Schroder Investment Management North America Inc

Schroder Investment Management North America Inc. Bay County Employees’ Retirement System Matthew Dobbs, Head of Global Small Cap Equities, Portfolio Manager Hannah Piper, Pan-European Small Cap Analyst June 2018 For professional advisers only. This material is not suitable for retail clients Investment Philosophy and Team Investment philosophy

Philosophical beliefs Deduction Process

Stock selection is key source of Inefficiency higher for small stocks Stock selection predominant value-added

Small stocks have higher specific Seek quality and growth – at the Embedded in screens and in-house risks wrong price stock research

Low liquidity an opportunity and a Seek long-term, not short-term Long-term time horizon challenge valuation anomalies

Opportunity set is global Need for on the ground presence Extensive, dedicated global team

The views and forecasts contained herein are those of the International Small Cap team and are subject to change.

2 Resources International small cap team – A fully resourced and focused team

– 20 specialists in international small Lead Portfolio Manager company research Matthew Dobbs 36 (36) and investment

– Core team of Lead Portfolio Japan Pacific x Jap Pan Europe Manager and Regional Specialists Small Cap Specialist Small Cap Specialist Small Cap Specialist have an average of 25 years Takuya Furutani 14 (23) Richard Sennitt2 24 (24) Jean Roche 2 (18) investment experience and an Paul Rathband 6 (26) Andrew Lynch 19 (19) average of 17 years tenure at Small Cap Analyst Small Cap Analyst Small Cap Analyst Schroders Andrew Rose2 36 (36) Kim Young Roe 10 (19) Andy Brough 30 (30) Ayumi KobayashI 13 (29) Rebecca Xu 7 (7) Luke Biermann4 11 (11) – Local presence and knowledge the Kota Takahashi 5 (11) Gina Kim Ji Yong 5 (18) Iain Staples 6 (19) key – primary research conducted Nina Chen 2 (8) Hannah Piper4 5(7) out of Schroder research offices Siew Ling Tan 4 (8) Alexander Deane3 2(7) globally Chuan Yao Lu <1 (9) – Team can draw on the broader International Small Cap Team Schroder focus list analysts – approximately 20% of holdings covered by focus list analysts – Cross fertilization of investment ideas between regions and with Focus list analysts1 ESG Team Data Insights Unit Global Sector Experts -Japan – 8 -Team of 12 dedicated ESG -A team of data scientists, data -Pacific ex Japan – 33 specialists consultants and data engineers -Pan Europe – 14 Global Sector Specialists – 8

# = Number of years with Schroders. (#) = Numbers of years investment experience. 1

Source: Schroders as of March 31, 2018. 30 September 2017. Global Resource 2Located in London. 3Includes other coverage. 4Also a specialist.

3 Process update

– Sector ranges

– Screens UK screen -D ecember 31, 2017

Free Cash Flow FCF Return On Piotroski Overall Screen Country of Free Cash Flow Yield FCF Return On Assets Score Overall Screen Rank Revisions Revisions Rank 3 ID Company Name Primary Listing Yield (Fractiles) Assets (Fractiles) Piotroski Score (Fractiles) Rank (Fractiles) Rank 3 months ago (Fractiles) months ago BYVGFL Gulf Keystone Petrole uUNITED KINGDOM 40.79 1 23.30 1 7 1 17.00 1#N/A3#N/A BYV249 Medica Group Plc UNITED KINGDOM #N/A NA 13.41 1 9 1 19.00 1#N/ANA#N/A B5TT18 Centamin plc UNITED KINGDOM 14.30 1 17.74 1 7 1 23.67 1145.00 B1FW50 Hochschild Mining plc UNITED KINGDOM 12.90 1 11.75 1 8 1 24.33 1155.00 087823 Taylor Wimpey plc UNITED KINGDOM 10.62 1 11.20 1 8 1 31.00 1131.00 B02L3W Berkeley Group Holdi nUNITED KINGDOM 10.48 1 10.34 1 8 1 34.67 1112.00 075902 Fidessa group plc UNITED KINGDOM 8.32 2 23.73 1 7 1 35.33 1152.00 092922 Victrex plc UNITED KINGDOM #N/A NA #N/A NA 7 1 36.00 1332.00 037184 Games Workshop Gro UNITED KINGDOM 12.88 1 44.13 1 6 2 38.33 1111.00 033450 Fenner PLC UNITED KINGDOM 10.00 1 9.36 2 8 1 40.67 1311.00

– Smallcap Optimizer and Risk Tool (SORT)

– ESG and DIU representation on the International Small Cap Investment Committee

Source: Schroders. The security information shown is for illustrative purposes, is subject to change, and is not a recommendation to buy/sell. Past performance is no guarantee of future results. The value of an investment can go down as well as up and is not guaranteed.

4 Portfolio construction Risk management and position sizing

Higher active weight Fundamental Factor Risk Analysis – Smallcap - Higher relative upside Optimizer and Risk Tool (SORT) 10 - Higher liquidity - Lower fundamental risk 9

8 Lower active weight -Lower relative upside 7 - Lower liquidity 6 - Higher fundamental risk 5

Risk scoring % 3 Fundamental Risk score  Liquidity factors - ADTV 40 2  ESG factors 30 1

 Financial factors - Piotroski score 15 0 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6  Earnings stability 15 Portfolio Weight (%)

Ensuring risk and conviction are consistently aligned Source: Schroders. May 2018 Based on Schroder International Small Companies Fund (SISCO). The information is intended to illustrate the risk management process and should not be viewed as a recommendation to buy/sell. Please see full disclosures at the end of the presentation

5 Performance Performance Investment environment

–Smaller companies have performed S&P EPAC SmallCap Index vs. MSCI MSCI EAFE and MSCI EAFE Small Cap strongly in both absolute and relative EAFE Index1 Index Performance in US$(%)2 terms over the last 12 months with MSCI EAFE Small Cap index rising June 1989 = 100 12 months to 30 April 2018 +20.0% compared to the +14.5% return 160 25 of the MSCI EAFE Index. 150 –Small cap outperformance came in all 140 20 regions with the strongest 130 contributions from continental Europe 15 and Japan. 120 110 –By sector, the strongest positive 10 impacts to small cap relative 100 outperformance were health care, 90 5 consumer staples and information 80 technology. Energy and consumer 70 0 discretionary were the only sectors 89 92 95 98 01 04 07 10 13 16 EAFE Cont UK Japan Pacific where smaller companies trailed large. Europe ex Japan

MSCI EAFE MSCI EAFE Small Cap

1Source: Schroders, S&P, MSCI, 30 April 2018 2Source: Schroders, MSCI Performance shown is past performance. Past performance is not necessarily a guide to future performance. The value of investment can go down as well as up and is not guaranteed

7 Performance SISCO2 - Bay County Employees’ Retirement System

Value: US$ 38,913,830 as at 30 April 2018 Inception date: June 30, 2006

Performance to 30 April 2018 (in US$%) 3 months 1 year 3 year1 5 year1 Since Inception1

SISCO (NAV)2 -3.4 +22.8 +12.0 +12.7 +7.9 Bay County Index3 -3.0 +21.5 +12.1 +12.4 +8.3 Fund Index4 -3.3 +20.0 +10.6 +10.9 +6.8 SISCO2 vs Fund Index -0.1 +2.8 +1.4 +1.8 +1.1

Performance Attribution against Fund Index4 Contribution from 3 months 1 year 3 years1 5 years1 Stock Selection +0.2 +4.1 +1.3 +2.0 Region Allocation -0.2 -1.1 -0.2 -0.2 Timing Residual -0.1 -0.2 +0.3 0.0 Difference Relative to Fund Index -0.1 +2.8 +1.4 +1.8

1Annualized 2Schroder International Small Companies Fund (SISCO). Performance based on JPMorgan NAV and is subject to fair value pricing adjustments applied in periods of elevated market volatility using an independent service. As the benchmark is not subject to this practice, artificial gaps between NAV and index performances can result. 3Fund Index plus 150 basis points 4S&P EPAC SmallCap to 12/31/2015, then MSCI EAFE Small Cap (NDR) Source: Schroders, S&P, MSCI, Factset PA3, gross of fees. Past performance is not an indication of future performance. Please see full disclosures at the end of the presentation

8 Performance and Performance Attribution 3 months to 30 April 2018 S&P EPAC SmallCap to 12/31/2015, SISCO1 then MSCI EAFE Small Cap (NDR)

End Weight Total Return End Weight Total Return Stock Selection Regional Allocation Total Effect

UK 14.9 -4.2 18.2 -1.5 -0.4 -0.1 -0.5

Continental Europe 41.5 -4.5 39.6 -4.7 0.1 -0.1 0.0

Japan 29.1 -0.6 31.1 -1.9 0.4 0.0 0.4

Pacific ex Japan 7.0 -3.7 11.1 -5.5 0.1 0.1 0.2

Emerging Markets 6.0 -5.3 - - --0.1-0.1

Cash 1.5 - - - -0.00.0 Residual ------0.1

Total 100.0 -3.4 100.0 -3.3 0.2 -0.2 -0.1

Top 5 Active Contributors Top 5 Active Detractors 3 months to April 30, 2018 3 months to April 30, 2018 Return (%) Contribution (%) Return (%) Contribution (%) OBIC Business Consultants 30.4 0.22 Marie Brizard -37.0 -0.24 Nordax Group 11.0 0.21 Ascom Holding -20.6 -0.15 Basic-Fit 10.5 0.16 Durr -27.9 -0.12 Ubisoft Entertainment 11.5 0.16 COMET Holding -23.8 -0.12 Arcs Company 18.9 0.15 Aumann GmbH -27.0 -0.11

1Schroder International Small Companies Fund (SISCO). Source: Schroders, S&P, MSCI, Factset PA3

9 Performance and Performance Attribution 12 months to 30 April 2018 S&P EPAC SmallCap to 12/31/2015, SISCO1 then MSCI EAFE Small Cap (NDR)

End Weight Total Return End Weight Total Return Stock Selection Regional Allocation Total Effect

UK 14.9 13.7 18.2 17.7 -0.5 0.1 -0.4

Continental Europe 41.5 25.6 39.6 19.7 2.3 0.0 2.3

Japan 29.1 30.6 31.1 23.6 1.7 0.0 1.7

Pacific ex Japan 7.0 24.8 11.1 15.9 0.6 0.2 0.8

Emerging Markets 6.0 9.5 - - --0.7-0.7

Cash 1.5--- --0.7-0.7 Residual ------0.2

Total 100.0 22.8 100.0 20.0 4.1 -1.1 2.8

Top 5 Active Contributors Top 5 Active Detractors 12 months to April 30, 2018 12 months to April 30, 2018 Return (%) Contribution (%) Return (%) Contribution (%) Ubisoft Entertainment 102.2 0.63 Marie Brizard -35.9 -0.38 YOOX Net APorter 74.3 0.50 SPIE -16.0 -0.37 Basic-Fit 72.5 0.42 Lenzing -34.0 -0.35 Advanced Metallurgical Grou 80.9 0.42 Origin Enterprises -17.9 -0.24 Kureha Corporation 56.6 0.32 Wirecard* 81.3 -0.20

1Schroder International Small Companies Fund (SISCO). *Position not held – index return shown. Source: Schroders, S&P, MSCI, Factset PA3

10 Fund1 risk characteristics

1Schroder International Small Companies). Source: Schroders Risk Report, Style Research, as at April 30, 2018 Portfolio characteristics are subject to change and should not be viewed as an investment recommendation. Please see full disclosures at the end of the presentation.

11 Fund characteristics Schroders1 vs. MSCI EAFE Small Cap index

As of 30 April 2018 Schroders1 Index Schroders 1 Index No of stocks 182 2,285 Percentage>$3Bn 21.9% 25.9% Free Market Capitalization US$M Percentage>$1Bn<$3Bn 45.0% 49.2% Minimum 63 41 Percentage>$0.5Bn<$1Bn 23.5% 17.7% Maximum 10,096 10,096 Percentage<$0.5Bn 9.7% 7.2% Weighted Average 2,187 2,286 Total 100.0% 100.0% Median 1,373 830

1 1 Valuation factors Schroders Index Valuation factors Schroders Index P/E (12mo trailing) 17.4 17.1 3 Year Sales Growth 8.6 7.8 P/CF 13.0 11.9 3 Year Earnings Growth 16.6 15.4 P/BV 2.1 1.7 Dividend Payout Ratio 33.9 38.7 LT Debt/Capital 24.2 26.6 Dividend Yield 1.9 2.3 ROE 14.6 13.1

1Schroder International Small Companies Fund (SISCO). Source: Schroders, Style Research, Factset

12 Investment strategy: Country weightings

We remain overweight continental Europe. Economic conditions remain supportive with 2 growth still being upgraded, and small caps are more exposed to the recovery in domestic Measured against Fund Index demand, as well as more sheltered from the direct impact of a stronger euro. Overall equity valuations look reasonable, although recent earnings revision data has been somewhat less 10 supportive. Key over-weights by sector are industrials and materials. The main Overweight % underweights are real estate and health care. In country terms, overweight the Netherlands, 5.6 6 6 Ireland and France, and underweight Sweden and Belgium. 5 4.1 2.6 Fund remains underweight the United Kingdom. There is some valuation support for UK 2 1.9 equities, but the macro economic situation continues to look tough with lowish growth 0.9 1.5 accompanied by inflationary pressures that have prompted tightening noises from the MPC. The Conservative led coalition government continues to appear extremely fragile, and 0 temporary relief at a transition deal has given way to realisation of the formidable negotiating process still to come. Domestically oriented sectors and stocks are where the -2 opportunities lie, but are not without risks. -2.9 -3.4 -3.3 -5 -2.7 -3.3 Fund remains underweight Japan. The economy has continued to register solid progress -4.3-4.6-4.1 while earnings revisions are strong, although this is truer of large cap than small cap. The Underweight % strength of the yen is undoubtedly an issue for some of our more internationally diversified -10 holdings among autoparts, industrials and I.T., but the portfolio continues to have a significant exposure to domestic capital spending where prospects remain encouraging. Japan Pacific ex. UK Continental EM Cash Corporate governance developments continue to be broadly positive, with share buybacks Japan Europe increasing and continued reform of best practice in terms of corporate governance. Fund¹ 09/30/17 Fund¹ 12/31/17 Fund¹ 04/30/18 The modest aggregate overweight to Pacific ex Japan and Emerging Asian masks the fact that the Fund remains very underweight Australia, and we continue to struggle to find attractive stocks in what is a sizeable market. Key exposures elsewhere remain HK/China, Fund1 weight % at 04/30/18 Korea, Taiwan and emerging ASEAN. China’s continued reliance on credit expansion to drive growth remains a major long-term issue, but if they can manage the tricky transition of 29.1 7.0 14.9 41.5 6.0 1.5 reining in credit growth while still engineering growth, that would be a very positive development. This transition is somewhat complicated by the Trump Administration’s attack on the “Made in China 2025” initiative. We continue to avoid more cyclical and/or leveraged Index weight % at 04/30/18 companies. Geopolitical risk remains somewhat elevated, but the region is in good economic shape. 31.1 11.1 18.2 39.6 – –

1Schroder International Small Companies Fund (SISCO). 2S&P EPAC SmallCap to 12/31/2015, then MSCI EAFE Small Cap (NDR) Source: Schroders, S&P, MSCI. Regional weights are subject to change and should not be viewed as an investment recommendation. This slide contains the views of the International Small Cap Team. These views are subject to change and do not necessarily represent the views of Schroders

13 Fund positioning Country Sector Matrix

MSCI EAFE Small Cap Index as of 30 April 2018 Consumer Consumer Total Discretionary Staples Energy Financials Healthcare Industrials IT Materials Real Estate Telecoms Utilities Cont. Europe 39.6 4.5 2.1 1.4 5.5 3.6 8.6 4.7 3.1 4.0 0.8 1.2 EM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Japan 31.1 5.4 3.4 0.2 2.4 2.0 7.7 3.8 3.1 2.8 0.0 0.3 Pacific ex Japan 11.1 1.8 0.8 0.4 0.9 0.5 1.4 0.9 1.6 2.0 0.3 0.4 UK 18.2 4.1 0.6 0.6 2.9 1.2 3.2 1.9 1.6 1.7 0.2 0.3 Total 100.0 15.9 6.9 2.6 11.7 7.3 21.0 11.3 9.5 10.4 1.3 2.1 SISCO1 as of 30 April 2018

Consumer Consumer Total Discretionary Staples Energy Financials Healthcare Industrials IT Materials Real Estate Telecoms Utilities Cont. Europe 41.5 5.8 1.4 0.7 6.1 0.4 13.5 5.1 5.4 2.7 0.0 0.5 EM 6.0 1.6 0.3 0.1 0.3 0.6 1.5 1.0 0.4 0.0 0.0 0.0 Japan 29.1 5.1 2.4 0.0 2.1 1.6 8.9 4.3 3.9 0.9 0.0 0.0 Pacific ex Japan 7.0 1.5 0.4 0.0 0.3 0.9 1.2 1.2 1.1 0.5 0.0 0.0 2 98.5 19.0 5.1 1.1 9.7 4.4 29.2 12.7 11.5 5.0 0.0 1.0 UK 14.9 5.1 0.6 0.2 0.8 0.9 4.1 1.1 0.6 1.0 0.0 0.5 1 SISCOTotal vs. MSCI EAFE Small Cap Index Consumer Consumer Total Discretionary Staples Energy Financials Healthcare Industrials IT Materials Real Estate Telecoms Utilities Cont. Europe 1.9 1.3 -0.8 -0.7 0.6 -3.2 4.8 0.4 2.4 -1.3 -0.8 -0.7 EM 6.0 1.6 0.3 0.1 0.3 0.6 1.5 1.0 0.4 0.0 0.0 0.0 Japan -2.0 -0.3 -1.1 -0.2 -0.3 -0.3 1.2 0.5 0.7 -1.9 0.0 -0.3 Pacific ex Japan -4.1 -0.4 -0.4 -0.4 -0.6 0.3 -0.2 0.2 -0.5 -1.5 -0.3 -0.4 UK3 -3.3-1.50.9 3.0 -1.9 0.0 -0.4-1.5 -2.1-2.0 -0.4-2.9 0.98.2 -0.8 1.4 -1.0 2.0 -0.7-5.4 -0.2-1.3 -1.1 0.3

1SchroderTotal International Small Companies Fund (SISCO). 2Cash 1.5% 3Difference due to 1.5% cash weighting Source: Schroders, MSCI.

14 Recent Stock Transactions SISCO1 – April 30, 2018

Significant New Buys since October 31, 2017 Significant Complete Sales since October 31, 2017

Security Country Weight April 30, 2018 % Security Country Weight October 31, 2017 % Nishi-Nippon Financial Japan 0.8 YOOX Net APorter Italy 1.2 Befesa Sa Germany 0.8 Nordax Group Sweden 1.1 Sumitomo Forestry Japan 0.7 Umicore Belgium 0.6 Fugro N.V. Netherlands 0.7 Bufab Holding Sweden 0.4 Ahlsell Ab Sweden 0.5 Fairfax Media Australia 0.3 Stemmer Imaging Germany 0.5 Prosegur Cash Spain 0.3 SMCP SA France 0.5 Ambu A/S Denmark 0.3 Elkem Asa Norway 0.4 Crest Nicholson United Kingdom 0.3 Altran Technologies France 0.4 Applus Services Spain 0.3 Tomra Systems Norway 0.2 Kendrion N.V. Netherlands 0.2

1Schroder International Small Companies Fund (SISCO). Source: Schroders

15 SISCO1 Top ten holdings by region – 30 April 2018

Europe UK Country Security Weight in fund % Weight in region % Country Security Weight in fund % Weight in region % Italy Anima Holding 1.5 3.5 UK Dechra Pharmaceuticals 0.9 5.8 Netherlands Basic-Fit Nv 1.4 3.3 UK Bodycote Plc 0.6 4.3 Ireland Dalata Hotel 1.2 2.9 UK Cineworld Group 0.6 4.3 Netherlands Sif Holding 1.2 2.8 UK Elementis Plc 0.6 4.2 France Ubisoft Entertainment 1.2 2.8 UK Homeserve Plc 0.6 4.1 Netherlands Advanced Metallurgical Group 1.1 2.6 UK Cranswick Plc 0.6 4.1 France Spie Sa 1.0 2.5 UK Grainger Plc 0.6 4.0 Finland Huhtamaki Oyj 1.0 2.4 UK Diploma Plc 0.6 3.9 Germany Senvion Sa 1.0 2.3 UK SSP Group 0.6 3.9 Netherlands Van Lanschot 0.9 2.3 UK Auto Trader 0.6 3.8 Total 11.5 27.4 Total 6.3 42.4

Japan Asia ex. Japan, Emerging Markets Country Security Weight in fund % Weight in region % Country Security Weight in fund % Weight in region % Japan Kureha Corporation 1.3 4.6 Australia Bingo Industries 0.8 6.4 Japan Tokai Tokyo Financial 1.3 4.4 Hong Kong Techtronic Industries 0.7 5.6 Japan Nippon Shinyaku 1.3 4.4 Australia Iluka Resources 0.7 5.4 Japan Ai Holdings 1.2 4.1 Australia Computershare Limited 0.5 3.7 Japan Tsuruha Holdings, 1.2 4.1 Hong Kong Crystal International 0.5 3.6 Japan Nippon Densetsu 1.2 4.0 New Zealand Fletcher Building 0.4 3.4 Japan Hitachi Transport 1.1 3.9 Taiwan Aerospace Industrial Development 0.4 3.0 Japan Koito Manufacturing 1.1 3.9 Taiwan Chroma Ate 0.4 2.7 Japan Trusco Nakayama 1.1 3.6 Korea Yuhan Corporation 0.3 2.5 Japan Glory Ltd. 1.0 3.6 Korea Medy-Tox Inc. 0.3 2.4 Total 11.8 40.6 Total 5.0 38.7 1Schroder International Small Companies Fund (SISCO). Source: Schroders. Stocks held and weights are subject to change and should not be viewed as an investment recommendation. Regions are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell. Source: Schroders

16 Investment Outlook and Strategy Overview 2018 set for impressive co-ordinated growth

. Consensus forecasts are for Global trade recovery drove the Growth starting to peak2 continuation of global recovery upswing in 20171 80 10 2.0 1.5 . However, rate of growth 60 5 1.0 starting to peak at high level as 40 0.5 lead indicators begin to turn 20 0 0.0 -0.5 0 . Rate hikes and the expectation -5 -1.0 of tightening liquidity has -20 -1.5 increased volatility -40 -10 -2.0

. So far inflation has surprised on 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 G7 IP Y/Y% Global activity indicator - RHS the downside – will central US China bank talk be followed by action? QE is unwinding – Global liquidity set to Citi inflation surprise indices lower in EM & slow3 DM4 25 Value of assets in central banks’ 40 Forecast balance sheets (trillions of USD) 30 20 20 10 15 0 10 -10 1Source: Thomson Reuters Datastream, Schroders, updated 1 -20 May 2018. 5 2Source: Thomson Reuters Datastream, Schroders, updated April -30 2018. 0 -40 3Source: Thomson Datastream, Schroders Economics Group, 3 March 2018. 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2010 2011 2013 2014 2016 2017 4Schroders Economics Group, Thomson Datastream, 30 April 2018 Citi inflation surprise index: EM The forecast should be regarded as illustrative of trends. Actual Eurozone Japan Switzerland China US UK Citi inflation surprise indec: G10 figures will differ from forecasts. Please refer to the important information slide at the end of this presentation.

18 Small Cap Valuations

– Temptation to reduce equity S&P EPAC SmallCap Index vs. MSCI EAFE FY1 PE – S&P EPAC SmallCap minus S&P exposure likely to be tempered Index1 EPAC LargeMidCap2 by lack of obvious value in June 1989 = 100 160 10 other asset classes 150 140 5 – Compared to large cap peers, 130 120 0 valuations are reasonable, but 110 100 have ticked up a bit recently 90 -5 80 – Continued earnings 70 -10 momentum is critical 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 S&P EPAC SmallCap vs. MSCI EAFE FY1 PE – EPAC SmallCap minus EPAC LargeMidcap

Valuations across assets3 EPS growth4 30 Index Earnings Yield Bond Yield 25 3.5 20 3.0 2.5 1Source: Schroders, S&P, MSCI, 30 April 2018. 15 2.0 2 Source: Schroders, FactSet PA2, S&P, 30 April 2018. 10 1.5 3Source: Bloomberg, Schroders, monthly data for the period 1.0 5 ending 31 December 2017. . Earnings Yield (S&P500, 0.5 FTSE100, MSCI Europe ex UK, TOPIX, MSCI EM), Yield To 0 0.0 Maturity (US, UK & German 10yr Government Bond), Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Option-Adjusted Spread (US Investment Grade and US High -5 Yield 4Source: FactSet MSCI. 30 April 2018. EM EZ Eq Japan US Eq UK Eq LTM EPS – MSCI EAFE Small Cap/MSCI EAFE US10yr Performance shown is past performance. Past performance UK10yr is not necessarily a guide to future performance. The value 20yr Max 20yr Min US IG OAS US HY OAS HY US

of investment can go down as well as up and is German10yr not guaranteed. Current

19 Investment outlook Continental Europe

Domestic demand in the Euro area, PMI – Still positive, but Europe weakening Amid all the noise (ECB policy 1 – United States and Japan while US robust. China trendless2 settings/BREXIT), the euroland 117 Manufacturing PMI (Purchasing Managers Index) 115 65 economy continues its solid 113 111 expansion. Albeit the rate of 109 60 107 expansion has moderated from 105 55 103 high levels 101 99 50 97 – Plenty of slack in the labour 95 market although Germany is 93 45 11 12 13 14 15 16 17 18 13 14 15 16 17 Euro area US Ja pan the exception USA Eurozone China – The relationship between small cap performance and the Europe x UK small cap rel large cap Europe x UK small cap rel large cap performance ($)1 valuation1 business cycle suggests 70 30% 160% 65 Europe ex UK small cap 12m investors are far from irrational 20% 150% 60 fwd PE rel large cap Average (+/- 1SD) exuberance 55 10% 140% 50 0% 130% 45 40 -10% 120% 35 -20% 110% 30 -30% 100% 25 20 -40% 90% 2006 2007 2009 2011 2012 2014 2016 2018 2008 2010 2012 2014 2016 1Source: Credit Suisse, May 2018. Eurozone PMI manufacturing new orders 2Thomson Datastream. May 2018. Performance shown is past performance. Past performance is Europe ex-UK small rel large y/y % chg, rhs not necessarily a guide to future performance. The value of investment can go down as well as up and is not guaranteed 20 Investment outlook United Kingdom

– UK still unloved, but global UK still unloved - The Longs & Shorts1 Household spending – surprised?2 fund managers are starting to Relative to Global FMS history* Household spending (annual change, current prices, £ million) tiptoe back into the region 2013 2014 2015 2016 2017

Total household UK household spending, 45,072 45,184 37,949 53,489 44,591 – expenditure surprisingly strong on a Food 4,522 1,253 -129 892 4,127

nominal basis, should now see Clothing & footwear 2,252 3,665 3,249 2,672 3,586

some real growth as real wage Household goods and 1,900 2,738 3,177 3,917 4,208 growth has finally reappeared services – Small cap valuations starting to Purchase of vehicles 2,584 3,778 2,886 2,550 -2,689 Restaurants 4,068 2,911 2,455 4,157 5,650 look more attractive relative to large Pressure on the UK consumer is reducing3 UK small cap rel large cap valuation4 UK real wage growth vs retail sales (ex-auto 8 3 125% fuel) 3MMA % yoy 6 2 115%

4 1 105%

2 0 95% 0 -1 85% Source: -2 -2 75% 1BofA Merrill Lynch Global Fund Manager Survey. *data since -4 -3 FTSE small cap 12m fwd PE rel 2006 for commodities and real estate, since 2001 for everything 65% else. Reprinted by permission. © 2018 Bank of America large cap Corporation. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Average (+/- 1SD) Real retail sales (ex-auto fuel) (LHS) 55% 2Source: ONS, Lazurus Economics & Strategy, 2001 to 2017. Real regular average weekly earnings (RHS) 2008 2010 2012 2014 2016 2018 3Source: Thomson Datastream, data shown to 15 March 2018. 4Source: Credit Suisse. May 2018

21 Investment outlook Japan

Average labour earnings growth (% point Foreigners have been heavy Cumulative foreign buying since dawn of – Abernomics1 contribution to Y/Y Growth)2 net sellers year to date, while 25 (¥trn) 1.5 % point contribution to Y/Y growth short positions have increased 1.0 20 substantially 0.5 15 – Domestic demand aided by 0.0 healthy earnings growth with 10 -0.5 -1.0 increased contribution from 5 full time employees -1.5 0 Jan-11 Jan-13 Jan-15 Jan-17 – Almost 90% of 1st section Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Overtime and bonus payments Regular wages companies have at least two Average labour earnings, %, 3M/Y independent voices on the Share of independent directors on Number of buyback announcements is board Japan boards has been picking up 3 increasing3 100% 1,200 % of TSE 1st section companies with 2 or more 2017 – Buybacks continue to increase 90% independent directors 1,000 by both number and value 80% 2016 70% 800 60% 2015 600 50% 2018 2014 40% 400 2013 30% 200 20% 10% 0 1Source: UBS Japan, as at 6 April 2018. 2010 2011 2012 2013 2014 2015 2016 2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2Source: Daiwa Research, as at 31 March 2018 3Source: Credit Suisse Research, as at 31 March 2018

22 Investment outlook Asia ex Japan

– US dollar strength has Reversal in last years weak dollar has Asian markets external debt2 1 spooked Emerging Markets Short-term Forex impacted EM sentiment along External 60 150 external reserves/ debt as % with talk of tariffs on US debt as % short-term of GDP imports 70 130 of GDP debt China 8.7 6.6 4.0x 80 110 – Asian external accounts better India 19.7 3.6 4.1x 90 90 Indonesia 33.2 4.5 2.6x placed than historically Korea 26.8 7.7 3.2x – Capital spending trends don’t 100 70 Malaysia 65.6 28.9 1.0x Philippines 23.1 4.6 4.9x 110 50 point to excesses with China Taiwan 30.4 28.3 2.8x 2008 2010 2012 2014 2016 2018 having been in tightening Thailand 32.0 12.6 3.2x US dollar index MSCI Em/MSCI World mode for much of the last year China exports 2017 (US$ billions)3 Capital spending has been disciplined4

6 3.8 4 2.7 1.3 2 0 -2 -1.8 -4 -2.4 -2.8 -6 -3.7 -3.8 -4.8 -8 -10 -9.2 -12 Europe 479 South America 146 Oceana 57 USA 476 India China Other North America 38 Asia 912 Korea Taiwan Thailand Africa 106 Malaysia Indonesia Singapore

1 Philippines Source: Thomson Reuters Datastream, Schroders, updated 1 May 2018. Hong Kong 2Haver Analytics, Asianomics, December 2017. Data for Q2 2017. Capex*/GDP** change between 2011 and 2016 (% 3Emerging Advisors Group, CEIC, April 2018 points) 4BofA Merrill Lynch Global Research. April 2018. *Capital Expenditure (Capex). **Gross Domestic Product (GDP). Countries and sectors shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell 23 Appendix Investment process Overview

Quantitative Schroders Economic Team

International Small Companies – Regional Allocation Risk Measurement Investment Committee

– Risk Management Matthew Dobbs and Regional PMs

Portfolio

– Stock Selection Small Cap Regional Portfolio Managers

Small Cap Analysts

Source: Schroders as of March 31, 2018.

25 Investment process Stock selection

Portfolio 200 Stocks

– Individual Company Visits Screening – Fair Value – Field Research  Researched Universe 600 Companies Targets – Proprietary Research – Earnings triggers

– Industry Analysis Screening – Company Contact Schroder Universe 1,500 Companies – Liquidity – Conferences – Factor Screens

Total Universe 5,000 Companies

Source: Schroders as of March 31, 2018.

26 Investment process Factor screens help define Schroder universe

– Focus towards investments Screens weighted based on past performance: in quintiles 1 and 2 of the screen – Aids identification of new ideas Criterion Metrics

– Existing holdings monitored in screens as Growth EPS revisions ongoing check Accruals ratio Quality FCF ROA Piotroski F-Score Dividend Yield Value FCF Yield Price/Book

UK screen - March 31, 2017

FCF Return On Overall Screen Country of Free Cash Flow Free Cash Flow FCF Return On Assets Piotroski Score Overall Screen Rank Rank 3 months Revisions Revisions Rank Sedol Company Name Primary Listing Yield Yield (Fractiles) Assets (Fractiles) Piotroski Score (Fractiles) Rank (Fractiles) ago (Fractiles) 3 months ago B1FW50 Hochschild Mining plc UNITED KINGDO 12.90 1 #N/A NA 8 1 20.00 1522 080856 Morgan Sindall Group plc UNITED KINGDO 51.49 1 15.42 1 7 1 25.67 1413 B5TT18 Centamin plc UNITED KINGDO 14.30 1 17.74 1 7 1 29.00 1124 074482 KCOM Group PLC UNITED KINGDO 10.95 1 21.65 1 7 1 33.00 1155 068253 Persimmon Plc UNITED KINGDO 12.12 1 16.02 1 7 1 34.00 1112 087823 Taylor Wimpey plc UNITED KINGDO 10.62 1 11.20 1 8 1 35.00 1212 BTC0LB DFS Furniture PLC UNITED KINGDO 13.97 1 9.12 2 8 1 35.33 1135 075902 Fidessa group plc UNITED KINGDO 8.32 2 23.73 1 7 1 41.33 1133 B27YGJ Severfield plc UNITED KINGDO 11.50 1 8.39 2 8 1 42.33 1123 BYX91H JD Sports Fashion Plc UNITED KINGDO 6.90 2 19.38 1 8 1 43.67 1132

27 Investment process Stock selection

Portfolio 200 Stocks

– Individual Company Visits Fundamental Ranking – Field Research Researched Universe 600 Companies – Fair Value Targets – Proprietary Research – Earnings triggers

– Industry Analysis Quantitative – Company Contact Schroder Universe 1,500 Companies Ranking – Conferences – Liquidity – Factor Screens

Total Universe 5,000 Companies

Source: Schroders as of March 31, 2018.

28 Investment process What we look for in investments - sustainability

Quantitative – the numbers Qualitative – behind the numbers

– High real EPS growth Management Assessment – Visibility of earnings – Interest in shareholder value – Strong product or service franchise – Focused strategy – Strong market share – Sound business practices – Beneficiary of structural change – Historic record of success – Limited financing risk – Length of time with company – Ability to reinvest Non Financial Factors  Sustainability of model  Governance  Labour practices

 Fair value  Why different from the market  ESG scores

Source: Schroders as of March 31, 2018.

29 Investment process Portfolio construction – Building stock portfolios

Fundamental 1 Process Regional Team ISIC Portfolio Investment Case Discussion Discussion Holding

– Detailed Research – Fair Value – Fair Value Review – Execution oversight – 1,500 Company Visits – Indicative sizing – Holding Size – Earnings Model – Regional Weights – Ongoing Review – Sector Balance

People – Analyst – Analyst – ISIC Team – Small Cap – Regional Fund Regional Specialist Manager

Source: Schroders as of March 31, 2018. 1ISCI – International Small Cap Investment Committee

30 Investment process Portfolio construction – Role of ISIC

Quantitative Small Cap Fundamentals Economics

Valuation/Growth Fundamentals Ranking of Regions Global backdrop (Actual Portfolios) Favored Characteristics Fundamental operating environment Small Cap Fair Values Sector Focus Monetary cycle Factor Screens Ranking Regions

International Small Cap Investment Committee (ISIC)1

Matthew Dobbs Andrew Lynch Richard Sennitt Takuya Furutani Jean Roche Paul Rathband

Review Determine Monitor

Stock purchases Regional Allocation Sector Allocation Stock sales

1Source: Schroders as of March 31, 2018.

31 Investment process Sell discipline

Our methodology seeks to identify holdings that offer poor relative potential and in which conviction is low The decision to sell a position may be based on: – Position reaches fair value target price – Opportunity cost perceived in comparison to alternative investment – Fundamental deterioration makes original target price no longer appropriate

Source: Schroders as of March 31, 2018.

32 Investment process Controlling portfolio risk

PRISM brings together alternative risk measurement and management tools into a single report – Online – Interactive PRISM integrates both internal and external tools – Risk analysis – Characteristics analysis – Other statistical measures The PRISM Risk Report identifies active risk and the sources of risk by decomposing active portfolio positions into Stock Specific/Sector and Style factors

Source: Schroders as of March 31, 2018.

33 Investment process Portfolio risk investment strategy manager – overview

Overview Characteristics Stock Detail

The security and portfolio information shown is for Schroder International Small Companies Fund (SISCO. The information is intended to illustrate the risk management process and should not be viewed as a recommendation to buy/sell. Please see full disclosures at the end of the presentation

34 Risk management Risk management guidelines

– Cash not to exceed 5% of the value of a portfolio – Stock weights: No formal limits, but generally between +/- 2% relative to the benchmark – Sector weights: No formal limits, but generally between +/- 10% relative to benchmark – Country weights: No formal limits, but generally between +/- 7% relative to the benchmark – Emerging Markets subject to client preference – Derivatives: Not used

Please note the benchmark will depend on the client preference i.e. S&P EPAC SmallCap, MSCI EAFE Small Cap etc.

35 Sustainability at Schroders Our experience and expertise

20years+ 1,000+ A+ ESG integration engagements in 2017 UN PRI annual assessment2 Across 12 50 #1 2017 ShareAction Responsible Dedicated ESG Countries globally Investment Survey of European specialists 3 With asset managers With 5,378 Top 5 110years+ Company meetings voted on 2017 AODP Global Climate 50 Asset Manager Index4 Combined investment experience bn $63.0 signatory Ethically screened mandates Tier 1 (10.7% of total AUM)1 UK Stewardship Code5 Source: Schroders, as at 31 March 2018, unless otherwise stated. 1As at 31 December 2017. 2PRI, 2015, 2016 and 2017 Assessment Reports. 3ShareAction, "Lifting the Lid: Responsible Investment Performance of European Asset Managers", March 2017. 4Asset Owners Disclosure Project, "Global Climate Index 2017“, April 2017 . 5Financial Reporting Council 2016 Assessment

36 Global Smaller Companies Our Fundamental Process is consistent with ESG Investing

Our Fundamental Process is consistent with ESG Investing

–We Engage with company management teams. As a team we do c.2000 visits a year

–We Vote all our proxies where practically possible

–We are Long term – our current average holding period is over 3 years highlighting the focus on business sustainability

We are well resourced Schroders Team of 12 dedicated sustainability analysts and professionals provide support and analysis by

–Quarterly Screening of Global Small Cap portfolios to identify holdings with poor ESG ratings

–Proprietary ESG Guidance Document to help analysts identify and understand key ESG issues

–Thematic research and innovative thought to challenge current thinking

–Governance team vote all shareholder meetings for our holdings where practically possible

–Dedicated ESG team member attends weekly team meeting.

Source: Schroders as of 31 March 2018.

37 The Data Insights Unit Harnessing the data science revolution

Sources of “alternative data”

- The process of collecting and analysing data has undergone a revolution. Open - Far from creating a level playing field, Market where more readily available Data Data information simply leads to greater market efficiency, this information Geo-Spati revolution is having the opposite effect. al News - To stay ahead of the game, we need to channel the data deluge and harness its Proprietary power to generate alpha in new ways. Web Data Scraped - >20 strong team of data scientists and Panels engineers with 200 years of combined data analytics experience

Source: Schroders

38 Stock Example: Howdens Joinery Site overlap

Competition Overlap Competition Intensity

• Site overlap analysis to asses possible overlap of sales with own stores and overlap with competitors

Source: Schroders Data Insights Unit, January 2017. Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

39 Important Information

Risks associated with International Small Companies: All investments involve risks including the risk of possible loss of principal. The market value of a fund’s portfolio may decline as a result of a number of factors, including adverse economic and market conditions, prospects of stocks in the portfolio, changing interest rates, and real or perceived adverse competitive industry conditions. Investing in foreign securities, may magnify risks due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. Investments in small capitalization companies generally carry greater risk than is customarily associated with larger capitalization companies, which may include, for example, less public information, more limited financial resources and product lines, greater volatility, higher risk of failure than larger companies, and less liquidity

The views and forecasts contained herein are those of the International Small Cap team and are subject to change. The information and opinions contained in this document have been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized

Past performance is no guarantee of future results. The value of an investment can go down as well as up and is not guaranteed

Schroder Investment Management North America Inc. 875 Third Avenue, New York, NY 10022-6225 (212) 641-3800 www.schroders.com/us

40 Disclosure statement

For Professional Investors only. Not Suitable for Private Customers

This presentation is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system

The returns presented represent past performance and are not necessarily representative of future returns which may vary. The value of investments can fall as well as rise as a result of market or currency movements. Exchange rates may cause the value of overseas investments and the income from them to rise or fall. Funds that invest in smaller companies that may be less liquid than in larger companies and price swings may therefore be greater than in larger companies funds

Performance Figures

Performance figures are presented on a “gross basis" not reflecting the deduction of investment advisory fees

Index Benchmark Comparison

Performance is compared to the S&P EPAC SmallCap to 12/31/2015, then MSCI EAFE Small Cap (NDR), widely accepted benchmarks for International equity accounts. The indices are unmanaged and do not reflect the deduction of any fees or expenses

Past Performance

Opinions

Schroders has expressed its own views and opinions in this presentation and these may change

Taped Telephone Lines

For your security, communications with our London office may be taped or monitored

Data Protection

For the purposes of the United Kingdom’s Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Investment Management North America Limited. Personal information you supply may be processed for the purposes of investment administration by the Schroders Group which may include the transfer of data outside of the European Economic Area. Schroder Investment Management North America Limited may also use such information for marketing activities unless you notify it otherwise in writing

June 2018

41 Contact Schroder Investment Management North America Inc. 875 Third Avenue, New York, NY 10022 (212) 641-3800 www.schroders.com/us