in emerging markets. The Fund does not focus its investments in a
particular industry or country. The Fund may invest in companies of any market capitalization. The equity securities in which the Fund may invest include, but are not limited to, common stocks, preferred stocks, depositary receipts, rights and
warrants to buy common stocks, and privately placed securities. The Fund may invest in derivative instruments including options, futures, and forward foreign currency exchange contracts. The Fund may typically use derivatives to seek to reduce
exposure to other risks, such as interest rate or currency risk, to substitute for taking a position in the underlying assets, for cash management, and/or to seek to enhance returns in the Fund.
The Fund invests its assets in foreign investments which
are denominated in U.S. dollars, major reserve currencies and currencies of other countries and can be affected by fluctuations in exchange rates. To attempt to protect against adverse changes in currency exchange rates, the Fund may, but will not
necessarily use special techniques such as forward foreign currency exchange contracts.
The Fund may invest in other investment companies,
including exchange traded funds, to the extent permitted under the Investment Company Act of 1940, as amended, and the rules, regulations, and exemptive orders thereunder (“1940 Act”).
Baillie Gifford Overseas Limited (“Baillie
Gifford”), J.P. Morgan Investment Management Inc. (“JPMorgan”), Lazard Asset Management LLC (“Lazard”), and T. Rowe Price Associates, Inc. (“T. Rowe Price”) (each a “Sub-Adviser” and collectively
“Sub-Advisers”) provide day-to-day management of the Fund. The Sub-Advisers act independently of each other and use their own methodologies for selecting investments. The Fund's investment adviser will determine the amount of Fund assets
allocated to each Sub-Adviser.
Each Sub-Adviser may
sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into opportunities believed to be more promising, among others.
The Fund may lend portfolio securities on a short-term or
long-term basis, up to 33
1
∕
3
% of its total assets.
Baillie Gifford Overseas Limited
In selecting investments for the Fund, Baillie Gifford
normally takes into account the industry and country allocations in the MSCI EAFE
®
Index. A significant part of the assets will normally be divided among continental Europe, the United
Kingdom, and Asia (including Australia and New Zealand). Country allocation, however, is driven by stock selection. Baillie Gifford invests in companies that it believes are well-managed, quality businesses that enjoy sustainable, competitive
advantages in their marketplace. Baillie Gifford's investment style primarily uses a bottom-up, stock-driven approach, with the objective of selecting stocks that it believes can sustain an above-average growth rate, which is not reflected in the
share price.
Companies are screened for quality first; valuation is a
secondary consideration. Baillie Gifford looks for companies that it believes have attractive industry backgrounds, strong competitive positions within those industries, high-quality earnings, and a positive approach toward shareholders. The main
fundamental factors that Baillie Gifford considers in this bottom-up analysis include earnings growth, cash flow growth, profitability, capital structure, and valuation.
J.P. Morgan Investment Management Inc.
In choosing securities, JPMorgan seeks to provide high
total return by investing primarily in equity securities from developed countries included in the MSCI EAFE
®
Value Index while emphasizing securities that are ranked as undervalued
according to its proprietary research while underweighting or avoiding those that appear over-valued. JPMorgan employs a process that combines fundamental research for identifying portfolio securities and currency management decisions. Various
models are used to quantify JPMorgan’s fundamental stock research, producing a ranking of companies in each industry group according to their relative value. JPMorgan then buys and sells securities, using the research and valuation rankings as
well as its assessment of other factors, including: (i) value characteristics such as low price-to-book and price-to-earnings ratios; (ii) catalysts that could trigger a change in a stock’s price; (iii) potential reward compared to potential
risk; and (iv) temporary mispricings caused by market overreactions.
Lazard Asset Management LLC
In choosing securities, Lazard normally invests in large
non-U.S. companies with market capitalizations in the range of companies included in the MSCI EAFE
®
Index that Lazard believes are undervalued based on their earnings, cash flow or asset
values. Lazard looks for established companies in economically developed countries and may invest in securities of companies whose principal business activities are located in emerging market countries.
T. Rowe Price Associates, Inc.
While T. Rowe Price invests with an awareness of the global
economic backdrop and the outlook for industry sectors and individual countries, bottom-up stock selection is the focus of T. Rowe Price's decision making. Country allocation is driven largely by stock selection, though we may limit investments in
markets that appear to have poor overall prospects.
Securities selection reflects a growth style. T. Rowe Price
relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies it believes are capable of achieving and sustaining above-average, long-term earnings growth. T. Rowe Price seeks to
purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value.
In selecting investments, T. Rowe Price generally favors
companies that it believes have one or more of the following characteristics: leading or improving market position; attractive business niche;