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Baron Real Estate Fund Update
Jeff Kolitch, Vice President, 

Portfolio Manager, M.B.A.
July 18, 2016 at 4:15 PM EDT

Important Additional Information

Baron Real Estate Fund’s annualized returns for the Retail Shares as of June 30, 2016: 1-year, (9.11)%; 5-years, 12.61%; Since Inception (12/31/09), 14.87%. Annual expense ratio for the Retail Shares as of December 31, 2015 was 1.31%.

Baron Real Estate Fund’s annualized returns for the Institutional Shares as of June 30, 2016: 1-year, (8.87)%; 5-years, 12.89%; Since Inception (12/31/09), 15.16%. Annual expense ratio for the Institutional Shares as of December 31, 2015 was 1.06%.

The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund and can be obtained from the Fund's distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing.

The discussion of market trends and companies throughout this report are not intended as advice to any person regarding the advisability of investing in any particular security. Some of our comments are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views are a reflection of our best judgment at the time of the publication of this report and are subject to change any time based on market and other conditions, and we have no obligation to update them.

Baron Real Estate Fund is non-diversified, which means it may invest a greater percentage of its assets in fewer issues, and which increases the volatility of its returns and exposes it to potentially greater losses in a given period. In addition to general market conditions, the value of the Fund will be affected by the strength of the real estate markets. Factors that could affect the value of the Fund’s holdings include the following: overbuilding and increased competition; increases in property taxes and operating expenses; declines in the value of real estate; lack of availability of equity and debt financing to refinance maturing debt; vacancies due to economic conditions and tenant bankruptcies; losses due to costs resulting from environmental contamination and its related cleanup; changes in interest rates; changes in zoning laws, casualty or condemnation losses; variations in rental income; changes in neighborhood values; and functional obsolescence and appeal of properties to tenants. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

The top 10 holdings for the Baron Real Estate Fund as of June 30, 2016 are as follows:

Holder % Holding
MGM Resorts International 6.1
Mohawk Industries, Inc. 5.6
InterXion Holding N.V. 5.4
Gaming and Leisure Properties, Inc. 5.2
CBRE Group, Inc. 5.1
American Tower Corp. 4.1
Equinix, Inc. 4.0
Macquarie Infrastructure Company Trust 4.0
MGM Growth Properties LLC 3.9
Hilton Worldwide Holdings, Inc. 3.6