Arctic Norwegian Value Creation Monthly Report August 2019

FUND COMMENTS Arcc Norwegian Value Creaon (Class B) fell by 0.3% in August bringing return year to date to 9.9%. Since incepon in August 2014, the fund has returned 69.9% compared to a return of 42.0% for the Norwegian OSEFX benchmark. The largest posive contribuons to fund performance in August came from Schibsted, Veidekke and Lerøy Group. Schibsted connued to perform well supported by strong share price development for its main asset, Adevinta. Adevinta comprises more than 2/3 of Schibsted’s market value. Schibsted started its buy-back program for up to 2% of the shares in August. The Tinius Trust, its main shareholder, increased its holdings during last month. Veidekke reported Q2 figures ahead of expectaons on both topline and margin. Previously taken measures to improve margins, especially within the Civil Engineering and Industrial segments, are starng to show results, while the order book of NOK 35 billion is at all-me high. With an improving balance sheet, the NOK 5 dividend per share should be intact, offering an aracve yield. The share price of Lerøy benefied from a generally strong senment for the aquaculture sector. Having said that, Lerøy reported a somewhat disappoinng second quarter while prices retreated during the month. The most negave contribuons to performance last month came from XXL, and B2 Holding. XXL’s Q2 in July showed weak like-for-like growth in Norway and uncertainty about sales connued last month. Moreover, XXL has manipulated the number of items sold at pre-discount sales prices at some stores in order to jusfy large percentwise campaign discounts. The Norwegian Consumer Authority will look into the maer and XXL has iniated its own invesgaon. Gresvig Retail Group, the second largest sport retail chain in Norway will rebrand its G-Max and G-Sport stores into Intersport stores. Sport retail sales for July in Norway and Sweden increased 3.7% and 3.6% respecvely. Storebrand’s share price fell as long term interest rates declined. Norwegian five year swap rates declined by 24 bps to 1.51%, and - ceteris paribus - this may hit the company’s solvency rao by almost 10 %- points. The CEO of B2 Holding stepped down in the middle of August. A week later, the company issued a profit warning. The company took write-downs of NOK 421 mill. as collecon esmates have proven to be too opmisc. B2 Holding’s Q2 report at the end of the month was in line with adjusted expectaons. Year to date, Bonheur, Schibsted and have been the largest posive contributors to fund performance, while B2 Holding, and Sbanken have been the largest detractors. We increased our investments in Veidekke and Storebrand, while we reduced our holdings in Adevinta, Mowi and Yara. At the end of August, the porolio was valued at 13.2 mes earnings (12m fwd) and 1.6 mes book value. Corresponding figures for the Norwegian market were 14.1 and 1.7, respecvely. Oslo, September 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 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% 12.4 % 11.2 % 11.1 % 11.1 % 9.9 % 9.6 % 10% 7.7 %

5% 0.6 % 0% -0.3 % -5% -3.7 % -3.0 % Month YTD 12m 36m p.a. 60m p.a. Incep. p.a. Arctic Norwegian Value Creation II Class B (25/8-14) OSEFX FUND COMPOSITION END OF MONTH

Real Estate 0.5% 10 largest positions Energy 16.9% Lerøy Seafood Group 5.7 % Aker BP ASA 4.0 % Industrials 11.3% Kongsberg Gruppen ASA 5.0 % Aker ASA 4.0 % Health Care 0.0% Schibsted ASA 4.8 % ASA 4.0 % Consumer Discretionary 8.6% ASA 4.2 % Evry ASA 3.3 % Materials 11.3% Europris ASA 4.2 % Gjensidige Forsikring AS 3.3 % Information Technology 6.8% Financials 21.2% 5 largest overweights +/- 5 largest underweights +/- Consumer Staples 8.0% Lerøy Seafood Group 4.0 % ASA -8.4 % Telecommunication Services 11.6% Kongsberg Gruppen 4.0 % Mowi ASA -6.1 % Utilities 1.7% Europris ASA 3.8 % DNB ASA -5.8 % Aker 2.8 % Telenor -5.2 % 0% 5% 10% 15% 20% 25% EVRY 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 -0.3 % 0.0 % -1.7 % 9.9 % -3.7 % 42.1 % 69.9 % Benchmark 0.6 % 1.6 % 1.0 % 9.6 % -3.0 % 37.5 % 45.0 % Difference -1.0 % -1.6 % -2.6 % 0.2 % -0.7 % 4.6 % 24.9 % Vinx Nordic Net, NOK 1.7 % 6.2 % 4.6 % 12.4 % 1.0 % 27.5 % 64.8 % Euro Stoxx 600, EUR -1.3 % 3.4 % 4.1 % 15.2 % 2.2 % 20.1 % 28.1 % S&P 500 TR, USD -1.6 % 6.9 % 6.2 % 18.3 % 2.9 % 43.2 % 62.4 % MSCI AC World, LC -2.0 % 4.6 % 3.7 % 14.6 % 0.8 % 32.2 % 42.3 %

5 top contribut. Fund Fund Contri- 5 bottom contribut. Fund Fund Contri- year to date weight return bution year to date weight return bution Bonheur Asa 2.3 % 107.6 % 1.77 % B2 Holding Asa 1.7 % -38.3 % -0.62 % Schibsted Asa-B Shs 4.2 % 34.2 % 1.56 % Sbanken Asa 2.6 % -14.3 % -0.38 % Gjensidige Forsikrin 3.3 % 36.3 % 1.08 % Drilling Co Of 1972/ 0.7 % -24.6 % -0.37 % Aker Bp Asa 4.5 % 17.0 % 0.93 % Norsk Hydro Asa 1.5 % -23.7 % -0.37 % Systems Asa 2.7 % 33.8 % 0.85 % Xxl Asa 2.8 % -12.4 % -0.36 %

Standard Sharpe Tracking Information Portfolio characteristics Deviation Ratio Error Ratio Arctic Norwegian Value Creation 10.9 % 1.1 4.4 % 0.3 Benchmark 9.7 % 1.1 *) 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 % -3.92 % 2.27 % -1.84 % -0.34 % 9.85 % 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 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.