9DEC NCE DIVERSIFIED FLOW-THROUGH (13) LIMITED PARTNERSHIP. $125,000,000 (Maximum Offering) $5,000,000 (Minimum Offering)

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1 This prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. PROSPECTUS Initial Public Offering January 18, DEC NCE DIVERSIFIED FLOW-THROUGH (13) LIMITED PARTNERSHIP $125,000,000 (Maximum Offering) $5,000,000 (Minimum Offering) A maximum of 5,000,000 and a minimum of 200,000 Limited Partnership Units Subscription Price: $25.00 per Unit Minimum Subscription: 200 Units The Partnership is a non-redeemable investment fund. The Partnership: NCE Diversified Flow-Through (13) Limited Partnership (the Partnership ), a limited partnership established under the laws of the Province of Ontario, has been created for the purpose of investing in flow-through shares ( Flow-Through Shares ) of Resource Companies (defined below) engaged in oil and gas exploration, development and/or production, or mineral exploration, development and/or production, or renewable energy exploration and development, and related resource business issuers such as pipeline or service companies and utilities. Investment Objective: The objective of the Partnership is to achieve capital appreciation according to the investment strategies detailed in this prospectus and to maximize the tax benefits received by investors. See Investment Objective. The Partnership will initially invest in Flow-Through Shares of Resource Companies. See Investment Strategies and Investment Restrictions. Investment Strategies: It is intended that the Gross Proceeds (defined below) will be allocated by the Partnership among various Resource Companies. The allocation of the Partnership s investment portfolio will be determined based on the investment opportunities available at the time of investment. See Investment Strategies. The Partnership will endeavour to invest the Gross Proceeds in Flow-Through Shares on or before December 31, Subject to certain limitations, limited partners of the Partnership ( Limited Partners ) with sufficient income may be able to claim certain deductions for income tax purposes. See Investment Strategies. The General Partner: The general partner of the Partnership is NCE Diversified Management (13) Corp. (the General Partner ). The General Partner is responsible for appointing the Manager (defined below) and monitoring the activities of the Partnership on behalf of the Partnership. See Organization and Management Details of the Partnership The General Partner. The Manager and Portfolio Advisor: Sentry Investments Inc. (the Manager or Sentry ) has been retained by the General Partner, and has been assigned such powers and duties as are necessary, to direct the business, operations and affairs of the Partnership and provide day-to-day management services to the Partnership, including, without limitation, the provision of advice on and the management of the investment portfolio of the Partnership. See Organization and Management Details of the Partnership The Manager and Portfolio Advisor. Termination of the Partnership: Units are non-redeemable. To provide the potential for liquidity and long-term capital growth, the General Partner intends to implement a liquidity transaction (the Liquidity Transaction ) at a date no later than May 31, 2015, pursuant to which the net assets of the Partnership would be transferred to Sentry Corporate Class Ltd. ( Corporate Class Ltd. ), an open-end mutual fund corporation managed by the Manager, or another mutual fund that is a reporting issuer and that is compliant with National Instrument Mutual Funds (a Designated Mutual Fund ), on a tax deferred basis in exchange for mutual fund shares of Corporate Class Ltd., or shares of such other Designated Mutual Fund, following which such shares will be distributed to the Limited Partners pro rata on a tax deferred basis. The Partnership Agreement (defined below) states that the Liquidity Transaction must be implemented by May 31, 2015, failing which the Partnership will be terminated by August 31, 2015 and the Limited Partners will receive their pro rata share of the net assets of the Partnership (at which time the Partnership will primarily own securities of Resource Companies and cash). See Termination of the Partnership Liquidity Transaction, Attributes of the Units Details of the Partnership Agreement and Risk Factors.

2 The Offering: This offering (the Offering ) consists of a minimum of $5,000,000 (200,000 Partnership units ( Units )) (the Minimum Offering ) and a maximum of $125,000,000 (5,000,000 Units) (the Maximum Offering ). A Subscriber (defined below) must purchase a whole number of Units at $25.00 per Unit. A Subscriber must purchase a minimum of 200 Units. Upon the purchase of Units a Subscriber will become a Limited Partner on the date of the closing (a Closing ) at which time such Subscriber s subscription is accepted. Agents Net Proceeds to the Price to Public (1) Commission (2) Partnership (2)(3) Per Unit... $ $ $ Maximum Offering... $125,000,000 $7,187,500 $117,812,500 Minimum Offering (4)... $ 5,000,000 $ 287,500 $ 4,712,500 Notes: (1) The Subscription Price (defined below) was established by the General Partner. (2) The Agents (defined below) will be paid a commission equal to 5.75% of the Gross Proceeds, which will be paid by the Partnership from the proceeds of the Loan Facility (defined below). See Investment Strategies Loan Facility and Plan of Distribution. As a result, it is expected that for each Unit sold, the full Subscription Price of $25.00 will be available for investment by the Partnership in Flow-Through Shares. (3) Expenses of the issue (estimated at $750,000) may, in the discretion of the Partnership, be paid from the proceeds of the Loan Facility to the extent that such expenses do not in the aggregate exceed 2% of the Gross Proceeds. The Manager has agreed to pay all expenses of the issue that exceed 2% of the Gross Proceeds. Accordingly, the Partnership s share of such expenses in the case of the Minimum Offering is estimated to be $100,000. See Investment Strategies Loan Facility and Fees and Expenses. (4) There will be no Closing unless and until subscriptions for the Minimum Offering are received and other closing conditions of this Offering have been satisfied, at which time an initial Closing will take place. For these purposes, the Minimum Offering will be subscribed for if Gross Proceeds of at least $5,000,000 are received. If the Minimum Offering is not subscribed for within 90 days after the date of the receipt for the final prospectus, this Offering may not continue and subscription proceeds received will be returned to the Subscribers, without interest or deduction, unless consent is obtained from Canadian securities regulators and those who have subscribed for Units on or before such date. The proceeds from subscriptions will be received by the Agents or such other registered dealers or brokers as are authorized by the Agents pending the initial Closing and any subsequent Closing. If the initial Closing takes place but subscriptions for the Maximum Offering have not been received, the unsold Units may continue to be offered for sale and one or more Closings may occur within 90 days after the date of the receipt for the final prospectus. The identification number issued for this tax shelter is TS The Québec tax shelter identification number is QAF The identification number issued for this tax shelter shall be included in any income tax return filed by the investor. Issuance of the identification number is for administrative purposes only and does not in any way confirm the entitlement of an investor to claim any tax benefits associated with the tax shelter. Le numéro d inscription/d identification attribué à cet abri fiscal doit figurer dans toute déclaration d impôt sur le revenu produite par l investisseur. L attribution de ce numéro n est qu une formalité administrative et ne confirme aucunement le droit de l investisseur aux avantages fiscaux découlant de cet abri fiscal. There is no market through which these securities may be sold and purchasers may not be able to resell securities purchased under this prospectus. This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity of the securities, and the extent of issuer regulation. See Risk Factors. THIS IS A SPECULATIVE OFFERING. THIS IS A BLIND POOL OFFERING. The purchase of Units involves a number of risk factors. Limited Partners may not receive any return on or repayment of their capital contributions to the Partnership. An investment in Units is appropriate only for investors who have the capacity to absorb a loss of their investment. Investors who are not willing to rely on the discretion and judgment of the General Partner, which has no operating or investment history and is expected only to have nominal assets, and of the Manager and key personnel of the Manager should not subscribe for Units. The purchase price per Unit paid at a Closing, subsequent to the initial Closing, may be lesser or greater than the Net Asset Value per Unit (defined below) at the time of purchase. See Risk Factors. There is no guarantee that an investment in the Partnership will earn a specified rate of return or any return in the short or long term. Regardless of any tax advantage that may be obtained from an investment in Units offered under this prospectus, a decision to subscribe for Units should be based primarily on an appraisal of the merits of the investment and on the prospective investor s ability to bear possible loss. Tax considerations ordinarily make the Units offered under this prospectus most suitable for individual investors whose income is subject to the highest marginal rate of tax and are not subject to minimum tax. Investors acquiring Units with a view to obtaining tax advantages should obtain independent tax advice from a knowledgeable tax advisor. See Canadian Federal Income Tax Considerations. The Manager may not be able to identify a sufficient number of investments to permit the Partnership to commit all the Gross Proceeds to purchase Flow-Through Shares on or before December 31, 2013 or such Resource Companies may not renounce Eligible Expenditures (defined below) equal to the amount paid for the Flow-Through Shares or such previously renounced expenditures could be reduced in accordance with the Tax Act whereupon the Subscribers would be reassessed accordingly by the CRA (as defined below). Therefore, the possibility exists that capital may be returned to Limited Partners and Limited Partners may be unable to claim anticipated deductions from income for income tax purposes. An investor should consult the investor s own professional advisors to assess the income tax, legal, and other aspects of the investment. See Risk Factors and Organization and Management Details of the Partnership Conflicts of Interest. CIBC World Markets Inc., National Bank Financial Inc., RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Manulife Securities Incorporated, Macquarie Private Wealth Inc., Raymond James Ltd., Desjardins Securities Inc., Dundee Securities Ltd. and Mackie Research Capital Corporation (the Agents ), as agents, conditionally offer the Units on a best efforts basis. The Units are issued, sold and delivered by the Partnership and accepted by the Agents in accordance with the conditions contained in the Partnership Agreement and the Agency Agreement (defined below) referred to under Plan of Distribution and subject to prior sale and the approval of certain legal and tax matters on behalf of the Partnership and the General Partner by Norton Rose Canada LLP and on behalf of the Agents by Blake, Cassels & Graydon LLP. Subscriptions for Units will be allotted by the Agents and may be accepted or rejected by the Manager, as agent of the General Partner on behalf of the Partnership, in whole or in part. The Manager, as agent of the General Partner on behalf of the Partnership, has the right to close the subscription books at any time without notice. Book-entry only certificates representing the Units will be issued in registered form to CDS Clearing and Depository Services Inc., or its nominee ( CDS ) and will be deposited with CDS on each Closing. Accordingly, a Subscriber will receive only a customer confirmation from the registered dealer which is a CDS Participant (defined below) and through which the Units are purchased. The initial Closing is expected to take place on or about February 22, 2013, but will not take place any later than 90 days after the date of the receipt for the final prospectus. See Plan of Distribution.

3 TABLE OF CONTENTS Page DEFINITIONS... 5 Underlying Securities SCHEDULE OF EVENTS... 8 Subscription Price FORWARD-LOOKING INFORMATION.. 8 Loan Facility INFORMATION FROM THIRD PARTY Liquidity Transaction SOURCES... 9 Sentry Mutual Fund Shares PROSPECTUS SUMMARY Possible Loss of Limited Liability and Organization and Management of the Liability for Return of Capital Partnership Reliance on the General Partner, the Agents Manager and Key Personnel of the Summary of Fees and Expenses Manager ILLUSTRATION OF POSSIBLE TAX Conflicts of Interest DEDUCTIONS Covered Call Writing OVERVIEW OF THE LEGAL Forward-looking Information STRUCTURE OF THE PARTNERSHIP. 24 DISTRIBUTION POLICY INVESTMENT OBJECTIVE PURCHASES OF SECURITIES INVESTMENT STRATEGIES REDEMPTION OF SECURITIES Flow-Through Investment Agreements CANADIAN FEDERAL INCOME TAX Loan Facility CONSIDERATIONS Overview of the Investment Structure Introduction OVERVIEW OF THE SECTORS IN WHICH THE PARTNERSHIP INVESTS 27 Status of the Partnership Energy Sector Eligibility for Investment Metals and Mining Sectors Taxation of the Partnership INVESTMENT RESTRICTIONS Specified Investment Flow-Through Entity Rules (the SIFT Rules ) FEES AND EXPENSES Taxation of Limited Partners Agents Commissions October 31, 2003 Tax Proposals Initial Fees and Expenses Eligible Expenditures Management Fee Limitation on Deductibility of Expenses or Performance Bonus Losses of the Partnership Operating Expenses Federal Investment Tax Credits The Manager Income Tax and Instalments Other Fees and Expenses: Loan Facility.. 36 Disposition of Units in Partnership RISK FACTORS Dissolution of Partnership Blind Pool Transfer of Partnership Assets to a Mutual Flow-Through Shares Fund Corporation Flow-Through Share Premiums Tax Status of Corporate Class Ltd Portfolio Volatility due to Concentration.. 37 Taxation of Shareholders of Corporate Resource Companies Class Ltd Liquidity of Units Minimum Tax on Individuals Tax-Related Tax Shelter Page 3

4 Page ORGANIZATION AND MANAGEMENT Reporting to Limited Partners DETAILS OF THE PARTNERSHIP TERMINATION OF THE PARTNERSHIP. 75 The General Partner Liquidity Transaction Officers and Directors of the General Corporate Class Ltd Partner USE OF PROCEEDS The Manager and Portfolio Advisor PLAN OF DISTRIBUTION Duties and Services to be Provided by the Manager PRINCIPAL HOLDERS OF SECURITIES OF THE PARTNERSHIP Details of the Management Agreement Principal Holders of Partnership Interests. 79 Officers and Directors of the Manager Principal Holders of Shares of the General Performance of Prior Partnerships Partner Brokerage Arrangements INTERESTS OF MANAGEMENT AND Conflicts of Interest OTHERS IN MATERIAL Independent Review Committee TRANSACTIONS Custodian PROXY VOTING DISCLOSURE FOR Auditor PORTFOLIO SECURITIES HELD Transfer Agent And Registrar Policy on Proxy Voting Promoter MATERIAL CONTRACTS CALCULATION OF NET ASSET VALUE 64 EXPERTS Valuation Policies and Procedures of the Legal Opinions Partnership Auditor Reporting of Net Asset Value PURCHASERS STATUTORY RIGHTS ATTRIBUTES OF THE UNITS OF WITHDRAWAL AND RESCISSION. 80 Description of the Units Distributed INDEPENDENT AUDITOR S CONSENT. F-1 Rights on Dissolution INDEPENDENT AUDITOR S REPORT.. F-2 Redemption NCE DIVERSIFIED FLOW-THROUGH Additional Contribution (13) LIMITED PARTNERSHIP BALANCE SHEET AS AT Amendment to the Terms of the Units JANUARY 18, 2013 (NOTE 1)... Details of the Partnership Agreement NCE DIVERSIFIED FLOW-THROUGH LIMITED PARTNER MATTERS (13) LIMITED PARTNERSHIP NOTES F-3 Meetings of Limited Partners TO THE BALANCE SHEET AS AT Matters Requiring Limited Partner JANUARY 18, F-4 Approval CERTIFICATES OF PARTNERSHIP, Amendments to the Limited Partnership MANAGER AND PROMOTER... C-1 Agreement CERTIFICATE OF AGENTS... C-2 Page 4

5 DEFINITIONS Terms which are not defined the first time they are used in this prospectus have the following meanings: Affiliates, as describing the relationship between two persons, means: (a) one of them is an affiliate of the other, as such term is defined in the Securities Act (Ontario); (b) one is a director or senior officer, as so defined, of the other or of an affiliate, as so defined, of the other; or (c) one does not deal at arm s length with the other for purposes of the Tax Act. arm s length has the meaning ascribed thereto in the Tax Act, as now in effect. Book-entry Only System means the book-entry only system of CDS. business day means any day of the year on which the TSX is open for trading in Toronto, Ontario. Canadian Resource Class means the Sentry Canadian Resource Class of Corporate Class Ltd., a mutual fund that is a reporting issuer in all provinces and territories of Canada. As Canadian Resource Class is not a separate legal entity, references in this prospectus to Canadian Resource Class relating to contracting or holding securities or other assets should be read as Corporate Class Ltd. contracting or holding securities or other assets in respect of Canadian Resource Class. CDE or Canadian Development Expense means Canadian development expense as defined in subsection 66.2(5) of the Tax Act that may be renounced pursuant to the Tax Act. CDS means CDS Clearing and Depository Services Inc., or its nominee. CDS Participant means a participant in the CDS depository service. CEE or Canadian Exploration Expense means Canadian exploration expense as defined in subsection 66.1(6) of the Tax Act that may be renounced pursuant to the Tax Act. Closing means any closing of a sale of Units to Subscribers. Corporate Class Ltd. means Sentry Corporate Class Ltd., which is an open-end mutual fund corporation as defined in the Tax Act managed by the Manager, the mutual fund classes of which are reporting issuers in all provinces and territories of Canada. CRA means the Canada Revenue Agency. Designated Mutual Fund means a mutual fund corporation within the meaning of the Tax Act that is a reporting issuer and that is compliant with NI Eligible Expenditures means expenditures in respect of resource exploration and development that may be renounced to the Partnership as CEE effective on or before December 31, Flow-Through Investment Agreements means agreements between the Partnership and Resource Companies pursuant to which the Partnership will subscribe for Flow-Through Shares and the Resource Companies will agree to renounce Eligible Expenditures to the Partnership, as described under Investment Strategies Flow-Through Investment Agreements. Flow-Through Mining Expenditure means flow-through mining expenditure as defined in subsection 127(9) of the Tax Act. Flow-Through Shares means shares or rights to acquire shares in the capital of Resource Companies, each that is a principal-business corporation as defined in subsection 66(15) of the Tax Act, which qualify as flow-through shares for purposes of the Tax Act and in respect of which the Resource Companies agree to renounce Eligible Expenditures to the Partnership, and for greater certainty shall include flow-through special warrants entitling the Partnership to acquire, for no additional consideration, shares in the capital of Resource Companies, provided that such flow-through special warrants qualify as flow-through shares for purposes of the Tax Act. General Partner means NCE Diversified Management (13) Corp. 5

6 Gross Proceeds means, at any time, the aggregate gross proceeds of this Offering. High Quality Money Market Instruments means money market instruments which are accorded the highest rating category by Standard & Poor s, a division of The McGraw-Hill Companies ( A-1 ) or by DBRS Limited ( R-1 ), bankers acceptances, and government guaranteed obligations all with a term of one year or less, and interestbearing deposits with Canadian banks or trust companies. Illiquid Investments means investments that may not be readily disposed of in a marketplace where such investments are normally purchased and sold and public quotations in common use in respect thereof are available. Examples of Illiquid Investments include limited partnership interests that are not listed and securities of a Private Company, but do not include Flow-Through Shares of publicly listed companies with resale restrictions which expire on or before December 31, Income or Loss of the Partnership for any fiscal year means the net income or net loss of the Partnership, including taxable capital gains or allowable capital losses arising on the sale of Flow-Through Shares and any extraordinary or unusual items determined in accordance with the Tax Act. Independent Review Committee means the independent review committee of the Partnership which has been established in accordance with NI and to which conflict of interest matters will be referred for review in order for the Partnership to obtain a recommendation or approval as applicable. Investment Canada Act means the Investment Canada Act, as amended from time to time. ITC means an investment tax credit as defined in subsection 127(9) of the Tax Act. Lender means a Schedule I Canadian chartered bank. Limited Partner means, at any particular time, any person who is bound by the Partnership Agreement as a limited partner of the Partnership and is shown on the record as a limited partner. Limited Partnerships Act means the Limited Partnerships Act (Ontario), as amended from time to time. Liquid Market means a market with a high degree of liquidity, often resulting from a large number of buyers and sellers and a significant public float. Liquidity Transaction means an exchange transaction pursuant to which the net assets of the Partnership would be transferred to Corporate Class Ltd. or another Designated Mutual Fund, on a tax deferred basis in exchange for shares of Corporate Class Ltd., or of such other Designated Mutual Fund, following which such shares would be distributed to the Limited Partners pro rata on a tax deferred basis. If the Partnership completes the Liquidity Transaction with Corporate Class Ltd., the Partnership will receive shares of Canadian Resource Class or shares of one of the other Sentry Mutual Funds and the net assets received by Corporate Class Ltd. from the Partnership will form part of the portfolio of Canadian Resource Class or of such other Sentry Mutual Fund. Loan Facility means a loan facility with a Schedule I Canadian chartered bank to be used to finance certain expenses to be incurred by the Partnership as described under Investment Strategies Loan Facility. Management Agreement means the agreement among the General Partner, the Manager and Petro Assets Inc. dated as of January 18, 2013, pursuant to which the General Partner has retained the Manager, and assigned such powers and duties as are necessary, to direct the business, operations and affairs of the Partnership and provide day-to-day management services to the Partnership on behalf of the General Partner, including, without limitation, the provision of advice on and the management of the investment portfolio of the Partnership. Management Fee means the monthly management fee payable to the General Partner equal to 1 12 of 2.0% of the Net Asset Value of the Partnership, calculated and paid monthly, commencing on the date of the initial Closing. Manager or Sentry means Sentry Investments Inc. NCE Resources Group means all companies, partnerships or other entities which the General Partner or any of its Affiliates or any of their respective directors or officers, directly or indirectly, control, including, without limitation, any limited partnership of which the general partner is controlled by any of the foregoing persons. 6

7 Net Asset Value has the meaning ascribed to that term under Calculation of Net Asset Value Valuation Policies and Procedures of the Partnership. Net Asset Value per Unit means the amount obtained by dividing the Net Asset Value of the Partnership as of a particular Valuation Date by the total number of Units outstanding on that date. NI means National Instrument Mutual Funds of the Canadian Securities Administrators (or any successor policy, rule or national instrument), as amended from time to time. NI means National Instrument Investment Fund Continuous Disclosure of the Canadian Securities Administrators (or any successor policy, rule or national instrument), as amended from time to time. NI means National Instrument Independent Review Committee for Investment Funds of the Canadian Securities Administrators (or any successor policy, rule or national instrument), as amended from time to time. October 31, 2003 Proposals has the meaning ascribed thereto under Canadian Federal Income Tax Considerations October 31, 2003 Tax Proposals. Ordinary Resolution means a resolution passed by more than 50% of the votes cast in respect of such resolution at a duly constituted meeting of Limited Partners called for the purpose of considering such resolution, at which a quorum (consisting of two or more Limited Partners present in person or by proxy and representing not less than 1% of the Units then outstanding) is present or, alternatively, a written resolution signed in one or more counterparts by Limited Partners holding more than 50% of the Units outstanding and entitled to vote on such resolution at a meeting. Partners means the General Partner and the Limited Partners. Partnership means NCE Diversified Flow-Through (13) Limited Partnership. Partnership Agreement means the amended and restated limited partnership agreement dated as of January 18, 2013 governing the Partnership, made among the General Partner, John F. Driscoll, as the initial Limited Partner, and those persons admitted as Limited Partners, together with all amendments, supplements, restatements and replacements thereof from time to time. Performance Bonus has the meaning ascribed thereto under Fees and Expenses Performance Bonus. Performance Bonus Date has the meaning ascribed thereto under Fees and Expenses Performance Bonus. Private Company or Private Companies means a company or companies which does not have any of its securities listed or quoted on a stock exchange. Resource Companies means resource issuers engaged in oil and gas exploration, development and/or production, or mineral exploration, development and/or production, or renewable energy exploration and development, and related resource business issuers such as pipeline or service companies and utilities. Sentry Mutual Fund means one of the classes of mutual fund shares of Corporate Class Ltd., each such class constituting a separate mutual fund. Services Agreement means the services agreement between the Manager and Sentry Select Capital Corp. dated January 1, 2009, as amended from time to time. Special Resolution means a resolution passed by % or more of the votes cast in respect of such resolution at a duly constituted meeting of the Limited Partners called for the purpose of considering such resolution, at which a quorum (consisting of two or more Limited Partners present in person or by proxy and representing not less than 20% of the Units then outstanding) is present or, alternatively, a written resolution signed in one or more counterparts by Limited Partners holding % or more of the Units outstanding and entitled to vote on such resolution at a meeting. Subscriber means a person who subscribes for Units. Subscription Price means the amount to be contributed by a Subscriber to the Partnership, which shall be $25.00 per Unit. 7

8 Tax Act means the Income Tax Act (Canada) and the regulations thereunder, each as amended from time to time. Transfer Form and Power of Attorney means a form of transfer and power of attorney substantially in the form attached as Schedule A to the Partnership Agreement. TSX means the Toronto Stock Exchange. Unit means a unit of a Limited Partner s interest in the Partnership as provided in the Partnership Agreement. Valuation Date means: (i) each Thursday during the year (or, if a Thursday is not a business day, the business day following such Thursday), the last business day of each month, December 31 in each year and the Performance Bonus Date; or (ii) in the event that the Partnership sells options to purchase securities owned by the Partnership, each business day, and December 31 in each year. $ means Canadian Dollars unless otherwise stated. SCHEDULE OF EVENTS Approximate Date February 22, 2013 (1) March, 2014 On or before May 31, 2015 August 31, 2015 Event Initial Closing. Investors subscribe for Units and pay the Subscription Price ($25.00 per Unit). Limited Partners receive a 2013 CEE tax receipt and other relevant tax information. Intended implementation of the Liquidity Transaction. If the Liquidity Transaction has not been implemented, the Partnership will be terminated and the Limited Partners will receive their pro rata share of the net assets of the Partnership. Note: (1) Funds representing the Minimum Offering must be received and certain other conditions must be met within 90 days after the date of the receipt for the final prospectus. If the Maximum Offering is not achieved when the initial Closing is completed, the unsold Units may continue to be offered for sale and one or more additional Closings may occur within 90 days after the date of the receipt for the final prospectus. See Plan of Distribution. Investors who borrow to purchase their Units must consider prohibitions on limitedrecourse amounts. See Canadian Federal Income Tax Considerations Limitation on Deductibility of Expenses or Losses of the Partnership and Attributes of the Units Details of the Partnership Agreement. FORWARD-LOOKING INFORMATION Certain information included in this prospectus constitutes forward-looking information, including information identified by the expressions anticipate, believe, plan, estimate, expect, intend and similar expressions to the extent they relate to the Partnership, the General Partner or the Manager. All information, other than information concerning historical fact, that addresses activities, events or developments that the Partnership, the General Partner or the Manager believes, expects or anticipates will or may occur in the future including, without limitation, information regarding the intention of the General Partner to implement the Liquidity Transaction, the intention of the Partnership to enter into the Loan Facility, the anticipated expenses of the Offering and administrative and operating expenses, the expectation that the Resource Companies in which the Partnership invests will primarily be Canadian issuers and the Manager s outlook regarding the metals and mining sectors and the energy sector, the economy, the price, demand and supply of gold, oil and gas, fiscal policy of global governments and the prospects for oil-weighted investments is forwardlooking information. Forward-looking information reflects the current expectations or beliefs of the Partnership, the General Partner and the Manager based on information currently available to the Partnership, the General Partner or the Manager. Forward-looking information is subject to significant risks and uncertainties and other factors that could cause the actual results to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the 8

9 expected consequences to, or effects on the Partnership. Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: delays in obtaining or failures to obtain necessary regulatory and other approvals in connection with the Liquidity Transaction; changes in the global economy, in global economic and business conditions, inflation, exchange rates and existing governmental regulations; and other market factors specific to the metals and mining sectors and to the energy sector that could cause actual results or events to differ materially from current expectations, including the matters discussed under Risk Factors and in other sections of this prospectus. Forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Partnership, the General Partner and the Manager disclaim any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Partnership, the General Partner and the Manager believe that the assumptions inherent in forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein. INFORMATION FROM THIRD PARTY SOURCES Certain information contained in this prospectus is taken from third party sources. Neither the Manager, the Partnership, the General Partner nor the Agents have independently verified the accuracy or completeness of any such information or assume any responsibility for the completeness or accuracy of such information. 9

10 PROSPECTUS SUMMARY The following is a summary of the principal features of this distribution and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. Certain capitalized terms used but not defined in this summary are defined on the face page of this prospectus or under Definitions. Issuer: NCE Diversified Flow-Through (13) Limited Partnership, a limited partnership organized under the laws of the Province of Ontario. Securities Offered: Units. Offering Size: Maximum $125,000,000 (5,000,000 Units). Minimum $5,000,000 (200,000 Units). Expected Net Maximum Offering $125,000,000. Minimum Offering $5,000,000. This assumes that Proceeds: the Agents commission and expenses of the Offering will be paid out of the Loan Facility. Price: $25.00 per Unit. Minimum $5,000 (200 Units). Subscription: Payment of The subscription price for Units is payable in full on Closing. Subscription Price: Investment Objective: The objective of the Partnership is to achieve capital appreciation according to the investment strategies detailed in this prospectus and to maximize the tax benefits received by investors. The Partnership will initially invest in Flow-Through Shares of Resource Companies. See Investment Objective. Investment Strategies: The investment strategy of the Partnership is to acquire Flow-Through Shares issued by Resource Companies that (i) have experienced management, (ii) have an exploration program and/or operational facility (in the case of renewable energy investments) in operation, (iii) offer potential for future growth, and (iv) meet certain specified enterprise value and other criteria. As part of the Partnership s investment strategy, the Partnership will, from time to time, dispose of Flow-Through Shares and other investments and reinvest the net proceeds from such dispositions in securities of Resource Companies. All investments will be made in accordance with the Partnership s investment policies and restrictions contained in the Partnership Agreement and as described herein. The Partnership Agreement contains certain investment criteria and restrictions. See Investment Strategies and Attributes of the Units Details of the Partnership Agreement. The Partnership will endeavour to invest the Gross Proceeds in Flow-Through Shares on or before December 31, Subject to certain limitations, Limited Partners with sufficient income may claim certain deductions from income for income tax purposes. See Illustration of Possible Tax Deductions for a description of income tax deductions and savings which may be possible. Investment The Partnership Agreement provides that the activities of the Partnership are to be Restrictions: conducted in accordance with the following investment criteria and restrictions, some of which will apply only once the Partnership has invested 100% of the Gross Proceeds. See Investment Restrictions. The investment criteria and restrictions provide, among other things, as follows: (a) initially, the Partnership will invest the Gross Proceeds in Flow-Through Shares subject to the limitations set out below. As part of the Partnership s investment 10

11 Loan Facility: strategy and subject to the limitations below, the Partnership will, from time to time, dispose of Flow-Through Shares and other investments and reinvest the net proceeds from such dispositions in securities of Resource Companies; (b) the Partnership will invest a minimum of 80% of the Gross Proceeds in securities of Resource Companies which are listed on a Canadian stock exchange. A minimum of 25% of the Gross Proceeds will be invested in securities of Resource Companies which have common shares listed on the TSX; (c) the Partnership will not invest more than 20% of the Gross Proceeds in Illiquid Investments; (d) the Partnership will not invest in Flow-Through Shares of Resource Companies that are principally engaged in renewable energy exploration and development if, immediately following such investment, more than 10% of the Gross Proceeds would be invested in Flow-Through Shares of such renewable energy Resource Companies; (e) the Partnership will invest a minimum of 50% of the Gross Proceeds in securities of Resource Companies which have an enterprise value (being the market value per share of the Resource Company multiplied by the number of shares outstanding after giving effect to the number of shares purchased by the Partnership and all third party indebtedness owing by the Resource Company) in excess of $50,000,000 (calculated at the date that the investment is made); (f) the Partnership will not invest more than 20% of the Gross Proceeds in the securities of any one issuer; (g) no investment will be made by the Partnership in any issuer if, immediately following such investment, the Partnership would own 10% or more of a class of voting securities of such issuer; (h) the Partnership will not invest in securities of issuers which are members of the NCE Resources Group or in any issuer that is not at arm s length to the Partnership, the General Partner, NCE Resources Group, the Manager, Corporate Class Ltd. or any of their respective officers and directors; (i) the Partnership may borrow money for the purpose of funding expenses of the Partnership and, with respect to such borrowings, may mortgage, pledge and hypothecate any of its securities and other assets, provided that the total principal amount of such borrowings does not, at any time, exceed 10% of the Gross Proceeds; and (j) the Partnership may sell options to purchase securities owned by the Partnership, a strategy commonly referred to as covered call writing, in circumstances the Manager considers appropriate, as a means of locking in gains or generating potential income. Other than the sale of such options for these purposes, the Partnership will not purchase or sell derivatives. To maximize the funds available for the purchase of Flow-Through Shares, the Partnership will enter into the Loan Facility with a Lender prior to the initial Closing. The Loan Facility will permit the Partnership to borrow an amount not exceeding 10% of the Gross Proceeds, which will be used to pay the Agents commissions and may, in the discretion of the Partnership, be used to pay the expenses of the issue, the Management Fee and the ongoing expenses of the Partnership. The interest rates, fees and expenses under the Loan Facility will be typical of credit facilities of this nature and the Partnership will provide a security 11

12 Uncommitted Funds: Use of Proceeds: interest in all of the assets held by or on behalf of the Partnership in favour of the Lender to secure such borrowings. The total market value of the Partnership s total assets less mark to market losses on written options divided by total outstanding indebtedness must at all times exceed 5 to 1. Consequently, in the event the value of the total assets of the Partnership declines, the maximum amount of leverage that the Partnership could be exposed to is 20% of total assets of the Partnership (or approximately 25% of net assets of the Partnership). All amounts outstanding under the Loan Facility, including all interest accrued thereon, will be repaid in full prior to the earlier of: (i) the completion of the Liquidity Transaction, (ii) the dissolution of the Partnership, and (iii) the maturity date of the Loan Facility (expected to be on or about May 31, 2015). See Investment Strategies Loan Facility. Any Gross Proceeds that have not been committed by the Partnership to purchase Flow-Through Shares on or before December 31, 2013 will be used to repay the Loan Facility in full and the balance, if any, distributed on or prior to January 15, 2014 on a pro rata basis to Limited Partners of record on December 31, See Use of Proceeds. The Partnership intends to use the Gross Proceeds from the sale of Units as follows: Maximum Offering Minimum Offering Gross Proceeds... $125,000,000 $5,000,000 Agents fee (1)... $ 7,187,500 $ 287,500 Offering expenses (1)... $ 750,000 $ 100,000 Partnership expenses payable in 2013 (2)... $ 2,066,503 $ 183,152 Proceeds from the Loan Facility (1)(2)... $ 10,004,003 $ 570,652 Proceeds available for investment... $125,000,000 $5,000,000 Risk Factors: Notes: (1) The Agents commissions amounting to $7,187,500 in the case of the Maximum Offering and $287,500 in the case of the Minimum Offering will, and the expenses of the issue (estimated at $750,000), to the extent that such expenses do not in the aggregate exceed 2% of the Gross Proceeds, may, in the discretion of the Partnership, be paid from the proceeds of the Loan Facility. The Manager has agreed to pay all expenses of the issue that exceed 2% of the Gross Proceeds. Accordingly, the Partnership s share of such expenses in the case of the Minimum Offering is estimated to be $100,000. For the purpose of the above table, it has been assumed that the Partnership s share of the expenses of the issue will be paid from the proceeds of the Loan Facility. See Investment Strategies Loan Facility and Fees and Expenses. (2) The Partnership s expenses payable in the 2013 calendar year have been estimated by the Partnership and include the Management Fee and all expenses incurred in connection with the Partnership s operation and administration from the initial Closing until December 31, Such expenses may, in the discretion of the Partnership, be paid from funds borrowed under the Loan Facility. For the purpose of the above table, it has been assumed that the Partnership s expenses payable in 2013 will be paid from funds borrowed under the Loan Facility. See Fees and Expenses Operating Expenses. The Partnership will use the Gross Proceeds to subscribe for Flow-Through Shares according to the investment criteria and restrictions set out under Investment Restrictions. See Use of Proceeds and Risk Factors. THIS IS A SPECULATIVE OFFERING. THIS IS A BLIND POOL OFFERING. There is no market through which the Units may be sold and none is expected to develop. Purchasers may not be able to resell Units purchased under this 12

13 prospectus. This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity of the securities, and the extent of issuer regulation. Consequently, Limited Partners may not be able to liquidate their Units in a timely manner, if at all, or pledge their Units as collateral for loans. There is no assurance of a positive return on investment and an investment in Units should be considered only by those who can afford to lose their investment. The anticipated tax benefits resulting from an investment in the Partnership are greatest for an investor whose income is subject to the highest marginal income tax rate. The purchase of Units involves a number of significant risk factors. Investors should consider the following risk factors and the additional risk factors outlined under Risk Factors and all other information contained in this prospectus before making an investment decision: (a) there can be no assurance that there will be a sufficient number of Resource Companies willing to issue Flow-Through Shares, nor any assurance that there will be a sufficient number of Resource Companies of the particular quality deemed acceptable to the Manager willing to issue Flow-Through Shares, to permit the Partnership to commit the Gross Proceeds to purchase Flow-Through Shares on or before December 31, 2013 and, therefore, capital may be returned to Limited Partners and Limited Partners may be unable to claim anticipated deductions from income for income tax purposes; (b) the Flow-Through Shares may be issued to the Partnership at prices that exceed the market prices of similar common shares that do not permit CEE to be renounced in favour of the holders; (c) the Partnership will invest in securities of Resource Companies which may result in the value of the portfolio being more volatile than the value of portfolios with a more diversified investment focus and may result in volatility based upon the underlying market for commodities produced by those sectors of the economy; (d) Resource Companies may not hold or discover commercial quantities of oil, natural gas or minerals, and their profitability may be affected by adverse fluctuations in commodity prices, liability for environmental damage, competition and government regulation; (e) the possibility exists that Resource Companies will not renounce Eligible Expenditures equal to the amount paid for the Flow-Through Shares in a timely manner, if at all, and/or amounts renounced by Resource Companies to the Partnership may not qualify as CEE, which could adversely affect the return of a Limited Partner s investment in the Units, result in additional tax payable by the Limited Partner, and necessitate the Limited Partner refiling or amending prior year tax returns with the CRA; (f) income tax laws, or their interpretation, in the various jurisdictions of Canada may be changed in a manner which will fundamentally alter the tax consequences to Limited Partners of holding or disposing of Units, including the ability to claim deductions for all expenditures by the Partnership; (g) the October 31, 2003 Proposals limiting the claim for losses resulting from the deduction of interest and other expenses in certain circumstances are only draft proposals; there is no provision for any carry forward of a loss that cannot be claimed as a result of the application of the October 31, 2003 Proposals. On 13

14 February 25, 2005, the Minister of Finance (Canada) announced that alternative proposals to replace the October 31, 2003 Proposals would be released for comment at an early opportunity. No such alternative proposals have been released to date. There can be no assurance that such alternative proposals will not adversely affect Limited Partners; (h) it is expected that Limited Partners will receive allocations of income and/or capital gains without receiving cash distributions from the Partnership in that year sufficient to satisfy a Limited Partner s tax liability for the year arising from his, her or its status as a Limited Partner; (i) any proposed amendments to the Tax Act may not be enacted. The Tax Act may not be amended to extend the deadline for entering into Flow-Through Investment Agreements eligible for the 15% ITC beyond March 31, 2013; (j) in some cases the value of securities owned by the Partnership may be affected by such factors as investor demand, resale restrictions, general market trends, market prices for commodities and adverse fluctuations in foreign exchange rates or regulatory restrictions; (k) a Liquid Market may not exist for Flow-Through Shares due to several factors, such as fluctuations in trading volumes and prices, and, if the Liquidity Transaction is not implemented and the Partnership is unable to dispose of all investments prior to the termination of the Partnership, Limited Partners may receive securities of Resource Companies upon the termination of the Partnership, for which there may not be a Liquid Market or which may be subject to resale restrictions; (l) in the case of Illiquid Investments, such securities may be subject to indefinite resale restrictions; (m) the purchase price per Unit paid by an investor at a Closing subsequent to the initial Closing may be lesser or greater than the Net Asset Value per Unit at the time of purchase; (n) the interest expenses and banking fees incurred in respect of the Loan Facility may exceed the incremental capital gains and tax benefits generated by the incremental investment in Flow-Through Shares. There can be no assurance that the borrowing strategy employed by the Partnership will enhance returns; (o) the Liquidity Transaction may not be implemented by the Partnership and Corporate Class Ltd. or another Designated Mutual Fund, because Corporate Class Ltd., or such other Designated Mutual Fund, is under no obligation to complete such transaction, or such transaction may not be approved by the regulators. In completing the Liquidity Transaction, the Partnership will face certain conflicts of interest. An alternative transaction (including the dissolution of the Partnership) may not be available on a tax deferred basis or a Limited Partner s investment may be less liquid. (see Termination of the Partnership Liquidity Transaction and Risk Factors Liquidity Transaction and Conflicts of Interest ). Investors should consult their own professional advisors to assess the income tax, legal and other aspects of the investment; (p) if the Partnership completes the Liquidity Transaction with Corporate Class Ltd., the Limited Partners will receive shares of Canadian Resource Class or shares of one of the other Sentry Mutual Funds. These shares of Canadian Resource Class, or such other Sentry Mutual Fund, will be subject to various 14

15 Federal Income Tax Considerations: risk factors applicable to shares of mutual fund corporations, including fluctuation of the net asset value of Canadian Resource Class, or such other Sentry Mutual Fund, and in the case of Canadian Resource Class, risks associated with investments in oil and gas, mineral, other natural resources and alternative energy corporations (see Termination of the Partnership Liquidity Transaction ); (q) Limited Partners may lose limited liability under certain circumstances and the General Partner may not be able to satisfy its obligation to indemnify the Limited Partners in the event of a loss of limited liability (see Attributes of the Units Details of the Partnership Agreement ); (r) Limited Partners must rely on the discretion and judgment of the Manager and key personnel employed by the Manager, for the management of the Partnership s portfolio; (s) the boards of directors of the General Partner and the Manager, and management of the General Partner and the Manager, may be changed at any time; (t) the Manager and other Affiliates of the General Partner may engage in the promotion, management or investment management of other funds or partnerships or other vehicles, including entities which invest primarily in Flow-Through Shares; (u) the Partnership may sell options to purchase securities owned by the Partnership, a strategy commonly referred to as covered call writing, in circumstances the Manager considers appropriate, as a means of locking in gains or generating potential income. In certain circumstances, the Partnership may realize a loss as a result of such options. The use of options involves risks different from, and potentially greater than, the risks associated with ownership of certain other securities and other more traditional assets; and (v) this prospectus contains forward-looking information that involves risk and uncertainties. Forward-looking information relates to, among other things, investment strategy and intentions contained in this prospectus that are not historical fact. When used in this prospectus, the words expects, anticipates, intends, may and similar expressions generally identify forward-looking information. This information reflects the Partnership s, the General Partner s and the Manager s current expectations. It is subject to a number of risks and uncertainties, including, but not limited to, changes in the global economy, in general economic and business conditions, existing governmental regulations and other market factors specific to the resource sector and to the securities of Resource Companies. The Partnership, the General Partner and the Manager undertake no obligation to update forwardlooking information except as required by law (see Forward-Looking Information ). See Risk Factors. Generally, a taxpayer (other than a principal-business corporation ) who is a Limited Partner at the end of a fiscal year may, in computing income for the taxation year in which the fiscal year ends, subject to the at-risk and limitedrecourse financing rules, deduct an amount equal to 100% of Eligible Expenditures renounced to the Partnership and allocated to the taxpayer by the Partnership in respect of the fiscal year. 15

16 Allocations: Based on the Tax Act, a Limited Partner who is an individual other than a trust may be entitled to claim an ITC of 15% of such Limited Partner s share of Flow-Through Mining Expenditures. The individual taxpayer s cumulative CEE at any time in a taxation year is reduced by the amount of the ITC claimed for a preceding year. If a taxpayer s cumulative CEE at the end of a taxation year is negative, the negative balance must be included in income and the cumulative CEE is reset to nil. Income, including capital gains, realized by the Partnership will be allocated to Limited Partners of record on December 31 of each fiscal year. The adjusted cost base of the Flow-Through Shares held by the Partnership will generally be deemed to be nil, and as a result, any capital gain realized by the Partnership and allocated to the Limited Partners on a sale of Flow-Through Shares will generally be equal to the proceeds of disposition, less reasonable costs of disposition. A disposition of Units by Limited Partners may trigger capital gains (or capital losses). One-half of realized capital gains will be included in a Limited Partner s income for the year of disposition, and one-half of any capital loss may be deducted against taxable capital gains in accordance with the provisions of the Tax Act. In the event that the Liquidity Transaction is not implemented and the Partnership is dissolved, it is anticipated that, following the dissolution of the Partnership, each Limited Partner will acquire a pro rata share of the assets held by the Partnership at that time on a tax-deferred basis, provided that certain requirements in the Tax Act are satisfied. If the Partnership transfers its net assets to Corporate Class Ltd., or another Designated Mutual Fund, pursuant to the Liquidity Transaction, provided the appropriate elections are made and filed in a timely manner, no taxable capital gains will be realized by the Partnership from the transfer. Corporate Class Ltd., or such other Designated Mutual Fund, will acquire each asset of the Partnership at a cost equal to the lesser of the cost amount thereof to the Partnership and the fair market value of the asset on the transfer date. Provided that the dissolution of the Partnership takes place within 60 days of the transfer of net assets to Corporate Class Ltd., or another Designated Mutual Fund, the shares of Corporate Class Ltd. or shares of such other Designated Mutual Fund will be distributed to the Limited Partners with a cost for tax purposes equal to the cost of the Units held by such Limited Partner. As a result, a Limited Partner will not be subject to tax in respect of such transaction. See Canadian Federal Income Tax Considerations, Illustration of Possible Tax Deductions and Risk Factors. Prior to investing, an investor should be satisfied as to the federal and provincial tax consequences of this investment by obtaining advice from the investor s advisor. An investor who borrows to finance the acquisition of Units should consult a tax advisor as to the consequences of such borrowing % of the Income will be allocated to the Limited Partners of record on December 31 of each fiscal year and 0.01% to the General Partner. 100% of the Losses will be allocated to the Limited Partners of record on December 31 of each fiscal year. All the amounts renounced to the Partnership will be allocated pro rata to the Limited Partners of record on December 31, The Partnership will allocate all Eligible Expenditures renounced to it by Resource Companies with an effective date in a particular fiscal year pro rata to the Limited Partners of record at the end of that fiscal year. The Partnership will make all filings in respect of such allocations as are required by the Tax Act. On dissolution of the Partnership, after settling any credit balances in the capital accounts of any of the Limited Partners, 16

17 Distribution Policy: Termination of the Partnership: Eligibility for Investment: and satisfying all liabilities of the Partnership including, without limitation, repayment of the Loan Facility, Limited Partners will receive 99.99% of the assets of the Partnership and the General Partner will receive 0.01% of such assets. See Attributes of the Units Details of the Partnership Agreement. Flow-Through Shares (subject to applicable hold periods) may be sold on behalf of the Partnership at any time if the Manager determines that it is in the best interests of the Partnership to do so. Subject to the Loan Facility, the Manager, as agent of the General Partner on behalf of the Partnership, will decide if any distributions will be made. Such distributions, if any, may not be sufficient to satisfy a Limited Partner s tax liability for the year arising from such status as a Limited Partner. See Distribution Policy. Units are non-redeemable. To provide the potential for liquidity and long-term capital growth, the General Partner intends to implement the Liquidity Transaction at a date no later than May 31, 2015, pursuant to which the net assets of the Partnership would be transferred to Corporate Class Ltd., or another Designated Mutual Fund, on a tax deferred basis in exchange for mutual fund shares of Corporate Class Ltd., or shares of such other Designated Mutual Fund, following which such shares will be distributed to the Limited Partners pro rata on a tax deferred basis. Corporate Class Ltd. currently offers several classes of mutual fund shares. Each class of mutual fund shares constitutes a separate mutual fund. In accordance with this multi-class structure, holders of shares of a Sentry Mutual Fund are entitled to switch between Sentry Mutual Funds without triggering immediate tax consequences. If the Partnership completes the Liquidity Transaction with Corporate Class Ltd., the Partnership will receive shares of Canadian Resource Class or shares of one of the other Sentry Mutual Funds and the net assets received by Corporate Class Ltd. from the Partnership pursuant to the Liquidity Transaction will form part of the portfolio of Canadian Resource Class or of such other Sentry Mutual Fund. Implementation of the Liquidity Transaction will be subject to the mutual agreement of the General Partner and Corporate Class Ltd. and to obtaining any necessary regulatory and other approvals, including the approval of the Independent Review Committee and the independent review committee of Canadian Resource Class, or the Designated Mutual Fund, as applicable, as well as compliance with all applicable laws (which may require Limited Partner approval of the Liquidity Transaction). There can be no assurance that such transaction will receive the necessary regulatory approvals or be implemented, as Corporate Class Ltd. is under no obligation to complete such transaction. The Liquidity Transaction will not be implemented if the General Partner (or the Manager, if the General Partner so delegates such responsibility) determines that it would prospectively or retrospectively affect the status of the Flow-Through Shares as flow-through shares for purposes of the Tax Act. The Partnership Agreement states that the Liquidity Transaction must be implemented by May 31, 2015, failing which the Partnership will be terminated by August 31, 2015 and the Limited Partners will receive their pro rata share of the net assets of the Partnership. At that time, the Partnership will primarily own securities of Resource Companies and cash. See Termination of the Partnership Liquidity Transaction and Attributes of the Units Details of the Partnership Agreement. Units are not eligible as an investment for registered retirement savings plans, registered retirement income plans, registered education savings plans, deferred 17

18 Organization and Management of the Partnership profit sharing plans, registered disability savings plans or tax-free savings accounts. See Canadian Federal Income Tax Considerations Eligibility for Investment. Management of the Partnership Services Provided to the Partnership Municipality of Residence General Partner and NCE Diversified Management (13) Corp. is the general Commerce Court Promoter: partner of the Partnership. The General Partner is West, 199 Bay Street, responsible for appointing the Manager and monitoring Suite 4100, the activities of the Partnership on behalf of the P.O. Box 108, Partnership. The General Partner is a wholly owned Commerce Court subsidiary of Petro Assets Inc., the promoter of the Postal Station, Partnership. Petro Assets Inc. is controlled by the Driscoll Toronto, Ontario, Family Trust, a trust established for the family of John F. M5L 1E2 Driscoll (an officer and director of the General Partner and the Manager and an officer and a director of Petro Assets Inc.). Petro Assets Inc. has an indirect interest in the Management Fee to be paid to the General Partner. See Organization and Management Details of the Partnership Officers and Directors of the General Partner. Manager and Portfolio Pursuant to the Management Agreement, the General Commerce Court Advisor: Partner has retained the Manager, and assigned such West, 199 Bay Street, powers and duties as are necessary, to direct the business, Suite 4100, operations and affairs of the Partnership and provide P.O. Box 108, day-to-day management services to the Partnership on Commerce Court behalf of the General Partner, including, without Postal Station, limitation, the provision of advice on and the management Toronto, Ontario, of the investment portfolio of the Partnership. The M5L 1E2 Manager is indirectly owned by John F. Driscoll and his family. See Organizational and Management Details of the Partnership The Manager and Portfolio Advisor. Custodian: State Street Trust Company Canada has been appointed Toronto, Ontario custodian of the portfolio of the Partnership. Transfer Agent and Computershare Investor Services Inc. will be appointed as Toronto, Ontario Registrar: the registrar and transfer agent for the Units. Auditor: The auditor of the Partnership is Deloitte LLP, Toronto, Ontario Chartered Accountants. Agents CIBC World Markets Inc., National Bank Financial Inc., RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Manulife Securities Incorporated, Macquarie Private Wealth Inc., Raymond James Ltd., Desjardins Securities Inc., Dundee Securities Ltd. and Mackie Research Capital Corporation. 18

19 Summary of Fees and Expenses The following table lists the fees and expenses payable by the Partnership, which will reduce the value of a Subscriber s investment in the Partnership. See Fees and Expenses. Such compensation and other payments were established by negotiation between the General Partner and the Agents. Fees and Expenses Payable by the Partnership Type of Fee/Expense Amount and Description Commissions Payable $ per Unit payable on Closing. The Agents commission will be paid by the to the Agents for Partnership from funds borrowed by the Partnership under the Loan Facility for selling the Units: such purpose. See Fees and Expenses Other Fees and Expenses: Loan Facility. Expenses of the Issue: In addition to the Agents commission, expenses of the issue (estimated at $750,000) may, in the discretion of the Partnership, be paid from the proceeds of the Loan Facility to the extent that such expenses do not in the aggregate exceed 2% of the Gross Proceeds. Such expenses include the costs of creating and organizing the Partnership, the costs of printing and preparing this prospectus, legal expenses of the Partnership, marketing expenses and legal and other out of pocket expenses incurred by the Agents and other incidental expenses. The Manager has agreed to pay all expenses of the issue that exceed 2% of the Gross Proceeds. Accordingly, the Partnership s share of such expenses in the case of the Minimum Offering is estimated to be $100,000. See Fees and Expenses Initial Fees and Expenses. Management Fees: The General Partner is entitled to a monthly management fee equal to 1 12 of 2.0% of the Net Asset Value of the Partnership, calculated and paid monthly, commencing on the date of the initial Closing. The General Partner is responsible for all fees paid to the Manager other than the Performance Bonus; such fees will be payable from the Management Fee. The Management Fee may be paid by the Partnership from funds borrowed by the Partnership under the Loan Facility for such purpose. See Fees and Expenses Management Fee, Fees and Expenses The Manager and Fees and Expenses Other Fees and Expenses: Loan Facility. Performance Bonus: The Manager will be entitled to a fee (the Performance Bonus ) payable, on a per Unit basis, on the earlier of: (a) the business day prior to the date on which the Liquidity Transaction is completed; and (b) the business day immediately prior to the date of dissolution or termination of the Partnership ( Performance Bonus Date ), equal to 20% of the amount by which the Net Asset Value per Unit on the Performance Bonus Date (prior to giving effect to the payment of the Performance Bonus) plus the amount of any distributions per Unit paid during the period commencing on the date of the initial Closing and ending on the Performance Bonus Date exceeds $ The Performance Bonus shall be paid to the Manager in cash before any assets of the Partnership are exchanged pursuant to the Liquidity Transaction or the termination or dissolution of the Partnership pursuant to the Partnership Agreement, as applicable. See Fees and Expenses Performance Bonus. Portfolio Advisor Fees: Other than the Performance Bonus, the General Partner is responsible for all fees paid to the Manager; such fees will be payable from the Management Fee. See Fees and Expenses The Manager. Operating Expenses: The Partnership will pay the costs of this Offering and all of its administrative and operating expenses, the ongoing Management Fee and the Performance Bonus, if any. The General Partner is responsible for its own overhead costs and amounts payable to the Manager, other than the Performance Bonus. The administrative and 19

20 Type of Fee/Expense Other Fees: Amount and Description operating expenses, including applicable Management Fees, (estimated at $2,700,000 in the case of the Maximum Offering and $220,000 in the case of the Minimum Offering) may, in the discretion of the Partnership, be paid by the Partnership from funds borrowed by the Partnership under the Loan Facility for such purpose. It is expected that such expenses will include, without limitation, expenses relating to investment transactions (excluding brokerage commissions), taxes, legal, audit and valuation fees, director fees, Limited Partner reporting costs, registrar and transfer agency costs, printing and mailing costs and costs to be incurred in connection with the Partnership s continuous public filing obligations, fees and expenses payable to the Independent Review Committee and the Management Fee. See Fees and Expenses Other Fees and Expenses: Loan Facility and Fees and Expenses. The Partnership will pay the loan fees and related interest charges in connection with the Loan Facility. See Fees and Expenses Other Fees and Expenses: Loan Facility. 20

21 ILLUSTRATION OF POSSIBLE TAX DEDUCTIONS At the end of each calendar year, Limited Partners may benefit from deductions for income tax purposes resulting from the investment of the Gross Proceeds in Flow-Through Shares. Possible tax deductions are illustrated in the following table and are based on the notes and assumptions set forth below, for a Limited Partner who is an individual (other than a trust) who has invested $5,000 and who continues to hold such Units. These illustrations are examples only. Actual tax deductions may vary significantly and the timing of such deductions may vary from that shown in the table. There can be no assurance of a positive return on investment and an investment in Units should be considered only by those who can afford to lose their investment. The following calculations and assumptions do not constitute and shall not be construed as a forecast, projection, estimate of possible results, contractual undertaking or guarantee. An investment in Units is appropriate only if the investor has the capacity to absorb a loss of the investor s investment. If an investor is not willing to rely on the discretion and judgment of the General Partner, which has no operating or investment history and is expected to have only nominal assets, and of the Manager and key personnel of the Manager, the investor should not subscribe for Units. The potential capital gain on a taxable disposition of Units or shares of Corporate Class Ltd. is not reflected. The anticipated tax benefits resulting from an investment in the Partnership are greatest for an individual investor whose income is subject to the highest marginal income tax rate. Regardless of any tax benefits that may be obtained, a decision to purchase Units should be based primarily on an appraisal of the merits of the investment and on an investor s ability to bear a loss of his, her or its investment. Investors acquiring Units with a view to obtaining tax advantages should obtain independent tax advice from a tax advisor who is knowledgeable in the area of income tax law. Only those Subscribers who are Limited Partners at the end of the fiscal year of the Partnership will qualify for income tax deductions available in respect of a particular year. It is assumed that the Limited Partner will hold the Units throughout all periods. Subscribers should be aware that these calculations are based on assumptions which may not be complete or accurate in all respects. The following tables are not based on an independent opinion rendered by an accountant or lawyer. A taxpayer who is an individual (other than a trust) and a Limited Partner at the end of a fiscal year of the Partnership may be entitled to claim an ITC of 15% of the Limited Partner s share of the Partnership s Flow-Through Mining Expenditures in computing such taxpayer s federal tax payable for the taxation year in which the fiscal year of the Partnership ends. Currently, this ITC is only available for Flow-Through Investment Agreements entered into before April 1, The Partnership s Flow-Through Mining Expenditures will generally be CEE related to certain surface grass roots mining exploration expenses incurred in Canada and renounced in favour of the Partnership. The 15% ITC reduces federal tax otherwise payable by the individual. Certain Canadian provinces have investment tax credits which generally parallel the federal ITCs for Flow-Through Mining Expenditures renounced to taxpayers residing in the province in respect of exploration occurring in that province. Limited Partners resident in a province that provides such an investment tax credit may claim the credit in combination with the federal ITC. However, the use of a provincial investment tax credit will generally reduce the amount of expenses eligible for the federal ITC. An individual (other than a trust) who is a Limited Partner and a resident in the Province of Ontario on December 31 of a taxation year may apply for a 5% focused flow-through share tax credit in respect of the Limited Partner s share of the Partnership s eligible Ontario exploration expenditures for the year. Eligible Ontario exploration expenditures are generally Flow-Through Mining Expenditures that would qualify for the federal ITC and are incurred for the purpose of determining the existence, location, extent, or quality of a mineral resource in the Province of Ontario by a corporation that is a principal-business corporation as defined in subsection 66(15) of the Tax Act with a permanent establishment in the Province of Ontario less certain amounts of assistance (other than federal ITCs) received or receivable in respect of such Flow-Through Mining Expenditures for that year. The Limited Partner must not have been a bankrupt at any time in the Limited Partner s taxation year in which the credit is claimed, unless the individual has been granted an absolute discharge from bankruptcy before the end of the year, in order to be eligible for the Ontario tax credit. 21

22 In addition to a base deduction of 100% for CEE, an individual (including a personal trust) that is resident or subject to tax in the Province of Québec, and is a Limited Partner at the end of a fiscal year of the Partnership may be entitled to an additional deduction of 25% in respect of certain exploration expenses incurred in the Province of Québec by a qualified corporation. Such a Limited Partner may also be entitled to a supplementary deduction of 25% in respect of certain surface mining exploration expenses incurred in the Province of Québec by a qualified corporation. Accordingly, an individual (including a personal trust) that is resident or subject to tax in the Province of Québec and is a Limited Partner at the end of a fiscal year of the Partnership may be entitled to deduct up to 150% of certain eligible exploration expenses incurred in the Province of Québec by a qualified corporation and renounced by it in favour of the Partnership. The Taxation Act (Québec) provides that where an individual taxpayer (including a personal trust) incurs in a given taxation year investment expenses to earn investment income in excess of the investment income earned for that year, such excess shall be included in the taxpayer s income, resulting in an offset of the deduction for such portion of those investment expenses. For these purposes, investment expenses include certain deductible interest and losses of an individual (including a personal trust) that is resident or subject to tax in Québec and is a Limited Partner at the end of a fiscal year of the Partnership and 50% of CEE renounced to, allocated to and deducted for Québec tax purposes by such Limited Partner, other than CEE incurred in Québec, and investment income includes taxable capital gains not eligible for the capital gains exemption. Such 50% of CEE (other than CEE incurred in Québec) renounced to, allocated to and deducted for Québec tax purposes by such Limited Partner will be included in such Limited Partner s income for Québec tax purposes to the extent that such Limited Partner has insufficient investment income. Investment expenses which have been included in the taxpayer s income in a given taxation year may be deducted against net investment income earned in any of the three previous taxation years and any subsequent taxation year. MAXIMUM OFFERING CEE Total Tax Taxable Capital Year Deductions Deductions (3)(6)(7)(8)(9)(10)(11) Credit (1) Gains (4)(5) 2013 (2)... $5,000 $5,000 $ $ 2014 and beyond... $ $ $ $252 $5,000 $5,000 $ $252 MINIMUM OFFERING CEE Total Tax Taxable Capital Year Deductions Deductions (3)(6)(7)(8)(9)(10)(11) Credit (1) Gains (4)(5) 2013 (2)... $5,000 $5,000 $ $ 2014 and beyond... $ $ $ $406 $5,000 $5,000 $ $406 The following notes and the assumptions below form an integral part of the calculations in the above illustration of possible tax deductions: Notes: (1) It is assumed that none of the expenditures will be Flow-Through Mining Expenditures that qualify for an ITC. For Québec purposes, the calculations assume that CEE is renounced by Resource Companies in accordance with the Taxation Act (Québec). Other than for Québec, no provincial or territorial credits or deductions have been taken into account. (2) It is assumed that $125,000,000 in the case of the Maximum Offering ($5,000,000 in the case of the Minimum Offering) is expended on Eligible Expenditures by Resource Companies which are renounced to the Partnership with an effective date in See Use of Proceeds and Risk Factors. 22

23 (3) Subject to note 10 below, to the extent the Partnership borrows to pay the Agents commissions, expenses of the issue, Management Fee and other administrative and operating expenses, the unpaid principal amount will be deemed to be a limited-recourse amount of the Partnership and such costs will generally not be deductible until the borrowed amount is repaid. It is assumed that the Partnership will borrow to pay the Agents commission and expenses of the issue, and that the Partnership will sell sufficient investments to permit it to repay all amounts borrowed by the Partnership on or prior to December 31, (4) The capital gains result from the sale of investments of the Partnership in order to repay money borrowed to pay the Agents commissions and expenses of the issue, as well as the Management Fee and certain administrative and operating expenses. (5) It is assumed that the Flow-Through Shares held by the Partnership are sold by the Partnership at a discount to their original issue price. Flow-Through Shares are purchased at a premium to the market price and the market price must appreciate in order for the Partnership to sell the shares at their original issue price. (6) No allocations of Income or Loss have been taken into account. (7) It is assumed that no portion of the Subscription Price will be financed with limited-recourse financing. See Canadian Federal Income Tax Considerations and Attributes of the Units Details of the Partnership Agreement. (8) It is assumed that Limited Partners are not liable for minimum tax. See Canadian Federal Income Tax Considerations Minimum Tax on Individuals. (9) A Limited Partner may not claim tax deductions in excess of such Limited Partner s at-risk amount. See Canadian Federal Income Tax Considerations Limitation on Deductibility of Expenses or Losses of the Partnership. (10) The calculations are prepared on the assumption that the October 31, 2003 Proposals will apply to deny the deduction of any expenses by the Partnership or a Limited Partner in respect of the Flow-Through Shares or Units, respectively. See Canadian Federal Income Tax Considerations October 31, 2003 Tax Proposals. (11) It is assumed that for Québec provincial tax purposes only, a Limited Partner who is an individual (including a personal trust) resident, or subject to tax, in Québec has investment income that exceeds his, her or its investment expenses for a given year. For these purposes, investment expenses include certain interest, losses of a Limited Partner and 50% of CEE incurred outside Québec. CEE not deducted in a particular year may be carried over and applied against net investment income earned in any of the three previous taxation years or any subsequent taxation year. See Risk Factors Tax-Related. The actual annual tax deductions available to a Limited Partner may vary significantly from those set out above and may be affected by the following factors: the failure of the Partnership to fully invest the Gross Proceeds; amounts renounced by the Resource Companies to the Partnership failing to qualify as CEE, a reduction in CEE which may be renounced to the Limited Partners due to limited-recourse amounts by Limited Partners; capital gains or losses resulting from the sale of securities during a year; or changes in applicable income tax legislation. The following hypothetical example illustrates the potential for capital gains that may be realized by Limited Partners: Assumptions: (i) an initial investment of $5,000, (ii) each of the Flow-Through Shares have an adjusted cost base of nil, (iii) the average premium paid to acquire Flow-Through Shares is 20%, (iv) 20% and 50% of the Flow-Through Shares are sold in 2013 and 2014, respectively, and (v) no allocations of Income or Loss are taken into account. Estimated taxable capital gains per 200 Units ($5,000): $417 and $1,042 in 2013 and 2014, respectively. The Partnership Agreement states that the Partnership will endeavour to invest all the Gross Proceeds in Flow-Through Shares on or before December 31, The Partnership Agreement provides that the Partnership will not enter into any Flow-Through Investment Agreement which contemplates that Eligible Expenditures will be renounced with an effective date later than December 31, There is no assurance that all the Gross Proceeds will be committed to purchase Flow-Through Shares on or before December 31, 2013 or that amounts renounced by Resource Companies to the Partnership will qualify as CEE. Either of these occurrences will reduce the amount of tax deductions to which Limited Partners may be entitled. As well, in the event that Limited Partners acquire Units using limited-recourse amounts for tax purposes, the amount of Eligible Expenditures and/or Losses allocated to the Limited Partners will be reduced. Finally, the minimum tax could limit tax benefits available to Limited Partners. See also Canadian Federal Income Tax Considerations and Risk Factors. 23

24 OVERVIEW OF THE LEGAL STRUCTURE OF THE PARTNERSHIP NCE Diversified Flow-Through (13) Limited Partnership is a limited partnership formed under the laws of the Province of Ontario and is governed by the Partnership Agreement. See Attributes of the Units Details of the Partnership Agreement for a summary of the Partnership Agreement. Declarations respecting the Partnership have been filed pursuant to the Limited Partnerships Act on February 12, 2009, November 1, 2011, November 27, 2012 and November 30, In order to establish the Partnership, the initial Limited Partner was issued one Unit for the sum of $ Concurrently with the admission of new Limited Partners to the Partnership, the interest of the initial Limited Partner will be purchased for cancellation by the Partnership for the sum of $ The General Partner is responsible for appointing the Manager and monitoring the activities of the Partnership on behalf of the Partnership. The General Partner has retained the Manager to direct the business, operations and affairs of the Partnership and provide day-to-day management services to the Partnership, including, without limitation, the provision of advice on and the management of the investment portfolio of the Partnership pursuant to the Management Agreement. See Organization and Management Details of the Partnership The Manager and Portfolio Advisor. The Limited Partners may not participate in the management or control of the business, operations and affairs of the Partnership; otherwise, in accordance with the Limited Partnerships Act, they will lose their protection of limited liability. The Partnership Agreement confers all rights as to allocations, distributions and other matters upon the Limited Partners and the General Partner. The Partnership is not considered to be a mutual fund under securities legislation. The Partnership s executive office is located at Commerce Court West, 199 Bay Street, Suite 4100, P.O. Box 108, Commerce Court Postal Station, Toronto, Ontario M5L 1E2. INVESTMENT OBJECTIVE The objective of the Partnership is to achieve capital appreciation and to maximize the tax benefits received by Limited Partners according to the investment strategies outlined herein. The Partnership will initially invest in Flow-Through Shares of Resource Companies. See Investment Strategies and Investment Restrictions. INVESTMENT STRATEGIES The Partnership Agreement provides that the Partnership will invest in Flow-Through Shares of Resource Companies. As described under Investment Restrictions, the Partnership will invest a minimum of 80% of the Gross Proceeds in Resource Companies whose shares are listed on a Canadian stock exchange. The Partnership may also invest up to 20% of the Gross Proceeds in Illiquid Investments, including securities of Private Companies. The Partnership will endeavour to invest all of the Gross Proceeds in Flow-Through Shares on or before December 31, It will use any uninvested amounts to repay the Loan Facility in full and the balance, if any, will be returned to Limited Partners. Subject to certain limitations, Limited Partners with sufficient income may claim certain deductions from income for income tax purposes. See Canadian Federal Income Tax Considerations. The Partnership will invest in Flow-Through Shares with a view to acquiring a diversified investment portfolio; however, there is no intention to maintain any specific portfolio mix. Although the Partnership is not required pursuant to its investment restrictions to invest in Canadian issuers, it is expected that the Resource Companies in which the Partnership invests will primarily be Canadian issuers. As part of the Partnership s investment strategy, the Partnership will, from time to time, dispose of Flow-Through Shares and other investments and reinvest the net proceeds from such dispositions in securities of Resource Companies. The Partnership s investment strategy is to acquire Flow-Through Shares issued by Resource Companies that (i) have experienced management, (ii) have an exploration program and/or operational facility (in the case of renewable energy investments) in operation, (iii) offer potential for future growth, and (iv) meet certain 24

25 specified enterprise value and other criteria. All investments will be made in accordance with the Partnership s investment policies and restrictions contained in the Partnership Agreement and as described herein. The purchase price of Flow-Through Shares is normally, depending on market conditions and other relevant factors, at a premium to the market price of the common shares of such issuers. Flow-Through Shares (subject to applicable hold periods) may be sold at any time if the Manager believes it is in the best interests of the Partnership to do so. The Partnership may sell options to purchase securities owned by the Partnership, a strategy commonly referred to as covered call writing, in circumstances the Manager considers appropriate, as a means of locking in gains or generating potential income. It is intended that the writing of covered calls would be used to assist the Partnership in offsetting premiums of Flow-Through Shares purchased by the Partnership pursuant to a prospectus exemption during any hold period applicable to such securities. There are no investment restrictions or limits regarding the use of such strategy. Any covered call option transactions undertaken in respect of the Partnership may be initiated only by authorized investment personnel approved by the Manager s Investment Committee (consisting of the Chief Investment Officer, the senior portfolio managers, senior traders and representatives of the compliance and legal departments), which ensures that these individuals have the necessary proficiency and experience to use derivatives of this nature. As any use of derivatives by the Partnership is expected to be limited, the Manager will not conduct simulations to test the portfolio under stress conditions. Senior management of the Manager will also review any use of derivatives at the quarterly meetings with the members of its Investment Department. Flow-Through Investment Agreements The Partnership intends to enter into Flow-Through Investment Agreements with Resource Companies to acquire Flow-Through Shares on customary terms and conditions. Pursuant to the terms of such agreements, such Resource Companies will be obligated to incur exploration and development expenditures that qualify as Eligible Expenditures. The Flow-Through Investment Agreements entered into with Resource Companies will require each Resource Company to represent and warrant that neither it nor any person who does not deal at arm s length with such Resource Company is a Limited Partner, the General Partner or the Manager. The Flow-Through Investment Agreements entered into with Resource Companies will require the Resource Companies to incur and renounce to the Partnership Eligible Expenditures in an amount equal to the amount paid for the Flow-Through Shares and any Resource Company which fails to do so may be liable to the Partnership if it fails to satisfy such obligations (See Risk Factors Tax Related ). The Partnership will receive Flow-Through Shares based on the amount paid, once payment is made to the Resource Companies. The Partnership will endeavour to subscribe for Flow-Through Shares on or before December 31, 2013 so that the aggregate purchase price equals the Gross Proceeds, in contemplation of the Resource Companies that have issued Flow-Through Shares incurring Eligible Expenditures and renouncing Eligible Expenditures in an amount equal to the purchase price of the Flow-Through Shares to the Partnership. Pursuant to the terms of the Flow-Through Investment Agreements, such Eligible Expenditures will be required to be renounced to the Partnership with an effective date no later than December 31, The Flow-Through Investment Agreements entered into by the Partnership during 2013 may permit a Resource Company to incur Eligible Expenditures at any time up to December 31, 2014 provided that the Resource Company agrees to renounce such Eligible Expenditures to the Partnership with an effective date on or before December 31, See Risk Factors Tax Related. Loan Facility The Partnership will enter into the Loan Facility with the Lender prior to the initial Closing of this Offering. The Lender will be at arm s length to the Partnership, the General Partner, the Manager and their respective Affiliates. The Loan Facility will permit the Partnership to borrow up to an amount not exceeding 10% of the Gross Proceeds, which will be used to pay the Agents commissions and may, in the discretion of the Partnership, be used to pay the expenses of the issue, the Management Fee and the ongoing expenses of the Partnership, in 25

26 order to maximize the funds available for the purchase of Flow-Through Shares. The General Partner anticipates that the interest rates, fees and expenses under the Loan Facility will be typical of credit facilities of this nature and that the Partnership will provide a security interest in all of the assets held by or on behalf of the Partnership in favour of the Lender to secure such borrowings. Other than the borrowing by the Partnership under the Loan Facility, the Partnership will not engage in any other borrowings. The total market value of the Partnership s total assets less mark to market losses on written options divided by total outstanding indebtedness must at all times exceed 5 to 1. Consequently, in the event the value of the total assets of the Partnership declines, the maximum amount of leverage that the Partnership could be exposed to is 20% of total assets of the Partnership (or approximately 25% of net assets of the Partnership). All amounts outstanding under the Loan Facility, including all interest accrued thereon, will be repaid in full prior to the earlier of: (i) the completion of the Liquidity Transaction, (ii) the dissolution of the Partnership, and (iii) the maturity date of the Loan Facility (expected to be on or about May 31, 2015). Overview of the Investment Structure The management and investment structure of the Partnership and the relationship among the Partnership, the General Partner, the Manager, Limited Partners (i.e., the investors), Corporate Class Ltd. and the Resource Companies are illustrated below. This diagram is provided for illustration purposes only and is qualified by the information set forth elsewhere in this prospectus. Sentry Investments Inc. (the Manager) Limited Partners NCE Diversified Management (13) Corp. (the General Partner) (owns 99.99% interest in the Partnership) (owns 0.01% interest in the Partnership) NCE Diversified Flow-Through (13) Limited Partnership (the Partnership) Resource Companies Sentry Corporate Class Ltd. 12DEC Notes: (1) Limited Partners purchase Units at $25.00 per Unit (minimum purchase $5,000 (200 Units)). (2) The Partnership enters into Flow-Through Investment Agreements with Resource Companies pursuant to which the Partnership subscribes for Flow-Through Shares. 26

27 (3) Pursuant to the Flow-Through Investment Agreements, Resource Companies renounce Eligible Expenditures to the Partnership. (4) As a tax benefit, renounced Eligible Expenditures flow through to Limited Partners who are Limited Partners of record on December 31, (5) The Manager has been retained by the General Partner, and has been assigned such powers and duties as are necessary, to direct the business, operations and affairs of the Partnership and provide day-to-day management services, including portfolio management, to the Partnership. (6) The Partnership pays the General Partner the Management Fee of 1 12 of 2.0% of the Net Asset Value of the Partnership, calculated and paid monthly. Other than the Performance Bonus which is paid directly to the Manager by the Partnership, the General Partner is responsible for all fees paid to the Manager; such fees will be payable from the Management Fee. See Fees and Expenses The Manager and Fees and Expenses Performance Bonus. (7) The Partnership intends to implement the Liquidity Transaction no later than May 31, 2015, pursuant to which the net assets of the Partnership will be transferred to Corporate Class Ltd., or another Designated Mutual Fund, in exchange for mutual fund shares of Corporate Class Ltd., or shares of such other Designated Mutual Fund, following which such shares will be distributed to the Limited Partners pro rata on a tax deferred basis. OVERVIEW OF THE SECTORS IN WHICH THE PARTNERSHIP INVESTS The following information on the resource sector contains forward-looking information that involves risks and uncertainties. Forward-looking information relates to, among other things, strategy, indicators and expectations for the resource sector and Resource Companies and other expectations, intentions and plans contained in this prospectus that are not historical fact (see Forward-Looking Information ). Energy Sector The energy sector consists mainly of Resource Companies that engage in exploration, development and/or production of oil and natural gas, and companies engaged in renewable energy exploration and development. The Manager believes that oil and gas will experience upward pricing pressure over the long term as the global energy industry is challenged to offset current production declines by exploiting resources that are increasingly difficult to discover, expensive to develop, and technically challenging. Current trends or events that may be expected to affect an investment in the Partnership include, but may not be limited to, the aftermath of the global credit crisis, and the pace and durability of the global economic recovery, which may impact demand for oil and gas related products. The recovery in global economies has been challenging as the developed world balances large fiscal deficits, expanding sovereign debt and the prospect of tepid economic growth. The ability of the emerging market economies to carry the burden of growth has been called into question as their economic growth has decelerated. Notwithstanding, the capital markets still continue to be amenable to financing those Resource Companies with strong prospects. Over the lifespan of the Partnership, the Manager anticipates that global governments will begin to withdraw the substantial amounts of fiscal stimulus that have been used to mitigate the effects of the economic slowdown. While the Manager is optimistic that there will be a return to more normal rates of growth over time, the Manager is cautious that additional economic distress could challenge the stability of energy markets in the short term. Oil markets Current trends in the oil market continue to support the investment merits of exploration and productionoriented Resource Companies in Canada: it is the view of the Manager that the supply/demand balance is likely to tighten if the global economic recovery continues. Growth in energy demand is expected to be primarily driven by emerging economies such as China and India; in Canada, advances in horizontal drilling and multi-stage fracturing have significantly improved the economics of exploiting tight oil reservoirs in western Canada and expanded the opportunities available to Canadian producers; and the Manager believes that the outlook for heavy oil differentials will be favourable and should continue to improve in North America. Infrastructure constraints in moving crude oil within the U.S. have been mitigated by significant growth in the volume of crude oil that producers have managed to move by rail, 27

28 and the Manager believes that in the coming years, plans to construct additional pipeline capacity will alleviate the current discounting of southbound Canadian crudes. The Manager believes that global oil balances are currently dominated by the geopolitics of supplier nations and the potential for interruptions that could result from conflicts or unplanned outages. The current macroeconomic environment and the implications of the European debt crisis, ongoing unrest in Middle Eastern and African countries, and the outcome of sanctions meant to deter Iran s nuclear ambitions represent significant potential for volatility in the commodity. Moreover, it is necessary to acknowledge the importance of the Organization of Petroleum Exporting Countries (OPEC) cartel s fiscal objectives and their influence in oil pricing. Figure 1 shows the wedges of production from OPEC countries and Russia that would be coming from countries running fiscal deficits at a range of various global oil prices. With much of the world s spare crude oil capacity residing in Saudi Arabia, the Manager believes that its fiscal goals, above others, will be particularly important in determining crude oil pricing. The Manager s current estimates suggest that Brent crude should be priced in the range of US$90 US$95 per barrel for Saudi Arabia to balance its budget. Figure 2 shows the historical relationship between monthly average Brent crude pricing per barrel and monthly average Saudi Arabian production levels. It is the view of the Manager that Saudi Arabia and other key producing nations of OPEC will not subsidize their crude oil customers for extended periods of time while running significant fiscal deficits and, in this scenario there would be a powerful fiscal incentive for OPEC members to comply with calls for production cuts. Against this backdrop, the Manager views the supply side of the equation for producing countries to be challenged by ongoing field declines and the drive of the industry towards higher cost and more technically challenging sources of supply to keep up with demand growth. Figure 1 Percent of world supply from oil-producing countries (OPEC Russia) in deficit Source: IMF, IEA and Bernstein analysis. As at Jun. 30, DEC

29 Figure 2 Saudi Arabia has a structural need for higher oil prices $150 Saudi Production (mmbbl/d) $130 $110 $90 $70 $50 $30 Average Monthly Brent Crude Price (US$/bbl) Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Saudi Production (mmbbl/d) Source: Bloomberg L.P., Sentry Investments, as at Jun. 30, 2012 Monthly Average Brent Crude Oil (US$/bbl) 12DEC On the other side of the equation, product demand in developed countries remains fairly muted as many governments grapple with fiscal austerity. In contrast, the Manager anticipates that the developing world will be the key driver of ongoing demand growth in future years. Chinese demand for crude oil and diesel fuel continued to grow during the recent downturn, and it is the view of the Manager that these trends are likely to continue over the term of the Partnership. The outlook for Canada s crude oil industry remains particularly positive. Much of the world s hydrocarbon production comes from politically risky areas. The Manager believes that the relative stability of Canada has been and will continue to be a key driver of the appeal of Canadian companies as a part of a global portfolio. On balance, the Manager views the prospects for oil-weighted investments as very favourable. Figure 3 shows the relative dislocation of the valuations of Canadian exploration and production stocks relative to the Canadiandollar-denominated price for WTI crude oil. Historically, the most pronounced dislocations highlighted in Figure 3 have produced significant and positive returns in the subsequent 12-month period (Figure 4). Figure 3 Ratio of S&P/TSX Corporate Oil and Figure 4 Twelve-month returns of the S&P/TSX Gas Exploration and Production Index to WTI Corporate Oil and Gas Exploration and Production crude oil (C$) Index 12DEC Source: Bloomberg L.P., Sentry Investments, as at Nov. 7, DEC Note: this chart shows the average and historical range of the ratio presented in Figure 3 in the subsequent 12-month period following the local minima shown by the arrows Source: Bloomberg L.P., Sentry Investments, as at Nov. 30,

30 Natural gas markets Natural gas markets have been challenged in the last few years by high inventory and increasing supply, primarily due to the development of prolific shale gas plays. The bifurcation between the pricing of natural gas and crude oil has driven much of the growing interest in liquids-rich plays. Growth in U.S. oil production has meant that much of the associated natural gas produced as a by-product has also contributed to growing volumes of gas. The Manager has begun to see signs that supply dynamics have been changing. The overall supply of natural gas has flattened as U.S. gas-directed rig counts have fallen and Canadian exports of natural gas to the U.S. have been in secular decline (Figure 5). Even though inventories continue to be bloated, there are some notable and very positive longer-term considerations. Currently, natural gas in North America represents a very competitive energy source for power generation, particularly when compared to dirtier coal. Power generation from natural gas enjoyed a large surge in 2012 (Figure 6). Longer term, the plans to construct in North America significant liquefied natural gas (LNG) export capacity in the latter half of the decade and beyond should have a positive influence in bringing North American gas prices closer to those realized in the global LNG trade. As positive as these trends may be, however, the industry will continue to grapple with concerns related to the environmental impact of hydraulic fracturing and any associated changes to legislation. It is the view of the Manager that while the current environment is challenging, it has presented significant opportunities for many Canadian natural gas producers. Lower royalties, drilling incentives, the production of higher-valued natural gas liquids, and the application of new technology have all had a positive impact on the economics of Western Canadian natural gas. Natural gas will continue to be an important and growing part of the energy balance in North America, and the Manager views the prospects for the commodity as positive in spite of the current challenges. Figure 5 U.S. gas growth finally moderating Figure 6 There has been a surge in gas demand (Left axis: US gas production, bfc/d; right axis: YoY, bcf/d) for electricity generation Electricity utility demand for natural gas (YTD) 12DEC Source: EIA, Morgan Stanley Commodity Research, as at Source: EIA, Credit Suisse, as at Sep. 30, 2012 Aug. 31, DEC Metals and Mining Sectors The Manager believes that sluggish global economic growth will force central bankers to keep interest rates at their current historic lows. The U.S. Federal Reserve chairman, Ben Bernanke, recently signalled such a stance, stating low interest rates will extend until mid The Manager believes that tepid growth in the U.S. the world s largest economy will force the government to continue to run fiscal deficits rather than embark on fiscal restraint. The Manager believes that the numbers presented in the Congressional Budget Office (CBO) projections (Figure 7) support this view and paint a deteriorating picture of the U.S. fiscal position. The Manager believes these numbers are likely optimistic. Under its base case scenario, the CBO forecasts an improving deficit in 2013 due to expiry of tax cuts at the end of Under this forecast, the U.S. debt still increases at a rate of $1 trillion per year after entitlements (off-budget deficit) are considered. 30