Arctic Norwegian Value Creation Monthly Report January 2020

FUND COMMENTS Arcc Norwegian Value Creaon (Class B) declined by 2.2% in January. Since incepon in August 2014, the fund has returned 82% compared to a return of 55% for the Norwegian OSEFX benchmark. The largest posive contribuons to fund performance in January came from , Scatec Solar and . Gjensidige reported a strong Q4 with healthy underwring results with improvements in claims as well as cost rao. Moreover, run-off gains as well as improved results from the investment porolio gave addional support. General Private and General Insurance Commercial in delivered parcularly good figures. The company connues to adjust its prices and is sasfied with the renewals in the Commercial business. The Board has proposed NOK 12.25 in dividend, of which NOK 5 will be an extraordinary dividend due to its strong solvency rao. Scatec connued its rapid growth through Q4 as its power producon, on a proporonate basis, increased by 176% y-o-y. Addionally, the management highlighted several growth opportunies. However, a 50% increase in the share price since mid-December must also be seen in the light of increased investor appete for “pure-play” companies. Telenor reported a Q4 slightly ahead of expectaons, driven by solid performance in Norway, Thailand and Myanmar. In addion, the company’s guidance for 2020 was roughly in line with expectaons, keeping capex guidance at 15% of sales, which some had feared would be increased. In September, Telenor ended negoaons on a merger of their Asian assets with Axiata without any results. In January, there were rumors that Telenor had restarted discussions, but the company has not confirmed this. The most negave contribuons to performance last month came from XXL, BW Offshore and Aker BP. XXL issued a profit warning for Q4 due to weak sales with 12% negave like-for-like growth. The company guides for an EBITDA (ex IFRS 16) of NOK 335-365 mill in 2019, which is considerably weaker than the, at that me disappoinng, NOK 541 mill in 2018. Inventories as well as campaign acvity remain high, increasing the risk of a write down of inventories. Moreover, an equity issue can not be ruled out. XXL has appointed Pål Wibe, currently CEO of Europris, as new CEO. An Extraordinary General Assembly approved a new long-term management incenve program, including Restricted Shares Units and an equity based investment program. Its main competor in the Norwegian market, Gresvig, filed for bankruptcy on February 3rd, 2020. BW Offshore and Aker BP declined as the price of Brent crude fell by close to USD 13/barrel during the month. BW Offshore announced its intenon to spin off its oil producon subsidiary, BW Energy, during the first quarter. Aker BP recorded all-me high producon of 191.1 thousand barrels per day, up 31% sequenally, on the back of a successful start-up of the giant Johan Sverdrup field as well as strong operaons on other hubs. We increased our investments in and Yara and sold close to half of our posion in Scatec Solar. At the end of January, the porolio was valued at 13.4 mes earnings (12m fwd) and 1.5 mes book value. Corresponding figures for the Norwegian market were 14.2 and 1.8, respecvely. , February 2020 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).

15% 11.9 % 11.6 % 10.4 % 10.3 % 11.0 % 9.8 % 9.1 % 10% 8.4 %

5%

0%

-1.8 % -1.8 % -5% -2.2 % -2.2 % Month YTD 12m 36m p.a. 60m p.a. Incep. p.a. Arctic Norwegian Value Creation Class B (25/8-14) OSEFX FUND COMPOSITION END OF MONTH

Real Estate 0.0% 10 largest positions Energy 12.3% Leroy Seafood Group AS 5.3 % Aker BP ASA 3.7 % Industrials 13.9% Kongsberg Gruppen ASA 5.2 % Telenor ASA 3.7 % Health Care 0.0% Europris ASA 4.7 % ASA 3.2 % Consumer Discretionary 9.9% Schibsted ASA 4.4 % ASA 3.2 % Materials 12.0% Aker ASA 4.2 % DNB ASA 3.1 % Information Technology 5.2% Financials 23.4% 5 largest overweights +/- 5 largest underweights +/- Consumer Staples 6.6% Europris ASA 4.3 % ASA -8.7 % Telecommunication Services 11.0% Kongsberg Gruppen 4.1 % ASA -6.6 % Utilities 1.0% Lerøy Seafood Group 3.8 % DNB ASA -6.2 % Aker 3.0 % Telenor -5.1 % 0% 5% 10% 15% 20% 25% Sbanken ASA 2.7 % Orkla -4.4 %

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

3 6 Since Month months months YTD 1 year 3 years launch Fund -2.2 % 3.9 % 6.8 % -2.2 % 10.4 % 34.1 % 82.1 % Benchmark -1.8 % 2.5 % 7.5 % -1.8 % 11.9 % 32.2 % 54.9 % Difference -0.5 % 1.4 % -0.7 % -0.5 % -1.5 % 1.8 % 27.2 % Vinx Nordic Net, NOK 3.7 % 6.1 % 15.7 % 3.7 % 24.0 % 44.2 % 87.6 % Euro Stoxx 600, EUR -1.2 % 3.8 % 7.3 % -1.2 % 17.9 % 24.0 % 39.3 % S&P 500 TR, USD 0.0 % 6.7 % 9.3 % 0.0 % 21.7 % 50.3 % 80.4 % MSCI AC World, LC -0.6 % 5.0 % 7.2 % -0.6 % 17.0 % 36.6 % 55.7 %

5 top contribut. Fund Fund Contri- 5 bottom contribut. Fund Fund Contri- year to date weight return bution year to date weight return bution Gjensidige Forsikrin 2.9 % 9.1 % 0.26 % Xxl Asa 1.6 % -29.3 % -0.59 % Scatec Solar Asa 1.2 % 26.8 % 0.25 % Bw Offshore Ltd 1.9 % -23.0 % -0.46 % Telenor Asa 3.4 % 6.0 % 0.19 % Aker Bp Asa 4.0 % -9.3 % -0.37 % Kongsberg Gruppen As 5.2 % 3.6 % 0.18 % Norsk Hydro Asa 2.6 % -11.1 % -0.32 % Tietoevry Oyj 2.2 % 7.7 % 0.17 % Nrc Group Asa 1.7 % -14.5 % -0.26 %

Standard Sharpe Tracking Information Portfolio characteristics Deviation Ratio Error Ratio Arctic Norwegian Value Creation 10.8 % 1.0 4.4 % 0.2 Benchmark 9.6 % 1.1 *) Based on 36 months performance Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2020 -2.21 % -2.21 % 2019 6.64 % 4.75 % 0.42 % 1.88 % -3.92 % 2.27 % -1.84 % -0.34 % 1.98 % 1.18 % 1.74 % 4.41 % 20.41 % 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 % *) August performance from 22.08.14 - 31.08.14

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 02/15 08/15 02/16 08/16 02/17 08/17 02/18 08/18 02/19 08/19 issued by companies that are either referred to in this rapport or are part of Arctic N orwegian Value Creation Class B (Start 22.08.14) OSEFX the fund's porolio.