Sprott Energy Fund ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE DECEMBER 31

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1 Sprott Energy Fund ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE DECEMBER 31 The annual management report of fund performance is an analysis and explanation that is designed to complement and supplement an investment fund s financial statements. This report contains financial highlights but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling , by visiting our website at or SEDAR at or by writing to us at: Ninepoint Partners LP, Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2700, P.O. Box 27, Toronto, Ontario M5J 2J1. Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure.

2 Management Discussion of Fund Performance Investment Objective and Strategies The objective of the Sprott Energy Fund (the Fund ) is to achieve long-term capital growth. The Fund invests primarily in equity and equity related securities of companies that are involved directly or indirectly in the exploration, development, production and distribution of oil, gas, coal, uranium and other related activities in the energy and resource sector. The Fund may follow a more concentrated investment approach and from time to time overweight certain sub-sectors within the energy and resource sector, when deemed appropriate by the Portfolio Adviser. This may result in the Fund s portfolio weighting being substantially different from the weightings of the S&P/TSX Capped Energy Total Return Index. As part of its investment strategy, the Fund may: engage in short selling up to 20% of the Fund s total net asset value as a result of special relief it obtained from Canadian securities regulators; and invest in and overweight cash and fixed income securities based on the market outlook for the energy sector. Risks The risks of investing in the Fund are described in the Fund s simplified prospectus. This Fund is suitable only for investors seeking long-term capital growth with a high tolerance for risk and volatility. Investors should be comfortable with high investment risks and have a long-term investment horizon. There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. Results of Operations and Recent Developments The Fund, Series A returned -35.6% in, while its benchmark, the S&P/TSX Capped Energy Total Return Index, returned -10.6%. The energy sector had a challenging, as oil prices hit multi-year highs while market sentiment caused oil equities to fall significantly over the first three quarters of the year. Oil inventories began the year above the five-year average, but production cuts by the Organization of Petroleum Exporting Countries and disappointing U.S. production growth, combined with exceedingly strong demand growth, led to a massive drawdown in storage that occurred at the fastest pace in history. The Fund maintained a very strong bias towards the services sub-sector, with a particular emphasis on pressure pumping (also known as fracking). The Fund s positions in this sub-sector have been trading below historical multiples in both the U.S. and Canada. The Fund s exposure to frac sand miners detracted from performance in the year owing to concerns about capacity additions, despite tight supply and rising prices. While the Manager sold the Fund s positions in U.S. frac sand companies, the position in Source Energy Services Ltd. was increased. Source Energy controls roughly 60% of the Canadian frac sand market, and Canadian exploration and production ( E&P ) companies are using greater amounts of frac sand on a per-well basis than U.S. companies. The Manager has a positive outlook on oil and expects prices to continue to rise gradually. Energy sector equities did not rally with oil prices last year, so the Manager believes that, broadly, stocks will do well in the months ahead. The Fund continues to favour oil over gas, particularly Canadian natural gas companies. For E&P exposure, the Manager favours the U.S. over Canada. The Manager believes the lack of oil and natural gas pipeline takeaway capacity will continue to cause Canadian E&P stocks to underperform their U.S. peers. The Fund s net asset value decreased by 12.5% during the period, from million on December 31, to million on December 31,. This change was predominantly due to net subscriptions of 51.2 million, offset by net realized and unrealized losses on investments of 66.4 million and Fund expenses of 7.7 million. The trading expense ratio and portfolio turnover ratio decreased compared to the prior period.

3 Ninepoint Partners LP is the manager and portfolio advisor of the Fund. Prior to August 1,, Sprott Asset Management LP was the manager and portfolio advisor of the Fund. Ninepoint Partners LP assumed the portfolio management of the Canadian diversified asset business of Sprott Asset Management LP on August 1,. Related Party Transactions MANAGEMENT FEES The Fund pays a management fee to the Manager, at an annual rate of 2.5% for Series A units, 1.5% for Series F units and as negotiated by the unitholders of Series I. The management fee is calculated and accrued daily based on daily net asset value of that series of the Fund, and is paid monthly. For the year ended December 31,, the Fund incurred management fees of 3,433,400 (including taxes). The breakdown of the services received in consideration of the management fees, as a percentage of management fees, is as follows: Portfolio Advisory Trailing Commissions Sprott Energy Fund Series A 62% 38% Sprott Energy Fund Series F 100% Sprott Energy Fund Series I 100% Out of the management fees that the Manager or former manager received from the Fund, the Manager or former manager paid trailer commissions of 33,588 during the year ended December 31, to Sprott Private Wealth LP, an affiliate of the former manager. INCENTIVE FEES The Fund also pays the Manager an annual incentive fee, equal to a percentage of the average net asset value of the applicable Series of the Fund. Such percentage will be equal to 10% of the difference by which the return in net asset value per unit of the applicable Series from January 1 to December 31 exceeds the percentage return of the S&P/TSX Capped Energy Total Return Index for the same period. If the performance of a Series of the Fund in any year is less than the performance of the Index (the Deficiency ), then no incentive fee will be payable until the performance of the applicable Series, on a cumulative basis, has exceeded the amount of the Deficiency. For the year ended December 31,, the Fund did not accrue any incentive fees. OPERATING EXPENSES The Fund pays its own operating expenses, which include, but are not limited to, audit, legal, custodial, trustee, filing and administrative expenses as well as unitholder reporting costs. The Manager pays certain of these expenses on behalf of the Fund and then is reimbursed by the Fund. OTHER RELATED PARTY TRANSACTIONS The Fund relied on the approval, positive recommendation or standing instruction from the Fund s Independent Review Committee with respect to any related party transactions.

4 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the year ended December 31, and the years shown. The Fund s Net Assets per Unit 1 Series A Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.79) (1.45) (1.37) (1.40) (0.86) Realized gains (losses) for the period (5.66) 6.57 (2.86) Unrealized gains (losses) for the period (0.40) 3.20 (0.52) (2.82) 1.57 Total increase (decrease) from operations 2 (6.80) 8.48 (4.33) (1.11) 1.19 Distributions: From income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets, end of period Series F Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.56) (1.79) (1.02) (1.00) (0.61) Realized gains (losses) for the period (6.24) 7.23 (3.44) Unrealized gains (losses) for the period (1.21) (3.47) 1.76 Total increase (decrease) from operations 2 (6.30) 8.67 (5.20) (1.57) 1.52 Distributions: From income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets, end of period

5 Series I Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.04) (1.79) (0.14) Realized gains (losses) for the period (2.90) Unrealized gains (losses) for the period (0.76) (1.58) 0.15 Total increase (decrease) from operations 2 (3.68) Distributions: From income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets, end of period This information is derived from the Fund s audited annual financial statements. 2 The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period. Net assets and distributions are based on the actual number of units outstanding at the relevant time. This table is not intended to be a reconciliation of beginning to ending net assets per unit. 3 All outstanding Series I units were fully redeemed during. Subsequently, Series I units was subscribed for on January 3,.

6 Ratios and Supplemental Data Series A Total net asset value (000s) 1 79, ,496 35,152 45,645 52,895 Number of units outstanding 1 6,170,667 5,350,523 2,951,643 2,816,868 3,099,852 Management expense ratio % 3.08% 3.33% 3.20% 3.28% Trading expense ratio % 6.15% 5.08% 3.36% 2.17% Portfolio turnover rate % 1,293.60% % % % Net asset value per unit Series F Total net asset value (000s) 1 76,170 73,943 12,332 10,756 12,797 Number of units outstanding 1 5,312,933 3,355, , , ,048 Management expense ratio % 3.37% 2.25% 2.12% 2.17% Management expense ratio before incentive fee % 1.96% 2.25% 2.12% 2.17% Trading expense ratio % 6.15% 5.08% 3.36% 2.17% Portfolio turnover rate % 1,293.60% % % % Net asset value per unit Series I Total net asset value (000s) 1 2,736 1,565 Number of units outstanding 1 412,902 73,821 Management expense ratio % 0.46% Trading expense ratio % 2.17% Portfolio turnover rate % % Net asset value per unit The information is provided as at December 31 of the years shown. 2 Management expense ratio ( MER ) is based on total expenses (including incentive fees, if any; excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of the daily average net asset value during the period. 3 The trading expense ratio ( TER ) represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The TER includes dividend expense and securities borrowing expense paid by the Fund in connection with securities sold short. 4 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser trades its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund.

7 Past Performance The indicated rates of return are the historical total returns including changes in unit values and assume reinvestment of all distributions in additional units of the relevant Series of the Fund. These returns do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that may reduce returns. Please note that past performance is not indicative of future performance. All rates of returns are calculated based on the Net Asset Value of the particular Series of the Fund. Year-by-Year Returns The following chart indicates the performance of each Series of the Fund for the previous twelve-month periods ended December 31 shown, unless otherwise noted. The chart shows, in percentage terms, how much an investment made on the first day of each period would have grown or decreased by the last day of each period. Return (%) * * * ** Series A Series F Series I * There were no Series I units outstanding as at the period end. ** Return from January 3, to December 31, for Series I units.

8 Long and Short Portfolio Returns The following table illustrates the contribution to the return of the Fund (before the impact of Fund expenses) by the long portfolio and the short portfolio of the Fund for the previous twelve-month periods ended December 31 shown, unless otherwise noted. For the purposes of this disclosure, certain derivatives may be considered to be part of the short portfolio. Return (%) * Long Portfolio Short Portfolio * The Fund did not hold short portfolio positions prior to Annual Compound Returns The following table illustrates the annual compound total return for each Series of units of the Fund for the periods shown. As a basis of performance comparison, the annual compound return of the Fund is compared to that of the S&P/TSX Capped Energy Total Return Index (the Index ). The Index is comprised of securities of Canadian energy sector issuers listed on the TSX. Since the Fund does not necessarily invest in the same securities or in the same proportion as the Index, the performance of the Fund is not expected to equal the performance of the Index. 1-Year 3-Year 5-Year 10-Year Since Inception* Sprott Energy Fund Series A -35.6% -7.2% -3.4% -5.9% 2.6% Sprott Energy Fund Series F -34.9% -6.7% -2.6% -5.0% 3.6% S&P/TSX Capped Energy Total Return Index -10.6% -1.8% -2.1% -3.0% 3.6% Sprott Energy Fund Series I -33.7% S&P/TSX Capped Energy Total Return Index -10.6% Long portfolio -31.2% -3.1% 0.2% Short portfolio 0.0% 0.0% 0.1% * Since launch date of April 15, 2004 for Series A and F. Returns for Series I are from January 3, to December 31,. There were no Series I units outstanding as at December 31,, December 31, and December 31,.

9 Summary of Investment Portfolio As at December 31, Portfolio Allocation All Long Positions % of Net Asset Value Issuer % of Net Asset Value Long Positions Keane Group Inc Oil & Gas Equipment & Services 63.3 Trican Well Service Ltd Oil & Gas Exploration & Production 34.8 C&J Energy Services Inc. 9.3 Total Long Positions 98.1 Source Energy Services Ltd. 9.2 Cash 1.6 Calfrac Well Services Ltd. 6.8 Other Net Assets 0.3 WPX Energy Inc. 6.7 Total Net Asset Value Devon Energy Corp. 6.6 Continental Resources Inc. 6.3 Enerplus Corp. 6.2 STEP Energy Services Ltd. 5.8 Secure Energy Services Inc. 3.9 Crescent Point Energy Corp. 3.6 Raging River Exploration Inc. 3.5 Weatherford International PLC 3.3 Halliburton Co. 2.9 Birchcliff Energy Ltd. 1.9 Cash 1.6 Sky Digital Stores Corp. (R1933) 0.0 All long positions as a percentage of net asset value 99.7 The Fund held no short positions as at December 31,. This summary of investment portfolio may change due to the ongoing portfolio transactions of the Fund. Quarterly updates of the Fund s investment portfolio are available on the Internet at

10 Corporate Information Corporate Address Ninepoint Partners LP Royal Bank Plaza, South Tower 200 Bay Street, Suite 2700, P.O. Box 27 Toronto, Ontario M5J 2J1 T TOLL-FREE F E invest@ninepoint.com For additional information visit our website: Call our mutual fund information line for daily closing prices: or Auditors KPMG LLP Bay Adelaide Centre 333 Bay Street Suite 4600 Toronto, Ontario M5H 2S5 Legal Counsel Borden Ladner Gervais LLP Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 M 03 E