B
aron Real Estate Income Fund® (the Fund) posted a 5.43 % gain in Q3 2025, outpacing the MSCI US REIT Index’s 4.49 % rise. Since its launch on 29 Dec 2017, the Fund has delivered a cumulative 97.17 % return versus 41.54 % for the REIT Index. Morningstar places the Fund in the top 5 % of 3‑year performers, top 17 % of 5‑year performers, and ranks it #4 overall since inception—only Baron Real Estate Fund® surpasses it.

    **Performance Snapshot (ended 30 Sep 2025)**

    - QTD: 5.31 % (Fund) vs 4.49 % (REIT)

    - YTD: 3.90 % vs 3.75 %

    - 1‑yr: 4.84 % vs 5.15 %

    - 3‑yr: 12.68 % vs 12.97 %

    - 5‑yr: 8.41 % vs 8.70 %

    - Since inception: 8.91 % vs 9.16 %

    - Cumulative: 93.76 % vs 97.17 % (Fund) and 41.54 % (REIT)

    Net expense ratios are 1.05 % for Retail Shares and 0.80 % for Institutional Shares after adviser fee waivers.

    **Portfolio Allocation (30 Sep 2025)**

    - REITs: 75 %

    - Non‑REIT real‑estate: 22 %

    - Cash & equivalents: 3 %

    REIT sector weights: Industrial 14.4 %, Health Care 14.0 %, Mall 7.5 %, Data Center 7.3 %, Wireless Tower 6.8 %, Office 4.4 %, Other 4.0 %, Single‑Family 3.8 %, Multi‑Family 3.7 %, Triple Net 3.3 %, Mortgage 2.0 %, Hotel 2.0 %, Self‑Storage 1.8 %.

    **Quarterly Drivers**

    *Top contributors:* Welltower (+1.37 %), Wynn Resorts (+0.81 %), Prologis (+0.74 %), Simon Property (+0.69 %), CRH (+0.62 %).

    *Top detractors:* American Tower (‑1.04 %), Invitation Homes (‑0.21 %), American Homes 4 Rent (‑0.14 %), Equity Residential (‑0.12 %), Equinix (‑0.11 %).

    **Recent Activity**

    *Purchases:* JLL (8.5 M), Prologis (5.1 M), Macerich (3.6 M), Iron Mountain (3.0 M), Kilroy Realty (1.9 M).

    *Sales:* SmartStop (3.9 M), Equinix (3.8 M), Elme Communities (2.6 M), Independence Realty (2.1 M), Welltower (2.1 M).

    **Outlook**

    The Fund remains bullish on public real estate. Demand continues to outstrip supply, especially in industrial, data‑center, and senior‑housing segments. Secular tailwinds—e‑commerce, 5G, aging demographics, and AI—support long‑term growth. New construction is constrained by high land, labor, and material costs, keeping valuations attractive. Credit markets stay liquid with tightening spreads, and potential Fed rate cuts could further lift valuations. The Fund’s diversified mix of high‑quality REITs and dividend‑paying non‑REITs positions it well for continued upside.

    **Top 10 Holdings (30 Sep 2025)**

    1. Welltower (8.8 %)

    2. Prologis (8.7 %)

    3. American Tower (6.8 %)

    4. Equinix (4.8 %)

    5. Simon Property (4.3 %)

    6. Iron Mountain (4.0 %)

    7. EastGroup (3.6 %)

    8. Brookfield (3.5 %)

    9. JLL (3.5 %)

    10. Macerich (3.3 %).

    The team thanks shareholders for continued support and remains committed to delivering strong, long‑term returns.