Dear International Growth Fund Shareholder:
Baron International Growth Fund (MUTF:BINIX, the Fund) declined 5.90% (Institutional Shares) during the final quarter of 2024, while its primary benchmark, the MSCI ACWI ex USA Index (the Benchmark), retreated 7.60%. The MSCI ACWI ex USA IMI Growth Index (the Proxy Benchmark) lost 7.79% for the quarter. The Fund outperformed both the Benchmark and the Proxy Benchmark during a difficult quarter for non-U.S. equity returns. For the full year 2024, the Fund gained 4.35%, modestly trailing the Benchmark and the Proxy Benchmark, which were up 5.53% and 4.81%, respectively, in the period. While we view our full-year results as respectable though not inspiring, we were pleased that a solid second half of outperformance may mark a longer-term inflection point for all-cap international growth strategies after an extended period of underperformance.
The principal catalyst driving global capital markets during the quarter was the U.S. election outcome, with the anticipated financial impact of Donald Trump’s campaign initiatives quickly being discounted. Markets anticipate immigration reform, an extension of U.S. tax legislation passed in 2017 with perhaps even lower corporate tax rates, cuts/efficiencies in domestic fiscal spending, and tariffs or other protectionist trade measures that would also reduce the U.S. current account deficit. Much of this policy mix would be dollar positive in the short term, and the dollar abruptly rallied roughly 6% to a two-year high from pre-election into the new year. Unlike 2016 when Trump’s victory was unexpected, betting sites were clearly presaging the outcome this time around, and in our view, the market was already pricing in a decent likelihood that Trump’s policies would be enacted. Further, Trump’s governing style and policy mix were much more of a mystery in late 2016, while in our view, the greater mystery today is whether Trump’s policies in a second term will actually live up to what the market has already discounted. Finally, relative multiples on U.S. and non-U.S. equities are very different today than when Trump was first elected, a fact that we believe sets up an attractive contrarian opportunity, particularly for longer-term and patient investors. We believe post-election market momentum may already be overdone, which we detail further in the Outlook section of this letter. We remain optimistic that international equities currently offer an attractive long-term entry point, with valuations and relative earnings expectations reaching fresh multi-decade lows in the aftermath of the U.S. presidential election, amid elevated investor skepticism. While returns on such equities have certainly lagged, we see multiple forward-looking catalysts that should enhance relative earnings growth potential, and as always, we are confident that our diversified portfolio of well-positioned and well-managed bottom-up investments can perform in the years ahead.
Table I. Performance Annualized for periods ended December 31, 2024
Baron International Growth Fund Retail Shares1,2 |
Baron International Growth Fund Institutional Shares1,2,3 |
MSCI ACWI ex USA Index1 |
MSCI ACWI ex USA IMI Growth Index1 |
|
Three Months4 |
(5.94)% |
(5.90)% |
(7.60)% |
(7.79)% |
One Year |
4.11% |
4.35% |
5.53% |
4.81% |
Three Years |
(6.77)% |
(6.54)% |
0.82% |
(2.93)% |
Five Years |
3.01% |
3.26% |
4.10% |
3.47% |
Ten Years |
5.59% |
5.85% |
4.80% |
5.39% |
Fifteen Years |
6.31% |
6.58% |
4.68% |
5.39% |
Since Inception(December 31, 2008) |
8.38% |
8.65% |
6.67% |
7.32% |
Performance listed in the above table is net of annual operating expenses. The gross annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2023 was 1.26% and 0.98%, but the net annual expense ratio was 1.20% and 0.95% (net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser waives and/or reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2035, unless renewed for another 11-year term and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit BaronCapitalGroup.com or call 1-800-99-BARON. (1)The MSCI ACWI ex USA Index Net (‘USD’) is designed to measure the equity market performance of large and mid cap securities across 22 of 23 Developed Markets countries (excluding the US) and 24 Emerging Markets countries. The MSCI ACWI ex USA IMI Growth Index Net (‘USD’) is designed to measure the performance of large, mid and small cap growth securities exhibiting overall growth style characteristics across 22 of 23 Developed Markets countries (excluding the U.S.) and 24 Emerging Markets countries. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. The indexes and the Fund include reinvestment of dividends, net of foreign withholding taxes, which positively impact the performance results. The indexes are unmanaged. Index performance is not Fund performance. Investors cannot invest directly in an index.(2)The performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.(3)Performance for the Institutional Shares prior to 5/29/2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns for the Institutional Shares prior to 5/29/2009 did not reflect this fee, the returns would be higher.(4)Not annualized. |
For 2024, we modestly underperformed both the Benchmark and our all-cap international growth Proxy Benchmark. Broadly, the underperformance was primarily attributable to our exposure to small-cap stocks, with select holdings (Watches of Switzerland Group PLC, AMG Critical Materials N.V., Befesa S.A., and Meyer Burger Technology AG) experiencing material corrections during the year. From a sector or theme perspective, our underweight positioning together with adverse stock selection effect in the Financials sector, driven by a few positions across multiple themes (XP Inc., BNP Paribas S.A., B3 S.A. – Brasil, Bolsa, Balcao, EQT AB, and Bajaj Finance Limited), was the largest detractor to relative performance for the year.
In addition, poor stock selection in the Energy sector, owing largely to a meaningful drawdown in Waga Energy SA, a non-traditional energy business that is part of our sustainability/ESG theme, also stood out as a detractor. Last, adverse stock selection effect in the Communication Services sector, relating to investments in our digitization theme (LY Corporation, Universal Music Group N.V., and Baidu, Inc.) also weighed on relative results. Partially offsetting the above, favorable stock selection across multiple themes within Consumer Discretionary (Trent Limited, Industria de Diseno Textil, S.A., Coupang, Inc., and Fuyao Glass Industry Group Co., Ltd.) and Health Care (argenx SE and Max Healthcare Institute Limited) were positive contributors to relative performance during the year.
From a country perspective for calendar year 2024, poor stock selection effect in the U.K., France, Switzerland and Germany, primarily attributable to the above-mentioned small-cap investments, drove the majority of relative underperformance. Partially offsetting the above was our overweight positioning combined with solid stock selection in India, along with favorable stock selection effect in Korea, Taiwan, and the Netherlands. In addition, positive allocation effect in Israel and our active exposure to the U.S. also bolstered relative results. As expressed in past letters, we are excited about the productivity enhancing economic reforms in India that are kickstarting a virtuous investment cycle and positioning the country as the fastest growing large economy in the world this decade. While Korean equities experienced a meaningful correction during the year (Korea down 23.4% in the Benchmark), we are pleased with the strong absolute returns (and relative gains) that were generated by our investments in the country.
For the fourth quarter, we outperformed the Benchmark, as well as our Proxy Benchmark. Favorable stock selection effect within the Health Care sector, principally our biotechnology/diagnostics theme (argenx SE, Zai Lab Limited, and Stevanato Group S.p.A.), and the Information Technology sector, related to various themes (Wix.com Ltd., Kaynes Technology India Limited, CyberArk Software Ltd., and eMemory Technology Inc.). Our investments in the Consumer Staples and Consumer Discretionary sectors were other key drivers of positive relative performance. Partly offsetting the above was adverse allocation and stock selection effect in the Materials and Financials sectors, primarily driven by some of our best-in-class/high-quality growth investments (DSM-Firmenich AG, Symrise AG, Lynas Rare Earths Limited, and Arch Capital Group Ltd.). From a country perspective, solid stock selection effect in Korea, Spain, China, and India was the key contributor to relative performance during the quarter, while adverse stock selection in the U.K. and Germany detracted. We are encouraged by our performance from the relative low in April, and we enter 2025 cautiously optimistic as we believe the portfolio is positioned to continue to recover lost ground.
Top Contributors to Performance
Table II. Top contributors to performance for the quarter ended December 31, 2024
Contribution to Return % |
|
eDreams ODIGEO SA (OTCPK:EDDRF) |
0.48 |
Wix.com Ltd. (WIX) |
0.43 |
argenx SE (ARGX) |
0.35 |
HD Hyundai Heavy Industries Co., Ltd. (OTCPK:MHVYF) |
0.35 |
Kaynes Technology India Limited |
0.30 |
Spain-based eDreams ODIGEO SA is an online travel agency with a subscription-based savings program (Prime) for flights and hotels. Shares were up during the quarter, reflecting strength with 6.5 million Prime members, inflecting profitability, and reiteration of 2024’s financial targets, coupled with a new €50 million share buyback authorization. As Prime matures, we are seeing profitability improve due to lower marketing spend on customer acquisition. The product roadmap should also materially improve the customer value proposition, with the addition of hotels (particularly in Europe’s fragmented hotel landscape) and generative AI enhancements (which the team has been working on for years). Given its strong customer acquisition, impressive pipeline of new products, and plans for the attractive hotel market, we retain conviction in eDreams’ long-term opportunity.
Wix.com Ltd. provides cloud-based software that helps micro-businesses build and maintain websites. Shares increased on reports that the company surpassed its mid-term 25% target a year ahead of schedule, with free cash flow margins of over 28%, up nearly 13 points year-over-year. Wix is marching steadily toward its goal of 35% free cash flow margins. After years of penalizing near-term profitability through investments in its Partners segment and sales and marketing, Wix is now leveraging its maturing product and leading brand name to acquire incremental users organically while sustaining rapid revenue growth in its Partners segment. Although advancements in AI remain a risk, we believe AI will be a net benefit for Wix. The company’s AI offerings, which it has been investing in for five years, are showing promising results with a 13% higher conversion rate. We remain shareholders.
Argenx SE is a biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Shares increased as Vyvgart continued its launch in generalized myasthenia gravis and got off to a strong start in chronic inflammatory demyelinating polyneuropathy. In addition, argenx recently announced that Vyvgart appears to be efficacious in three subsets of myositis (a group of rare autoimmune conditions that cause muscle inflammation) in a Phase 2 clinical trial and moved the drug into Phase 3. Over time, we expect Vyvgart to demonstrate efficacy in an ever-expanding range of autoantibody-driven autoimmune conditions. We expect Vyvgart to continue to launch well in its existing indications and the addressable market to expand as the drug is developed in additional indications.
Top Detractors from Performance
Table III. Top detractors from performance for the quarter ended December 31, 2024
DSM-Firmenich AG is a Swiss-Dutch company specializing in chemicals, nutrition, and materials. Shares fell due to concerns about the separation of the animal health and nutrition segment and its valuation. We remain investors. DSM is one of the leading suppliers of essential nutrients (such as vitamins), enzymes, consumer ingredients, and personal care products. We anticipate the valuation will align more closely with that of its pure-play ingredients and flavors and fragrances peers following the planned divestment of its animal health and nutrition segment. We also expect DSM’s innovation pipeline – featuring eco-friendly products such as feed additives that reduce cattle methane emissions and algae-based oil that addresses overfishing – to contribute over $1 billion in revenue over time.
Symrise AG is one of the largest manufacturers in the global flavor and fragrance industry, providing flavor and scent inputs for consumer staples products, including packaged food, beverages, and household and personal care. Shares fell on weaker-than-expected full-year guidance for revenue growth and a slowdown in the Fine Fragrance segment. We remain investors. Demand for processed foods and convenience items that use Symrise products is rising in emerging economies. As one of four global companies that dominate the flavor and fragrance industry, we also think Symrise stands to profit from industry consolidation and will continue to gain share from smaller local companies.
Shares of credit bureau Experian plc fell due to concerns about a cyclical slowdown in consumer credit activity due to higher interest rates. Despite a drop of 100 basis point in the overnight rate since the Federal Reserve (the Fed) began cutting rates in September, long-term interest rates as represented by the 10-year Treasury yield (US10Y) have risen by 100 basis points, thereby weighing on the outlook for consumer lending. Nevertheless, Experian reported solid half-year financial results with 7% organic growth, and management slightly raising their full-year margin guidance. Over the medium term, management expects organic revenue growth in the high single digits, ongoing margin expansion, and lower capital intensity. We continue to own the stock because of Experian’s long runway for growth and formidable competitive advantages.
Portfolio Structure
Table IV. Top 10 holdings in Developed Countries as of December 31, 2024
Table V. Top five holdings in Emerging Countries as of December 31, 2024
Percent of Net Assets (%) |
|
Taiwan Semiconductor Manufacturing Company Limited (TSM) |
3.6 |
InPost S.A. (OTCPK:INPOY) |
2.4 |
HD Korea Shipbuilding & Offshore Engineering Co., Ltd. |
2.3 |
Trent Limited |
2.0 |
Full Truck Alliance Co. Ltd. (YMM) |
1.6 |
Table VI. Percentage of securities in Developed Markets as of December 31, 2024
Percent of Net Assets (%) |
|
Japan |
10.6 |
Netherlands |
7.7 |
United Kingdom |
7.7 |
France |
7.4 |
Israel |
5.1 |
Canada |
4.6 |
Spain |
4.5 |
United States |
4.2 |
Sweden |
1.9 |
Germany |
1.9 |
Australia |
1.4 |
Ireland |
1.3 |
Switzerland |
1.2 |
Denmark |
1.0 |
Hong Kong |
0.9 |
Italy |
0.9 |
Table VII. Percentage of securities in Emerging Markets as of December 31, 2024
Percent of Net Assets (%) |
|
India |
9.8 |
China |
8.5 |
Korea |
5.9 |
Taiwan |
4.2 |
Poland |
3.2 |
Brazil |
1.4 |
Peru |
1.0 |
The table above does not include the Fund’s exposure to Russia (less than 0.1%) because the country falls outside of MSCI’s developed/emerging/frontier framework. |
Exposure by Market Cap: The Fund may invest in companies of any market capitalization, and we strive to maintain broad diversification by market cap. At the end of the fourth quarter of 2024, the Fund’s median market cap was $20.7 billion. We were invested 70.2% in large- and giant-cap companies, 20.6% in mid-cap companies, and 5.6% in small- and micro-cap companies, as defined by Morningstar, with the remainder in cash.
Recent Activity
During the fourth quarter, we added a handful of new investments toward existing themes, while also increasing exposure to several positions that we established in earlier periods. We continue our endeavor to add to our highest conviction ideas.
As part of our global security theme, we initiated positions in BAE Systems plc (OTCPK:BAESF) and TotalEnergies SE (TTE). BAE is a U.K.-based international defense, aerospace, and security company. As one of the world’s largest defense contractors, the company supplies a highly diversified range of products and services for air, land, space, and naval forces, as well as advanced electronics, security, and information technology solutions. In our view, BAE is well positioned to benefit from rising global defense spending, particularly in Europe in the aftermath of Russia’s invasion of Ukraine, among other geopolitical conflicts. We also expect multi-year growth opportunities to arise in the Indo-Pacific region, supported by technology partnerships in the development of submarine and next generation combat aircraft systems.
TotalEnergies is an integrated energy company that produces and markets fuels, natural gas, and electricity. The conflict in Ukraine highlighted the need to reorient supply chains away from politically risky jurisdictions such as Russia. Higher energy security in the near term requires increased supply of hydrocarbons, particularly of liquefied natural gas (LNG). TotalEnergies is one of the largest and lowest cost producers of LNG, with one of the industry leading project growth pipelines and LNG marketing networks. In addition, the company is making significant investments in integrated power supply chains by building a large portfolio of renewable, and low carbon power projects. We also like the improvements related to shareholder cash returns and growing ESG initiatives. TotalEnergies has set out several goals aligned with the Paris agreement including a 40% reduction in Scope 1 and 2 emissions by 2030 and becoming a net zero business by 2050.
During the quarter, we initiated an investment in Airbus SE (OTCPK:EADSF), a global leader in aerospace & defense. The company’s commercial division, along with Boeing, is a leader in commercial aircraft manufacturing, a highly concentrated duopoly market. Airbus has been impacted by post-COVID supply-chain disruptions including reduced availability of engines and labor cost inflation which has resulted in significant delays in new aircraft deliveries and has pressured Airbus’ earnings over the past two years. We expect supply chains, particularly for aircraft engines, to normalize in 2025, leading to significant improvement in aircraft deliveries and resulting in better operating margins and free cash flow. We also like Airbus’ market share growth opportunity in the narrowbody jet segment, supported by a near decade-long order backlog.
We increased exposure to our sustainability/ESG theme by building a position in Lundin Mining Corporation (OTCPK:LUNMF). The company, headquartered in Canada, is a large copper producer enabling the electrification of transportation and growth in renewable power demand. We are bullish on the long-term growth outlook for copper and expect a multi-year deficit driven by structural demand from electrification. Electric vehicles on average require four times the amount of copper compared to internal combustion engine vehicles, while wind/solar power plants use 5 times the amount of copper per megawatt compared to conventional power plants. We admire Lundin’s portfolio transition, the copper production growth opportunity, and the recently announced transformational joint venture partnership with BHP to develop Vicuna District copper deposits in Argentina.
Finally, we added to several of our existing positions during the quarter, most notably WiseTech Global Limited (OTCPK:WTCHF), Waga Energy SA, JD.com, Inc. (JD), Ajinomoto Co., Inc., Pernod Ricard SA (OTCPK:PDRDF), ODDITY Tech Ltd. (ODD), and Tokyo Electron Limited (OTCPK:TOELF).
In our endeavor to concentrate our holdings where we have highest conviction in quality and return potential, we exited the Fund’s positions in Endava plc (DAVA), Befesa S.A. (OTCPK:BFSAF), and Shenzhen Mindray Bio-Medical Electronics Co., Ltd. during the quarter.
Outlook
In our third quarter letter, we posited that the combination of a Fed easing cycle, Japanese interest rate normalization, and enhanced stimulus, liquidity, and property/financial sector support in China had likely triggered a bottom in international equity relative performance. While we noted that the upcoming U.S. election presented risks to non-U.S. equities, we cautioned that most of these risks were reasonably well understood and discounted after a multi-year, relative bear market. Not unexpected, and similar to 2016, the immediate reaction to Trump’s victory was a strong U.S. dollar rally, while associated investor enthusiasm towards U.S. equities more than reversed prior quarter underperformance and powered U.S. equity relative multiples to multi-decade highs. Unlike 2016, when non-U.S. equities were priced at the long-term median relative earnings multiple prior to Trump’s unexpected win, this time international equities were already trading at a 20-year low, with post-election momentum driving emerging market equities in particular to a record discount notwithstanding the fact that Trump was favored to win by the real-money oddsmakers. As we enter 2025, U.S. equities trade at approximately 1.6 times the multiple of international equities (ex-U.S.), or roughly 21 times forward earnings versus 13 times for international, suggesting to us that the horse of U.S. exceptionalism has already left the barn, and we maintain that there is likely more upside than downside in non-U.S. relative performance looking forward from here.
Taking the 2016 case study a bit further, we note that the U.S. dollar index (USDOLLAR,DXY) rallied roughly 5% in the immediate aftermath of that election (in a nearly identical pattern to the 6% rally from Nov. 5, 2024 to Jan. 2, 2025), topping in early January and abruptly reversing the entire gain on the way to a 14% decline from the post-election peak by early 2018. In 2017, international equities rallied 27.2%, while EM equities appreciated 37.3%, both far exceeding the 21.8% return of U.S. equities. Given the larger initial discount now, and catalysts noted above, we would not be surprised to see a similar relative scenario unfold in the coming quarters, particularly if the Trump administration prioritizes domestic immigration and taxes over protectionist trade policy and tariffs in the initial months, perhaps over concerns of stoking politically sensitive inflation. Further, potential military/geopolitical de-escalation or evidence that threats of tariffs would be used as negotiating leverage could trigger a dramatic reduction in risk premium, particularly benefitting non-U.S. assets and currencies, while any confirmation of recent press speculation that Trump may temper campaign rhetoric when transitioning to actual governing would also likely spark some mean reversion in relative performance and narrow the current historic premium attributed to U.S. equities.
Moving to fundamentals and earnings outlook, we remain constructive regarding the outlook for improving relative earnings growth in international and EM jurisdictions. First, as we have consistently mentioned in prior communications, most non-U.S. jurisdictions have less concern regarding inflation and are therefore in a position to deliver more monetary easing than the U.S. Fed, particularly if the dollar peaks and reverses as the period following Trump’s first victory in 2016. As we have discussed in recent letters, Taiwan, Korea, and even Europe have many strategically important constituents benefitting from the accelerating growth of AI, advanced computing, leading edge semiconductor design/manufacturing, and data center deployment, and we have focused our resources and added exposure here over the past year. Further, while European politics and geopolitics have led to currency pressure and fiscal prudence in recent quarters, the vast majority of our investments are in global facing companies, rather than purely domestic, which materially dilutes such concerns and helps drive global export opportunity. We see a mean reversion in relative multiples in Europe and the U.K. as likely over the medium term. In addition, Europe’s global security and defense priorities remain center stage, and we believe spending in these areas will remain elevated.
India, our second-largest country allocation after Japan, continues to ride a wave of productivity and secular growth, and we continue to expect sustainable double-digit earnings gains across the economy, with of course considerably greater potential for the quality leaders and innovators that we own. China, still a top three weight in the Benchmark at year-end, remains challenged by the property sector slowdown and geopolitical shifts, though, as outlined in our previous letter, has recently materially increased stimulus and support efforts, demonstrating a will and commitment to economic growth, consumer confidence, and financial stability, which we believe will eventually result in improving investor perception and declining risk premium. In addition to the extensive support measures outlined in our previous letter, during the fourth quarter several fresh initiatives were announced, including an RMB 10 trillion local government debt swap program, a higher fiscal deficit target for 2025, a doubling of funds for the consumer goods trade-in program, and a civil servant wage hike, alongside quite dovish language suggesting a more accommodative regulatory environment and posture towards the private sector. We maintain our view that the policy pivot last September marks a key inflection point, though we believe leadership is holding back firepower and the makings of an “all-in” signal should the Trump administration launch aggressive trade measures early in the new term.
After India, Korea was the largest source of outperformance for our strategies in 2024 – entirely driven by bottom-up stock selection and in particular our shipbuilding/defense/global security concentration. We remain quite enthusiastic regarding our holdings and, notwithstanding recent political turmoil, we see this jurisdiction as perhaps the most likely out of favor, self-help story within the international asset class. Korea is penalized dearly for a poor corporate governance record, a good portion of which has evolved from misguided policy; a world-leading inheritance tax incents the Chaebol-class to manipulate the value of or restructure their publicly traded holdings, often to the detriment of minority shareholders. Ironically, we see the recent political events, impeachment and likely change in leadership party as a potential positive catalyst, as the liberal-leaning party may actually take the harder line against Chaebol resistance to governance reform. We remain overweight and see very attractive risk/ reward for our holdings in this market.
We look forward to what we anticipate will likely be an exciting and volatile year ahead, one that we suspect will offer many intriguing investment opportunities for long-term investors.
Thank you for investing in the Baron International Growth Fund.
Sincerely,
Michael Kass | Portfolio Manager
The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. The Adviser waives and/or reimburses or may waive or reimburse certain Funds expenses pursuant to a contract expiring on August 29, 2035, unless renewed for another 11-year term and the Funds’ 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 BaronCapitalGroup.com or call 1-800-99-BARON. Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the Funds. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99-BARON or visiting BaronCapitalGroup.com. Please read them carefully before investing. Risks: All investments are subject to risk and may lose value. Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contain this and other information about the Funds. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99-BARON or visiting BaronCapitalGroup.com. Please read them carefully before investing. Risks: Non-U.S. investments may involve additional risks to those inherent in U.S. investments, including exchange-rate fluctuations, political or economic instability, the imposition of exchange controls, expropriation, limited disclosure and illiquid markets. This may result in greater share price volatility. Securities of small and medium-sized companies may be thinly traded and more difficult to sell. Even though the Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund’s returns. The Fund may not achieve its objectives. Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk. The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio manager only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron International Growth Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation. Free cash flow represents the cash that a company generates after accounting for cash outflows to support operations and maintain its capital assets. BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA). |
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