btg58869-scotia arcvr09 eng · 2011. 11. 22. · pinnacle short term income fund statement of net...

Annual Report 2009The Pinnacle Funds

The Pinnacle Portfolios

The Pinnacle Funds

Money Market Fund

Pinnacle Short Term Income Fund

Bond Funds

Pinnacle Income FundPinnacle High Yield Income FundPinnacle American Core-Plus Bond Fund

Real Estate Fund

Pinnacle Global Real Estate Securities Fund

Balanced Fund

Pinnacle Strategic Balanced Fund

Canadian Equity Funds

Pinnacle Canadian Value Equity FundPinnacle Canadian Mid Cap Equity FundPinnacle Canadian Growth Equity FundPinnacle Canadian Small Cap Equity Fund

Foreign Equity Funds

Pinnacle American Value Equity FundPinnacle American Mid Cap Value Equity FundPinnacle American Large Cap Growth Equity FundPinnacle American Mid Cap Growth Equity FundPinnacle International Equity FundPinnacle International Small to Mid Cap Value Equity FundPinnacle Global Equity Fund


Pinnacle Balanced Income PortfolioPinnacle Conservative Balanced Growth PortfolioPinnacle Balanced Growth PortfolioPinnacle Conservative Growth PortfolioPinnacle Growth Portfolio

54D 9098E 03/10

The Pinnacle Funds and the Pinnacle Portfolios are managed by Scotia Asset Management L.P. ScotiaCapital Inc. is a corporate entity separate from, although wholly-owned by, The Bank of Nova Scotia.Member CIPF.

BTG58869-Scotia ARCvr09 Eng.qx6 3/19/10 2:13 PM

The Pinnacle Funds andthe Pinnacle Portfolios2009 Annual ReportFinancial Statements

Money Market Fund3 • Pinnacle Short Term Income Fund

Bond Funds6 • Pinnacle Income Fund9 • Pinnacle High Yield Income Fund13 • Pinnacle American Core-Plus Bond Fund

Real Estate Fund21 • Pinnacle Global Real Estate Securities Fund

Balanced Fund25 • Pinnacle Strategic Balanced Fund

Canadian Equity Funds29 • Pinnacle Canadian Value Equity Fund32 • Pinnacle Canadian Mid Cap Equity Fund35 • Pinnacle Canadian Growth Equity Fund38 • Pinnacle Canadian Small Cap Equity Fund

Foreign Equity Funds41 • Pinnacle American Value Equity Fund44 • Pinnacle American Mid Cap Value Equity Fund48 • Pinnacle American Large Cap Growth Equity Fund52 • Pinnacle American Mid Cap Growth Equity Fund55 • Pinnacle International Equity Fund59 • Pinnacle International Small to Mid Cap Value Equity Fund64 • Pinnacle Global Equity Fund

The Pinnacle Portfolios68 • Pinnacle Balanced Income Portfolio70 • Pinnacle Conservative Balanced Growth Portfolio72 • Pinnacle Balanced Growth Portfolio74 • Pinnacle Conservative Growth Portfolio76 • Pinnacle Growth Portfolio

78 Notes to the Financial Statements

88 Management and Auditors’ Reports

1


Statement of Net AssetsAs at December 31,

2009 2008

AssetsInvestments at fair value $15,617,683 $17,636,137Cash 97,335 112,486Subscriptions receivable – 23,210Prepaid expense – 2,872Accounts receivable 1,693 617

15,716,711 17,775,322

LiabilitiesRedemptions payable 2,164 12,533Distributions payable 394 804Accrued expenses 28,615 34,846

31,173 48,183

Net Assets $15,685,538 $17,727,139

Net Assets per classClass A Units $15,685,538 $17,727,139Class F Units $ – $ –

Units outstandingClass A Units 1,568,533 1,772,694Class F Units – –

Net Assets per unitClass A Units $ 10.00 $ 10.00Class F Units $ – $ –

Statement of OperationsFor the periods ended December 31,

2009 2008

Investment IncomeInterest $146,273 $400,613Securities lending 29 341

146,302 400,954

ExpensesManagement fees (including GST) (note 7) 2,855 –Legal fees 6,737 2,116Audit fees 13,117 12,975Custody fees 3,838 2,176Filing fees 17,757 19,532Independent Review Committee fees 3,189 2,269Unitholder reporting costs 16,515 10,779Unitholder administration, service fees and GST 39,314 46,729

103,322 96,576Absorbed expenses (21,576) (32,708)

Net expenses 81,746 63,868

Net investment income (loss) 64,556 337,086

Increase (Decrease) in Net Assets from Operations $ 64,556 $337,086

Increase (Decrease) in Net Assets from OperationsClass A Units $ 63,949 $337,086Class F Units* $ 607 $ –

Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 0.04 $ 0.28Class F Units* $ 0.01 $ –

Statement of Changes in Net AssetsFor the periods ended December 31,

2009 2008

Net Assets – Beginning of PeriodClass A Units $ 17,727,139 $ 11,299,682

Increase (Decrease) in Net Assets from OperationsClass A Units 63,949 337,086Class F Units* 607 –

64,556 337,086

Distributions to unitholdersFrom net investment income

Class A Units (63,943) (336,972)Class F Units* (607) –

(64,550) (336,972)

Unit TransactionsProceeds from issue

Class A Units 18,470,404 17,308,671Class F Units* 3,106,158 –

Reinvested distributionsClass A Units 63,336 335,989Class F Units* 607 –

Payments on redemptionClass A Units (20,575,347) (11,217,317)Class F Units* (3,106,765) –

(2,041,607) 6,427,343

Increase (Decrease) in Net AssetsClass A Units (2,041,601) 6,427,457Class F Units* – –

(2,041,601) 6,427,457

Net Assets – End of PeriodClass A Units 15,685,538 17,727,139Class F Units* – –

$ 15,685,538 $ 17,727,139

* Start date February 17, 2009

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Portfolio Advisor: Scotia Asset Management L.P.

The accompanying notes are an integral part of these financial statements.

Statement of Investment PortfolioAs at December 31, 2009FaceValue ($) Issuer

AverageCost ($)

FairValue ($)

Money Market Instruments – 99.6%Treasury Bills – 48.8%1,825,000 Province of British Columbia

0.23% due Feb. 1, 2010 1,824,631 1,824,631300,000 Province of New Brunswick

0.23% due Feb. 10, 2010 299,921 299,921200,000 Province of Newfoundland and Labrador

0.23% due Mar. 25, 2010 199,895 199,895200,000 Province of Ontario

0.22% due Jan. 6, 2010 199,993 199,993435,000 Province of Ontario

0.23% due Feb. 17, 2010 434,866 434,8661,600,000 Province of Ontario

0.23% due Mar. 10, 2010 1,599,304 1,599,3041,100,000 Province of Ontario

0.23% due Mar. 17, 2010 1,099,472 1,099,4722,000,000 Province of Quebec

0.23% due Mar. 26, 2010 1,998,938 1,998,938

7,657,020 7,657,020

Banker’s Acceptances – 8.9%400,000 Canadian Imperial Bank of Commerce

0.64% due Apr. 28, 2010 399,172 399,172300,000 National Bank of Canada

0.70% due Jun. 4, 2010 300,000 300,157700,000 Royal Bank of Canada

0.26% due Mar. 8, 2010 699,670 699,670

1,398,842 1,398,999

Banker’s Deposit Note – 4.5%700,000 Bank of Montreal

0.28% due Mar. 10, 2010 699,624 699,624

Commercial Paper – 2.2%250,000 Suncor Energy, Inc.

0.39% due Feb. 23, 2010 249,854 249,854100,000 Suncor Energy, Inc.

0.40% due Mar. 25, 2010 99,909 99,909

349,763 349,763

Deposit Note – 2.7%425,000 Enbridge Inc.

0.30% due Mar. 17, 2010 424,738 424,738

Short-Term Bonds – 32.5%400,000 407 International Inc.

4.90% due Oct. 4, 2010 412,147 416,939200,000 Canadian Imperial Bank of Commerce

0.83% due Oct. 3, 2011 200,000 200,414700,000 CARDS II Trust

0.49% due Mar. 22, 2010 699,599 699,757312,000 EPCOR Utilities Inc.

6.95% due Jun. 28, 2010 321,306 321,544

FaceValue ($) Issuer

AverageCost ($)

FairValue ($)

Money Market Instruments (cont’d)Short-Term Bonds (cont’d)

400,000 GE Capital Canada Funding Company3.65% due Jun. 7, 2010 403,802 404,802

600,000 Genesis Trust4.00% due Mar. 15, 2010 603,499 610,663

600,000 Golden Credit Card Trust4.05% due Jun. 15, 2010 608,074 609,208

235,000 Greater Toronto Airports Authority6.70% due Jul. 19, 2010 242,583 249,685

330,000 John Deere Credit Inc.4.45% due Apr. 16, 2010 333,592 336,698

100,000 Manulife Bank of Canada0.43% due Oct. 14, 2010 100,000 100,094

500,000 Province of Ontario1.03% due Jul. 15, 2011 503,810 504,914

200,000 TransCanada PipeLines Limited10.50% due Aug. 20, 2010 212,004 219,651

400,000 Union Gas Ltd.7.20% due Jun. 1, 2010 410,717 413,170

5,051,133 5,087,539

Total Investment Portfolio 15,581,120 15,617,683

Other Assets, Less Liabilities – 0.4% 67,855

Net Assets – 100.0% 15,685,538

Summary of Investment Portfolio

Investment Category December 31, 2009 December 31, 2008

Percentage of Net Assets (%)

Banker’s Acceptance 8.9 13.9Banker’s Deposit Note 4.5 3.8Commercial Paper 2.2 15.7Deposit Note 2.7 17.5Treasury Bills 48.8 34.3Short-Term Bonds 32.5 14.1

Fair Value Classification (note 2)

Assets

Quoted prices in activemarkets for identicalassets (Level 1) ($)

Significant otherobservable inputs

(Level 2) ($)

Significantunobservable

inputs (Level 3) ($) Total ($)

Money Market Instruments – 15,617,683 – 15,617,683

Total Investments – 15,617,683 – 15,617,683

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Pinnacle Short Term Income Fund (Continued)

Discussion of Financial Instrument RiskAs at December 31, 2009 and 2008

A. Risk managementThe investment objective of Pinnacle Short Term Income Fund (the “Fund”) is to preserveinvestment capital while providing interest income and maintaining liquidity by investingprimarily in highly liquid, senior investment grade money market instruments (i.e. federal andprovincial treasury bills and bonds) and bankers acceptances with a minimum credit rating ofR-1 (low) or A-1 (low).

Managing risk is among the most important factors in the portfolio management process,guiding investment decisions made for the Fund. The Fund’s investment practice includesportfolio monitoring to ensure compliance with stated investment guidelines. The Managerseeks to minimize potential adverse effects of risks on the Fund’s performance by employingand overseeing professional and experienced portfolio advisors that regularly monitor theFund’s securities and financial market developments.

B. Liquidity riskThe Fund’s exposure to liquidity risk is derived primarily from the daily cash redemptionof units. The Fund primarily invests in securities that are traded in active markets andcan be readily disposed. In addition, the Fund aims to retain sufficient cash and moneymarket instrument positions to maintain liquidity, and has the ability to borrow up to5% of its Net Asset Value for the purpose of funding redemptions. The Fund may, fromtime to time, enter into over-the-counter derivative contracts or invest in securities thatare not traded in an active market. Such securities are identified in the Statement ofInvestment Portfolio. All liabilities are short term in nature.

C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. As at December 31, 2009 and December 31,2008, the Fund had no significant exposure to foreign currencies.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments. The Fund is exposed toinsignificant interest rate risk as the overall average term to maturity of its investments is lessthan a year.

The table below summarizes the Fund’s exposure to interest rate risks by remainingterm to maturity of the Fund’s portfolio of money market instruments.

Interest Rate Exposure*December 31, 2009

($)December 31, 2008

($)

Less than 1 Year 14,912,355 17,602,1921-3 years 705,328 –3-5 years – –5-10 years – –H 10 years – –

Total 15,617,683 17,602,192

* Excludes cash and preferred shares as applicable.

E. Credit riskCredit risk is the risk that the counterparty to a financial interest will fail to dischargean obligation or commitment that it has entered into with the Fund. The Fund’s maincredit risk is concentrated in debt instruments. All transactions in listed securities aresettled (paid) for upon delivery using approved brokers. The risk of default isconsidered minimal, as delivery of securities sold is only made once the broker hasreceived payment. Payment is made on a purchase once the securities have beenreceived by the broker.

Where the Fund invests in money market instruments this represents the mainconcentration of credit risk. The market value of money market instruments includesconsideration of the creditworthiness of the issuer, and accordingly, represents themaximum credit risk exposure to the Fund.

Debt instruments, excluding cash, held by the Fund have credit ratings as follows:

Percentage ofTotal Debt

Securities (%)Percentage of

Net Assets (%)

Percentage ofTotal Debt

Securities (%)Percentage of

Net Assets (%)

December 31, 2009 December 31, 2008

Short-Term RatingR1 – High 11.5 11.5 51.7 51.2R1 – Middle 49.7 49.4 21.1 21.0R1 – Low 6.2 6.2 13.0 12.9

Bond Credit RatingA– to AAA+ 29.9 29.8 14.2 14.1B– to BBB+ 2.1 2.1 – –Unrated 0.6 0.6 – –

Total 100.0 99.6 100.0 99.2

The Fund may enter into securities lending transactions with counterparties wherebythe Fund temporarily exchanges securities for collateral with a commitment by thecounterparty to deliver the same securities on a future date. Credit risk associated withthese transactions is considered minimal as all counterparties have a sufficient,approved credit rating and the market value of cash or securities held as collateralmust be at least 102% of the fair value of the securities loaned, as disclosed in Note 8.

F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). As at December 31, 2009 and December 31, 2008, the Fund wasnot significantly exposed to other price risks.

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Pinnacle Short Term Income Fund (Continued)


Pinnacle Income Fund


2009 2008

AssetsInvestments at fair value $284,218,324 $281,853,007Cash 16,964 3,274Subscriptions receivable 125,138 73,465Receivable for securities sold 6,031,091 5,806,443Accrued investment income 1,358,459 1,451,671Prepaid expense – 2,872Accounts receivable 1,175 –

291,751,151 289,190,732

LiabilitiesPayable for securities purchased 5,982,592 6,202,266Redemptions payable 292,107 208,020Accrued expenses 67,565 75,071

6,342,264 6,485,357

Net Assets $285,408,887 $282,705,375

Net Assets per classClass A Units $284,824,352 $282,705,375Class F Units $ 584,535 $ –

Units outstandingClass A Units 26,657,740 26,508,211Class F Units 53,026 –

Net Assets per unitClass A Units $ 10.68 $ 10.66Class F Units $ 11.02 $ –


2009 2008

Investment IncomeInterest $12,133,515 $15,038,523Securities lending 10,339 36,661

12,143,854 15,075,184


236,062 244,309Absorbed expenses (1,175) –

Net expenses 234,887 244,309

Net investment income (loss) 11,908,967 14,830,875

Net realized gain (loss) on investments sold 3,139,958 6,544,732Change in unrealized appreciation (depreciation) of investments 2,059,135 (4,602,836)

Net gain (loss) on investments 5,199,093 1,941,896

Increase (Decrease) in Net Assets from Operations $17,108,060 $16,772,771

Increase (Decrease) in Net Assets from OperationsClass A Units $17,097,956 $16,772,771Class F Units* $ 10,104 $ –

Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 0.67 $ 0.57Class F Units* $ 0.44 $ –


2009 2008

Net Assets – Beginning of PeriodClass A Units $282,705,375 $ 330,937,233

Increase (Decrease) in Net Assets from OperationsClass A Units 17,097,956 16,772,771Class F Units* 10,104 –

17,108,060 16,772,771


Class A Units (11,963,813) (14,961,554)Class F Units* (6,734) –

From capital gainsClass A Units (4,634,637) (1,630,586)Class F Units* (261) –

(16,605,445) (16,592,140)


Class A Units 62,263,757 71,882,983Class F Units* 621,492 –

Reinvested distributionsClass A Units 16,451,894 16,542,853Class F Units* 5,769 –

Payments on redemptionClass A Units (77,096,180) (136,838,325)Class F Units* (45,835) –

2,200,897 (48,412,489)

Increase (Decrease) in Net AssetsClass A Units 2,118,977 (48,231,858)Class F Units* 584,535 –

2,703,512 (48,231,858)

Net Assets – End of PeriodClass A Units 284,824,352 282,705,375Class F Units* 584,535 –

$285,408,887 $ 282,705,375


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Portfolio Advisor: Fiera Capital Inc.



MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures – 98.6%Federal Government – 44.8%28,200,000 Government of Canada 1.25% 12/01/2011 28,158,174 28,080,15047,660,000 Government of Canada 2.00% 09/01/2012 47,742,009 47,749,08540,650,000 Government of Canada 2.00% 12/01/2014 39,404,752 39,217,9592,600,000 Government of Canada 4.00% 06/01/2016 2,745,210 2,734,657

10,350,000 Government of Canada 3.50% 06/01/2020 10,182,319 10,111,287

128,232,464 127,893,138

Provincial Government – 6.7%3,300,000 Province of Ontario 4.70% 06/02/2037 3,309,181 3,251,391

14,090,000 Province of Quebec 5.75% 12/01/2036 15,681,002 15,801,966

18,990,183 19,053,357

Corporate – 47.1%300,000 407 International Inc. 5.96% 12/03/2035 299,790 314,390267,672 Alliance Pipeline LP 5.55% 12/31/2023 267,672 277,201

1,135,347 Alliance Pipeline LP 7.22% 12/31/2025 1,135,347 1,251,374514,328 Blue Water Bridge Authority

6.41%* 07/09/2027 514,328 565,529860,000 British Columbia Ferry Services

Inc. 5.74% 05/27/2014 875,032 941,6261,100,000 British Columbia Ferry Services

Inc. 5.02% 03/20/2037 1,100,000 1,009,1281,022,000 Electricity Distributors Financial

Corp. 6.45% 08/15/2012 1,052,743 1,101,452170,000 Enbridge Inc. 3.95% 02/15/2010 167,484 170,561200,000 Enbridge Inc. 7.22% 07/24/2030 245,800 228,480

1,200,000 Enbridge Inc. 7.20% 06/18/2032 1,218,300 1,378,0131,500,000 FortisAlberta Inc. 5.33% 10/31/2014 1,499,400 1,620,3754,900,000 Glacier Credit Card Trust 4.27% 11/18/2011 4,759,990 5,075,7945,491,000 Greater Toronto Airports

Authority 6.45% 12/03/2027 6,053,512 5,879,6802,487,651 Greater Toronto Airports

Authority 6.45% 07/30/2029 2,377,342 2,626,3131,600,000 Greater Toronto Airports

Authority 6.47% 02/02/2034 1,916,197 1,738,016500,000 Investors Group Inc. 6.58% 03/07/2018 501,985 546,163

1,000,000 Loblaw Companies Limited7.10% 06/01/2016 1,004,400 1,154,697

2,200,000 Merrill Lynch & Co., Inc 4.68% 08/12/2015 2,086,260 2,175,2162,988,894 Merrill Lynch Financial Assets,

Inc. 5.06% 05/12/2012 2,926,874 3,004,3507,550,000 Merrill Lynch Financial Assets,






Inc. 4.64% 01/12/2040 2,068,778 2,102,277200,000 Merrill Lynch Mortgage Loans,

Inc. 7.77% 09/05/2021 199,998 197,903777,246 Merrill Lynch Mortgage Loans,

Inc. 7.37% 05/10/2022 873,391 783,1192,950,000 Merrill Lynch Mortgage Loans,

Inc. 6.75% 11/15/2032 3,063,943 3,003,841629,696 Milit-Air Inc. 5.75%* 06/30/2019 682,383 683,677900,000 N 45 Degrees First Issuer

Corporation 7.34% 07/15/2015 967,630 908,203900,000 N 45 Degrees First Issuer

Corporation 5.67% 11/15/2020 917,796 889,083


MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures (cont’d)Corporate (cont’d)2,420,362 New Brunswick FM Project Inc.

6.47%* 11/30/2027 2,433,736 2,733,640375,000 NOVA Gas Transmission Ltd.

11.20% 06/01/2014 507,000 470,8211,400,000 Ontario Infrastructure Projects

Corp. 4.70% 06/01/2037 1,401,862 1,289,3393,843,428 Ontario School Boards Financing

Corporation 7.20% 06/09/2025 4,467,617 4,446,9231,912,959 Ontario School Boards Financing

Corporation 6.55% 10/19/2026 1,904,695 2,127,8631,362,737 Ontario School Boards Financing

Corporation 5.90% 10/11/2027 1,377,272 1,468,648696,920 Ontario School Boards Financing

Corporation 5.80% 11/07/2028 694,522 722,0831,255,000 Ontrea Inc. 5.70% 10/31/2011 1,338,131 1,341,3551,600,000 Ornge Issuer Trust 5.73% 06/11/2034 1,600,000 1,616,275

17,000,000 PSP Capital Inc. 4.57% 12/09/2013 17,408,680 18,017,2571,613,199 Real Estate Asset Liquidity

Trust 4.71% 03/12/2038 1,562,899 1,622,9781,998,561 Real Estate Asset Liquidity

Trust 4.45% 12/12/2038 1,837,737 1,956,59811,041,136 Royal Office Finance LP 5.21% 11/12/2032 11,008,146 10,887,7722,879,936 Strait Crossing Development Inc.

6.17%* 09/15/2031 2,682,949 2,656,4071,400,000 TCHC Issuer Trust 4.88% 05/11/2037 1,400,000 1,299,438

976,498 Toronto Hospital 5.64%* 12/08/2022 961,008 1,018,7538,500,000 Toronto-Dominion Bank, The

4.78% 12/14/2105 7,968,070 8,492,2402,220,000 Toronto-Dominion Bank, The

5.38% 11/01/2017 2,220,000 2,384,11411,080,000 Toronto-Dominion Bank, The

5.76% 12/18/2106 11,149,440 11,539,149700,000 TransCanada PipeLines Limited

7.90% 04/15/2027 734,489 849,629300,000 TransCanada PipeLines Limited

8.21% 04/25/2030 366,030 379,1601,000,000 York Region District School Board

6.55% 04/12/2023 995,850 1,104,431

131,016,660 134,317,141

Total Bonds and Debentures 278,239,307 281,263,636

Money Market Instruments – 1.0%1,905,000 Government of Canada Treasury Bills

0.16% due Jan. 21, 2010 1,904,829 1,904,8291,050,000 Province of British Columbia

0.20% due Jan. 25, 2010 1,049,859 1,049,859

Total Money Market Instruments 2,954,688 2,954,688


Other Assets, Less Liabilities – 0.4% 1,190,563

Net Assets – 100.0% 285,408,887

* This security is not actively traded and considered illiquid.




Federal Bonds 44.8 43.3Provincial Bonds 6.7 13.8Corporate Bonds 47.1 39.1Money Market Instruments 1.0 3.5

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Pinnacle Income Fund (Continued)



Statement of Investment PortfolioAs at December 31, 2009Fair Value Classification (note 2)

Assets



(Level 2) ($)



Bonds and Debentures – 281,263,636 – 281,263,636Money Market Instruments – 2,954,688 – 2,954,688

Total Investments – 284,218,324 – 284,218,324


A. Risk managementThe investment objective of Pinnacle Income Fund (the “Fund”) is to preserveinvestment capital while seeking to achieve increased income by investing primarily in aportfolio of Canadian government and corporate bonds, preferred shares of Canadiancorporations and loans of supranational organizations.

Managing risk is among the most important factors in the portfolio managementprocess, guiding investment decisions made for the Fund. The Fund’s investmentpractice includes portfolio monitoring to ensure compliance with stated investmentguidelines. The Manager seeks to minimize potential adverse effects of risks on theFund’s performance by employing and overseeing professional and experienced portfolioadvisors that regularly monitor the Fund’s securities and financial market developments.


C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. As at December 31, 2009 and December 31,2008, the Fund had no significant exposure to foreign currencies.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As atDecember 31, 2009, had prevailing interest rates increased or decreased by 0.25%,assuming a parallel shift in the yield curve and all other variables held constant, NetAssets would have decreased or increased by approximately $3,851,158, 1.3% of theFund’s total Net Assets (December 31, 2008-$4,305,314, 1.5% of the Fund’s total NetAssets). The Fund’s sensitivity to interest rate fluctuations was estimated using theweighted average duration of the bond and debenture portfolio. In practice, actualresults may differ from this sensitivity analysis and the difference could be material.

The table below summarizes the Fund’s exposure to interest rate risk by remaining termto maturity of the Fund’s portfolio of debt instruments.



($)

Less than 1 Year 170,561 14,405,331

1-3 years 86,352,186 16,470,635

3-5 years 60,268,038 63,248,831

5-10 years 10,586,727 81,177,143

H 10 years 123,886,124 106,551,067

Total 281,263,636 281,853,007

* Excludes cash, money market instruments and preferred shares as applicable.

E. Credit riskCredit risk is the risk that the counterparty to a financial interest will fail to dischargean obligation or commitment that it has entered into with the Fund. All transactions inlisted securities are settled (paid) for upon delivery using approved brokers. The risk ofdefault is considered minimal, as delivery of securities sold is only made once thebroker has received payment. Payment is made on a purchase once the securities havebeen received by the broker.

Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. The market value of debt instruments includes consideration of thecreditworthiness of the issuer, and accordingly, represents the maximum credit riskexposure to the Fund.

Debt instruments, excluding cash and money market instruments, but includingpreferred shares held by the Fund have credit ratings as follows:

Percentage ofTotal Fixed

IncomeSecurities (%)

Percentage ofNet Assets (%)





A– to AAA+ 96.6 95.2 96.0 92.3

B– to BBB+ 2.2 2.2 4.0 3.9

Unrated 1.2 1.2 – –

Total 100.0 98.6 100.0 96.2



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SPinnacle Income Fund (Continued)



Pinnacle High Yield Income Fund


2009 2008

AssetsInvestments at fair value $161,163,634 $105,965,299Cash 322,357 5,635Receivable for currency spot and forward contracts 532,377 –Subscriptions receivable 114,010 21,050Accrued investment income 2,327,174 2,490,746Prepaid expense – 2,872Accounts receivable 700 –

164,460,252 108,485,602

LiabilitiesPayable for currency spot and forward contracts – 378,941Payable for securities purchased 9,905,603 –Redemptions payable 107,587 61,462Accrued expenses 67,463 73,315

10,080,653 513,718

Net Assets $154,379,599 $107,971,884

Net Assets per classClass A Units $150,648,914 $107,971,884Class F Units $ 3,730,685 $ –




2009 2008

Investment IncomeInterest $ 9,623,902 $ 11,357,167Securities lending 1,112 1,284Less: Foreign withholding taxes – (5,873)

9,625,014 11,352,578


230,725 208,417Absorbed expenses (700) –

Net expenses 230,025 208,417


Net realized gain (loss) on investments sold (12,830,180) (5,899,602)Net realized gain (loss) on foreign exchange 7,598,354 (3,376,026)Transaction costs (note 2) (1,518) –Change in unrealized appreciation (depreciation) of investments 30,484,484 (21,442,741)Change in unrealized appreciation (depreciation) of currency forwards 911,318 (644,165)Change in unrealized appreciation (depreciation) of foreign exchange (83,620) 76,592

Net gain (loss) on investments and transaction costs 26,078,838 (31,285,942)

Increase (Decrease) in Net Assets from Operations $ 35,473,827 $(20,141,781)

Increase (Decrease) in Net Assets from OperationsClass A Units $ 35,024,919 $(20,141,781)Class F Units* $ 448,908 $ –

Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 2.03 $ (1.22)Class F Units* $ 1.98 $ –


2009 2008

Net Assets – Beginning of PeriodClass A Units $107,971,884 $151,085,456

Increase (Decrease) in Net Assets from OperationsClass A Units 35,024,919 (20,141,781)Class F Units* 448,908 –

35,473,827 (20,141,781)



(9,307,646) (11,221,366)


Class A Units 41,527,229 42,131,618Class F Units* 3,958,240 –



20,241,534 (11,750,425)

Increase (Decrease) in Net AssetsClass A Units 42,677,030 (43,113,572)Class F Units* 3,730,685 –

46,407,715 (43,113,572)

Net Assets – End of PeriodClass A Units 150,648,914 107,971,884Class F Units* 3,730,685 –

$154,379,599 $107,971,884


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Portfolio Advisor: Guardian Capital LP


Statement of Investment PortfolioAs at December 31, 2009


MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures – 89.2%Federal Government – 6.4%5,000,000 Government of Canada 2.00% 12/01/2014 4,828,035 4,823,8575,000,000 Government of Canada 3.75% 06/01/2019 5,050,000 5,054,188

9,878,035 9,878,045

Corporate – 82.8%3,000,000 Ahern Rentals Inc. 9.25% 08/15/2013 3,616,484 1,800,1693,105,000 Allied Waste North America Inc.

7.25% 03/15/2015 3,506,874 3,401,6143,400,000 Athabasca Oil Sands Corp.

13.00%* 07/30/2011 3,400,000 3,604,0002,000,000 Baytex Energy Trust 9.15% 08/26/2016 2,000,000 2,121,7881,100,000 Bell Aliant Regional

Communications LP 6.17% 02/26/2037 1,090,920 970,5211,000,000 Bombardier Inc. 4.00% 11/15/2013 1,452,834 1,428,0622,000,000 Bombardier Inc. 7.35% 12/22/2026 2,025,000 1,854,0001,000,000 Brookfield Power 5.45%* 12/18/2017 1,157,300 1,046,5823,000,000 Brookfield Renewable Power Inc.

5.25% 11/05/2018 2,998,920 2,745,6741,000,000 Cameco Corporation 5.67% 09/02/2019 1,004,240 1,016,6752,973,000 Canadian Tire Corporation,

Limited 5.61% 09/04/2035 2,709,647 2,613,0761,650,000 Catalyst Paper Corporation

7.38% 03/01/2014 2,117,695 1,052,6482,000,000 CCS Inc. 11.00% 11/15/2015 1,814,914 1,558,3171,500,000 Chesapeake Energy Corporation

9.50% 02/15/2015 1,732,797 1,721,7312,490,000 Chesapeake Energy Corporation

6.38% 06/15/2015 2,733,624 2,552,083500,000 Chesapeake Energy Corporation

6.88% 01/15/2016 504,206 522,9253,000,000 Clear Channel Communications,

Inc. 10.75% 08/01/2016 2,245,845 2,470,8211,000,000 Clondalkin Acquisition B.V.

2.25% 12/15/2013 786,190 915,1192,500,000 Corrections Corporation of

America 7.75% 06/01/2017 2,797,179 2,706,1372,500,000 Couche-Tard U.S. LP 7.50% 12/15/2013 2,864,499 2,660,3812,300,000 Data & Audio-Visual Enterprises

Holdings Inc. 15.00%* 09/25/2018 2,300,000 2,300,0001,000,000 Domtar Corporation 7.13% 08/15/2015 1,210,937 1,048,465

750,000 Domtar Corporation 9.50% 08/01/2016 838,353 839,2952,500,000 El Paso Corporation 6.88% 06/15/2014 2,657,808 2,621,162

900,000 El Paso Corporation 7.25% 06/01/2018 919,885 936,559950,000 Enbridge Income Fund 5.25% 12/22/2014 949,924 956,349

1,500,000 ERAC Canada Finance Ltd.5.38% 02/26/2016 1,498,980 1,434,879

4,617,000 Fairfax Financial Holdings Limited7.38% 04/15/2018 4,887,773 4,840,761

5,000,000 Fairfax Financial Holdings Limited7.50% 08/19/2019 4,981,950 5,195,186

2,150,000 Freeport-McMoran Copper &Gold, Inc. 8.38% 04/01/2017 2,100,404 2,459,382

3,875,000 Iron Mountain Nova ScotiaFunding Co. 7.50% 03/15/2017 3,823,750 3,798,155

2,700,000 KIMCO North Trust III 5.18% 08/16/2013 2,692,629 2,684,1602,350,000 Kingsway 2007 General

Partnership 6.00% 07/11/2012 2,119,271 1,339,8971,200,000 Kingsway America Inc. 7.50% 02/01/2014 1,191,656 718,4991,000,000 Las Vegas Sands Corp. 6.38% 02/15/2015 1,083,881 936,0362,000,000 Leucadia National Corporation

7.13% 03/15/2017 1,986,686 1,968,0831,000,000 Mariner Energy Inc. 11.75% 06/30/2016 1,113,057 1,166,1231,000,000 Mariner Energy Inc. 8.00% 05/15/2017 1,119,939 1,004,0163,140,000 Massey Energy Company 6.88% 12/15/2013 3,629,908 3,279,864

FaceValue ($)/Number ofShares Issuer

MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures (cont’d)Corporate (cont’d)1,000,000 Merrill Lynch Financial Assets,

Inc. 6.45% 10/12/2013 952,460 892,496599,000 Merrill Lynch Financial Assets,

Inc. 6.45% 11/12/2014 527,959 481,235500,000 Merrill Lynch Financial Assets,

Inc. 6.65% 11/12/2034 492,950 445,9981,500,000 Methanex Corporation 8.75% 08/15/2012 1,636,057 1,629,5653,000,000 Millar Western Forest Products

Ltd. 7.75% 11/15/2013 3,153,359 2,282,5682,150,000 Nextel Communications, Inc.

7.38% 08/01/2015 2,064,567 2,186,742500,000 Norske Skog Canada Limited

8.63% 06/15/2011 555,912 402,6522,400,000 North American Energy Partners

Inc. 8.75% 12/01/2011 2,602,736 2,503,7651,000,000 Northgroup Preferred Capital

Group 6.38% 10/15/2017 557,681 899,9541,305,000 NOVA Chemcials Corporation

6.50% 01/15/2012 1,369,904 1,371,658400,000 NOVA Chemicals Corporation

3.65% 11/15/2013 369,780 385,9192,000,000 NOVA Chermicals Corporation

8.38% 11/01/2016 2,117,701 2,123,0752,000,000 NOVA Chermicals Corporation

8.63% 11/01/2019 2,127,226 2,128,3053,200,000 OPTI Canada Inc. 8.25% 12/15/2014 2,717,358 2,777,7781,121,143 Paragon Gaming 12.50%* 04/15/2012 1,121,143 1,076,2972,040,000 Paramount Resources Ltd. 8.50% 01/31/2013 2,470,276 2,130,8672,500,000 RONA inc. 5.40% 10/20/2016 2,494,800 2,386,1353,000,000 Royal Bank of Scotland Group

PLC, The 6.67% 10/15/2017 2,741,310 1,500,000500,000 Seminole Hard Rock

Entertainment Inc. 2.75% 03/15/2014 302,254 427,4913,500,000 Sherritt International Corporation

8.25% 10/24/2014 3,500,000 3,611,5623,500,000 Sherritt International Corporation

7.75% 10/15/2015 3,500,000 3,572,6901,500,000 Sobeys Inc. 7.16% 02/26/2018 1,673,535 1,651,469

867,302 SR Telecom Inc. 17.00%* 10/01/2011 1,052,698 –841,538 SR Telecom Inc. 17.00%* 10/01/2020 834,412 –

1,041,000 Superior Plus Corporation 5.75% 12/31/2012 1,040,999 1,054,0122,000,000 Toronto-Dominion Bank, The

4.78% 12/14/2105 1,948,160 1,998,1742,500,000 Viterra, Inc. 8.50% 07/07/2014 2,500,000 2,679,0221,000,000 Wynn Las Vegas LLC 6.63% 12/01/2014 1,010,208 1,013,1672,500,000 YPG Holdings Inc. 5.25% 02/15/2016 2,289,093 2,344,2504,000,000 YPG Holdings Inc. 5.85% 11/18/2019 3,865,000 3,564,606

137,255,497 127,810,646


Equities – 0.0%1,858 Masonite Worldwide Holdings* 2,372,414 70,441

44,000 Insight Health Services Holdings* 580,993 7,82346,000 Data & Audio-Visual Enterprises

Holdings Inc. Warrants $12.00Sep. 25, 2018* – –

Total Equities 2,953,407 78,264

Money Market Instruments – 15.2%4,535,000 Alberta Capital Finance Authority

0.18% to 0.24% due fromJan. 8, 2010 to Feb. 16, 2010 4,534,290 4,534,290

105,000 Alberta Treasury Branch0.11% due Jan. 20, 2010 110,690 109,808

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SPinnacle High Yield Income Fund (Continued)

Portfolio Advisor: Guardian Capital LP-For equities, all common shares unless otherwise noted.The accompanying notes are an integral part of these financial statements.


AverageCost ($)

FairValue ($)

Money Market Instruments (cont’d)500,000 Bank of Montreal

0.15% due Jan. 11, 2010 527,776 522,902925,000 Export Development Corporation

0.05% to 0.08% due fromJan. 28, 2010 to Apr. 1, 2010 970,280 967,308

7,708,000 Government of Canada Treasury Bills0.25% to 1.36% due fromJan. 7, 2010 to Mar. 4, 2010 7,704,764 7,704,764

305,000 Province of British Columbia0.13% due Feb. 8, 2010 318,971 318,941

1,855,000 Province of Manitoba0.22% due Feb. 3, 2010 1,854,617 1,854,617

3,995,000 Province of Ontario0.10% to 0.27% due fromJan. 29, 2010 to Mar. 17, 2010 4,065,943 4,038,390


AverageCost ($)

FairValue ($)

Money Market Instruments (cont’d)3,220,000 Province of Quebec

0.21% to 0.22% due fromJan. 21, 2010 to Jan. 29, 2010 3,364,770 3,345,659

Total Money Market Instruments 23,452,101 23,396,679

Total Investments Portfolio 173,539,040 161,163,634

Currency Forward Contracts – 0.3% 532,377Other Assets, Less Liabilities – (4.7)% (7,316,412)

Net Assets – 100.0% 154,379,599


Currency Forward Contracts

Settlement Date Currency To Be Received Contractual Amount Currency To Be Delivered Contractual Amount

Canadian ($)Appreciation/

(Depreciation)

Jan. 27, 2010 Canadian Dollar 25,427,353 U.S. Dollar 24,205,000 113,092Feb. 8, 2010 Canadian Dollar 19,267,310 U.S. Dollar 18,140,000 296,032Feb. 11, 2010 Canadian Dollar 15,618,831 U.S. Dollar 14,885,000 51,651Mar. 12, 2010 Canadian Dollar 11,236,185 U.S. Dollar 10,675,000 71,602

532,377

The currency forward contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of AA� by Standard & Poor’s.

Summary of Investment Portfolio and Financial Derivatives



Bonds and Debentures 89.2 97.5Equities – –Money Market Instruments 15.2 0.7Currency Forward Contracts 0.3 (0.4)


Assets



(Level 2) ($)



Equities 78,264 – – 78,264Warrants – – – –Bonds and Debentures – 137,688,691 – 137,688,691Money Market Instruments – 23,396,679 – 23,396,679Currency Forward Contracts – 532,377 – 532,377

Total Investments 78,264 161,617,747 – 161,696,011

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Pinnacle High Yield Income Fund (Continued)


Portfolio Advisor: Guardian Capital LP



A. Risk managementThe investment objective of Pinnacle High Yield Income Fund (the “Fund”) is to achievesuperior long term returns and to provide income as well as capital growth by investingprimarily in high yield, lower rated Canadian corporate bonds, preferred shares andshort term money market securities.



C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. The Fund’s financial instruments wereexposed to the following currencies:

December 31, 2009

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)Net CurrencyExposure ($)


European Euro 1,428,063 – 1,428,063 0.9

U.S. Dollar 72,464,205 (71,017,301) 1,446,904 0.9

Total 73,892,268 (71,017,301) 2,874,967 1.8

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 1,184,051 – 1,184,051 1.1

U.S. Dollar 49,402,756 (48,751,155) 651,601 0.6

Total 50,586,807 (48,751,155) 1,835,652 1.7

The amounts in the above tables are based on the fair value of the Fund’s financialinstruments. Other financial assets (including dividends and interest receivable andreceivable for investments sold) and financial liabilities that are denominated in foreigncurrencies do not expose the Fund to significant currency risk.

As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10%in relation to all currencies, with all other variables held constant, the Fund’s NetAssets would have decreased or increased, respectively by approximately $287,497, 0.2%of the Fund’s Net Assets (December 31, 2008-$183,565, 0.2% of the Fund’s Net Assets).In practice, actual results may differ from this sensitivity analysis and the differencecould be material.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As at

December 31, 2009, had prevailing interest rates increased or decreased by 0.25%,assuming a parallel shift in the yield curve and all other variables held constant, NetAssets would have decreased or increased by approximately $1,969,946, 1.3% of theFund’s Net Assets (December 31, 2008-$1,184,071, 1.1% of the Fund’s Net Assets). TheFund’s sensitivity to interest rate fluctuations was estimated using the weighted averageduration of the bond and debenture portfolio. In practice, actual results may differ fromthis sensitivity analysis and the difference could be material.

The table below summarizes the Fund’s exposure to interest rate risks by remainingterm to maturity of the Fund’s portfolio of bonds and debentures.



($)

Less than 1 Year – 5,184,516

1-3 years 12,981,848 10,175,539

3-5 years 39,622,376 30,301,898

5-10 years 74,802,744 48,094,151

H 10 years 10,281,723 12,208,245

Total 137,688,691 105,964,349



Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. The market value of debt instruments includes consideration of thecreditworthiness of the issuer, and accordingly, represents the maximum credit riskexposure to the Fund. Credit risk may also exist in relation to counterparties ofcurrency forward contracts.

Debt instruments, excluding cash and money market instruments but includingpreferred shares held by the Fund have credit ratings as follows:








A– to AAA+ 10.3 9.2 9.5 9.3

B– to BBB+ 72.2 64.4 66.6 64.9

C– to CCC+ 9.6 8.5 8.7 8.4

Unrated 7.9 7.1 15.2 14.9

Total 100.0 89.2 100.0 97.5



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SPinnacle High Yield Income Fund (Continued)


Pinnacle American Core-Plus Bond Fund


2009 2008

AssetsInvestments at fair value $74,893,164 $45,469,504Cash 1,060,389 1,933,211Receivable for currency spot and forward contracts 1,112,345 –Subscriptions receivable 4,166 20,832Receivable for securities sold 344,632 536,730Accrued investment income 675,526 694,663Prepaid expense – 4,153Accounts receivable 1,388 –

78,091,610 48,659,093

LiabilitiesPayable for currency spot and forward contracts – 185,265Payable for securities purchased 9,215,223 5,252,287Redemptions payable 18,274 7,356Accrued expenses 55,271 64,377

9,288,768 5,509,285

Net Assets $68,802,842 $43,149,808

Net Assets per classClass A Units $27,424,631 $43,149,808Class F Units $ 81,265 $ –Class I Units $41,296,946 $ –

Units outstandingClass A Units 3,383,324 5,887,464Class F Units 9,805 –Class I Units 4,967,627 –

Net Assets per unitClass A Units $ 8.11 $ 7.33Class F Units $ 8.29 $ –Class I Units $ 8.31 $ –


2009 2008

Investment IncomeDividends $ – $ 22,597Interest 1,899,388 5,070,080Securities lending – 359Less: Foreign withholding taxes (14,487) (6,833)

1,884,901 5,086,203

ExpensesManagement fees (including GST) (note 7) 217 –Legal fees 9,293 2,115Audit fees 20,406 15,223Custody fees 105,309 110,568Filing fees 17,205 14,756Independent Review Committee fees 3,189 2,269Unitholder reporting costs 19,282 16,456Unitholder administration, service fees and GST 96,662 166,090


Net expenses 215,843 327,477


Net realized gain (loss) on investments sold (455,291) (635,042)Net realized gain (loss) on foreign exchange 5,671,000 176,387Transaction costs (note 2) (14) –Change in unrealized appreciation (depreciation) of investments (1,793,238) 3,427,162Change in unrealized appreciation (depreciation) of currency spot and forwards 1,297,610 (218,496)Change in unrealized appreciation (depreciation) of foreign exchange (176,093) (34,322)

Net gain (loss) on investments and transaction costs 4,543,974 2,715,689

Increase (Decrease) in Net Assets from Operations $ 6,213,032 $7,474,415

Increase (Decrease) in Net Assets from OperationsClass A Units $ 4,153,812 $7,474,415Class F Units* $ 3,661 $ –Class I Units** $ 2,055,559 $ –

Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 1.07 $ 0.87Class F Units* $ 1.03 $ –Class I Units** $ 1.07 $ –


2009 2008


Increase (Decrease) in Net Assets from OperationsClass A Units 4,153,812 7,474,415Class F Units* 3,661 –Class I Units** 2,055,559 –

6,213,032 7,474,415


Class A Units (1,281,888) (4,725,984)Class F Units* (401) –Class I Units** (308,309) –

(1,590,598) (4,725,984)


Class A Units 5,632,685 10,986,981Class F Units* 78,104 –Class I Units** 39,781,051 –

Reinvested distributionsClass A Units 1,275,996 4,721,243Class F Units* 401 –Class I Units** 308,309 –

Payments on redemptionClass A Units (25,505,782) (42,023,125)Class F Units* (500) –Class I Units** (539,664) –

21,030,600 (26,314,901)

Increase (Decrease) in Net AssetsClass A Units (15,725,177) (23,566,470)Class F Units* 81,265 –Class I Units** 41,296,946 –

25,653,034 (23,566,470)

Net Assets – End of PeriodClass A Units 27,424,631 43,149,808Class F Units* 81,265 –Class I Units** 41,296,946 –

$ 68,802,842 $ 43,149,808


** Start date January 20, 2009

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Portfolio Advisor: Logan Circle Partners, L.P.



MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures – 96.8%Brazilian Real – 0.5%

250,000 Federative Republic of Brazil 12.50% 01/05/2022 146,200 167,826300,000 Federative Republic of Brazil 10.25% 01/10/2028 148,492 180,215

294,692 348,041

British Pound – 0.9%50,000 European Investment Bank 4.88% 09/07/2016 94,924 89,450

300,000 United Kingdom Treasury 4.50% 03/07/2013 554,954 542,105

649,878 631,555

European Euro – 1.8%290,000 Cemex Finance Europe BV 4.75% 03/05/2014 388,353 361,963150,000 Corporacion Andina de Fomento

1.27% 11/16/2011 209,291 206,69160,000 Federal Republic of Germany 3.50% 01/04/2016 86,751 93,578

185,000 Federal Republic of Germany 3.75% 01/04/2017 283,833 290,36780,000 Federal Republic of Germany 4.00% 01/04/2037 108,850 116,81460,000 Government of France 4.00% 10/25/2038 91,098 86,44675,000 Republic of Korea 4.25% 12/07/2021 113,401 104,528

1,281,577 1,260,387

Hungarian Forint – 0.5%60,000,000 Government of Hungary 8.00% 02/12/2015 333,234 336,684

Japanese Yen – 0.1%7,000,000 Procter & Gamble Company, The

2.00% 06/21/2010 70,870 78,900

Mexican Peso – 0.2%1,895,000 Government of Mexico 8.50% 11/18/2038 151,418 146,893

Norwegian Krone – 0.1%500,000 General Electric Capital Corporation

1.91% 02/02/2011 91,177 88,497

U.S. Dollar – 92.7%113,790 Adjustable Rate Mortage

Trust 5.40% 01/25/2036 116,389 109,16050,000 Aetna Inc. 6.50% 09/15/2018 55,306 56,135

175,000 Aetna Inc. 6.75% 12/15/2037 191,418 191,90875,000 ALLTEL Corporation 6.80% 05/01/2029 71,750 85,21730,000 ALLTEL Corporation 7.88% 07/01/2032 38,311 37,768

235,000 Altria Group, Inc. 7.75% 02/06/2014 282,462 279,137265,000 Altria Group, Inc. 9.70% 11/10/2018 330,179 343,52935,000 Altria Group, Inc. 10.20% 02/06/2039 43,200 48,969

155,000 American Express Canada CreditCorporation 7.30% 08/20/2013 177,970 182,273

100,000 American Express Credit AccountMaster Trust 1.48% 03/15/2017 109,485 106,939

110,000 Americredit Automobile ReceivablesTrust 3.15% 05/15/2012 128,074 115,994

395,000 Ameriprise Financial Inc. 7.52% 06/01/2066 376,778 357,052110,000 Anadarko Petroleum Corporation

5.95% 09/15/2016 123,940 123,504265,000 Anheuser-Busch Companies, Inc.

5.05% 10/15/2016 287,790 284,04720,000 AT&T Corp. 7.30% 11/15/2011 21,521 23,05931,000 AT&T Corp. 8.00% 11/15/2031 41,348 39,641

220,000 AT&T Inc. 4.85% 02/15/2014 254,316 245,83125,000 AT&T Inc. 6.55% 02/15/2039 29,523 27,607

170,000 Banc of America CommercialMortgage Inc. 5.74% 05/10/2045 165,026 168,037



196,089 Banc of America Mortgage Securities3.98% 01/25/2035 176,114 184,953


MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures (cont’d)U.S. Dollar (cont’d)

113,731 Banc of America Mortgage Securities4.92% 08/25/2035 109,937 101,774

43,202 Bank of America Alternative LoanTrust 5.50% 04/25/2020 54,652 40,326




25,000 Bank of America CommercialMortgage Inc. 7.38% 09/15/2032 26,785 26,439

165,000 Bank of America CommercialMortgage Inc. 6.17% 02/10/2051 163,295 154,601

166 Bank of America Mortgage SecuritiesInc. 3.72% 05/25/2033 243 114

84,006 Bank of America Mortgage SecuritiesInc. 6.00% 09/25/2037 82,049 71,961

20,000 Baxter International Inc. 4.00% 03/01/2014 24,962 21,74195,000 BB&T Corporation 3.85% 07/27/2012 104,341 102,968

186,937 Bear Stearns ALT-A Trust 6.07% 05/25/2036 147,665 115,32359,806 Bear Stearns Commercial Mortgage

Securities Trust 4.24% 08/13/2039 64,983 61,72725,000 Bear Stearns Commercial Mortgage



Securities Trust 5.43% 01/12/2045 27,079 25,669160,000 Best Buy Co. Inc. 6.75% 07/15/2013 183,477 183,859195,000 Boston Scientific Corporation 4.50% 01/15/2015 204,188 204,983300,000 Boston Scientific Corporation 6.40% 06/15/2016 316,689 338,855210,000 Boston Scientific Corporation 6.00% 01/15/2020 218,426 224,80150,000 Boston Scientific Corporation 7.38% 01/15/2040 52,452 56,215

265,000 BP Capital Markets PLC 4.75% 03/10/2019 308,273 282,57130,000 British Telecommunications PLC

9.63% 12/15/2030 35,699 40,208185,000 Capital One Multi Asset Execution

Trust 4.85% 02/18/2014 206,915 201,248150,000 Capital One Multi Asset Execution

Trust 0.27% 03/16/2015 158,877 153,530120,000 Capital One Multi Asset Execution

Trust 5.75% 07/15/2020 120,073 136,232170,000 Capmark Financial Group Inc 0.01% 05/10/2010 89,715 44,44955,000 Capmark Financial Group Inc 5.88% 05/10/2012 40,254 14,66835,000 Carolina Power & Light Co. 5.30% 01/15/2019 41,327 38,104

100,000 Casella Waste Systems, Inc. 9.75% 02/01/2013 111,151 103,14718,465 Caterpillar Financial Asset

Trust 5.34% 06/25/2012 19,031 19,657145,000 Cellco Partnership 8.50% 11/15/2018 189,118 189,40989,362 Centex Home Equity Loan

Trust 5.27% 10/25/2035 92,366 92,42421,295 Chase Commercial Mortgage

Securities Corporation 7.32% 10/15/2032 22,906 22,839174,000 Chase Issuance Trust 0.39% 04/15/2013 180,803 177,952155,000 Chase Issuance Trust 1.78% 04/15/2014 171,590 165,849155,000 Citicorp Home Mortgage 5.75% 06/25/2036 127,365 126,40025,000 Citigroup Capital XXI 8.31% 12/21/2077 23,715 25,100

245,000 Citigroup Commercial MortgageTrust 5.43% 10/15/2049 239,644 244,192

50,000 Citigroup Inc. 5.63% 08/27/2012 52,419 53,836545,000 Citigroup Inc. 6.01% 01/15/2015 598,506 585,518461,653 Citigroup Mortgage Loan Trust Inc.

5.59% 03/25/2037 486,295 104,641

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SPinnacle American Core-Plus Bond Fund (Continued)




MaturityDate

AverageCost ($)

FairValue ($)


288,000 Citigroup/Deutsche Bank CommericalMortgage Trust 5.62% 10/15/2048 277,314 283,226

15,328 CNH Equipment Trust 5.40% 10/17/2011 15,896 16,124205,000 Comcast Corporation 6.50% 11/15/2035 223,441 221,61917,374 Commercial Mortgage Acceptance

Corporation 7.27% 09/15/2030 19,669 17,973100,000 Commercial Mortgage Pass-Through

Certificates 4.08% 06/10/2038 106,030 103,36350,000 Commercial Mortgage Pass-Through

Certificates 5.69% 06/10/2046 55,645 53,45910,000 Commercial Mortgage Pass-Through

Certificates 5.31% 12/10/2046 10,385 9,919105,000 Commonwealth Edison Company

6.15% 09/15/2017 110,241 119,343205,000 Commonwealth Edison Company

5.80% 03/15/2018 225,017 228,960110,000 ConocoPhillips 6.50% 02/01/2039 129,398 127,939100,000 Constellation Brands, Inc. 8.13% 01/15/2012 106,366 105,369150,000 Consumer Energy Company 6.13% 03/15/2019 170,884 170,50485,000 Continental Airlines, Inc. 6.50% 12/15/2012 104,101 88,231

115,000 Continental Airlines, Inc. 6.56% 08/15/2013 116,166 116,06340,000 Cooper-Standard Automotive, Inc.

8.38% 12/15/2014 35,318 10,66846,491 Countrywide Alternative Loan

Trust 6.00% 01/25/2035 57,258 43,238124,527 Countrywide Alternative Loan

Trust 5.86% 11/25/2035 139,388 96,27549,700 Countrywide Alternative Loan

Trust 5.50% 03/25/2036 57,279 37,378104,467 Countrywide Asset Backed

Certificates 5.73% 08/25/2036 120,828 46,10955,000 Countrywide Asset Backed

Certificates 5.53% 09/25/2037 53,707 50,32442,407 Countrywide Home Loans 3.93% 09/20/2034 41,139 20,212

112,210 Countrywide Home Loans 5.75% 12/25/2035 91,026 95,85071,847 Countrywide Home Loans 6.00% 03/25/2036 76,303 57,789

195,855 Countrywide Home Loans 5.86% 05/20/2036 149,275 119,955115,000 Covidien Limited 6.00% 10/15/2017 138,383 129,64385,000 Cox Communications, Inc. 4.63% 01/15/2010 95,208 88,98811,591 Credit Suisse First Boston Mortgage

Corp. 7.00% 12/25/2033 16,095 11,6884,709 Credit Suisse First Boston Mortgage



Securities Corp. 6.44% 12/15/2035 44,590 43,83220,000 Credit Suisse First Boston Mortgage

Corp. 6.73% 12/18/2035 23,343 20,592100,000 Credit-Based Asset Servicing and

Securitization LLC 5.72% 01/25/2037 117,985 49,108245,000 CVS Caremark Corporation 6.13% 09/15/2039 256,225 252,403190,000 Delta Air Lines, Inc. 7.57% 05/18/2012 200,909 201,19520,000 Developers Diversified Realty

Corporation 5.00% 05/03/2010 18,376 20,94275,000 Developers Diversified Realty

Corporation 4.63% 08/01/2010 73,064 77,638175,000 Developers Diversified Realty

Corporation 5.38% 10/15/2012 174,558 172,802185,000 Discover Card Master Trust 1 0.27% 03/15/2014 194,975 190,668130,000 Discover Card Master Trust 1 0.29% 10/16/2014 132,497 133,219100,000 Discover Card Master Trust 1 1.56% 02/17/2015 109,485 105,443100,000 Discover Card Master Trust 1 0.59% 06/15/2015 106,528 102,613245,000 Discover Card Master Trust 1 5.10% 10/15/2013 268,528 267,325


MaturityDate

AverageCost ($)

FairValue ($)


115,000 Discover Card Master Trust 1 5.65% 12/15/2015 130,762 130,306150,000 Discover Card Master Trust 1 0.31% 01/19/2016 153,551 151,653240,000 Discover Financial Services 0.83% 06/11/2010 223,098 248,774130,000 Discover Financial Services 10.25% 07/15/2019 152,553 157,490

6,861 DLJ Commercial Mortgage Corp.7.18% 11/10/2033 8,130 7,270

35,000 Ecopetrol SA 7.63% 07/23/2019 41,780 40,21625,000 El Paso Corporation 8.25% 02/15/2016 29,740 27,84636,926 Elwood Energy, LLC 8.16% 07/05/2026 45,573 35,62695,000 Energy Future Holdings Corp.

10.88% 11/01/2017 73,322 80,975135,000 Enterprise Products Operating LLC



7.03% 01/15/2068 51,183 57,519130,000 Export-Import Bank of Korea, The

5.88% 01/14/2015 150,497 146,192240,000 Express Scripts, Inc. 6.25% 06/15/2014 277,054 275,012740,000 Fannie Mae Stripped Bond 10/09/2019 433,367 426,904100,000 Fannie Mae 5.26% 05/25/2020 115,076 107,96760,000 Fannie Mae 4.50% 08/25/2023 55,903 61,457

115,000 Fannie Mae 5.00% 10/25/2024 113,225 126,84021,598 Fannie Mae 7.50% 11/25/2026 30,861 24,66624,817 Fannie Mae 4.50% 02/25/2028 30,322 26,74840,000 Fannie Mae 4.50% 06/25/2029 47,652 40,121

160,000 Fannie Mae 4.00% 09/25/2029 156,704 153,652100,000 Fannie Mae 4.00% 11/25/2029 98,694 96,417

4,984 Fannie Mae 7.50% 06/01/2031 7,992 5,7647,216 Fannie Mae 7.50% 04/01/2032 10,480 8,334

21,803 Fannie Mae 5.41% 09/26/2033 24,959 16,70254,821 Fannie Mae 5.00% 11/01/2033 71,116 58,61121,026 Fannie Mae 5.00% 11/01/2034 24,937 22,45234,593 Fannie Mae 5.00% 11/01/2034 41,269 36,9851,775 Fannie Mae 7.00% 06/01/2035 2,266 2,042

73,659 Fannie Mae 5.50% 09/25/2035 88,714 80,52485,896 Fannie Mae 5.00% 01/01/2036 95,308 91,58047,255 Fannie Mae 0.49% 05/25/2037 47,279 48,446

190,000 Fannie Mae 3.81% 12/01/2039 203,747 196,48619,324 Fannie Mae 9.50% 07/25/2041 29,896 23,5036,851 Fannie Mae 7.50% 12/25/2041 9,876 7,780

30,783 Fannie Mae 6.50% 02/25/2044 43,515 34,4345,215,000 Fannie Mae 4.50% 12/01/2099 5,583,672 5,447,2902,940,000 Fannie Mae 5.50% 12/01/2099 3,281,476 3,218,930

10,930 Federal Home Loan MortgageCorporation 4.00% 02/01/2014 13,623 11,793

53,977 Federal Home Loan MortgageCorporation 6.50% 06/15/2031 70,203 61,004

80,000 Federal National MortgageAssociation 5.25% 08/01/2012 79,375 89,529



125,000 First Data Corporation 9.88% 09/24/2015 102,830 121,580115,654 First Horizon Alternative Mortgage

Securities 5.40% 09/25/2035 104,457 87,8739,730 First Horizon Mortgage Pass-Through

Trust 8.00% 07/25/2033 14,610 10,58838,041 First Horizon Mortgage Pass-Through

Trust 5.71% 10/25/2034 48,825 37,78012,485 First Union National Bank

Commercial Mortgage Trust 6.14% 03/15/2033 13,935 13,196

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MaturityDate

AverageCost ($)

FairValue ($)


10,000 First Union-Lehman BrothersCommercial Mortgage Trust 7.12% 11/18/2029 11,007 10,562

120,000 First Union-Lehman Brothers-Bank ofAmerica Commercial MortgageTrust 6.78% 11/18/2035 135,167 132,973

47,085 First Union-National BankCommerical Mortgage Trust 6.66% 01/12/2043 52,894 50,151

235,000 Ford Motor Credit Company 9.88% 08/10/2011 243,701 257,449100,000 Ford Motor Credit Company 3.03% 01/13/2012 97,621 96,954130,000 Ford Motor Credit Company LLC

7.50% 08/01/2012 128,954 137,32025,000 Fortune Brands, Inc. 5.13% 01/15/2011 27,066 26,917

235,000 Fortune Brands, Inc. 3.00% 06/01/2012 248,333 243,789105,000 FPL Group Capital Inc. 5.63% 09/01/2011 118,895 117,503190,000 France Telecom SA 4.38% 07/08/2014 215,905 208,14754,796 Freddie Mac 5.00% 06/01/2018 55,047 60,72922,744 Freddie Mac 7.00% 05/15/2024 29,744 25,798

110,000 Freddie Mac 5.00% 10/15/2024 108,517 121,20160,000 Freddie Mac 5.00% 05/15/2026 55,629 62,71486,604 Freddie Mac 5.00% 09/01/2033 117,975 93,73980,000 Freddie Mac 4.00% 08/15/2029 80,284 77,100

220,000 Freddie Mac 4.50% 11/15/2029 229,962 217,851105,000 Freddie Mac 5.50% 07/15/2030 104,989 115,63445,129 Freddie Mac 4.50% 10/15/2031 54,171 49,02235,000 Freddie Mac 4.50% 12/15/2033 33,778 33,441

5,903 Freddie Mac 4.33% 04/01/2034 7,709 6,42885,000 Freddie Mac 6.00% 04/15/2035 90,476 95,57729,025 Freddie Mac 6.50% 09/25/2043 41,790 32,88525,000 Freeport-McMoran Copper & Gold,

Inc. 8.25% 04/01/2015 29,391 28,303105,000 Freeport-McMoran Copper & Gold,

Inc. 8.38% 04/01/2017 98,880 120,10950,000 GE Capital Commercial Mortgage

Corporation 6.53% 05/15/2033 51,667 54,19810,000 GE Capital Commercial Mortgage

Corporation 6.72% 05/15/2033 11,071 10,72680,000 GE Capital Commercial Mortgage

Corporation 6.27% 12/10/2035 100,810 88,891110,000 General Electric Capital Corporation

5.25% 10/19/2012 124,608 122,505330,000 General Electric Capital Corporation

6.00% 08/07/2019 354,575 358,17875,000 General Electric Capital Corporation

5.88% 01/14/2038 72,218 72,76520,000 Genetech, Inc. 4.75% 07/15/2015 23,495 22,346

4,072 Ginnie Mae 7.50% 02/15/2032 5,939 4,68262,530 Ginnie Mae 7.00% 12/15/2034 76,489 72,173

9,065 GMAC Commercial MortgageSecurities Inc. 7.97% 03/15/2033 9,905 9,385

9,000 GMAC LLC 6.88% 08/28/2012 8,081 9,295891,559 GMAC Mortgage Corporation Loan

Trust 5.17% 05/25/2035 879,722 772,733125,567 GMAC Mortgage Corporation Loan

Trust 6.05% 12/25/2037 56,549 73,927480,000 Goldman Sachs Group, Inc., The

5.63% 01/15/2017 520,026 516,29980,000 Goldman Sachs Group, Inc., The

6.75% 10/01/2037 83,760 86,053210,000 Goodyear Tire & Rubber Company,

The 10.50% 05/15/2016 243,837 242,69055,000 Greenwich Capital Commercial

Funding Corp 5.44% 03/10/2039 50,373 50,16010,000 GS Mortgage Securities Corporation

II 5.56% 11/10/2039 9,625 9,000


MaturityDate

AverageCost ($)

FairValue ($)


100,000 Harley-Davidson MotorcycleTrust 2.13% 07/15/2012 116,432 105,198

135,000 Harley-Davidson MotorcycleTrust 2.85% 03/15/2014 157,179 143,411

45,000 Hasbro, Inc. 6.13% 05/15/2014 51,863 51,35140,000 Hasbro, Inc. 6.30% 09/15/2017 43,020 44,210

375,000 HCA, Inc. 9.13% 11/15/2014 414,100 414,25560,000 Health Net Inc. 6.38% 06/01/2017 66,293 55,286

180,000 HEALTHSOUTH Corporation 10.75% 06/15/2016 207,051 204,72555,000 Honda Auto Receivables Owner

Trust 3.10% 01/15/2013 64,672 58,56675,000 HRPT Properties Trust 5.75% 02/15/2014 72,462 76,72519,073 Hyundai Auto Receivables

Trust 5.04% 01/17/2012 19,356 20,237100,000 ICAHN Enterprises SR NT 8.13% 06/01/2012 105,409 106,67773,968 IndyMac INDX Mortgage Loan

Trust 5.64% 12/25/2035 87,591 59,252100,000 International Business Machines

Corporation 5.70% 09/14/2017 118,283 114,38715,000 International Lease Finance




Corporation 5.88% 05/01/2013 67,852 54,554160,000 International Paper Company 7.50% 08/15/2021 170,663 186,800210,000 International Paper Company 7.30% 11/15/2039 221,502 232,54940,000 Ispat Inland ULC 9.75% 04/01/2014 44,010 44,03055,000 Jabil Circuit, Inc. 7.75% 07/15/2016 59,366 60,542

150,000 Jabil Circuit, Inc. 8.25% 03/15/2018 153,997 168,251100,000 JPMorgan Chase & Co. 5.75% 01/02/2013 106,107 112,51185,000 JPMorgan Chase & Co. 7.90% 04/30/2018 84,131 92,45360,000 JPMorgan Chase & Co. 6.30% 04/23/2019 71,262 69,40725,000 JPMorgan Chase Commercial

Mortgage Securities Corp. 6.75% 03/15/2033 26,795 24,344104,000 JPMorgan Chase Commercial








Mortgage Securities Corp. 5.13% 05/15/2047 210,602 208,64741,497 JPMorgan Mortgage Trust 5.39% 07/25/2035 45,633 35,836

110,000 JPMorgan Mortgage Trust 5.15% 09/25/2035 129,549 84,212302,480 JPMorgan Mortgage Trust 5.99% 10/25/2036 261,691 287,710100,000 Kansas City Southern de Mexico

9.38% 05/01/2012 104,877 107,803105,000 Kansas City Southern Railway

13.00% 12/15/2013 123,637 127,385150,000 Kraft Foods Inc. 6.75% 02/19/2014 175,185 174,211125,000 Kroger Co., The 3.90% 10/01/2015 135,772 131,837175,000 Kroger Co., The 6.40% 08/15/2017 177,666 200,434125,000 LaBranche & Co Inc. 11.00% 05/15/2012 132,041 125,665

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MaturityDate

AverageCost ($)

FairValue ($)


120,000 LB-Commercial Conduit MortgageTrust 7.02% 06/15/2031 127,586 125,485

14,016 LB-UBS Commercial MortgageTrust 7.37% 08/15/2026 14,947 14,871



25,000 Lehman Brothers Holdings Inc.6.63% 01/18/2012 21,741 5,164

40,000 Lehman Brothers Holdings Inc.6.88% 05/02/2018 40,417 8,681

41,591 Lehman Mortgage Trust 5.50% 12/25/2035 49,462 37,96390,000 Lincoln National Corporation 0.38% 03/12/2010 90,981 93,85310,000 Lincoln National Corporation 6.20% 12/15/2011 12,067 11,032

130,000 Lubrizol Corporation 8.88% 02/01/2019 169,824 167,424250,000 Mandalay Resort Group 9.38% 02/15/2010 263,084 261,136105,000 Marathon Oil Corporation 6.50% 02/15/2014 127,731 121,72010,000 Marsh & McLennan Companies, Inc.

5.15% 09/15/2010 11,528 10,69415,000 Martin Marietta Materials, Inc.

0.43% 04/30/2010 15,710 15,616150,000 Masco Corporation 0.60% 03/12/2010 160,203 156,314

7,007 Master Adjustable Rate MortagesTrust 5.69% 12/25/2033 9,255 6,144

134,016 Master Adjustable Rate MortagesTrust 5.33% 06/25/2035 99,705 104,971

7,314 Master Alternative LoansTrust 8.00% 09/25/2033 10,490 7,621

210,000 Medco Health Solutions, Inc. 6.13% 03/15/2013 229,350 235,551130,000 Medco Health Solutions, Inc. 7.25% 08/15/2013 138,184 150,93315,000 Medtronic, Inc. 4.50% 03/15/2014 19,436 16,681

125,000 Merrill Lynch & Co., Inc. 6.15% 04/25/2013 127,049 141,966195,000 Merrill Lynch & Co., Inc. 6.88% 04/25/2018 207,281 220,058100,000 Merrill Lynch & Co., Inc. 6.22% 09/15/2026 99,249 99,42080,000 Merrill Lynch Mortgage Trust 5.66% 11/12/2037 83,310 84,80525,000 Merrill Lynch Mortgage Trust 4.96% 07/12/2038 27,695 26,08760,000 Merrill Lynch Mortgage Trust 5.11% 07/12/2038 50,062 52,15075,000 Merrill Lynch Mortgage Trust 5.23% 05/12/2039 77,273 73,846

105,000 Merrill Lynch Mortgage Trust 5.69% 02/12/2051 85,495 94,856225,000 MetLife, Inc. 7.72% 02/15/2019 280,614 275,47120,238 Mid State Trust 4.86% 07/15/2038 26,932 16,96995,000 MidAmerican Funding, LLC 6.75% 03/01/2011 117,782 104,38015,338 Mid-State Capital Corporation

2004–1 Trust 6.01% 08/15/2037 20,434 13,416155,000 Montpelier Re Holdings Ltd. 6.13% 08/15/2013 168,652 159,230150,000 Morgan Stanley 6.60% 04/01/2012 175,990 170,276365,000 Morgan Stanley 4.20% 11/20/2014 386,418 381,320150,000 Morgan Stanley 6.63% 04/01/2018 170,951 170,18749,665 Morgan Stanley Mortgage Loan

Trust 6.50% 02/25/2036 30,377 39,708170,000 Motorola, Inc. 5.38% 11/15/2012 170,449 181,33280,000 National City Bank 0.39% 01/21/2010 71,993 83,64940,000 National City Corporation 0.47% 06/16/2010 45,082 41,702

130,000 National City Corporation 4.00% 02/01/2011 136,147 138,591240,000 Navistar International Corporation

8.25% 11/01/2021 250,361 256,96520,000 NB Capital Trust IV 8.25% 04/15/2027 13,709 20,237

130,000 New Cingular Wireless Services Inc.8.13% 05/01/2012 150,974 153,556

35,000 Nissan Auto Receivables OwnerTrust 3.20% 02/15/2013 43,332 37,513

96,270 Nomura Asset AcceptanceCorporation 4.79% 03/25/2035 120,792 81,577


MaturityDate

AverageCost ($)

FairValue ($)


120,000 Northrop Grumman Corporation3.70% 08/01/2014 129,419 126,901

28,000 SuperMedia, Inc. 11/15/2016 – –35,000 NRG Energy, Inc. 7.38% 02/01/2016 35,959 36,605

225,000 Nuveen Investments Inc. 5.00% 09/15/2010 189,607 233,55130,000 Oneok Partners, L.P. 5.90% 04/01/2012 33,721 33,06550,000 Orion Power Holdings, Inc. 12.00% 05/01/2010 69,404 53,600

200,000 Petrobras International FinanceCompany 6.88% 01/20/2040 211,714 212,924

700,000 Petroleos de Venezuela SA 5.25% 04/12/2017 370,808 402,652100,000 Philip Morris International Inc.

6.88% 03/17/2014 121,279 118,972330,000 Philip Morris International Inc.

5.65% 05/16/2018 371,220 363,00995,000 Prestige Brands Holdings Inc. 9.25% 04/15/2012 105,739 100,59815,859 Prime Mortgage Trust 6.00% 02/25/2034 21,627 15,37835,000 Princeton University 4.95% 03/01/2019 42,770 37,58760,000 Progress Energy, Inc. 4.88% 12/01/2019 62,682 61,483

235,000 Qwest Corporation 7.88% 09/01/2011 252,498 257,14270,000 Reed Elsevier Capital Inc. 7.75% 01/15/2014 85,646 82,70195,000 Regency Centers LP 5.88% 06/15/2017 98,153 91,992

194,556 Renaissance Home Equity LoanTrust 5.61% 05/25/2036 217,410 166,181

170,000 Renaissance Home Equity LoanTrust 5.68% 06/25/2037 114,637 94,645

95,655 Residential Accredit Loans, Inc.6.00% 09/25/2035 67,299 72,622

2,948 Residential Asset Mortgage Products,Inc. 7.00% 11/25/2031 4,161 3,263

24,382 Residential Asset Mortgage Products,Inc. 6.50% 07/25/2032 31,193 23,067

97,576 Residential Funding MortgageSecurities I 6.05% 09/25/2036 91,463 72,670

88,232 Residential Funding MortgageSecurities I 6.00% 10/25/2037 67,719 65,708

155,000 Residential Funding MortgageSecurities II 5.79% 02/25/2036 173,703 110,377

40,000 Reynolds American Inc. 6.50% 07/15/2010 43,830 42,723520,000 Rio Tinto Finance (USA) Limited

5.88% 07/15/2013 551,320 587,558180,000 Rio Tinto Finance (USA) Limited

9.00% 05/01/2019 227,216 238,34920,000 Roper Industries, Inc. 6.25% 09/01/2019 21,964 21,781

100,000 RSB Bondco LLC 5.72% 04/01/2018 106,715 115,237200,000 Saturns Credit Suisse First Boston,

Series 2005–C6 5.23% 12/15/2040 207,603 201,98875,000 SLM Corporation 5.40% 10/25/2011 80,543 78,376

220,000 Southern Copper Corporation 7.50% 07/27/2035 233,792 222,145150,000 Sprint Capital Corp. 7.63% 01/30/2011 161,361 160,603330,000 Sprint Capital Corp. 6.88% 11/15/2028 268,303 286,89095,000 Sprint Nextel Corporation 0.68% 06/28/2010 100,966 97,61770,000 Staples, Inc. 7.75% 04/01/2011 84,540 78,649

175,000 Staples, Inc. 9.75% 01/15/2014 221,004 223,28948,327 Structured Adjustable Rate Mortgage

Loan 5.50% 12/25/2034 58,283 39,193298,911 Structured Adjustable Rate Mortgage

Loan 5.49% 06/25/2036 314,811 57,90139,399 Structured Asset Securities

Corporation 3.38% 08/25/2031 44,902 37,55539,469 Structured Asset Securities

Corporation 6.00% 05/25/2034 50,588 36,66119,260 Structured Asset Securities

Corporation 4.51% 02/25/2035 20,039 17,33340,000 Suncor Energy, Inc. 5.95% 12/01/2034 38,896 41,374

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MaturityDate

AverageCost ($)

FairValue ($)


450,000 TD Ameritrade Holding Corporation4.15% 12/01/2014 480,097 464,983

120,000 Telecom Italia Capital SA 0.89% 07/18/2011 136,062 124,562210,000 Telecom Italia Capital SA 7.00% 06/04/2018 228,992 240,976230,000 Telecom Italia Capital SA 7.72% 06/04/2038 257,643 277,14575,000 Telefonica Emisiones SAU 5.98% 06/20/2011 83,082 83,191

150,000 Telefonica Emisiones SAU 6.42% 06/20/2016 176,306 174,646150,000 Telefonos de Mexico SAB de CV

5.50% 01/27/2015 165,256 162,39475,000 Textron Inc. 6.20% 03/15/2015 81,222 80,93945,000 Textron Inc. 7.25% 10/01/2019 48,669 49,100

245,000 Time Warner Cable, Inc. 8.25% 02/14/2014 301,776 298,825240,000 Time Warner Cable, Inc. 5.00% 02/01/2020 250,399 244,06415,000 Time Warner Telecommunications

Holdings 9.25% 02/15/2014 18,618 16,17895,000 Timken Company, The 6.00% 09/15/2014 104,048 103,23060,000 Transocean Ltd. 5.25% 03/15/2013 65,631 67,170

220,000 Transocean Ltd. 6.00% 03/15/2018 247,773 245,58845,000 Tyco International Finance SA 8.50% 01/15/2019 53,076 57,050

355,000 Tyco International Group SA 6.55% 10/01/2017 386,473 382,87195,000 United States Treasury 4.50% 08/15/2039 102,755 97,198

1,860,000 U.S. Treasury Notes 0.75% 11/30/2011 1,967,627 1,932,5154,040,000 U.S. Treasury Notes 2.38% 12/31/2014 4,249,647 4,213,3502,795,000 U.S. Treasury Notes 3.38% 11/15/2019 2,900,457 2,813,076

75,000 UST Inc. 6.63% 07/15/2012 84,982 84,961330,000 Vale Overseas Limited 6.88% 11/10/2039 353,651 346,426230,000 Valero L.P. 6.05% 03/15/2013 297,663 253,53250,000 Verizon Communications Inc. 8.75% 11/01/2018 64,356 66,190

355,000 Verizon Communications Inc. 6.35% 04/01/2019 423,043 411,23565,000 Verizon Communications Inc. 8.95% 03/01/2039 93,593 92,626

200,000 Viacom Inc. 6.25% 04/30/2016 234,286 229,245181,287 Wachovia Bank Commercial

Mortgage Trust 4.37% 08/15/2041 192,717 188,82175,000 Wachovia Bank Commercial

Mortgage Trust 5.50% 10/15/2048 84,099 79,238250,000 Wachovia Bank NA 6.60% 01/15/2038 282,172 279,450360,000 Wachovia Capital Trust III 5.80% 03/15/2011 317,831 286,14517,273 WaMu Mortgage Pass-Through

Certificates 6.00% 10/25/2034 22,994 18,03360,000 Warner Music Group 7.38% 04/15/2014 52,008 60,39870,944 Washington Mutual, Inc. 5.92% 09/25/2036 80,396 56,279

477,614 Washington Mutual Mortgage Pass-Through Certificates 5.32% 03/25/2037 466,161 397,605

95,000 Waste Management, Inc. 6.38% 03/11/2015 113,128 110,41925,000 Waste Management, Inc. 7.38% 05/15/2029 29,853 28,841

205,000 Watson Pharmaceuticals, Inc. 5.00% 08/15/2014 224,910 219,399100,000 Weatherford International Ltd.

9.63% 03/01/2019 131,773 130,66415,000 Weatherford International Ltd.

9.88% 03/01/2039 17,633 20,220115,000 Wells Fargo & Company 7.98% 03/15/2018 100,938 121,475205,000 Wells Fargo Capital Trust XV 9.75% 09/29/2013 218,532 231,55167,576 Wells Fargo Mortgage Backed

Securities Trust 3.07% 09/25/2034 57,351 63,91814,412 Wells Fargo Mortgage Backed




Securities Trust 5.50% 12/25/2035 479,294 440,361

FaceValue ($)/Number ofShares Issuer

MaturityDate

AverageCost ($)

FairValue ($)


174,006 Wells Fargo Mortgage BackedSecurities Trust 5.50% 01/25/2036 185,754 135,552











45,000 Williams Companies, Inc., The8.75% 01/15/2020 55,056 56,169

70,000 World Omni Auto ReceivablesTrust 3.30% 05/15/2013 86,620 74,960

100,000 WPP Finance UK Corp. 8.00% 09/15/2014 109,717 117,393110,000 XL Capital Ltd. 5.25% 09/15/2014 111,650 114,638275,000 XL Capital Ltd. 6.50% 04/15/2017 261,741 218,22385,000 XTO Energy, Inc. 6.50% 12/15/2018 87,871 101,957

175,000 Yum! Brands, Inc. 4.25% 09/15/2015 187,119 184,72655,000 Yum! Brands, Inc. 5.30% 09/15/2019 59,783 57,789

66,573,828 63,728,675


Equities – 0.1%314 Charter Communications, Inc., Warrants

U.S.$16.30 Nov. 30, 2014* 118,419 –376 Charter Communications, Inc., Warrants

U.S.$46.86 Nov. 30, 2014* 157,260 –4,525 Fannie Mae 8.25% Series S Preferred 108,383 5,2064,950 Fannie Mae 8.25% Series T Preferred 124,146 5,125

11,325 Freddie Mac 8.38% Dec. 31, 2012 Series ZPreferred 285,923 12,436

10 Mirant Corporation – 16022 SuperMedia, Inc.* 29,474 805

233 World Color Press Inc., Warrants U.S. $13.00Jul. 20, 2014* 512 1,024

233 World Color Press Inc., Warrants U.S. $16.30Jul. 20, 2014* 384 714

Total Equities 824,501 25,470

Money Market Instruments – 12.0%7,886,467 State Street Canada Trust Company Canada U.S.

Dollar Call Deposit 0.01% due Jan. 4, 2010 8,377,501 8,248,062

Total Investments Portfolio 78,648,676 74,893,164

Currency Spot and Forward Contracts – 1.6% 1,112,345Other Assets, Less Liabilities – (10.5)% (7,202,667)

Net Assets – 100.0% 68,802,842

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Portfolio Advisor: Logan Circle Partners, L.P. * This security is not actively traded and considered illiquid.

-For equities, all common shares unless otherwise noted.The accompanying notes are an integral part of these financial statements.

Currency Spot Contracts


Canadian ($)Appreciation/(Depreciation)

Jan. 5, 2010 Brazilian Real 95,783 U.S. Dollar 55,009 7Jan. 5, 2010 Brazilian Real 168,070 U.S. Dollar 96,525 12Jan. 5, 2010 Brazilian Real 175,700 U.S. Dollar 100,907 12Jan. 5, 2010 U.S. Dollar 56,147 Brazilian Real 97,763 (7)

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The currency spot contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of AA- by Standard & Poor’s.

Currency Forward Contracts



Jan. 5, 2010 Brazilian Real 97,763 U.S. Dollar 55,000 1,206Jan. 5, 2010 U.S. Dollar 55,000 Brazilian Real 95,783 (17)Jan. 5, 2010 U.S. Dollar 98,000 Brazilian Real 168,070 1,531Jan. 5, 2010 U.S. Dollar 100,000 Brazilian Real 175,700 (961)Jan. 7, 2010 Australian Dollar 45,000 U.S. Dollar 40,770 (373)Jan. 7, 2010 British Pounds 81,000 U.S. Dollar 129,760 1,120Jan. 7, 2010 Canadian Dollar 57,940 U.S. Dollar 55,000 419Jan. 7, 2010 Canadian Dollar 58,355 U.S. Dollar 55,000 833Jan. 7, 2010 Canadian Dollar 641,720 U.S. Dollar 610,000 3,753Jan. 7, 2010 Canadian Dollar 2,632,450 U.S. Dollar 2,500,000 17,832Jan. 7, 2010 Canadian Dollar 60,665,100 U.S. Dollar 57,000,000 1,051,815Jan. 7, 2010 New Turkish Lira 800,000 U.S. Dollar 527,993 8,003Jan. 7, 2010 U.S. Dollar 361,454 British Pound 222,000 3,015Jan. 7, 2010 U.S. Dollar 143,300 European Euro 100,000 (57)Jan. 7, 2010 U.S. Dollar 835,070 European Euro 565,000 26,266Jan. 7, 2010 U.S. Dollar 341,698 Hungarian Forint 64,000,000 1,870Jan. 7, 2010 U.S. Dollar 65,000 Mexican Peso 834,438 1,286Jan. 7, 2010 U.S. Dollar 262,832 New Turkish Lira 400,000 (5,220)

1,112,321

The currency forward contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of AA� by Standard & Poor’s.




Bonds and DebenturesAustrialian Dollar – 0.2Brazillian Real 0.5 0.6British Pound 0.9 1.5European Euro 1.8 9.2Hungarian Forint 0.5 –Japanese Yen 0.1 2.2Mexican Peso 0.2 –Norwegian Krone 0.1 0.2Swedish Krone – 0.2United States Dollars 92.7 91.1

Foreign Equities 0.1 –Money Market Instruments 12.0 0.2Currency Spot Contracts 0.0 –Currency Forward Contracts 1.6 –


AssetsQuoted prices in activemarkets for identicalassets (Level 1) ($)


(Level 2) ($)



Equities 22,927 805 – 23,732Warrants – 1,738 – 1,738Bonds and Debentures – 66,619,632 – 66,619,632Money Market Instruments – 8,248,062 – 8,248,062Currency Spot Contracts – 24 – 24Currency Forward Contracts – 1,112,321 – 1,112,321

Total Investments 22,927 75,982,582 – 76,005,509

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A. Risk managementThe investment objective of Pinnacle American Core-Plus Bond Fund (the “Fund”) is toachieve superior long term returns and to provide income as well as capital growth byinvesting primarily in a portfolio of U.S. government and corporate bonds and mortgagepass through securities. The Fund may also invest in the U.S. dollar denominatedemerging markets, non-investment grade debt and non-U.S. investment grade sovereignand corporate debt.



C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. The Fund’s financial instruments wereexposed to the following currencies:

December 31, 2009

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency

Exposure ($)Percentage of

Net Assets (%)

U.S. Dollar 73,404,932 (61,402,905) 12,002,027 17.2British Pound 631,556 (238,183) 393,373 0.6New Turkish Lira – 280,102 280,102 0.4European Euro 1,259,356 (997,016) 262,340 0.4Norwegian Krone 88,497 – 88,497 0.1Mexican Peso 153,403 (66,694) 86,709 0.1Japanese Yen 78,901 – 78,901 0.1Australian Dollar – 42,266 42,266 0.1New Russian Ruble 83 – 83 0.0South African Rand 1 – 1 0.0Hungarian Forint 336,684 (355,494) (18,810) 0.0Brazilian Real – (205,319) (205,319) 0.0

Total 75,953,413 (62,943,243) 13,010,170 19.0

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 39,625,446 2,848,950 42,474,396 98.4Japanese Yen 1,103,037 1,258,922 2,361,959 5.5European Euro 5,474,508 (4,010,061) 1,464,447 3.4Swiss Franc 21,062 350,330 371,392 0.9Australian Dollar 65,646 257,937 323,583 0.8Swedish Krona 75,944 16,067 92,011 0.2British Pound 944,516 (855,052) 89,464 0.2Norwegian Krone 87,494 – 87,494 0.2New Zealand Dollar 642 – 642 0.0Mexican Peso 578 – 578 0.0Russian Ruble 97 – 97 0.0Polish Zloty 2 – 2 0.0South African Rand 1 – 1 0.0Brazilian Real – (52,358) (52,358) (0.1)

Total 47,398,973 (185,265) 47,213,708 109.4

The amounts in the above tables are based on the fair value of the Fund’s financialinstruments. Other financial assets (including dividends and interest receivable and

receivable for investments sold) and financial liabilities that are denominated in foreigncurrencies do not expose the Fund to significant currency risk.

As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10% inrelation to all currencies, with all other variables held constant, the Fund’s Net Assets wouldhave decreased or increased, respectively by approximately $1,301,017, 1.9% of the Fund’s NetAssets (December 31, 2008 -$4,721,371, 10.9% of the Fund’s Net Assets). In practice, actualresults may differ from this sensitivity analysis and the difference could be material.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As atDecember 31, 2009, had prevailing interest rates increased or decreased by 0.25%,assuming a parallel shift in the yield curve and all other variables held constant, NetAssets would have decreased or increased by approximately $787,470, 1.1% of the Fund’sNet Assets (December 31, 2008-$453,655, 1.1% of the Fund’s Net Assets). The Fund’ssensitivity to interest rate fluctuations was estimated using the weighted averageduration of the bond portfolio. In practice, actual results may differ from this sensitivityanalysis and the difference could be material.




($)

Less than 1 Year 1,665,600 1,632,9921-3 years 6,569,491 3,705,9963-5 years 13,323,388 4,340,0405-10 years 15,787,723 10,731,031H 10 years 29,273,430 25,045,039

Total 66,619,632 45,455,098



Where the Fund invests in debt instruments this represents the main concentration of creditrisk. The market value of debt instruments includes consideration of the creditworthiness ofthe issuer, and accordingly, represents the maximum credit risk exposure to the Fund. Creditrisk may also exist in relation to counterparties of currency forward contracts.

Debt instruments, excluding cash and money market instruments but includingpreferred shares held by the Fund have credit ratings as follows:

Percentage ofTotal Fixed-







A– to AAA+ 30.5 29.6 54.9 57.7B– to BBB+ 35.5 34.4 23.6 24.8C– to CCC+ 3.0 2.9 3.8 4.0D– to DDD+ 0.2 0.2 1.7 1.8Unrated 30.8 29.8 16.0 16.8

Total 100.0 96.9 100.0 105.1



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2009 2008

AssetsInvestments at fair value $117,738,047 $82,061,446Cash 6,273,367 731,193Receivable for currency spot and forward contracts 6,982 –Subscriptions receivable 71,855 26,404Receivable for securities sold – 2,136,690Accrued investment income 316,846 556,090Prepaid expense – 4,153Accounts receivable 1,321 –

124,408,418 85,515,976

LiabilitiesPayable for currency spot and forward contracts – 22,870Payable for securities purchased 1,250,355 123,864Redemptions payable 71,768 47,871Accrued expenses 68,965 82,479

1,391,088 277,084

Net Assets $123,017,330 $85,238,892

Net Assets per classClass A Units $109,863,333 $85,238,892Class F Units $ 361,834 $ –Class I Units $ 12,792,163 $ –




2009 2008

Investment IncomeDividends $ 4,038,629 $ 3,939,200Interest 84,448 199,728Securities lending 1,554 28,559Less: Foreign withholding taxes (747,902) (733,415)

3,376,729 3,434,072


294,786 280,854

Absorbed expenses (1,860) –

Net expenses 292,926 280,854


Net realized gain (loss) on investments sold (12,802,703) (18,542,081)Net realized gain (loss) on foreign exchange (311,864) (275,579)Transaction costs (Note 2) (261,370) (311,300)Change in unrealized appreciation (depreciation) of investments 29,420,706 (22,948,577)Change in unrealized appreciation (depreciation) of currency forwards 29,852 (21,350)Change in unrealized appreciation (depreciation) of foreign exchange (49,518) 61,888



Increase (Decrease) in Net Assets from OperationsClass A Units $ 17,372,300 $(38,883,781)Class F Units* $ 269,257 $ –Class I Units** $ 1,467,349 $ –

Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 1.62 $ (4.60)Class F Units* $ 3.33 $ –Class I Units** $ 2.93 $ –


2009 2008

Net Assets – Beginning of PeriodClass A Units $ 85,238,892 $107,662,590

Increase (Decrease) in Net Assets from OperationsClass A Units 17,372,300 (38,883,781)Class F Units* 269,257 –Class I Units** 1,467,349 –

19,108,906 (38,883,781)


Class A Units (3,185,008) (3,045,292)Class F Units* (11,027) –Class I Units** (92,575) –

(3,288,610) (3,045,292)


Class A Units 40,472,081 58,842,738Class F Units* 1,457,389 –Class I Units** 11,923,281 –

Reinvested distributionsClass A Units 3,160,419 3,037,952Class F Units* 11,027 –Class I Units** 92,575 –

Payments on redemptionClass A Units (33,195,351) (42,375,315)Class F Units* (1,364,812) –Class I Units** (598,467) –

21,958,142 19,505,375

Increase (Decrease) in Net AssetsClass A Units 24,624,441 (22,423,698)Class F Units* 361,834 –Class I Units** 12,792,163 –

37,778,438 (22,423,698)


$123,017,330 $ 85,238,892



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Portfolio Advisor: Forum Partners (UK) LLP


Statement of Investment PortfolioAs at December 31, 2009Number ofShares Issuer

AverageCost ($)

FairValue ($)

Equities – 95.7%Australia – 9.3%1,988,200 Commonwealth Property Office Fund 1,904,359 1,798,1491,375,415 Dexus Property Group 1,441,843 1,086,1902,054,900 General Property Trust 1,077,047 1,154,193

864,000 Macquarie Goodman Group 414,770 508,520286,238 Stockland 1,148,689 1,052,011506,104 Westfield Group 6,836,258 5,903,000

12,822,966 11,502,063

Brazil – 1.4%54,957 Multiplan Empreendimentos Imobiliarios SA 617,467 1,069,17059,500 PDG Realty SA 508,247 610,647

1,125,714 1,679,817

Canada – 2.4%35,312 Allied Properties Real Estate Investment Trust 653,352 679,75644,900 Boardwalk Real Estate Investment Trust 1,285,447 1,651,42221,800 Canadian Real Estate Investment Trust 480,748 590,998

2,419,547 2,922,176

Finland – 0.5%122,759 Technopolis Oyj 691,077 571,350

France – 4.9%6,341 ICADE NPV 621,310 630,6996,800 Societe Immobiliere de Location pour

l’Iundustrie et le Commerce (Silic) 717,310 865,57319,720 Unibail 4,082,144 4,540,164

5,420,764 6,036,436

Germany – 0.9%30,001 Deutsche Euroshop AG 1,162,257 1,064,763

Hong Kong – 16.4%1,007,800 China Overseas Land & Investment Limited 2,408,142 2,204,258

878,300 China Resources Land Limited 1,510,088 2,072,435221,700 Great Eagle Holdings 501,474 599,576427,300 Hang Lung Properties Ltd. 1,423,496 1,745,990231,000 Henderson Land Development Company Ltd. 1,403,149 1,806,280282,100 Hongkong Land Holdings Limited 1,136,632 1,451,937195,400 Hysan Development Company, Limited 574,612 578,654162,319 Kerry Properties Limited 717,247 857,177411,600 Link Real Estate Investment Trust, The 961,309 1,091,024660,000 Sino-Ocean Land Holdings Ltd. 564,217 632,243387,300 Sun Hung Kai Properties Limited 5,412,989 6,010,426186,100 Wharf (Holdings) Limited, The 773,372 1,112,928

17,386,727 20,162,928

Japan – 12.0%27,000 AEON Mall Co., Ltd. 560,296 546,440

49 Global One Real Estate Investment Co., Ltd. 438,495 345,962273,545 Mitsubishi Estate Company, Limited 5,811,201 4,537,761262,700 Mitsui Fudosan Co. Ltd. 5,452,352 4,613,737

191 Nippon Building Fund Inc. 2,161,967 1,513,3841,303 NTT Urban Development Corporation 1,209,928 903,561

224 ORIX JREIT Inc. 1,085,857 1,164,31060,000 Sumitomo Realty & Development Co., Ltd. 952,900 1,176,926

17,672,996 14,802,081

Netherlands – 1.1%15,979 Corio NV 864,035 1,141,37015,600 Vastned Offices/Industrial NV 254,811 273,025

1,118,846 1,414,395

New Zealand – 0.7%1,548,150 AMP NZ Office Trust 1,035,331 890,333

Poland – 0.3%39,000 Globe Trade Centre SA 370,294 362,079

Number ofShares Issuer

AverageCost ($)

FairValue ($)

Equities (cont’d)Singapore – 3.6%

560,500 Ascott Residence Trust 478,975 497,519333,300 Capitaland Limited 817,739 1,032,490

1,431,000 Mapletree Logistics Trust 799,132 833,9951,154,800 Parkway Life Real Estate Investment Trust 818,854 1,043,5741,116,000 Suntec Real Estate Investment Trust 967,038 1,116,393

3,881,738 4,523,971

Sweden – 0.7%83,229 Castellum AB 842,449 878,315

Switzerland – 0.5%10,000 Swiss Prime Site AG 607,140 586,451

United Kingdom – 5.6%97,579 British Land Company, PLC 1,337,848 782,278

105,970 Development Securities PLC 551,527 611,194270,108 Grainger PLC 742,440 578,789128,991 Great Portland Estates PLC 864,946 624,93172,829 Helical Bar PLC 547,785 417,576

192,190 Land Securities Group PLC 2,981,851 2,202,828200,000 SEGRO PLC 1,138,791 1,154,60271,000 Shaftesbury PLC 475,423 470,846

8,640,611 6,843,044

United States – 35.4%23,000 Alexandria Real Estate Equities, Inc. 1,546,421 1,543,34037,700 AMB Property Corp. 1,030,166 1,004,63921,700 Avalonbay Communities, Inc. 2,123,572 1,861,89335,900 Boston Properties, Inc. 2,638,799 2,517,83641,700 Corporate Office Properties Trust 1,524,224 1,597,50640,700 Digital Realty Trust, Inc. 1,649,302 2,138,09598,500 Douglas Emmett, Inc. 1,812,498 1,464,89145,300 Equity Residential 1,592,344 1,600,39513,000 Essex Property Trust, Inc. 1,258,231 1,137,31027,000 Federal Realty Investment Trust 1,935,769 1,907,19163,600 HCP, Inc. 1,936,810 2,031,40134,600 Health Care Real Estate Investment Trust Inc. 1,507,169 1,603,420

143,808 Host Marriott Corp. 1,669,807 1,755,18743,400 Kimco Realty Corporation 1,060,984 614,12542,600 LaSalle Hotel Properties 939,497 945,86569,400 ProLogis Trust 668,169 993,64730,800 Public Storage 2,467,876 2,623,68280,700 Retail Opportunity Investments Corp. 900,503 844,84567,575 Simon Property Group, Inc. 4,821,313 5,639,73015,800 SL Green Realty Corp. 565,175 830,18718,000 Sovran Self Storage, Inc. 593,203 672,62827,300 Starwood Hotels & Resorts Worldwide, Inc. 1,135,389 1,043,85045,500 Tanger Factory Outlet Centers, Inc. 1,747,726 1,855,38551,700 Ventas, Inc. 2,051,837 2,365,04139,725 Vornado Realty Trust 2,872,564 2,905,756

42,049,348 43,497,845


Currency Spot Contracts – 0.0% 6,982Other Assets, Less Liabilities – 4.3% 5,272,301

Net Assets – 100.0% 123,017,330

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Pinnacle Global Real Estate Securities Fund (Continued)






Jan. 4, 2010 Australian Dollar 139,117 Canadian Dollar 131,396 (705)Jan. 4, 2010 Australian Dollar 324,308 Canadian Dollar 303,131 1,535Jan. 4, 2010 British Pounds 199,077 Canadian Dollar 331,005 5,287Jan. 4, 2010 Hong Kong Dollar 1,600,415 Canadian Dollar 215,489 390Jan. 4, 2010 Hong Kong Dollar 1,948,465 Canadian Dollar 262,352 475

6,982

The currency spot contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of AA� by Standard & Poor’s.




Australia 9.3 8.9Brazil 1.4 1.2Canada 2.4 2.4Finland 0.5 0.8France 4.9 4.5Germany 0.9 –Hong Kong 16.4 11.9Japan 12.0 13.9Netherlands 1.1 2.0New Zealand 0.7 0.8Poland 0.3 –Singapore 3.6 3.0South Africa – 0.4Sweden 0.7 1.4Switzerland 0.5 –United Kingdom 5.6 7.8United States 35.4 37.3


Assets



(Level 2) ($)



Equities 47,030,667 70,707,380 – 117,738,047Spot Contracts – 6,982 – 6,982

Total Investments 47,030,667 70,714,362 – 117,745,029

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A. Risk managementThe investment objective of Pinnacle Global Real Estate Securities Fund (the “Fund”) isto achieve superior long term returns through income and capital growth, by investingprimarily in U.S., Canadian and non-North American real estate stocks and real estateinvestment trusts (REITs).


B. Liquidity riskThe Fund’s exposure to liquidity risk is derived primarily from the daily cash redemptionof units. The Fund primarily invests in securities that are traded in active markets andcan be readily disposed. In addition, the Fund aims to retain sufficient cash and moneymarket instrument positions to maintain liquidity, and has the ability to borrow up to5% of its Net Asset Value for the purpose of funding redemptions. The Fund may, fromtime to time, enter into over-the-counter derivative contracts or invest in securities thatare not traded in an active market and may be illiquid. Illiquid securities are identifiedin the Statement of Investment Portfolio. All liabilities are short term in nature.

C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. The Fund’s financial instruments wereexposed to the following currencies:December 31, 2009

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 44,961,628 – 44,961,628 36.5

Hong Kong Dollar 18,710,990 – 18,710,990 15.2

Japanese Yen 14,802,081 – 14,802,081 12.0

Australian Dollar 11,502,063 – 11,502,063 9.3

European Euro 9,086,945 – 9,086,945 7.4

British Pound 6,846,357 – 6,846,357 5.6

Singapore Dollar 4,524,715 – 4,524,715 3.7

Brazilian Real 1,679,817 – 1,679,817 1.4

New Zealand Dollar 890,333 – 890,333 0.7

Swedish Krona 878,316 – 878,316 0.7

Swiss Franc 586,451 – 586,451 0.5

Polish Zloty 362,079 – 362,079 0.3

Total 114,831,775 – 114,831,775 93.3

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 32,432,405 – 32,432,405 38.1

Japanese Yen 11,884,860 – 11,884,860 13.9

Hong Kong Dollar 9,557,411 – 9,557,411 11.2


British Pound 6,641,982 – 6,641,982 7.8

European Euro 6,180,288 – 6,180,288 7.3


Swedish Krona 1,182,875 – 1,182,875 1.4

Brazilian Real 1,009,649 – 1,009,649 1.2

New Zealand Dollar 686,058 – 686,058 0.8

South African Rand 357,537 – 357,537 0.4

Total 80,099,185 – 80,099,185 94.0


As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10%in relation to all currencies, with all other variables held constant, Net Assets wouldhave decreased or increased, respectively by approximately $11,483,177, 9.3% of theFund’s Net Assets (December 31, 2008-$8,009,918, 9.4% of the Fund’s Net Assets). Inpractice, actual results may differ from this sensitivity analysis and the difference couldbe material.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As atDecember 31, 2009 and December 31, 2008, the majority of the Fund’s financial assetsand liabilities are non-interest bearing, accordingly, the Fund did not have a significantexposure to interest rate risk.


Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. As at December 31, 2009 and December 31, 2008, the Fund had nosignificant investments in debt instruments and/or derivatives. Credit risk may also existin relation to counterparties of spot currency contracts.


F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, the Financial Times Stock Exchange (FTSE) European Public Real EstateAssociation (EPRA) / North American Association of Real Estate Investment Trusts(NAREIT) Global Real Estate Index, as of December 31, 2009 with all other variablesheld constant, would result in an increase or decrease of approximately $22,635,189,18.4% of the Fund’s Net Assets (December 31, 2008-$7,631,769, 9.0% of the Fund’s NetAssets). The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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2009 2008

AssetsInvestments at fair value $56,732,941 $75,273,122Cash 45,083 216,612Futures margin receivable – 67,243Receivable for futures contracts – 15,731Subscriptions receivable 16,189 45,597Receivable for securities sold – 297,004Accrued investment income 271,376 444,351Prepaid expense – 2,871Accounts receivable 1,292 –

57,066,881 76,362,531

LiabilitiesPayable for currency spot and forward contracts – 28,288Payable for securities purchased – 240,299Redemptions payable 111,860 31,108Accrued expenses 74,464 92,782

186,324 392,477

Net Assets $56,880,557 $75,970,054


Units outstandingClass A Units 3,969,101 6,225,761Class F Units 949 –



2009 2008

Investment IncomeDividends $ 676,387 $ 978,917Interest 1,579,297 2,064,552Securities lending 2,359 11,723Income (loss) from futures contracts 60,138 22,432Less: Foreign withholding taxes (12,855) (30,108)

2,305,326 3,047,516



Net expenses 300,802 365,182


Net realized gain (loss) on investments sold (6,445,339) (5,414,662)Net realized gain (loss) on foreign exchange 74,697 (230,494)Transaction costs (note 2) (110,057) (119,708)Change in unrealized appreciation (depreciation) of investments 15,291,996 (12,864,253)Change in unrealized appreciation (depreciation) of currency forwards 28,288 (56,255)Change in unrealized appreciation (depreciation) of futures contracts (15,731) –Change in unrealized appreciation (depreciation) of foreign exchange (3,845) 214


Increase (Decrease) in Net Assets from Operations $10,824,533 $(16,002,824)

Increase (Decrease) in Net Assets from OperationsClass A Units $10,821,771 $(16,002,824)Class F Units* $ 2,762 $ –



2009 2008



10,824,533 (16,002,824)


Class A Units (2,028,660) (2,659,382)Class F Units* (227) –

(2,028,887) (2,659,382)



Reinvested distributionsClass A Units 2,021,964 2,649,258Class F Units* 227 –


(27,885,143) 2,226,831

Increase (Decrease) in Net AssetsClass A Units (19,103,245) (16,435,375)Class F Units* 13,748 –

(19,089,497) (16,435,375)


$ 56,880,557 $ 75,970,054


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Portfolio Advisor: Gryphon Investment Counsel Inc.



AverageCost ($)

FairValue ($)

Equities – 58.1%Energy – 16.6%

7,050 Calfrac Well Services Ltd. 106,354 145,0188,550 Cameco Corporation 204,258 288,733

21,850 Canadian Natural Resources Limited 1,327,350 1,652,95224,050 Cenovus Energy Inc. 679,350 634,9209,800 Crescent Point Energy Corp 323,951 386,610

24,050 EnCana Corporation 746,650 818,90240,100 Nexen Inc. 959,489 1,011,32223,300 Petrobank Energy and Resources Ltd. 848,237 1,188,30039,850 Suncor Energy, Inc. 1,381,654 1,478,83470,350 Talisman Energy Inc. 1,157,672 1,385,1921,434 Technip SA 93,233 105,0932,565 Total SA 158,475 171,9065,450 Trican Well Service Ltd. 71,942 76,627

11,100 Trinidad Drilling Ltd. 56,234 78,477

8,114,849 9,422,886

Materials – 8.5%10,850 Agrium Inc. 575,097 701,99539,750 HudBay Minerals, Inc. 343,623 536,62515,950 Inmet Mining Corporation 777,617 1,012,02736,500 Kingboard Chemical Holdings Limited 127,454 151,3849,000 Kuraray Company Limited 104,555 110,1803,300 Potash Corporation of Saskatchewan Inc. 394,291 376,5639,300 Quebecor Inc., Class B 198,856 252,123

23,450 Sino-Forest Corporation 325,677 453,05430,050 Teck Cominco Limited, Class B, Sub.

Voting 742,490 1,102,835605 Wacker Chemie AG 84,165 110,357

3,673,825 4,807,143

Industrials – 3.6%1,392 Adecco SA 73,086 80,375

10,000 Asahi Glass Company, Limited 88,928 97,9747,700 CP Railway Limited 392,595 435,2815,000 Hexagon AB, Series B 60,821 76,815

600 IBI Income Fund* 7,728 10,0202,414 Intertek Group PLC 47,626 50,8353,300 Komatsu Ltd. 61,581 71,953

214 Kuehne & Nagel International AG 20,411 21,6511,702 MTU Aero Engines Holding AG 68,509 97,6751,500 Nidec Corporation 108,616 144,2491,370 Schneider Electric SA 134,756 165,9942,586 Serco Group PLC 22,859 22,9931,604 Siemens AG 142,176 153,8696,750 SNC-Lavalin Group Inc. 295,963 363,9601,966 SR Teleperformance 70,939 66,3874,500 Stanley Electric Co., Ltd. 96,728 94,6431,057 Vestas Wind Systems A/S 78,989 67,6401,100 Viterra, Inc.* 8,800 10,857

1,781,111 2,033,171

Consumer Discretionary – (6.7%1,643 Adidas-Salomon AG 82,034 92,776

11,300 Astral Media Inc. 349,871 374,03010,750 Canadian Tire Corporation, Limited 607,995 615,43712,819 Esprit Holdings Ltd. 94,141 88,23632,950 Gildan Activewear Inc., Sub. Voting 636,014 846,8152,500 Hamamatsu Photonics K.K 52,350 63,1492,400 Honda Motor Co., Ltd. 82,413 84,8702,516 Industria de Diseno Textil SA 143,466 163,049

38,000 Li & Fung Ltd. 127,826 162,7986,950 Magna International Inc., Sub. Voting 349,087 369,045

12,950 RONA inc 190,001 199,8192,300 Seven & I Holdings Co. Ltd. 58,081 48,824

14,850 Thomson Reuters Corporation 539,604 503,415


AverageCost ($)

FairValue ($)

Equities (cont’d)Industrials (cont’d)

3,809 Wolters Kluwer NV 85,139 87,31426,000 Yue Yuen Industrial – (Holdings) Limited 80,564 78,883

3,478,586 3,778,460

Consumer Staples – 2.3%24,800 Alimentation Couche-Tard Inc., Class B

Sub. Voting 426,794 516,336822 Beiersdorf AG 44,260 56,500

4,486 Davide Campari – Milano SpA 41,877 48,8801,044 Delhaize Group 78,431 83,6292,429 Heineken NV 106,658 120,372

32 Lindt & Spruengli AG 70,977 71,8848,450 Metro Inc., Sub. Voting 304,496 331,240

886 Nutreco Holding NV 40,559 51,9441,630 Unilever NV 54,223 55,549

1,168,275 1,336,334

Health Care – 0.8%2,154 Fresenius AG Preferred Non-Voting 125,798 160,9981,670 Novartis AG 80,930 95,1571,470 Stada Arzneimittel AG 39,489 53,2282,600 Terumo Corporation 139,139 162,733

385,356 472,116

Financials – 15.3%24,450 Bank of Montreal 1,177,068 1,363,57630,600 Bank of Nova Scotia, The 1,362,321 1,505,2141,906 BNP Paribas 138,903 157,306

18,400 Canadian Imperial Bank of Commerce 1,160,386 1,253,9608,918 ING Groep NV 109,577 90,165

50,650 Manulife Financial Corporation 1,331,943 979,0649,100 National Bank of Canada 444,321 545,636

22,550 Power Financial Corporation 678,065 700,85435,650 Royal Bank of Canada 1,686,024 2,008,8783,343 Standard Chartered PLC 81,943 87,556

8,170,551 8,692,209

Information Technology – 3.0%2,369 Axalto Holding NV 92,157 106,629

28,700 CGI Group Inc., Sub Voting 312,249 407,5403,300 Ibiden Co. Ltd. 114,422 122,9144,800 Nikon Corporation 87,790 99,009

13,293 Research In Motion Limited 879,635 944,2025,070 Telefonaktiebolaget LM Ericsson, Class B 51,974 48,771

1,538,227 1,729,065

Telecommunication Services – 1.3%23,350 Rogers Communications, Inc., Class B 697,168 763,312

Total Equities 29,007,948 33,034,696

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Pinnacle Strategic Balanced Fund (Continued)




MaturityDate

AverageCost ($)

FairValue ($)

Bonds and Debentures – 39.6%Federal Government – 25.9%4,775,000 Canada Housing Trust No. 1 4.60% 09/15/2011 5,068,233 5,029,9035,750,000 Canada Housing Trust No. 1 4.00% 06/15/2012 6,048,885 6,032,4083,550,000 Canada Housing Trust No. 1 3.60% 06/15/2013 3,676,451 3,683,782

14,793,569 14,746,093

Provincial Government – 13.1%3,175,000 Province of Ontario 4.20% 03/08/2018 3,194,824 3,220,1423,500,000 Province of Ontario 6.50% 03/08/2029 4,177,950 4,212,666

7,372,774 7,432,808

Corporate – 0.6%54,447 Arrow Lakes Power 5.39%* 03/31/2015 56,560 60,512

115,000 Athabasca Oil Sands Corp. 13.00%* 07/30/2011 115,000 121,90069,515 Brilliant Power Funding Corp. 5.67%* 05/31/2026 74,143 74,79876,685 Pearson International Fuel Facilities Corp

5.09%* 03/09/2032 76,558 69,12686,000 Royal Bank of Scotland Group PLC, The

6.67%* 10/05/2017 82,963 43,000

405,224 369,336



0.10% to 0.14% due fromJan. 7, 2010 to Jan. 21, 2010 1,150,008 1,150,008


Other Assets, Less Liabilities (0.3%) 147,616

Total Net Assets (100.0%) 56,880,557





Bonds and DebenturesFederal 25.9 9.9Provincial 13.1 6.4Corporate 0.6 19.6

EquitiesEnergy 16.6 13.3Materials 8.5 5.6Industrials 3.6 5.2Customer Discretionary 6.7 2.9Consumer Staples 2.3 2.8Health Care 0.8 2.6Financials 15.3 13.2Information Technology 3.0 3.5Telecommunication Services 1.3 2.9Utilities – 1.2

Money Market Instruments 2.0 10.0Futures Contracts – 0.0Currency Forward Contracts – 0.0


AssetsQuoted prices in activemarkets for identicalassets (Level 1) ($)


(Level 2) ($)



Equities 28,629,601 4,405,095 – 33,034,696Bonds and Debentures – 22,548,237 – 22,548,237Money Market Instruments – 1,150,008 – 1,150,008


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A. Risk managementThe investment objective of Pinnacle Strategic Balanced Fund (the “Fund”) is toachieve superior long term returns through a combination of capital growth and incomeby investing primarily in large capitalization stocks of Canadian corporations andCanadian government bonds. The weighting of the Fund’s portfolio is allocated betweenasset classes within specified ranges: 40% – 80% equities; 20% – 60% fixed incomesecurities; 0% – 30% short term money market securities and cash.



C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. As at December 31, 2009 and December 31,2008, the Fund’s financial instruments were exposed to the following currencies:

December 31, 2009

CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 2,199,619 – 2,199,619 3.9Japanese Yen 1,100,497 – 1,100,497 1.9Hong Kong Dollar 481,302 – 481,302 0.8Swiss Franc 269,066 – 269,066 0.5British Pound 161,384 – 161,384 0.3Swedish Krona 125,587 – 125,587 0.2Danish Krone 67,640 – 67,640 0.1U.S. Dollar 1,361 – 1,361 0.0

Total 4,406,456 – 4,406,456 7.7

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 5,539,625 (1,257,639) 4,281,986 5.6European Euro 1,593,758 (82,828) 1,510,930 2.0Japanese Yen 1,038,345 – 1,038,345 1.4British Pound 890,966 – 890,966 1.2Swiss Franc 646,332 – 646,332 0.9Hong Kong Dollar 334,411 – 334,411 0.4Australian Dollar 330,961 – 330,961 0.4Malaysian Ringgit 97 – 97 0.0Philippine Peso 20 – 20 0.0Singapore Dollar (22) – (22) 0.0

Total 10,374,493 (1,340,467) 9,034,026 11.9

The amounts in the above table are based on the fair value of the Fund’s financialinstruments. Other financial assets (including dividends and interest receivable andreceivable for investments sold) and financial liabilities that are denominated in foreigncurrencies do not expose the Fund to significant currency risk.

As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10%in relation to all currencies, with all other variables held constant, Net Assets wouldhave decreased or increased, respectively by approximately $440,646, 0.8% of the Fund’sNet Assets (December 31, 2008-$903,403, 1.2% of the Fund’s Net Assets). In practice,actual results may differ from this sensitivity analysis and the difference could bematerial.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds anddebentures. The Fund is exposed to the risk that the value of interest-bearing financialinstruments will fluctuate due to changes in the prevailing levels of market interestrates. As at December 31, 2009, had prevailing interest rates increased or decreased by0.25%, assuming a parallel shift in the yield curve and all other variables held constant,Net Assets would have decreased or increased by approximately $280,232, 0.5% of theFund’s Net Assets (December 31, 2008-$481,564, 0.6% of the Fund’s Net Assets). TheFund’s sensitivity to interest rate fluctuations was estimated using the weighted averageduration of the bond and debenture portfolio. In practice, actual results may differ fromthis sensitivity analysis and the difference could be material.




($)

Less than 1 Year – 8,114,1181-3 years 11,184,211 565,9323-5 years 3,683,782 8,447,5905-10 years 3,280,654 7,430,862�10 years 4,399,590 10,305,956

Total 22,548,237 34,864,458

* Excludes cash, money market instruments, futures and preferred shares as applicable.


Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. The market value of debt instruments includes consideration of thecreditworthiness of the issuer, and accordingly, represents the maximum credit riskexposure to the Fund. Credit risk may also exist in relation to counterparties of foreigncurrency forward contracts.

Debt instruments excluding cash and money market instruments but including preferredshares held by the Fund have credit ratings as follows:








A– to AAA+ 98.6 39.4 73.1 26.3B– to BBB+ – – 8.1 2.9C– to CCC+ 0.2 0.1 0.7 0.2Unrated 1.2 0.5 17.6 6.3

Total 100.0 40.0 99.5 35.7


F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its blended benchmarkstock index, 40% S&P/TSX Composite Index, 50% DEX Universe Bond Index and 10%Morgan Stanley Capital Index (MSCI) All Country World (ACWI) ex-Canada Index, as ofDecember 31, 2009 with all other variables held constant, would result in an increase ordecrease of approximately $12,172,439, 21.4% of the Fund’s Net Assets (December 31,2008-$4,364,136, 5.7% of the Fund’s Net Assets). The Fund’s historical sensitivitymeasure may not be representative of its future sensitivity measure, and accordingly, theimpact on Net Assets could be materially different.

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Pinnacle Canadian Value Equity Fund


2009 2008

AssetsInvestments at fair value $109,846,766 $89,604,789Cash 76,169 873,300Subscriptions receivable 46,652 11,127Accrued investment income 311,646 301,480Prepaid expense – 2,872Accounts receivable 1,295 –

110,282,528 90,793,568

LiabilitiesRedemptions payable 96,928 68,659Accrued expenses 78,369 87,185

175,297 155,844

Net Assets $110,107,231 $90,637,724





2009 2008

Investment IncomeDividends $ 2,846,685 $ 2,872,258Interest 59,900 178,398Securities lending 1,916 68,952

2,908,501 3,119,608



Net expenses 236,318 240,835


Net realized gain (loss) on investments sold (10,564,608) (3,270,144)Net realized gain (loss) on foreign exchange (35,602) (2,496)Transaction costs (Note 2) (134,472) (52,684)Change in unrealized appreciation (depreciation) of investments 41,711,180 (49,642,047)Change in unrealized appreciation (depreciation) of currency forwards – 5Change in unrealized appreciation (depreciation) of foreign exchange (839) 250






2009 2008



33,647,842 (50,088,343)



(2,392,220) (2,906,057)





(11,786,115) 488,886


19,469,507 (52,505,514)


$110,107,231 $ 90,637,724


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Portfolio Advisor: Scheer, Rowlett & Associates Investment Management Ltd.



AverageCost ($)

FairValue ($)


43,100 Cameco Corporation 925,380 1,455,48770,400 Canadian Natural Resources Limited 2,146,593 5,325,76088,600 Cenovus Energy Inc. 1,907,685 2,339,04098,600 EnCana Corporation 2,412,601 3,357,330

124,100 Nexen Inc. 2,438,704 3,129,80249,100 Penn West Energy Trust 753,621 909,332

214,764 Suncor Energy, Inc. 4,580,086 7,969,892233,500 Talisman Energy Inc. 1,984,757 4,597,61529,500 TransCanada Corporation 929,250 1,067,605

18,078,677 30,151,863

Materials – 17.4%81,400 Agrium Inc. 4,193,870 5,266,580

158,400 Barrick Gold Corporation 6,869,756 6,554,59287,390 Cascades Inc. 299,282 781,26722,016 Domtar Corporation 529,500 1,276,928

167,400 Gerdau Ameristeel Corporation 1,824,935 1,458,05475,900 Methanex Corporation 1,144,786 1,550,63719,700 Potash Corporation of Saskatchewan Inc. 1,907,277 2,247,967

16,769,406 19,136,025

Industrials – 8.2%46,400 Canadian National Railway Company 1,251,429 2,651,29638,000 CP Railway Limited 1,949,876 2,148,14081,500 Russel Metals Inc. 1,402,902 1,438,475

431,500 Sherritt International Corporation 1,254,146 2,817,695

5,858,353 9,055,606

Consumer Discretionary – 4.8%16,800 Canadian Tire Corporation, Limited 769,779 961,80053,100 Gildan Activewear Inc., Sub. Voting 567,290 1,364,67010,600 Magna International Inc., Sub. Voting 729,033 562,860

109,500 RONA inc. 1,332,738 1,689,58520,700 Thomson Reuters Corporation 739,260 701,730

4,138,100 5,280,645

Consumer Staples – 2.0%117,100 Maple Leaf Foods Inc. 1,247,552 1,358,36022,600 Metro Inc., Sub. Voting 860,735 885,920

2,108,287 2,244,280

Financials – 31.0%168,700 Bank of Nova Scotia, The 5,276,506 8,298,35393,000 Canadian Imperial Bank of Commerce 5,304,416 6,337,950

400 Industrial Alliance Insurance and FinancialServices Inc. 11,987 12,848

133,300 Manulife Financial Corporation 3,116,224 2,576,689156,700 Royal Bank of Canada 6,058,891 8,830,045123,100 Toronto-Dominion Bank, The 4,915,655 8,117,214

24,683,679 34,173,099

Information Technology – 1.3%20,000 Research In Motion Limited 1,280,680 1,420,600

Telecommunication Services – 6.5%36,000 BCE Inc. 1,009,162 1,041,840

102,700 Rogers Communications, Inc., Class B 3,112,215 3,357,26382,800 TELUS Corporation Non-Voting 2,685,450 2,701,764

6,806,827 7,100,867

Index Fund – 0.4%25,000 iShares CDN S&P/TSX 60 Index Fund 429,335 434,250

Total Equities 80,153,344 108,997,235


AverageCost ($)

FairValue ($)

Money Market Instruments – 0.8%850,000 Government of Canada Treasury Bills

0.19% due Apr. 15, 2010 849,531 849,531



Net Assets – 100.0% 110,107,231




Energy 27.4 25.2Materials 17.4 9.1Industrials 8.2 11.0Consumer Discretionary 4.8 7.1Consumer Staples 2.0 2.7Financials 31.0 33.0Information Technology 1.3 5.2Telecommunication Services 6.5 5.6Index Fund 0.4 –Money Market Instruments 0.8 –


Assets



(Level 2) ($)



Equities 108,997,235 – – 108,997,235Money Market Instruments – 849,531 – 849,531

Total Investments 108,997,235 849,531 – 109,846,766

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SPinnacle Canadian Value Equity Fund (Continued)

Portfolio Advisor: Scheer, Rowlett & Associates Investment Management Ltd.

The accompanying notes are an integral part of these financial statements. -For equities, all common shares unless otherwise noted.


A. Risk managementThe investment objective of Pinnacle Canadian Value Equity Fund (the “Fund”) is toachieve superior long term returns through capital growth by investing primarily insecurities of Canadian corporations.



C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. As at December 31, 2009 and December 31,2008, the Fund did not have a significant exposure to currency risk.

D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As atDecember 31, 2009 and December 31, 2008, the majority of the Fund’s financial assets

and liabilities are non-interest bearing, accordingly, the Fund did not have a significantexposure to interest rate risk.


Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. As at December 31, 2009 and December 31, 2008, the Fund had nosignificant investments in debt instruments and/or derivatives.


F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, S&P/TSX Composite Index, as of December 31, 2009 with all other variables heldconstant, would result in an increase or decrease of approximately $22,682,090, 20.6% ofthe Fund’s Net Assets (December 31, 2008-$9,050,084, 10.0% of the Fund’s Net Assets).The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle Canadian Value Equity Fund (Continued)


Pinnacle Canadian Mid Cap Equity Fund


2009 2008

AssetsInvestments at fair value $49,283,180 $36,206,468Cash 201,259 61,163Subscriptions receivable 18,810 11,428Receivable for securities sold 71,079 –Accrued investment income 109,327 87,453Prepaid expense – 2,872Accounts receivable 1,295 –

49,684,950 36,369,384


115,293 92,570

Net Assets $49,569,657 $36,276,814





2009 2008

Investment IncomeDividends $ 622,298 $ 531,176Interest 318,531 342,139Securities lending 14,026 10,976

954,855 884,291



Net expenses 190,149 180,791


Net realized gain (loss) on investments sold (3,024,411) (1,442,053)Net realized gain (loss) on foreign exchange 52 (273)Transaction costs (Note 2) (80,272) (215,169)Change in unrealized appreciation (depreciation) of investments 22,179,662 (21,141,393)Change in unrealized appreciation (depreciation) of foreign exchange (18) 12






2009 2008



19,839,719 (22,095,376)



(732,617) (765,016)





(5,814,259) 7,162,582


13,292,843 (15,697,810)


$ 49,569,657 $ 36,276,814


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Portfolio Advisor: Montrusco Bolton Investments Inc.



AverageCost ($)

FairValue ($)


45,000 Crescent Point Energy Corp 1,567,065 1,775,250181,725 Crew Energy Inc. 1,102,441 2,635,013237,085 Daylight Resources Trust 2,117,169 2,411,154112,281 NAL Oil & Gas Trust 1,294,724 1,533,759

1 PetroBakken Energy Ltd. 33 3248,859 ShawCor Ltd., Sub. Voting 1,253,875 1,424,72871,250 Talisman Energy Inc. 1,268,989 1,402,91333,561 Vermilion Energy Trust 1,088,716 1,087,376

9,693,012 12,270,225

Materials – 15.3%17,675 Agnico-Eagle Mines Limited 956,025 1,003,763

158,869 Alamos Gold Inc. 1,392,007 1,985,86346,040 Allied Nevada Gold Corporation 549,587 720,986

104,570 Consolidated Thompson Iron Mines Limited 551,942 703,756114,916 Jaguar Mining Inc. 1,156,325 1,342,21963,750 Major Drilling Group International Inc. 2,478,909 1,815,600

7,084,795 7,572,187

Industrials – 10.2%90,424 CAE, Inc. 1,029,422 784,88030,425 Finning International Inc. 736,368 507,48945,850 Ritchie Bros. Auctioneers Incorporated 1,151,004 1,078,85138,300 Stantec Inc. 1,159,976 1,156,66073,100 Transat A.T. Inc., Class B 1,853,381 1,534,369

5,930,151 5,062,249

Consumer Discretionary – 7.5%36,139 Gildan Activewear Inc., Sub. Voting 1,019,349 928,77245,983 RONA inc 896,599 709,51850,951 Le Chateau Inc. 587,006 695,48173,235 North West Company Fund, The 1,361,251 1,390,733

3,864,205 3,724,504

Consumer Staples – 4.9%49,208 Metro Inc., Sub. Voting 1,457,968 1,928,95310,675 Shoppers Drug Mart Corporation 465,685 483,684

1,923,653 2,412,637

Health Care – 2.0%72,600 CML Healthcare Income Fund 1,094,172 1,002,606

Financials – 23.1%79,915 Canadian Western Bank 1,967,267 1,750,13950,154 GMP Capital, Inc. 918,454 629,93469,030 Home Capital Group Inc., Class B, Sub. Voting 2,203,082 2,871,64860,263 Industrial Alliance Insurance and Financial 1,620,234 1,935,648

Services Inc.29,800 Laurentian Bank of Canada 1,148,447 1,269,77829,525 Power Financial Corporation 503,505 917,63763,375 TMX Group Inc. 2,239,415 2,098,346

10,600,404 11,473,130

Information Technology – 10.4%18,896 Open Text Corporation 766,570 807,04826,842 SXC Health Solutions Corporation 457,911 1,521,941

198,373 CGI Group Inc., Sub Voting 1,983,743 2,816,897

3,208,224 5,145,886

Total Equities 43,398,616 48,663,424


AverageCost ($)

FairValue ($)

Money Market Instruments – 1.2%620,000 Government of Canada Treasury Bills

0.19% to 0.20% due fromMar. 4, 2010 to Mar. 18, 2010 619,756 619,756



Net Assets – 100.0% 49,569,657




Energy 24.8 24.5Materials 15.3 12.2Industrials 10.2 13.8Consumer Discretionary 7.5 8.2Consumer Staples 4.9 5.2Health Care 2.0 3.2Financials 23.1 19.0Information Technology 10.4 11.2Money Market Instruments 1.2 2.5


Assets



(Level 2) ($)





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Pinnacle Canadian Mid Cap Equity Fund (Continued)

Portfolio Advisor: Montrusco Bolton Investments Inc.



A. Risk managementThe investment objective of Pinnacle Canadian Mid Cap Equity Fund (the “Fund”) is toachieve superior long term returns through capital growth by investing primarily instocks of small and medium capitalization Canadian corporations.









F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, S&P/TSX Completion Index as of December 31, 2009 with all other variables heldconstant, would result in an increase or decrease of approximately $ 9,616,513, 19.4% ofthe Fund’s Net Assets (December 31, 2008-$3,319,175, 9.1% of the Fund’s Net Assets).The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure and accordingly, the impact on Net Assets could be materiallydifferent.

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SPinnacle Canadian Mid Cap Equity Fund (Continued)


Pinnacle Canadian Growth Equity Fund


2009 2008

AssetsInvestments at fair value $119,189,433 $108,005,562Cash 39,306 –Subscriptions receivable 56,927 122,219Receivable for securities sold – 1,896,306Accrued investment income 218,374 338,681Prepaid expense – 2,872Accounts receivable 1,291 –

119,505,331 110,365,640

LiabilitiesBank overdraft – 975,056Payable for securities purchased – 151,651Redemptions payable 93,823 99,057Accrued expenses 75,819 91,433

169,642 1,317,197

Net Assets $119,335,689 $109,048,443





2009 2008

Investment IncomeDividends $ 2,555,821 $ 4,841,990Interest 404,515 859,284Securities lending 15,656 55,467Less: Foreign withholding taxes (1,419) (139)

2,974,573 5,756,602



Net expenses 251,993 264,722


Net realized gain (loss) on investments sold (33,399,342) (12,323,704)Net realized gain (loss) on foreign exchange (427) 1,405Transaction costs (Note 2) (794,526) (1,032,859)Change in unrealized appreciation (depreciation) of investments 66,757,425 (60,005,085)Change in unrealized appreciation (depreciation) of currency forwards – 38Change in unrealized appreciation (depreciation) of foreign exchange (48) (10)






2009 2008



35,285,662 (67,868,335)


Class A Units (2,751,265) (5,483,929)Class F Units* (462) –

(2,751,727) (5,483,929)


Class A Units 19,775,788 45,087,091Class F Units* 221,439

Reinvested distributionsClass A Units 2,712,660 5,465,029Class F Units* 462


(22,246,689) 5,602,377


10,287,246 (67,749,887)


$119,335,689 $109,048,443


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Portfolio Advisor: MFC Global Investment Management



AverageCost ($)

FairValue ($)


58,270 Cameco Corporation 1,632,293 1,967,77889,300 Canadian Natural Resources Limited 5,327,615 6,755,54555,360 Cenovus Energy Inc. 1,563,527 1,461,50445,910 Crescent Point Energy Corp 1,692,591 1,811,14955,360 EnCana Corporation 1,718,419 1,885,00855,460 Imperial Oil Ltd. 2,263,857 2,252,23140,300 Niko Resources Ltd. 3,095,571 3,953,83355,720 PetroBakken Energy Ltd. 1,786,436 1,796,970

201,520 Suncor Energy, Inc. 7,421,289 7,478,40793,540 Talisman Energy Inc. 1,408,673 1,841,803

27,910,271 31,204,228

Materials – 25.2%14,950 Agnico-Eagle Mines Limited 944,916 849,01121,660 Agrium Inc. 1,172,597 1,401,402

132,780 Barrick Gold Corporation 5,991,340 5,494,436194,530 Eldorado Gold Corporation 2,365,031 2,886,825152,550 Equinox Minerals Limited 554,336 616,30216,640 First Quantum Minerals Ltd. 1,161,802 1,334,52854,930 FNX Mining Company Inc. 551,343 632,244

109,620 Goldcorp, Inc. 4,062,727 4,532,78740,090 HudBay Minerals, Inc. 558,710 541,21518,740 Inmet Mining Corporation 1,027,533 1,189,05356,370 Kinross Gold Corporation 1,211,968 1,091,88710,880 Potash Corporation of Saskatchewan Inc. 1,193,486 1,241,51741,950 Quadra Mining Ltd. 593,651 608,275

113,390 Red Back Mining Inc. 1,603,024 1,683,842125,060 Sino-Forest Corporation 1,859,499 2,416,15978,770 Teck Cominco Limited, Class B, Sub. Voting 2,200,504 2,890,85949,530 Thompson Creek Metals Company, Inc. 543,854 609,219

27,596,321 30,019,561

Industrials – 7.7%260,070 Bombardier Inc., Class B 1,096,344 1,245,735130,090 CAE, Inc. 1,158,625 1,129,18161,690 Canadian National Railway Company 2,917,725 3,524,96746,050 SNC-Lavalin Group Inc. 2,185,246 2,483,01668,253 Westjet Airlines Ltd. 837,541 840,877

8,195,481 9,223,776

Consumer Discretionary – 5.0%30,750 Canadian Tire Corporation, Limited 1,779,392 1,760,43757,430 Gildan Activewear Inc., Sub. Voting 1,098,703 1,475,95185,510 Shaw Communications, Inc., Class B, Non-

Voting 1,612,351 1,853,00225,520 Thomson Reuters Corporation 871,503 865,128

5,361,949 5,954,518

Consumer Staples – 2.0%53,250 Shoppers Drug Mart Corporation 2,369,513 2,412,758

Health Care – 0.0%54,650 BioMS Medical Corp. Warrants $4.00 May 23,

2010* 22,953 –32,750 BioMS Medical Corp. Warrants $4.00 May 30,

2010* – –

22,953 –

Financials – 25.7%165,720 Bank of Nova Scotia, The 7,325,113 8,151,767128,020 Manulife Financial Corporation 2,851,854 2,474,62734,360 National Bank of Canada 2,046,476 2,060,22681,160 Power Financial Corporation 2,362,008 2,522,453

167,650 Royal Bank of Canada 7,576,805 9,447,07728,190 TMX Group Inc. 942,711 933,37176,940 Toronto-Dominion Bank, The 4,121,706 5,073,423

27,226,673 30,662,944


AverageCost ($)

FairValue ($)

Equities (cont’d)Financials (cont’d)Information Technology – 4.4%

73,430 Research In Motion Limited 5,327,397 5,215,733

Telecommunication Services – 2.6%96,270 Rogers Communications, Inc., Class B 2,901,076 3,147,066

Total Equities 106,911,634 117,840,584


0.24% to 0.25% due fromApr 29, 2010 to May 13, 2010 1,348,849 1,348,849



Net Assets – 100.0% 119,335,689





Energy 26.2 24.6Materials 25.2 15.0Industrials 7.7 6.5Consumer Discretionary 5.0 4.2Consumer Staples 2.0 2.8Health Care – 2.5Financials 25.7 32.9Information Technology 4.4 4.6Telecommunication Services 2.6 5.4Utilities – 0.5Money Market Instruments 1.1 –


Assets



(Level 2) ($)



Equities 117,840,584 – – 117,840,584Money Market Instruments – 1,348,849 – 1,348,849


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Portfolio Advisor: MFC Global Investment Management


Pinnacle Canadian Growth Equity Fund (Continued)


A. Risk managementThe investment objective of Pinnacle Canadian Growth Equity Fund (the “Fund”) is toachieve superior long term returns through capital growth by investing in stocks of largeand medium capitalization Canadian corporations.









F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, S&P/TSX Composite Index, as of December 31, 2009 with all other variables heldconstant, would result in an increase or decrease of approximately $ 25,299,166, 21.2%of the Fund’s Net Assets (December 31, 2008-$11,772,606, 10.8% of the Fund’s NetAssets). The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle Canadian Growth Equity Fund (Continued)


Pinnacle Canadian Small Cap Equity Fund


2009 2008

AssetsInvestments at fair value $85,565,926 $49,773,417Cash 12,622 71,037Subscriptions receivable 20,513 3,345Receivable for securities sold 22,147 181,384Accrued investment income 298,745 323,771Prepaid expense – 4,153Accounts receivable 1,301 –

85,921,254 50,357,107

LiabilitiesPayable for securities purchased 42,299 579Redemptions payable 63,779 103,125Accrued expenses 66,889 79,036

172,967 182,740

Net Assets $85,748,287 $50,174,367





2009 2008

Investment IncomeDividends $ 849,533 $ 1,144,638Interest 2,113,021 2,101,165Securities lending 6,977 4,702

2,969,531 3,250,505



Net expenses 234,523 231,616


Net realized gain (loss) on investments sold (115,384) 2,371,074Net realized gain (loss) on foreign exchange (5,786) 8,280Transaction costs (note 2) (78,435) (95,391)Change in unrealized appreciation (depreciation) of investments 26,356,844 (39,676,162)Change in unrealized appreciation (depreciation) of foreign exchange (243) 94



Increase (Decrease) in Net Assets from OperationsClass A Units $24,666,847 $(34,373,216)Class F Units* $ 60,361 $ –Class I Units** $ 4,164,796 $ –

Increase (Decrease) in Net Assets from operations per unitClass A Units $ 6.16 $ (8.05)Class F Units* $ 6.91 $ –Class I Units** $ 7.67 $ –


2009 2008



28,892,004 (34,373,216)


Class A Units (2,234,807) (3,067,312)Class F Units* (4,411) –Class I Units** (402,065) –

From capital gainsClass A Units – (4,203,507)Class F Units* – –Class I Units** – –

(2,641,283) (7,270,819)



Reinvested distributionsClass A Units 2,215,564 7,254,262Class F Units* 4,377 –Class I Units** 402,065 –

Payments on redemptionClass A Units (21,461,624) (38,838,505)Class F Units* (7,242) –Class I Units** (377,717) –

9,323,199 (10,723,996)

Increase (Decrease) in Net AssetsClass A Units 13,242,545 (52,368,031)Class F Units* 696,070 –Class I Units** 21,635,305 –

35,573,920 (52,368,031)


$ 85,748,287 $ 50,174,367



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AverageCost ($)

FairValue ($)


131,978 AltaGas Income Trust 2,767,859 2,477,22713,300 Canadian Energy Services & Technology

Corporation 133,000 143,319114,060 Canadian Energy Services LP 1,008,003 1,334,50246,486 Crescent Point Energy Corp 873,949 1,833,873

112,403 MAXIM Power Corp. 303,734 406,89981,457 Mullen Group Limited 1,528,530 1,331,822

479,074 ProspEx Resources Ltd. 1,093,044 579,67957,300 ShawCor Ltd., Sub. Voting 899,137 1,670,868

123,849 West Energy Ltd. 447,500 478,05738,400 Zargon Energy Trust 840,892 734,20860,224 Zargon Oil & Gas Ltd. 309,831 1,324,928

238,440 ZCL Composites Inc. 1,512,161 774,930

11,717,640 13,090,312

Materials – 8.7%115,300 Canam Group Inc. 959,462 812,865794,991 Neo Material Technologies, Inc. 1,975,994 3,617,20932,100 Omni-Lite Industries Canada Inc. 82,566 24,39643,728 Opta Minerals Inc. 168,438 56,846

120,695 Supremex Income Fund 1,097,830 293,289310,037 Winpak Ltd. 2,664,436 2,638,415

6,948,726 7,443,020

Industrials – 23.1%56,477 Bird Construction Income Fund 1,404,603 1,939,420

211,383 Contrans Group Inc. Cl. A 2,094,667 1,462,77042,246 Genivar Income Fund 530,125 1,142,754

105,386 Global Railway Industries Ltd. 344,956 107,49424,100 GLV, Inc., Sub. Voting 218,391 210,87571,376 IBI Income Fund 1,406,579 1,191,979

145,008 Marsulex Inc. 1,394,509 1,654,54198,100 Richelieu Hardware Ltd. 1,823,909 2,207,2503,515 Ritchie Bros. Auctioneers Incorporated 39,485 82,708

71,161 Russel Metals Inc. 832,186 1,255,992115,233 Stantec Inc. 1,976,341 3,480,037135,957 Transat A.T. Inc., Class B 2,485,793 2,853,73871,924 Uni-Select Inc. 1,688,465 2,194,401

16,240,009 19,783,959

Consumer Discretionary – 5.3%136,900 Automodular Corp. 264,807 61,605

4,800 McGraw-Hill Ryerson Ltd., The 167,190 211,296101,332 MTY Food Group Inc. 933,391 927,188332,730 New Flyer Industries Inc. 3,318,199 3,320,645

4,683,587 4,520,734

Consumer Staples – 1.6%45,100 Alliance Grain Traders Income Fund 872,363 1,348,490

Health Care – 3.9%59,400 Futuremed Healthcare Income Fund 575,190 576,774

142,474 Paladin Labs, Inc. 2,411,874 2,805,313

2,987,064 3,382,087

Financials – 29.2%42,682 Allied Properties Real Estate Investment Trust 675,364 821,629

169,168 Altus Group Income Fund 2,687,094 2,004,641130,797 Canadian Western Bank 1,503,651 2,864,45479,517 DirectCash Income Fund 1,163,167 1,252,39364,435 EGI Financial Holdings, Inc. 679,065 708,78595,122 Equitable Group Inc. 2,252,078 2,007,074

136,461 First National Financial Income Fund 1,601,909 2,572,2901,830 FirstService Corporation, Preferred 2,972 39,618

151,970 FirstService Corporation, Sub. Voting 2,906,622 3,042,439

Number ofShares/FaceValue ($) Issuer

AverageCost ($)

FairValue ($)

Equities (cont’d)Financials (cont’d)

68,786 Grey Horse Corporation 367,704 343,24299,018 Home Capital Group Inc., Class B, Sub. Voting 1,798,341 4,119,149

152,290 Morneau Sobeco Income Fund 1,562,215 1,489,396604,952 Parkbridge Lifestyles Communities Inc. 2,938,802 3,055,008563,564 Realex Properties Corporation 898,473 343,774373,937 Realex Properties Corporation Non-Voting 6,042 213,144283,360 TIO Networks Corp 176,028 175,683

21,219,527 25,052,719

Information Technology – 10.6%126,440 COM DEV International Ltd. 409,991 432,42587,390 Constellation Software Inc. 1,973,224 3,189,735

240,353 Critical Control Solutions Corp. 157,549 194,686428,206 Descartes Systems Group Inc., The 1,611,435 2,697,69859,323 Logibec Groupe Informatique Ltd. 1,114,309 1,180,52774,772 MOSAID Technologies Incorporated 1,185,463 1,421,416

6,451,971 9,116,487

Total Equities 71,120,887 83,737,808


0.19% to 0.25% due fromMar. 18, 2010 to Apr. 1, 2010 1,828,118 1,828,118



Net Assets – 100.0% 85,748,287




Energy 15.3 21.4Materials 8.7 5.5Industrials 23.1 29.3Consumer Discretionary 5.3 8.3Consumer Staples 1.6 –Health Care 3.9 0.8Financials 29.2 26.1Information Technology 10.6 6.1Utilities – 0.6Money Market Instruments 2.1 1.1


Assets



(Level 2) ($)



Equities 83,737,808 – – 83,737,808Money Market Instruments – 1,828,118 – 1,828,118


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Pinnacle Canadian Small Cap Equity Fund (Continued)

Portfolio Advisor: Mawer Investment Management Ltd.



A. Risk managementThe investment objective of Pinnacle Canadian Small Cap Equity Fund (the “Fund”) isto achieve superior long term returns through capital growth by investing primarily instocks of small and medium capitalization Canadian corporations.



C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Fund’s reporting currency, willfluctuate due to changes in exchange rates. The Fund’s financial instruments wereexposed to the following currency:December 31, 2009

CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 40,923 – 40,923 0.1

Total 40,923 – 40,923 0.1

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 537,298 – 537,298 1.1

Total 537,298 – 537,298 1.1

The amounts in the above tables are based on the fair value of the Fund’s financialinstruments. Other financial assets (including dividends and interest receivable andreceivables for investments sold) and financial liabilities that are denominated inforeign currencies do not expose the Fund to significant currency risk.

As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10%in relation to all currencies, with all other variables held constant, the Fund’s NetAssets would have decreased or increased, respectively by approximately $4,092, 0.0% ofthe Fund’s Net Assets (December 31, 2008-$53,730,0.1% of the Fund’s Net Assets). Inpractice, actual results may differ from this sensitivity analysis and the difference couldbe material.





F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, BMO Small Cap Weighted Index , as of December 31, 2009 with all othervariables held constant, would result in an increase or decrease of approximately$14,748,705, 17.2% of the Fund’s Net Assets (December 31, 2008-$4,037,978, 8.0% of theFund’s Net Assets). The Fund’s historical sensitivity measure may not be representativeof its future sensitivity measure, and accordingly, the impact on Net Assets could bematerially different.

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SPinnacle Canadian Small Cap Equity Fund (Continued)


Pinnacle American Value Equity Fund


2009 2008

AssetsInvestments at fair value $74,327,714 $51,732,590Cash 5,000,773 361,893Subscriptions receivable 20,191 15,417Accrued investment income 99,324 88,582Prepaid expense – 4,153Accounts receivable 1,293 –

79,449,295 52,202,635

LiabilitiesPayable for securities purchased 193,966 –Redemptions payable 31,074 24,932Accrued expenses 83,423 98,974

308,463 123,906

Net Assets $79,140,832 $52,078,729





2009 2008

Investment IncomeDividends $ 1,343,589 $ 1,493,830Interest 26,990 2,850Securities lending – 5,182Less: Foreign withholding taxes (183,899) (196,291)

1,186,680 1,305,571



Net expenses 241,824 247,563

Net investment income (loss) 944,856 1,058,008

Net realized gain (loss) on investments sold (2,874,110) (1,001,050)Net realized gain (loss) on foreign exchange (687,374) 350,937Transaction costs (Note 2) (52,105) (65,548)Change in unrealized appreciation (depreciation) of investments 8,922,228 (16,135,892)Change in unrealized appreciation (depreciation) of foreign exchange (69,292) 4,546






2009 2008



6,184,203 (15,788,999)


Class A Units (808,167) (1,053,667)Class F Units* (115) –Class I Units** (76,274) –

(884,556) (1,053,667)



Reinvested distributionsClass A Units 804,571 1,050,815Class F Units* 115 –Class I Units** 76,274 –


21,762,456 (6,516,749)

Increase (Decrease) in Net AssetsClass A Units (381,935) (23,359,415)Class F Units* 40,273 –Class I Units** 27,403,765 –

27,062,103 (23,359,415)


$ 79,140,832 $ 52,078,729



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Portfolio Advisor: Metropolitan West Capital Management, LLC



AverageCost ($)

FairValue ($)


36,900 ConocoPhillips 1,769,824 1,968,957100,370 Weatherford International Ltd. 1,742,794 1,880,048

3,512,618 3,849,005

Materials – 2.6%23,900 Air Products and Chemicals, Inc. 1,663,075 2,024,661

Industrials – 8.4%30,100 Boeing Company, The 1,552,211 1,702,75833,100 Deere & Company 1,460,434 1,870,04538,200 Northrop Grumman Corporation 2,525,715 2,229,29214,790 SPX Corporation 863,806 846,106

6,402,166 6,648,201

Consumer Discretionary – 8.7%60,000 Gentex Corporation 918,524 1,120,10572,200 Home Depot, Inc., The 1,923,157 2,182,25045,000 J.C. Penney Company, Inc. 1,214,809 1,250,94122,000 Polo Ralph Lauren Corporation 1,166,301 1,863,24475,300 Warner Music Group Corp. 1,602,037 443,377

6,824,828 6,859,917

Consumer Staples – 15.4%87,600 ConAgra Foods, Inc. 2,033,638 2,111,75920,600 Diageo PLC ADR 1,496,669 1,494,32748,500 Hershey Foods Corporation 2,008,940 1,814,89537,500 Kellogg Company 1,936,481 2,086,07967,100 L’Oreal SA ADR 1,460,181 1,553,70968,400 Safeway Inc. 2,019,909 1,523,00455,900 Sysco Corp. 1,482,817 1,631,703

12,438,635 12,215,476

Health Care – 7.1%35,900 Baxter International Inc. 1,687,266 2,203,20039,800 Eli Lilly and Company 2,105,820 1,484,75835,600 Hospira, Inc. 1,578,475 1,898,845

5,371,561 5,586,803

Financials – 15.2%27,100 Aflac, Inc. 1,298,432 1,310,84258,637 Banco Santander Central Hispano SA ADR 915,092 1,008,19287,743 Bank of America Corporation 2,089,772 1,381,99622,257 Bank of America Corporation 10% Preferred 358,495 347,06757,000 Charles Schwab Corporation, The 877,114 1,121,92556,500 JPMorgan Chase & Co. 2,642,044 2,462,30227,700 M&T Bank Corporation 1,421,778 1,937,807

293,000 Mitsubishi UFJ Financial Group, Inc. ADR 2,229,361 1,504,59179,000 Zions Bancorporation 2,384,717 1,060,042

14,216,805 12,134,764

Information Technology – 22.6%53,400 Adobe Systems Incorporated 1,500,980 2,054,10414,800 Apple Inc. 685,380 3,261,337

123,000 EMC Corporation 1,809,577 2,244,76018,900 International Business Machines Corporation 2,289,507 2,586,06052,400 Intuit Inc. 1,646,363 1,682,98673,300 Molex Incorporated 2,400,055 1,466,521

101,600 Oracle Corporation 1,630,196 2,607,58071,600 Texas Instruments Incorporated 1,959,624 1,949,201

13,921,682 17,852,549

Telecommunication Services – 1.9%62,600 Vodafone Group PLC ADR 1,746,435 1,511,052


AverageCost ($)

FairValue ($)

Equities (cont’d)Utilities – 7.1%

51,600 Dominion Resources, Inc. 2,380,548 2,100,35135,500 FPL Group, Inc. 1,986,375 1,959,97036,500 Questar Corporation 1,492,370 1,584,965

5,859,293 5,645,286


Other Assets, Less Liabilities – 6.1% 4,813,118

Net Assets – 100.0% 79,140,832

ADR – American Depository Receipt




Energy 4.9 4.9Materials 2.6 2.5Industrials 8.4 9.0Consumer Discretionary 8.7 11.6Consumer Staples 15.4 19.8Health Care 7.1 9.8Financials 15.2 15.0Information Technology 22.6 16.6Telecommunication Services 1.9 1.9Utilities 7.1 6.9Index Fund – 1.3


Assets



(Level 2) ($)



Equities 74,327,714 – – 74,327,714

Total Investments 74,327,714 – – 74,327,714

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Pinnacle American Value Equity Fund (Continued)

Portfolio Advisor: Metropolitan West Capital Management, LLC



A. Risk managementThe investment objective of Pinnacle American Value Equity Fund (the “Fund”) is toachieve superior long term returns through capital growth by investing primarily instocks of large capitalization U.S. corporations.




CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 79,328,487 – 79,328,487 100.2

Total 79,328,487 – 79,328,487 100.2

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 52,093,948 – 52,093,948 100.0

Total 52,093,948 – 52,093,948 100.0


As at December 31, 2009, if the Canadian dollar had strengthened or weakened by 10%in relation to all currencies, with all other variables held constant, the Fund’s NetAssets would have decreased or increased, respectively by approximately $7,932,849,10.0% of the Fund’s Net Assets (December 31, 2008-$5,209,395, 10.0% of the Fund’s NetAssets). In practice, actual results may differ from this sensitivity analysis and thedifference could be material.



Where the Fund invests in debt instruments this represents the main concentration ofcredit risk. The market value of debt instruments includes consideration of thecreditworthiness of the issuer, and accordingly, represents the maximum credit riskexposure to the Fund. Credit risk may also exist in relation to counterparties of foreigncurrency forward contracts.

Debt instruments, excluding cash and money market instruments but includingpreferred shares, held by the Fund have credit ratings as follows:








Unrated 100.0 0.4 – –

Total 100.0 0.4 – –


F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Russell 1000 Value Index, as of December 31, 2009 with all other variables heldconstant, would result in an increase or decrease of approximately $15,195,040, 19.2% ofthe Fund’s Net Assets (December 31, 2008-$5,224,992, 10% of the Fund’s Net Assets).The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle American Value Equity Fund (Continued)


Pinnacle American Mid Cap Value Equity Fund


2009 2008

AssetsInvestments at fair value $12,244,369 $12,992,964Cash 232,827 84,923Subscriptions receivable 30 920Receivable for securities sold – 364,925Accrued investment income 12,751 30,714Prepaid expense – 4,153Accounts receivable 6,393 2,787

12,496,370 13,481,386

LiabilitiesPayable for securities purchased 8,084 22,008Redemptions payable 4,647 –Accrued expenses 44,590 52,418

57,321 74,426

Net Assets $12,439,049 $13,406,960





2009 2008

Investment IncomeDividends $ 253,038 $ 353,635Interest 18,761 121,511Securities lending – 4,069Foreign withholding taxes (44,225) (62,770)

227,574 416,445





Net realized gain (loss) on investments sold (2,287,539) (3,940,684)Net realized gain (loss) on foreign exchange (76,796) (106,801)Transaction costs (Note 2) (63,551) (72,519)Change in unrealized appreciation (depreciation) of investments 3,390,889 (1,428,692)Change in unrealized appreciation (depreciation) of foreign exchange 1,218 (1,016)

Net gain (loss) on investments and transaction costs 964,221 (5,549,712)


Increase (Decrease) in Net Assets from OperationsClass A Units $ 1,123,879 $(5,220,373)Class F Units* $ 451 $ –



2009 2008


Increase (Decrease) in Net Assets from OperationsClass A Units 1,123,879 (5,220,373)Class F Units* 451 –

1,124,330 (5,220,373)



(158,081) (326,179)





(1,934,160) 2,808,016

Increase (Decrease) in Net AssetsClass A Units (979,873) (2,738,536)Class F Units* 11,962 –

(967,911) (2,738,536)


$12,439,049 $13,406,960


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Portfolio Advisor: Integrity Asset Management, LLC



AverageCost ($)

FairValue ($)


2,257 Chesapeake Energy Corporation 57,171 61,0423,709 Continental Resources, Inc. 175,981 166,0625,098 Hornbeck Offshore Services, Inc. 193,710 124,1238,300 Key Energy Services, Inc. 69,549 76,3021,287 Newfield Exploration Company 39,586 64,9185,127 Spectra Energy Corporation 92,183 109,9764,756 Weatherford International Ltd. 103,085 89,0868,844 Willbros Group, Inc. 219,296 155,669

950,561 847,178

Materials – 10.0%2,238 Airgas, Inc. 106,886 111,3204,454 AK Steel Holding Corporation 95,078 99,4533,789 Albemarle Corporation 128,574 144,1243,938 Ashland Inc. 145,224 162,9714,478 Celanese Corporation, Series A 67,282 150,2411,365 CF Industries Holdings Inc. 85,633 129,5962,053 FMC Corporation 103,144 119,724

17,255 Mueller Water Products, Inc. Series A 83,382 93,4796,569 Steel Dynamics, Inc. 85,591 121,6715,220 Temple Inland Inc. 90,839 115,247

991,633 1,247,826

Industrials – 10.8%6,940 Actuant Corporation 99,838 134,4943,950 Baldor Electric Company 117,235 116,0435,062 BE Aerospace, Inc. 83,293 123,9885,874 Continental Airlines, Inc., Class B 96,217 110,0882,232 General Cable Corporation 92,270 68,6762,263 Genuine Parts Company 97,976 89,8422,871 Granite Construction Incorporated 116,940 101,069

12,804 Hexcel Corporation 147,682 173,4142,895 J.B. Hunt Transport Services, Inc. 99,017 97,7053,930 Molex Inc. 85,911 88,5751,720 Parker-Hannifin Corporation 100,511 96,8514,184 Ryland Group, Inc., The 89,707 86,2041,240 Triumph Group, Inc. 63,153 62,573

1,289,750 1,349,522

Consumer Discretionary – 12.7%9,040 CBS Corporation, Class B 103,840 132,8367,470 D.R. Horton Inc. 92,848 84,9222,430 Dollar General Corp. 57,257 56,9532,581 Eaton Corporation 144,011 171,7327,092 Foot Locker Incorporated 68,290 82,6275,998 Gannett Co., Inc. 75,361 93,1543,080 Genesco Inc. 80,651 88,4553,141 J.C. Penney Company, Inc. 117,850 87,3163,792 Jones Apparel Group, Inc. 28,697 63,6125,593 Macy’s, Inc. 117,078 98,0378,407 MGM Mirage Inc. 95,410 80,1874,046 Penn National Gaming Inc. 140,126 114,8852,268 Phillips-Van Heusen Corporation 91,112 96,4923,321 Starwood Hotels & Resorts Worldwide, Inc. 81,213 126,9834,912 Tenneco Inc. 61,449 90,9804,247 TRW Automotive Holdings Corp. 88,578 105,935

1,443,771 1,575,106

Consumer Staples – 4.0%6,129 Dean Foods Company 139,784 115,5733,217 Dr. Pepper Snapple Group, Inc. 94,426 95,1141,464 J.M. Smucker Company, The 78,975 94,547


AverageCost ($)

FairValue ($)

Equities (cont’d)Consumer Staples (cont’d)

1,424 Lorillard, Inc. 94,463 119,4866,045 Tyson Foods, Inc. 93,665 77,573

501,313 502,293

Health Care – 4.7%3,782 AmerisourceBergen Corporation 82,149 102,9992,720 CIGNA Corporation 68,910 100,3332,320 Kinetic Concepts, Inc. 88,729 91,353

14,169 King Pharmaceuticals, Inc. 157,355 181,6773,444 UnitedHealth Group Incorporated, Class B 105,612 109,858

502,755 586,220

Financials – 22.5%1,634 Affiliated Managers Group, Inc. 126,248 115,0792,542 Ameriprise Financial, Inc. 104,587 103,2052,566 Aon Corporation 112,173 102,8911,870 Arch Capital Group Ltd. 140,321 139,9141,000 Associated Banc-Corp 11,541 11,5154,118 BB&T Corporation 88,973 109,2647,510 Colonial Properties Trust 81,680 92,0536,128 Developers Diversified Realty Corp. 53,868 59,2192,054 Equity Residential 77,837 72,5651,370 Federal Realty Investment Trust 86,625 96,7725,929 Fidelity National Financial, Inc. 104,043 83,463

10,080 Fifth Third Bancorp 103,687 102,7862,649 FirstMerit Corporation 54,345 55,797

10,308 Genworth Financial Inc. 138,005 122,3602,443 Hancock Holding Company 97,391 111,8843,053 Hanover Insurance Group Inc. 153,920 141,8642,590 Health Care Real Estate Investment Trust Inc. 131,723 120,0251,760 Highwoods Properties, Inc. 55,399 61,2952,366 KBW Inc 69,159 67,628

15,200 KeyCorp 90,373 88,2284,970 Knight Capital Group, Inc. 97,087 79,9954,612 Lincoln National Corporation 70,157 120,008

11,670 National Penn Bancshares, Inc. 75,001 70,66710,320 Sunstone Hotel Investors, Inc. 77,139 95,52017,563 Synovus Financial Corp. 37,451 37,4715,444 UnumProvident Corporation 129,705 111,082

12,170 U–Store-It Trust 76,747 93,1693,564 Washington Real Estate Investment Trust 126,432 102,690

14,460 Whitney Holding Corporation 120,197 137,7706,605 Zions Bancorporation 206,462 88,628

2,898,276 2,794,807

Information Technology – 13.5%3,033 Arrow Electronics Inc. 104,174 93,925

16,065 Atmel Corporation 77,323 77,4552,101 CommScope, Inc. 52,093 58,2952,160 Comtech Telecommunications Corp. 78,203 79,1112,462 Diebold Inc. 87,123 73,255

21,090 Entegris Inc. 91,687 116,24014,753 Fairchild Semiconductor International, Inc. 84,328 154,14021,870 Integrated Device Technology, Inc. 160,989 147,9874,730 Jabil Circuit, Inc. 42,499 85,9272,911 JDA Software Gorup, Inc. 72,976 77,5435,402 MKS Instruments, Inc. 92,672 98,1357,857 Parametric Technology Corporation 124,024 134,2708,532 PerkinElmer Inc. 192,206 183,7293,351 Plexus Corp. 78,693 99,8123,426 Progress Software Corporation 84,042 104,6625,296 Seagate Technology 63,142 100,751

1,486,174 1,685,237

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Pinnacle American Mid Cap Value Equity Fund (Continued)




AverageCost ($)

FairValue ($)

Equities (cont’d)Telecommunication Services – 1.2%

3,815 CenturyTel, Inc. 139,624 144,475

Utilities – 9.3%4,983 Edison International 221,007 181,2556,685 MDU Resources Group, Inc. 138,552 164,9994,733 Northeast Utilities 126,613 127,661

12,998 RRI Energy, Inc. 92,761 77,7572,509 Sempra Energy 144,111 146,8944,589 UGI Corporation 130,724 116,0983,207 Wisconsin Energy Corporation 155,364 167,1327,661 Xcel Energy, Inc. 166,912 170,020

1,176,044 1,151,816

Total Equities 11,379,901 11,884,480

Money Market Instruments – 2.9%344,112 State Street Canada Trust Company Canada U.S.

Dollar Call Deposit0.01% due Dec. 31, 2030 365,581 359,889



Net Assets – 100.0% 12,439,049




Energy 6.8 2.5Materials 10.0 6.5Industrials 10.8 10.4Consumer Discretionary 12.7 7.1Consumer Staples 4.0 7.6Health Care 4.7 6.7Financials 22.5 30.4Information Technology 13.5 12.5Telecommunication Services 1.2 1.8Utilities 9.3 11.1Money Market Instruments 2.9 0.4


Assets



(Level 2) ($)





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A. Risk managementThe investment objective of Pinnacle American Mid Cap Value Equity Fund (the “Fund”)is to achieve superior long term returns through capital growth by investing primarily instocks of small and medium capitalization companies located in the U.S.


B. Liquidity riskThe Fund’s exposure to liquidity risk is derived primarily from the daily cash redemptionof units. The Fund primarily invests in securities that are traded in active markets andcan be readily disposed. In addition, the Fund aims to retain sufficient cash and moneymarket instrument positions to maintain liquidity, and has the ability to borrow up to5% of its Net Asset Value for the purpose of funding redemptions. The Fund may, fromtime to time, enter into over-the-counter derivative contracts or invest in securities thatare not traded in an active market may be illiquid. Illiquid securities are identified inthe Statement of Investment Portfolio. All liabilities are short term in nature.


CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 12,245,411 – 12,245,411 98.4

Total 12,245,411 – 12,245,411 98.4

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 12,899,989 – 12,899,989 96.2

Total 12,899,989 – 12,899,989 96.2







F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Russell Mid Cap Value Index, as of December 31, 2009 with all other variablesheld constant, would result in an increase or decrease of approximately $2,363,419,19.0% of the Fund’s Net Assets (December 31, 2008-$1,242,713, 9.3% of the Fund’s NetAssets). The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle American Large Cap Growth Equity Fund


2009 2008

AssetsInvestments at fair value $42,244,597 $48,629,449Cash 281,875 –Receivable for currency spot and forward contracts – 171Subscriptions receivable 15,246 6,748Receivable for securities sold 12,967 525,141Accrued investment income 30,201 72,432Prepaid expense – 2,872Accounts receivable 5,723 –

42,590,609 49,236,813

LiabilitiesBank overdraft – 144,897Payable for securities purchased 15,688 –Redemptions payable 36,745 21,200Accrued expenses 85,890 95,898

138,323 261,995

Net Assets $42,452,286 $48,974,818





2009 2008

Investment IncomeDividends $ 631,066 $ 798,732Interest 8,042 6,816Securities lending – 5,149Less: Foreign withholding taxes (92,875) (112,984)

546,233 697,713



Net expenses 218,792 281,767


Net realized gain (loss) on investments sold (2,485,111) (7,220,959)Net realized gain (loss) on foreign exchange (76,678) 919Transaction costs (note 2) (65,323) (65,214)Change in unrealized appreciation (depreciation) of investments 7,846,400 (8,686,014)Change in unrealized appreciation (depreciation) of currency forwards (171) 171Change in unrealized appreciation (depreciation) of foreign exchange (4,481) 3,148






2009 2008



5,542,077 (15,552,003)



(328,881) (390,535)





(11,735,728) (7,612,196)


(6,522,532) (23,554,734)


$ 42,452,286 $ 48,974,818


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Portfolio Advisor: American Century Investment Management, Inc.


Statement of Investment PortfolioAs at December 31, 2009Numbers ofShares Issuer

AverageCost ($)

FairValue ($)


2,100 Apache Corporation 187,979 226,5913,100 EOG Resources, Inc. 297,173 315,4602,800 Exxon Mobil Corporation 249,695 199,4814,600 Occidental Petroleum Corporation 356,980 390,9827,600 Schlumberger Limited 521,447 517,365

1,613,274 1,649,879

Materials – 2.4%4,600 Airgas, Inc. 238,308 228,8079,816 Celanese Corporation, Series A 182,231 329,3352,100 Freeport-McMoRan Copper & Gold Inc.,

Class B 162,395 176,3406,000 Newmont Mining Corporation 286,400 296,875

869,334 1,031,357

Industrials – 7.1%7,400 3M Company 497,472 639,1882,300 Caterpillar Inc. 143,574 137,0877,400 Honeywell International Inc. 417,614 303,225

11,200 Illinois Tool Works Inc. 471,548 562,0157,322 Rockwell Automation Inc. 334,688 359,7596,600 Union Pacific Corporation 469,244 440,6639,500 United Parcel Service, Inc., Class B 580,055 569,507

2,914,195 3,011,444

Consumer Discretionary – 14.2%7,900 Abercrombie & Fitch Co. 285,431 287,4422,100 Amazon.com, Inc. 258,035 295,444

15,200 BorgWagner, Inc. 580,686 528,09611,600 Chico’s FAS Inc. 114,174 170,4531,700 Chipotle Mexican Grill, Inc. 164,049 156,5845,000 Eaton Corporation 320,847 332,685

12,600 Ford Motor Company 128,358 131,51319,500 Home Depot, Inc., The 577,501 589,3896,100 J. Crew Group, Inc. 102,876 284,9176,200 Kohl’s Corporation 318,462 349,6972,500 Polo Ralph Lauren Corporation 123,390 211,7326,700 Scripps Networks Interactive Inc. 274,328 290,7988,968 Starwood Hotels & Resorts Worldwide, Inc. 272,576 342,903

11,400 Target Corporation 534,998 576,46218,100 Wal-Mart Stores, Inc. 1,017,885 1,011,4245,400 Whirlpool Corporation 312,941 455,196

5,386,537 6,014,735

Consumer Staples – 14.4%15,500 Archer-Daniels-Midland Company 491,719 507,55618,800 Coca–Cola Company, The 1,054,718 1,120,1434,000 Colgate-Palmolive Company 327,574 343,5838,300 General Mills, Inc. 524,668 614,670

12,910 Kellogg Company 685,875 718,1675,000 Mead Johnson Nutrition Company 185,921 228,204

11,700 PepsiCo, Inc. 785,042 743,60916,900 Procter & Gamble Company, The 1,090,313 1,071,09719,600 Walgreen Co. 716,599 751,891

5,862,429 6,098,920

Health Care – 15.9%21,900 Abbott Laboratories 1,282,650 1,235,6774,300 Alexion Pharmaceuticals Inc. 161,582 219,3719,600 AmerisourceBergen Corporation 264,831 261,446

13,400 Amgen Inc. 821,106 792,7949,997 Baxter International Inc. 594,115 613,5214,001 Becton, Dickinson and Company 306,890 329,9856,500 Covidien PLC 255,292 325,4904,000 Edwards Lifesciences Corporation 294,231 362,8689,500 Express Scripts, Inc. 682,408 858,931

Numbers ofShares Issuer

AverageCost ($)

FairValue ($)

Equities (cont’d)Health Care (cont’d)

2,700 Gen-Probe Incorporated 154,059 121,1138,500 Gilead Sciences, Inc. 425,577 384,658

11,600 Johnson & Johnson 751,759 780,4433,800 Novo Nordisk A/S, Class B 233,075 254,2825,300 Talecris Biotherapeutics Holdings Corporation 116,196 122,9992,200 Vertex Pharmaceuticals Inc. 74,281 98,569

6,418,052 6,762,147

Financials – 5.8%11,400 Aflac, Inc. 406,544 551,42414,900 American Express Company 445,693 630,96217,800 Charles Schwab Corporation, The 349,893 350,3562,400 Goldman Sachs Group, Inc., The 391,756 423,143

17,900 Wells Fargo & Company 512,313 504,336

2,106,199 2,460,221

Information Technology – 34.5%9,111 Adobe Systems Incorporated 323,596 350,4676,500 Apple Inc. 791,871 1,432,344

11,000 Arris Group Inc. 150,900 131,4957,300 Broadcom Corporation 206,405 239,959

41,300 Cisco Systems, Inc. 1,033,357 1,034,0553,800 Cree, Inc. 165,139 223,908

26,200 Dell Inc. 428,472 392,93412,400 EMC Corporation 192,356 226,3016,800 F5 Networks, Inc. 235,347 376,3552,600 Google Inc. 1,265,165 1,685,856

21,500 Hewlett-Packard Company 1,037,897 1,157,3432,900 International Business Machines Corporation 329,230 396,803

26,000 Jabil Circuit, Inc. 386,104 472,3274,600 Lexmark International Inc. 130,880 124,987

19,500 Linear Technology Corporation 562,737 622,83510,200 Marvell Technology Group Ltd. 204,466 221,35464,336 Microsoft Corporation 1,793,160 2,050,87116,900 NetApp, Inc. 430,524 607,1329,000 NVIDIA Corporation 144,398 175,640

28,200 Oracle Corporation 622,807 723,7584,300 Palm, Inc. 73,443 45,0628,300 Qlogic Corp. 132,519 163,715

16,400 QUALCOMM Incorporated 734,252 793,4499,300 Rockwell Collins, Inc. 467,514 537,8702,100 Salesforce.com, Inc. 105,759 161,9105,700 Thermo Electron Corp. 288,621 283,998

12,236,919 14,632,728

Telecommunication Services – 1.1%10,800 American Tower Corporation 425,217 487,387

Utilities – 0.2%1,900 Southwestern Energy Company 98,072 95,779



Net Assets – 100.0% 42,452,286

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Pinnacle American Large Cap Growth Equity Fund (Continued)






Energy 3.9 7.4Materials 2.4 3.4Industrials 7.1 9.5Consumer Discretionary 14.2 15.8Consumer Staples 14.4 10.6Health Care 15.9 15.5Financials 5.8 5.4Information Technology 34.5 26.9Telecommunication Services 1.1 2.3Utilities 0.2 2.5


Assets



(Level 2) ($)



Equities 41,990,315 254,282 – 42,244,597


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A. Risk managementThe investment objective of Pinnacle American Large Cap Growth Equity Fund (the“Fund”) is to achieve superior long term returns through capital growth by investingprimarily in large capitalization stocks of U.S. corporations.




CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 42,272,149 – 42,272,149 99.6

Danish Krone 254,282 – 254,282 0.6

Total 42,526,431 – 42,526,431 100.2

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



U.S. Dollar 47,256,704 – 47,256,704 96.5

Swiss Franc 618,076 – 618,076 1.3

Danish Krone 578,433 – 578,433 1.2

Total 48,453,213 – 48,453,213 99.0




D. Interest rate riskInterest rate risk arises from interest-bearing financial instruments such as bonds. TheFund is exposed to the risk that the value of interest-bearing financial instruments willfluctuate due to changes in the prevailing levels of market interest rates. As atDecember 31, 2009, the majority of the Fund’s financial assets and liabilities are non-interest bearing, accordingly, the Fund did not have a significant exposure to interestrate risk.




F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Russell 1000 Growth Index, as of December 31, 2009 with all other variables heldconstant, would result in an increase or decrease of approximately $8,405,553, 19.8% ofthe Fund’s Net Assets (December 31, 2008-$4,911,574, 10.0% of the Fund’s Net Assets).The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle American Mid Cap Growth Equity Fund


2009 2008

AssetsInvestments at fair value $11,252,625 $14,162,430Cash 247,091 108,757Subscriptions receivable 4,130 1,566Receivable for securities sold 271,412 562,897Accrued investment income 1,565 8,991Prepaid expense – 4,152Accounts receivable 9,531 4,010

11,786,354 14,852,803

LiabilitiesPayable for securities purchased 233,545 120,809Redemptions payable 7,499 445Accrued expenses 79,839 89,049

320,883 210,303

Net Assets $11,465,471 $14,642,500


Units outstandingClass A Units 798,267 1,306,553Class F Units 1,531 –



2009 2008

Investment IncomeDividends $ 51,808 $ 94,911Interest 797 119,927Securities lending – 28,772Less: Foreign withholding taxes (7,324) (8,023)

45,281 235,587




Net investment income (loss) (19,794) 125,283

Net realized gain (loss) on investments sold (171,628) (2,303,319)Net realized gain (loss) on foreign exchange (35,331) (33,402)Transaction costs (note 2) (30,877) (35,982)Change in unrealized appreciation (depreciation) of investments 3,239,627 (5,520,249)Change in unrealized appreciation (depreciation) of foreign exchange (2,341) 561





Statement of Changes in Net AssetsFor the periods December 31,

2009 2008

Net Assets – Beginning of PeriodClass A Units $14,642,500 $ 24,649,007


2,979,656 (7,767,108)


Class A Units – (160,725)Class F Units* – –

– (160,725)



Reinvested distributionsClass A Units – 160,636Class F Units* – –


(6,156,685) (2,078,674)


(3,177,029) (10,006,507)


$11,465,471 $ 14,642,500


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Portfolio Advisor: TCW Investment Management Company




AverageCost ($)

FairValue ($)


3,100 Contango Oil & Gas Company 157,139 152,3802,100 Core Laboratories NV 210,113 259,4255,050 National-Oilwell Varco Inc. 299,801 232,8634,500 Oceaneering International, Inc. 237,161 275,4146,500 Smith International, Inc. 259,187 184,363

1,163,401 1,104,445

Materials – 1.4%1,750 CF Industries Holdings Inc. 142,044 166,149

Industrials – 28.6%4,450 Aerovironment Inc. 127,642 135,3393,750 C.H. Robinson Worldwide, Inc. 210,559 230,3352,350 Capella Education Company 141,521 185,0684,025 Clean Harbors, Inc. 203,875 250,7634,450 Cummins Inc. 214,689 213,3877,300 Education Management Corporation 164,035 167,5826,150 Expeditors International of Washington, Inc. 234,876 223,3836,270 K12 Inc. 145,564 132,9207,900 Kennametal Inc. 212,568 214,1579,150 Quanta Services, Inc. 202,213 199,4299,750 Resources Connection Incorporated 250,449 216,3815,250 Robert Half International Inc. 139,785 146,7675,350 Rockwell Automation Inc. 163,338 262,867

10,000 Spirit Aerosystems Holdings Inc. 277,451 207,4971,510 Strayer Education, Inc. 195,414 335,5713,100 Ultra Petroleum Corp. 149,907 161,653

3,033,886 3,283,099

Consumer Discretionary – 5.3%770 Chipotle Mexican Grill, Inc. 52,874 70,923

1,350 Ctrip.com International Ltd. ADR 57,132 101,3602,800 DreamWorks Animation SKG, Inc. 82,398 116,9592,104 Mercadolibre Inc. 63,153 114,1162,600 Wabtec Corporation, 96,035 111,0531,600 Wynn Resorts, Ltd. 66,555 97,440

418,147 611,851

Consumer Staples – 2.1%5,856 Hansen Natural Corporation 163,959 235,181

Health Care – 14.1%11,450 Amylin Pharmaceuticals Inc. 164,172 169,925

3,850 Genzyme Corporation 285,246 197,3407,450 Human Genome Sciences Inc. 44,552 238,1893,950 InterMune Inc. 70,745 53,8691,080 Intuitive Surgical, Inc. 131,224 342,6054,050 Masimo Corporation 143,854 128,8501,550 Medication Inc. 37,880 61,033

11,500 Mylan Laboratories Inc. 129,752 221,6635,000 Thoratec Corporation 111,187 140,7713,300 Xenoport Inc. 81,348 63,953

1,199,960 1,618,198

Financials – 10.8%4,275 ACE Limited 202,745 225,339

12,016 China Real Estate Information Corp. ADR 176,024 137,3571,400 IntercontinentalExchange Inc. 188,093 164,2244,586 MSCI Inc. 113,124 152,5219,350 Northwest Bancshares, Inc. 111,795 110,2069,550 People’s United Financial Inc. 196,208 166,7976,600 Signature Bank 214,029 220,1932,560 Tower Group, Inc. 73,040 62,597

1,275,058 1,239,234


AverageCost ($)

FairValue ($)

Equities (cont’d)Information Technology – 21.5%

9,400 Akamai Technologies, Inc. 189,012 248,9212,400 Alliance Data Systems Corporation 95,667 162,1243,867 Ansys Inc. 116,889 175,9279,940 Avago Technologies Ltd. 176,986 189,619

450 Baidu.com, Inc. 74,574 193,5109,163 Cavium Networks Inc. 202,816 228,2705,150 Digital River, Inc. 200,724 145,372

10,000 Electronic Arts Inc. 343,836 185,6384,500 Longtop Finlancia Technologies Limited 143,753 174,2282,800 Perfect World Co Limited ADR 136,980 115,4954,900 Salesforce.com, Inc. 126,571 377,7905,952 VMware Inc. 284,554 263,313

2,092,362 2,460,207

Utilities – 1.4%1,100 First Solar, Inc. 149,026 155,769

Total Equities 9,637,843 10,874,133

Money Market Instruments – 3.3%361,898 State Street Canada Trust Company Canada

U.S. Dollar Call Deposit0.01% due Jan. 4, 2010 380,122 378,492



Net Assets – 100.0% 11,465,471




Energy 9.6 7.9Materials 1.4 –Industrials 28.6 26.6Consumer Discretionary 5.3 5.6Consumer Staples 2.1 3.3Health Care 14.1 19.2Financials 10.8 12.2Information Technology 21.5 20.3Telecommunication Services – 1.6Utilities 1.4 –Money Market Instruments 3.3 –


Assets

Quoted prices inactive markets for

identical assets(Level 1) ($)

Significant otherObservable inputs

(Level 2) ($)





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Pinnacle American Mid Cap Growth Equity Fund (Continued)

Portfolio Advisor: TCW Investment Management Company



A. Risk managementThe investment objective of Pinnacle American Mid Cap Growth Equity Fund (the“Fund”) is to achieve superior long term returns through capital growth by investingprimarily in stocks of small and medium capitalization companies traded on U.S. stockexchanges.




CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency

Exposure ($)

Percentageof Net

Assets (%)

U.S. Dollar 11,265,667 – 11,265,667 98.3

Total 11,265,667 – 11,265,667 98.3

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency

Exposure ($)

Percentageof Net

Assets (%)

U.S. Dollar 14,101,280 – 14,101,280 96.3

Total 14,101,280 – 14,101,280 96.3








F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Russell Mid Cap Growth Index, as of December 31, 2009 with all other variablesheld constant, would result in an increase or decrease of approximately $2,430,680,21.2% of the Fund’s Net Assets (December 31, 2008-$1,543,705, 10.5% of the Fund’s NetAssets). The Fund’s historical sensitivity measure may not be representative of its futuresensitivity measure, and accordingly, the impact on Net Assets could be materiallydifferent.

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Pinnacle American Mid Cap Growth Equity Fund (Continued)


Pinnacle International Equity Fund


2009 2008

AssetsInvestments at fair value $133,666,667 $ 76,243,544Cash 11,921,487 –Subscriptions receivable 27,739 21,181Receivable for securities sold – 69,676,429Accrued investment income 189,077 238,004Prepaid expense – 4,153Accounts receivable 1,294 –

145,806,264 146,183,311

LiabilitiesBank overdraft – 329,465Payable for currency spot and forward contracts 8,489 61,010Payable for securities purchased 3,193,744 64,923,817Redemptions payable 62,376 52,445Accrued expenses 113,931 133,836

3,378,540 65,500,573

Net Assets $142,427,724 $ 80,682,738

Net Assets per classClass A Units $ 71,844,216 $ 80,682,738Class F Units $ 62,211 $ –Class I Units $ 70,521,297 $ –




2009 2008


3,518,877 3,154,650



Net expenses 393,026 388,309


Net realized gain (loss) on investments sold (2,885,983) (39,596,530)Net realized gain (loss) on foreign exchange (279,002) 29,376Transaction costs (note 2) (246,546) (353,028)Change in unrealized appreciation (depreciation) of investments 11,784,986 4,620,854Change in unrealized appreciation (depreciation) of currency spots 52,521 (64,973)Change in unrealized appreciation (depreciation) of foreign exchange 7,309 17,105






2009 2008



11,559,136 (32,580,855)


Class A Units (2,301,901) (3,111,353)Class F Units* (643) –Class I Units** (785,970) –

(3,088,514) (3,111,353)



Reinvested distributionsClass A Units 2,285,802 3,104,613Class F Units* 643 –Class I Units** 785,970 –

Payments on redemptionClass A Units (24,279,874) (25,891,020)Class F Units* (13,086) –Class I Units** (1,021,785) –

53,274,364 1,127,928


61,744,986 (34,564,280)


$142,427,724 $ 80,682,738



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Portfolio Advisor: Thornburg Investment Management, Inc.


Statement of Investment Portfolioas at December 31, 2009Number ofShares Issuer

AverageCost ($)

FairValue ($)

Equities – 93.8%Australia – 2.2%

78,034 BHP Billiton Limited 2,622,477 3,125,226

Brazil – 0.9%24,942 Petroleo Brasileiro SA ADR 1,158,983 1,242,718

China – 1.9%2,100 Baidu.com, Inc. 312,197 903,046

2,144,000 Industrial and Commercial Bank of China 1,958,381 1,840,159

2,270,578 2,743,205

Denmark – 4.1%52,400 Novo Nordisk A/S, Class B 3,356,633 3,506,42135,800 Vestas Wind Systems A/S 2,611,733 2,290,937

5,968,366 5,797,358

France – 11.7%17,899 Air Liquide SA 1,971,666 2,209,73498,100 AXA SA 2,884,216 2,426,46532,800 BNP Paribas 1,678,049 2,707,04345,400 Dassault Systemes SA 2,790,990 2,702,62636,238 Lafarge SA 3,472,947 3,116,72229,700 LVMH Moet Hennessy Louis Vuitton SA 2,539,181 3,487,681

15,337,049 16,650,271

Germany – 7.9%53,700 Deutsche Bank AG 4,024,479 3,958,46230,200 E.ON AG 1,384,329 1,318,58644,500 Fresenius Medical Care AG & Co. KGaA 2,210,811 2,464,22671,300 SAP AG 3,226,922 3,516,973

10,846,541 11,258,247

Greece – 2.4%44,600 Coca–Cola Hellenic Bottling Company SA 680,160 1,062,66089,244 National Bank of Greece SA 2,140,009 2,379,976

2,820,169 3,442,636

Hong Kong – 4.0%6,500 China Mobile (Hong Kong) Limited 63,632 63,365

775,053 CNOOC Limited 1,143,294 1,259,900362,000 Hang Lung Properties Ltd. 1,012,522 1,479,168161,200 Hong Kong Exchanges & Clearing Limited 2,198,044 3,001,325

4,417,492 5,803,758

Ireland – 0.9%26,900 Covidien PLC 1,215,798 1,347,026

Israel – 2.4%58,900 Teva Pharmaceutical Industries Ltd. ADR 3,188,025 3,460,720

Italy – 1.2%358,780 Intesa Sanpaolo 1,638,036 1,681,267

Japan – 9.4%20,616 Fanuc Ltd. 1,786,396 2,004,879

166,592 Komatsu Ltd. 2,986,094 3,632,355494,300 Mitsubishi UFJ Financial Group, Inc. 3,415,249 2,531,152

4,500 Nintendo Co., Ltd. 1,938,246 1,115,71194,700 Toyota Motor Corporation 3,928,945 4,161,334

14,054,930 13,445,431


AverageCost ($)

FairValue ($)

Equities (cont’d)Korea – 0.8%

10,300 Hyundai Motor Co., Ltd. 986,645 1,112,041

Mexico – 1.4%420,300 Wal-Mart de Mexico SA de CV, Series V 1,400,209 1,955,589

Netherlands – 1.0%133,900 ING Groep NV 1,400,382 1,353,784

Spain – 2.2%105,600 Telefonica SA 2,903,831 3,078,183

Sweden – 1.7%42,900 Hennes & Mauritz AB, Class B 2,212,319 2,482,821

Switzerland – 8.5%37,720 Julius Baer Group Ltd. 1,560,211 1,377,79567,700 Logitech International SA 1,285,106 1,218,03164,600 Nestlé SA 3,109,365 3,282,34769,000 Novartis AG 3,806,670 3,931,63712,800 Roche Holding AG 2,380,368 2,277,325

12,141,720 12,087,135

Taiwan – 0.5%59,800 Taiwan Semiconductor Manufacturing

Company Limited ADR 665,046 714,853

United Kingdom – 24.9%1,032,800 ARM Holdings PLC 1,627,851 3,088,688

289,995 BP PLC 2,943,206 2,933,18632,000 BP PLC ADR 1,951,434 1,940,09482,124 British American Tobacco PLC 2,680,004 2,786,303

249,181 British Sky Broadcasting Group PLC 2,270,606 2,347,591128,090 Cairn Energy PLC 674,319 713,91280,900 Carnival PLC 2,225,847 2,889,284

833,439 Kingfisher PLC 2,949,503 3,195,204131,858 Pearson PLC 1,718,811 1,982,45354,500 Reckitt Benckiser Group PLC 2,604,953 3,088,07477,600 SABMiller PLC 1,718,221 2,379,918

145,465 Smith & Nephew PLC 1,196,752 1,562,135114,086 Standard Chartered PLC 2,012,963 2,988,002491,100 Tesco PLC 3,590,397 3,528,966

30,164,867 35,423,810

United States – 3.8%60,500 Amdocs Ltd. 1,357,198 1,805,20537,600 Schlumberger Limited 2,068,130 2,559,5978,000 Synthes, Inc. 947,043 1,095,786

4,372,371 5,460,588


Currency Spot Contracts – 0.0% (8,489)Other Assets, Less Liabilities – 6.2% 8,769,546

Net Assets – 100.0% 142,427,724

ADR – American Depository Receipt




Jan. 5, 2010 British Pounds 1,852,978 Canadian Dollar 3,138,555 (8,398)Jan. 5, 2010 Hong Kong Dollar 471,402 Canadian Dollar 63,678 (91)

(8,489)

The currency spot contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of A+ by Fitch Ratings.

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Pinnacle International Equity Fund (Continued)






Australia 2.2 –Brazil 0.9 –China 1.9 2.3Denmark 4.1 5.7Finland – 4.1France 11.7 14.5Germany 7.9 4.1Greece 2.4 2.8Hong Kong 4.0 4.3India – 0.3Ireland 0.9 –Isreal 2.4 2.0Italy 1.2 –Japan 9.4 11.9Korea 0.8 –Mexico 1.4 2.2Netherland 1.0 –Singapore – 0.1Spain 2.2 2.5Sweden 1.7 2.9Switzerland 8.5 14.5Taiwan 0.5 –United Kingdom 24.9 17.0United States 3.8 3.3


Assets



(Level 2) ($)



Equities 15,928,847 117,737,820 – 133,666,667Currency Spot Contracts – (8,489) – (8,489)


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Statement of Investment Portfolioas at December 31, 2009




A. Risk managementThe investment objective of Pinnacle International Equity Fund (the “Fund”) is toachieve superior long term returns through capital growth by investing primarily inlarge capitalization stocks of companies in Europe, Australia and the Far East.




CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 37,564,691 – 37,564,691 26.4

British Pound 33,483,717 – 33,483,717 23.5

U.S. Dollar 13,981,528 – 13,981,528 9.8

Japanese Yen 13,445,431 – 13,445,431 9.4

Swiss Franc 13,182,977 – 13,182,977 9.3

Hong Kong Dollar 7,643,917 – 7,643,917 5.4

Danish Krone 5,797,358 – 5,797,358 4.1


Swedish Krona 2,482,821 – 2,482,821 1.7

Mexican Peso 1,955,589 – 1,955,589 1.4

South Korean Won 1,112,041 – 1,112,041 0.8

Total 133,775,296 – 133,775,296 94.0

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 23,024,501 – 23,024,501 28.5

Swiss Franc 11,302,654 – 11,302,654 14.0

British Pound 11,211,187 – 11,211,187 13.9

Japanese Yen 9,635,753 – 9,635,753 11.9

U.S. Dollar 7,767,336 – 7,767,336 9.6

Hong Kong Dollar 5,303,958 – 5,303,958 6.6

Danish Krone 4,607,795 – 4,607,795 5.7

Swedish Krona 2,344,434 – 2,344,434 2.9

Mexican Peso 966,296 – 966,296 1.2

Singapore Dollar 74,573 – 74,573 0.1

Australian Dollar 37,019 – 37,019 0.1

Total 76,275,506 – 76,275,506 94.5







F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East(EAFE) Index, as of December 31, 2009 with all other variables held constant, wouldresult in an increase or decrease of approximately $27,630,978, 19.4% of the Fund’s NetAssets (December 31, 2008-$7,547,556, 9.4% of the Fund’s Net Assets). The Fund’shistorical sensitivity measure may not be representative of its future sensitivity measure,and accordingly, the impact on Net Assets could be materially different.

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Pinnacle International Small to Mid Cap Value Equity Fund


2009 2008

AssetsInvestments at fair value $52,223,014 $45,843,465Cash 380,628 –Subscriptions receivable 26,721 11,839Receivable for securities sold 349,028 1,706,837Accrued investment income 109,363 142,210Prepaid expense – 4,153Accounts receivable 15,785 6,084

53,104,539 47,714,588LiabilitiesBank overdraft – 1,291,742Payable for currency spot and forward contracts – 760Payable for securities purchased 33,715 –Redemptions payable 40,337 71,327Accrued expenses 125,613 125,012

199,665 1,488,841Net Assets $52,904,874 $46,225,747





2009 2008

Investment IncomeDividends $ 1,360,496 $ 1,985,042Interest 1,026 7,556Securities lending 1,635 19,865Less: Foreign withholding taxes (111,964) (177,879)

1,251,193 1,834,584ExpensesManagement fees (including GST) (note 7) 190 –Legal fees 7,178 2,115Audit fees 19,613 19,398Custody fees 362,603 226,345Filing fees 15,047 16,081Independent Review Committee fees 2,970 2,269Unitholder reporting costs 23,046 29,240Unitholder administration, service fees and GST 136,581 124,409

567,228 419,857Absorbed expenses (296,171) (73,084)Net expenses 271,057 346,773Net investment income (loss) 980,136 1,487,811Net realized gain (loss) on investments sold (8,341,569) (22,035,025)Net realized gain (loss) on foreign exchange (6,451) (83,682)Transaction costs (note 2) (121,322) (186,034)Change in unrealized appreciation (depreciation) of investments 15,934,872 (11,836,391)Change in unrealized appreciation (depreciation) of currency forwards 760 (760)Change in unrealized appreciation (depreciation) of foreign exchange (11,029) 12,263Net gain (loss) on investments and transaction costs 7,455,261 (34,129,629)Increase (Decrease) in Net Assets from Operations $ 8,435,397 $(32,641,818)

Increase (Decrease) in Net Assets from OperationsClass A Units $ 8,429,486 $(32,641,818)Class F Units* $ 5,911 $ –Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 1.79 $ (7.36)Class F Units* $ 3.18 $ –


2009 2008



8,435,397 (32,641,818)


Class A Units (995,874) (1,401,344)Class F Units* (171) –

(996,045) (1,401,344)



Reinvested distributionsClass A Units 988,012 1,395,440Class F Units* 171 –


(760,225) 3,878,110


6,679,127 (30,165,052)


$ 52,904,874 $ 46,225,747


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Portfolio Advisor: Munder Capital Management



AverageCost ($)

FairValue ($)


30,683 Bradken Limited 194,890 194,43751,624 Centennial Coal Company Limited 153,397 191,82653,666 Downer EDI Limited 274,944 467,83029,336 IOOF Holdings Limited 160,134 165,67710,566 JB Hi-Fi Limited 107,711 222,24527,595 Macarthur Coal Limited 199,339 287,735

120,908 Mount Gibson Iron Limited 77,831 184,259152,696 Pacific Brands Limited 156,505 160,21794,805 Panoramic Resources, Ltd. 227,575 205,007

159,965 Ten Network Holdings Limited 237,604 242,420522,882 Virgin Blue Holdings 141,734 286,169

1,931,664 2,607,822

Austria – 1.8%5,642 Andritz AG 272,401 340,6557,293 BWIN Interactive Entertainment AG 227,148 454,4791,649 Mayr Melnhof Karton AG 159,451 177,417

659,000 972,551

Belgium – 0.4%6,693 Telenet Group Holding NV 144,395 198,590

Canada – 11.1%18,502 Alamos Gold Inc. 148,554 231,275

8,476 Alimentation Couche-Tard Inc., Class B Sub.Voting 174,881 176,470

6,500 Astral Media Inc. 180,371 215,1505,710 ATCO Ltd. 318,948 261,689

12,964 Atrium Innovations Inc. 190,170 204,1837,133 Baytex Energy Trust 172,002 210,6388,208 Bird Construction Income Fund 280,859 281,863

24,190 Celestica Inc., Sub Voting 215,342 238,7557,449 Dorel Industries Inc., Class B, Sub. Voting 239,709 238,741

14,706 FNX Mining Company Inc. 165,204 169,2669,837 Home Capital Group Inc., Class B, Sub. Voting 338,294 409,219

20,956 HudBay Minerals, Inc. 159,298 282,9064,200 Inmet Mining Corporation 160,464 266,4908,164 Laurentian Bank of Canada 339,371 347,8684,386 Macdonald, Dettwiler and Associates Ltd. 189,491 186,7567,372 Methanex Corporation 152,693 150,610

11,913 Pacific Rubiales Energy Corporation 146,300 183,4606,351 Pan American Silver Corp. 147,448 158,457

12,131 Petrominerales Ltd. 141,981 227,45613,529 Peyto Energy Trust 164,913 188,45918,253 Red Back Mining Inc. 142,542 271,057

8,679 ShawCor Ltd., Sub. Voting 165,027 253,08010,306 Sino-Forest Corporation 138,586 199,112

5,357 SXC Health Solutions Corporation 128,335 303,74214,818 Thompson Creek Metals Company, Inc. 222,651 182,261

4,823,434 5,838,963

China – 0.7%130,000 Xinao Gas Holdings Limited 214,664 347,285

Denmark – 0.8%2,590 FLS Industries A/S 160,340 189,6967,500 Sydbank A/S 227,647 202,040

387,987 391,736

Finland – 1.5%46,704 Citycon Oyj 134,282 205,80823,952 Huhtamaki Oyj 225,954 348,43637,867 Oriola-KD Oyj 228,126 250,013

588,362 804,257

France – 8.0%7,563 Axalto Holding NV 216,190 340,410


AverageCost ($)

FairValue ($)

Equities (cont’d)France (cont’d)

5,163 Compagnie Generale des EtablissementsMichelin, Class B 430,747 414,188

9,101 Eutelsat Communications 241,845 305,3812,767 Faiveley SA 191,819 230,1741,974 Fonciere des Regions 147,881 211,1362,005 Fonciere des Regions Warrants u65.00 Dec. 31,

2010 – 1,7196,908 Legrand SA 211,606 201,4609,277 M6 Metropole Television 209,697 248,2404,360 Publicis Groupe SA 143,817 184,981

15,849 Recylex SA 166,608 207,7163,837 Rubis 334,783 351,9933,308 Saft Groupe SA 116,825 166,6579,847 SCOR SE 246,086 257,2364,811 SEB SA 268,919 285,0483,486 Sopra Group 265,900 257,5696,665 SR Teleperformance 232,591 225,0614,459 Technip SA 290,105 326,785

3,715,419 4,215,754

Germany – 7.0%5,275 Bilfinger Berger AG 336,331 424,2714,357 Deutsche Euroshop AG 163,568 154,6346,128 H&R WASAG AG 157,029 137,5704,526 Hannover Rueckversicherungs AG 186,972 222,1885,284 Hugo Boss AG 123,321 194,491

29,183 Infineon Technologies AG 134,618 168,4944,506 Lanxess 189,140 177,391

11,158 MTU Aero Engines Holding AG 400,211 640,33932,053 ProSiebenSat.1 Media AG Preferred 199,498 388,1456,030 Rhoen-Klinikum AG 150,412 154,2496,549 Stada Arzneimittel AG 195,091 237,1367,082 Suedzucker AG 161,729 153,780

13,178 United Internet AG 190,816 182,2621,577 Wacker Chemie AG 320,862 287,6572,502 Wincor Nixdorf AG 149,917 178,489

3,059,515 3,701,096

Greece – 0.6%11,721 Hellenic Exchanges Holding SA 161,466 127,04816,264 Jumbo SA 164,336 216,067

325,802 343,115

Hong Kong – 1.3%62,000 Great Eagle Holdings 162,907 167,676

204,000 Midland Holdings Limited 203,240 182,914214,000 Peace Mark (Holdings) Limited* 242,118 –358,000 Texwinca Holdings Limited 290,672 350,020

898,937 700,610

Ireland – 0.1%40,456 Allied Irish Banks, PLC 185,059 73,596

Italy – 4.7%18,147 Azimut Holding SpA 228,841 253,34928,254 Cementir SpA 160,587 142,56718,774 Credito Emiliano SpA 161,951 150,70426,283 Davide Campari – Milano SpA 213,199 286,3826,549 DiaSorin 188,413 243,255

121,379 Immobiliare Grande Distribuzione 259,631 282,71415,391 Prysmian SpA 368,229 281,76737,113 Recordati SpA 309,389 288,8233,449 Tod’s SpA 220,589 267,239

17,662 Trevi Finanziaria SpA 224,768 290,082

2,335,597 2,486,882

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Pinnacle International Small to Mid Cap Value Equity Fund (Continued)




AverageCost ($)

FairValue ($)

Equities (cont’d)Japan – 17.4%

5,000 ABC-Mart, Inc. 132,572 145,31840,300 ALPS Electric Co., Ltd. 267,832 247,360

9,400 Asahi Holdings, Inc. 154,160 149,77010,600 Capcom Co. Ltd. 290,222 182,20625,100 COMSYS Holdings Corporation 269,132 275,15942,000 Dainippon Screen MFG. Co., Ltd. 180,429 192,134

3,300 Disco Corp. 228,400 214,8215,800 Don Quijote Co. Ltd. 146,249 146,531

145 Fields Corporation 275,865 188,02014,600 FUJI OIL CO., LTD. 239,017 222,27737,000 Fujikura Ltd. 178,975 198,780

6,400 Fujirebio Inc. 218,840 183,2034,300 Funai Electric Co. 228,123 225,630

15,500 Gigas Ks Denki Corporation 316,606 483,15833,000 Kagoshima Bank, Ltd., The 279,231 240,82212,100 Kintetsu World Express Inc. 363,171 328,169

4,500 Kobayashi Pharmaceutical Co., Ltd. 170,149 188,17527,000 Koito Manufacturing Co., Ltd. 311,614 449,86221,100 Kuroda Electric Co. Ltd. 273,967 320,92315,000 Kyowa Exeo Corporation 152,154 132,26113,700 Lintec Corp. 252,714 286,053

5,500 Mandom Corporation 144,650 162,9653,800 Mars Engineering Corporation 146,469 95,946

62,000 Mitsui Mining & Smelting Company, Limited 156,851 167,81422,000 Nippon Shokubai Company Ltd. 223,538 197,83812,500 NS Solutions Corporation 243,164 205,732

2,700 Okinawa Electric Power Company,Incorporated, The 212,767 149,963

3,630 Point Inc. 221,079 211,95530,000 Rengo Co., Ltd. 199,485 186,180

266 RISA Partners, Inc. 317,762 174,58821,000 San-In Godo Bank Ltd. 198,917 170,62557,000 Sankyu Inc. 199,187 304,62426,000 Shiga Bank, Ltd., The 190,183 153,198

6,860 Sumitomo Real Estate Sales Co., Ltd. 288,615 293,5668,300 Taiyo Ink Mfg. Co., Ltd. 196,691 229,070

16,000 Taiyo Yuden Co., Ltd. 169,081 215,77230,000 Takasago Thermal Engineering Co., Ltd. 304,696 267,36216,600 Tokyu Livable, Inc. 154,397 148,780

4,300 Towa Pharmaceutical Co., Ltd. 255,685 207,07549,000 Toyo Engineering Corporation 182,010 150,30859,000 Toyo Tire & Rubber Co. Ltd. 151,421 113,376

5,000 Tsuruha Holdings, Inc. 166,709 186,39336 United Urban Investment Corporation 207,888 198,044

9,460,667 9,191,806

Jersey – 0.4%2,362 Randgold Resources Limited 137,301 196,281

Korea – 3.5%3,500 CJ Home Shopping 220,714 241,656

17,530 Daegu Bank 257,107 269,5074,763 Daum Communications Corporation 246,123 299,236

10,680 Hyundai Marine & Fire Insurance Co., Ltd. 199,188 178,3338,920 LG Dacom Corporation* 144,023 142,0627,480 LG International Corporation 192,860 202,165

38,770 Nexen Tire Corporation 239,743 234,16723,100 Pusan Bank 316,123 287,998

1,815,881 1,855,124

Luxembourg – 0.7%17,077 Gagfah SA 224,920 163,284

6,125 Ternium SA ADR 215,107 226,894

440,027 390,178


AverageCost ($)

FairValue ($)

Equities (cont’d)Netherlands – 3.3%

10,762 Aalberts Industries NV 160,743 160,80227,493 Binck NV 285,770 515,7752,547 Fugro NV 130,045 152,120

13,124 Imtech NV 350,113 368,3394,762 Koninklijke Vopak NV 196,016 393,4752,802 Nutreco Holding NV 164,404 164,275

1,287,091 1,754,786

Norway – 2.1%42,900 Ementor ASA 274,763 388,06710,500 Leroy Seafood Group ASA 204,992 198,63225,500 Prosafe ASA 113,846 168,88818,850 TGS Nopec Geophysical Company ASA 281,002 355,792

874,603 1,111,379

Singapore – 0.5%222,000 Ho Bee Investment Limited 207,817 282,587

Spain – 3.1%9,348 Abengoa SA 196,554 314,765

21,076 Banco de Sabadell SA 162,061 122,4335,927 Bolsas y Mercados Espanoles 220,223 198,905

15,126 Obrascon Huarte Lain SA 442,405 424,8814,836 Red Electrica de Espana 264,415 280,309

10,936 Viscofan, SA 254,130 290,199

1,539,788 1,631,492

Sweden – 1.6%7,797 Aangpanneforeningen AB 201,771 222,066

17,598 Boliden AB 210,595 235,1858,237 Elekta AB, Series B 115,202 205,309

24,100 Peab AB 183,212 161,361

710,780 823,921

Switzerland – 5.4%3,066 Actelion Ltd. 135,331 171,2604,284 Baloise Holding Ltd. 400,737 373,205

528 Banque Cantonale Vaudosie 212,763 218,994572 Galenica Holding AG 212,470 216,383

4,605 Noble Corporation 202,492 196,0172,128 Orascom Development Holding AG 156,695 156,2723,432 PSP Swiss Property AG 163,759 203,1193,784 Schindler Holding AG 213,830 303,604

125 Sika AG 178,250 203,3771,816 Sonova Holding AG 203,920 229,6581,860 Sulzer AG 155,746 151,5543,473 Tecan AG 203,599 274,0735,468 Vontobel Holding AG 196,460 163,336

2,636,052 2,860,852

United Kingdom – 17.8%20,562 Aggreko PLC 213,454 320,11759,516 Amlin PLC 396,688 357,38175,189 ARM Holdings PLC 130,491 224,8607,302 Autonomy Corporation PLC 120,363 186,200

29,344 Babcock International Group PLC 259,683 294,13237,052 Balfour Beatty PLC 272,131 161,028

165,289 Beazley Group PLC 291,198 278,59238,674 Britvic PLC 179,819 266,53755,895 Carillion PLC 261,418 285,99544,595 Carphone Warehouse PLC, The 137,833 140,58915,949 Charter International PLC 208,453 192,78610,576 Chemring Group PLC 444,091 520,49822,093 Davis Service Group, The 164,894 148,06139,527 Domino’s Pizza UK & IRL PLC 155,677 197,78431,396 easyJet PLC 180,782 184,99739,899 Gulfsands Petroleum PLC 162,972 154,181

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AverageCost ($)

FairValue ($)

Equities (cont’d)United Kingdom (cont’d)

27,728 IG Group Holdings PLC 194,855 176,518593,128 Inchcape PLC 231,913 295,28434,956 Informa PLC 154,267 187,01918,201 Inmarsat PLC 133,868 211,59057,818 International Personnel Finance 223,037 201,19233,776 Interserve PLC 310,804 109,745

194,680 ITV PLC 177,543 171,90233,376 J.D. Wetherspoon PLC 281,781 239,42147,812 JKX Oil & Gas PLC 173,175 225,26396,843 LogicaCMG PLC 202,444 185,76084,095 McBride PLC 203,251 300,292

210,753 MFI Furniture Group PLC 139,851 260,24626,734 Micro Focus International PLC 195,393 205,59180,234 N Brown Group PLC 400,989 333,46024,868 Petrofac Limited 195,470 433,08210,940 Premier Oil PLC 245,587 202,831

213,722 Spirent PLC 247,097 365,93729,115 SSL International PLC 252,977 384,25173,574 Stagecoach Group PLC 212,642 210,547

179,924 Taylor Woodrow PLC 154,138 117,99947,264 Thomas Cook Group PLC 206,421 183,57712,598 Travis Perkins PLC 185,257 179,71730,595 Tullett Prebon PLC 214,528 142,52031,369 Vitec Group PLC 307,476 204,869

8,824,711 9,442,351



Net Assets – 100.0% 52,904,874





Australia 4.9 3.1Austria 1.8 1.0Belgium 0.4 1.5Canada 11.1 7.5China 0.7 0.4Denmark 0.8 0.2Finland 1.5 0.8France 8.0 9.1Germany 7.0 7.7Greece 0.6 0.5Hong Kong 1.3 1.8Ireland 0.1 0.8Italy 4.7 3.8Japan 17.4 25.5Jersey 0.4 –Korea 3.5 2.6Luxemburg 0.7 0.6Netherlands 3.3 3.1Norway 2.1 1.0Portugal – 0.5Singapore 0.5 0.2Spain 3.1 3.6Sweden 1.6 1.7Switzerland 5.4 5.6United Kingdom 17.8 16.6


Assets



(Level 2) ($)



Equities 6,261,876 45,959,419 – 52,221,295Warrants – 1,719 – 1,719


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A. Risk managementThe investment objective of Pinnacle International Small to Mid Cap Value Equity Fund(the “Fund”) is to achieve superior long term returns through capital growth byinvesting primarily in stocks of small and medium capitalization corporations in Europe,Australia and the Far East.




CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 16,486,118 – 16,486,118 31.2British Pound 9,640,391 – 9,640,391 18.2Japanese Yen 9,230,198 – 9,230,198 17.5Swiss Franc 2,689,643 – 2,689,643 5.1Australian Dollar 2,610,222 – 2,610,222 4.9South Korean Won 1,917,320 – 1,917,320 3.6Norwegian Krone 1,111,481 – 1,111,481 2.1Hong Kong Dollar 1,053,213 – 1,053,213 2.0Swedish Krona 823,953 – 823,953 1.6U.S. Dollar 428,505 – 428,505 0.8Danish Krone 391,766 – 391,766 0.7Singapore Dollar 288,063 – 288,063 0.5New Zealand Dollar 3,826 – 3,826 0.0

Total 46,674,699 – 46,674,699 88.2

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward



European Euro 15,271,034 – 15,271,034 33.0Japanese Yen 11,392,615 – 11,392,615 24.7British Pound 7,695,533 – 7,695,533 16.6Swiss Franc 2,576,864 – 2,576,864 5.6Australian Dollar 1,454,355 – 1,454,355 3.1South Korean Won 1,262,667 – 1,262,667 2.7Hong Kong Dollar 903,472 – 903,472 2.0Swedish Krona 836,646 – 836,646 1.8U.S. Dollar 623,490 – 623,490 1.4Norwegian Krone 460,239 – 460,239 1.0Singapore Dollar 275,439 – 275,439 0.6Danish Krone 106,514 – 106,514 0.2New Zealand Dollar 3,635 – 3,635 0.0

Total 42,862,503 – 42,862,503 92.7







F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, S&P Developed ex-U.S. Small Cap Index , as of December 31, 2009 with all othervariables held constant, would result in an increase or decrease of approximately$11,004,214, 20.8% of the Fund’s Net Assets (December 31, 2008-$5,134,329, 11.1% of theFund’s Net Assets). The Fund’s historical sensitivity measure may not be representativeof its future sensitivity measure, and accordingly, the impact on Net Assets could bematerially different.

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Pinnacle Global Equity Fund


2009 2008

AssetsInvestments at fair value $78,232,355 $57,469,621Cash 2,611,047 961,301Subscriptions receivable 14,376 10,182Receivable for securities sold 115,845 171,449Accrued investment income 52,589 89,817Prepaid expense – 4,152Accounts receivable 1,297 –

81,027,509 58,706,522

LiabilitiesPayable for currency spot and forward contracts 476 –Payable for securities purchased 677,405 –Redemptions payable 47,422 41,962Accrued expenses 88,065 109,265

813,368 151,227

Net Assets $80,214,141 $58,555,295





2009 2008


975,204 1,329,009ExpensesManagement fees (including GST) (note 7) 639 –Legal fees 6,736 2,118Audit fees 19,613 19,400Custody fees 32,829 31,777Filing fees 17,205 15,005Independent Review Committee fees 2,878 2,273Unitholder reporting costs 34,955 33,168Unitholder administration, service fees and GST 149,901 173,061

264,756 276,802Absorbed expenses (1,350) –Net expenses 263,406 276,802Net investment income (loss) 711,798 1,052,207Net realized gain (loss) on investments sold (3,518,905) (3,392,575)Net realized gain (loss) on foreign exchange (166,915) (116,027)Transaction costs (note 2) (73,365) (80,404)Change in unrealized appreciation (depreciation) of investments 13,403,269 (16,656,013)Change in unrealized appreciation (depreciation) of currency spots (476) 2,696Change in unrealized appreciation (depreciation) of foreign exchange (10,696) 11,352Net gain (loss) on investments and transaction costs 9,632,912 (20,230,971)Increase (Decrease) in Net Assets from Operations $10,344,710 $(19,178,764)

Increase (Decrease) in Net Assets from OperationsClass A Units $ 7,924,516 $(19,178,764)Class F Units* $ 9,309 $ –Class I Units** $ 2,410,885 $ –Increase (Decrease) in Net Assets from Operations per unitClass A Units $ 1.64 $ (3.13)Class F Units* $ 1.56 $ –Class I Units** $ 2.25 $ –


2009 2008



10,344,710 (19,178,764)


Class A Units (500,266) (1,098,978)Class F Units* – –Class I Units** (80,499) –

(580,765) (1,098,978)



Reinvested distributionsClass A Units 497,307 1,095,671Class F Units* – –Class I Units** 80,499 –


11,894,901 (4,116,196)


21,658,846 (24,393,938)


$ 80,214,141 $ 58,555,295



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Portfolio Advisor: Harding Loevner LP



AverageCost ($)

FairValue ($)


19,350 Cochlear Ltd. 1,095,480 1,249,629

Austria – 1.8%18,200 Erste Group Bank AG 848,694 705,55216,900 Oesterreichische Elektrizitaetswirtschafts AG 886,787 749,361

1,735,481 1,454,913

Canada – 2.1%27,330 Cenovus Energy Inc. 587,995 720,29427,330 EnCana Corporation 624,366 925,520

1,212,361 1,645,814

Denmark – 0.9%11,300 Novo Nordisk A/S, Class B 683,241 756,156

France – 6.5%10,976 Air Liquide SA 1,112,575 1,355,05015,500 Dassault Systemes SA 938,384 922,70317,700 L’Oréal SA 2,038,844 2,055,242

7,835 LVMH Moet Hennessy Louis Vuitton SA 777,183 920,067

4,866,986 5,253,062

Germany – 2.6%14,840 Fresenius SE 873,646 966,12314,600 Hamburger Hafen und Logistik AG 585,814 590,05610,800 SAP AG ADR 477,016 528,388

1,936,476 2,084,567

Hong Kong – 3.7%249,000 China Merchants Holdings International

Company Limited 762,259 838,927501,800 Li & Fung Ltd. 1,338,725 2,149,789

2,100,984 2,988,716

Indonesia – 1.3%25,900 PT Telekomunikasi Indonesia ADR 1,160,901 1,080,521

Israel – 1.2%16,500 Teva Pharmaceutical Industries Ltd. ADR 925,550 969,472

Japan – 5.9%20,000 Canon Inc. ADR 796,932 884,580

7,300 Fanuc Ltd. 723,873 709,91546,600 JSR Corporation 1,053,301 987,932

5,630 Keyence Corporation 1,171,053 1,213,9041,600 Nintendo Co., Ltd. 527,047 396,697

179 So–net M3, Inc. 688,794 564,163

4,961,000 4,757,191

Mexico – 1.4%22,313 America Movil SA de CV Series L ADR 965,017 1,094,694

Netherlands – 1.0%33,030 Qiagen NV 549,228 771,661

Russia – 2.2%67,740 Gazprom ADR 2,515,636 1,769,009

South Africa – 1.0%19,900 Sasol 685,771 835,420

Sweden – 0.7%61,500 Telefonaktiebolaget LM Ericsson ADR 636,787 589,812

Switzerland – 5.4%19,370 Nestlé SA ADR 740,688 979,07416,100 Novartis AG 872,112 917,38210,500 Sonova Holding AG 888,240 1,327,869

4,200 Swatch Group 804,124 1,105,611

3,305,164 4,329,936


AverageCost ($)

FairValue ($)

Equities (cont’d)United Kingdom – 7.4%

33,700 Autonomy Corporation PLC 869,280 859,34724,501 Rio Tinto PLC 1,021,125 1,381,060

161,900 RPS Group PLC 788,779 588,80082,600 Standard Chartered PLC 1,748,235 2,163,35989,720 WPP plc 713,219 916,273

5,140,638 5,908,839

United States – 50.8%23,720 3M Company 1,979,286 2,048,85724,060 Abbott Laboratories 1,252,327 1,357,55237,350 Adobe Systems Incorporated 1,065,498 1,436,71924,650 Bunge Limited 1,468,793 1,645,55060,000 Charles Schwab Corporation, The 1,160,411 1,180,97467,140 Cisco Systems, Inc. 1,592,206 1,681,02850,900 Coach, Inc. 1,547,236 1,943,03216,650 Colgate-Palmolive Company 1,241,726 1,430,16334,100 eBay Inc. 808,997 838,80553,800 Emerson Electric Co. 2,214,781 2,396,96315,820 Exxon Mobil Corporation 1,156,935 1,127,06923,250 Genzyme Corporation 1,407,151 1,191,7282,650 Google Inc. 1,386,345 1,718,276

15,200 Greenhill & Co., Inc. 1,440,703 1,273,18430,100 JPMorgan Chase & Co. 1,233,546 1,311,77513,038 Medco Health Solutions, Inc. 444,013 871,46320,700 Monsanto Company 1,682,671 1,769,81445,770 Oracle Corporation 939,396 1,174,69412,450 Praxair, Inc. 795,159 1,045,70322,850 Procter & Gamble Company, The 1,413,015 1,448,19915,090 QUALCOMM Incorporated 571,237 730,07024,560 Schlumberger Limited 1,272,195 1,671,90728,150 Sigma Aldrich Corporation 1,396,746 1,487,63776,240 Staples, Inc. 1,629,462 1,959,9014,100 Synthes, Inc. 529,170 561,590

59,650 Walgreen Co. 2,588,255 2,288,28065,500 Wells Fargo & Company 1,968,580 1,845,47671,600 Yahoo! Inc. 1,115,441 1,256,534

37,301,281 40,692,943


Currency Spot Contracts – 0.0% (476)Other Assets, Less Liabilities – 2.5% 1,982,262

Net Assets – 100.0% 80,214,141

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Pinnacle Global Equity Fund (Continued)






Jan. 4, 2010 Canadian Dollar 115,370 Singapore Dollar 155,610 (476)

(476)

The currency spot contracts outstanding at December 31, 2009 are placed with a financial institution with a minimum credit rating of AA� by Standard & Poor’s.




Australia 1.6 2.0Austria 1.8 3.1Canada 2.1 2.7Denmark 0.9 0.7France 6.5 7.4Germany 2.6 1.4Hong Kong 3.7 3.5Indonesia 1.3 1.4Isreal 1.2 –Japan 5.9 9.0Malaysia – 1.0Mexico 1.4 1.5Netherlands 1.0 1.3Russia 2.2 2.0Singapore – 2.2South Africa 1.0 1.7Sweden 0.7 –Switzerland 5.4 6.8United Kingdom 7.4 4.3United States 50.8 46.1


Assets



(Level 2) ($)



Equities 48,037,055 30,195,300 – 78,232,355Currency Spot Contracts – (476) – (476)


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A. Risk managementThe investment objective of Pinnacle Global Equity Fund (the “Fund”) is to achievesuperior long term returns through capital growth by investing primarily in stocks oflarge capitalization companies in North America, Europe, Australia and the Far East.




CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 49,693,582 – 49,693,582 62.0

European Euro 9,035,814 – 9,035,814 11.3

British Pound 5,908,839 – 5,908,839 7.4

Swiss Franc 3,912,452 – 3,912,452 4.9

Japanese Yen 3,872,611 – 3,872,611 4.8

Hong Kong Dollar 2,988,716 – 2,988,716 3.7



Danish Krone 756,156 – 756,156 0.9

Total 78,253,219 – 78,253,219 97.6

December 31, 2008

CurrencyFinancial

Instruments ($)

CurrencyForward

Contracts ($)

NetCurrency


Net Assets (%)

U.S. Dollar 33,157,790 – 33,157,790 56.6

European Euro 7,241,336 – 7,241,336 12.4

Japanese Yen 5,267,711 – 5,267,711 9.0

Swiss Franc 3,396,509 – 3,396,509 5.8

Hong Kong Dollar 2,058,920 – 2,058,920 3.5

British Pound 1,966,616 – 1,966,616 3.4




Malaysian Ringgit 581,557 – 581,557 1.0

Danish Krone 395,785 – 395,785 0.7

Total 57,481,155 – 57,481,155 98.2







F. Other price riskOther price risk is the risk that the fair value of the Fund’s financial instruments willfluctuate as a result of changes in market prices (other than those arising from interestrate or currency risk). The impact on the Net Assets of the Fund due to a 20% changein the respective stock indices (December 31, 2008 – 10%), using a historical measureof the sensitivity of the Fund’s returns relative to the returns of its benchmark stockindex, Morgan Stanley Capital International (MSCI) World Index, as of December 31,2009 with all other variables held constant, would result in an increase or decrease ofapproximately $16,363,685, 20.4% of the Fund’s Net Assets (December 31, 2008-$5,887,602, 10.2% of the Fund’s Net Assets). The Fund’s historical sensitivity measuremay not be representative of its future sensitivity measure, and accordingly, the impacton Net Assets could be materially different.

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Pinnacle Balanced Income Portfolio

Statement of Net AssetsAs at December 31, 2009

2009 2008

AssetsInvestments at market value $10,061,620 $8,923,051Cash 198,610 192,038Subscriptions receivable 104,115 121Prepaid expense – 1,591Accounts receivable – 1,402

10,364,345 9,118,203

LiabilitiesRedemptions payable 3,872 922Accrued expenses 26,012 34,563

29,884 35,485

Net Assets $10,334,461 $9,082,718

Units outstandingClass A Units 1,051,988 1,034,912

Net Assets per unitClass A Units $ 9.82 $ 8.78


2009 2008

Investment IncomeInterest $ 33 $ 1,183Income from underlying funds 370,660 505,386Capital gains distribution received 70,342 21,184

441,035 527,753

ExpensesManagement fees (including GST) (note 7) 183,227 186,548Legal fees 3,217 2,800Audit fees 11,253 9,926Custody fees 3,589 12,600Filing fees 17,642 17,584Independent Review Committee fees 2,273 2,273Unitholder reporting costs 7,557 1,901Unitholder administration, service fees and GST 32,305 29,600


Net expenses 232,325 238,114


Net realized gain (loss) on investments sold (490,605) (159,661)Change in unrealized appreciation (depreciation) of investments 1,465,300 (884,114)

Net gain (loss) on investments 974,695 (1,043,775)

Increase (Decrease) in Net Assets from OperationsClass A Units $1,183,405 $ (754,136)

Increase (Decrease) in Net Assets from Operations perunit

Class A Units $ 1.16 $ (0.75)


2009 2008


Increase (Decrease) in Net Assets from OperationsClass A Units 1,183,405 (754,136)


Class A Units (134,205) (274,799)From capital gains

Class A Units – (38,809)

(134,205) (313,608)


Class A Units 1,282,451 2,093,866Reinvested distributions

Class A Units 134,107 313,372Payments on redemption

Class A Units (1,214,015) (2,422,261)

202,543 (15,023)

Increase (Decrease) in Net AssetsClass A Units 1,251,743 (1,082,767)

Net Assets – End of PeriodClass A Units $10,334,461 $ 9,082,718

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Statement of Investment PortfolioAs at December 31, 2009Number ofUnits Issuer

AverageCost ($)

MarketValue ($)

Fixed Income Funds – 68.1%185,154 Pinnacle American Core-Plus Bond Fund Class A 1,383,345 1,503,453116,830 Pinnacle High Yield Income Fund Class A 1,003,242 1,008,247423,314 Pinnacle Income Fund Class A 4,540,088 4,529,462

6,926,675 7,041,162

Canadian Equity Funds – 10.9%71,761 Pinnacle Canadian Growth Equity Fund Class A 875,489 806,58818,168 Pinnacle Canadian Value Equity Fund Class A 298,918 316,481

1,174,407 1,123,069

Foreign Equity Funds – 18.4%45,321 Pinnacle American Value Equity Fund Class A 374,029 410,15326,222 Pinnacle Global Equity Fund Class A 312,098 304,69774,259 Pinnacle Global Real Estate Securities

Fund Class A 640,324 791,60332,879 Pinnacle International Small to Mid Cap Value

Equity Fund Class A 512,547 390,936

1,838,998 1,897,389

Total Investment Portfolio – 97.4% 9,940,080 10,061,620


Net Assets – 100.0% 10,334,461




Fixed Income Funds 68.1 67.3Canadian Equity Funds 10.9 21.4Foreign Equity Funds 18.4 9.5


Assets



(Level 2) ($)



Mutual Funds 10,061,620 – – 10,061,620



A. Risk managementThe investment objective of Pinnacle Balanced Income Portfolio (the “Portfolio”) is togenerate current income and long-term capital growth, with a bias towards income. Itinvests primarily in a mix of equity and income mutual funds managed by Scotia AssetManagement L.P. As a result, the Portfolio is not directly exposed to significantcurrency, interest rate or credit risks.

Managing risk is among the most important factors in the portfolio managementprocess, guiding investment decisions made for the Portfolio. The Portfolio’s investmentpractice includes portfolio monitoring to ensure compliance with stated investmentguidelines. The Portfolio is an asset allocation fund that allocates the investmentbetween three asset classes: bonds, Canadian equities and foreign equities.

B. Liquidity risk

The Portfolio’s exposure to liquidity risk is derived primarily from the daily cashredemption of units. The underlying funds primarily invest in securities that are tradedin active markets and can be readily disposed. In addition, the Portfolio aims to retainsufficient cash and money market instrument positions to maintain liquidity, and hasthe ability to borrow up to 5% of its Net Asset Value for the purpose of fundingredemptions.

C. Currency risk

Currency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Portfolio’s reporting currency, willfluctuate due to changes in exchange rates. The Portfolio may be exposed to indirectcurrency risk in the event that the underlying funds invest in financial instruments thatare denominated in a currency other than Canadian dollars.

D. Interest rate riskInterest rate risk arises from the possibility that changes in interest rates will affectfuture cash flows or fair values of financial instruments. Interest rate risk arises oninterest- bearing financial instruments held by a Portfolio. The Portfolio may be exposedto indirect interest rate risk in the event that the underlying funds invest in interest-bearing financial instruments.

E. Credit riskCredit risk is the risk that the counterparty to a financial interest will fail to dischargean obligation or commitment that it has entered into with the Portfolio. The risk ofdefault is considered minimal. The Portfolio may be exposed to indirect credit risk inthe event that the underlying funds invest in debt instruments and derivatives.

F. Other price riskOther price risk is the risk that the fair value of the Portfolio’s financial instrumentswill fluctuate as a result of changes in market prices (other than those arising frominterest rate or currency risk). The impact on the Net Assets of the Portfolio due to a20% change in the respective stock indices (December 31, 2008 – 10%), using ahistorical measure of the sensitivity of the Portfolio’s return relative to the returns of itsblended benchmark stock index of, 55% DEX Universe Bond Index, 15% Barclays CapitalU.S. Aggregate Bond Index (CAD Hedged), 11% S&P/TSX Composite Index, 8% TheFinancial Times Stock Exchange (FTSE) / European Public Real Estate Association(EPRA) / North American Association of Real Estate Investment Trusts ( NAREIT)Global Real Estate Index, 5.5% S&P 500 Index and 5.5% Morgan Stanley CapitalInternational (MSCI) Europe, Australasia and Far East (EAFE) Index, as ofDecember 31, 2009, with all other variables held constant, would result in an increaseor decrease of approximately $2,170,237, 21.0% of the Portfolio’s Net Assets(December 31, 2008-$963,690, 10.6% of the Portfolio’s Net Assets). The Portfolio’shistorical sensitivity measure may not be representative of its future sensitivity measure,and accordingly, the impact on Net Assets could be materially different.

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Pinnacle Balanced Income Portfolio (Continued)



Pinnacle Conservative Balanced Growth Portfolio


2009 2008

AssetsInvestments at market value $65,517,882 $58,516,645Cash 814,724 258,960Subscriptions receivable 152,809 6,997Receivable for securities sold – 110,000Prepaid expense – 1,591

66,485,415 58,894,193

LiabilitiesPayable for securities purchased – 107,250Redemptions payable 166,288 78,402Accrued expenses 73,490 78,129

239,778 263,781

Net Assets $66,245,637 $58,630,412




2009 2008

Investment IncomeInterest $ 15 $ 781Income from underlying funds 2,053,796 2,881,717Capital gains distribution received 305,856 291,364

2,359,667 3,173,862

ExpensesManagement fees (including GST) (note 7) 1,337,550 1,589,970Legal fees 3,217 2,800Audit fees 14,800 9,926Custody fees 5,013 27,416Filing fees 17,645 19,904Independent Review Committee fees 2,273 2,273Unitholder reporting costs 15,822 7,715Unitholder administration, service fees and GST 49,784 43,749

1,446,104 1,703,753

Net investment income (loss) 913,563 1,470,109

Net realized gain (loss) on investments sold (4,066,844) (2,211,559)Change in unrealized appreciation (depreciation) of investments 13,924,855 (15,487,018)

Net gain (loss) on investments 9,858,011 (17,698,577)

Increase (Decrease) in Net Assets from OperationsClass A Units $10,771,574 $(16,228,468)

Increase (Decrease) in Net Assets from Operationsper unit

Class A Units $ 1.56 $ (2.19)


2009 2008


Increase (Decrease) in Net Assets from OperationsClass A Units 10,771,574 (16,228,468)


Class A Units (610,674) (1,149,018)



Class A Units 607,827 1,142,290Payments on redemption

Class A Units (10,971,908) (15,546,983)

(2,545,675) (3,796,949)

Increase (Decrease) in Net AssetsClass A Units 7,615,225 (21,174,435)

Net Assets – End of PeriodClass A Units $ 66,245,637 $ 58,630,412

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AverageCost ($)

MarketValue ($)

Fixed Income Funds – 38.4%757,669 Pinnacle High Yield Income Fund Class A 7,062,181 6,538,680

1,767,632 Pinnacle Income Fund Class A 18,962,182 18,913,660

26,024,363 25,452,340

Canadian Equity Funds – 30.9%631,053 Pinnacle Canadian Growth Equity Fund Class A 8,294,901 7,093,041305,683 Pinnacle Canadian Mid Cap Equity Fund Class A 3,516,477 4,077,806129,657 Pinnacle Canadian Small Cap Equity

Fund Class A 2,181,479 2,289,741403,179 Pinnacle Canadian Value Equity Fund Class A 7,084,320 7,023,385

21,077,177 20,483,973

Foreign Equity Funds – 29.6%427,083 Pinnacle American Large Cap Growth Equity

Fund Class A 2,886,314 2,840,101306,897 Pinnacle American Value Equity Fund Class A 3,060,820 2,777,419166,968 Pinnacle Global Equity Fund Class A 2,046,945 1,940,167613,401 Pinnacle Global Real Estate Securities

Fund Class A 8,056,460 6,538,857363,569 Pinnacle International Equity Fund Class A 4,074,865 3,224,855190,090 Pinnacle International Small to Mid Cap Value

Equity Fund Class A 2,959,840 2,260,170

23,085,244 19,581,569



Net Assets – 100.0% 66,245,637




Fixed Income Funds 38.4 37.8Canadian Equitiy Funds 30.9 33.4Foreign Equitiy Funds 29.6 28.7


Assets

Quoted pricesin active markets for

identical assets(Level 1) ($)


(Level 2) ($)



Mutual Funds 65,517,882 – – 65,517,882



A. Risk managementThe investment objective of Pinnacle Conservative Balanced Growth Portfolio (the“Portfolio”) is to achieve a balance of long-term capital growth and current income. Itinvests primarily in a mix of equity and income mutual funds managed by Scotia AssetManagement L.P. As a result, the Portfolio is not directly exposed to significant currency,interest rate or credit risks.

Managing risk is among the most important factors in the portfolio managementprocess, guiding investment decisions made for the Portfolio. The Portfolio’s investmentpractice includes portfolio monitoring to ensure compliance with stated investmentguidelines. The Portfolio is an asset allocation fund that allocates the investmentbetween four asset classes: bonds, real estate, Canadian equities and foreign equities.

B. Liquidity riskThe Portfolio’s exposure to liquidity risk is derived primarily from the daily cashredemption of units. The underlying funds primarily invest in securities that are tradedin active markets and can be readily disposed. In addition, the Portfolio aims to retainsufficient cash and money market instrument positions to maintain liquidity, and hasthe ability to borrow up to 5% of its Net Asset Value for the purpose of fundingredemptions.

C. Currency riskCurrency risk is the risk that financial instruments which are denominated in acurrency other than Canadian dollars, which is the Portfolio’s reporting currency, willfluctuate due to changes in exchange rates. The Portfolio may be exposed to indirectcurrency risk in the event that the underlying funds invest in financial instruments thatare denominated in a currency other than Canadian dollars.



F. Other price riskOther price risk is the risk that the fair value of the Portfolio’s financial instrumentswill fluctuate as a result of changes in market prices (other than those arising frominterest rate or currency risk). The impact on the Net Assets of the Portfolio due to a20% change in the respective stock indices (December 31, 2008 – 10%), using ahistorical measure of the sensitivity of the Portfolio’s return relative to the returns of itsblended benchmark stock index of, 40% DEX Universe Bond Index, 10% The FinancialTimes Stock Exchange (FTSE) / European Public Real Estate Association (EPRA) /North American Association of Real Estate Investment Trusts ( NAREIT) Global RealEstate Index, 30% S&P/TSX Composite Index, 10% S&P 500 Index and 10% MorganStanley Capital International (MSCI) Europe, Australasia and the Far East (EAFE)Index, as of December 31, 2009, with all other variables held constant, would result inan increase or decrease of approximately $13,249,127, 20.0% of the Portfolio’s Net Assets(December 31, 2008-$6,027,214, 10.3% of the Portfolio’s Net Assets). The Portfolio’shistorical sensitivity measure may not be representative of its future sensitivity measure,and accordingly, the impact on net assets could be materially different.

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Pinnacle Conservative Balanced Growth Portfolio (Continued)



Pinnacle Balanced Growth Portfolio


2009 2008

AssetsInvestments at market value $12,491,797 $13,260,537Cash 225,062 184,114Subscriptions receivable 455 774Prepaid expense – 1,591Accounts receivable – 1,415

12,717,314 13,448,431

LiabilitiesRedemptions payable 58,533 399Accrued expenses 32,368 42,055

90,901 42,454

Net Assets $12,626,413 $13,405,977




2009 2008

Investment IncomeInterest $ – $ 849Income from underlying funds 419,845 696,232Capital gains distribution received 44,673 44,229

464,518 741,310



Net expenses 349,222 439,067


Net realized gain (loss) on investments sold (1,350,315) (536,208)Change in unrealized appreciation (depreciation) of investments 3,420,014 (2,869,083)


Increase (Decrease) in Net Assets from OperationsClass A Units $ 2,184,995 $(3,103,048)


Class A Units $ 1.52 $ (1.85)


2009 2008




Class A Units (61,318) (258,953)



Class A Units 60,839 258,478Payments on redemption

Class A Units (4,185,720) (3,371,078)

(2,903,241) (1,032,360)

Increase (Decrease) in Net AssetsClass A Units (779,564) (4,394,361)

Net Assets – End of PeriodClass A Units $12,626,413 $13,405,977

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AverageCost ($)

MarketValue ($)

Fixed Income Funds – 39.5%105,775 Pinnacle American Core-Plus Bond Fund Class A 794,132 858,889146,143 Pinnacle High Yield Income Fund Class A 1,228,763 1,261,216268,111 Pinnacle Income Fund Class A 2,872,875 2,868,788

4,895,770 4,988,893

Canadian Equity Funds – 25.2%100,939 Pinnacle Canadian Growth Equity Fund Class A 1,285,675 1,134,55630,047 Pinnacle Canadian Mid Cap Value Equity

Fund Class A 398,846 400,82426,464 Pinnacle Canadian Small Cap Equity

Fund Class A 452,963 467,36067,522 Pinnacle Canadian Value Equity Fund Class A 1,177,622 1,176,239

3,315,106 3,178,979


Fund Class A 433,205 402,74027,098 Pinnacle American Mid Cap Growth Equity

Fund Class A 384,889 388,58459,423 Pinnacle American Value Equity Fund Class A 625,529 537,78036,588 Pinnacle Global Equity Fund Class A 436,382 425,152

116,402 Pinnacle Global Real Estate SecuritiesFund Class A 999,000 1,240,846

108,666 Pinnacle International Equity Fund Class A 1,216,021 963,87030,694 Pinnacle International Small to Mid Cap Value


4,604,110 4,323,925



Net Assets – 100.0% 12,626,413






Assets



(Level 2) ($)



Mutual Funds 12,491,797 – – 12,491,797



A. Risk managementThe investment objective of Pinnacle Balanced Growth Portfolio (the “Portfolio”) is toachieve a balance of long-term capital growth and current income, with a small biastowards capital growth. It invests primarily in a mix of equity and income mutual fundsmanaged by Scotia Asset Management L.P. As a result, the Portfolio is not directlyexposed to significant currency, interest rate or credit risks.

Managing risk is among the most important factors in the portfolio managementprocess, guiding investment decisions made for the Portfolio. The Portfolio’s investmentpractice includes portfolio monitoring to ensure compliance with stated investmentguidelines. The Portfolio is an asset allocation fund that allocates the investmentbetween three asset classes: bonds, Canadian equities and foreign equities.





F. Other price riskOther price risk is the risk that the fair value of the Portfolio’s financial instrumentswill fluctuate as a result of changes in market prices (other than those arising frominterest rate or currency risk). The impact on the Net Assets of the Portfolio due to a20% change in the respective stock indices (December 31, 2008 – 10%), using ahistorical measure of the sensitivity of the Portfolio’s return relative to the returns of itsblended benchmark stock indices of, 33% DEX Universe Bond Index, 7% Barclays CapitalU.S. Aggregate Bond Index (CAD Hedged), 25% S&P/TSX Composite Index, 10% TheFinancial Times Stock Exchange (FTSE)/European Public Real Estate Association(EPRA)/North American Association of Real Estate Investment Trusts (NAREIT) GlobalReal Estate Index, 12.5% S&P 500 Index and 12.5% Morgan Stanley Capital International(MSCI) Europe, Australasia and the Far East (EAFE) Index, as of December 31, 2009,with all other variables held constant, would result in an increase or decrease ofapproximately $2,601,041, 20.6% of the Portfolio’s Net Assets (December 31, 2008-$1,445,399, 10.8% of the Portfolio’s Net Assets). The Portfolio’s historical sensitivitymeasure may not be representative of its future sensitivity measure, and accordingly, theimpact on Net Assets could be materially different.

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Pinnacle Balanced Growth Portfolio (Continued)



Pinnacle Conservative Growth Portfolio


2009 2008

AssetsInvestments at market value $11,450,860 $10,669,278Cash 266,085 219,521Subscriptions receivable 17,949 8,797Prepaid expense – 1,591Accounts receivable – 2,125

11,734,894 10,901,312

LiabilitiesRedemptions payable – 467Accrued expenses 30,736 40,003

30,736 40,470

Net Assets $11,704,158 $10,860,842




2009 2008


328,479 532,785



Net expenses 331,452 463,212

Net investment income (loss) (2,973) 69,573

Net realized gain (loss) on investments sold (1,493,566) (856,601)Change in unrealized appreciation (depreciation) of investments 3,882,811 (4,100,017)


Increase (Decrease) in Net Assets from OperationsClass A Units $ 2,386,272 $(4,887,045)


Class A Units $ 1.92 $ (3.26)


2009 2008




Class A Units 1,330,975 2,050,434Payments on redemption

Class A Units (2,873,931) (4,470,354)

(1,542,956) (2,419,920)

Increase (Decrease) in Net AssetsClass A Units 843,316 (7,306,965)

Net Assets – End of PeriodClass A Units $11,704,158 $10,860,842

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AverageCost ($)

MarketValue ($)

Fixed Income Funds – 19.4%77,039 Pinnacle High Yield Income Fund Class A 690,748 664,846

149,582 Pinnacle Income Fund Class A 1,602,829 1,600,529

2,293,577 2,265,375

Canadian Equity Funds – 49.3%184,706 Pinnacle Canadian Growth Equity Fund Class A 2,549,182 2,076,09075,787 Pinnacle Canadian Mid Cap Equity Fund Class A 916,065 1,010,99434,535 Pinnacle Canadian Small Cap Equity

Fund Class A 632,808 609,892119,485 Pinnacle Canadian Value Equity Fund Class A 2,177,498 2,081,423

6,275,553 5,778,399


Fund Class A 522,811 491,00252,606 Pinnacle American Value Equity Fund Class A 519,782 476,08628,504 Pinnacle Global Equity Fund Class A 359,548 331,217

107,454 Pinnacle Global Real Estate SecuritiesFund Class A 1,428,022 1,145,458

64,260 Pinnacle International Equity Fund Class A 502,699 569,98633,081 Pinnacle International Small to Mid Cap Value


3,881,341 3,407,086



Net Assets – 100.0% 11,704,158






Assets



(Level 2) ($)



Mutual Funds 11,450,860 – – 11,450,860



A. Risk managementThe investment objective of Pinnacle Conservative Growth Portfolio (the “Portfolio”) isto achieve long-term capital growth and provide some current income. It investsprimarily in a mix of equity and income mutual funds managed by Scotia AssetManagement L.P. As a result, the Portfolio is not directly exposed to significant currency,interest rate or credit risks.






F. Other price riskOther price risk is the risk that the fair value of the Portfolio’s financial instrumentswill fluctuate as a result of changes in market prices (other than those arising frominterest rate or currency risk). The impact on the net assets of the Portfolio due to a20% change in the respective stock indices (December 31, 2008 – 10%), using ahistorical measure of the sensitivity of the Portfolio’s return relative to the returns of itsblended benchmark stock indices of, 20% DEX Universe Bond Index, 10% The FinancialTimes Stock Exchange (FTSE) / European Public Real Estate Association (EPRA) /North American Association of Real Estate Investment Trusts ( NAREIT) Global RealEstate Index, 50% S&P/TSX Composite Index, 10% S&P 500 Index and 10% MorganStanley Capital International (MSCI) Europe, Australasia and the Far East (EAFE)Index, as of December 31, 2009, with all other variables held constant, would result inan increase or decrease of approximately $2,340,832, 20.0% of the Portfolio’s Net Assets(December 31, 2008-$1,098,936, 10.1% of the Portfolio’s Net Assets). The Portfolio’shistorical sensitivity measure may not be representative of its future sensitivity measure,and accordingly, the impact on net assets could be materially different.

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Pinnacle Conservative Growth Portfolio (Continued)



Pinnacle Growth Portfolio


2009 2008

AssetsInvestments at market value $5,888,353 $5,620,386Cash 142,327 227,262Subscriptions receivable 1,208 1,787Prepaid expense – 1,591Accounts receivable – 1,902

6,031,888 5,852,928


42,249 40,328

Net Assets $5,989,639 $5,812,600

Units outstandingClass A Units 632,770 730,582



2009 2008


160,297 246,025



Net expenses 170,252 252,182

Net investment income (loss) (9,955) (6,157)

Net realized gain (loss) on investments sold (647,485) (534,831)Change in unrealized appreciation (depreciation) of investments 1,593,877 (1,846,470)

Net gain (loss) on investments 946,392 (2,381,302)

Increase (Decrease) in Net Assets from OperationsClass A Units $ 936,437 $(2,387,459)


Class A Units $ 1.43 $ (2.82)


2009 2008


Increase (Decrease) in Net Assets from OperationsClass A Units 936,437 (2,387,459)


Class A Units 749,736 1,006,828Payments on redemption

Class A Units (1,509,134) (2,701,304)

(759,398) (1,694,476)

Increase (Decrease) in Net AssetsClass A Units 177,039 (4,081,935)

Net Assets – End of PeriodClass A Units $ 5,989,639 $ 5,812,600

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AverageCost ($)

MarketValue ($)

Fixed Income Funds – 19.7%40,995 Pinnacle High Yield Income Fund Class A 368,990 353,78877,014 Pinnacle Income Fund Class A 825,465 824,054

1,194,455 1,177,842

Canadian Equity Funds – 34.8%72,635 Pinnacle Canadian Growth Equity Fund Class A 944,583 816,41513,485 Pinnacle Canadian Mid Cap Equity Fund Class A 186,819 179,89615,246 Pinnacle Canadian Small Cap Equity Fund Class A 261,986 269,24546,997 Pinnacle Canadian Value Equity Fund Class A 788,587 818,684

2,181,975 2,084,240


Fund Class A 280,311 262,10312,040 Pinnacle American Mid Cap Growth Equity

Fund Class A 175,762 172,65922,958 Pinnacle American Mid Cap Value Equity

Fund Class A 220,136 165,52427,305 Pinnacle American Value Equity Fund Class A 289,816 247,11427,715 Pinnacle Global Equity Fund Class A 348,156 322,05355,327 Pinnacle Global Real Estate Securities

Fund Class A 652,778 589,78171,142 Pinnacle International Equity Fund Class A 813,497 631,02619,850 Pinnacle International Small to Mid Cap Value


3,124,564 2,626,271



Net Assets – 100.0% 5,989,639






Assets



(Level 2) ($)



Mutual Funds 5,888,353 – – 5,888,353



A. Risk managementThe investment objective of Pinnacle Growth Portfolio (the “Portfolio”) is to achievelong-term capital growth and provide some current income, with a strong bias towardscapital growth. It invests primarily in equity mutual funds, with some exposure toincome mutual funds, managed by Scotia Asset Management L.P. As a result, thePortfolio is not directly exposed to significant currency, interest rate or credit risks.






F. Other price riskOther price risk is the risk that the fair value of the Portfolio’s financial instrumentswill fluctuate as a result of changes in market prices (other than those arising frominterest rate or currency risk). The impact on the Net Assets of the Portfolio due to a20% change in the respective stock indices (December 31, 2008 – 10%), using ahistorical measure of the sensitivity of the Portfolio’s return relative to the returns of itsblended benchmark stock indices of, 20% DEX Universe Bond Index, 10% The FinancialTimes Stock Exchange (FTSE) / European Public Real Estate Association (EPRA) /North American Association of Real Estate Investment Trusts (NAREIT) Global RealEstate Index , 35% S&P/TSX Composite Index, 17.5% S&P 500 Index and 17.5% MorganStanley Capital International (MSCI) Europe, Australasia and the Far East (EAFE)Index, as of December 31, 2009, with all other variables held constant, would result inan increase or decrease of approximately $1,185,949, 19.8% of the Portfolio’s Net Assets(December 31, 2008-$590,141, 10.2% of the Portfolio’s Net Assets). The Portfolio’shistorical sensitivity measure may not be representative of its future sensitivity measure,and accordingly, the impact on Net Assets could be materially different.

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Pinnacle Growth Portfolio (Continued)



Notes to the Financial Statements

1. The FundsAll of the Pinnacle Funds and Pinnacle Portfolios presented in these financial statements (individually, a “Fund” and collectively,the “Funds”) are open-ended mutual fund trusts established under the laws of the Province of Ontario pursuant to a masterdeclaration of trust (“Declaration of Trust”) dated as at April 22, 2005, as amended and /or restated from time to time. Theinception date for each Fund is as follows:

Pinnacle Short Term Income Fund September 3, 1997

Pinnacle Income Fund September 3, 1997

Pinnacle High Yield Income Fund September 3, 1997

Pinnacle American Core-Plus Bond Fund January 28, 2002

Pinnacle Global Real Estate Securities Fund January 28, 2002

Pinnacle Strategic Balanced Fund September 3, 1997

Pinnacle Canadian Value Equity Fund September 3, 1997

Pinnacle Canadian Mid Cap Equity Fund January 28, 2002

Pinnacle Canadian Growth Equity Fund September 3, 1997

Pinnacle Canadian Small Cap Equity Fund September 3, 1997

Pinnacle American Value Equity Fund September 3, 1997

Pinnacle American Mid Cap Value Equity Fund January 28, 2002

Pinnacle American Large Cap Growth Equity Fund January 18, 2001

Pinnacle American Mid Cap Growth Equity Fund September 3, 1997

Pinnacle International Equity Fund September 3, 1997

Pinnacle International Small to Mid Cap Value Equity Fund January 28, 2002

Pinnacle Global Equity Fund September 3, 1997

(the “Pinnacle Funds”)

Pinnacle Balanced Income Portfolio April 22, 2005

Pinnacle Conservative Balanced Growth Portfolio April 22, 2005

Pinnacle Balanced Growth Portfolio April 22, 2005

Pinnacle Conservative Growth Portfolio April 22, 2005

Pinnacle Growth Portfolio April 22, 2005

(the “Pinnacle Portfolios”)

The Statement of Investment Portfolio of each of the Funds is as at December 31, 2009. The Statement of Net Assets are as atDecember 31, 2009 and 2008, and the Statement of Operations and Statement of Changes in Net Assets are for the years endedDecember 31, 2009 and 2008, except for funds or classes started during either year, in which case the information presented isfor the period from the Fund inception date (as noted above) or class start date, respectively, to December 31, 2009 or 2008, asapplicable.

On November 1, 2009, the manager and trustee of the Funds changed from ScotiaMcLeod to Scotia Asset Management L.P.(“SAM” or the “Manager”).

2. Significant Accounting PoliciesThese financial statements are prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). Inapplying Canadian GAAP, the Manager may make estimates and assumptions that may affect the reported amounts in thefinancial statements. Actual results may differ from such estimates. The significant accounting policies followed by the Fundsfor the fiscal years ended December 31, 2009 and 2008 are summarized below.

(a) Significant Accounting ChangesFinancial Instruments

(i) In January 2009, The Canadian Institute of Chartered Accountants (“CICA”) issued Emerging Issues Committee (“EIC”)Abstract 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities (“EIC-173”). EIC-173 providesguidance on how to take into account credit risk of an entity and counterparty when determining the fair value offinancial assets and financial liabilities, including derivative instruments. EIC-173 is applicable to the Funds’ interimand annual financial statements for its fiscal year ended December 31, 2009, with retrospective application. The adoptionof EIC-173 did not result in a significant impact on the Funds’ financial statements.

(ii) In March 2009, CICA Handbook Section 3862, Financial Instruments – Disclosures, was amended to align withInternational Financial Reporting Standard (“IFRS”) 7, Financial Instruments – Disclosures. The amendments areeffective for annual financial statements for fiscal years ending after September 30, 2009. The amendments introduce a

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three-level fair value hierarchy, which provides information about the relative observability of inputs to fair valuemeasurement of financial assets and liabilities. As per the CICA Handbook, the levels are defined as follows:

• Level 1: Fair value is based on quoted prices in active markets for identical assets or liabilities;

• Level 2: Fair value is based on inputs other than quoted prices included in level 1 that are observable for the assetsor liabilities, either directly or indirectly. This is inclusive of bonds and debentures that are based on multi-dealerpricing, short-term notes carried at amortized cost, foreign equity securities in markets closing before 4:00pm Easterntime;

• Level 3: Fair value is based on non-observable inputs that are not supported by market data for the assets orliabilities.

The adoption of the new standards does not impact the daily valuation of the Fund’s investments or net assets. The disclosurerequirement, pertaining to this Handbook section, are reported in Statement of Investment Portfolio for each fund.

(b) Valuation of Investments

The fair value of investments as at the financial reporting period end are determined as follows:

(i) In accordance with Accounting Guideline 18, Investment Companies, investments are deemed to be categorized asheld-for-trading and are required to be recorded at fair value, as defined in CICA Handbook Section 3855, FinancialInstruments – Recognition and Measurement (Section 3855”). Investments that are traded in an active market on arecognized public stock exchange and over-the-counter markets, are valued at their bid prices for investments held andask prices for investments sold short. Securities held with no available bid, or a quoted value determined by theManager to be inaccurate or unreliable, are valued in such a manner as, in the opinion of the Manager, most accuratelyreflects the asset’s fair value. This section impacts the valuation and disclosure of the net assets of an investment fundfor financial reporting purposes (“Net Assets”). The value used to determine the Funds’ daily price for purchase andredemption of units (“Pricing NAV” or “Net Asset Value Per Unit”) is not affected by this accounting policy. Areconciliation of Net Asset Value per unit and Net Assets per unit of each Fund is provided in Note 9.

(ii) Fair value factors, provided by a third party pricing vendor, are applied to the closing prices for all non-North Americanequity securities to determine fair value.

(iii) Short-term debt instruments are carried at amortized cost, which, approximates fair value.

(c) Foreign Currency

Foreign currency amounts are translated into Canadian dollars as follows: market value of investments, forward and spotcurrency contracts, and other assets and liabilities at the 3:00 p.m. rate of exchange on each business day; income, expensesand purchases, sales and settlements of investments at the rate of exchange prevailing on the respective dates of suchtransactions.

(d) Investment Transactions and Income Recognition

Investment transactions are accounted for on a trade date basis. In accordance with Section 3855, transaction costs directlyattributable to the acquisition or disposal of an investment are expensed and are included in transaction costs in the statementsof operations. The investment cost of a security represents the amount paid and is determined on an average cost basisexcluding transaction costs.

Dividend income and distributions from underlying funds are recognized on the ex-dividend date and interest income isrecognized on an accrual basis.

Realized and unrealized gains and losses are accounted for on the trade date.

Realized gains and losses on the sale of short-term debt instruments are recorded in interest income.

Income, realized gain (loss) and unrealized gain (loss) are allocated among the unit classes on a pro rata basis.

(e) Foreign Exchange Forward Contracts

The value of forward contracts is the gain or loss that would be realized if, on the valuation date, the positions were to beclosed out and is recorded as an unrealized gain or loss. Upon maturity of the contracts, the difference between the cost andthe market value of the foreign currency is reported in net realized gain (loss) on foreign currency forwards on the statementsof operations.

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(f) Futures Contracts

Futures contracts are valued at their bid prices for financial reporting purposes at the close of business on each valuation date.Any difference between the settlement value at the close of business on the current valuation date and that of the previousvaluation date is settled in cash daily and recorded in the statements of operations as net realized gain (loss) on futures.Amounts receivable (payable) from settlement of futures contracts are reflected in the statements of net assets as futuresmargin receivable (payable).

(g) Options

Options are valued at their bid or ask price as reported by the principal exchange or over-the-counter market on which thecontracts are traded.

(h) Valuation of Underlying Funds

Investments in underlying funds are valued at the Class’ Net Asset Value “NAV” per unit at the end of each valuation date.

(i) Forward Commitments/Dollar Roll

Some Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time (i.e., a“forward commitment”, “delayed settlement” or “when issued” transaction, e.g., to be announced (“TBA”)) consistent with aFund’s ability to manage its investment portfolio and meet redemption requests. For example, the Funds may enter into dollarrolls (principally in TBAs) in which the Funds purchase securities. The price of the securities and the date when securities willbe delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of that forwardcommitment transaction prior to settlement if it is appropriate to do so and realize short – term gains (losses) upon such sale.When effecting such transactions, cash or cash equivalents in a dollar amount sufficient to make payment for the portfoliosecurities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction issettled. A forward commitment transaction involves a risk of loss if the value of the securities to be purchased declines prior tothe settlement date or the other party to the transaction fails to complete the transaction.

(j) Other Assets and Liabilities

Financial assets and liabilities, other than investment securities, cash and derivative instruments are valued at cost oramortized cost. These balances are short-term in nature; therefore, their carrying values approximate fair value.

(k) Securities Lending

Certain of the Funds may enter into securities lending transactions. These transactions involve the temporary exchange ofsecurities for collateral with a commitment to return the same securities on a future date. The income earned from thesesecurities lending transactions is recorded in the statements of operations. The market value of the securities lent andcollateral held is determined on a daily basis. The securities lending arrangement can be terminated by the borrower, thesecurities lending agent or a Fund at any time.

3. Income TaxesThe Funds qualify as mutual fund trusts under the Income Tax Act (Canada). Each of the Funds distributes sufficient amountsof its taxable net investment income and net realized taxable capital gains, less the amount required to enable each Fund toutilize any available tax credit attributable to redemptions during the period, to its unitholders. Such income is taxable in thehands of the unitholders. Accordingly, no provision for income taxes has been recorded in these financial statements.

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Net capital losses may be carried forward indefinitely to reduce future net realized taxable capital gains. Non-capital losses forincome tax purposes may be carried forward for up to twenty years and applied against capital gains realized and net income infuture years. The following Funds have capital and/or non-capital loss carry forwards as at December 15, 2009.

Fund Capital Loss Non-Capital Loss Expiry Date

Pinnacle High Yield Income Fund $15,456,186 $ – –

Pinnacle American Core-Plus Bond Fund 7,000,384 – –

Pinnacle Global Real Estate Securities Fund 27,661,122 – –

Pinnacle Strategic Balanced Fund 12,868,344 – –

Pinnacle Canadian Value Equity Fund 17,004,672 – –

Pinnacle Canadian Mid Cap Equity Fund 5,096,948 – –

Pinnacle Canadian Growth Equity Fund 37,607,838 – –

Pinnacle Canadian Small Cap Equity Fund 1,341,665 – –

Pinnacle American Value Equity Fund 27,401,139 – –

Pinnacle American Mid Cap Value Equity Fund 6,088,894 – –

Pinnacle American Large Cap Growth Equity Fund 22,029,716 – –

Pinnacle Global Equity Fund 30,159,135 – –

Pinnacle American Mid Cap Growth Equity Fund 54,519,495 – –

Pinnacle International Equity Fund 62,057,676 – –

Pinnacle International Small to Mid Cap Value Equity Fund 30,592,812 – –

Pinnacle Balanced Income Portfolio 417,297 – –

Pinnacle Conservative Balanced Growth Portfolio 3,484,312 – –

Pinnacle Balanced Growth Portfolio 1,143,877 – –

Pinnacle Conservative Growth Portfolio 1,517,014 – –

Pinnacle Growth Portfolio 790,721 – –

4. Unitholders’ EquityUnits issued and outstanding represent the capital of each Fund. Each of the Funds may issue an unlimited number of units.Each unit is redeemable at the option of the unitholder in accordance with the Declaration of Trust, ranks pari passu with allother units of the Fund and entitles the unitholder to a proportionate undivided interest in the Net Asset Value of the Fund.Unitholders are entitled to distributions when declared. Distributions on units of a Fund are reinvested in additional units ofthe Fund or at the option of the unitholder, paid in cash. The Funds have no restrictions on capital or specific capitalrequirements. SAM manages the capital of the Funds in accordance with the Funds’ investment objectives.

The units of each class of the Funds are issued and redeemed at their Pricing NAV per unit of each class, which is determinedas of the close of business on each day that the Toronto Stock Exchange is open for trading. The Pricing NAV is calculated bydividing the NAV attributable to a class by the total number of outstanding units of the class.

On January 20, 2009, Pinnacle American Core-Plus Bond Fund, Pinnacle Global Real Estate Securities Fund, Pinnacle CanadianSmall Cap Equity Fund, Pinnacle American Value Equity Fund, Pinnacle International Equity Fund and Pinnacle Global EquityFund commenced their offering of Class I units.

On February 17, 2009, Pinnacle Short Term Income Fund, Pinnacle Income Fund, Pinnacle High Yield Income Fund, PinnacleAmerican Core-Plus Bond Fund, Pinnacle Global Real Estate Securities Fund, Pinnacle Strategic Balanced Fund, PinnacleCanadian Value Equity Fund, Pinnacle Canadian Mid Cap Equity Fund, Pinnacle Canadian Growth Equity Fund, PinnacleCanadian Small Cap Equity Fund, Pinnacle American Value Equity Fund, Pinnacle American Mid Cap Value Equity Fund,Pinnacle American Large Cap Growth Equity Fund, Pinnacle American Mid Cap Growth Equity Fund, Pinnacle InternationalEquity Fund, Pinnacle International Small to Mid Cap Value Equity Fund and Pinnacle Global Equity Fund commenced theiroffering of Class F units.

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For the twelve month periods ended December 31, 2009 and 2008, the following numbers of units were issued, re-invested andredeemed:

FundUnitsissued

Unitsre-invested

Unitsredeemed (i)

Unitsissued

Unitsre-invested

UnitsRedeemed (i)

2009 2008


Class A Units 1,847,040 6,334 2,057,535 1,730,867 33,599 1,121,732

Class F Units 310,613 64 310,676 – – –


Class A Units 5,780,370 1,532,414 7,163,255 6,747,463 1,555,188 12,865,714

Class F Units 56,715 523 4,212 – – –


Class A Units 5,544,408 1,172,774 4,355,320 4,862,284 1,370,745 7,932,490

Class F Units 485,521 4,249 70,934 – – –


Class A Units 742,462 175,511 3,422,114 1,452,191 682,907 5,840,480

Class F Units 9,817 50 62 – – –

Class I Units 4,998,922 37,645 68,940 – – –


Class A Units 4,679,592 297,017 3,572,660 4,734,026 325,633 3,766,423

Class F Units 160,688 1,045 127,482 – – –

Class I Units 1,230,147 8,517 63,437 – – –


Class A Units 446,474 157,062 2,860,195 2,030,748 187,095 1,825,761

Class F Units 1,221 16 288 – – –


Class A Units 1,491,656 140,133 2,430,838 2,049,677 237,912 2,060,046

Class F Units 24,560 312 8,344 – – –


Class A Units 1,171,044 55,684 1,721,347 1,694,333 96,617 1,121,862

Class F Units 3,510 13 479 – – –


Class A Units 2,086,343 248,092 4,757,152 4,071,162 692,037 3,714,377

Class F Units 21,362 42 3,284 – – –


Class A Units 784,078 129,046 1,578,486 1,203,696 681,205 2,185,808

Class F Units 39,231 249 448 – – –

Class I Units 1,223,774 22,975 26,435 – – –


Class A Units 1,306,727 88,511 1,888,834 1,110,430 128,016 1,915,582

Class F Units 7,291 13 2,880 – – –

Class I Units 3,024,975 8,264 50,666 – – –


Class A Units 705,379 21,837 1,039,593 1,305,447 51,393 1,134,640

Class F Units 1,992 – 338 – – –


Class A Units 1,205,542 49,154 3,274,828 1,524,847 67,957 2,778,676

Class F Units 13,481 5 7,783 – – –


Class A Units 88,739 (5) 597,020 244,144 14,778 400,094

Class F Units 4,979 – 3,448 – – –


Class A Units 984,746 257,980 3,000,624 2,379,859 389,083 2,650,011

Class F Units 8,292 71 1,447 – – –

Class I Units 7,812,882 86,848 117,564 – – –

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FundUnitsissued

Unitsre-invested

Unitsredeemed (i)

Unitsissued

Unitsre-invested

UnitsRedeemed (i)

2009 2008


Class A Units 1,437,937 82,812 1,542,288 1,977,634 142,205 1,878,551

Class F Units 3,553 14 979 – – –


Class A Units 474,018 42,650 2,145,722 1,164,323 114,736 1,636,598

Class F Units 17,283 – 2,042 – – –

Class I Units 2,600,423 6,851 30,449 – – –


Class A Units 135,292 13,643 131,860 219,129 36,609 251,290


Class A Units 885,204 63,053 1,259,446 1,086,426 143,684 1,649,139


Class A Units 136,581 6,202 468,464 219,868 32,069 358,311


Class A Units 147,518 – 328,677 206,727 – 460,134


Class A Units 86,796 – 184,608 101,063 – 287,644

(i) Included in units redeemed are redemptions related to payments of the Pinnacle Program Fee, where applicable.

5. Operating ExpensesThe Funds are responsible for all expenses relating to the operations and conduct of business of the Funds. These expensesinclude: taxes; interest; brokerage commissions for the purchase and sale of portfolio securities; legal; audit; trustee; custodialand safekeeping fees; administrative costs; investor servicing costs; and the cost of reports and prospectuses.

The ratio of operating expenses (excluding taxes, interest and brokerage commissions) expressed as a percentage of theaverage daily Net Asset Value of the respective Fund is referred to as the operating expense ratio. The operating expense ratioof Class A of each Pinnacle Fund may not exceed 0.50% on an annualized basis as specified in the Pinnacle Funds’ simplifiedprospectus. Each class of the Funds incurs the expenses which are directly attributable to that class. Common expenses of theFund are allocated on a pro rata basis to each class of the Fund based on its respective Net Asset Value.

The Manager, at its’ sole discretion, absorbs operating expenses otherwise payable by certain classes. The absorbed expenses arereflected in the statements of operations.

6. Pinnacle Program FeeEach Class A unitholder of the Pinnacle Funds has agreed to pay, on a quarterly basis, a negotiated asset based fee for allservices in respect of their investment in the Pinnacle Funds. These fees are paid to the Manager by redemption of units heldin the Pinnacle Funds, unless otherwise determined by the Manager.

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7. Management FeesThe Funds’ management fees are calculated daily and paid monthly. The Manager is entitled to a maximum annual managementfee, exclusive of GST, as follows:

% of Net Asset ValueClass A Units Class F Units

Pinnacle Short Term Income Fund – 0.50%

Pinnacle Income Fund – 0.70%

Pinnacle High Yield Income Fund – 0.75%

Pinnacle American Core-Plus Bond Fund – 0.75%

Pinnacle Global Real Estate Securities Fund – 1.00%

Pinnacle Strategic Balanced Fund – 1.00%

Pinnacle Canadian Value Equity Fund – 1.00%

Pinnacle Canadian Mid Cap Equity Fund – 1.00%

Pinnacle Canadian Growth Equity Fund – 1.00%

Pinnacle Canadian Small Cap Equity Fund – 1.00%

Pinnacle American Value Equity Fund – 1.00%

Pinnacle American Mid Cap Value Equity Fund – 1.00%

Pinnacle American Large Cap Growth Equity Fund – 1.00%

Pinnacle American Mid Cap Growth Equity Fund – 1.00%

Pinnacle International Equity Fund – 1.00%

Pinnacle International Small to Mid Cap Value Equity Fund – 1.00%

Pinnacle Global Equity Fund – 1.00%

Pinnacle Portfolios

Pinnacle Balanced Income Portfolio 1.85% –

Pinnacle Conservative Balanced Growth Portfolio 2.10% –

Pinnacle Balanced Growth Portfolio 2.10% –

Pinnacle Conservative Growth Portfolio 2.40% –

Pinnacle Growth Portfolio 2.40% –

Management fees disclosed for the Pinnacle Portfolios above are inclusive of the management fees charged to the UnderlyingFunds. There is no duplication of fees. Management fees are not charged on Class I units.

8. Securities LendingThe Funds have entered into a securities lending program with their custodian, State Street Trust Company of Canada. Theaggregate market value of all securities loaned by a Fund cannot exceed 50% of the NAV of such Fund. The Funds receivecollateral of at least 102% of the value of the securities on loan. Collateral is received in the form of debt obligations of theGovernment of Canada, Canadian provincial and municipal governments or financial institutions, and is not included in thestatements of investment portfolio. The aggregated dollar value of the securities that are on loan and the collateral received bythe Pinnacle Funds as at December 31, 2009 are as follows:

Pinnacle FundMarket Value ofSecurities Loaned

Market Value ofCollateral Received

Pinnacle Income Fund $ 77,527,958 $ 81,708,286

Pinnacle High Yield Income Fund 3,471,672 3,673,888

Pinnacle Strategic Balanced Fund 948,770 1,072,656

Pinnacle Canadian Mid Cap Equity Fund 379,282 404,639

Pinnacle Canadian Small Cap Equity Fund 3,439,382 3,635,640

Pinnacle International Small to Mid Cap Value Equity Fund 1,515,331 1,595,886

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9. Comparison of Net Asset Value and Net AssetsIn accordance with National Instrument 81-106, a comparison of Net Asset Value and Net Assets per unit, as at December 31,2009 and 2008 is as follows:

Pinnacle FundNet Asset Valueper Unit ($)

Net AssetsPer Unit ($)

Net Asset Valueper Unit ($)


2009 2008


Class A units 10.00 10.00 10.00 10.00

Class F units – – – –


Class A units 10.70 10.68 10.67 10.66

Class F units 11.04 11.02 – –


Class A units 8.63 8.60 7.17 7.12

Class F units 8.94 8.91 – –


Class A units 8.12 8.11 7.35 7.33


Class I units 8.33 8.31 – –


Class A units 10.66 10.65 9.57 9.57

Class F units 10.57 10.56 – –

Class I units 10.89 10.88 – –


Class A units 14.35 14.33 12.23 12.20

Class F units 14.51 14.48 – –


Class A units 17.42 17.38 12.77 12.73

Class F units 17.36 17.32 – –


Class A units 13.34 13.29 8.65 8.59

Class F units 13.43 13.38 – –


Class A units 11.24 11.22 8.41 8.36

Class F units 11.40 11.38 – –


Class A units 17.66 17.40 11.87 11.64

Class F units 18.10 17.83 – –

Class I units 18.00 17.73 – –


Class A units 9.05 9.05 8.41 8.39




Class A units 7.21 7.20 6.60 6.58



Class A units 6.65 6.65 5.84 5.83



Class A units 14.34 14.34 11.24 11.21

Class F units 14.28 14.27 – –

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Pinnacle FundNet Asset Valueper Unit ($)


Net Asset Valueper Unit ($)


2009 2008


Class A units 8.87 8.87 8.19 8.18




Class A units 11.89 11.88 10.34 10.34

Class F units 11.97 11.97 – –


Class A units 11.62 11.62 9.89 9.89

Class F units 11.68 11.67 – –

Class I units 11.71 11.71 – –


Class A units 9.82 9.82 8.78 8.78


Class A units 9.71 9.71 8.22 8.22


Class A units 9.86 9.86 8.35 8.35


Class A units 10.00 10.00 8.04 8.04


Class A units 9.47 9.47 7.96 7.96

10. Related Party Transactions(a) BNS owns a significant interest in CI Financial Corp. (formerly, CI Financial Income Fund), the parent company of themanager of CI Funds and Blackmont Capital Inc. Effective December 31, 2009, Blackmont Capital Inc. was sold by CI FinancialCorp. to Macquarie Group Ltd. BNS also owns a significant interest in DundeeWealth Inc., which owns the manager of theDynamic Funds and Dundee Securities Corporation. These entities are therefore considered related parties. Some of the Fundshave holdings in CI Financial Corp. and DundeeWealth Inc. and holdings in certain CI Funds and Dynamic Funds as atDecember 31, 2009 and 2008. The brokerage fees paid to related parties for the twelve month periods ended December 31, 2009and 2008 are as follows:

Pinnacle Fund Scotia Capital Inc. Dundee Securities Corporation Blackmont Capital Inc.

2009

Pinnacle High Yield Income Fund $ 1,518 $ – $ –Pinnacle Global Real Estate Securities Fund 224 – –Pinnacle Strategic Balanced Fund 3,674 62 –Pinnacle Canadian Value Equity Fund 6,438 – –Pinnacle Canadian Mid Cap Equity Fund 2,471 – –Pinnacle Canadian Growth Equity Fund 38,594 41,774 –Pinnacle Canadian Small Cap Equity Fund 4,261 2,757 –

Pinnacle Fund Scotia Capital Inc. Dundee Securities Corporation Blackmont Capital Inc.

2008

Pinnacle Strategic Balanced Fund $15,552 $ 130 $ –Pinnacle Canadian Value Equity Fund 6,145 3,428 –Pinnacle Canadian Mid Cap Equity Fund 25,979 1,229 11,757Pinnacle Canadian Growth Equity Fund 40,189 67,982 685Pinnacle Canadian Small Cap Equity Fund 6,691 – –

(b) The Manager, a wholly owned subsidiary of The Bank of Nova Scotia (“BNS”), is the trustee and manager of the Funds.

86

11. Soft Dollar CommissionsThe ascertainable soft dollar commissions in connection with investment portfolio transactions for the twelve month periodended December 31, 2009 and 2008 are set out below.

Fund 2009 2008

Pinnacle Strategic Balanced Fund $ 2,955 $ 3,974

Pinnacle Canadian Mid Cap Equity Fund 321 1,503

Pinnacle Canadian Growth Equity Fund 4,820 24,464

Pinnacle Canadian Small Cap Equity Fund 5,408 13,337

Pinnacle American Value Equity Fund – 3,115

Pinnacle American Mid Cap Value Equity Fund 1,004 196

Pinnacle American Mid Cap Growth Equity Fund 22,135 31,318

Pinnacle International Equity Fund 989 4,865

Pinnacle International Small to Mid Cap Value Equity Fund 24,362 12,163

Pinnacle Global Equity Fund 10,424 10,436

Soft dollar commissions are arrangements pursuant to which products or services, other than execution of portfolio securitiestransactions, are obtained by an adviser from or through a broker-dealer in exchange for directing client portfolio transactionsto the broker-dealer.

12. Future Accounting ChangesThe Canadian Accounting Standards Board confirmed that, effective January 1, 2011, IFRS will replace current Canadianstandards and interpretations as Canadian GAAP for publicly accountable enterprises, which includes investment funds. TheManager has commenced development of a changeover plan to meet the implementation deadline. The key elements of thisplan include identifying differences between the Funds’ current accounting policies and those the Funds expect to apply underIFRS, as well as any accounting policy and implementation decisions and their resulting impact, if any, on the Net Assets orNAV of the Funds. A disclosure of the qualitative and quantitative impact will be presented in the annual financial statementsas at and for the year ending December 31, 2010. The Manager does not expect that there will be a significant impact to theFunds’ NAV as a result of the changeover to IFRS. The Manager expects the changes to be limited to presentation anddisclosures relating to Fund consolidations, classification of puttables, and the additional note disclosure. However, theManager’s current assessment may change if new standards are issued or if interpretations of existing standards are revised.

13. Comparative FiguresCertain of the prior period’s comparative amounts have been restated to conform to the current period’s presentation.

14. Significant Events(a) Effective January 6, 2009, Thornburg Investment Management, Inc. became the portfolio advisor for the PinnacleInternational Equity Fund, replacing Wellington Management Company, LLP.

(b) Effective February 5, 2009, Scheer, Rowlett & Associates Investment Management Ltd. became the portfolio advisor for thePinnacle Canadian Value Equity Fund, replacing BonaVista Asset Management Ltd.

(c) Effective July 1, 2009, Forum Partners (UK) LLP became the portfolio advisor for the Pinnacle Global Real Estate SecuritiesFund, replacing Citigroup Alternative Investments LLC.

(d) Effective August 5, 2009, Gryphon Investment Counsel Inc. became the portfolio advisor for the Pinnacle Strategic BalancedFund, replacing Connor, Clark & Lunn Investment Management Ltd.

(e) Effective September 5, 2009, MFC Global Investment Management became the portfolio advisor for the Pinnacle CanadianGrowth Equity Fund, replacing Aurion Capital Management Inc.

(f) Effective November 1, 2009, Scotia Asset Management L.P. became the portfolio advisor for the Pinnacle Portfolios, replacingScotia Capital Inc.

(g) Effective November 1, 2009, Scotia Asset Management L.P. became the portfolio advisor for the Pinnacle Short Term IncomeFund, replacing Scotia Cassels Investment Counsel Limited.

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Management and Audit Reports

Management’s Responsibility for Financial ReportingThe accompanying financial statements have been prepared by the manager and approved by the Board of Directors ofScotia Asset Management G.P. Inc., as general partner for and on behalf of Scotia Asset Management L.P., the manager ofthe Funds. Management is responsible for the information and representations made in these financial statements.

Scotia Asset Management L.P. maintains appropriate processes to ensure that relevant and reliable financial informationis produced.

The financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles andinclude certain amounts that are based on estimates and assumptions made by Scotia Asset Management L.P. Thesignificant accounting policies which Scotia Asset Management L.P. believes are appropriate for the Funds are describedin Note 2 to the financial statements. PricewaterhouseCoopers LLP are the external auditors of the Funds. They haveaudited the financial statements in accordance with Canadian generally accepted auditing standards to enable them toexpress their opinion on the financial statements. Their report is set out below.

Walter PavanChief Financial OfficerScotia Asset Management L.P.March 11, 2010

Auditors’ ReportTo the Unitholders of the Pinnacle Funds and Pinnacle Portfolios

We have audited the Statements of Investment Portfolio of the Pinnacle Funds and Pinnacle Portfolios (the Funds) as atDecember 31, 2009, the Statements of Net Assets as at December 31, 2009 and 2008, and the Statements of Operationsand Changes in Net Assets for the periods then ended as described in Note 1 of the financial statements. These financialstatements are the responsibility of the Funds’ manager. Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards requirethat we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bythe Funds’ manager, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Funds as atDecember 31, 2009 and 2008, and the results of their operations and changes in their net assets for the periods thenended, as described in Note 1 of the financial statements in accordance with Canadian generally accepted accountingprinciples.

Chartered Accountants, Licensed Public AccountantsToronto, OntarioMarch 11, 2010

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Annual Report 2009The Pinnacle Funds


The Pinnacle Funds

Money Market Fund


Bond Funds

Pinnacle Income FundPinnacle High Yield Income FundPinnacle American Core-Plus Bond Fund

Real Estate Fund


Balanced Fund


Canadian Equity Funds

Pinnacle Canadian Value Equity FundPinnacle Canadian Mid Cap Equity FundPinnacle Canadian Growth Equity FundPinnacle Canadian Small Cap Equity Fund

Foreign Equity Funds

Pinnacle American Value Equity FundPinnacle American Mid Cap Value Equity FundPinnacle American Large Cap Growth Equity FundPinnacle American Mid Cap Growth Equity FundPinnacle International Equity FundPinnacle International Small to Mid Cap Value Equity FundPinnacle Global Equity Fund


Pinnacle Balanced Income PortfolioPinnacle Conservative Balanced Growth PortfolioPinnacle Balanced Growth PortfolioPinnacle Conservative Growth PortfolioPinnacle Growth Portfolio

54D 9098E 03/10

The Pinnacle Funds and the Pinnacle Portfolios are managed by Scotia Asset Management L.P. ScotiaCapital Inc. is a corporate entity separate from, although wholly-owned by, The Bank of Nova Scotia.Member CIPF.

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