (depreciation) | — | (47,715 | ) | (1 | ) | 3 | ||||||||||
Undistributed (accumulated) net investment income (loss) | 1,068,820 | (251,189 | ) | 1,933 | (3,054 | ) | ||||||||||
Undistributed (accumulated) net realized gain (loss) | (38,244,746 | ) | (729,685 | ) | (120,067 | ) | (5,220 | ) | ||||||||
Paid-in capital | 80,019,891 | 69,066,896 | 2,966,827 | 3,568,405 | ||||||||||||
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Net Assets | $ | 60,327,020 | $ | 87,067,000 | $ | 2,952,010 | $ | 3,680,499 | ||||||||
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As of December 31, 2017, the Funds had capital loss carryforwards expiring as follows:
Baron Partners Fund | Baron Fund | Baron International Fund | Baron Real Estate Fund | Baron Emerging Markets Fund | Baron Energy and Resources Fund | Baron Global | ||||||||||||||||||||||
Short term: | ||||||||||||||||||||||||||||
No expiration date | $ | — | $ | — | $ | — | $ | — | $ | 125,640,792 | $ | 19,510,849 | $ | 337,182 | ||||||||||||||
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Long term: | ||||||||||||||||||||||||||||
No expiration date | — | — | — | — | — | 18,442,130 | 638,034 | |||||||||||||||||||||
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50
Table of Contents
June 30, 2018 | 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, 2018 and the fiscal year ended December 31, 2017 was as follows:
Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | |||||||||||||||||||||||
Fund | Ordinary1 | Long Term Capital Gain | Return of Capital | Ordinary1 | Long Term Capital Gain | Return of Capital | ||||||||||||||||||
Baron Partners Fund | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Baron Focused Growth Fund | — | — | — | 18,516 | 3,968,499 | — | ||||||||||||||||||
Baron International Growth Fund | — | — | — | — | 5,523,281 | — | ||||||||||||||||||
Baron Real Estate Fund | — | — | — | — | 49,502,988 | — | ||||||||||||||||||
Baron Emerging Markets Fund | — | — | — | 18,258,381 | — | 766,584 | ||||||||||||||||||
Baron Energy and Resources Fund | — | — | — | 63,663 | — | — | ||||||||||||||||||
Baron Global Advantage Fund | — | — | — | — | — | — | ||||||||||||||||||
Baron Real Estate Income Fund | 29,423 | — | — | — | — | — | ||||||||||||||||||
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 June 30, 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, 2018, the officers, trustees and portfolio managers owned, directly or indirectly, 53.27% of Baron Focused Growth Fund, 78.01% of Baron Real Estate Income Fund and 61.80% 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, 2017 | Purchase Cost | Sales Proceeds | Change in Net Unrealized Appreciation (Depreciation) | Realized (Losses) | Dividend Income | Shares Held at June 30, 2018 | Value at June 30, 2018 | Percentage of Net Assets at June 30, 2018 | |||||||||||||||||||||||||||
“Affiliated” Company as of June 30, 2018: |
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Lekoil Ltd. | $ | 7,156,444 | $ | — | $ | — | $ | 592,204 | $ | — | $ | — | 32,618,323 | $ | 7,748,648 | 0.14 | % | |||||||||||||||||||
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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, 2018. |
51
Table of Contents
Baron Select Funds | June 30, 2018 |
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 | 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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2018 | 48.75 | (0.27 | )1 | 7.75 | 7.48 | 0.00 | 0.00 | 0.00 | 56.23 | 15.34 | 2 | 1.96 | 3 | (0.64 | )3 | 1.32 | 3 | (1.03 | )3 | 1,188.1 | 1.15 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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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 | ||||||||||||||||||||||||||||||||||||||||||
2009 | 12.20 | (0.04 | )1 | 3.48 | 3.44 | 0.00 | 0.00 | 0.00 | 15.64 | 28.20 | 1.51 | (0.10 | ) | 1.41 | (0.30 | ) | 1,249.3 | 32.43 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2018 | 49.73 | (0.21 | )1 | 7.92 | 7.71 | 0.00 | 0.00 | 0.00 | 57.44 | 15.50 | 2 | 1.70 | 3 | (0.64 | )3 | 1.06 | 3 | (0.77 | )3 | 927.2 | 1.15 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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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 | ||||||||||||||||||||||||||||||||||||||||||
20094 | 12.66 | (0.03 | )1 | 3.03 | 3.00 | 0.00 | 0.00 | 0.00 | 15.66 | 23.70 | 2 | 1.38 | 3 | (0.21 | )3 | 1.17 | 3 | (0.31 | )3 | 158.5 | 32.43 | |||||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 49.73 | (0.17 | )1 | 7.88 | 7.71 | 0.00 | 0.00 | 0.00 | 57.44 | 15.50 | 2 | 1.74 | 3 | (0.67 | )3 | 1.07 | 3 | (0.63 | )3 | 145.0 | 1.15 | 2 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||
20165 | 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 May 29, 2009 (initial offering of Institutional shares) to December 31,2009. |
5 | For the period August 31, 2016 (initial offering of R6 shares) to December 31, 2016. |
52 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | 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 ($) | Net ($) | Net realized and (loss) on ($) | Total from ($) | Net ($) | Net realized on ($) | Return of ($) | Total ($) | Net ($) | Total (%) | Operating (%) | Less: by Adviser (%) | Net (%) | Net (%) | Net ($) | Portfolio (%) | |||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.38 | (0.02 | )1 | 2.13 | 2.11 | 0.00 | 0.00 | 0.00 | 0.00 | 17.49 | 13.72 | 3,4 | 1.41 | 5 | (0.06 | )5 | 1.35 | 5 | (0.23 | )5 | 46.0 | 1.93 | 4 | |||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (0.05 | ) | 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 | (0.08 | ) | 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 | (0.04 | ) | 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 | (0.04 | ) | 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 | (0.07 | ) | 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 | (0.13 | ) | 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 | (0.13 | ) | 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 | (0.12 | ) | 1.35 | (0.16 | ) | 46.4 | 24.08 | ||||||||||||||||||||||||||||||||||||||||||
2009 | 6.27 | 0.12 | 1 | 2.00 | 2.12 | (0.13 | ) | 0.00 | (0.12 | ) | (0.25 | ) | 8.14 | 33.77 | 3 | 1.52 | (0.17 | ) | 1.35 | 1.81 | 39.9 | 34.76 | ||||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.66 | (0.01 | )1 | 2.19 | 2.18 | 0.00 | 0.00 | 0.00 | 0.00 | 17.84 | 13.92 | 4 | 1.09 | 5 | 0.00 | 1.09 | 5 | (0.14 | )5 | 74.8 | 1.93 | 4 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (0.02 | ) | 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 | (0.03 | ) | 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 | 0.16 | 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 | 0.56 | 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 | (0.02 | ) | 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 | (0.06 | ) | 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 | (0.08 | ) | 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 | (0.09 | ) | 1.10 | 0.08 | 44.3 | 24.08 | |||||||||||||||||||||||||||||||||||||||||||
20096 | 6.88 | 0.07 | 1 | 1.45 | 1.52 | (0.13 | ) | 0.00 | (0.12 | ) | (0.25 | ) | 8.15 | 22.06 | 3,4 | 1.25 | 5 | (0.15 | )5 | 1.10 | 5 | 1.63 | 5 | 36.6 | 34.76 | |||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.67 | 0.02 | 1 | 2.15 | 2.17 | 0.00 | 0.00 | 0.00 | 0.00 | 17.84 | 13.85 | 3,4 | 1.12 | 5 | (0.02 | )5 | 1.10 | 5 | 0.21 | 5 | 99.3 | 1.93 | 4 | |||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | )8 | 1.10 | (0.38 | ) | 22.6 | 11.48 | |||||||||||||||||||||||||||||||||||||||||
20167 | 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 | (0.04 | )5 | 1.10 | 5 | 0.53 | 5 | 8.6 | 14.31 |
1 | Based on average shares outstanding. |
2 | Less than $0.01 per share. |
3 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
4 | Not Annualized. |
5 | Annualized. |
6 | For the period May 29, 2009 (initial offering of Institutional Shares) to December 31, 2009. |
7 | For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. |
8 | Less than 0.01%. |
See Notes to Financial Statements. | 53 |
Table of Contents
Baron Select Funds | June 30, 2018 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON INTERNATIONAL GROWTH FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) on investments ($) | 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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2018 | 23.90 | 0.03 | 1 | (0.11 | ) | (0.08 | ) | 0.00 | 0.00 | 0.00 | 23.82 | (0.33 | )3,4 | 1.35 | 5,8 | (0.15 | )5 | 1.20 | 5 | 0.23 | 5 | 66.2 | 28.90 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||
2009 | 10.00 | 0.04 | 1 | 4.43 | 4.47 | 0.00 | (0.36 | ) | (0.36 | ) | 14.11 | 44.69 | 3 | 2.33 | (0.83 | ) | 1.50 | 0.38 | 8.4 | 53.94 | ||||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 24.19 | 0.07 | 1 | (0.11 | ) | (0.04 | ) | 0.00 | 0.00 | 0.00 | 24.15 | (0.17 | )3,4 | 1.07 | 5,8 | (0.12 | )5 | 0.95 | 5 | 0.60 | 5 | 177.9 | 28.90 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||
20096 | 11.13 | (0.02 | )1 | 3.38 | 3.36 | 0.00 | (0.36 | ) | (0.36 | ) | 14.13 | 30.18 | 3,4 | 1.89 | 5 | (0.64 | )5 | 1.25 | 5 | (0.29 | )5 | 22.1 | 53.94 | |||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 24.19 | 0.08 | 1 | (0.12 | ) | (0.04 | ) | 0.00 | 0.00 | 0.00 | 24.15 | (0.17 | )3,4 | 1.07 | 5,8 | (0.12 | )5 | 0.95 | 5 | 0.64 | 5 | 14.2 | 28.90 | 4 | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
20167 | 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 $0.01 per share. 3 The total returns would have been lower had certain expenses not been reduced during the period shown. 4 Not Annualized. |
5 Annualized. 6 For the period May 29, 2009 (initial offering of Institutional Shares) to December 31, 2009. 7 For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. 8 Interest expense rounds to less than 0.01%. |
54 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON REAL ESTATE FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net ($) | Net realized and unrealized gain (loss) on investments ($) | Total from investment operations ($) | Net ($) | Net realized ($) | Return ($) | Total ($) | Net ($) | Total (%) | Operating (%) | Less: (%) | Net (%) | Net (%) | Net (%) | Portfolio (%) | |||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 29.58 | 0.00 | 1,3 | (1.29 | ) | (1.29 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 28.29 | (4.36 | )5 | 1.31 | 6 | 0.00 | 1.31 | 6 | 0.01 | 6 | 367.2 | 23.46 | 5 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 30.01 | 0.04 | 1 | (1.32 | ) | (1.28 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 28.73 | (4.27 | )5 | 1.06 | 6 | 0.00 | 1.06 | 6 | 0.28 | 6 | 586.3 | 23.46 | 5 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 30.01 | 0.06 | 1 | (1.33 | ) | (1.27 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 28.74 | (4.23 | )5 | 1.06 | 6 | 0.00 | 1.06 | 6 | 0.44 | 6 | 11.1 | 23.46 | 5 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 $0.01 per share. |
4 | The total returns would have been lower had certain expenses not been reduced during the period shown. |
5 | Not Annualized. |
6 | Annualized. |
7 | For the period January 29, 2016 (initial offering of R6 Shares) to December 31, 2016. |
See Notes to Financial Statements. | 55 |
Table of Contents
Baron Select Funds | June 30, 2018 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON EMERGING MARKETS FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized and unrealized gain (loss) on investments ($) | 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 (%) | 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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2018 | 15.33 | 0.01 | 1 | (1.35 | ) | (1.34 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 13.99 | (8.74 | )3 | 1.36 | 4 | 0.00 | 1.36 | 4 | 0.13 | 4 | 1,079.2 | 20.04 | 3 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.37 | 0.03 | 1 | (1.35 | ) | (1.32 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 14.05 | (8.59 | )3 | 1.10 | 4 | 0.00 | 1.10 | 4 | 0.42 | 4 | 4,346.9 | 20.04 | 3 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 15.38 | 0.04 | 1 | (1.36 | ) | (1.32 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 14.06 | (8.58 | )3 | 1.11 | 4 | 0.00 | 1.11 | 4 | 0.52 | 4 | 7.8 | 20.04 | 3 | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 $0.01 per share. |
56 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON ENERGY AND RESOURCES FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net ($) | Net realized ($) | Total from ($) | From Net ($) | Net realized ($) | Total ($) | Net asset ($) | Total (%) | Operating (%) | Less: Reimbursement of expenses by Adviser (%) | Net (%) | Net (%) | Net ($) | Portfolio (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 8.19 | 0.00 | 1,7 | 0.47 | 0.47 | 0.00 | 0.00 | 0.00 | 8.66 | 5.74 | 2,3 | 1.79 | 4 | (0.44 | )4 | 1.35 | 4 | 0.11 | 4 | 41.0 | 10.80 | 3 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 9.00 | (0.01 | )1 | (0.79 | ) | (0.80 | ) | (0.01 | ) | 0.00 | (0.01 | ) | 8.19 | (8.90 | )2 | 1.66 | 6 | (0.31 | ) | 1.35 | (0.07 | ) | 37.6 | 23.48 | ||||||||||||||||||||||||||||||||||||
2016 | 7.03 | 0.02 | 1 | 1.95 | 1.97 | 0.00 | 0.00 | 0.00 | 9.00 | 28.02 | 2 | 1.70 | 6 | (0.35 | ) | 1.35 | 0.28 | 72.8 | 53.52 | |||||||||||||||||||||||||||||||||||||||||
2015 | 10.33 | 0.02 | 1 | (3.31 | ) | (3.29 | ) | 0.00 | (0.01 | ) | (0.01 | ) | 7.03 | (31.88 | )2 | 1.58 | (0.23 | ) | 1.35 | 0.24 | 56.4 | 48.19 | ||||||||||||||||||||||||||||||||||||||
2014 | 11.84 | (0.01 | )1 | (1.50 | ) | (1.51 | ) | 0.00 | 0.00 | 0.00 | 10.33 | (12.75 | )2 | 1.79 | (0.44 | ) | 1.35 | (0.04 | ) | 39.7 | 23.12 | |||||||||||||||||||||||||||||||||||||||
2013 | 9.46 | (0.01 | )1 | 2.40 | 2.39 | (0.01 | ) | 0.00 | (0.01 | ) | 11.84 | 25.32 | 2 | 2.25 | (0.90 | ) | 1.35 | (0.05 | ) | 29.2 | 25.60 | |||||||||||||||||||||||||||||||||||||||
2012 | 10.00 | (0.03 | )1 | (0.51 | ) | (0.54 | ) | 0.00 | 0.00 | 0.00 | 9.46 | (5.40 | )2 | 9.07 | (7.72 | ) | 1.35 | (0.36 | ) | 1.8 | 35.74 | |||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 8.31 | 0.02 | 1 | 0.47 | 0.49 | 0.00 | 0.00 | 0.00 | 8.80 | 5.90 | 2,3 | 1.54 | 4 | (0.44 | )4 | 1.10 | 4 | 0.37 | 4 | 18.7 | 10.80 | 3 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 9.11 | 0.01 | 1 | (0.80 | ) | (0.79 | ) | (0.01 | ) | 0.00 | (0.01 | ) | 8.31 | (8.68 | )2 | 1.42 | 6 | (0.32 | ) | 1.10 | 0.14 | 16.9 | 23.48 | |||||||||||||||||||||||||||||||||||||
2016 | 7.10 | 0.04 | 1 | 1.97 | 2.01 | 0.00 | 0.00 | 0.00 | 9.11 | 28.31 | 2 | 1.46 | 6 | (0.36 | ) | 1.10 | 0.56 | 30.7 | 53.52 | |||||||||||||||||||||||||||||||||||||||||
2015 | 10.41 | 0.05 | 1 | (3.35 | ) | (3.30 | ) | 0.00 | (0.01 | ) | (0.01 | ) | 7.10 | (31.73 | )2 | 1.29 | (0.19 | ) | 1.10 | 0.53 | 22.8 | 48.19 | ||||||||||||||||||||||||||||||||||||||
2014 | 11.91 | 0.03 | 1 | (1.53 | ) | (1.50 | ) | 0.00 | 0.00 | 0.00 | 10.41 | (12.59 | )2 | 1.52 | (0.42 | ) | 1.10 | 0.22 | 29.3 | 23.12 | ||||||||||||||||||||||||||||||||||||||||
2013 | 9.48 | 0.02 | 1 | 2.41 | 2.43 | 0.00 | 0.00 | 0.00 | 11.91 | 25.63 | 2 | 2.84 | (1.74 | ) | 1.10 | 0.20 | 4.0 | 25.60 | ||||||||||||||||||||||||||||||||||||||||||
2012 | 10.00 | (0.01 | )1 | (0.51 | ) | (0.52 | ) | 0.00 | 0.00 | 0.00 | 9.48 | (5.20 | )2 | 8.65 | (7.55 | ) | 1.10 | (0.11 | ) | 1.4 | 35.74 | |||||||||||||||||||||||||||||||||||||||
R6 SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 8.31 | 0.02 | 1 | 0.47 | 0.49 | 0.00 | 0.00 | 0.00 | 8.80 | 5.90 | 2,3 | 1.49 | 4 | (0.40 | )4 | 1.09 | 4 | 0.38 | 4 | 0.6 | 10.80 | 3 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 9.10 | 0.00 | 1,7 | (0.78 | ) | (0.78 | ) | (0.01 | ) | 0.00 | (0.01 | ) | 8.31 | (8.58 | )2 | 1.40 | 6 | (0.31 | ) | 1.09 | 0.03 | 0.4 | 23.48 | |||||||||||||||||||||||||||||||||||||
20165 | 8.55 | (0.01 | )1 | 0.56 | 0.55 | 0.00 | 0.00 | 0.00 | 9.10 | 6.43 | 2,3 | 1.55 | 4,6 | (0.46 | )4 | 1.09 | 4 | (0.23 | )4 | 0.4 | 53.52 |
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 August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. 6 Interest expense rounds to less than 0.01%. 7 Less than $0.01 per share. |
See Notes to Financial Statements. | 57 |
Table of Contents
Baron Select Funds | June 30, 2018 |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON GLOBAL ADVANTAGE FUND
Selected data for a share outstanding throughout each period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period ($) | Net investment income (loss) ($) | Net realized (loss) on ($) | Total from ($) | Net ($) | Net realized ($) | Total ($) | Net asset value, end of period ($) | Total (%) | Total (%) | Less: (%) | Operating (%) | Less: (%) | Net (%) | Net (%) | Net ($) | Portfolio (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 20.56 | (0.09 | )2 | 2.72 | 2.63 | 0.00 | 0.00 | 0.00 | 23.19 | 12.74 | 4,6 | 1.53 | 8 | 0.00 | 8 | 1.53 | 8 | (0.38 | )8 | 1.15 | 8 | (0.82 | )8 | 43.9 | 8.39 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
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Six Months Ended June 30, |
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2018 | 20.77 | (0.07 | )2 | 2.75 | 2.68 | 0.00 | 0.00 | 0.00 | 23.45 | 12.85 | 4,6 | 1.26 | 8 | 0.00 | 8 | 1.26 | 8 | (0.36 | )8 | 0.90 | 8 | (0.58 | )8 | 38.2 | 8.39 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
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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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2018 | 20.79 | (0.06 | )2 | 2.73 | 2.67 | 0.00 | 0.00 | 0.00 | 23.46 | 12.84 | 4,6 | 1.24 | 8 | 0.00 | 8 | 1.24 | 8 | (0.34 | )8 | 0.90 | 8 | (0.55 | )8 | 5.0 | 8.39 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 8 | 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 $47,291 to compensate the Fund for a loss incurred due to a shareholder activity processing error. The impact of this payment increased the Fund’s total return by 0.54%. |
6 | Not Annualized. |
7 | Certain fixed expenses incurred by the Fund were not annualized for the period ended December 31, 2012. |
8 | Annualized. |
9 | For the period August 31, 2016 (initial offering of R6 Shares) to December 31, 2016. |
10 | The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of Fund shares in relation to fluctuating market values of investments of the Fund. |
58 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
FINANCIAL HIGHLIGHTS (Unaudited) (Continued)
BARON REAL ESTATE INCOME FUND
Selected data for a share outstanding throughout the period:
Income (loss) from investment operations: | Less distributions to shareholders from: | Ratios to Average Net Assets: | Supplemental Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset ($) | Net ($) | Net realized ($) | Total from investment operations ($) | Net investment income ($) | Net realized gain on investments ($) | Total distributions ($) | Net asset value, end of period ($) | Total return (%) | Operating expenses (%) | Less: (%) | Net operating expenses (%) | Net investment income (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Six Months Ended June 30, |
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2018 | 10.00 | 0.09 | 1 | (0.12 | ) | (0.03 | ) | (0.10 | ) | 0.00 | (0.10 | ) | 9.87 | (0.25 | )2,3 | 9.41 | 4 | (8.36 | )4 | 1.05 | 4 | 1.95 | 4 | 0.3 | 30.61 | 3 | ||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Six Months Ended June 30, |
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2018 | 10.00 | 0.11 | 1 | (0.13 | ) | (0.02 | ) | (0.10 | ) | 0.00 | (0.10 | ) | 9.88 | (0.15 | )2,3 | 6.24 | 4 | (5.44 | )4 | 0.80 | 4 | 2.41 | 4 | 2.2 | 30.61 | 3 | ||||||||||||||||||||||||||||||||||
R6 SHARES |
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Six Months Ended June 30, |
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2018 | 10.00 | 0.14 | 1 | (0.15 | ) | (0.01 | ) | (0.10 | ) | 0.00 | (0.10 | ) | 9.89 | (0.05 | )2,3 | 6.22 | 4 | (5.42 | )4 | 0.80 | 4 | 3.06 | 4 | 0.5 | 30.61 | 3 |
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. |
See Notes to Financial Statements. | 59 |
Table of Contents
Baron Select Funds | June 30, 2018 |
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 ($) | Net investment loss ($) | Net realized and unrealized gain on investments ($) | Total from investment operations ($) | 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 (%) | Net assets (in millions), end of period ($) | Portfolio turnover rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||
RETAIL SHARES |
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Period Ended June 30, |
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20181 | 10.00 | (0.01 | )2 | 0.49 | 0.48 | 0.00 | 0.00 | 0.00 | 10.48 | 4.80 | 3,4 | 7.72 | 5 | (6.62 | )5 | 1.10 | 5 | (0.75 | )5 | 1.8 | 7.94 | 4 | ||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
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Period Ended June 30, |
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20181 | 10.00 | (0.01 | )2 | 0.50 | 0.49 | 0.00 | 0.00 | 0.00 | 10.49 | 4.90 | 3,4 | 7.56 | 5 | (6.71 | )5 | 0.85 | 5 | (0.47 | )5 | 1.7 | 7.94 | 4 | ||||||||||||||||||||||||||||||||||||||
R6 SHARES |
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Period Ended June 30, |
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20181 | 10.00 | (0.01 | )2 | 0.49 | 0.48 | 0.00 | 0.00 | 0.00 | 10.48 | 4.80 | 3,4 | 7.19 | 5 | (6.34 | )5 | 0.85 | 5 | (0.33 | )5 | 0.2 | 7.94 | 4 |
1 For the period April 30, 2018 (commencement of operations) to June 30, 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. |
60 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | Baron Select Funds |
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 Rule 12b-1 fees, long-term shareholders may indirectly pay more than the maximum permitted front-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, 2018 and held for the six months ended June 30, 2018.
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, 20181
Actual Total Return | Beginning Account Value January 1, 2018 | Ending Account Value June 30, 2018 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron Partners Fund — Retail Shares | 15.34 | % | $ | 1,000.00 | $ | 1,153.40 | 1.96 | %2 | $ | 10.46 | ||||||||||
Baron Partners Fund — Institutional Shares | 15.50 | % | $ | 1,000.00 | $ | 1,155.00 | 1.70 | %2 | $ | 9.08 | ||||||||||
Baron Partners Fund — R6 Shares | 15.50 | % | $ | 1,000.00 | $ | 1,155.00 | 1.74 | %2 | $ | 9.30 | ||||||||||
Baron Focused Growth Fund — Retail Shares | 13.72 | % | $ | 1,000.00 | $ | 1,137.20 | 5 | 1.35 | %6 | $ | 7.15 | |||||||||
Baron Focused Growth Fund — | 13.92 | % | $ | 1,000.00 | $ | 1,139.20 | 1.09 | % | $ | 5.78 | ||||||||||
Baron Focused Growth Fund — R6 Shares | 13.85 | % | $ | 1,000.00 | $ | 1,138.50 | 5 | 1.10 | %6 | $ | 5.83 | |||||||||
Baron International Growth Fund — Retail Shares | (0.33 | )% | $ | 1,000.00 | $ | 996.70 | 5 | 1.20 | %6 | $ | 5.94 | |||||||||
Baron International Growth Fund — | (0.17 | )% | $ | 1,000.00 | $ | 998.30 | 5 | 0.95 | %6 | $ | 4.71 | |||||||||
Baron International Growth Fund — R6 Shares | (0.17 | )% | $ | 1,000.00 | $ | 998.30 | 5 | 0.95 | %6 | $ | 4.71 | |||||||||
Baron Real Estate Fund — Retail Shares | (4.36 | )% | $ | 1,000.00 | $ | 956.40 | 1.31 | % | $ | 6.35 | ||||||||||
Baron Real Estate Fund — Institutional Shares | (4.27 | )% | $ | 1,000.00 | $ | 957.30 | 1.06 | % | $ | 5.14 | ||||||||||
Baron Real Estate Fund — R6 Shares | (4.23 | )% | $ | 1.000.00 | $ | 957.70 | 1.06 | % | $ | 5.15 | ||||||||||
Baron Emerging Markets Fund — Retail Shares | (8.74 | )% | $ | 1,000.00 | $ | 912.60 | 1.36 | % | $ | 6.45 | ||||||||||
Baron Emerging Markets Fund — | (8.59 | )% | $ | 1,000.00 | $ | 914.10 | 1.10 | % | $ | 5.22 | ||||||||||
Baron Emerging Markets Fund — R6 Shares | (8.58 | )% | $ | 1,000.00 | $ | 914.20 | 1.11 | % | $ | 5.27 | ||||||||||
Baron Energy & Resources Fund — Retail Shares | 5.74 | % | $ | 1,000.00 | $ | 1,057.40 | 5 | 1.35 | %6 | $ | 6.89 | |||||||||
Baron Energy & Resources Fund — | 5.90 | % | $ | 1,000.00 | $ | 1,059.00 | 5 | 1.10 | %6 | $ | 5.62 | |||||||||
Baron Energy & Resources Fund — R6 Shares | 5.90 | % | $ | 1,000.00 | $ | 1,059.00 | 5 | 1.09 | %6 | $ | 5.56 | |||||||||
Baron Global Advantage Fund — Retail Shares | 12.74 | % | $ | 1,000.00 | $ | 1,127.40 | 5 | 1.15 | %6 | $ | 6.07 | |||||||||
Baron Global Advantage Fund — | 12.85 | % | $ | 1,000.00 | $ | 1,128.50 | 5 | 0.90 | %6 | $ | 4.75 | |||||||||
Baron Global Advantage Fund — R6 Shares | 12.84 | % | $ | 1,000.00 | $ | 1,128.40 | 5 | 0.90 | %6 | $ | 4.75 | |||||||||
Baron Real Estate Income Fund — Retail Shares | (0.25 | )% | $ | 1,000.00 | $ | 997.50 | 5 | 1.05 | %6 | $ | 5.20 | |||||||||
Baron Real Estate Income Fund — | (0.15 | )% | $ | 1,000.00 | $ | 998.50 | 5 | 0.80 | %6 | $ | 3.96 | |||||||||
Baron Real Estate Income Fund — R6 Shares | (0.05 | )% | $ | 1,000.00 | $ | 999.50 | 5 | 0.80 | %6 | $ | 3.97 | |||||||||
Baron Health Care Fund — Retail Shares | 4.80 | % | $ | 1,000.00 | $ | 1,048.00 | 5 | 1.10 | %6 | $ | 1.88 | 4 | ||||||||
Baron Health Care Fund — | 4.90 | % | $ | 1,000.00 | $ | 1,049.00 | 5 | 0.85 | %6 | $ | 1.46 | 4 | ||||||||
Baron Health Care Fund — R6 Shares | 4.80 | % | $ | 1,000.00 | $ | 1,048.00 | 5 | 0.85 | %6 | $ | 1.45 | 4 |
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, 2018, includes 1.32%, 1.06% and 1.07% for net operating expenses and 0.64%, 0.64% and 0.67% 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 | Baron Health Care Fund commenced operations on April 30, 2018. 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. |
5 | Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived. |
6 | Annualized expense ratios are adjusted to reflect fee waiver. |
61
Table of Contents
Baron Select Funds | June 30, 2018 |
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, 2018
Hypothetical Annualized Total Return | Beginning Account Value January 1, 2018 | Ending Account Value June 30, 2018 | Annualized Expense Ratio | Expenses Paid During the Period3 | ||||||||||||||||
Baron Partners Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,015.08 | 1.96 | %2 | $ | 9.79 | ||||||||||
Baron Partners Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,016.36 | 1.70 | %2 | $ | 8.50 | ||||||||||
Baron Partners Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,016.17 | 1.74 | %2 | $ | 8.70 | ||||||||||
Baron Focused Growth Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.10 | 4 | 1.35 | %5 | $ | 6.76 | |||||||||
Baron Focused Growth Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.39 | 1.09 | % | $ | 5.46 | ||||||||||
Baron Focused Growth Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.34 | 4 | 1.10 | %5 | $ | 5.51 | |||||||||
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 | $ | 1,018.30 | 1.31 | % | $ | 6.56 | ||||||||||
Baron Real Estate Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.54 | 1.06 | % | $ | 5.31 | ||||||||||
Baron Real Estate Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.54 | 1.06 | % | $ | 5.31 | ||||||||||
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 | $ | 1,019.34 | 1.10 | % | $ | 5.51 | ||||||||||
Baron Emerging Markets Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.29 | 1.11 | % | $ | 5.56 | ||||||||||
Baron Energy & Resources Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,018.10 | 4 | 1.35 | %5 | $ | 6.76 | |||||||||
Baron Energy & Resources Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.34 | 4 | 1.10 | %5 | $ | 5.51 | |||||||||
Baron Energy & Resources Fund — R6 Shares | 5.00 | % | $ | 1,000.00 | $ | 1,019.39 | 4 | 1.09 | %5 | $ | 5.46 | |||||||||
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, 2018, includes 1.32%, 1.06% and 1.07% for net operating expenses and 0.64%, 0.64% and 0.67% 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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Table of Contents
June 30, 2018 | Baron Select Funds |
2018 DISCLOSURE REGARDING THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS (Unaudited)
The Board of Trustees (the “Board”) of Baron Select Funds (the “Trust”) met on May 7, 2018 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 Energy and Resources Fund and Baron Global Advantage Fund (each, a “Fund” and collectively, the “Funds”). The members of the Board who are not affiliated with the Trust (the “Independent Trustees”) met in a separate session to discuss and consider the renewal of the advisory agreements for the Funds. An independent consultant provided reports to the Board and attended the Board meeting. The Trustees received a substantial amount of information from the Adviser and from the independent consultant, 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 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 total expense ratio of the Funds and comparisons to similar funds managed by other advisers over comparable periods; |
• | 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; and |
• | Additional services provided by the Adviser. |
The Board was provided with information from the Adviser and the independent consultant regarding the fees charged by the Adviser as compared to the fees charged by comparable funds. This information compared various fees and expenses, as well as the total expense ratios, of the Funds against the fees, expenses and total expense ratios of other funds of similar size, character and investment strategies (“comparable funds”). The Board observed that, for the retail and institutional classes of most of the Funds, while the management fee was comparatively higher, the other expenses paid by the Funds generally were comparatively lower, when compared to respective peer groups. They concluded that the nature, extent and quality of the services the Adviser provides, including performance consistent with its investing principles, 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 the independent consultant. The Board considered for each Fund, among other information, the independent consultant’s comparisons of the expense ratio and contractual advisory fee with those of the comparable funds selected by the independent consultant, as noted above. The Board also considered the independent consultant’s risk-adjusted performance comparisons with comparable funds. The Board also considered comparisons of each Fund’s annualized total return over one-, three-, five- and ten-year periods, where applicable, against the comparable funds and performance universe averages and relevant securities market indices. 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 benefits that accrue to the Adviser and its affiliates from their relationship with the Funds. Representatives of the Adviser said the Board should consider the advisory fee in the context of other fees paid to the Adviser’s affiliates, such as the distribution fee paid to Baron Capital, Inc. and paid out pursuant to the 12b-1 plan.
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, even as profits had declined in recent years due to persistent outflows.
4. ECONOMIES OF SCALE AND BENEFITS TO INVESTORS
The Board considered the extent to which each Fund’s management 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 scrutinize the extent of economies of scale, asset growth and BAMCO’s plans to invest further to support the Funds. The Board concluded that approval of the management fee for each Fund was supportable in light of the services provided as discussed at this meeting.
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 and the modification of the expense caps for Baron International Growth Fund and Baron Global Advantage Fund.
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Baron Select Funds | June 30, 2018 |
BARON HEALTH CARE FUND - 2018 DISCLOSURE REGARDING THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS (Unaudited)
The Board of Trustees (the “Board”) of Baron Select Funds (the “Trust”) met on February 22, 2018 to discuss the selection of BAMCO, Inc. (the “Adviser”) as the investment adviser and the approval of the investment advisory agreement for Baron Health Care Fund (the “Fund”). The members of the Board who are not affiliated with the Trust (the “Independent Trustees”) met in a separate session to discuss and consider the renewal of the advisory agreement for the Fund. Because, at its May 4, 2017 meeting, the Board had considered the annual review of the Investment Advisory Agreements, Distribution Agreements, and 12b-1 Plans, had received presentations from an independent consultant and from management about the relevant fees, expenses and services, and, from independent legal counsel, about the legal standards, similar materials were not presented at this meeting upon the Board’s confirmation that they recalled and understood the application to the Fund of the information to the presentations received and the deliberations undertaken. Based on its evaluation of this and other information, the Board, including a majority of the Independent Trustees, approved the advisory agreement for the Fund for an initial term of two years.
The Board considered a broad scope of information, including the following, which they had considered in past years and remained in their thinking, as material to their consideration:
1. NATURE, EXTENT AND QUALITY OF SERVICES
As part of their consideration of the nature, extent and quality of proposed services to be provided by the Adviser, the Independent Trustees relied on the information they received at this meeting, as well as other information they received at the May 4, 2017 meeting and at other times. In particular, the Board considered the following:
• | Its confidence in the Adviser’s senior personnel, portfolio management, the financial condition of the Adviser and its affiliates and the Adviser’s available resources; |
• | The nature, quality and the level of long-term performance of the services provided by the Adviser to the Funds, which were expected to be provided to the Fund, including: intensive devotion to research, relationships with and supervision of third party service providers, such as the 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 to be provided to the Fund and the support services provided to the Board and, with respect to the Fund, the selection of broker/dealers for portfolio transactions; |
• | The Adviser’s investment principles and processes and the Board members’ general understanding of historical performance of the other Funds the Adviser advises as compared to similar funds managed by other advisers; |
• | The anticipated total expense ratio of the Fund; |
• | The costs of portfolio management, including the types of investments to be made for the Fund and the personnel and systems necessary for implementation of the investment strategy; and |
• | Any additional services to be provided by the Adviser. |
The Board concluded that the nature, extent and quality of the services to be provided by the Adviser to the Fund were appropriate and that they would likely benefit from those services to be provided under the Investment Advisory Agreement with the Adviser.
2. COSTS OF SERVICES PROVIDED AND PROFITS TO BE REALIZED BY THE ADVISER
As part of its consideration of the cost of services to be provided, the Board examined the fees to be charged by the Adviser as compared to the fees charged by comparable funds. The Board also discussed and considered certain services to be provided to the Fund, which include accounting, oversight of service providers, legal, regulatory, compliance, risk management and Trustee support.
In addition, the Board also considered the financial condition of the Adviser and its affiliates. Since the Fund is newly formed, had not commenced operations and the eventual aggregate amount of its assets is uncertain, the Adviser was not able to provide the Board with specific information concerning the cost of services to be provided and the expected profits to be realized by the Adviser and its affiliate from their relationships with the Fund.
The Board concluded that the proposed management fee was supportable in light of the services to be provided.
3. ECONOMIES OF SCALE AND BENEFITS TO INVESTORS
Since the Fund is newly formed, had not commenced operations and the eventual aggregate amount of the Fund’s assets, uncertain, the Adviser was not able to provide the Board with specific information concerning the extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale, if any. It was agreed that the issue would be revisited no later than when the Board next reviewed the advisory fee in connection with the renewal of the advisory contract for the Fund.
After due consideration of the above-enumerated factors, among others, the Board, including a majority of the Independent Trustees, approved the advisory agreement for the Fund for an initial term of two years.
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Table of Contents
JUNE 18
Table of Contents
June 30, 2018
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 |
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, 2018. 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 24, 2018 | Linda S. Martinson Chairman, President and Chief Operating Officer August 24, 2018 | Peggy Wong Treasurer and Chief Financial Officer August 24, 2018 |
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 Energy and Resources Fund, Baron Global Advantage Fund, Baron Real Estate Income Fund and Baron Health Care Fund series, 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 series, 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 on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC; information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-202-551-8090. A copy of the Funds’ Forms N-Q may also be obtained upon request by calling 1-800-99BARON. 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.
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Baron WealthBuilder Fund (Unaudited) | June 30, 2018 |
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 for your children, your grandchildren... and even yourself. |
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, 2018, the five largest Baron mutual funds represented 69% of Baron WealthBuilder Fund’s portfolio.
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, 2018 (Unaudited) | Baron WealthBuilder Fund |
COMPARISONOFTHECHANGEIN VALUEOF $10,000INVESTMENTIN BARON WEALTHBUILDER FUND (RETAIL SHARES)
INRELATIONTOTHE S&P 500 INDEXANDTHE MSCI ACWI INDEX
TOTAL RETURNSFORTHEPERIODENDED JUNE 30, 2018 |
| |||
Six Months and Since | ||||
Baron WealthBuilder Fund — Retail Shares1, 2 | 7.40% | |||
Baron WealthBuilder Fund — TA Shares1, 2 | 7.40% | |||
Baron WealthBuilder Fund — Institutional Shares1, 2 | 7.40% | |||
S&P 500 Index1 | 2.65% | |||
MSCI ACWI1 | (0.43% | ) |
* | Not Annualized. |
1 | The indexes are unmanaged. The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The MSCI ACWI Index is an unmanaged, free float-adjusted market capitalization weighted index reflected in US dollars that measures the equity market performance of large and mid cap securities across developed and emerging markets. The Indexes and Baron WealthBuilder Fund are with dividends, which positively impact the performance results. |
2 | 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 has reimbursed certain Fund expenses (by contract as long as BAMCO, Inc. is the Adviser to the Fund) and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. |
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Baron WealthBuilder Fund (Unaudited) | June 30, 2018 |
COUNTRY EXPOSURESASOF JUNE 30, 2018
Percent of Total Investments | ||||
United States | 80.5% | |||
China | 5.4% | |||
India | 2.6% | |||
Israel | 1.1% | |||
South Africa | 1.0% | |||
Korea | 1.0% | |||
Brazil | 0.9% | |||
Taiwan | 0.8% | |||
Japan | 0.8% | |||
Mexico | 0.8% | |||
Other | 5.1% |
SECTOR EXPOSURESASOF JUNE 30, 2018
(as a percent of total investments)
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE
For the six months ended June 30, 2018, Baron WealthBuilder Fund appreciated 7.40%1, outperforming the S&P 500 Index, which rose 2.65%, and the MSCI ACWI Index, which fell 0.43%.
Baron WealthBuilder Fund is a non-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 specialty 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. Of course, there can be no assurance that we will be successful in achieving the Fund’s investment goals.
The Fund’s investments in concentrated and high-growth segments have performed best during the period. We believe the environment continues to favor active stock picking as the elevated correlations between securities witnessed the prior few years have returned to normal levels. The economy is strong and reduced bureaucracy and advantageous tax changes have made domestic businesses more profitable. Job growth has consistently surpassed expectations and unemployment is at multi-year lows. Home prices are rising, and consumer confidence is high. Inflation is a bit elevated and interest rates are slowly rising but both appear manageable. Rising oil prices have not significantly impacted spending or GDP growth. Baron Emerging Markets Fund and Baron International Growth Fund did not perform as well in the period. Prevalent political uncertainty in many emerging markets increased the risk in these economies as has the stronger dollar. Macro factors stemming from higher oil prices, rising interest rates and protectionism across the globe pressured financial systems in these emerging markets.
The diversity of WealthBuilder investments is crucial to producing favorable risk-adjusted returns discussed above. It is unlikely all our investments will perform well (or poorly) at the same time, but we expect the diversity of WealthBuilder’s underlying Baron Funds holdings to provide less volatile returns over the long term.
Within the U.S., we continue to believe the current environment favors active stock picking, as the economy is strong and corporate earnings are solid. Abroad, while we currently believe the scope of the correction, especially in emerging countries, may be larger than we had anticipated, we are beginning to see value and opportunity emerging. We also suspect conditions could improve quickly should trade tensions de-escalate and/or the U.S. Fed temper expectations of future tightening measures.
† | 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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June 30, 2018 | Baron WealthBuilder Fund |
STATEMENT OF NET ASSETS (Unaudited)
JUNE 30, 2018
|
Shares | Cost | Value | ||||||||||
Affiliated Mutual Funds (100.02%) | ||||||||||||
Small Cap Funds (31.36%) | ||||||||||||
46,109 | Baron Discovery Fund — Institutional Shares | $ | 841,872 | $ | 973,359 | |||||||
58,675 | Baron Growth Fund — Institutional Shares | 4,134,167 | 4,516,834 | |||||||||
138,093 | Baron Small Cap Fund — Institutional Shares | 4,083,346 | 4,439,684 | |||||||||
|
|
|
| |||||||||
Total Small Cap Funds | 9,059,385 | 9,929,877 | ||||||||||
|
|
|
| |||||||||
Small to Mid Cap Funds (3.14%) | ||||||||||||
55,778 | Baron Focused Growth Fund — Institutional Shares | 901,602 | 995,079 | |||||||||
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|
| |||||||||
Mid Cap Funds (14.15%) | ||||||||||||
57,420 | Baron Asset Fund — Institutional Shares | 4,136,073 | 4,479,895 | |||||||||
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|
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| |||||||||
Large Cap Funds (7.83%) | ||||||||||||
56,445 | Baron Durable Advantage Fund — Institutional Shares | 594,684 | 582,510 | |||||||||
63,531 | Baron Fifth Avenue Growth Fund — Institutional Shares | 1,736,802 | 1,895,135 | |||||||||
|
|
|
| |||||||||
Total Large Cap Funds | 2,331,486 | 2,477,645 | ||||||||||
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| |||||||||
All Cap Funds (19.01%) | ||||||||||||
64,683 | Baron Opportunity Fund — Institutional Shares | 1,261,041 | 1,369,335 | |||||||||
80,955 | Baron Partners Fund — Institutional Shares | 4,156,759 | 4,650,077 | |||||||||
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|
|
| |||||||||
Total All Cap Funds | 5,417,800 | 6,019,412 | ||||||||||
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|
| |||||||||
International Funds (19.77%) | ||||||||||||
273,889 | Baron Emerging Markets Fund — Institutional Shares | 4,174,736 | 3,848,138 | |||||||||
40,593 | Baron Global Advantage Fund — Institutional Shares | 892,334 | 951,910 | |||||||||
60,345 | Baron International Growth Fund — Institutional Shares | 1,488,954 | 1,457,320 | |||||||||
|
|
|
| |||||||||
Total International Funds | 6,556,024 | 6,257,368 | ||||||||||
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|
| |||||||||
Specialty Funds (4.76%) | ||||||||||||
52,487 | Baron Real Estate Fund — Institutional Shares | 1,533,090 | 1,507,951 | |||||||||
|
|
|
| |||||||||
Total Affiliated Investments (100.02%) | $ | 29,935,460 | 31,667,227 | |||||||||
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| |||||||||||
Liabilities Less Cash and Other Assets (-0.02%) | (5,785 | ) | ||||||||||
|
| |||||||||||
Net Assets | $ | 31,661,442 | ||||||||||
|
| |||||||||||
Retail Shares (Equivalent to $10.74 per share based on 40,014 shares outstanding) | $ | 429,701 | ||||||||||
|
| |||||||||||
TA Shares (Equivalent to $10.74 per share based on 735,553 shares outstanding) | $ | 7,902,995 | ||||||||||
|
| |||||||||||
Institutional Shares (Equivalent to $10.74 per share based on 2,171,918 shares outstanding) | $ | 23,328,746 | ||||||||||
|
|
% | Represents percentage of net assets. |
All securities are Level 1.
See Notes to Financial Statements. | 5 |
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Baron WealthBuilder Fund | June 30, 2018 |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2018
|
Assets: | ||||
Investments in Affiliated Mutual Funds, at value* | $ | 31,667,227 | ||
Receivable for shares sold | 47,490 | |||
Due from investment adviser | 14,937 | |||
Prepaid expenses | 26,648 | |||
|
| |||
31,756,302 | ||||
|
| |||
Liabilities: | ||||
Due to custodian bank | 47,490 | |||
Distribution fees payable (Note 4) | 452 | |||
Accrued expenses and other payables | 46,918 | |||
|
| |||
94,860 | ||||
|
| |||
Net Assets | $ | 31,661,442 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 29,946,658 | ||
Undistributed (accumulated) net investment loss | (5,787 | ) | ||
Undistributed (accumulated) net realized loss on investments | (11,196 | ) | ||
Net unrealized appreciation on investments | 1,731,767 | |||
|
| |||
Net Assets | $ | 31,661,442 | ||
|
| |||
Retail Shares: | ||||
Net Assets | $ | 429,701 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 40,014 | |||
|
| |||
Net Asset Value and Offering Price Per Share | $ | 10.74 | ||
|
| |||
TA Shares: | ||||
Net Assets | $ | 7,902,995 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 735,553 | |||
|
| |||
Net Asset Value and Offering Price Per Share | $ | 10.74 | ||
|
| |||
Institutional Shares: | ||||
Net Assets | $ | 23,328,746 | ||
Shares Outstanding ($0.01 par value; indefinite shares authorized) | 2,171,918 | |||
|
| |||
Net Asset Value and Offering Price Per Share | $ | 10.74 | ||
|
| |||
*Investments in securities, at cost | $ | 29,935,460 | ||
|
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6 | See Notes to Financial Statements. |
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June 30, 2018 | Baron WealthBuilder Fund |
STATEMENTS OF OPERATIONS (Unaudited)
JUNE 30, 2018
|
For the Six Months Ended June 30, 2018 | ||||
Investment income: | ||||
Income: | ||||
Interest | $ | 10 | ||
|
| |||
Total income | 10 | |||
|
| |||
Expenses: | ||||
Distribution fees — Retail Shares (Note 4) | 451 | |||
Shareholder servicing agent fees and expenses — Retail Shares | 7 | |||
Shareholder servicing agent fees and expenses — TA Shares | 108 | |||
Shareholder servicing agent fees and expenses — Institutional Shares | 328 | |||
Reports to shareholders | 1,022 | |||
Registration and filing fees | 35,216 | |||
Custodian and fund accounting fees | 23,479 | |||
Administration fees | 15,250 | |||
Insurance expense | 2 | |||
Professional fees | 20,927 | |||
Miscellaneous expenses | 151 | |||
|
| |||
Total operating expenses | 96,941 | |||
Reimbursement of expenses by Adviser — Retail Shares (Note 4) | (1,442 | ) | ||
Reimbursement of expenses by Adviser — TA Shares (Note 4) | (22,409 | ) | ||
Reimbursement of expenses by Adviser — Institutional Shares (Note 4) | (67,293 | ) | ||
|
| |||
Net expenses | 5,797 | |||
|
| |||
Net investment income (loss) | (5,787 | ) | ||
|
| |||
Realized and unrealized gain (loss) on investments: | ||||
Net realized gain (loss) on investments sold | (11,196 | ) | ||
Change in net unrealized appreciation (depreciation) of investments | 1,731,767 | |||
|
| |||
Net gain (loss) on investments | 1,720,571 | |||
|
| |||
Net increase (decrease) in net assets resulting from operations | $ | 1,714,784 | ||
|
|
See Notes to Financial Statements. | 7 |
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Baron WealthBuilder Fund | June 30, 2018 |
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
|
For the Six Months Ended June 30, 2018 | For the Period Ended December 31, 20171 | |||||||
Increase (Decrease) in Net Assets: | ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (5,787 | ) | $ | (19 | ) | ||
Net realized gain (loss) | (11,196 | ) | — | |||||
Change in net unrealized appreciation (depreciation) | 1,731,767 | — | ||||||
|
|
|
| |||||
Increase (decrease) in net assets resulting from operations | 1,714,784 | (19 | ) | |||||
|
|
|
| |||||
Capital share transactions: | ||||||||
Proceeds from the sale of shares — Retail Shares | 1,094,902 | 33,040 | ||||||
Proceeds from the sale of shares — TA Shares | 7,072,840 | 1,000,040 | ||||||
Proceeds from the sale of shares — Institutional Shares | 18,567,509 | 3,411,273 | ||||||
Cost of shares redeemed — Retail Shares | (722,721 | ) | — | |||||
Cost of shares redeemed — TA Shares | (510,206 | ) | — | |||||
|
|
|
| |||||
Increase (decrease) in net assets derived from capital share transactions | 25,502,324 | 4,444,353 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets | 27,217,108 | 4,444,334 | ||||||
|
|
|
| |||||
Net Assets: | ||||||||
Beginning of period | 4,444,334 | — | ||||||
|
|
|
| |||||
End of period | $ | 31,661,442 | $ | 4,444,334 | ||||
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|
|
| |||||
Undistributed net investment income (accumulated net investment loss) at end of period | $ | (5,787 | ) | $ | — | |||
|
|
|
| |||||
Capital share transactions — Retail Shares | ||||||||
Shares sold | 105,033 | 3,304 | ||||||
Shares redeemed | (68,323 | ) | — | |||||
|
|
|
| |||||
Net increase (decrease) | 36,710 | 3,304 | ||||||
|
|
|
| |||||
Capital share transactions — TA Shares | ||||||||
Shares sold | 687,178 | 100,004 | ||||||
Shares redeemed | (51,629 | ) | — | |||||
|
|
|
| |||||
Net increase (decrease) | 635,549 | 100,004 | ||||||
|
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|
| |||||
Capital share transactions — Institutional Shares | ||||||||
Shares sold | 1,830,791 | 341,127 | ||||||
|
|
|
| |||||
Net increase (decrease) | 1,830,791 | 341,127 | ||||||
|
|
|
|
1 | For the period December 29, 2017 (commencement of operations) through December 31, 2017. |
8 | See Notes to Financial Statements. |
Table of Contents
June 30, 2018 | 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 an open-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 ten series (the “Funds”). This report covers only the Baron WealthBuilder Fund (the “Fund”), which commenced operations on December 29, 2017. The Fund’s investment objective is capital appreciation. The Fund is a non-diversified fund because it invests, at any given time, in the securities of a select number of Baron mutual funds (the “Underlying Funds”), representing specific investment strategies. 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- to mid-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 a 12b-1 fee or make revenue sharing payments, to include payments to sub-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 through fee-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 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 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”). 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 held by the Underlying Funds 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 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 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.
Non-U.S. equity securities held by the Underlying Funds are valued on the basis of their most recent closing market prices and translated into U.S. dollars at the NAV Calculation Time, except under the circumstances described below. Most foreign markets close before the NAV Calculation Time. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at the NAV Calculation Time. As a result, the Adviser may use a third-party pricing service to assist in determining fair value of foreign securities. This service utilizes a systematic methodology in making fair value estimates. 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. The Adviser cannot predict how often it will use closing prices or how often it will adjust those prices. As a means of evaluating its fair value process, the Adviser routinely compares closing market prices, the next day’s opening prices in the same markets, and the adjusted prices. Other mutual funds may adjust the prices of their securities by different amounts.
9
Table of Contents
Baron WealthBuilder Fund | June 30, 2018 |
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 the ex-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 gain. 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 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 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 is marked-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, 2018.
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 hold non-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, 2018 were as follows:
Fund | Purchases | Sales | ||||||
Baron WealthBuilder Fund | $ | 25,723,210 | $ | 220,907 |
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 Rule 12b-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.
10
Table of Contents
June 30, 2018 | Baron WealthBuilder Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
5. 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.
6. 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 in open-end registered investment companies are valued at NAV and are classified in the fair value hierarchy as Level 1.
7. 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, 2018, the components of net assets on a tax basis were as follows:
Cost of investments | $ | 29,935,460 | ||
|
| |||
Gross tax unrealized appreciation | 2,127,312 | |||
Gross tax unrealized depreciation | (395,545 | ) | ||
|
| |||
Net tax unrealized appreciation | 1,731,767 | |||
Accumulated net investment loss | (5,787 | ) | ||
Accumulated net realized loss | (11,196 | ) | ||
Paid-in capital | 29,946,658 | |||
|
| |||
Net Assets | $ | 31,661,442 | ||
|
|
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 has concluded that no provision for federal income tax is required in the Fund’s financial statements. At June 30, 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) are subject to examination by the Internal Revenue Service and state departments of revenue.
8. OWNERSHIP CONCENTRATION
As of June 30, 2018 the officers, trustees and portfolio managers owned, directly or indirectly, 20.84% 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.
11
Table of Contents
Baron WealthBuilder Fund | June 30, 2018 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
9. TRANSACTIONS IN “AFFILIATED” COMPANIES
The Fund invests in the Institutional Shares of the Underlying Funds which are considered to be affiliated with the Fund.
Name of Issuer | Value at December 31, 2017 | Purchase Cost | Sales Proceeds | Change in Net Unrealized Appreciation (Depreciation) | Realized (Losses) | Dividend Income | Shares Held at June 30, 2018 | Value at June 30, 2018 | % of Net Assets at June 30, 2018 | |||||||||||||||||||||||||||
“Affiliated” Company as of June 30, 2018: |
| |||||||||||||||||||||||||||||||||||
Baron Asset Fund, | $ | 666,653 | $ | 3,500,714 | $ | 30,284 | $ | 343,822 | $ | (1,010 | ) | $ | — | 57,420 | $ | 4,479,895 | 14.15 | |||||||||||||||||||
Baron Discovery Fund, Institutional Shares | 177,774 | 674,483 | 9,884 | 131,487 | (501 | ) | — | 46,109 | 973,359 | 3.07 | ||||||||||||||||||||||||||
Baron Durable Advantage Fund, Institutional Shares | — | 599,133 | 4,204 | (12,174 | ) | (245 | ) | — | 56,445 | 582,510 | 1.84 | |||||||||||||||||||||||||
Baron Emerging Markets Fund, Institutional Shares | 666,653 | 3,540,792 | 30,123 | (326,598 | ) | (2,586 | ) | — | 273,889 | 3,848,138 | 12.16 | |||||||||||||||||||||||||
Baron Fifth Avenue Growth Fund, Institutional Shares | 222,218 | 1,528,206 | 12,826 | 158,333 | (796 | ) | — | 63,531 | 1,895,135 | 5.99 | ||||||||||||||||||||||||||
Baron Focused Growth Fund, Institutional Shares | 111,109 | 797,174 | 6,466 | 93,477 | (215 | ) | — | 55,778 | 995,079 | 3.14 | ||||||||||||||||||||||||||
Baron Global Advantage Fund, Institutional Shares | — | 899,262 | 6,466 | 59,576 | (462 | ) | — | 40,593 | 951,910 | 3.01 | ||||||||||||||||||||||||||
Baron Growth Fund, | 666,653 | 3,498,394 | 30,070 | 382,667 | (810 | ) | — | 58,675 | 4,516,834 | 14.27 | ||||||||||||||||||||||||||
Baron International Growth Fund, Institutional Shares | 199,996 | 1,300,361 | 10,724 | (31,634 | ) | (679 | ) | — | 60,345 | 1,457,320 | 4.60 | |||||||||||||||||||||||||
Baron Opportunity Fund, Institutional Shares | 66,665 | 1,204,644 | 9,860 | 108,294 | (408 | ) | — | 64,683 | 1,369,335 | 4.32 | ||||||||||||||||||||||||||
Baron Partners Fund, Institutional Shares | 666,653 | 3,521,757 | 30,284 | 493,318 | (1,367 | ) | — | 80,955 | 4,650,077 | 14.69 | ||||||||||||||||||||||||||
Baron Real Estate Fund, Institutional Shares | 333,326 | 1,210,877 | 10,158 | (25,139 | ) | (955 | ) | — | 52,487 | 1,507,951 | 4.76 | |||||||||||||||||||||||||
Baron Small Cap Fund, Institutional Shares | 666,653 | 3,447,413 | 29,558 | 356,338 | (1,162 | ) | — | 138,093 | 4,439,684 | 14.02 | ||||||||||||||||||||||||||
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$ | 4,444,353 | $ | 25,723,210 | $ | 220,907 | $ | 1,731,767 | $ | (11,196 | ) | $ | — | $ | 31,667,227 | ||||||||||||||||||||||
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12
Table of Contents
June 30, 2018 | 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) on investments ($) | Total from investment operations ($) | 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, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 10.00 | (0.02 | )2 | 0.76 | 0.74 | 0.00 | 0.00 | 0.00 | 10.74 | 7.40 | 4,7 | 1.10 | 6 | (0.80 | )6 | 0.30 | 6 | (0.15 | )6 | 0.5 | 1.06 | 7 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (0.29 | )5,6 | 0.30 | 5,6 | (0.30 | )5,6 | 0.0 | 0.00 | ||||||||||||||||||||||||||||||||||||||
TA SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 10.00 | (0.00 | )2,3 | 0.74 | 0.74 | 0.00 | 0.00 | 0.00 | 10.74 | 7.40 | 4,7 | 0.93 | 6 | (0.88 | )6 | 0.05 | 6 | (0.02 | )6 | 7.9 | 1.06 | 7 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (0.29 | )5,6 | 0.05 | 5,6 | (0.05 | )5,6 | 3.4 | 0.00 | ||||||||||||||||||||||||||||||||||||||
INSTITUTIONAL SHARES |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 10.00 | (0.00 | )2,3 | 0.74 | 0.74 | 0.00 | 0.00 | 0.00 | 10.74 | 7.40 | 4,7 | 0.90 | 6 | (0.85 | )6 | 0.05 | 6 | (0.02 | )6 | 23.3 | 1.06 | 7 | ||||||||||||||||||||||||||||||||||||||
Period Ended December 31, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (0.29 | )5,6 | 0.05 | 5,6 | (0.05 | )5,6 | 1.0 | 0.00 |
1 | For the period December 29, 2017 (commencement of operations) through 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, 2018 |
As a shareholder of the Fund, 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 Rule 12b-1 fees, long-term shareholders may indirectly pay more than the maximum permitted front-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, 2018 and held for the six months ended June 30, 2018.
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, 20181
Actual Total Return | Beginning Account Value January 1, 2018 | Ending Account Value June 30, 2018 | Annualized Expense Ratio | Expenses Paid During the Period2 | ||||||||||||||||
Baron WealthBuilder Fund — Retail Shares | 7.40 | % | $ | 1,000.00 | $ | 1,074.00 | 3 | 0.30 | %4 | $ | 1.54 | |||||||||
Baron WealthBuilder Fund — TA Shares | 7.40 | % | $ | 1,000.00 | $ | 1,074.00 | 3 | 0.05 | %4 | $ | 0.26 | |||||||||
Baron WealthBuilder Fund — Institutional Shares | 7.40 | % | $ | 1,000.00 | $ | 1,074.00 | 3 | 0.05 | %4 | $ | 0.26 |
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, 2018
Hypothetical Annualized Total Return | Beginning Account Value January 1, 2018 | Ending Account Value June 30, 2018 | Annualized Expense Ratio | Expenses Paid During the Period2 | ||||||||||||||||
Baron WealthBuilder Fund — Retail Shares | 5.00 | % | $ | 1,000.00 | $ | 1,023.31 | 3 | 0.30 | %4 | $ | 1.51 | |||||||||
Baron WealthBuilder Fund — TA Shares | 5.00 | % | $ | 1,000.00 | $ | 1,024.55 | 3 | 0.05 | %4 | $ | 0.25 | |||||||||
Baron WealthBuilder Fund — Institutional Shares | 5.00 | % | $ | 1,000.00 | $ | 1,024.55 | 3 | 0.05 | %4 | $ | 0.25 |
1 | Assumes reinvestment of all dividends and capital gain distributions, if any. |
2 | 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. |
3 | Ending account value assumes the return earned after waiver and would have been lower if a portion of the expenses had not been waived. |
4 | Annualized expense ratios are adjusted to reflect fee waiver. |
14
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Table of Contents
JUNE 18
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 for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-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 Rule 30a-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 Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant’s second fiscal quarter of 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. 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 Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as a part of EX-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 of EX-99.906CERT.
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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: August 30, 2018 |
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: August 30, 2018 | ||
By: | /s/ Peggy Wong | |
Peggy Wong | ||
Treasurer and Chief Financial Officer | ||
Date: August 30, 2018 |