Arctic Norwegian Value Creation Monthly Report April 2019

FUND COMMENTS Arcc Norwegian Value Creaon (Class B) increased by 1.9% in April. Since incepon in August 2014, the fund has returned 76%, compared to 46% for the OSEFX index. The largest contributors to fund performance in April were Elkem, Yara Internaonal and . Despite de- clining product prices in most segments, Elkem reported a reasonably strong Q1-19. Lower costs and specialisaon efforts partly compensated for lower market prices, while the company reiterated the target of NOK 500 mill. profitability improvement with full effect already in 2019. Yara benefied from increasing urea and ferliser prices, while a sharp decline in European gas prices this year is providing cost relief. Moreover, during its quarterly call, management indicated increasing nitrate demand in Europe into the second quarter. The share price of Storebrand increased, likely due to an overall posive development in the equity market and a 12 increase in the Norwe- gian five year swap rate. The most negave contribuons to fund performance last month came from Schibsted, Aker BP and Aker ASA. Schibsted partly spun off ownership in its non-Nordic marketplaces into Adevinta. Schibsted’s shareholders got one Adevinta share for each Schibsted share, while Schibsted placed 5.7% of Adevinta in the market. Schibsted is retain- ing 59.3% ownership of the new company. We believe some investors have swapped from the diversified Schibsted to the pure play Adevinta. Aker BP reported somewhat higher Q1-19 costs than expected, while crude prices fell back towards month end. Aker ASA declined in tandem with weak performance by its main investment, Aker BP. Addionally, Aker Energy’s update on the appraisal drilling outside Ghana indicates less upside than previously as- sumed. Year to date, Elkem, Aker BP and Aker ASA have been the largest posive contributors to fund performance, while Lerøy Seafood, and Veidekke have been the largest detractors. Adevinta entered the fund. In addion to shares spun-off from Schibsted, we subscribed for addional Adevinta- shares in the placement. Moreover, Copenhagen-listed Maersk Drilling, the dominant jack-up rig drilling operator on the Norwegian Connental Shelf, entered the fund. We increased our holdings in and Lerøy. All of our shares in Børs VPS Holding were divested. We reduced our posion in significantly. At the end of the month, the porolio was valued at 14.2 mes earnings (12 m fwd) and 1.6 mes book equity. Corresponding figures for the Norwegian market were 15.2 and 1.8, respecvely. Oslo, May 2019 Sindre Sørbye Ole E. Dahl Tore Mengshoel Thomas Rasmussen Porolio Manager Porolio Manager Porolio Manager Analyst

ABOUT THE FUND Arcc Norwegian Value Creaon is research driven and truly index-independent UCITS fund. The investment process focus on idenfying companies which are considered to be value-creang over me at a reasonable price. The porolio is con- structed by boom up stock picking. There are no constraints regarding sectors and the goal is to achieve the best possible long-term risk-adjusted return. The funds benchmark is Mutual Fund Index (OSEFX).

20% 16.0 % 14.3 % 15% 12.6 % 12.9 % 10.7 % 10% 7.8 % 8.5 %

5% 3.4 % 1.9 % 1.9 %

0% Month YTD 12m 36m p.a. 60m p.a. Incep. p.a. Arctic Norwegian Value Crea tion II Class B (25/8‐14) OSEFX FUND COMPOSITION END OF MONTH

Real Estate 0.5% 10 largest positions Energy 18.3% Kongsberg Gruppen ASA 4.6 % Aker ASA 4.0 % Industrials 9.7% Aker BP ASA 4.4 % Elkem ASA 4.0 % Health Care 0.0% Lerøy Seafood Group 4.2 % Europris ASA 3.8 % Consumer Discretionary 6.5% ASA 4.1 % Forsikring AS 3.4 % Materials 11.5% ASA 4.0 % DNB Bank ASA 3.2 % Information Technology 5.9% Financials 21.9% 5 largest overweights +/‐ 5 largest underweights +/‐ Consumer Staples 13.8% Elkem ASA 4.0 % ASA -8.9 % Telecommunication Services 4.0% Kongsberg Gruppen 3.6 % DNB ASA -5.8 % Utilities 1.4% Europris ASA 3.4 % Mowi ASA -5.7 % Sbanken ASA 2.7 % Telenor -5.2 % 0% 5% 10% 15% 20% 25% Aker 2.5 % Orkla -4.5 %

FUND PERFORMANCE AND RISK FIGURES —CLASS B NOK (FORMER CLASS A)

3 6 Since Month months months YTD 1 year 3 years launch Fund 1.9 % 7.2 % 6.3 % 14.3 % 7.8 % 56.2 % 76.7 % Benchmark 1.9 % 5.8 % -0.2 % 10.7 % 3.4 % 42.9 % 46.5 % Difference -0.1 % 1.4 % 6.4 % 3.5 % 4.4 % 13.2 % 30.2 % Vinx Nordic Net, NOK 2.9 % 8.4 % 9.8 % 11.9 % 7.1 % 30.1 % 64.0 % Euro Stoxx 600, EUR 3.8 % 10.3 % 9.8 % 17.3 % 4.5 % 24.6 % 30.4 % S&P 500 TR, USD 4.0 % 9.5 % 9.8 % 18.2 % 13.5 % 51.6 % 62.3 % MSCI AC World, LC 3.6 % 8.5 % 9.4 % 16.3 % 7.5 % 41.3 % 44.4 %

5 top contribut. Fund Fund Contri‐ 5 bottom contribut. Fund Fund Contri‐ year to date weight return bution year to date weight return bution Elkem Asa 3.6 % 60.4 % 1.82 % Leroy Seafood Group 3.5 % -5.5 % -0.20 % Aker Bp Asa 5.0 % 32.7 % 1.54 % Veidekke Asa 1.7 % -0.5 % -0.04 % Aker Asa-A Shares 3.9 % 32.4 % 1.01 % Norsk Hydro Asa 1.1 % -5.7 % -0.03 % Asa 2.3 % 48.0 % 0.97 % Fjord1 Asa 1.6 % -2.3 % -0.03 % Gjensidige Forsikrin 3.3 % 29.8 % 0.91 % Drilling Co Of 1972/ 0.1 % -0.4 % -0.01 %

Standard Sharpe Tracking Information Portfolio characteristics Deviation Ratio Error Ratio Arctic Norwegian Value Creation 10.8 % 1.4 4.2 % 0.8 Benchmark 9.8 % 1.2 *) Based on 36 months performance Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2019 6.64 % 4.75 % 0.42 % 1.88 % 14.28 % 2018 -0.75 % -0.84 % -0.69 % 6.85 % 4.70 % -0.03 % 0.80 % 2.02 % 1.70 % -7.32 % -0.19 % -6.84 % -1.47 % 2017 1.70 % 0.29 % -2.35 % 4.19 % 0.70 % -0.07 % 3.81 % -0.48 % 4.53 % 3.17 % -2.03 % 3.09 % 17.51 % 2016 -7.33 % 2.60 % 2.10 % 4.08 % 3.70 % -3.14 % 3.81 % 1.29 % 1.71 % 3.60 % 1.99 % 3.96 % 19.23 % 2015 4.66 % -1.15 % 1.42 % 3.48 % 0.13 % -2.25 % 1.62 % -5.13 % -1.22 % 3.68 % 4.05 % -0.76 % 8.34 % 2014 0.44 % 0.28 % -0.88 % 1.49 % 2.05 % 3.39 %

Disclaimer: Historical returns are no guarantee for future returns. Future 100.0 % returns will depend, inter alia, on market developments, the fund man‐ ager’s skill, the fund’s risk profile and subscripon and management fees. 80.0 % The return may become negave as a result of negave price develop‐

60.0 % ments. Arcc Fund Management AS seeks to the best of its ability to ensure that all informaon given in this report is correct, however, makes reserva‐ 40.0 % ons regarding possible errors and omissions. Statements in the report reflect the porolio managers’ viewpoint at a given me, and this view‐ 20.0 % point may be changed without noce. The report should not be perceived as an offer or recommendaon to buy or sell financial instruments. Arcc 0.0 % Fund Management AS does not assume responsibility for direct or indirect loss or expenses incurred through use or understanding of the report. -20.0 % Employees of Arcc Fund Management AS may be owners of securies 08/14 01/15 06/15 11/15 04/16 09/16 02/17 07/17 12/17 05/18 10/18 03/19 issued by companies that are either referred to in this rapport or are part of Arctic Norwegian Value Creation Class B (Start 22.08.14) OSEFX the fund's porolio.