Semi-Annual Report 2006 the Pinnacle Program Funds the Pinnacle Portfolios

Professional Investment Advice

Semi-Annual Report 2006 The Pinnacle Program Funds The Pinnacle Portfolios

Money Market Fund Pinnacle Short Term Income Fund

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

Real Estate Fund Pinnacle Global Real Estate Securities Fund

Balanced Funds Pinnacle Strategic Balanced Fund Pinnacle Global Tactical Asset Allocation Fund

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

Foreign Equity Funds 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 International Equity Fund Pinnacle International Small to Mid Cap Value Equity Fund Pinnacle Global Equity Fund

The Pinnacle Portfolios Pinnacle Balanced Income Portfolio Pinnacle Conservative Balanced Growth Portfolio Pinnacle Balanced Growth Portfolio Pinnacle Conservative Growth Portfolio Pinnacle Growth Portfolio ScotiaMcLeod: A Tradition of Trust The Pinnacle Program Funds and 1 and Performance The Pinnacle Portfolios For more than 75 years, ScotiaMcLeod has been 2006 Semi-Annual Report providing professional service and expert 2 Message to Clients investment advice to Canadians. In today’s Money Market Fund complex ﬁnancial markets, 3 ) Pinnacle Short Term Income Fund that service and advice is more important than ever. Bond Funds At ScotiaMcLeod, we offer 5 ) Pinnacle Income Fund our clients the best of both 7 ) Pinnacle High Yield Income Fund worlds – the strength and 10 ) Pinnacle American Core-Plus Bond Fund security of one of Canada’s largest ﬁnancial Real Estate Funds institutions; and the insight 17 ) Pinnacle Global Real Estate Securities Fund and personal attention of our well-respected advisors. Balanced Funds 19 ) Pinnacle Strategic Balanced Fund 24 ) Pinnacle Global Tactical Asset Allocation Fund Canadian Equity Funds 26 ) Pinnacle Canadian Value Equity Fund 28 ) Pinnacle Canadian Mid Cap Value Equity Fund 30 ) Pinnacle Canadian Growth Equity Fund 32 ) Pinnacle Canadian Small Cap Equity Fund Foreign Equity Funds 34 ) Pinnacle American Value Equity Fund 36 ) Pinnacle American Mid Cap Value Equity Fund 38 ) Pinnacle American Large Cap Growth Equity Fund 40 ) Pinnacle American Mid Cap Growth Equity Fund 42 ) Pinnacle International Equity Fund 45 ) Pinnacle International Small to Mid Cap Value Equity Fund 49 ) Pinnacle Global Equity Fund The Pinnacle Portfolios 51 ) Pinnacle Balanced Income Portfolio 53 ) Pinnacle Conservative Balanced Growth Portfolio 55 ) Pinnacle Balanced Growth Portfolio 57 ) Pinnacle Conservative Growth Portfolio 59 ) Pinnacle Growth Portfolio

61 Notes to the Financial Statements Message to Clients

2 We are pleased to present you with the 2006 Semi-Annual Report for the Pinnacle Program Funds and The Pinnacle Portfolios. Most of the major global economic trends and investor sentiment from 2005 rolled into the beginning of 2006. The second quarter saw investors reacting to a variety of somewhat contradictory indicators regarding the global outlook for inﬂation, interest rates and economic growth overall. It is probable that volatility will continue to persist, at least over the short term, as investors re-assess their appetite for risk. While we don’t know what the future holds, what we do know is that regardless of which direction the markets take, a disciplined investment process, coupled with a focus on the long-term is essential for long-term investment success. The Pinnacle Program was designed with these two core principles at its foundation. The Program continues to provide clients such as yourself with the freedom and peace of mind of having daily investment decisions left in the hands of the professional money managers, selected by ScotiaMcLeod, who have been carefully chosen to manage the Pinnacle Funds. This disciplined investment management style allows each of our valued Pinnacle clients to have a portfolio that accounts for their risk tolerance and objectives – a combination that will generate returns to help you meet your long-term goals. As part of our ongoing efforts to reduce our Funds’ expenses, we are also pleased to announce that we are offering our unitholders the option to receive the Semi-Annual Report, Annual Report, and Annual and Interim Management Reports of Fund Performance (MRFP). These reports are now mailed only to those unitholders who request them. By providing this option to unitholders, it helps to create signiﬁcant reductions in printing and postage costs, which in turn lowers the Funds’ expenses and may improve unitholder returns. Thank you for your continued support and for choosing the Pinnacle Program. We wish you all the best for a successful second half of 2006. Best regards,

Hamish Angus Managing Director ScotiaMcLeod Pinnacle Short Term Income Fund

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $18,504,165 $25,535,085 Increase (decrease) in net assets from operations 231,356 273,325 Distributions to unitholders Investment income (231,356) (273,325) 18,504,165 25,535,085 Unit Transactions: Proceeds from issue 7,232,316 8,995,675 Reinvested distributions 229,121 272,371 Payments on redemption (9,444,476) (8,790,459) (1,983,039) 477,587 Increase (decrease) in net assets (1,983,039) 477,587 Net Assets, End of Period $16,521,126 $26,012,672

Portfolio Advisor: Scotia Cassels Investment Counsel Limited -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Income Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

Government of Canada (60.3%) 1,139,346 Toronto Hospital 5.64% 12/08/22 1,121,273 1,190,853 6,600,000 Government of Canada 2.75% 12/01/07 6,470,336 6,448,829 700,000 TransCanada PipeLines Limited 40,650,000 Government of Canada 3.75% 06/01/08 40,377,113 40,168,298 7.90% 04/15/27 734,489 873,826 25,700,000 Government of Canada 4.00% 09/01/10 25,795,770 25,242,540 300,000 TransCanada PipeLines Limited 2,200,000 Government of Canada 4.50% 06/01/15 2,191,200 2,187,790 8.21% 04/25/30 366,030 391,508 9,575,000 Government of Canada 5.25% 06/01/12 10,261,195 9,930,425 971,000 Union Gas Ltd. 10.75% 07/31/09 1,206,824 1,025,811 5,440,000 Government of Canada 5.25% 06/01/13 5,876,826 5,665,679 1,000,000 York Region District School 9,275,000 Government of Canada 5.50% 06/01/09 9,763,576 9,539,131 Board 6.55% 04/12/23 995,850 1,148,009 23,600,000 Government of Canada 5.75% 06/01/33 28,812,770 27,748,880 39,686,253 41,700,105 129,548,786 126,931,572 Total Bonds (91.0%) 193,112,945 191,696,042 Provincial Government (10.9%) Short Term Notes 1,000,000 Ontario School Boards (Schedule 1) (8.2%) 17,191,145 17,191,145 Financing Corp. 6.30% 09/22/10 996,410 1,061,802 Total Investments (99.2%) 210,304,090 208,887,187 6,650,000 Province of Ontario 5.60% 06/02/35 7,366,900 7,132,090 13,750,000 Province of Quebec 5.75% 12/01/36 15,514,596 14,870,473 Other Assets, Less Liabilities (0.8%) 1,718,155 23,877,906 23,064,365 Total Net Assets (100.0%) 210,605,342 Corporate (19.8%) 200,000 1st Street Tower 7.77% 09/05/21 199,998 234,677 Net Asset Value Per Unit $10.38 300,000 407 International Inc. 5.96% 12/03/35 299,790 315,176 321,000 Alliance Pipeline LP 5.55% 12/31/23 321,000 326,668 Schedule 1 1,278,798 Alliance Pipeline LP 7.22% 12/31/25 1,278,798 1,476,530 Short-Term Notes 562,453 Blue Water Bridge Authority 6.41% 07/09/27 562,453 574,880 Face Maturity Average Market 800,000 British Columbia Ferry Services Amount Issuer Date Cost ($) Value ($) Inc. 5.74% 05/27/14 810,682 831,697 800,000 Canadian Tire Receivables 17,325,000 Government of Canada Treasury Trust 4.67% 11/20/09 800,000 790,879 Bills 9/7/2006 17,191,145 17,191,145 1,022,000 Electricity Distributors Financial Corp. 6.45% 08/15/12 1,052,743 1,090,465 1,000,000 Enbridge Inc. 7.20% 06/18/32 975,100 1,144,520 1,500,000 FortisAlberta Inc. 5.33% 10/31/14 1,499,400 1,517,913 1,800,000 HSBC Canada Asset Trust 7.78% 12/31/49 1,800,000 1,997,248 500,000 Investors Group Inc. 6.58% 03/07/18 501,985 552,796 1,000,000 Loblaw Companies Limited 7.10% 06/01/16 1,004,400 1,134,184 1,398,634 Merrill Lynch Financial Assets, Inc. 6.67% 05/07/21 1,376,469 1,482,584 808,763 Milit-Air Inc. 5.75% 06/30/19 876,432 851,987 400,000 N 45 Degrees First Issuer Corporation 5.67% 11/15/20 399,996 412,716 400,000 N 45 Degrees First Issuer Corporation 7.34% 07/15/15 429,880 427,076 2,079,268 New Brunswick FM Project Inc. 6.47% 11/30/27 2,016,120 2,318,524 456,000 NOVA Gas Transmission Ltd. 11.20% 06/01/14 616,512 591,162 604,000 NOVA Gas Transmission Ltd. 11.70% 10/15/08 783,388 674,902 560,000 NOVA Gas Transmission Ltd. 11.95% 10/01/07 696,640 599,405 761,296 Ontario School Boards Financing Corp. 5.80% 11/07/28 758,677 801,252 1,498,520 Ontario School Boards Financing Corp. 5.90% 10/11/27 1,514,504 1,588,123 2,106,974 Ontario School Boards Financing Corp. 6.55% 10/19/26 2,097,872 2,352,158 4,266,281 Ontario School Boards Financing Corp. 7.20% 06/09/25 4,959,145 4,986,558 400,000 Shoppers Drug Mart Corporation 4.97% 10/24/08 399,964 400,749 750,000 TD Capital Trust 7.60% 12/29/49 785,010 813,859 3,600,000 The Greater Toronto Airports Authority 6.45% 12/03/27 3,856,340 3,860,034 2,708,595 The Greater Toronto Airports Authority 6.45% 07/30/29 2,588,489 2,921,376

Portfolio Advisor: YMG Capital Management Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Income Fund

Statement of Net Assets as at June 30, 2006 (unaudited) Statement of Operations for the six month periods and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Interest $ 4,388,597 $3,001,764 Investments at market value $208,887,187 $173,343,849 Securities lending income 15,350 2,967 Cash – 140,436 4,403,947 3,004,731 Subscriptions receivable 747,246 590,785 Receivable for securities sold – 4,379,377 Expenses Accrued investment income 1,384,648 1,275,410 Legal fees – 1,072 Audit fees 4,822 5,777 211,019,080 179,729,857 Custody fees 12,149 9,731 Liabilities Interest – 31 Bank overdraft 185,884 – Filing fees 6,456 6,830 Payable for securities purchased – 4,959,923 Unitholder reporting costs 15,198 14,667 Redemptions payable 181,382 92,677 Unitholder administration and service fees 52,947 55,001 Distributions payable (24) – 91,572 93,109 Accrued expenses 46,496 52,196 Net investment income (loss) 4,312,375 2,911,622 413,738 5,104,796 Net Realized and Unrealized Gain (Loss) on Net assets representing unitholders’ equity $210,605,342 $174,625,061 Investments Number of units outstanding 20,282,030 16,145,102 Net realized gain (loss) on investments (312,409) 1,074,747 Increase (decrease) in unrealized appreciation Net asset value per unit $ 10.38 $ 10.82 (depreciation) of investments (7,512,972) 3,135,911 Net gain (loss) on investments (7,825,381) 4,210,658 Increase (Decrease) in Net Assets from Operations $(3,513,007) $7,122,280 Increase (decrease) in net assets from operations per unit $ (0.19) $ 0.58

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $174,625,061 $120,910,358 Increase (decrease) in net assets from operations (3,513,007) 7,122,280 Distributions to unitholders Investment income (4,602,342) (3,064,903) 166,509,712 124,967,735 Unit Transactions: Proceeds from issue 53,929,653 33,783,959 Reinvested distributions 4,587,476 3,053,380 Payments on redemption (14,421,499) (15,506,846) 44,095,630 21,330,493 Increase (decrease) in net assets 35,980,281 25,387,870 Net Assets, End of Period $210,605,342 $146,298,228

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Amount Issuer Date Cost ($)

600,000 Alcan Inc. CP 4.22% 07/31/06 597,857 100,000 Bank of Montreal BDN 4.20% 07/28/06 99,679 2,000,000 Canada Housing Trust 4.75% 03/15/07 2,006,778 590,000 Enbridge Inc. DN 4.26% 08/14/06 586,920 200,000 Farm Credit Corporation DN 3.88% 07/24/06 199,491 4,100,000 Farm Credit Corporation DN 4.12% 08/02/06 4,084,796 600,000 Farm Credit Corporation DN 4.12% 08/03/06 597,704 650,000 FirstBank BA 4.26% 08/14/06 646,606 200,000 GE Capital Canada Funding Company DN 4.12% 07/18/06 199,595 500,000 GE Capital Canada Funding Company DN 4.30% 08/17/06 497,188 400,000 Government of Canada Treasury Bill 2.89% 09/07/06 397,826 300,000 Honda Canada Finance Inc. DN 4.07% 07/18/06 299,399 500,000 HSBC Bank BDN 4.13% 08/15/06 497,412 300,000 John Deere Credit Inc. DN 3.43% 07/05/06 299,859 300,000 John Deere Credit Inc. DN 4.21% 07/25/06 299,138 810,000 JP Morgan Chase Bank DN 4.30% 08/16/06 805,536 300,000 Loblaw Companies Limited DN 4.00% 07/14/06 299,541 300,000 Merrill Lynch Canada Finance Company CP 3.77% 07/14/06 299,566 600,000 Nova Scotia Power Inc. DN 3.93% 07/11/06 599,289 400,000 Province of Alberta BDN 4.00% 08/02/06 398,559 700,000 Province of British Columbia PN 4.14% 08/09/06 696,839 800,000 Shell Canada Limited DN 4.22% 07/26/06 797,600 390,000 Terasen Gas Inc. CP 4.21% 07/27/06 388,791 550,000 The Toronto-Dominion Bank BA 4.3% 05/18/07 529,920 300,000 Toyota Credit Canada Inc. DN 4.26% 08/02/06 298,848 Total Investments (99.4%) 16,424,737 Other Assets, Less Liabilities (0.6%) 96,389 Total Net Assets (100.0%) 16,521,126 Net Asset Value Per Unit $10.00

BA — Banker’s Acceptance BDN — Banker’s Deposit Note CP — Commercial Paper DN — Deposit Note PN — Promissory Note

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

*Bonds (88.4%) 500,000 Norske Skog Canada Limited Federal Government (2.5%) 8.63% 06/15/11 555,912 546,350 1,050,000 Government of Canada 4.50% 06/01/15 1,070,355 1,044,172 1,400,000 North American Energy Partners 1,750,000 Government of Canada 5.75% 06/01/33 2,087,000 2,057,650 Inc. 8.75% 12/01/11 1,620,035 1,514,170 3,157,355 3,101,822 780,000 NOVA Chemicals Corporation 6.50% 01/15/12 851,204 804,473 Corporate (85.9%) 1,500,000 NOVA Chemicals Corporation 1,250,000 Abitibi-Consolidated Inc. 8.38% 04/01/15 1,477,848 1,275,281 7.85% 08/30/10 1,596,250 1,529,001 1,000,000 Allied Waste North America Inc. 1,300,000 Paragon Gaming 12.50% 04/15/12 1,300,000 1,300,000 7.25% 03/15/15 1,147,324 1,064,825 815,000 Paramount Resources Ltd. 8.50% 01/31/13 1,048,637 925,764 2,520,000 Avenor Inc. 10.85% 11/30/14 2,810,840 2,658,600 1,178,489 Petrobank Energy and Resources 834,411 BCE Place Ltd. 7.07% 10/08/07 849,330 854,858 Ltd. 9.00% 07/31/06 1,032,260 1,178,489 1,000,000 Brookﬁeld Power 5.45% 12/18/17 1,157,300 1,106,526 325,000 Pogo Producing Company 6.63% 03/15/15 388,883 333,385 2,650,000 Canadian Hotel Income 1,065,000 Pope & Talbot, Inc. 8.38% 06/01/13 1,269,411 945,527 Properties Real Estate Investment 750,000 Retirement Residences Real Trust 6.00% 11/30/14 2,650,000 2,936,465 Estate Investment Trust 8.25% 01/31/11 750,000 750,000 1,425,000 Canadian Tire Corporation, 1,750,000 Rogers Cable Inc. 7.25% 12/15/11 1,783,750 1,826,559 Limited 5.61% 09/04/35 1,378,046 1,304,238 1,700,000 Rogers Wireless Communications 3,500,000 CanWest Media Inc. 8.00% 09/15/12 4,016,609 3,902,500 Inc. 6.38% 03/01/14 2,293,970 1,803,094 2,000,000 Cascades Inc. 7.25% 02/15/13 2,244,631 2,073,900 1,750,000 Rogers Wireless Communications 253,000 Charter Communications Inc. 7.63% 12/15/11 1,783,750 1,856,450 Holdings LLC 10.00% 05/15/14 218,051 168,904 1,000,000 Sealy Mattress Co. 8.25% 06/15/14 1,245,426 1,120,575 1,105,000 Charter Communications 1,000,000 Shaw Communications, Inc. Holdings LLC 11.00% 10/01/15 1,261,538 1,084,226 6.15% 05/09/16 944,515 949,786 1,000,000 Charter Communications 1,500,000 Sobeys Inc. 7.16% 02/26/18 1,673,535 1,662,652 Holdings LLC 9.45% 12/15/10 1,162,183 1,142,875 867,302 SR Telecom Inc. 16.00% 10/01/06 1,052,698 967,041 2,000,000 CHC Helicopter Corporation 2,000,000 STEERS Thayer Gate CDO 7.38% 05/01/14 2,515,493 2,160,312 Trust 5.13% 06/20/13 1,925,380 1,925,380 1,990,000 Chesapeake Energy Corporation 2,000,000 STEERS Thayer Gate CDO 6.38% 06/15/15 2,295,750 2,074,625 Trust 7.52% 06/20/13 1,997,520 1,997,520 450,000 Cogeco Cable Inc. 8.44% 07/31/07 428,625 459,970 2,000,000 Summit Real Estate Investment 1,000,000 Cominar Real Estate Investment Trust 5.20% 03/01/12 1,987,160 1,935,386 Trust 6.30% 06/27/14 999,999 1,102,600 1,600,000 Sun Life Financial Inc. 4.95% 06/01/36 1,602,240 1,555,578 500,000 Couche-Tard U.S. LP 7.50% 12/15/13 700,505 557,500 1,500,000 Superior Plus Income 2,000,000 Dole Food Company, Inc. 7.25% 06/15/10 2,548,611 1,990,275 Fund 5.75% 12/31/12 1,500,000 1,372,350 200,000 Domtar Inc. 10.85% 08/05/17 223,000 214,422 500,000 Swift Trust 5.30% 05/06/07 490,000 560,113 1,000,000 Domtar Inc. 7.13% 08/15/15 1,210,937 975,625 1,260,000 Talisman Energy Inc. 4.44% 01/27/11 1,259,887 1,231,580 1,000,000 Dundee Bancorp Inc. 6.70% 09/24/07 1,018,750 1,013,369 700,000 Tekni-Plex Inc. 12.75% 06/15/10 936,033 542,448 1,925,000 EchoStar DBS Corporation 6.38% 10/01/11 2,397,208 2,063,203 1,550,000 Tembec Industries, Inc. 8.50% 02/01/11 1,602,219 911,652 950,000 Enbridge Income Fund 5.25% 12/22/14 949,924 941,699 900,000 The Bear Stearns Companies Inc. 1,500,000 ERAC Canada Finance Ltd. 4.20% 06/30/08 900,036 900,684 5.38% 02/26/16 1,498,980 1,464,172 2,560,000 The Jean Coutu Group (PJC) Inc. 2,695,000 Fairfax Financial Holdings Limited 8.50% 08/01/14 3,036,495 2,643,888 7.38% 04/15/18 3,002,108 2,539,162 2,500,000 The Royal Bank of Scotland PLC 490,000 Freeport-McMoran Copper & 5.37% 11/29/49 2,490,410 2,456,996 Gold, Inc. 10.13% 02/01/10 741,410 580,497 2,350,000 Videon Cable Systems Inc. 700,000 Harvest Energy Trust 10.50% 01/31/08 699,999 805,000 8.15% 04/26/10 2,378,676 2,581,163 600,000 Hudson Bay Mining and Smelting 1,500,000 Wynn Las Vegas LLC 6.63% 12/01/14 1,808,601 1,599,328 Company, Ltd. 9.63% 01/15/12 727,324 735,900 2,000,000 YPG Holdings Inc. 5.85% 11/18/19 1,999,200 1,956,469 1,100,000 InSight Health Services Corp. 9.88% 11/01/11 1,379,253 545,793 113,518,823 105,968,047 3,275,000 Intrawest Corp. 6.88% 10/15/09 3,278,875 3,307,750 250,000 Intrawest Corporation 7.50% 10/15/13 308,988 278,750 700,000 Kingsway America Inc. 7.50% 02/01/14 902,563 775,417 No. of Average Market 2,800,000 Lindsey Morden Group Inc. Shares Issuer Cost ($) Value ($) 7.00% 06/16/08 1,922,500 2,646,000 1,080,000 Masonite International Equity Investments (4.3%) Corporation 11.35% 07/11/06 1,237,302 1,204,200 Consumer Discretionary (2.2%) 2,940,000 Massey Energy Company 6.88% 12/15/13 3,413,331 3,056,828 108,800 Shaw Communications Inc. Preferred 2,638,400 2,720,000 599,000 Merrill Lynch Financial Assets, Telecommunication Services (2.1%) Inc. 6.45% 11/12/14 527,959 596,913 7,392,447 SR Telecom Inc. 1,704,784 2,587,357 1,000,000 Merrill Lynch Financial Assets, Short Term Notes – (Schedule 1) (5.6%) 6,929,105 6,929,105 Inc. 6.45% 10/12/13 952,460 1,030,918 500,000 Merrill Lynch Financial Assets, Total Investments (98.3%) 127,948,467 121,306,331 Inc. 6.65% 11/12/34 492,950 521,257 Foreign Currency Forward Contracts 3,000,000 Millar Western Forest Products (Schedule 2) (0.1%) – 87,774 Ltd. 7.75% 11/15/13 3,155,339 2,558,925 Other Assets, Less Liabilities (1.6%) 2,024,957 2,000,000 Molson Coors Capital Finance ULC 5.00% 09/22/15 1,893,192 1,891,881 Total Net Assets (100.0%) 123,419,062 2,500,000 NIF-T 4.29% 09/17/08 2,500,000 2,453,061 Net Asset Value Per Unit $9.92 1,650,000 Norske Skog Canada Limited 7.38% 03/01/14 2,117,695 1,664,974

(continued on next page) * Corporate bonds are comprised of 19% U.S. denominated bonds, 76% Canadian denominated bonds and 5% foreign bonds. Portfolio Advisor: Guardian Capital LP -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle High Yield Income Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

Schedule 1 Short Term Notes

Face Maturity Average Market Amount Issuer Date Cost ($) Value ($)

2,750,000 Caterpillar Financial Services Ltd. 4.23% 7/31/2006 2,740,150 2,740,150 600,000 EnCana Corporation 4.23% 7/25/2006 598,267 598,267 1,300,000 Potash Corporation of Saskatchewan 4.22% 7/27/2006 1,295,952 1,295,952 2,300,000 TransCanada Pipelines Limited 4.19% 7/20/2006 2,294,736 2,294,736 6,929,105 6,929,105

Schedule 2 Foreign Currency Forward Contracts Value

Due Credit Market Contracts Pay Receive Date Rating (1) Value ($)

1 5,860,000 U.S. $ 6,458,540 Canadian $ 10/01/06 AA- (56,557) 1 7,935,000 U.S. $ 8,711,043 Canadian $ 09/06/06 AA- (118,603) 1 5,990,000 U.S. $ 6,858,550 Canadian $ 10/07/06 AA- 181,761 1 5,865,000 U.S. $ 6,467,746 Canadian $ 09/14/06 AA- (56,887) 1 7,220,000 U.S. $ 8,065,318 Canadian $ 09/21/06 AA- 35,040 1 2,950,000 U.S. $ 3,348,840 Canadian $ 07/24/06 AA- 62,025 1 7,225,000 U.S. $ 8,083,691 Canadian $ 08/24/06 AA- 40,995 Total Foreign Currency Forward Contracts Value 87,774

(1) Credit rating refers to the credit worthiness of the counter party, not the contract

Portfolio Advisor: Guardian Capital LP -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle High Yield Income Fund

Statement of Net Assets as at June 30, 2006 (unaudited) Statement of Changes in Net Assets for the six month and December 31, 2005 (audited) periods ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Net Assets, Beginning of Period $110,895,635 $ 84,881,582 Assets Increase (decrease) in net assets from operations 2,315,336 2,986,902 Investments at market value $121,306,331 $108,880,367 Distributions to unitholders Cash 1,114,793 61,495 Investment income (4,048,030) (3,424,603) Receivable on open forward contracts 87,774 147,060 109,162,941 84,443,881 Subscriptions receivable 379,602 373,634 Accrued investment income 1,683,377 1,699,837 Unit Transactions: Proceeds from issue 22,017,859 22,490,344 124,571,877 111,162,393 Reinvested distributions 4,038,412 3,409,903 Liabilities Payments on redemption (11,800,150) (13,131,187) Payable for securities purchased 953,261 – 14,256,121 12,769,060 Redemptions payable 156,213 215,499 Distributions payable 553 – Increase (decrease) in net assets 12,523,427 12,331,359 Accrued expenses 42,788 51,259 Net Assets, End of Period $123,419,062 $ 97,212,941 1,152,815 266,758 Net assets representing unitholders’ equity $123,419,062 $110,895,635 Number of units outstanding 12,439,754 11,027,886 Net asset value per unit $ 9.92 $ 10.06

Statement of Operations for the six month periods ended June 30, (unaudited) 2006 2005

Investment Income Dividends $ 88,045 $ 141,644 Interest 3,768,584 3,173,074 Securities lending income 770 717 Less: Foreign withholding taxes – (17,301) 3,857,399 3,298,134 Expenses Legal fees – 1,072 Audit fees 4,822 5,730 Custody fees 8,281 6,461 Interest 1,040 116 Filing fees 6,456 6,852 Unitholder reporting costs 14,580 14,092 Unitholder administration and service fees 51,322 52,818 86,501 87,141 Net investment income (loss) 3,770,898 3,210,993 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 150,393 1,118,446 Net realized gain (loss) on foreign exchange 1,813,652 600,749 Net realized gain (loss) from underlying funds/trust units – 3,495 Increase (decrease) in unrealized appreciation (depreciation) of investments (3,357,738) (1,968,522) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (61,869) 21,741 Net gain (loss) on investments (1,455,562) (224,091) Increase (Decrease) in Net Assets from Operations $ 2,315,336 $2,986,902 Increase (decrease) in net assets from operations per unit $ 0.20 $ 0.36

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

Bonds (98.2%) 80,000 Centex Corporation 5.40% 08/01/07 98,944 89,220 Corporate (54.4%) 65,000 Century Communications Corp. 20,000 Abitibi-Consolidated Inc. 7.88% 08/01/09 22,757 21,547 9.50% 03/01/49 70,699 72,837 20,000 Accuride Corporation 8.50% 02/01/15 25,290 21,631 25,000 Charter Communications Holdings 30,000 Adesa, Inc. 7.63% 06/15/12 36,544 32,865 LLC 11.13% 01/15/11 20,810 17,282 35,000 AK Steel Holding Corporation 95,000 Charter Communications Holdings 7.88% 02/15/09 39,106 38,976 LLC 13.50% 01/15/11 80,517 70,970 30,000 Aleris International Inc. 9.00% 11/15/14 38,084 34,161 438,315 Chase Mortgage Finance 60,000 Allied Waste North America Inc. Corporation 5.00% 09/25/18 512,712 466,115 9.25% 09/01/12 78,751 71,248 25,000 Chemtura Corporation 6.88% 06/01/16 28,254 27,074 12,751 American Airlines, Inc. 7.38% 05/23/16 13,275 12,866 45,000 Cincinnati Bell Inc. 8.38% 01/15/14 53,882 48,858 35,000 American Airlines 6.82% 05/23/11 48,884 38,147 115,000 Citigroup Inc. 5.88% 02/22/33 170,897 120,222 50,000 American Real Estate Partners, 50,000 Comcast Corporation 6.50% 11/15/35 54,909 52,612 L.P. 8.13% 06/01/12 59,547 56,029 50,000 Commercial Mortgage Pass- 35,000 American Tower Corporation Through Certificates 5.69% 06/10/46 55,645 55,572 7.13% 10/15/12 44,357 39,513 80,000 Consolidated Edison Company of 15,000 American Tower Corporation New York 6.20% 06/15/36 87,762 87,715 7.25% 12/01/11 17,081 17,122 95,000 Constellation Brands, Inc. 8.13% 01/15/12 118,836 109,765 145,000 Ameriprise Financial, Inc. 7.52% TBA 162,479 162,879 50,000 Continental Airlines, Inc. 6.50% 06/15/11 67,914 55,691 55,000 AO Siberian Oil Company 10.75% 01/15/09 75,065 67,059 60,000 Corrections Corporation of 50,000 Armor Holdings, Inc. 8.25% 08/15/13 64,133 57,980 America 7.50% 05/01/11 73,611 67,903 85,000 AT&T Corp. 7.30% 11/15/11 107,520 100,691 50,000 Cott Beverages USA Inc. 8.00% 12/15/11 65,101 55,889 55,000 AT&T Corp. 8.00% 11/15/31 70,814 70,708 53,773 Countrywide Alternative Loan 90,000 Atmos Energy Corporation 5.44% 10/15/07 105,980 100,379 Trust 4.67% 08/25/34 66,117 58,902 115,000 AVA Capital Trust III 6.50% 04/01/34 150,535 126,240 112,498 Countrywide Alternative Loan 10,000 Avista Corp. 9.75% 06/01/08 15,861 11,849 Trust 5.50% 03/25/36 129,652 124,723 35,000 BAC Capital Trust XI 6.63% 05/23/36 38,943 38,778 163,326 Countrywide Alternative Loan 60,000 Banc of America Commercial Trust 5.90% 11/25/35 194,698 180,176 Mortgage Inc. 5.78% 05/10/45 66,694 66,307 69,657 Countrywide Alternative Loan 75,141 Bank of America Alternative Loan Trust 6.00% 01/25/35 85,790 76,602 Trust 5.50% 04/25/35 95,056 81,924 90,000 Countrywide Asset-Backed 105,232 Bank of America Alternative Loan Certificates 3.87% 03/25/20 111,180 98,254 Trust 6.00% 12/25/33 143,171 115,351 185,000 Countrywide Asset-Backed 62,150 Bank of America Alternative Loan Certificates 4.37% 11/25/35 228,105 203,994 Trust 6.00% 12/25/34 78,597 67,508 150,000 Countrywide Asset-Backed 78,316 Bank of America Alternative Loan Certificates 4.90% 02/25/36 176,765 165,003 Trust 6.00% 06/25/35 100,218 85,576 115,000 Countrywide Asset-Backed 58,328 Bank of America Alternative Loan Certificates 5.63% 07/25/27 134,825 127,343 Trust 6.00% 03/25/34 80,346 63,553 100,000 Countrywide Asset-Backed 33,033 Bank of America Alternative Loan Certificates 6.09% 06/25/21 112,238 111,498 Trust 6.00% 11/25/34 42,690 36,194 80,838 Countrywide Home Loans 6.00% 03/25/36 92,714 88,142 1,862 Bank of America Mortgage 107,691 Countrywide Home Loans 6.14% 05/20/36 127,081 121,592 Securities Inc. 6.12% 05/25/33 2,725 2,084 60,000 Cox Communications, Inc. 4.63% 01/15/10 66,941 63,836 141,840 Bank of America Mortgage 29,022 Credit Suisse First Boston Securities Inc. 4.75% 10/25/20 163,912 150,113 Mortgage Corp. 7.00% 12/25/33 40,299 32,420 70,000 Baxter International Inc. 5.20% 02/16/08 83,342 77,461 11,756 Credit Suisse First Boston 46,350 Bear Stearns Adjustable Rate Mortgage Corp. 7.00% 02/25/34 16,398 13,102 Mortgage Trust 4.75% 08/25/35 53,139 50,468 30,000 Credit Suisse First Boston 121,559 Bear Stearns ALT-A Trust 6.21% 05/25/36 143,285 135,834 Mortgage Corp. 5.56% 02/15/39 33,524 32,893 92,999 Bear Stearns ALT-A Trust 6.23% 05/25/36 103,319 104,027 95,371 Credit-Based Asset Servicing and 143,030 Bear Stearns Asset Backed Securities 5.45% 12/25/35 111,335 105,707 Securities, Inc. 5.50% 11/25/35 163,709 157,394 45,000 CSC Holdings Inc. 8.13% 08/15/09 51,377 51,367 40,000 BellSouth Corporation 4.20% 09/15/09 47,245 42,501 25,000 CSC Holdings Inc. 8.13% 07/15/09 28,566 28,502 40,000 BF Saul REIT 7.50% 03/01/14 50,334 45,046 270,000 DaimlerChrysler North America 25,000 Bluewater Finance Limited Holding Corporation 5.33% 03/13/09 305,151 301,211 10.25% 02/15/12 30,788 28,432 15,000 Del Laboratories, Inc. 8.00% 02/01/12 12,897 14,028 80,000 Bowater Incorporated 9.50% 10/15/12 104,167 90,984 5,013 Deutsche Alternate – A Securities, 25,000 Boyd Gaming Corporation 8.75% 04/15/12 29,146 29,373 Inc. 4.50% 10/25/33 6,828 5,565 45,000 British Telecommunications PLC 85,000 Developers Diversified Realty 8.63% 12/15/30 66,656 61,736 Corporation 4.63% 08/01/10 110,453 90,372 234,000 Caisse d’Amortissement de la 40,000 Developers Diversified Realty Dette Sociale (CADES) 3.63% 04/25/16 316,525 318,782 Corporation 5.38% 10/15/12 46,653 43,031 105,000 Caremark Rx, Inc. 7.38% 10/01/06 141,010 117,461 20,000 Dex Media East LLC 12.13% 11/15/12 28,398 25,115 15,000 Carrols Corporation 9.00% 01/15/13 17,512 16,850 35,000 Dole Food Company, Inc. 8.88% 03/15/11 39,590 36,586 300,000 Casella Waste Systems, Inc. 80,000 Dominion Resources, Inc. 5.79% 09/28/07 93,716 89,266 9.75% 02/01/13 373,947 351,643 60,000 Dominion Resources, Inc. 5.75% 05/15/08 69,646 66,722 80,000 Centex Corporation 6.50% 05/01/16 88,230 86,776

(continued on next page) Portfolio Advisor: Delaware Investment Advisers -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Core-Plus Bond Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

60,000 E*Trade Financial Corporation 60,000 Inmarsat Finance PLC 10.38% 11/15/12 59,828 57,200 8.00% 06/15/11 75,588 68,740 111,000 Insight Midwest, LP/Insight 70,000 El Paso Corporation 7.63% 08/01/10 89,351 79,904 Capital, Inc. 10.50% 11/01/10 137,316 129,334 12,484 Elwood Energy, LLC 8.16% 07/05/26 17,019 15,085 10,000 Intelsat Subsidiary Holding Co Ltd. 50,000 ERAP 3.75% 04/25/10 70,536 71,033 8.63% 01/15/15 10,927 11,289 61,223 First Horizon Mortgage Pass- 35,000 Interface, Inc. 10.38% 02/01/10 44,927 42,732 Through Trust 5.70% 10/25/34 78,579 67,244 35,000 Intertape Polymer U.S. Inc. 8.50% 08/01/14 41,724 36,488 23,068 First Horizon Mortgage Pass- 50,000 J.C. Penney Corporation, Inc. Through Trust 8.00% 07/25/33 34,637 26,812 7.38% 08/15/08 63,441 57,396 145,000 First Union Institutional Capital II 20,000 J.C. Penney Corporation, Inc. 7.85% 01/01/27 168,869 169,249 7.63% 03/01/97 22,570 22,098 160,000 Ford Motor Company 7.45% 07/16/31 165,997 128,448 30,000 J.C. Penney Corporation, Inc. 50,000 Ford Motor Credit Company 7.65% 08/15/16 38,788 36,484 5.70% 01/15/10 57,934 48,864 110,000 J.P. Morgan Mortgage 30,000 Ford Motor Credit Company Trust 5.15% 09/25/35 129,549 116,628 7.38% 10/28/09 31,779 31,191 10,000,000 Japan Finance Corporation for 65,000 FPL Group Capital Inc. 4.09% 02/16/07 78,816 71,771 Municipal Enterprises 2.00% 05/09/16 98,063 98,063 115,000 FTI 7.63% 06/15/13 131,124 130,789 45,000 Johnson Controls, Inc. 5.00% 11/15/06 64,279 50,052 40,000 Gaylord Entertainment Company 65,000 JP Morgan Chase Commercial 8.00% 11/15/13 48,517 44,823 Mortgage Securities Corp. 4.99% 01/12/37 85,120 68,854 100,000 Gazprom 9.63% 03/01/13 150,110 127,991 60,000 JP Morgan Chase Commercial 45,000 GE Capital Commercial Mortgage Mortgage Securities Corp. 5.38% 07/12/37 80,833 65,016 Corporation 4.71% 05/10/43 56,504 48,523 165,000 JP Morgan Chase Commercial 40,000 GE Capital Commercial Mortgage Mortgage Securities Corp. 5.88% 04/15/45 183,702 182,223 Corporation 4.86% 07/10/45 48,033 43,330 40,000 JPM Capital Trust I 7.54% 01/15/27 46,027 46,101 125,000 GE Capital Commercial Mortgage 35,000 Kansas City Southern 9.50% 10/01/08 44,991 41,367 Corporation 6.27% 12/10/35 165,561 141,607 14,000,000 KfW International Finance Inc. 305,000 General Motors Acceptance 1.75% Mar 23/10 03/23/10 146,967 139,005 Corporation 6.88% 09/15/11 332,657 328,025 55,000 Kraft Foods Inc. 4.13% 11/12/09 65,260 58,223 148,000 General Motors Acceptance 12,000,000 Kreditanstalt fuer Wiederaufbau Corporation 7.50% 12/01/06 103,339 98,599 2.05% 02/16/26 113,150 113,203 405,000 General Motors Acceptance 60,000 Kreditanstalt fuer Wiederaufbau Corporation 8.00% 11/01/31 452,524 434,641 4.75% 12/07/10 122,542 122,165 185,000 General Motors Corporation 98,000 Kreditanstalt fuer Wiederaufbau 8.38% 07/15/33 153,172 169,145 6.50% 11/15/11 71,868 66,261 50,000 Georgia-Paciﬁc Corp. 9.50% 12/01/11 60,737 58,956 35,000 LaBranche & Co Inc. 11.00% 05/15/12 45,497 42,928 72,686 GMAC Mortgage Corporation 60,000 LaBranche & Co Inc. 9.50% 05/15/09 75,341 71,416 Loan Trust 3.87% 05/25/25 84,874 79,806 26,000 Landry’s Restaurants, Inc. 7.50% 12/15/14 28,617 26,671 124,191 GMAC Mortgage Corporation 19,000,000 Landwirtschaftliche Rentenbank Loan Trust 5.19% 05/25/35 140,294 133,047 1.38% 04/25/13 214,734 180,740 20,000 Gold Kist Inc. 10.25% 03/15/14 26,648 23,415 145,000 LB-UBS Commercial Mortgage 20,000 Graham Packaging Company Inc. Trust 4.89% 09/15/30 174,403 156,692 9.88% 10/15/14 22,248 21,966 122,367 Lehman Mortgage Trust 5.50% 12/25/35 145,523 135,141 170,000 Greenwich Capital Commercial 86,000 Liberty Media Corporation 6.83% 09/17/06 107,800 96,180 Funding Corp. 6.11% 07/10/16 189,716 188,667 70,000 Lodgenet Entertainment 9.50% 06/15/13 92,054 83,514 98,311 GSAMP Trust 6.09% 05/25/36 111,720 109,377 80,000 MagnaChip Semiconductor SA 30,000 GTE Hawaiian Telephone 8.00% 12/15/14 83,245 74,482 Company, Inc. Series B 7.38% 09/01/06 42,045 33,522 55,000 Mandalay Resort Group 9.50% 08/01/08 66,996 65,234 50,000 Gundle/SLT Environmental, Inc. 80,000 Marsh & McLennan Companies, 11.00% 05/15/12 58,397 56,238 Inc. 5.15% 09/15/10 94,503 86,111 35,000 Halliburton Company 5.50% 10/15/10 48,743 38,675 105,000 Marsh & McLennan Companies, 50,000 H-Lines Finance Holding Corp. Inc. 5.38% 03/15/07 132,459 116,756 11.00% 04/01/13 48,267 47,666 80,000 Marsh & McLennan Companies, 112,000 Horizon Lines, LLC 9.00% 11/01/12 132,329 127,378 Inc. 5.64% 07/13/07 98,296 89,165 65,000 HRPT Properties Trust 5.75% 02/15/14 74,148 70,198 20,000 Marsh Supermarkets, Inc. 8.88% 08/01/07 22,259 22,189 100,000 HSBC Finance Capital Trust IX 68,909 Master Adjustable Rate Mortgages 5.91% 11/30/35 118,645 106,723 Trust 3.13% 12/25/33 91,008 77,176 100,000 HSBC Finance Corporation 4.63% 09/15/10 117,876 106,733 75,255 Master Alternative Loans 65,000 Humana Inc. 6.45% 06/01/16 71,749 72,131 Trust 5.50% 12/25/18 102,245 81,453 85,000 Huntsman International LLC 105,887 Master Alternative Loans 10.13% 07/01/09 97,484 96,907 Trust 6.00% 04/25/35 133,381 116,390 78,469 Indymac Index Mortgage Loan 17,976 Master Alternative Loans Trust 6.17% 03/25/36 92,384 87,196 Trust 8.00% 09/25/33 25,782 20,112 116,904 Indymac Index Mortgage Loan 135,000 Medco Health Solutions, Inc. Trust 5.90% 12/25/35 138,436 128,892 7.25% 08/15/13 189,018 159,006 25,000 Ingles Markets, Incorporated 200,000 Mediacom Communications Corp. 8.88% 12/01/11 28,817 29,234 9.50% 01/15/13 231,589 222,443

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

45,000 Merril Lynch Mortgage 90,000 Queensland Treasury Corporation Trust 5.84% 05/12/39 49,703 49,446 5.50% 05/14/10 75,560 73,436 210,000 Merrill Lynch & Co., Inc. 6.05% 05/16/16 230,890 233,867 65,000 RBS Capital Trust 4.71% 12/29/49 66,086 65,566 38,928 Merrill Lynch Mortgage Investors, 59,145 Renaissance Home Equity Loan Inc. 5.45% 07/25/36 46,394 43,309 Trust 3.86% 02/25/35 70,459 65,257 50,000 Merrill Lynch Mortgage 75,000 Renaissance Home Equity Loan Trust 4.47% 10/12/41 61,693 52,318 Trust 4.36% 08/25/35 93,679 82,028 40,000 Metaldyne Corporation 10.00% 11/01/13 42,950 43,262 60,000 Renaissance Home Equity Loan 45,000 MetLife, Inc. 5.00% 06/15/15 55,288 46,559 Trust 5.40% 02/25/36 69,486 66,311 10,000 MetLife, Inc. 5.70% 06/15/35 12,290 10,003 35,000 Renaissance Home Equity Loan 26,847 Mid State Trust 4.86% 07/15/38 35,727 27,389 Trust 5.57% 02/25/36 40,534 38,655 30,000 MidAmerican Funding, LLC 6.75% 03/01/11 39,299 34,740 190,000 Renaissance Home Equity Loan 21,777 Mid-State Capital Corporation Trust 5.61% 05/25/36 216,633 209,698 2004-1 Trust 6.01% 08/15/37 29,013 24,308 65,000 Residential Asset Mortgage 30,000 ML-CFC Commercial Mortgage Products, Inc. 4.30% 01/25/31 87,739 71,266 Trust 5.92% 06/12/46 33,677 33,599 83,900 Residential Asset Mortgage 45,000 Monongahela Power Company Products, Inc. 6.00% 05/25/32 108,966 93,096 5.00% 10/01/06 54,522 50,071 60,492 Residential Asset Mortgage 65,000 Morgan Stanley Capital I 4.88% 08/13/42 80,114 70,071 Products, Inc. 6.50% 07/25/32 77,388 67,710 48,306 Morgan Stanley Mortgage Loan 38,941 Residential Asset Mortgage Trust 6.50% 02/25/36 56,422 53,945 Products, Inc. 7.00% 11/25/31 54,976 43,514 100,000 MUFG Capital Finance 1 Limited 100,000 Residential Capital Corporation 6.35% 07/25/49 115,925 107,748 5.13% 05/17/12 140,875 140,861 30,000 National Beef Packing Company, 90,000 Residential Capital Corporation LLC/NB Finance Corp. 10.50% 08/01/11 37,884 33,575 6.00% 02/22/11 103,454 97,398 135,000 Nelnet Student Loan Corporation 75,000 Residential Capital Corporation 5.76% 07/01/12 175,371 151,297 6.13% 11/21/08 89,262 82,568 82,000 New South Wales Treasury 88,000 Residential Capital Corporation Corporation 7.00% 12/01/10 70,632 70,441 6.38% 06/30/10 102,658 96,702 100,000 New South Wales Treasury 50,000 Residential Capital Corporation Corporation 6.00% 05/01/12 85,225 82,532 6.38% 05/17/13 104,614 102,492 35,000 NewPage Corporation 10.00% 05/01/12 41,481 40,586 105,000 Residential Capital Corporation 110,000 Nextel Communications, Inc. 6.50% 04/17/13 119,947 114,773 6.88% 10/31/13 145,678 123,773 295,000 Residential Capital Corporation 150,000 Nomura Asset Acceptance 6.88% 06/30/15 359,498 328,327 Corporation 4.79% 03/25/35 188,207 163,551 155,000 Residential Funding Mortgage 100,000 Nomura Asset Acceptance Securities II 5.79% 02/25/36 173,703 171,610 Corporation 6.16% 05/25/36 111,163 111,415 33,000 Rhodia SA 8.88% 06/01/11 39,406 37,071 85,000 Northern State Power Company 25,000 Royal Caribbean Cruises Ltd. 6.25% 06/01/36 95,015 95,086 7.25% 06/15/16 27,706 27,460 50,000 NRG Energy, Inc. 7.25% 02/01/14 57,805 54,496 30,000 Rural Cellular Corporation 9.88% 02/01/10 39,144 34,746 70,000 NRG Energy, Inc. 7.38% 02/01/16 80,535 76,294 85,000 SAFECO Capital Trust I 8.07% 07/15/37 98,842 100,235 25,000 NTK Holdings, Inc. 10.75% 03/01/14 19,740 20,418 80,000 Safeway Inc. 5.83% 03/27/09 93,272 89,228 30,000 O’Charley’s Inc. 9.00% 11/01/13 34,948 33,994 15,000 Sanmina-SCI Corporation 8.13% 03/01/16 16,586 16,391 100,000 OMI Corporation 7.63% 12/01/13 120,998 112,058 25,000 Seabulk International, Inc. 9.50% 08/15/13 34,425 30,848 50,000 Oncor Electric Delivery Company 170,000 Sempra Energy 4.62% 05/17/07 212,666 187,714 7.00% 05/01/32 73,985 58,589 95,000 Sempra Energy 5.66% 05/21/08 116,017 106,066 70,000 ONEOK, Inc. 5.51% 02/16/08 83,626 77,608 25,000 Sirius Satellite Radio Inc. 9.63% 08/01/13 27,249 26,412 30,000 Orion Power Holdings, Inc. 205,000 SLM Corporation 6.50% 06/15/10 163,173 136,196 12.00% 05/01/10 44,007 38,133 20,000 Solo Cup Company 8.50% 02/15/14 19,449 19,624 14,000,000 Osterreichische Kontrollbank 45,000 Solutia Inc. 6.72% 10/15/37 38,691 46,914 1.80% 03/22/10 147,263 139,253 30,000 Southern California Edison 45,000 Ownit Mortgage Loan Asset- Company 7.63% 01/15/10 44,931 35,425 Backed Certiﬁcate 5.63% 01/25/37 51,149 49,728 160,000 Southern Copper Corporation 105,000 Pepco Holdings, Inc. 5.50% 08/15/07 130,031 116,725 7.50% 07/27/35 184,839 169,257 95,000 Pepco Holdings, Inc. 5.86% 06/01/10 107,133 105,870 75,000 Sovereign Capital Trust VI 7.91% 06/13/36 83,610 85,141 175,000 Pilgrim’s Pride Corporation 9.63% 09/15/11 231,998 204,393 100,000 Sprint Capital Corp. 7.63% 01/30/11 125,978 118,639 30,000 Pinnacle Food Holding Corporation 135,000 Sprint Capital Corp. 8.75% 03/15/32 179,766 182,574 8.25% 12/01/13 33,965 32,865 85,000 St. Paul Travelers Companies, Inc. 55,000 Playtex Products, Inc. 9.38% 06/01/11 66,365 64,161 5.01% 08/16/07 107,405 94,136 110,000 Popular North America Capital 35,000 Stena AB 9.63% 12/01/12 46,839 42,488 Trust I 6.56% 09/15/34 134,735 113,684 67,429 Structured Adjustable Rate 95,000 Popular North America Inc. 4.25% 04/01/08 133,981 103,082 Mortgage Loan 5.50% 12/25/34 81,321 73,036 65,000 Popular North America Inc. 5.41% 04/06/09 76,170 72,652 64,453 Structured Asset Securities 35,000 Potlatch Corporation 9.13% 12/01/09 45,271 45,806 Corporation 3.38% 08/25/31 73,455 65,119 37,189 Prime Mortgage Trust 6.00% 02/25/34 50,715 40,844 68,473 Structured Asset Securities Corporation 6.00% 05/25/34 92,705 74,965

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

16,618 Structured Asset Securities 163,873 Wells Fargo Mortgage Backed Corporation 7.00% 11/25/32 24,110 18,573 Securities Trust 5.50% 11/25/35 183,156 175,130 125,000 SunCom Wireless Holdings, Inc. 77,644 Wells Fargo Mortgage Backed 9.38% 02/01/11 115,070 101,047 Securities Trust 5.55% 04/25/36 87,863 85,847 50,000 Tanger Properties LP 9.13% 02/15/08 63,621 58,150 113,510 Wells Fargo Mortgage Backed 35,000 Telecom Italia Capital SA 4.00% 01/15/10 38,629 36,557 Securities Trust 5.75% 03/25/36 130,243 123,825 75,000 Telefonica Emisiones SAU 5.71% 06/19/09 83,040 83,665 311,999 Wells Fargo Mortgage Backed 75,000 Telefonica Emisiones SAU 5.98% 06/20/11 83,082 83,528 Securities Trust 5.79% 04/25/36 359,491 341,125 75,000 Telefonica Emisiones SAU 6.42% 06/20/16 83,040 83,840 205,868 Wells Fargo Mortgage Backed 150,000 Telefonica Emisiones SAU 7.05% 06/20/36 164,443 168,124 Securities Trust 5.87% 04/25/36 236,821 226,452 105,000 Telefonos de Mexico SA de CV 78,554 Wells Fargo Mortgage Backed 4.50% 11/19/08 128,328 112,468 Securities Trust 3.46% 09/25/34 94,691 86,763 5,000 Tennessee Gas Pipeline Company 75,000 Weyerhaeuser Company 7.13% 07/15/23 85,143 82,174 Co. 8.38% 06/15/32 7,202 5,923 100,000 Wheeling Island Gaming, Inc. 10,000 The Brickman Group, Ltd. 11.75% 12/15/09 12,748 12,042 10.13% 12/15/09 120,213 116,099 89,250 The FINOVA Group Inc. 7.50% 11/15/09 39,695 29,481 20,000 Whiting Petroleum Corporation 75,000 The Goldman Sachs Group, Inc. 7.25% 05/01/13 21,547 21,520 6.35% 02/15/34 91,202 78,491 55,000 Willis North America Inc. 6.75% 07/15/16 61,397 61,831 70,000 The Lubrizol Corporation 4.63% 10/01/09 88,560 75,027 65,000 Willis North America Inc. 5.13% 07/15/10 79,137 69,922 85,000 The Neiman Marcus Group, Inc. 175,000 Willis North America Inc. 5.63% 07/15/15 194,931 182,822 10.38% 10/15/15 99,888 98,889 20,000 Witco Corporation 6.88% 02/01/26 24,969 19,959 40,000 Time Warner Entertainment Co LP 100,000 Wyeth 5.50% 02/01/14 117,928 108,113 8.38% 03/15/23 67,150 49,370 30,000 Xcel Energy, Inc. 6.50% 07/01/36 33,323 32,996 135,000 Time Warner Inc. 8.18% 08/15/07 190,612 154,336 10,000 York International Corporation 25,000 Town Sports International, Inc. 6.63% 08/15/06 15,877 11,155 Zero Coupon 02/01/14 21,785 22,161 29,899,541 27,579,660 40,000 TriMas Corporation 9.88% 06/15/12 42,356 40,809 25,000 True Temper Sports Inc. 8.38% 09/15/11 26,090 25,575 U.S. Government and Guarantee (33.1%) 100,000 Tyumen Oil Company 11.00% 11/06/07 139,462 117,900 42,911 Fannie Mae 4.42% 08/25/24 57,108 47,560 70,000 United Technologies Corporation 52,993 Fannie Mae 4.50% 02/25/28 64,746 56,817 6.05% 06/01/36 77,656 76,723 50,290 Fannie Mae 4.91% 09/26/33 57,571 55,722 45,000 UnitedHealth Group Incorporated 148,244 Fannie Mae 5.00% 01/01/36 164,489 155,829 5.80% 03/15/36 51,008 45,083 121,158 Fannie Mae 5.00% 11/01/33 157,169 127,906 20,000 US LEC Corp. 13.62% 10/01/09 25,243 23,973 42,101 Fannie Mae 5.00% 11/01/34 49,933 44,285 50,000 US Oncology, Inc. 10.75% 08/15/14 65,562 60,977 68,423 Fannie Mae 5.00% 11/01/34 81,625 72,138 45,000 US Oncology, Inc. 9.00% 08/15/12 55,613 52,496 195,000 Fannie Mae 5.00% TBA 202,934 203,292 45,000 US Unwired Inc. 10.00% 06/15/12 59,784 55,711 143,861 Fannie Mae 5.50% 04/01/29 197,234 154,962 85,000 USX Corp. 9.13% 01/15/13 164,223 110,527 75,776 Fannie Mae 5.50% 08/01/25 92,923 81,686 100,000 Vale Overseas Ltd. 6.25% 01/11/16 116,160 106,148 128,545 Fannie Mae 5.50% 03/01/29 176,663 138,464 35,000 Valero Energy Corp. 6.13% 04/15/07 58,206 39,082 110,000 Fannie Mae 5.50% 09/25/35 132,483 120,729 105,000 Valero L.P. 6.05% 03/15/13 151,806 115,076 1,995,000 Fannie Mae 5.50% TBA 2,138,375 2,136,143 240,000 Vanguard Health Holding Co. I 85,000 Fannie Mae 6.38% 08/15/07 76,156 70,496 LLC 11.25% 10/01/15 200,392 188,658 54,077 Fannie Mae 6.50% 02/25/44 76,444 60,542 15,000 Vertis Inc. 10.88% 06/15/09 17,631 16,516 445,000 Fannie Mae 6.50% 12/01/99 498,056 498,811 180,000 Visteon Corporation 8.25% 08/01/10 196,377 187,153 12,006 Fannie Mae 7.00% 06/01/35 15,330 13,701 110,000 VTB Capital SA for Vneshtorgbank 15,355 Fannie Mae 7.50% 04/01/32 22,303 17,716 4.25% 02/15/16 148,157 150,976 13,231 Fannie Mae 7.50% 12/25/41 19,073 15,135 285,000 Wachovia Capital Trust III 5.80% 03/15/42 317,901 310,799 10,181 Fannie Mae 7.50% 06/01/31 16,326 11,747 80,000 WaMu Mortgage Pass-Through 39,943 Fannie Mae 7.50% 11/25/26 57,073 46,135 Certificates 5.08% 07/25/46 89,884 89,144 13,446 Fannie Mae 7.50% 03/01/32 18,715 15,514 114,036 WaMu Mortgage Pass-Through 34,773 Fannie Mae 9.50% 07/25/41 53,800 41,433 Certificates 6.00% 10/25/19 157,758 126,641 215,000 Fannie Mae Zero Coupon 10/09/19 120,822 110,557 25,424 WaMu Mortgage Pass-Through 29,252 Federal Home Loan Mortgage Certificates 6.00% 10/25/34 33,845 27,899 Corporation 4.00% 02/01/14 36,460 30,507 20,000 Warnaco Inc. 8.88% 06/15/13 26,364 22,746 117,236 Federal Home Loan Mortgage 75,000 Warner Chilcott PLC 8.75% 02/01/15 84,124 85,088 Corporation 5.50% 09/01/24 143,117 126,420 25,000 Warner Music Group 7.38% 04/15/14 31,935 27,108 101,815 Federal Home Loan Mortgage 78,426 Washington Mutual Mortgage Corporation 6.50% 06/15/31 132,421 114,186 Pass-Through Certificates 5.50% 10/25/20 93,483 85,064 44,651 Federal National Mortgage 21,176 Washington Mutual, Inc. 3.95% 05/25/33 31,485 22,908 Association 6.50% 08/01/17 57,543 50,525 50,000 WellPoint Inc. 5.85% 01/15/36 57,788 50,074 81,154 Federal National Mortgage 204,129 Wells Fargo Mortgage Backed Association 6.50% 05/25/44 106,446 91,161 Securities Trust 6.00% 06/25/36 220,441 223,265 34,702 Federal National Mortgage 126,699 Wells Fargo Mortgage Backed Association 7.50% 06/01/34 45,625 40,038 Securities Trust 5.50% 01/25/36 143,039 135,760 5,000 Federal National Mortgage 107,207 Wells Fargo Mortgage Backed Association 7.00% TBA 5,699 5,704 Securities Trust 5.50% 01/25/36 119,834 113,634 49,602 Freddie Mac 3.73% 04/01/34 64,781 55,024

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

102,140 Freddie Mac 4.50% 10/15/31 122,606 108,558 250,000 Government of France 2.75% 03/12/08 352,603 351,565 105,000 Freddie Mac 4.75% 01/19/16 121,234 110,500 108,000 Government of France 3.50% 04/25/15 158,382 147,798 50,000 Freddie Mac 5.00% 12/15/28 60,118 53,813 82,000 Government of France 4.00% 04/25/55 109,497 109,270 115,000 Freddie Mac 5.00% 02/15/29 133,030 123,550 76,000 Government of Netherlands 115,000 Freddie Mac 5.00% 11/15/29 138,524 122,868 5.75% 02/15/07 111,311 109,897 100,000 Freddie Mac 5.00% 11/15/29 120,295 106,820 772,000 Government of Norway 5.00% 05/15/15 147,802 144,861 146,446 Freddie Mac 5.00% 09/01/33 199,493 155,623 1,916,000 Government of Norway 6.00% 05/16/11 390,303 370,646 310,000 Freddie Mac 5.00% TBA 324,525 322,751 355,000 Government of Norway 6.50% 05/15/13 73,418 71,876 30,530 Freddie Mac 6.50% 10/01/33 42,799 34,345 386,000 Government of Poland 6.00% 11/24/10 150,917 137,692 51,782 Freddie Mac 6.50% 09/25/43 74,553 58,213 21,000,000 Inter-American Development Bank 43,272 Freddie Mac 7.00% 05/15/24 56,589 49,396 1.90% 07/08/09 266,012 209,458 21,960 Freddie Mac 7.00% 11/01/33 30,669 25,115 975,000 Kingdom of Sweden 1.00% 04/01/12 143,180 145,406 8,448 Ginnie Mae 7.50% 02/15/32 12,321 9,814 425,000 Kingdom of Sweden 5.00% 12/01/20 74,868 72,225 30,000 State of California 5.00% 02/01/33 40,773 33,746 840,000 Kingdom of Sweden 5.50% 10/08/12 140,614 141,124 40,000 State of California 5.00% 11/01/30 50,373 45,522 435,000 Republic of Argentina Zero 50,000 State of Illinois 5.10% 06/01/33 66,298 49,823 Coupon 12/15/35 24,203 42,973 70,000 State of New Jersey 5.75% 06/15/29 86,427 82,316 39,375 Republic of Argentina 4.89% 08/03/12 43,655 36,527 65,000 State of New York 5.25% 03/15/34 80,507 76,163 435,000 Republic of Argentina 1.33% 12/31/38 161,350 176,792 60,000 State of Oregon 5.89% 06/01/27 78,630 66,226 48,000 Republic of Austria 5.25% 01/04/11 72,526 72,360 180,000 United States Treasury Bond 18,600,000 Republic of Austria 9.00% 09/15/06 354,494 269,604 2.38% 04/15/11 205,775 202,831 53,000 Republic of Panama 6.70% 01/26/36 60,263 54,367 285,000 United States Treasury Bond 30,000 Republic of Venezuela 6.00% 12/09/20 31,661 28,600 3.00% 07/15/12 412,673 366,486 65,000 Slovak Republic 4.00% 03/26/21 87,592 87,457 145,000 United States Treasury Bond 13,000,000 The Development Bank of Japan 3.88% 01/15/09 212,626 205,663 1.70% 09/20/22 128,575 118,134 1,310,000 United States Treasury Bond 131,000 The International Bank for 4.50% 02/15/16 1,445,004 1,389,671 Reconstruction and Development 2,020,000 United States Treasury Bond Zero Coupon 08/20/07 85,389 82,369 4.50% 02/15/36 2,294,667 2,018,624 27,000 United Kingdom Treasury 4.75% 09/07/15 58,136 55,764 70,000 United States Treasury Bond 12,000 United Kingdom Treasury 5.00% 03/07/12 25,227 25,044 4.88% 05/31/08 77,217 77,623 36,000 United Kingdom Treasury 8.00% 06/07/21 100,333 100,600 570,000 United States Treasury Bond 29,000 United Kingdom Treasury 9.00% 07/12/11 72,800 70,947 4.88% 05/31/11 626,140 629,095 25,000 United Mexican States 6.38% 01/16/13 29,018 27,874 120,000 United States Treasury Bond 5,752,277 5,490,974 5.13% 06/30/08 134,308 133,737 4,270,000 United States Treasury Bond 5.13% 05/15/16 4,750,397 4,755,099 30,000 United States Treasury Bond 5.38% 02/15/31 33,863 34,014 75,000 United States Treasury Bond 6.25% 08/15/23 97,191 92,197 560,000 United States Treasury Bond Zero Coupon 11/15/13 475,357 430,348 30,000 West Virginia Economic No. of Average Market Development Authority 5.37% 07/01/20 41,388 32,219 Shares Issuer Cost ($) Value ($) 17,785,813 16,813,654 Sovereign (10.7%) Preferred Stock (0.1%) 87,000 Asian Development Bank 0.50% 10/09/12 53,169 51,245 60,000 Barclays Bank PLC 6.28% Dec 15/34 Preferred 64,129 Dominican Republic International Series 1 ADR 64,069 58,405 Bond 9.04% 01/23/18 83,380 75,079 Short Term Notes – (Schedule 1) (6.6%) 3,309,414 3,327,150 15,300,000 European Investment Bank 1.40% 06/20/17 152,198 140,580 Total Investments (104.9%) 56,811,514 53,269,843 11,800,000 European Investment Bank 1.90% 01/26/26 108,647 108,459 53,000 European Investment Bank 3.63% 10/15/11 73,737 74,379 Purchased Call Options Contracts (0.0%) 220,000 European Investment Bank 4.00% 10/15/37 307,311 286,630 3,000 JPY Call/USD Put Aug 06 at U.S. $105 2,778 72 75,000 European Investment Bank 4.25% 12/07/10 149,536 149,949 Foreign Currency Spot and Forward 100,000 European Investment Bank 4.38% 07/08/15 202,125 196,592 Contracts (Schedule 2) (0.1%) – 51,383 435,000 Federal Republic of Brazil 12.50% 01/05/16 213,422 226,749 Total Portfolio (105.0%) 56,813,892 53,321,298 328,000 Federal Republic of Germany 4.75% 07/04/08 485,851 477,641 Other Assets, Less Liabilities (-5.0%) (2,534,672) 120,000 Federal Republic of Germany Total Net Assets (100.0%) 50,786,626 6.25% 01/04/24 228,489 212,659 Net Asset Value Per Unit $7.42 130,000 Federal Republic of Brazil 8.25% 01/20/34 154,391 151,038 65,000 Federal Republic of Brazil 8.75% 02/04/25 85,892 78,744

(continued on next page) * Bonds are comprised of 84% U.S. denominated bonds and 16% denominated in other foreign currencies. Portfolio Advisor: Delaware Investment Advisers -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Core-Plus Bond Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Schedule 1 Short Term Notes

Face Maturity Average Market Amount Issuer Date Cost ($) Value ($)

2,410,000 Fannie Mae 4.68% 07/13/06 2,664,944 2,682,680 578,000 State Street Trust Company Canada Euro Dollar Time Deposit 07/05/06 644,470 644,470 3,309,414 3,327,150

Schedule 2 Foreign Currency Spot and Forward Contracts Value (Capital) Due Credit Market Contracts Pay Receive Date Rating Value ($)

Spot Currency Contracts 1 131,000 Iceland Krona 1,368 Euro Dollar 09/15/06 AA- 27 1 109 Euro Dollar 1,000 Swedish Krona 08/01/06 AA- (2) 25 Forward Currency Contracts 1 397,000 Australian Dollar 33,655,278 Japanese Yen 08/01/06 AA- 890 1 1,462 Euro Dollar 1,000 British Pound 08/01/06 AA- (25) 1 83,595 Euro Dollar 7,735,000 Iceland Krona 09/15/06 AA- (7,627) 1 442,000 Euro Dollar 63,885,354 Japanese Yen 08/01/06 AA- (6,114) 1 53,375 Euro Dollar 66,596 U.S.$ 09/15/06 AA- (2,181) 1 10,950,000 Iceland Krona 114,122 Euro Dollar 09/15/06 AA- 4,770 1 20,269,420 Iceland Krona 295,343 U.S.$ 09/15/06 AA- 35,537 1 20,269,420 Iceland Krona 250,637 U.S.$ 09/15/06 AA- (14,195) 1 284,000 Japanese Yen 1,958 Euro Dollar 08/01/06 AA- 18 1 541,200 New Zealand Dollar 38,013,888 Japanese Yen 08/01/06 AA- 4,832 1 3,336,000 Norwegian Krone 424,168 Euro Dollar 08/01/06 AA- 6,895 1 219,667 Polish Zloty 54,546 Euro Dollar 08/01/06 AA- 899 1 241,000 Pound Sterling 351,825 Euro Dollar 08/01/06 AA- 5,287 1 517,000 Swedish Krona 55,738 Euro Dollar 08/01/06 AA- (527) 1 250,637 U.S.$ 201,505 Euro Dollar 09/15/06 AA- 9,102 1 250,673 U.S.$ 20,269,420 Iceland Krona 09/15/06 AA- 14,156 1 66,596 U.S.$ 5,100,000 Iceland Krona 09/15/06 AA- (359) 51,358 Total Foreign Currency Forward Contracts Value 51,383

Portfolio Advisor: Delaware Investment Advisers -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle American Core-Plus Bond Fund

Statement of Net Assets as at June 30, 2006 (unaudited) Statement of Operations for the six month periods and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ – $ 296 Investments at market value $53,269,843 $ 46,887,055 Interest 1,177,354 1,172,540 Cash 497,362 315,977 Less: Foreign withholding taxes (2,704) (960) Receivable on options purchased 72 23,205 1,174,650 1,171,876 Receivable on open forward contracts 51,383 15,779 Subscriptions receivable 144,879 98,507 Expenses Receivable for securities sold 2,341,527 2,494,631 Legal fees – 1,072 Accrued investment income 659,572 575,182 Audit fees 4,822 5,354 Custody fees 42,151 27,624 56,964,638 50,410,336 Interest 4,959 1,037 Liabilities Filing fees 6,456 6,851 Payable for securities purchased 6,018,766 4,817,422 Unitholder reporting costs 7,830 3,991 Redemptions payable 127,811 89,133 Unitholder administration and service fees 39,260 27,461 Distributions payable 2 – 105,478 73,390 Accrued expenses 31,433 38,267 Net investment income (loss) 1,069,172 1,098,486 6,178,012 4,944,822 Net Realized and Unrealized Gain (Loss) on Net assets representing unitholders’ equity $50,786,626 $ 45,465,514 Investments Number of units outstanding 6,846,622 5,745,075 Net realized gain (loss) on investments (2,207,967) (296,516) Net realized gain (loss) on foreign exchange 50,880 (37,766) Net asset value Per Unit $ 7.42 $ 7.91 Increase (decrease) in unrealized appreciation (depreciation) of investments (1,039,823) 699,760 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 52,599 22,816 Net gain (loss) on investments (3,144,311) 388,294 Increase (Decrease) in Net Assets from Operations $(2,075,139) $1,486,780 Increase (decrease) in net assets from operations Per Unit $ (0.32) $ 0.29

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $45,465,514 $41,748,624 Increase (decrease) in net assets from operations (2,075,139) 1,486,780 Distributions to unitholders Investment income (1,144,333) (1,039,439) 42,246,042 42,195,965 Unit Transactions: Proceeds from issue 14,551,162 15,410,332 Reinvested distributions 1,143,627 1,039,044 Payments on redemption (7,154,205) (12,168,941) 8,540,584 4,280,435 Increase (decrease) in net assets 5,321,112 4,727,776 Net Assets, End of Period $50,786,626 $46,476,400

Portfolio Advisor: Delaware Investment Advisers -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Global Real Estate Securities Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Australia (2.1%) 28,700 FelCor Lodging Trust Inc. 673,804 695,691 260,000 DB RREEF Trust 319,163 315,044 10,600 First Potomac Realty Trust 342,758 352,088 172,517 General Property Trust 558,949 620,030 11,100 Forest City Enterprises, Inc. 561,074 617,711 571 Mirvac Group 2,221 2,054 31,800 General Growth Properties Inc. 1,157,801 1,597,692 57,604 Westfield Group 845,283 825,788 61,732 Host Marriott Corp. 1,027,183 1,505,338 1,725,616 1,762,916 37,200 Kimco Realty Corp. 1,392,510 1,513,532 9,600 LaSalle Hotel Properties 352,663 495,595 Canada (34.7%) 33,900 Maguire Properties Inc. 1,175,105 1,329,373 180,800 Allied Properties REIT 3,030,112 3,203,776 13,700 Mid-America Apartment Communities, Inc. 783,469 851,609 171,000 Boardwalk REIT 3,541,981 4,386,150 46,200 ProLogis Trust 1,944,043 2,684,858 20,800 Brookfield Properties Corporation 643,617 746,087 25,800 Public Storage, Inc. 1,974,575 2,183,415 86,561 Canadian Apartment Properties REIT 1,179,643 1,420,466 7,200 Reckson Associates Realty Corp. 304,574 332,199 95,300 Canadian REIT 1,685,353 2,296,730 16,400 Regency Centers Corp. 943,709 1,136,475 83,600 Cominar REIT 1,282,061 1,618,496 31,800 Simon Property Group, Inc. 2,000,003 2,940,804 85,900 Dundee REIT 2,287,078 2,422,380 9,100 SL Green Realty Corp. 731,271 1,110,737 160,939 H&R REIT 2,646,592 3,698,378 2,900 Starwood Hotels & Resorts Worldwide, Inc. 118,590 195,109 111,600 Primaris Retail REIT 1,500,733 1,813,500 37,800 Strategic Hotel Capital, Inc. 924,227 874,129 236,900 RioCan REIT 3,488,406 5,126,516 33,500 Sunstone Hotel Investors, Inc. 995,677 1,085,464 101,800 Summit REIT 1,377,866 2,606,080 13,800 Tanger Factory Outlet Centers, Inc. 399,291 498,077 1 Trizec Canada Inc. Sub. Voting 26 34 14,900 Taubman Centers, Inc. 674,809 679,492 22,663,468 29,338,593 4,300 The Macerich Co. REIT 311,486 336,574 13,800 United Dominion Realty Trust, Inc. 350,396 430,990 France (3.2%) 24,200 Ventas, Inc. 878,686 914,184 5,658 Compagnie Fonciere Klepierre 536,151 729,232 17,600 Vornado Realty Trust 1,477,975 1,914,321 10,010 Unibail 1,483,772 1,942,093 35,650,170 43,518,156 2,019,923 2,671,325 Total Investments (98.6%) 67,138,911 83,336,641 Germany (0.5%) 500 Deutsche Wohnen AG 159,490 168,839 Other Assets, Less Liabilities (1.4%) 1,143,314 8,900 IVG Immobilien AG 288,769 299,008 Total Net Assets (100.0%) 84,479,955 448,259 467,847 Net Asset Value Per Unit $16.55 Hong Kong (0.9%) 104,785 Kerry Properties Limited 271,283 399,626 REIT – Real Estate Investment Trust 30,000 Sun Hung Kai Properties Limited 364,029 340,974 635,312 740,600 Japan (2.2%) 24 Japan Real Estate Investment Corporation 243,745 238,495 33 Japan Retail Fund Investment Corp. 285,767 289,368 30,000 Mitsui Fudosan Co. Ltd. 535,644 730,052 52 Nippon Building Fund Inc. 517,387 561,726 1,582,543 1,819,641 Netherlands (0.3%) 2,612 Rodamco Europe NV 212,330 284,954 Singapore (0.4%) 128,192 Ascendas REIT 155,441 173,141 87,800 CapitaMall Trust 106,435 130,941 261,876 304,082 Spain (0.1%) 3,500 Inmobiliaria Urbis SA 95,627 101,350 United Kingdom (2.8%) 31,644 British Land Company, PLC 610,166 822,648 18,668 Capital & Regional PLC 232,975 388,424 19,937 Land Securities Group PLC 658,545 736,308 9,720 Liberty International PLC 186,453 213,138 13,251 Slough Estates PLC 155,648 166,659 1,843,787 2,327,177 United States (51.4%) 16,500 Alexandria Real Estate Equities, Inc. 1,310,035 1,631,490 7,900 AMB Property Corp. 486,192 445,270 22,400 Archstone-Smith Trust 859,353 1,270,529 17,400 Avalonbay Communities, Inc. 1,874,629 2,146,139 6,500 BioMed Realty Trust, Inc. 205,085 216,990 18,200 Boston Properties, Inc. 1,362,681 1,834,487 19,400 Camden Property Trust 1,302,082 1,590,960 32,900 Corporate Office Properties Trust 943,170 1,543,642 13,600 Developers Diversified Realty Corp. 592,630 791,258 40,900 Digital Realty Trust, Inc. 1,090,087 1,125,950 30,300 Equity Inns Inc. 551,567 559,471 16,900 Equity Office Properties Trust 661,826 687,976 38,100 Equity Residential 1,619,485 1,900,198 4,700 Essex Property Trust, Inc. 451,976 585,154 11,700 Federal Realty Investment Trust 843,693 913,185

Portfolio Advisor: Alliance Capital Management Canada, Inc. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Global Real Estate Securities Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 941,761 $ 908,744 Investments at market value $83,336,641 $ 71,936,366 Interest 345,528 216,461 Cash 489,835 2,738,065 Securities lending income 5,994 2,746 Subscriptions receivable 202,576 237,158 Less: Foreign withholding taxes (233,949) (245,465) Receivable for securities sold 800,228 67,460 1,059,334 882,486 Accrued investment income 348,467 297,470 Expenses 85,177,747 75,276,519 Legal fees — 1,072 Liabilities Audit fees 7,054 7,586 Payable for securities purchased 393,405 — Custody fees 10,413 10,991 Redemptions payable 269,503 219,200 Interest 135 — Accrued expenses 34,884 48,817 Filing fees 6,456 6,885 697,792 268,017 Unitholder reporting costs 10,874 10,487 Unitholder administration and service fees 43,890 43,601 Net assets representing unitholders’ equity $84,479,955 $ 75,008,502 78,822 80,622 Number of units outstanding 5,105,671 4,913,772 Net investment income (loss) 980,512 801,864 Net asset value per unit $ 16.55 $ 15.26 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 4,158,537 1,120,507 Net realized gain (loss) on foreign exchange 5,420 (39,285) Net realized gain (loss) from underlying funds 125,410 (14,181) Increase (decrease) in unrealized appreciation (depreciation) of investments 1,050,918 2,658,418 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (1,432) (34,736) Net gain (loss) on investments 5,338,853 3,690,723 Increase (Decrease) in Net Assets from Operations $6,319,365 $4,492,587 Increase (decrease) in net assets from operations per unit $ 1.24 $ 1.02

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $75,008,502 $57,285,088 Increase (decrease) in net assets from operations 6,319,365 4,492,587 81,327,867 61,777,675 Unit Transactions: Proceeds from issue 13,731,517 17,634,917 Payments on redemption (10,579,429) (11,126,547) 3,152,088 6,508,370 Increase (decrease) in net assets 9,471,453 11,000,957 Net Assets, End of Period $84,479,955 $68,286,045

Portfolio Advisor: Alliance Capital Management Canada, Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Strategic Balanced Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) Face Maturity Average Market Face Maturity Average Market Amount Issuer Date Cost ($) Value ($) Amount Issuer Date Cost ($) Value ($)

Federal Government (16.3%) 246,000 GE Capital Canada Funding 232,000 Canada Housing Trust 3.55% 9/15/10 225,400 222,791 Company 4.75% 5/2/11 245,675 244,665 825,000 Canada Housing Trust 3.75% 3/15/10 810,002 801,407 145,000 Great Canadian Gaming 600,000 Canada Housing Trust 4.05% 3/15/11 592,848 585,616 Corporation 5.74% 9/29/14 147,842 141,810 2,171,000 Canada Housing Trust 4.65% 9/15/09 2,199,258 2,174,849 19,000 Hydro Quebec 6.00% 2/15/40 22,465 21,387 2,103,000 Canada Housing Trust 5.10% 9/15/07 2,131,219 2,114,977 192,000 Kreditanstalt fuer 467,000 Government of Canada 4.25% 9/1/09 468,000 464,107 Wiederaufbau 4.38% 2/9/16 190,343 184,215 1,508,000 Government of Canada 5.00% 6/1/14 1,576,168 1,551,370 161,000 Manulife Financial 205,000 Government of Canada 5.00% 6/1/37 240,486 219,378 Corporation 4.67% 3/28/13 160,961 157,948 1,218,000 Government of Canada 5.25% 6/1/12 1,286,158 1,263,212 62,000 Maritimes & Northeast 1,937,000 Government of Canada 5.50% 6/1/10 2,035,546 2,007,736 Pipeline 6.90% 11/30/19 71,405 68,580 208,000 Government of Canada 5.75% 6/1/29 247,233 240,401 85,000 Mccain Finance Canada 415,000 Government of Canada 5.75% 6/1/33 503,159 487,957 Ltd 5.29% 6/30/15 86,643 84,350 1,072,000 Government of Canada 6.00% 6/1/11 1,155,202 1,141,842 164,000 Metropolitan Life Global 475,000 Government of Canada 8.00% 6/1/23 622,606 659,973 Funding I 4.50% 2/10/11 163,517 161,243 440,000 Government of Canada 8.00% 6/1/27 673,366 635,956 202,000 Metropolitan Life Global 14,766,651 14,571,572 Funding I 4.85% 5/30/13 201,905 199,702 114,000 Province of Alberta 4.10% 6/1/11 112,557 111,300 Provincial Government (7.9%) 185,000 Province of Ontario 4.70% 6/2/37 180,005 173,136 421,000 Province of British 267,000 RBC Capital Trust 4.87% 12/31/15 265,523 253,745 Columbia 5.70% 6/18/29 465,639 459,337 47,000 RioCan REIT 5.29% 9/21/09 47,140 47,030 200,000 Province of British 576,000 Rogers Wireless Communications Columbia 8.50% 8/23/13 257,258 245,102 Inc. 7.63% 12/15/11 615,849 611,037 150,000 Province of New 123,000 Royal Bank of Canada 4.71% 12/22/14 120,855 119,964 Brunswick 5.85% 12/1/11 164,052 158,151 88,000 Royal Bank of Canada 4.79% TBA 87,992 87,992 125,000 Province of Newfoundland 5.70% 10/17/35 145,739 135,098 110,000 Royal Bank of Canada 5.95% 6/18/14 115,918 114,258 100,000 Province of Nova Scotia 6.60% 12/1/31 130,424 120,956 347,000 Shaw Communications, 232,000 Province of Ontario 5.38% 12/2/12 243,331 240,198 Inc. 6.15% 5/9/16 340,240 329,576 700,000 Province of Ontario 5.60% 6/2/35 812,903 750,746 402,000 SLM Corporation 4.63% 6/15/11 399,248 393,120 1,468,000 Province of Ontario 5.85% 3/8/33 1,745,872 1,621,354 – Strait Crossing Development 678,000 Province of Ontario 6.10% 12/2/11 750,960 723,134 Inc. 6.17% 9/15/31 – – 675,000 Province of Ontario 6.10% 11/19/10 738,678 713,716 228,000 Sun Life Financial Inc. 4.95% 6/1/36 227,385 221,670 42,000 Province of Ontario 7.60% 6/2/27 58,199 55,344 240,000 TD Banknorth, Inc. 4.64% 9/20/22 232,402 226,796 100,000 Province of Quebec 6.00% 10/1/12 110,563 106,402 87,000 Terasen Gas Inc. 5.90% 2/26/35 93,207 84,968 400,000 Province of Quebec 6.25% 12/1/10 434,822 424,317 49,000 The Canada Life Assurance 1,076,000 Province of Quebec 6.25% 6/1/32 1,306,777 1,232,113 Company 6.40% 12/11/28 57,277 53,661 97,000 Province of Saskatchewan 6.40% 9/5/31 117,792 115,096 520,000 The Greater Toronto Airports 7,483,009 7,101,064 Authority 6.47% 2/2/34 601,904 560,669 Corporate (12.1%) 158,000 The Greater Toronto Airports 65,000 Aeroports de Montreal 5.17% 9/17/35 64,041 61,137 Authority 6.98% 10/15/32 157,863 180,805 150,000 Alberta Capital Fiance 500,000 The Greater Toronto Airports Authority 4.45% 12/15/25 144,390 139,905 Authority 7.05% 6/12/30 613,755 573,736 240,000 AltaLink Investment LP 5.02% 11/21/12 240,871 233,949 252,000 The Royal Bank of Scotland 82,110 Arrow Lakes Power 5.39% 3/31/15 85,296 81,973 PLC 5.37% TBA 251,884 247,665 19,000 Bank of Montreal 4.55% 8/1/17 18,696 17,955 198,000 The Toronto-Dominion 249,000 Bank of Montreal 4.65% 3/14/13 248,883 244,197 Bank 4.97% 10/30/15 201,464 190,924 251,000 Bank of Montreal 5.10% 4/21/21 250,453 246,837 20,000 Vancouver International Airport 300,000 bcIMC Realty Corporation 4.10% 2/10/11 294,732 290,808 Authority 7.38% 12/7/26 25,684 24,694 165,000 bcIMC Realty Corporation 4.65% 2/10/15 164,275 160,475 200,000 Wells Fargo Financial Canada 172,000 Bell Canada 6.10% 3/16/35 180,480 167,063 Corporation 4.40% 12/12/12 200,708 193,803 36,000 Bell Canada 6.55% 5/1/29 37,515 37,014 600,000 York Receivables Trust III 3.57% 7/21/06 599,460 599,829 57,000 Bell Canada 7.30% 2/23/32 64,521 64,069 364,000 YPG Holdings Inc. 6.25% 2/15/36 368,109 343,143 380,000 Bell Canada 7.65% 12/30/31 454,993 421,018 11,198,551 10,849,960 91,000 Bell Canada 8.88% 4/17/26 117,073 111,765 389,000 Brascan Corporation 4.65% 12/16/09 389,798 384,310 144,000 Brascan Corporation 5.95% 6/14/35 147,456 139,684 No. of Average Market 95,880 Brilliant Power Funding Shares Issuer Cost ($) Value ($) Corp. 5.67% 5/31/26 102,266 97,263 175,000 British Columbia Ferry Services Energy (12.3%) Inc. 6.25% 10/13/34 206,943 191,214 700 Advantage Energy Income Fund 13,819 13,643 210,000 Citigroup Inc. 5.37% 3/6/36 208,971 194,707 1,100 Akita Drilling Ltd. Cl. A Non-Voting 27,609 22,616 65,000 DEPFA ACS Bank 4.90% 8/24/35 66,278 61,281 1,105 Apache Corporation 91,668 84,089 21,000 Enbridge Gas Distribution 13,100 ARC Energy Trust 352,923 366,800 Inc. 6.16% 12/16/33 23,819 22,403 9,900 Baytex Energy Trust 233,385 239,580 38,000 ERAC Canada Finance Ltd 5.70% 2/26/21 37,172 36,988 1,700 Bonavista Energy Trust 64,529 59,500 116,000 ERAC Canada Finance 900 Bonterra Energy Income Trust 23,599 28,944 Ltd. 5.38% 2/26/16 115,771 113,229 9,500 Canadian Natural Resources Limited 605,207 586,340 327,000 Europaeische Hypothekenbank 11,100 Canadian Oil Sands Trust 341,503 399,600 SA 4.60% 5/30/13 326,673 323,295 1,500 CCS Income Trust 55,979 55,500 5,500 Celtic Exploration Ltd. 70,180 70,235

Portfolio Advisor: (continued on next page) Connor, Clark & Lunn Investment Management Ltd. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Strategic Balanced Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

664 Chevron Corporation 43,315 45,947 23,320 Gloucester Coal Ltd. 64,454 70,444 900 Clear Energy Inc. 4,366 3,204 1,200 High River Gold Mines Ltd. 2,229 2,760 4,900 Crew Energy Inc. 87,909 65,660 4,800 HudBay Minerals, Inc. 58,353 68,160 8,400 Cyries Energy Inc. 125,358 86,940 10,200 IAMGOLD Corporation 107,995 101,184 14,710 EnCana Corporation 484,604 864,654 1,967 Incitec Pivot Limited 35,383 36,628 4,100 Enerplus Resources Fund 247,484 258,300 2,100 Inco Limited 139,542 154,350 11,500 Ensign Energy Services, Inc. 275,659 263,810 9,200 Inmet Mining Corp. 306,247 383,640 3,759 Exxon Mobil Corporation 269,258 257,135 2,500 IPSCO Inc. 262,647 267,175 7,200 Fort Chicago Energy Partners L.P. Cl. A 90,365 83,952 19,200 Ivernia, Inc. 42,758 35,136 800 Freehold Royalty Trust 16,562 16,800 14,500 Kinross Gold Corp. 203,649 176,465 7,900 Highpine Oil & Gas Ltd. 158,902 146,940 1,700 Labrador Iron Ore Royalty Income Fund 47,694 40,511 3,400 Husky Energy Inc. 225,657 238,204 330 Lafarge SA 36,607 46,149 6,400 Imperial Oil Limited 255,040 260,992 6,000 LionOre Mining International Ltd. 32,482 36,360 9,800 Innova Exploration Ltd. 68,903 56,644 200 Major Drilling Group International Inc. 5,615 4,464 18,500 Inter Pipeline Fund Cl. A 185,398 183,335 5,200 Meridian Gold Inc. 180,499 183,144 6,500 International Uranium Corp. 45,265 36,075 6,000 Methanex Corporation 135,107 141,180 19,200 Iteration Energy Ltd. 118,179 79,680 20,800 Miramar Mining Corporation 87,649 84,656 12,800 Kereco Energy Ltd. 180,426 136,960 15,700 Noranda Income Fund Cl. A 182,733 186,830 9,700 Keyera Facilities Income Fund 213,617 210,490 900 North American Palladium Ltd. 12,331 8,667 410 LUKOIL ADR 38,465 38,035 8,000 Northern Orion Resources Inc. 43,348 43,840 663 Marathon Oil Corporation 58,623 61,579 24,500 Northgate Minerals Corporation 104,771 99,960 4,800 NAL Oil & Gas Trust 92,550 96,000 2,650 Orica Limited 49,725 52,395 11,500 Nexen Inc. 703,451 723,350 1,358 Rio Tinto Limited 92,957 87,439 2,800 Niko Resources Ltd. 158,272 176,512 18,800 Sino-Forest Corporation Cl. A Sub. Voting 112,356 108,100 7,000 Nippon Oil Corporation 63,153 56,984 4,800 Teck Cominco Limited Cl. B Sub. Voting 278,910 321,504 867 Noble Corp. 81,212 71,942 1,900 The Canam Manac Group Inc. Cl. A Sub. Voting 14,877 18,981 2,500 NuVista Energy Ltd. 43,186 35,225 5,700 Viceroy Exploration Ltd. 38,476 47,880 6,400 OPTI Canada Inc. 138,680 146,240 21,400 Yamana Gold Inc. 178,484 234,544 2,700 Paramount Resources Ltd. Cl. A 89,029 97,200 5,817,247 6,380,891 14,000 Pason Systems Inc. 224,714 228,900 24,600 Pembina Pipeline Income Fund 417,634 399,750 Industrials (4.8%) 5,300 Pengrowth Energy Trust Cl. B 127,682 138,065 44,300 Aeroplan Income Fund 557,370 607,796 12,100 Penn West Energy Trust 524,811 543,290 1,178 AGCO Corporation 29,817 34,571 6,000 Petro-Canada 304,249 317,760 510 Alstom 48,961 51,919 4,700 Petrofund Energy Trust 110,872 125,725 6,650 BAE Systems PLC 57,658 50,685 7,400 ProEx Energy Ltd. 113,784 100,122 10,800 BFI Canada Income Fund 314,544 312,120 1,500 Progress Energy Trust 25,422 24,450 3,900 Bird Construction Income Fund 46,800 56,784 7,300 Rider Resources Ltd. 154,123 103,660 26,900 Bombardier Inc. Cl. B 109,530 83,659 200 Savana Energy Services Corp. 6,004 4,574 21,200 CAE Inc. 195,135 180,200 1,150 Statoil ASA 34,151 36,351 13,800 Canadian National Railway Company 716,197 672,888 10,500 Suncor Energy, Inc. 581,413 948,570 2,737 General Electric Company 107,703 100,586 18,900 Talisman Energy Inc. 352,623 368,172 5,000 Groupe Laperriere & Verreault Inc. Cl. A Sub. 637 Technip SA 45,792 39,299 Voting 102,246 120,000 8,400 Total Energy Services Trust 153,218 134,736 138,000 Guangdong Investment Ltd. 69,850 59,432 1,320 Total SA 102,150 96,764 9,574 Hanfeng Evergreen Inc. 26,249 32,073 8,700 Trican Well Service Ltd. 153,612 194,010 172 Horizon North Logistics Inc. – 657 7,700 Trinidad Energy Services Income Trust 139,087 136,752 121 Horizon North Logistics Inc. Warrants (Exp. 18,900 UTS Energy Corp. 125,840 110,943 07/01/06) – – 2,100 Vermilion Energy Trust 65,222 72,555 104 LVMH Moet Hennessy Louis Vuitton SA 10,691 11,499 23,400 West Energy Ltd. 179,761 96,642 4,000 Marsulex Inc. 31,856 33,000 5,600 Western Lakota Energy Services Inc. 101,747 82,320 200 Mullen Group Income Fund 6,230 5,780 12,700 Newalta Income Fund 363,191 415,036 10,487,200 11,029,046 1,144 Norfolk Southern Corp. 64,928 67,885 Materials (7.1%) 6,500 Oceanex Income Fund Trust 94,978 93,275 12,000 Agnico-Eagle Mines Limited 373,085 444,120 37 Orkla ASA 2,034 1,912 452 Akzo Nobel NV 27,130 27,151 11,900 Railpower Technologies Corp. 76,207 28,560 9,700 Alcan Inc. 505,805 507,213 1,374 Republic Services, Inc. Cl. A 63,897 61,801 4,400 Algoma Steel Inc. 144,165 155,980 4,939 Rolls-Royce Group PLC 42,507 42,150 33 Arkema 1,302 1,435 16,100 Russel Metals Inc. 404,307 416,990 21,100 Aur Resources Inc. 319,018 375,580 500 Secom Co., Ltd. 28,499 26,340 8,800 Barrick Gold Corporation 292,638 290,136 1,660 Securitas AB Cl. B 34,744 35,403 21,200 Bema Gold Corp. 100,549 118,084 3,686 Smiths Group PLC 75,323 67,700 2,100 CCL Industries Inc. Cl. B 62,840 68,040 6,900 SNC-Lavalin Group Inc. 207,631 202,722 18,100 Centerra Gold Inc. 214,377 208,150 10,500 Student Transportation of America, Inc. 142,590 122,325 2,000 Domtar Inc. 16,181 13,780 4,000 Toromont Industries Ltd. 101,045 98,400 24,200 Eldorado Gold Corporation 135,395 131,164 1,900 TransForce Income Fund 35,149 32,205 7,300 Falconbridge Limited 261,682 429,240 690 United Technologies Corporation 45,729 48,792 3,700 First Quantum Minerals Ltd. 140,355 185,148 1,100 Wajax Income Fund 47,921 44,341 800 Gammon Lake Resources Inc. 12,610 12,248 1,148 Waste Management, Inc. 44,572 45,927 2,300 Gerdau Ameristeel Corporation 25,350 25,714 4,306,089 4,265,413 8,156 Glamis Gold Ltd. 326,887 345,162

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Consumer Discretionary (4.9%) 8,400 Extendicare Inc. Cl. A Sub. Voting 186,760 198,828 685 Abercrombie & Fitch Co. Cl. A 45,806 42,336 1,780 GlaxoSmithKline PLC 52,856 55,442 4,000 AEON Co., Ltd. 116,955 97,765 10,900 Imaging Dynamics Company Ltd. 42,133 38,150 10,000 Alliance Atlantis Communications Inc. Cl. B 1,486 Johnson & Johnson 105,740 99,281 Non-Voting 340,361 327,000 4,800 Labopharm Inc. 43,008 42,048 1,800 Astral Media Inc. Cl. A 60,307 62,784 12,000 Medical Facilities Corporation 137,040 110,400 6,000 British Sky Broadcasting Group PLC 65,932 70,931 1,142 Novartis AG 73,213 68,820 15,000 CanWest MediaWorks Income Fund 133,161 123,750 3,468 Pfizer Inc. 99,737 90,754 840 Carnival Corporation 34,718 39,094 540 Roche Holding AG 93,562 99,347 24,400 Cineplex Galaxy Income Fund 348,799 330,132 650 Sanofi-Aventis 68,992 70,663 800 Cogeco Cable Inc. 21,080 16,704 2,295 Schering-Plough Corporation 48,447 48,696 3,600 Corus Entertainment Inc. Cl. B Non-Voting 120,438 130,500 4,470 Sonic Healthcare Limited 57,520 52,532 3,000 Daiwa House Industry Co., Ltd. 60,844 53,459 23,400 Theratechnologies Inc. 45,805 30,420 2,683 EMAP PLC 46,799 47,093 950 UnitedHealth Group Incorporated 47,610 47,433 14,000 Gateway Casinos Income Fund 229,450 212,100 1,300 Wyeth 71,777 64,372 6,500 Gildan Activewear Inc. Cl. A Sub. Voting 332,252 343,135 2,197,072 2,086,583 900 Intrawest Corporation 32,301 31,752 914 KB Home 45,591 46,726 Financials (12.6%) 15,000 Keystone North America Inc. 134,700 124,650 7,600 ADDENDA Capital Inc. 235,710 194,940 819 Kohl’s Corporation 45,627 53,988 230 Allianz AG 42,073 40,478 8,600 Liquor Barn Income Fund 92,536 95,890 1,372 Alpha Credit Bank AE 39,025 38,080 677 Lowe’s Companies, Inc. 50,158 45,797 6,400 Amvescap, Inc. Non-Voting 63,011 65,600 400 Magna International Inc. Cl. A Sub. Voting 32,277 31,856 3,740 Aviva PLC 55,722 59,016 3,200 Mega Bloks 84,928 73,024 1,733 Axa SA 64,884 63,359 1,120 Metro AG 65,692 70,725 3 Axa SA Rights (Exp. 06/30/06) – 3 5,872 Publishing and Broadcasting Limited 87,882 88,496 2,748 Banco Bilbao Vizcaya Argentaria SA 61,768 62,959 1,241 Pulte Homes Inc. 56,704 39,837 2,266 Bank of America Corporation 118,290 121,529 2,533 Quiksilver Incorporated 41,067 34,400 4,800 Bank of Montreal 295,551 288,288 2,281 RadioShack Corporation 45,741 35,606 400 Boardwalk REIT 10,035 10,260 2,330 Russell Corporation 39,657 47,179 11,750 Brookfield Asset Management Inc. Cl. A Limited 5,000 Sekisui House, Ltd. 86,476 76,489 Voting 531,646 527,105 2,000 Sharp Corporation 40,333 35,211 13,100 Calloway REIT 326,704 320,295 5,900 Shaw Communications Inc. Cl. B Non-Voting 182,391 186,145 8,400 Canadian Apartment Properties REIT 132,198 137,844 6,000 Television Broadcasts Ltd. 39,411 41,301 5,400 Canadian Imperial Bank of Commerce 460,830 403,434 11,000 The Consumers’ Waterheater Income Fund 184,618 149,820 4,100 Canadian REIT 94,406 98,810 600 The Forzani Group Ltd. Cl. A 10,000 10,020 4,400 Canadian Western Bank 186,048 188,320 3,600 The Thomson Corporation 154,223 154,836 13,500 Chartwell Seniors Housing REIT 206,748 188,055 4,400 Tim Hortons, Inc. 121,881 126,192 7,000 Cheung Kong (Holdings) Limited 86,625 84,612 1,505 Wal-Mart Stores, Inc. 79,499 80,833 7,500 CI Financial Inc. 215,768 221,550 1,970 Wolters Kluwer NV 52,933 51,843 2,348 Citigroup Inc. 126,555 126,293 48,900 Yellow Pages Income Fund 809,866 787,290 1,100 Commerzbank AG 45,296 44,574 9,700 Crombie Real Estate Investment Trust 97,000 108,155 4,573,394 4,416,689 12,500 Davis + Henderson Income Fund 278,358 221,250 Consumer Staples (1.4%) 500 Dundee Bancorp Inc. Cl. A Sub. Voting 18,866 18,480 12,000 Alimentation Couche-Tard Inc. Cl. B Sub. Voting 284,775 287,880 190 E-L Financial Corporation Limited 106,805 118,750 29,500 Arctic Glacier Income Fund 313,143 352,230 1,000 First Capital Realty Inc. 24,277 23,000 600 Carrefour SA 32,610 39,188 1,560 Fortis 61,086 59,168 1,200 Empire Company Limited Cl. A 46,282 51,264 2,600 GMP Capital Trust 57,025 61,178 1,000 Kao Corporation 30,598 29,164 1,500 Great-West Lifeco Inc. 42,478 42,690 919 PepsiCo, Inc. 61,470 61,522 2,680 HSBC Holdings PLC 52,638 52,565 1,200 Saputo Inc. 42,665 42,372 14,300 Industrial Alliance Insurance and Financial 2,909 Scottish and Newcastle PLC 29,795 30,567 Services Inc. 446,010 456,456 800 Shoppers Drug Mart Corporation 33,121 32,400 13,000 ING Canada Inc. 709,477 734,500 200 Sleeman Breweries Ltd. 3,034 2,802 1,500 ING Groep NV 62,641 65,676 200 Sobeys Inc. 7,664 7,560 1,810 J.P. Morgan Chase & Co. 86,855 84,762 400 SunOpta Inc. 3,795 4,128 2,600 Kingsway Financial Services Inc. 63,353 52,442 10,900 The Jean Coutu Group (PJC) Inc. Cl. A Sub. 3,600 Laurentian Bank of Canada 125,308 105,156 Voting 128,691 127,530 500 Legacy Hotels REIT 4,152 4,250 1,219 The Procter & Gamble Company 80,072 75,571 21,420 Legal & General Group PLC 55,844 56,628 4,200 Van Houtte Inc., Sub. Voting 84,213 77,952 27,300 Manulife Financial Corporation 651,841 965,601 1,181,928 1,222,130 884 Merrill Lynch & Co., Inc. 75,599 68,562 4,000 Mitsui Sumitomo Insurance Company, Limited 58,449 55,972 Health Care (2.3%) 10,600 National Bank of Canada 673,154 604,200 1,054 Amgen Inc. 90,574 76,659 4,000 Nikko Cordial Corporation 70,775 57,023 17,000 AnorMED Inc. 107,704 106,590 2,900 Nomura Holdings, Inc. 68,031 60,573 970 Barr Pharmaceuticals Inc. 71,015 51,579 4,000 Northbridge Financial Corp. 139,643 131,800 1,316 Baxter International Inc. 57,761 53,940 4,400 RioCan REIT 93,262 95,216 1,800 Biovail Corporation 45,474 46,908 42,000 Royal Bank of Canada 1,809,850 1,903,440 4,200 Cardiome Pharma Corp. 54,499 41,160 5,100 Saxon Financial, Inc. 120,458 96,849 35,800 CML Healthcare Income Fund 520,822 520,890 20,000 Scott’s Real Estate Investment Trust 179,028 178,800 1,163 Eli Lilly and Company 75,023 71,671 4,000 Shinsei Bank, Ltd. 30,659 28,239

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

3,770 Sovereign Bancorp, Inc. 88,539 85,363 500 EPCOR Power LP 16,539 16,500 8,000 Sumitomo Trust & Banking Co., Ltd. 101,203 97,376 18,600 Fortis, Inc. 436,793 414,594 7,200 Summit REIT 176,637 184,320 10,000 Great Lakes Hydro Income Fund 183,626 178,100 6,000 Sun Hung Kai Properties Limited 72,967 68,218 19,200 Innergex Power Income Fund 249,003 260,736 442 The Goldman Sachs Group, Inc. 74,724 74,136 4,818 National Grid PLC 58,721 58,100 11,600 The Toronto-Dominion Bank 591,358 657,488 600 Northland Power Income Fund 8,566 8,694 200 TSX Group Inc. 9,005 8,960 67,100 Tonbridge Power, Inc. 28,182 26,840 550 UBS AG 67,102 67,090 33,550 Tonbridge Power, Inc. – – 4,270 UniCredito Italiano SPA 34,800 37,234 1,050 Suez SA 46,739 48,621 6,000 United Overseas Bank Ltd. 64,258 65,907 25,300 TransAlta Corporation 593,428 583,418 1,238 Wells Fargo & Company 90,767 92,595 1,752,818 1,715,543 11,033,175 11,235,472 Total Portfolio (89.4%) 79,950,771 80,063,639 Information Technology (3.3%) Short-Term Notes (Schedule 1) (9.8%) 8,720,984 8,720,984 4,900 Aastra Technologies Limited 183,371 171,059 Total Investments (99.2%) 88,671,755 88,784,623 3,130 Alcatel SA 49,532 44,240 1,940 ASML Holding NV 48,876 43,784 Futures Contracts Value 1,100 ATI Technologies Inc. 18,558 17,842 Schedule 2 (–0.1%) (70,220) 1,000 CAP Gemini SA 54,480 63,589 Other Assets, Less Liabilities (0.9%) 783,448 5,000 Celestica Inc. Sub. Voting 50,618 52,850 Total Net Assets (100.0%) 89,497,851 5,400 CGI Group Inc. Cl. A Sub. Voting 38,004 37,584 Net Asset Value Per Unit $17.25 3,346 Cisco Systems, Inc. 79,877 72,862 200 Cognos Incorporated 6,426 6,282 ADR – American Depository Receipt 3,300 Constellation Software Inc. 56,100 63,360 REIT – Real Estate Investment Trust 4,300 Emergis Inc. 22,426 21,930 14,400 Evertz Technologies Limited 148,536 174,240 Schedule 1 10,100 EXFO Electro-Optical Engineering Inc. 58,514 69,589 6,200 Gennum Corporation 102,009 68,200 Short-Term Notes 4,590 Intel Corporation 112,100 96,983 Face Maturity Average Market 491 International Business Machines Corporation 47,170 42,056 Amount Issuer Date Cost ($) Value ($) 5,000 MacDonald, Dettwiler and Associates Ltd. 229,663 229,700 2,500 March Networks Corporation 75,763 59,100 100,000 Bank of Montreal 3.44% 7/5/2006 99,953 99,953 6,530 Microsoft Corporation 203,900 169,646 650,000 Bank of Montreal 3.97% 7/13/2006 649,082 649,082 12,800 Miranda Technologies Inc. 188,059 220,800 100,000 Bank of Montreal 4.05% 7/17/2006 99,812 99,812 800 MOSAID Technologies Incorporated 19,984 19,200 1,000,000 Canadian Imperial Bank of 800 Murata Manufacturing Company, Ltd. 64,191 57,880 Commerce 4.06% 7/18/2006 998,001 998,001 3,900 Nortel Networks Corporation 13,926 9,672 100,000 Canadian Imperial Bank of 2,000 Omron Corporation 59,980 56,770 Commerce 4.16% 7/24/2006 99,727 99,727 6,900 Onex Corporation Sub. Voting 149,807 153,594 1,900,000 Farm Credit Corporation 4.04% 7/25/2006 1,894,762 1,894,762 800 Open Text Corporation 12,974 12,808 100,000 Government of Canada Treasury 5,192 Oracle Corporation 78,498 83,884 Bill 3.74% 9/7/2006 99,297 99,297 11,700 Q9 Networks Inc. 113,080 119,340 1,100,000 Province of Alberta 3.96% 7/17/2006 1,097,976 1,097,976 1,300 Research In Motion Limited 96,447 101,140 200,000 Royal Bank of Canada 3.44% 7/7/2006 199,863 199,863 350,000 Royal Bank of Canada 3.84% 7/17/2006 349,376 349,376 160 SAP AG 36,413 37,615 1,150,000 Royal Bank of Canada 4.09% 7/21/2006 1,147,298 1,147,298 1,470 Seagate Technology 35,767 37,108 200,000 Royal Bank of Canada 4.24% 8/4/2006 199,190 199,190 7,600 Sierra Wireless, Inc. 125,536 152,532 100,000 The Toronto-Dominion Bank 3.20% 7/4/2006 99,965 99,965 4,500 Systems Xcellence Inc. 60,750 58,275 200,000 The Toronto-Dominion Bank 4.11% 8/15/2006 198,969 198,969 2,400 The Descartes Systems Group Inc. 10,359 9,960 1,550,000 The Toronto-Dominion Bank 4.46% 6/8/2007 1,487,713 1,487,713 12,400 Tundra Semiconductor Corporation Limited 176,203 194,680 8,720,984 8,720,984 6,200 VCom Inc. 50,120 58,590 2,800 Workbrain Corporation 36,279 35,336 2,914,296 2,924,080 Schedule 2 Telecommunication Services (2.5%) Futures Contracts Value 4,700 Aliant Inc. 167,129 155,899 Expiration Exercise Market 21,400 BCE Inc. 580,336 564,532 Futures Contracts Date Country Price ($) Value ($) 600 Bouygues SA 36,895 34,366 2,155 China Mobile (Hong Kong) Limited ADR 67,021 68,745 Canadian 10 Year Bond Future 38 09/20/06 Canada 4,262,760 4,192,540 3,500 Manitoba Telecom Services Inc. 153,034 158,935 4,262,760 4,192,540 760 Mobile Telesystems ADR 32,543 24,947 14 NTT DoCoMo, Inc. 24,790 22,903 Exercise Price (4,262,760) 5,545 Sprint Nextel Corporation 155,185 123,592 Total Futures Contracts Value (70,220) 9,700 TELUS Corporation 443,239 446,491 13,200 TELUS Corporation Non-Voting 504,108 594,660 29,518 Vodafone Group PLC 75,061 70,126 2,239,341 2,265,196 Utilities (1.9%) 600 ATCO Ltd. Cl. I Non-Voting 23,342 21,960 2,400 Canadian Utilities Limited Cl. A 98,559 88,560 500 Emera Inc. 9,320 9,420

Portfolio Advisor: Connor, Clark & Lunn Investment Management Ltd. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Strategic Balanced Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 375,557 $ 381,235 Investments at market value $88,784,623 $ 90,511,334 Interest 1,218,244 825,128 Cash 416,987 107,973 Securities lending income 1,352 2,210 Margin deposits 80,480 — Income (loss) from derivatives 1,391 — Subscriptions receivable 168,377 453,283 Less: Foreign withholding taxes (14,105) (18,804) Receivable for securities sold 295,417 — 1,582,439 1,189,769 Accrued investment income 435,344 471,950 Expenses 90,181,228 91,544,540 Legal fees — 1,072 Liabilities Audit fees 7,054 7,568 Payable on open futures contracts 70,220 — Custody fees 5,108 6,563 Payable for securities purchased 492,919 — Interest 2,501 107 Redemptions payable 121,053 79,108 Filing fees 6,456 6,887 Distributions payable 46 — Unitholder reporting costs 11,582 9,846 Accrued expenses (861) 46,169 Unitholder administration and service fees 44,809 44,369 683,377 125,277 77,510 76,412 Net assets representing unitholders’ equity $89,497,851 $ 91,419,263 Net investment income (loss) 1,504,929 1,113,357 Number of units outstanding 5,189,042 5,127,188 Net Realized and Unrealized Gain (Loss) on Investments Net asset value per unit $ 17.25 $ 17.52 Net realized gain (loss) on investments 16,550,614 3,097,239 Net realized gain (loss) on foreign exchange (254,062) (55,032) Net realized gain (loss) from underlying funds 9,975 — Increase (decrease) in unrealized appreciation (depreciation) of investments (17,761,664) 874,755 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 722 264 Net gain (loss) on investments (1,454,415) 3,917,226 Increase (Decrease) in Net Assets from Operations $ 50,514 $5,030,583 Increase (decrease) in net assets from operations per unit $ 0.01 $ 0.92

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $91,419,263 $86,800,548 Increase (decrease) in net assets from operations 50,514 5,030,583 Distributions to unitholders Investment income (1,473,396) (1,222,503) 89,996,381 90,608,628 Unit Transactions: Proceeds from issue 12,056,675 11,405,364 Reinvested distributions 1,471,724 1,219,649 Payments on redemption (14,026,929) (15,346,100) (498,530) (2,721,087) Increase (decrease) in net assets (1,921,412) 1,086,993 Net Assets, End of Period $89,497,851 $87,887,541

Portfolio Advisor: CC&L Investment Management Ltd. Effective January 16, 2006 -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Global Tactical Asset Allocation Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Maturity Average Market Shares Issuer Date Cost ($) Value ($)

600,000 Bank of Montreal BDN 4.29% 09/07/06 595,177 595,177 600,000 Canadian Imperial Bank of Commerce BA 4.33% 09/15/06 594,563 594,563 3,790,000 Government of Canada Treasury Bills 4.10% 09/07/06 3,760,880 3,760,880 445,000 Government of Canada Treasury Bills 4.15% 09/21/06 440,845 440,845 600,000 The Toronto-Dominion Bank BA 4.30% 09/12/06 594,813 594,813 650,000 Royal Bank of Canada BDN 4.29% 09/01/06 645,291 645,291 Total Investments (97.6%) 6,631,569 6,631,569 Futures Contracts Value - Schedule 1 (0.6%) 41,439 Total Portfolio (98.2%) 6,673,008 Other Assets, Net of Liabilities (1.8%) 123,993 Total Net Assets (100.0%) 6,797,001 Net Asset Value Per Unit $11.35

BA – Banker’s Acceptance BDN – Banker’s Deposit Note

Schedule 1 Futures Contracts Value

Expiration Exercise Market Futures Contracts Date Country Price ($) Value ($)

CONF Swiss 6% 10 Year Bond 1 09/07/06 Switzerland 115,574 114,463 Euro Bund 6% 10 Year Bond 9 09/07/06 Germany 1,484,674 1,478,775 FTSE 100 Index 1 09/15/06 United Kingdom 114,570 120,074 German DAX Index 1 09/15/06 Germany 190,478 203,978 MIB 30 Index 1 09/15/06 Italy 248,023 261,245 S&P 500 Index 4 09/14/06 United States 1,417,360 1,426,531 TOPIX Index 5 09/07/06 Japan 762,451 773,893 U.S. Treasury 6% 10 Year Bond 7 09/20/06 United States 822,817 818,427 5,155,947 5,197,386 Exercise Price (5,155,947) Total Futures Contracts Value 41,439

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Interest $134,625 $137,344 Investments at market value $6,631,569 $ 7,735,586 Securities lending income 180 179 Cash 152 3,657 134,805 137,523 Margin deposits 189,078 229,305 Receivable on open futures contracts 41,439 24,453 Expenses Subscriptions receivable – 733,422 Legal fees – 1,072 Accounts receivable 20,620 4,341 Audit fees 7,054 7,437 Custody fees 2,480 4,253 6,882,858 8,730,764 Interest 8,126 32,277 Liabilities Filing fees – 6,887 Redemptions payable 69,041 108,911 Unitholder reporting costs – 2,597 Accrued expenses 16,816 30,390 Unitholder administration and service fees 28,829 26,537 85,857 139,301 46,489 81,060 Net assets representing unitholders’ equity $6,797,001 $ 8,591,463 Rebated and absorbed expenses (16,279) (17,883) Number of units outstanding 598,624 760,947 Net expenses 30,210 63,177 Net investment income (loss) 104,595 74,346 Net asset value per unit $ 11.35 $ 11.29 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 2,341 – Gain (loss) on derivative investments (56,104) 427,297 Increase (decrease) in unrealized appreciation (depreciation) of investments 16,986 (176,258) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (1,875) – Net gain (loss) on investments (38,652) 251,039 Increase (Decrease) in Net Assets from Operations $ 65,943 $325,385 Increase (decrease) in net assets from operations per unit $ 0.10 $ 0.34

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $ 8,591,463 $12,725,090 Increase (decrease) in net assets from operations 65,943 325,385 8,657,406 13,050,475 Unit Transactions: Proceeds from issue 300,795 629,517 Payments on redemption (2,161,200) (3,777,524) (1,860,405) (3,148,007) Increase (decrease) in net assets (1,794,462) (2,822,622) Net Assets, End of Period $ 6,797,001 $ 9,902,468

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (28.3%) Telecommunication Services (3.0%) 77,600 Canadian Natural Resources Limited 956,076 4,479,472 28,900 Manitoba Telecom Services Inc. 1,151,384 1,312,349 80,000 CHC Helicopter Corporation Cl. A Sub. Voting 1,108,843 2,136,000 19,400 Rogers Communications Inc. Cl. B 843,512 871,254 72,400 EnCana Corporation 2,210,878 4,255,672 27,900 TELUS Corporation 702,290 1,284,237 18,300 Husky Energy Inc. 745,577 1,282,098 2,697,186 3,467,840 18,900 Maverick Tube Corporation 659,355 1,331,635 28,400 Nexen Inc. 519,361 1,786,360 Short Term Notes (2.6%) 2,918,000 2,918,000 30,000 Penn West Energy Trust 870,000 1,347,000 Total Investments (100.6%) 76,046,999 115,077,096 89,600 Petro-Canada 1,466,386 4,745,216 41,200 Precision Drilling Trust 1,308,470 1,528,520 Other Assets, Less Liabilities (–0.6%) (652,467) 54,000 Suncor Energy, Inc. 1,006,396 4,878,360 Total Net Assets (100.0%) 114,424,629 172,800 Talisman Energy Inc. 883,623 3,366,144 Net Asset Value Per Unit $18.39 17,212 Weatherford International Ltd. 673,784 952,276 12,408,749 32,398,753 Materials (19.9%) 169,647 Abitibi-Consolidated Inc. 1,934,674 510,637 81,300 Alcan Inc. 3,912,767 4,251,177 110,500 Aur Resources Inc. 691,083 1,966,900 52,331 Falconbridge Limited 946,850 3,077,063 55,000 Inco Limited 1,424,483 4,042,500 20,700 IPSCO Inc. 415,137 2,212,209 44,200 NOVA Chemicals Corporation 1,576,101 1,417,052 79,816 Teck Cominco Limited Cl. B Sub. Voting 1,350,019 5,346,076 12,215,114 22,823,614 Industrials (6.5%) 205,600 Bombardier Inc. Cl. B 1,908,140 639,416 130,800 CAE Inc. 1,240,313 1,111,800 92,900 Canadian National Railway Company 2,072,592 4,529,804 12,300 CP Railway Limited 569,859 699,993 33,300 Quebecor World Inc. Sub. Voting 789,734 412,920 6,580,638 7,393,933 Consumer Discretionary (4.6%) 21,200 Canadian Tire Corporation, Limited Cl. A 503,728 1,403,016 19,700 Magna International Inc. Cl. A Sub. Voting 1,356,672 1,568,908 52,100 Mega Bloks 1,113,553 1,188,922 43,400 Quebecor Inc. Cl. B 1,667,104 1,048,544 4,641,057 5,209,390 Consumer Staples (2.3%) 40,800 Alimentation Couche-Tard Inc. Cl. B Sub. Voting 715,845 978,792 26,600 Saputo Inc. 758,030 939,246 63,600 The Jean Coutu Group (PJC) Inc. Cl. A Sub. Voting 1,051,753 744,120 2,525,628 2,662,158 Health Care (0.7%) 33,000 Angiotech Pharmaceuticals, Inc. 808,238 429,660 25,100 Axcan Pharma Inc. 377,045 367,715 1,185,283 797,375 Financials (28.5%) 64,000 Bank of Montreal 2,167,761 3,843,840 86,900 Canadian Imperial Bank of Commerce 4,391,421 6,492,299 36,100 IGM Financial Inc. 768,626 1,606,811 68,400 Kingsway Financial Services Inc. 730,745 1,379,628 130,800 Manulife Financial Corporation 2,804,139 4,626,396 87,400 Royal Bank of Canada 2,204,173 3,960,968 81,000 Sun Life Financial Inc. 2,679,783 3,592,350 124,700 The Toronto-Dominion Bank 4,602,832 7,067,996 20,349,480 32,570,288 Information Technology (4.2%) 58,600 Aastra Technologies Limited 744,421 2,045,726 59,100 ATI Technologies Inc. 881,440 958,602 376,313 Nortel Networks Corporation 7,861,071 933,256 56,100 Open Text Corporation 1,002,932 898,161 10,489,864 4,835,745

Portfolio Advisor: BonaVista Asset Management Ltd. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Canadian Value Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 879,801 $ 771,651 Investments at market value $115,077,096 $110,792,730 Interest 172,687 443 Cash – 235,413 Securities lending income 2,888 2,718 Subscriptions receivable 165,911 292,078 1,055,376 774,812 Accrued investment income 332,249 284,067 Expenses 115,575,256 111,604,288 Legal fees – 1,072 Liabilities Audit fees 7,054 8,241 Bank overdraft 883,754 – Custody fees 5,703 4,809 Redemptions payable 209,584 146,352 Interest 806 1,105 Accrued expenses 57,289 66,822 Filing fees 6,456 6,887 1,150,627 213,174 Unitholder reporting costs 19,841 20,111 Unitholder administration and service fees 62,442 73,854 Net assets representing unitholders’ equity $114,424,629 $111,391,114 102,302 116,079 Number of units outstanding 6,221,027 6,388,385 Net investment income (loss) 953,074 658,733 Net asset value per unit $ 18.39 $ 17.44 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 1,743,299 1,173,440 Net realized gain (loss) on foreign exchange (436) (659) Increase (decrease) in unrealized appreciation (depreciation) of investments 3,424,725 3,673,587 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 104 (276) Net gain (loss) on investments 5,167,692 4,846,092 Increase (Decrease) in Net Assets from Operations $6,120,766 $5,504,825 Increase (decrease) in net assets from operations per unit $ 0.98 $ 0.86

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $111,391,114 $ 91,692,511 Increase (decrease) in net assets from operations 6,120,766 5,504,825 117,511,880 97,197,336 Unit Transactions: Proceeds from issue 15,922,015 11,794,533 Payments on redemption (19,009,266) (15,729,049) (3,087,251) (3,934,516) Increase (decrease) in net assets 3,033,515 1,570,309 Net Assets, End of Period $114,424,629 $ 93,262,820

Portfolio Advisor: BonaVista Asset Management Ltd. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Canadian Mid Cap Value Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (21.1%) Utilities (2.2%) 27,600 Canadian Natural Resources Limited 423,265 1,703,472 24,300 ATCO Ltd. Cl. I Non-Voting 633,911 889,380 52,200 Enerﬂex Systems Ltd. 1,254,258 1,453,770 Short Term Notes (2.0%) 813,934 813,934 74,200 Ensign Energy Services, Inc. 748,959 1,702,148 30,400 Husky Energy Inc. 580,427 2,129,824 Total Investments (99.7%) 35,889,927 40,859,886 34,900 Savana Energy Services Corp. 935,772 798,163 Other Assets, Less Liabilities (0.3%) 103,845 52,700 ShawCor Ltd. Cl. A Sub. Voting 815,070 874,293 Total Net Assets (100.0%) 40,963,731 4,757,751 8,661,670 Net Asset Value Per Unit $14.77 Materials (7.2%) 27,000 Agrium Inc. 455,455 699,840 48,800 Cascades Inc. 684,780 539,728 83,400 Norbord Inc. 742,525 783,960 166,200 Sino-Forest Corporation Cl. A Sub. Voting 628,220 955,650 2,510,980 2,979,178 Industrials (8.2%) 70,700 CAE Inc. 323,806 600,950 55,800 Royal Group Technologies Limited Sub. Voting 661,200 697,500 58,900 Russel Metals Inc. 866,859 1,525,510 27,300 Transcontinental Inc. Cl. A Sub. Voting 683,903 518,700 2,535,768 3,342,660 Consumer Discretionary (15.8%) 18,600 Alliance Atlantis Communications Inc. Cl. B Non-Voting 526,194 608,220 101,200 CanWest Global Communications Corp. Sub. Voting 946,458 839,960 26,800 Dorel Industries Inc. Cl. B Sub. Voting 759,512 682,864 53,600 Linamar Corporation 644,803 792,744 11,200 Magna International Inc. Cl. A Sub. Voting 997,901 891,968 26,000 Mega Bloks 598,215 593,320 79,800 The Forzani Group Ltd. Cl. A 1,001,469 1,332,660 48,500 TVA Group Inc. Cl. B 843,187 752,235 6,317,739 6,493,971 Consumer Staples (8.3%) 108,600 Agricore United 671,499 882,918 271,900 CoolBrands International, Inc. Sub. Voting 1,763,708 625,370 10,676 Molson Coors Canada Inc. Cl. B 932,328 811,376 28,600 Sobeys Inc. 997,389 1,081,080 4,364,924 3,400,744 Health Care (4.8%) 37,300 Biovail Corporation 901,489 972,038 48,300 MDS Inc. 929,212 982,905 1,830,701 1,954,943 Financials (20.6%) 28,500 Bank of Montreal 1,362,075 1,711,710 6,530 Fairfax Financial Holdings Limited Sub. Voting 985,168 693,225 19,400 IGM Financial Inc. 744,168 863,494 32,400 Industrial Alliance Insurance and Financial Services Inc. 947,011 1,034,208 32,900 Kingsway Financial Services Inc. 713,319 663,593 11,800 Morguard Corp. 230,441 401,200 50,100 Northbridge Financial Corp. 1,527,233 1,650,795 31,900 Sun Life Financial Inc. 1,399,652 1,414,765 7,909,067 8,432,990 Information Technology (7.6%) 48,400 ATI Technologies Inc. 753,037 785,048 54,800 Celestica Inc. Sub. Voting 748,217 579,236 114,300 CGI Group Inc. Cl. A Sub. Voting 948,713 795,528 59,200 Open Text Corporation 1,101,827 947,792 3,551,794 3,107,604 Telecommunication Services (1.9%) 23,600 Aliant Inc. 663,358 782,812

Portfolio Advisor: Foyston, Gordon & Payne Inc. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Canadian Mid Cap Value Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 377,222 $ 460,376 Investments at market value $40,859,886 $ 40,642,351 Interest 19,291 11,735 Cash 47,198 67,580 Securities lending income 24,304 8,957 Subscriptions receivable 69,217 157,752 420,817 481,068 Receivable for securities sold 377,140 – Accrued investment income 124,203 88,831 Expenses Accounts receivable – 570 Legal fees – 1,072 Audit fees 7,054 7,914 41,477,644 40,957,084 Custody fees 3,173 3,227 Liabilities Interest – 138 Payable for securities purchased 411,300 – Filing fees 6,456 6,887 Redemptions payable 58,462 51,462 Unitholder reporting costs 10,129 13,819 Accrued expenses 44,151 56,359 Unitholder administration and service fees 41,748 52,113 513,913 107,821 68,560 85,170 Net assets representing unitholders’ equity $40,963,731 $ 40,849,263 Net investment income (loss) 352,257 395,898 Number of units outstanding 2,772,535 2,793,970 Net Realized and Unrealized Gain (Loss) on Investments Net asset value per unit $ 14.77 $ 14.62 Net realized gain (loss) on investments 658,942 2,787,618 Net realized gain (loss) on foreign exchange (165) 75 Increase (decrease) in unrealized appreciation (depreciation) of investments (576,088) (1,405,912) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (126) (54) Net gain (loss) on investments 82,563 1,381,727 Increase (Decrease) in Net Assets from Operations $ 434,820 $ 1,777,625 Increase (decrease) in net assets from operations per unit $ 0.16 $ 0.74

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $40,849,263 $31,365,987 Increase (decrease) in net assets from operations 434,820 1,777,625 41,284,083 33,143,612 Unit Transactions: Proceeds from issue 6,636,971 7,129,046 Payments on redemption (6,957,323) (4,668,150) (320,352) 2,460,896 Increase (decrease) in net assets 114,468 4,238,521 Net Assets, End of Period $40,963,731 $35,604,508

Portfolio Advisor: Foyston, Gordon & Payne Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Canadian Growth Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (27.2%) Health Care (3.3%) 204,000 Birchcliff Energy Ltd. 1,015,297 1,091,400 45,600 Angiotech Pharmaceuticals, Inc. 1,096,229 593,712 25,800 Cameco Corporation 1,039,097 1,147,326 14,800 Aspreva Pharmaceuticals Corporation 230,903 448,144 62,700 Canadian Natural Resources Limited 3,545,343 3,869,844 64,600 BioMS Medical Corp. 232,390 206,074 86,400 EnCana Corporation 3,834,102 5,078,592 65,500 BioMS Medical Corp. Restricted 223,355 219,398 188,400 International Uranium Corp. 838,536 1,045,620 32,750 BioMS Medical Corp. Warrants (Exp. 05/30/10) – – 55,700 Nexen Inc. 3,108,511 3,503,530 50,700 Cardiome Pharma Corp. 500,674 496,860 82,262 Petro-Canada 3,564,255 4,356,595 99,400 Extendicare Inc. Cl. A Sub. Voting 1,834,083 2,352,798 65,600 Stratic Energy Corporation 102,493 82,000 60,414 World Heart Corporation 1,506,282 41,081 73,700 Suncor Energy, Inc. 5,300,853 6,658,058 6,257 World Heart Corporation Restricted 56,064 4,255 31,300 Synenco Energy Inc. Cl. A 777,816 708,945 43,800 World Heart Corp. Warrants (Exp. 12/30/07) – – 68,310 Talisman Energy Inc. 907,407 1,330,679 5,679,980 4,362,322 85,900 TransCanada Corporation 2,913,934 2,735,915 39,500 Trican Well Service Ltd. 895,989 880,850 Financials (28.4%) 118,900 UTS Energy Corp. 857,792 697,943 62,000 Bank of Montreal 3,908,353 3,723,720 52,900 Valkyries Petroleum Corp. 394,936 688,229 46,700 Brookﬁeld Asset Management Inc. Cl. A 158,000 West Energy Ltd. 1,025,195 652,540 Limited Voting 1,978,347 2,094,962 69,100 Western Oil Sands Inc. 2,206,371 2,137,954 62,700 Canaccord Capital Inc. 1,005,756 1,111,044 20,000 Canadian Imperial Bank of Commerce 1,564,240 1,494,200 32,327,927 36,666,020 27,900 Cl Financial Inc. 837,816 824,166 Materials (14.0%) 93,300 Dundee Wealth Management Inc. 928,585 1,012,305 31,200 Agnico-Eagle Mines Limited 978,914 1,154,712 4,011 E-L Financial Corporation Limited 1,083,940 2,506,875 50,600 Alcan Inc. 2,688,542 2,645,874 44,100 GMP Capital Trust 821,268 1,037,673 104,106 Barrick Gold Corporation 3,341,334 3,432,375 23,500 IGM Financial Inc. 1,146,145 1,045,985 28,500 Falconbridge Limited 1,170,595 1,675,800 11,100 ING Canada Inc. 610,668 627,150 12,700 First Quantum Minerals Ltd. 563,333 635,508 113,600 Manulife Financial Corporation 3,544,901 4,018,032 17,000 Glamis Gold Ltd. 601,432 719,440 37,600 RioCan REIT 785,145 813,664 42,200 Goldcorp Inc. Cl. A Sub. Voting 1,252,725 1,420,030 172,870 Royal Bank of Canada 7,128,320 7,834,469 31,100 Inco Limited 2,254,463 2,285,850 41,271 Sun Life Financial Inc. 1,947,621 1,850,326 74,800 Ivanhoe Mines Ltd. 780,894 565,488 144,300 The Toronto-Dominion Bank 7,831,100 8,178,924 260,700 Revett Minerals Inc. 265,235 323,268 32,122,205 38,173,495 107,400 Shore Gold Inc. 760,642 533,778 52,700 Teck Cominco Limited Cl. B Sub. Voting 3,642,455 3,529,846 Information Technology (5.7%) 26,400 MacDonald, Dettwiler and Associates Ltd. 1,256,640 1,212,816 18,300,564 18,921,969 73,800 Miranda Technologies Inc. 1,193,980 1,273,050 Industrials (7.0%) 595,700 Nortel Networks Corporation 2,226,004 1,477,336 23,300 ACE Aviation Holdings Inc. 763,945 729,057 31,200 Research In Motion Limited 2,752,066 2,427,360 85,400 CAE Inc. 737,608 725,900 102,200 Workbrain Corporation 1,335,244 1,289,764 55,400 Canadian National Railway Company 2,862,511 2,701,304 8,763,934 7,680,326 46,800 Finning International Inc. 1,758,692 1,740,960 192,400 Jazz Air Income Fund 1,848,587 1,675,804 Telecommunication Services (5.5%) 3,200 SNC-Lavalin Group Inc. 93,978 94,016 19,600 Manitoba Telecom Services Inc. 782,379 890,036 31,500 Toromont Industries Ltd. 696,623 774,900 79,500 Rogers Communications Inc. Cl. B 3,553,911 3,570,345 86,000 WestJet Airlines ltd. 993,730 944,280 62,500 TELUS Corporation 2,830,717 2,876,875 9,755,674 9,386,221 7,167,007 7,337,256 Consumer Discretionary (4.6%) Utilities (0.5%) 48,800 Alliance Atlantis Communications Inc. Cl. B 31,300 Fortis, Inc. 689,494 697,677 Non-Voting 1,621,953 1,595,760 Total Investments (98.6%) 127,412,932 132,684,190 46,900 Canadian Satellite Radio Holdings Inc. Cl. A Other Assets, Less Liabilities (1.4%) 1,938,438 Sub. Voting 623,885 448,364 52,400 Gildan Activewear Inc. Cl. A Sub. Voting 2,577,681 2,766,196 Total Net Assets (100.0%) 134,622,628 6,600 Magna International Inc. Cl. A Sub. Voting 540,259 525,624 Net Asset Vaule Per Unit $16.15 26,300 Shaw Communications Inc. Cl. B Non-Voting 824,336 829,765 6,188,114 6,165,709 Consumer Staples (2.4%) 50,500 Alimentation Couche-Tard Inc. Cl. B Sub. Voting 1,253,079 1,211,495 51,400 Shoppers Drug Mart Corporation 2,164,954 2,081,700 3,418,033 3,293,195

Portfolio Advisor: Aurion Capital Management Inc. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Canadian Growth Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 976,242 $ 735,040 Investments at market value $132,684,190 $126,566,123 Interest 42,539 9,798 Cash 1,693,451 1,421,468 Securities lending income 4,350 3,186 Subscriptions receivable 247,989 372,702 1,023,131 748,024 Receivable for securities sold 3,848,891 517,197 Accrued investment income 284,428 255,474 Expenses Legal fees – 1,072 138,758,949 129,132,964 Audit fees 7,053 8,173 Liabilities Custody fees 20,381 18,086 Payable for securities purchased 3,829,385 926,623 Interest 1,160 300 Redemptions payable 243,154 147,969 Filing fees 6,456 6,857 Accrued expenses 63,782 67,349 Unitholder reporting costs 19,161 18,129 4,136,321 1,141,941 Unitholder administration and service fees 62,045 64,925 Net assets representing unitholders’ equity $134,622,628 $127,991,023 116,256 117,542 Number of units outstanding 8,335,289 8,421,699 Net investment income (loss) 906,875 630,482 Net Realized and Unrealized Gain (Loss) Net asset value per unit $ 16.15 $ 15.20 on Investments Net realized gain (loss) on investments 16,425,905 7,400,723 Net realized gain (loss) on foreign exchange (934) (777) Increase (decrease) in unrealized appreciation (depreciation) of investments (9,295,307) 2,337,019 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 71 (79) Net gain (loss) on investments 7,129,735 9,736,886 Increase (Decrease) in Net Assets from Operations $ 8,036,610 $10,367,368 Increase (decrease) in net assets from operations per unit $ 0.96 $ 1.42

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $127,991,023 $ 97,339,334 Increase (decrease) in net assets from operations 8,036,610 10,367,368 136,027,633 107,706,702 Unit Transactions: Proceeds from issue 20,807,471 17,758,417 Payments on redemption (22,212,476) (17,105,431) (1,405,005) 652,986 Increase (decrease) in net assets 6,631,605 11,020,354 Net Assets, End of Period $134,622,628 $108,359,688

Portfolio Advisor: Aurion Capital Management Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Canadian Small Cap Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (24.5%) Financials (15.1%) 72,133 AltaGas Income Trust 1,459,826 2,091,857 25,900 ADDENDA Capital Inc. 594,622 664,335 92,900 Canadian Energy Services LP Cl. A 902,592 771,070 96,100 Canadian Western Bank 1,862,957 4,113,080 116,500 CCS Income Trust 1,792,933 4,310,500 21,700 DirectCash Income Fund 324,455 328,755 109,900 CHC Helicopter Corporation Cl. A Sub. Voting 2,116,206 2,934,330 56,950 EGI Financial Holdings, Inc. 585,906 526,218 27,377 Crescent Point Energy Trust 335,127 597,640 52,400 Equitable Group Inc. 1,178,776 1,375,500 29,000 Crescent Point Energy Trust 107,694 891,603 61,830 First National Financial Income Fund 618,454 710,427 121,300 Esprit Energy Trust 1,519,463 1,408,293 78,800 Home Capital Group Inc. Cl. B Sub. Voting 1,164,102 2,568,880 324,600 ProspEx Resources Ltd. 1,175,510 1,265,940 61,900 Morneau Sobeco Income Fund 763,371 780,559 78,300 ShawCor Ltd. Cl. A Sub. Voting 1,117,043 1,298,997 59,000 Whiterock Real Estate Investment Trust 112,400 199,420 16,700 Zargon Energy Trust 394,155 510,686 7,205,043 11,267,174 60,224 Zargon Oil & Gas Ltd. 309,831 2,166,558 Information Technology (0.8%) 11,230,380 18,247,474 29,680 Constellation Software Inc. 511,231 569,856 Materials (9.5%) Utilities (1.4%) 80,310 Harris Steel Group Inc. 1,581,291 2,268,757 43,000 AtlasGas Utility Group Inc. 365,054 333,250 133,600 International Forest Products Limited Cl. A Sub. 52,600 Caribbean Utilities Company Ltd. Cl. A 841,420 699,683 Voting 969,912 935,200 31,800 Omni-Lite Industries Canada Inc. 88,226 73,140 1,206,474 1,032,933 52,600 Opta Minerals Inc. 196,476 166,742 Short Term Notes (3.0%) 2,251,846 2,251,845 227,442 Supremex Income Fund 2,272,320 2,183,443 Total Investments (98.5%) 51,468,408 73,181,936 35,516 The Canam Manac Group Inc. Cl. A Sub. Voting 370,432 354,805 111,760 Winpak Ltd. 1,237,500 1,084,072 Other Assets, Less Liabilities (1.5%) 1,127,800 6,716,157 7,066,159 Total Net Assets (100.0%) 74,309,736 Industrials (37.4%) Net Asset Value Per Unit $19.82 20,592 Buhler Industries Inc. 132,828 129,730 202,253 Contrans Income Fund 2,266,522 2,568,613 226,540 Exco Technologies Ltd. 1,452,840 792,890 69,400 FirstService Corporation Sub. Voting 1,238,993 2,078,530 76,520 Genivar Income Fund 805,846 826,416 111,310 Global Railway Industries Ltd. 408,833 333,930 119,800 Groupe Laperriere & Verreault Inc. Cl. A Sub. Voting 1,121,554 2,875,200 26,391 Horizon North Logistics Inc. — 100,869 18,569 Horizon North Logistics Inc. Warrants (Exp. 07/01/06) — — 47,600 Marsulex Inc. 375,846 392,700 91,700 Mullen Group Income Fund 2,027,438 2,650,130 69,770 Richelieu Hardware Ltd. 1,096,719 1,503,543 23,500 Ritchie Bros. Auctioneers Incorporated 658,802 1,396,605 164,900 Russel Metals Inc. 1,333,778 4,270,910 123,680 Stantec Inc. 1,433,068 2,609,648 84,200 Steeplejack Industrial Group Inc. 409,651 606,240 141,760 Transat A.T. Inc. Cl. B 2,754,846 3,453,274 22,600 Transcontinental Inc. Cl. A Sub. Voting 465,540 429,400 147,800 ZCL Composites Inc. 446,205 739,000 18,429,309 27,757,628 Consumer Discretionary (3.6%) 5,800 The McGraw-Hill Ryerson Ltd. 192,960 261,000 74,700 Uni-Select Inc. 1,592,293 2,416,545 1,785,253 2,677,545 Consumer Staples (1.5%) 5,800 Alimentation Couche-Tard Inc. Cl. B Sub. Voting 53,597 139,142 50,600 Van Houtte Inc., Sub. Voting 1,034,434 939,136 1,088,031 1,078,278 Health Care (1.7%) 68,800 Futuremed Healthcare Income Fund 694,384 885,456 45,200 Parkbridge Lifestyles Communities Inc. Non Voting Restricted 233,684 230,520 22,600 Parkbridge Lifestyles Communities Inc. Restricted 116,616 117,068 1,044,684 1,233,044

Portfolio Advisor: Mawer Investment Management Ltd. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Canadian Small Cap Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 467,599 $ 310,269 Investments at market value $73,181,936 $ 67,957,737 Interest 537,739 289,240 Cash 21,925 23,178 Securities lending income 155 1,574 Subscriptions receivable 142,591 203,650 1,005,493 601,083 Receivable for securities sold 1,289,503 121,133 Accrued investment income 200,913 571,065 Expenses Legal fees – 1,072 74,836,868 68,876,763 Audit fees 7,054 8,078 Liabilities Custody fees 9,421 3,789 Payable for securities purchased 269,693 536,000 Interest 169 – Redemptions payable 202,761 102,650 Filing fees 6,456 6,887 Accrued expenses 54,678 61,301 Unitholder reporting costs 16,390 16,793 527,132 699,951 Unitholder administration and service fees 55,438 59,731 Net assets representing unitholders’ equity $74,309,736 $ 68,176,812 94,928 96,350 Number of units outstanding 3,748,897 3,706,280 Net investment income (loss) 910,565 504,733 Net Realized and Unrealized Gain (Loss) Net asset value per unit $ 19.82 $ 18.39 on Investments Net realized gain (loss) on investments 3,439,588 1,496,272 Net realized gain (loss) on foreign exchange 140 279 Net realized gain (loss) from underlying funds 10,418 1 Increase (decrease) in unrealized appreciation (depreciation) of investments 950,564 1,033,502 Net gain (loss) on investments 4,400,710 2,530,054 Increase (Decrease) in Net Assets from Operations $5,311,275 $3,034,787 Increase (decrease) in net assets from operations per unit $ 1.42 $ 1.00

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $ 68,176,812 $45,429,568 Increase (decrease) in net assets from operations 5,311,275 3,034,787 73,488,087 48,464,355 Unit Transactions: Proceeds from issue 11,670,059 15,696,937 Payments on redemption (10,848,410) (8,331,572) 821,649 7,365,365 Increase (decrease) in net assets 6,132,924 10,400,152 Net Assets, End of Period $ 74,309,736 $55,829,720

Portfolio Advisor: Mawer Investment Management Ltd. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Value Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (6.6%) Information Technology (15.8%) 32,100 ConocoPhillips 1,527,533 2,345,417 32,000 Apple Computer, Inc. 887,061 2,038,041 35,000 Weatherford International Ltd. 1,107,628 1,936,420 17,000 Autodesk, Inc. 209,784 653,189 2,635,161 4,281,837 17,000 International Business Machines Corporation 2,081,973 1,456,123 382,000 Lucent Technologies Inc. 1,055,530 1,030,751 Materials (4.4%) 46,000 Molex Incorporated Cl. A 1,711,190 1,473,562 21,400 Air Products and Chemicals Inc. 1,457,746 1,525,195 116,000 Oracle Corporation 1,672,501 1,874,137 20,200 Weyerhaeuser Co. 1,635,515 1,402,057 52,000 Texas Instruments Incorporated 1,480,696 1,756,214 3,093,261 2,927,252 9,098,735 10,282,017 Industrials (8.2%) Telecommunication Services (4.5%) 20,000 Deere & Company 1,623,981 1,861,827 55,882 AT&T Inc. 1,715,858 1,737,782 23,400 The Boeing Company 1,175,884 2,137,114 50,900 Vodafone Group PLC ADR 1,367,731 1,208,850 45,000 Tyco International Ltd. 1,228,150 1,379,812 3,083,589 2,946,632 4,028,015 5,378,753 Utilities (1.4%) Consumer Discretionary (13.4%) 20,000 FPL Group, Inc. 863,879 922,774 38,600 Clear Channel Communications, Inc. 1,570,609 1,332,057 28,300 J.C. Penney Company, Inc. 1,079,730 2,130,244 Total Investments (97.9%) 54,088,279 63,873,844 67,300 Matsushita Electric Industrial Co., Ltd. ADR 1,150,587 1,585,584 Other Assets, Less Liabilities (2.1%) 1,379,519 57,000 The Walt Disney Company 1,762,211 1,906,650 Total Net Assets (100.0%) 65,253,363 53,700 Warner Music Group Corp. 1,129,669 1,765,130 Net Asset Value Per Unit $10.37 6,692,806 8,719,665 Consumer Staples (18.4%) 56,000 Archer-Daniels-Midland Company 1,064,112 2,577,523 21,700 Clorox Company 1,473,173 1,475,200 22,600 Diageo PLC ADR 1,576,851 1,702,192 30,000 Kellogg Co. 1,543,133 1,619,983 46,000 L’Oreal SA ADR 843,146 964,252 54,000 Sysco Corp. 1,828,196 1,840,018 36,000 UST Inc. 1,713,429 1,813,927 10,042,040 11,993,095 Health Care (8.5%) 32,000 AstraZeneca PLC ADR 1,884,504 2,134,378 39,400 Baxter International Inc. 1,685,346 1,614,903 21,000 C.R. Bard Inc. 1,053,227 1,715,383 2,100 Community Health Systems Inc. 84,610 86,050 4,707,687 5,550,714 Financials (16.7%) 20,800 American International Group, Inc. 1,848,292 1,369,487 42,000 J.P. Morgan Chase & Co. 2,095,958 1,966,860 119,000 Mitsubishi UFJ Financial Group, Inc. ADR 1,106,597 1,850,956 26,000 Morgan Stanley 1,639,522 1,832,458 9,200 TCF Financial Corporation 309,590 271,324 101,000 The Charles Schwab Corporation 1,400,322 1,799,588 32,000 The Chubb Corporation 1,442,825 1,780,432 9,843,106 10,871,105

Portfolio Advisor: Metropolitan West Capital Management, LLC -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle American Value Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 552,331 $ 512,641 Investments at market value $63,873,844 $ 62,995,771 Interest 40 93 Cash 1,228,075 609,774 Securities lending income 8,686 10,013 Subscriptions receivable 120,215 124,814 Less: Foreign withholding taxes (72,490) (65,365) Receivable for securities sold 152,743 73,622 488,568 457,382 Accrued investment income 121,549 171,509 Expenses 65,496,426 63,975,490 Legal fees – 1,072 Liabilities Audit fees 7,054 7,586 Payable for securities purchased 84,573 407,661 Custody fees 744 4,343 Redemptions payable 104,690 130,291 Interest 232 648 Accrued expenses 53,800 56,928 Filing fees 6,456 6,887 243,063 594,880 Unitholder reporting costs 24,683 14,968 Unitholder administration and service fees 72,347 53,629 Net assets representing unitholders’ equity $65,253,363 $ 63,380,610 111,516 89,133 Number of units outstanding 6,295,115 6,414,476 Net investment income (loss) 377,052 368,249 Net asset value per unit $ 10.37 $ 9.88 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 1,641,478 3,337,014 Net realized gain (loss) on foreign exchange (115,780) (71,355) Increase (decrease) in unrealized appreciation (depreciation) of investments 1,199,408 (2,581,734) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 8,507 (40,148) Net gain (loss) on investments 2,733,613 643,777 Increase (Decrease) in Net Assets from Operations $3,110,665 $ 1,012,026 Increase (decrease) in net assets from operations per unit $ 0.49 $ 0.14

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $63,380,610 $ 69,753,034 Increase (decrease) in net assets from operations 3,110,665 1,012,026 66,491,275 70,765,060 Unit Transactions: Proceeds from issue 8,165,901 12,098,053 Payments on redemption (9,403,813) (19,814,873) (1,237,912) (7,716,820) Increase (decrease) in net assets 1,872,753 (6,704,794) Net Assets, End of Period $65,253,363 $ 63,048,240

Portfolio Advisor: Metropolitan West Capital Management, LLC -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Mid Cap Value Equity Fund

Statement of Investment Portfolio as at June 30, 2006

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (5.1%) Financials (30.4%) 3,547 Grant Prideco Inc. 181,020 176,982 1,880 AmerUs Group Co. 125,437 122,732 3,890 Holly Corporation 147,395 209,060 12,414 Annaly Mortgage Management Inc. 181,432 177,311 1,811 National-Oilwell Varco Inc. 131,091 127,860 6,710 Aon Corporation 267,742 260,511 3,676 Noble Energy, Inc. 192,164 192,067 6,413 Archstone-Smith Trust 303,347 353,746 2,254 Peabody Energy Corporation 121,279 140,111 4,516 Assurant, Inc. 196,028 243,710 772,949 846,080 3,950 Camden Property Trust 262,336 323,933 6,514 Conseco, Inc. 184,387 167,778 Materials (5.1%) 16,000 Doral Financial Corp. 129,812 114,354 2,959 Airgas, inc. 104,334 122,898 2,349 Downey Financial Corp. 186,552 177,708 2,031 Ashland Inc. 135,706 151,047 2,850 Equity Residential 127,401 142,141 1,617 Carpenter Technology Corporation 161,487 208,241 4,746 First Horizon National Corporation 206,904 212,730 2,007 Martin Marietta Materials, Inc. 191,741 203,976 4,578 FirstFed Financial Corp. 287,935 294,375 2,319 PPG Industries Inc. 160,610 170,655 3,130 Hanover Insurance Group Inc. 172,251 165,633 753,878 856,817 1,596 Intercontinental Exchange Inc. 97,793 103,106 3,699 Lincoln National Corporation 227,291 232,780 Industrials (12.4%) 6,915 Marshall & Ilsley Corporation 347,726 352,666 2,010 Alliant Techsystems Inc. 177,060 171,112 18,650 New York Community Bancorp, Inc. 356,013 343,321 6,925 BE Aerospace, Inc. 166,865 176,511 17,071 Sovereign Bancorp, Inc. 450,766 386,582 3,900 Crane Co. 167,134 180,898 7,063 Thornburg Mortgage, Inc. 212,463 219,483 3,340 Curtiss-Wright Corporation 115,757 115,000 5,435 W. R. Berkley Corporation 241,746 206,829 3,837 Goodrich Corporation 179,917 172,371 3,350 Washington Real Estate Investment Trust 128,740 137,084 2,702 Granite Construction Incorporated 128,604 136,386 3,809 Zions Bancorporation 318,346 331,014 1,959 Jacobs Engineering Group Inc. 156,742 173,956 1,763 Manpower Inc. 91,724 126,987 5,012,448 5,079,527 2,588 NCI Building Systems, Inc. 139,524 153,428 Information Technology (12.8%) 4,300 Republic Services, Inc. Cl. A 180,729 193,410 9,128 Avnet, Inc. 249,946 203,758 2,800 Ryder Systems Inc. 114,248 182,419 3,837 CommScope, Inc. 123,161 134,423 1,990 The Manitowoc Company, Inc. 82,030 98,739 4,438 Comtech Telecommunications Corp. 159,261 144,839 4,074 URS Corporation 201,489 190,785 5,186 Electronic Data Systems Corporation 146,279 139,124 1,901,823 2,072,002 4,719 FileNET Corporation 141,634 141,697 3,906 Freescale Semiconductor Inc. Cl. A 113,711 126,300 Consumer Discretionary (8.4%) 3,658 Jabil Circuit, Inc. 98,252 104,414 6,781 Brightpoint, Inc. 170,698 102,301 2,252 Lexmark International Inc. Cl. A 124,233 140,188 5,546 Foot Locker Incorporated 144,417 151,441 2,681 Mettler Toledo International Incorporated 191,658 181,063 2,250 Harrah’s Entertainment Inc. 172,478 178,573 4,447 Novellus Systems, Inc. 126,195 122,473 2,800 Lennar Corporation Cl. A 185,799 138,523 15,896 Parametric Technology Corporation 274,426 225,273 3,908 Liz Claiborne Incorporated 171,261 161,486 11,147 Perot Systems Corp. Cl. A 192,572 179,970 3,258 Ofﬁce Depot, Inc. 92,872 138,041 6,474 Photronics, Inc. 137,436 106,834 2,430 R.H. Donnelley Corp. 169,119 146,500 4,460 Thermo Electron Corp. 143,541 180,218 4,271 Tribune Company 168,569 154,437 3,316 United Rentals, Inc. 77,777 118,241 2,222,305 2,130,574 1,289 Whirlpool Corporation 125,699 117,788 Telecommunication Services (1.5%) 1,478,689 1,408,331 6,150 CenturyTel, Inc. 251,495 254,747 Consumer Staples (6.7%) Utilities (11.6%) 1,823 Clorox Company 130,886 123,930 5,288 AGL Resources Inc. 222,405 224,760 2,759 Hormel Foods Corporation 106,692 114,253 6,690 American Electric Power Company, Inc. 282,684 255,483 2,348 Loews Corp-Carolina Group 121,395 134,488 2,420 Constellation Energy Group Inc. 132,291 147,111 2,617 Molson Coors Brewing Company Cl. B 205,463 198,071 5,269 Edison International 282,422 229,123 9,280 The Kroger Co. 195,588 226,190 2,093 Entergy Corporation 165,594 165,109 5,100 The Pepsi Bottling Group Inc. 170,521 182,821 6,810 PPL Corp. 197,159 245,259 8,389 Tyson Foods, Inc. Cl. A 156,773 138,996 4,150 Sempra Energy 223,372 210,447 9,466 UGI Corporation 271,445 259,854 1,087,318 1,118,744 4,300 Wisconsin Energy Corporation 200,932 193,218 Health Care (5.6%) 1,978,304 1,930,364 2,250 CIGNA Corporation 310,344 247,137 4,000 Community Health Systems Inc. 179,409 163,905 Short Term Notes (1.8%) 295,475 295,475 5,624 Endo Pharmaceuticals Holdings Inc. 181,301 206,810 Total Investments (101.4%) 16,715,706 16,933,257 2,900 Humana Inc. 162,352 173,639 2,850 Manor Care Inc. 127,616 149,100 Other Assets, Less Liabilities (–1.4%) (233,561) 961,022 940,591 Total Net Assets (100.0%) 16,699,696 Net Asset Value Per Unit $9.85

Portfolio Advisor: Integrity Asset Management, LLC -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle American Mid Cap Value Equity Fund

Statement of Net Assets as at June 30, 2006 (unaudited) Statement of Operations for the six month periods and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $114,281 $ 134,918 Investments at market value $16,933,257 $ 16,032,815 Interest (319) (21,743) Cash 154,848 55,518 Securities lending income 487 204 Subscriptions receivable 53,725 58,280 Less: Foreign withholding taxes (21,003) (15,060) Receivable for securities sold 167,705 – 93,446 98,319 Accrued investment income 38,299 26,289 Accounts receivable – 5,631 Expenses Legal fees – 1,072 17,347,834 16,178,533 Audit fees 7,054 7,586 Liabilities Custody fees 7,191 15,667 Payable for securities purchased 572,185 – Interest 207 212 Redemptions payable 36,096 37,751 Filing fees 6,456 6,887 Distributions payable – – Unitholder reporting costs 6,453 5,761 Accrued expenses 39,857 42,584 Unitholder administration and service fees 34,155 34,018 648,138 80,335 61,516 71,203 Net assets representing unitholders’ equity $16,699,696 $ 16,098,198 Rebated and absorbed expenses (15,669) (27,983) Number of units outstanding 1,695,073 1,667,691 Net expenses 45,847 43,220 Net investment income (loss) 47,599 55,099 Net asset value per unit $ 9.85 $ 9.65 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 344,152 799,607 Net realized gain (loss) on foreign exchange (11,072) 2,457 Increase (decrease) in unrealized appreciation (depreciation) of investments (50,902) (108,081) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 1,794 2,539 Net gain (loss) on investments 283,972 696,522 Increase (Decrease) in Net Assets from Operations $331,571 $ 751,621 Increase (decrease) in net assets from operations per unit $ 0.20 $ 0.48

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $16,098,198 $15,170,339 Increase (decrease) in net assets from operations 331,571 751,621 16,429,769 16,461,960 Unit Transactions: Proceeds from issue 3,329,499 3,878,285 Payments on redemption (3,059,572) (4,502,650) 269,927 (624,365) Increase (decrease) in net assets 601,498 127,256 Net Assets, End of Period $16,699,696 $15,837,595

Portfolio Advisor: Integrity Asset Management, LLC -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Large Cap Growth Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (3.8%) Financials (11.2%) 5,800 Cameron International Corporation 310,593 308,929 31,000 Bank of America Corporation 1,701,589 1,662,576 6,100 Occidental Petroleum Corporation 654,173 697,494 5,100 Capital One Financial Corp. 510,439 485,911 14,300 Schlumberger Limited 779,544 1,038,146 7,600 CIT Group Inc. 453,165 443,105 1,744,310 2,044,569 5,100 Endurance Specialty Holdings Limited 208,391 181,968 5,800 J.P. Morgan Chase & Co. 272,826 271,614 Materials (5.0%) 2,380 PartnerRe Ltd. 184,167 169,970 9,400 Allegheny Technologies Inc. 746,996 725,704 3,600 The Bear Stearns Companies Inc. 579,924 562,281 5,700 Carpenter Technology Corporation 702,244 734,060 3,400 The Goldman Sachs Group, Inc. 609,872 570,280 10,678 Monsanto Company 568,161 1,002,364 14,300 The St. Paul Companies Inc. 722,269 710,806 3,000 Potash Corporation of Saskatchewan Inc. 308,092 287,570 14,700 Wells Fargo & Company 1,088,236 1,099,475 2,325,493 2,749,698 6,330,878 6,157,986 Industrials (20.6%) Information Technology (25.2%) 14,500 Ceridian Corporation 417,412 395,134 13,243 Accenture Ltd. Cl. A 477,564 418,171 17,000 Continental Airlines, Inc. Cl. B 497,689 564,859 40,300 BEA Systems, Inc. 606,141 588,193 9,000 Cooper Industries Ltd. Cl. A 921,605 932,452 7,250 Broadcom Corporation Cl. A 206,686 242,917 2,300 Deere & Company 228,541 214,110 18,100 Cadence Design Systems Inc. 362,352 346,113 14,900 Emerson Electric Co. 1,287,607 1,392,378 51,400 CIENA Corporation 299,287 275,666 62,600 General Electric Company 2,817,753 2,300,575 78,500 Cisco Systems, Inc. 1,801,325 1,709,412 9,400 Global Payments Inc. 536,176 508,853 6,500 Citrix Systems, Inc. 219,824 290,915 13,300 Textron Inc. 1,048,607 1,366,983 23,000 Dell Inc. 637,116 625,994 8,500 The Boeing Company 774,167 776,302 32,100 Freescale Semiconductor Inc. Cl. B 999,780 1,052,270 15,000 United Parcel Service, Inc. Cl. B 1,374,176 1,376,969 2,400 Google Inc. Cl. A 969,463 1,122,127 20,700 United Technologies Corporation 1,271,445 1,463,765 17,600 Hewlett-Packard Company 610,149 621,688 11,175,178 11,292,380 14,400 International Business Machines Corporation 1,386,597 1,233,422 Consumer Discretionary (8.2%) 4,003 Itron, Inc. 274,310 264,498 7,400 AnnTaylor Stores Corporation 235,297 357,928 2,700 Komag, Incorporated 149,331 139,025 9,800 Foot Locker Incorporated 257,967 267,602 3,700 Marvell Technology Group Ltd. 248,461 182,883 2,100 Group 1 Automotive, Inc. 136,210 131,920 20,936 Microsoft Corporation 708,944 543,907 3,000 Guess?, Inc. 147,046 139,654 32,700 Motorola, Inc. 834,210 734,679 3,400 Gymboree Corporation 127,291 131,775 18,000 Nokia OYJ ADR 457,007 406,618 8,500 J.C. Penney Company, Inc. 557,001 639,826 48,500 Oracle Corporation 791,991 783,583 9,800 Lamar Advertising Company Cl. A 608,249 588,528 15,400 QUALCOMM Incorporated 788,357 688,042 10,700 Payless ShoeSource, Inc. 301,208 324,152 9,407 Roper Industries, Inc. 496,986 490,352 11,300 Polo Ralph Lauren Corporation 703,519 691,712 4,600 SAP AG ADR 272,048 269,375 15,100 Ross Stores Inc. 518,215 472,264 16,600 Seagate Technology 491,961 419,044 11,400 Target Corporation 709,947 621,187 7,759 VeriFone Holdings, Inc. 246,311 263,691 4,900 The Dress Barn, Inc. 129,787 138,500 7,600 Vishay Intertechnology, Inc. 135,501 133,296 4,431,737 4,505,048 14,471,702 13,845,881 Consumer Staples (6.8%) Telecommunication Services (0.5%) 12,200 Archer-Daniels-Midland Company 409,580 561,532 7,800 American Tower Corporation Cl. A 272,759 270,651 7,300 CVS Corporation 246,576 249,883 Total Investments (98.6%) 54,287,007 54,114,056 12,800 General Mills, Inc. 735,129 737,291 Other Assets, Less Liabilities (1.4%) 787,102 16,100 Newell Rubbermaid Inc. 489,587 463,687 25,800 PepsiCo, Inc. 1,833,392 1,727,171 Total Net Assets (100.0%) 54,901,158 3,714,264 3,739,564 Net Asset Value Per Unit $6.62 ADR - American Depository Receipt Health Care (17.3%) 3,800 Alcon Inc. 491,889 417,556 1,800 Allergan, Inc. 199,298 215,271 15,800 Amgen Inc. 1,383,018 1,149,157 21,700 Baxter International Inc. 946,814 889,427 14,722 Becton, Dickinson and Company 1,007,238 1,003,451 6,500 Caremark Rx, Inc. 374,160 361,433 3,600 Cytyc Corporation 118,942 101,795 3,200 DJ Orthopedics Incorporated 148,634 131,409 9,022 Edwards Lifesciences Corporation 472,013 457,004 5,700 Genentech, Inc. 568,696 519,880 11,600 Gilead Sciences, Inc. 831,498 765,175 8,000 Laboratory Corporation of America Holdings 520,939 555,092 12,398 Novartis AG 743,906 747,139 5,400 Novo Nordisk A/S Cl. B 365,813 383,208 4,217 Roche Holding AG 596,955 775,822 48,800 Schering-Plough Corporation 1,050,873 1,035,460 9,820,686 9,508,279

Portfolio Advisor: American Century Investment Management, Inc. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle American Large Cap Growth Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 294,972 $268,940 Investments at market value $54,114,056 $ 52,989,111 Interest 2,883 82 Cash 381,781 373,550 Securities lending income 5,240 5,006 Subscriptions receivable 169,839 305,462 Less: Foreign withholding taxes (41,607) (39,403) Receivable for securities sold 836,293 – 261,488 234,625 Accrued investment income 61,998 53,816 Expenses 55,563,967 53,721,939 Legal fees – 1,072 Liabilities Audit fees 7,054 7,586 Payable for securities purchased 522,180 93,070 Custody fees 47,109 31,689 Redemptions payable 77,350 76,332 Interest 17 – Accrued expenses 63,279 62,898 Filing fees 6,456 6,887 662,809 232,300 Unitholder reporting costs 17,039 13,646 Unitholder administration and service fees 59,502 51,656 Net assets representing unitholders’ equity $54,901,158 $ 53,489,639 137,177 112,536 Number of units outstanding 8,292,514 7,648,309 Net investment income (loss) 124,311 122,089 Net asset value per unit $ 6.62 $ 6.99 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments (290,439) (546,036) Net realized gain (loss) on foreign exchange (73,544) (29,867) Increase (decrease) in unrealized appreciation (depreciation) of investments (2,850,094) 369,289 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (3,636) 7,701 Net gain (loss) on investments (3,217,713) (198,913) Increase (Decrease) in Net Assets from Operations $(3,093,402) $ (76,824) Increase (decrease) in net assets from operations per unit $ (0.39) $ (0.01)

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $53,489,639 $49,076,631 Increase (decrease) in net assets from operations (3,093,402) (76,824) 50,396,237 48,999,807 Unit Transactions: Proceeds from issue 10,832,914 12,279,662 Payments on redemption (6,327,993) (11,045,375) 4,504,921 1,234,287 Increase (decrease) in net assets 1,411,519 1,157,463 Net Assets, End of Period $54,901,158 $50,234,094

Portfolio Advisor: American Century Investment Management, Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle American Mid Cap Growth Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Energy (13.7%) Information Technology (19.4%) 11,100 Energy Conversion Devices, Inc. 396,569 450,876 11,400 Ansys Inc. 643,227 607,840 10,800 FMC Technologies, Inc. 633,204 812,353 16,500 Broadcom Corporation Cl. A 504,299 552,845 10,200 Frontier Oil Corporation 301,140 368,485 6,500 Cerner Corporation 345,546 268,955 6,200 National-Oilwell Varco Inc. 407,891 437,731 14,100 Cognizant Technology Solutions Corp. Cl. A 734,443 1,059,157 22,700 Smith International, Inc. 878,953 1,125,558 10,270 Hittite Microwave Corporation 273,169 414,070 8,200 Veritas DGC Inc. 426,379 471,596 9,400 Marvell Technology Group Ltd. 492,998 464,623 10,600 Whiting Petroleum Corporation 524,678 494,862 52,700 Opsware, Inc. 435,037 484,186 3,568,814 4,161,461 4,000 Research In Motion Limited 170,868 311,174 15,700 Salesforce.com, Inc. 341,523 466,697 Industrials (22.9%) 13,400 Silicon Laboratories Inc. 597,835 525,176 9,000 Alliance Data Systems Corporation 545,999 590,259 5,400 Sina Corp. 155,960 150,404 17,000 Bright Horizons Family Solutions Inc. 751,282 714,414 16,616 Yahoo! Inc. 265,965 611,386 5,900 CheckFree Holdings Corp. 255,868 326,030 6,300 Foster Wheeler Ltd. 303,039 303,458 4,960,870 5,916,513 12,200 Joy Global Inc. 705,090 708,580 Short Term Notes (4.4%) 1,338,000 1,338,000 13,100 MSC Industrial Direct Co., Inc. 529,745 694,831 Total Investments (100.8%) 27,307,755 30,691,384 24,400 Resources Connection Incorporated 689,994 680,694 20,400 Robert Half International Inc. 799,512 955,332 Other Assets, Less Liabilities (-0.8%) (232,743) 2,900 Strayer Education, Inc. 365,385 314,038 Total Net Assets (100.0%) 30,458,641 10,300 The Corporate Executive Board Company 862,140 1,150,747 Net Asset Value per Unit $14.46 7,900 Ultra Petroleum Corp. 516,235 522,080 6,324,289 6,960,463 Consumer Discretionary (8.4%) 22,100 eBay Inc. 407,547 721,750 13,300 Monster Worldwide Inc. 478,640 632,626 19,400 Netﬂix Inc. 655,592 588,580 7,600 Wynn Resorts, Ltd. 466,068 621,144 2,007,847 2,564,100 Health Care (20.0%) 12,900 Abaxis, Inc. 265,849 321,759 11,500 Cubist Pharmaceuticals, Inc. 172,554 322,871 15,400 CV Therapeutics Inc. 400,327 239,879 10,200 Express Scripts, Inc. Cl. A 605,693 815,899 5,400 Foxhollow Technologies Inc. 156,394 164,494 10,600 Genentech, Inc. 670,782 966,794 14,740 IntraLase Corp. 320,404 275,124 5,200 Intuitive Surgical, Inc. 618,362 683,990 4,400 Invitrogen Corporation 354,193 324,139 9,000 MedImmune, Inc. 353,569 271,948 8,700 Nuvelo, Inc. 171,145 161,513 7,400 Onyx Pharmaceuticals, Inc. 264,004 138,864 6,100 Palomar Medical Technologies, Inc. 292,244 310,353 17,900 Salix Pharmaceuticals, Ltd. 339,109 245,490 10,100 The Advisory Board Company 550,387 541,565 7,600 Vertex Pharmaceuticals Inc. 331,981 311,081 5,866,997 6,095,763 Financials (12.0%) 26,200 E*TRADE Group, Inc. 548,473 666,641 10,500 GFI Group Inc. 621,546 631,619 7,200 Hancock Holding Company 425,338 449,568 21,682 National Interstate Corporation 470,364 655,638 14,100 SEI Investments Company 724,592 768,467 5,442 Signature Bank 176,988 196,476 6,800 T. Rowe Price Group Inc. 273,637 286,675 3,240,938 3,655,084

Portfolio Advisor: TCW Investment Management Company -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle American Mid Cap Growth Equity Fund

Statement of Net Assets as at June 30, 2006 (unaudited) Statement of Operations for the six month periods and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 39,590 $ 39,215 Investments at market value $ 30,691,384 $ 32,457,179 Interest (798) 1,629 Cash 696,057 1,648 Securities lending income 3,625 2,157 Subscriptions receivable 55,423 40,298 Less: Foreign withholding taxes (5,536) (5,818) Receivable for securities sold 523,582 – 36,881 37,183 Accrued investment income 28,569 5,325 Expenses 31,995,015 32,504,450 Legal fees – 1,072 Liabilities Audit fees 7,054 7,586 Payable for securities purchased 1,371,156 584,101 Custody fees 3,571 4,179 Redemptions payable 123,482 107,961 Interest – 610 Accrued expenses 41,736 36,425 Filing fees 6,456 6,887 1,536,374 728,487 Unitholder reporting costs 22,518 9,491 Unitholder administration and service fees 67,874 42,506 Net assets representing unitholders’ equity $ 30,458,641 $ 31,775,963 107,473 72,331 Number of units outstanding 2,106,644 2,067,954 Rebated and absorbed expenses (22,162) – Net asset value per unit $ 14.46 $ 15.37 Net expenses 85,311 72,331 Net investment income (loss) (48,430) (35,148) Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 1,338,986 (2,343,892) Net realized gain (loss) on foreign exchange (10,862) 5,639 Increase (decrease) in unrealized appreciation (depreciation) of investments (3,162,001) 373,226 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 249 (1,334) Net gain (loss) on investments (1,833,628) (1,966,361) Increase (Decrease) in Net Assets from Operations $ (1,882,058) $ (2,001,509) Increase (decrease) in net assets from operations per unit $ (0.91) $ (0.90)

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $ 31,775,963 $ 31,405,905 Increase (decrease) in net assets from operations (1,882,058) (2,001,509) 29,893,905 29,404,396 Unit Transactions: Proceeds from issue 6,012,611 11,762,792 Payments on redemption (5,447,875) (8,927,215) 564,736 2,835,577 Increase (decrease) in net assets (1,317,322) 834,068 Net Assets, End of Period $ 30,458,641 $ 32,239,973

Portfolio Advisor: TCW Investment Management Company -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle International Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Australia (3.7%) 44,000 Fujitsu Ltd. 433,502 381,655 20,687 AMP Limited 154,805 156,693 2,100 Hirose Electric Co., Ltd. 267,018 283,539 25,626 Australia and New Zealand Banking Group 7,700 Japan Petroleum Exploration Co., Ltd. 553,395 544,802 Limited 506,459 565,311 21,600 JSR Corporation 574,407 610,877 21,922 BHP Billiton Limited 353,552 525,826 59 Kenedix, Inc. 413,572 284,709 26,975 Brambles Industries Limited 214,140 246,169 28,000 Konica Minolta Holdings, Inc. 331,174 395,833 30,594 Coca-Cola Amatil Limited 255,929 179,538 24,700 Matsui Securities Co. Ltd. 449,609 261,825 79,081 Macquarie Airports 237,909 200,731 21,600 Mitsubishi Corporation 382,988 483,577 7,695 National Australia Bank Limited 227,874 223,362 118,000 Mitsubishi Heavy Industries Ltd. 617,531 570,300 42,934 Origin Energy Limited 259,990 261,267 59 Mitsubishi UFJ Financial Group, Inc. 592,154 917,330 38,514 Publishing and Broadcasting Limited 554,943 579,617 45,000 Mitsui & Co. 566,125 711,871 21,848 Westpac Banking Corporation 386,413 420,362 28,000 Mitsui Fudosan Co. Ltd. 417,563 681,382 6,034 Woodside Petroleum Limited 244,543 220,051 5,900 Nintendo Co., Ltd. 951,377 1,106,878 3,396,557 3,578,927 70,000 Obayashi Corporation 597,215 535,597 3,600 Orix Corporation 609,427 978,837 Belgium (0.3%) 8,750 Promise Co., Ltd. 686,231 566,711 4,419 UCB SA 266,693 266,693 540 Rakuten, Inc. 446,018 359,413 France (18.9%) 7,100 Ryohin Keikaku Co. 517,043 651,197 54,082 Axa SA 2,178,803 1,972,814 10,600 Shin-Etsu Chemical Co., Ltd. 573,381 645,248 45,576 France Telecom SA 1,630,535 1,089,939 40,000 Shionogi & Co., Ltd. 650,228 793,264 12,009 Lafarge SA 1,392,662 1,677,340 5,200 T&D Holdings, Inc. 432,485 471,059 8,086 L’Air Liquide SA 1,650,300 1,751,936 11,800 Terumo Corporation 434,552 437,620 19,131 M6 Metropole Television 638,312 666,060 26,000 The Shizuoka Bank, Ltd. 312,356 313,815 7,103 Pernod-Ricard SA 1,356,597 1,567,376 87,000 Toshiba Corp. 613,261 636,210 16,598 Peugeot SA 1,151,760 1,148,727 49,000 TOTO Ltd. 501,398 522,061 27,275 Sanoﬁ-Aventis 2,703,672 2,965,060 34,900 Toyota Motor Corporation 1,824,536 2,034,750 56,705 Total SA 3,180,431 4,143,008 10,380 USS Co. Ltd. 823,873 765,814 27,402 Veolia Environnement 1,739,939 1,575,443 11,200 Yusen Air & Sea Service Co., Ltd. 269,923 293,309 17,623,011 18,557,703 18,723,031 20,500,674 Germany (7.4%) Netherlands (3.8%) 7,922 Bayerische Motoren Werke (BMW) AG 393,599 440,190 54,577 Koninklijke (Royal) Philips Electronics NV 1,851,662 1,900,765 87,727 Deutsche Telekom AG 2,089,286 1,571,115 41,697 STMicroelectronics NV 837,224 746,380 11,357 Muenchener Rueckversicherungs-Gesellschaft AG 1,679,521 1,725,342 27,188 TPG NV 953,688 1,084,251 15,200 RWE AG 1,499,482 1,406,112 3,642,574 3,731,396 8,844 SAP AG 1,739,639 2,075,591 Portugal (0.8%) 7,401,527 7,218,350 172,392 Electricidade de Portugal SA 701,748 753,576 Greece (1.4%) Singapore (0.7%) 34,962 OPAP SA 1,341,579 1,410,029 268,000 Banyan Tree Holdings Limited 184,587 175,499 Hong Kong (2.0%) 21,000 DBS Group Holdings Limited 241,434 267,272 148,500 BOC Hong Kong Holdings Ltd. 334,502 323,972 110,800 Singapore Telecommunications Limited 212,069 197,947 48,000 Cheung Kong (Holdings) Limited 643,939 580,024 638,090 640,718 225,000 CNOOC Limited 149,630 201,373 55,600 Dah Sing Financial Group 443,481 454,855 South Korea (0.8%) 33,000 Kerry Properties Limited 123,498 125,855 4,000 Lotte Shopping Co. Ltd. GDR 94,829 85,454 170,000 Sino Land Company, Limited 258,124 302,456 1,898 Samsung Electronics Co., Ltd. GDR 565,464 663,170 1,953,174 1,988,535 660,293 748,624 India (0.2%) Spain (3.6%) 1,800 Infosys Technologies Ltd. ADR 144,474 153,355 104,164 Banco Bilbao Vizcaya Argentaria SA 2,075,261 2,390,404 16,167 Industria de Diseno Textil SA 571,369 759,147 Italy (5.8%) 11,023 Repsol YPF, SA 343,520 346,184 296,971 Banca Intesa SpA 1,800,872 1,935,378 26,582 Banche Popolari Unite Scrl 735,315 765,158 2,990,150 3,495,735 97,697 Capitalia SpA 629,915 891,387 Sweden (1.4%) 53,042 Eni SpA 1,307,539 1,738,074 377,000 Telefonaktiebolaget LM Ericsson Cl. B 1,322,854 1,385,677 7,068 FastWeb SpA Convertible 427,723 341,840 Switzerland (7.4%) 4,901,364 5,671,837 7,229 Nestl´e SA 2,401,625 2,524,246 Japan (21.0%) 16,043 Swatch Group 611,043 622,646 13,800 Canon Inc. 549,387 752,152 26,440 UBS AG 2,119,097 3,218,252 11,400 Credit Saison Co., Ltd. 712,851 603,987 3,404 Zurich Financial Services AG 712,352 828,998 12,000 Daikin Industries, Ltd. 383,378 465,160 5,844,117 7,194,142 62 East Japan Railway Company 394,753 514,757 Taiwan (0.3%) 8,700 Eisai Co., Ltd. 453,338 435,877 13,200 Chunghwa Telecom Co., Ltd. ADR 310,590 271,842 11,500 Electric Power Development Co., Ltd. 386,982 489,258

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Portfolio Advisor: Wellington Management Company, LLP -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle International Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market Shares Issuer Cost ($) Value ($)

Thailand (0.2%) 49,600 Bangkok Bank Public Company Limited 169,151 153,505 United Kingdom (18.9%) 92,353 3i Group PLC 1,655,586 1,714,368 47,219 AstraZeneca PLC 2,352,648 3,156,681 205,149 Barclays PLC 2,618,279 2,594,542 112,859 British Airways PLC 690,693 795,428 59,178 British American Tobacco PLC 1,495,110 1,659,588 257,541 Debenhams PLC 1,004,302 998,063 75,738 ICAP PLC 732,603 775,458 2,017,927 Invensys PLC 738,367 798,931 24,119 Land Securities Group PLC 982,954 890,756 11,211 Rio Tinto PLC 663,953 655,636 32,400 TI Automotive Ltd. – – 444,482 Vodafone Group PLC 1,460,552 1,054,010 103,189 WPP Group PLC 1,366,339 1,390,506 47,319 Xstrata PLC 1,631,555 1,994,208 17,392,941 18,478,175 Total Investments (98.6%) 89,423,918 96,199,493 Foreign Currency Spot Contracts (Schedule 1) (0.0%) – (558) Total Portfolio (98.6%) 89,423,918 96,198,935 Other Assets, Less Liabilities (1.4%) 1,354,543 Total Net Assets (100.0%) 97,553,478 Net Asset Value Per Unit $11.53

ADR – American Depository Receipt GDR – Global Depository Receipt

Schedule 1 Foreign Currency Spot Contracts Value (Capital)

Due Credit Market Contracts Pay Receive Date Rating Value ($)

Spot Currency Contracts 1 29,811 Pound Sterling 60,893 Canadian $ 07/04/06 AA (558) Total Foreign Currency Spot Contracts Value (558)

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $1,740,161 $2,249,056 Investments at market value $96,199,493 $ 91,945,184 Interest 10,733 25,916 Cash 439,748 42,271 Securities lending income 39,773 55,658 Subscriptions receivable 655,527 – Less: Foreign withholding taxes (123,217) (313,495) Receivable for securities sold 804,537 219,155 1,667,450 2,017,135 Accrued investment income 431,314 264,325 Expenses 98,530,619 92,470,935 Legal fees – 1,072 Liabilities Audit fees 8,045 8,578 Payable on open forward contracts 558 – Custody fees 39,424 77,315 Payable for securities purchased 784,003 – Interest 405 7,309 Redemptions payable 106,898 116,861 Filing fees 6,456 6,751 Accrued expenses 85,682 89,909 Unitholder reporting costs 27,257 14,696 977,141 206,770 Unitholder administration and service fees 80,626 53,067 Net assets representing unitholders’ equity $97,553,478 $ 92,264,165 162,213 168,788 Number of units outstanding 8,461,908 8,394,300 Net investment income (loss) 1,505,237 1,848,347 Net Realized and Unrealized Gain (Loss) on Net asset value per unit $ 11.53 $ 10.99 Investments Net realized gain (loss) on investments 3,379,438 5,484,575 Net realized gain (loss) on foreign exchange (17,577) (160,778) Increase (decrease) in unrealized appreciation (depreciation) of investments (337,776) (7,633,727) Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange 8,272 (31,002) Net gain (loss) on investments 3,032,357 (2,340,932) Increase (Decrease) in Net Assets from Operations $4,537,594 $ (492,585) Increase (decrease) in net assets from operations per unit $ 0.54 $ (0.04)

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $92,264,165 $163,574,231 Increase (decrease) in net assets from operations 4,537,594 (492,585) 96,801,759 163,081,646 Unit Transactions: Proceeds from issue 13,293,110 31,975,615 Payments on redemption (12,541,391) (102,422,288) 751,719 (70,446,673) Increase (decrease) in net assets 5,289,313 (70,939,258) Net Assets, End of Period $97,553,478 $ 92,634,973

Portfolio Advisor: Wellington Management Company, LLP -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle International Small To Mid Cap Value Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Australia (3.5%) Germany (6.8%) 5,850 Cochlear Ltd. 145,193 265,288 4,120 Continental AG 182,101 468,159 36,320 Downer EDI Limited 203,391 223,798 2,940 Deutsche Boerse AG 304,118 445,297 53,100 Oil Search Limited 185,926 180,513 4,050 Deutsche Postbank AG 265,116 324,137 270,970 Oxiana Limited 315,772 710,400 1,930 Fresenius AG Preferred Non-Voting 265,227 357,733 72,770 Paciﬁc Brands Limited 178,073 129,372 2,960 Henkel KGaA Preferred 322,190 376,443 21,970 Ramsay Health Care Limited 195,348 175,012 4,470 Hugo Boss AG 204,336 209,607 47,230 Record Investments Limited 337,375 481,861 2,770 Hypo Real Estate Holding AG 128,566 187,026 1,561,078 2,166,244 4,900 Lanxess 212,659 215,612 5,690 Leoni AG 190,927 238,423 Austria (0.8%) 3,710 Man AG 216,015 298,395 7,800 Boehler-Uddeholm AG 218,711 475,953 6,900 ProSiebenSat.1 Media AG Preferred 182,636 191,797 Belgium (1.6%) 3,930 Software AG 175,484 227,303 3,800 Delhaize Group 304,948 293,138 4,690 Stada Arzneimittel AG 170,826 208,286 2,100 Mobistar SA 175,814 185,428 9,240 Vivacon AG 420,366 230,959 7,240 Option NV 186,260 192,883 1,500 Wincor Nixdorf AG 158,265 213,345 2,210 Umicore 231,901 328,234 3,398,832 4,192,522 898,923 999,683 Hong Kong (2.1%) Canada (5.6%) 590,000 China Overseas Land & Investment Limited 170,072 399,920 7,600 Astral Media Inc. Cl. A 236,857 265,088 73,750 China Overseas Land & Investment Limited 10,400 Canaccord Capital Inc. 219,626 184,288 Warrants (Exp. 07/17/07) – 2,382 18,200 Ensign Energy Services, Inc. 218,561 417,508 279,300 Hengan International Group Company Limited 222,616 508,375 6,100 Gildan Activewear Inc. Cl. A Sub. Voting 177,847 322,019 663,600 Solomon Systech International Limited 215,990 187,500 19,000 Inmet Mining Corp. 304,220 792,300 19,600 Wing Hang Bank Limited 164,760 191,242 4,800 IPSCO Inc. 304,424 512,976 773,438 1,289,419 10,400 Kingsway Financial Services Inc. 230,484 209,768 5,600 Northbridge Financial Corp. 191,214 184,520 Ireland (1.4%) 27,200 Trican Well Service Ltd. 239,032 606,560 43,740 C&C Group PLC 326,794 423,156 15,250 Grafton Group PLC 134,274 213,835 2,122,265 3,495,027 12,930 IAWS Group PLC 238,650 253,950 Denmark (0.5%) 699,718 890,941 4,400 Jyske Bank A/S 166,048 283,352 Italy (4.5%) Finland (1.3%) 23,000 Amplifon SpA 221,878 217,765 14,100 Rautaruukki Oyj 161,601 472,730 14,250 Azimut Holding SpA 199,741 165,152 11,600 YIT Oyj 146,851 316,113 20,100 Banca Populare di Milano 245,263 284,891 308,452 788,843 15,340 Banco Popclare di Verona e Novara Scrl 343,604 457,339 France (9.5%) 21,300 Credito Emiliano SpA 327,794 292,739 7,930 Alten 204,851 321,503 23,690 Davide Campari - Milano SpA 180,246 273,365 3,620 April Group 145,279 216,468 6,160 Fondiaria Sai SpA 213,439 279,969 1,700 Bacou-Dalloz 240,242 225,500 37,320 Milano Assicurazioni SpA 220,630 302,987 3,040 BioMerieux 203,260 200,105 31,930 Recordati SpA 273,909 259,503 1,550 Ciments Francais SA 150,965 287,044 82,680 Terna SpA 244,136 245,421 2,380 CNP Assurances 192,720 251,675 2,470,640 2,779,131 1,300 Compagnie Generale de Geophysique SA 245,699 249,146 3,310 Eiffage SA 104,294 311,717 3,630 Euler & Hermes SA 271,900 445,890 4,660 Ilias SA 241,257 432,367 2,068 Imerys SA 149,154 184,059 2,450 Lagardere SCA 183,600 201,146 1,560 Natexis Banques Populaires 246,795 399,465 3,390 Nexans SA 181,476 269,264 1,710 Pierre & Vacances 181,009 208,796 6,900 Pinguely-Haulotte 243,227 220,693 3,800 Publicis Groupe SA 149,533 163,319 7,030 Silicon-On-Insulator Technologies SA 188,138 230,765 7,230 SR Teleperformance 250,899 321,827 400 Vallourec SA 72,298 535,687 1,900 Vinci SA 119,647 217,752 3,966,243 5,894,188

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Portfolio Advisor: The Boston Company Asset Management, LLC -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle International Small To Mid Cap Value Equity Fund

Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Japan (18.7%) Portugal (0.5%) 7,000 Asahi Pretec Corp. 185,087 250,800 33,820 Banco BPI SA 162,610 286,069 5,600 Chiyoda Integre Co., Ltd. 211,222 164,629 Singapore (1.0%) 14,000 CKD Corporation 270,975 243,572 59,400 Jurong Technologies Industrial Corporation Ltd. 55,333 41,895 13,000 COMSYS Holdings Corporation 218,108 179,350 124,700 MobileOne Limited 191,686 181,464 40 Creed Corp. 237,832 175,554 45,000 Singapore Petroleum Company Limited 174,637 160,124 25,100 Dainippon Screen MFG. Co., Ltd. 212,419 255,591 296,000 ST Assembly Test Services Ltd. 242,940 206,357 15,000 Dainippon Sumitomo Pharma Co., Ltd. 197,416 188,308 7,500 Don Quijote Co. Ltd. 242,921 189,874 664,596 589,840 11,000 Exedy Corporation 376,717 387,408 South Korea (3.3%) 11,100 Hitachi Construction Machinery Co., Ltd. 200,758 299,815 16,140 Dongbu Insurance Co., Ltd. 137,083 453,631 10,000 Hitachi High-Technologies Corporation 205,713 340,626 1,330 Hanmi Pharm Co., Ltd. 184,600 148,207 7,900 Izumi Co., Ltd. 263,871 321,879 2,400 Hyundai Department Store Co., Ltd. 191,362 207,504 15,000 Japan Aviation Electronics Industry, Limited 253,042 233,139 4,900 Hyundai Development Company 220,104 236,086 9,600 Joint Corporation 374,642 347,847 2,980 Hyundai Mipo Dockyard Co. Ltd. 88,642 332,768 22,400 Katokichi Co., Ltd. 218,856 251,139 1,575 INTOPS Co., Ltd. 34,624 41,837 7,200 Keihin Corporation 128,332 172,953 11,700 LG Telecom Ltd. 175,539 169,973 83 Kenedix, Inc. 310,328 400,523 17,370 Pusan Bank 175,808 247,883 26,000 Kyowa Expo Corporation 256,953 373,420 15,000 Simm Tech Co., Ltd. 186,405 178,994 8,000 Leopalace21 Corporation 359,848 306,791 1,394,167 2,016,883 6,600 Makita Corporation 132,266 232,178 59,400 Mitsubishi Gas & Chemical Company, Limited 361,616 763,192 Spain (3.8%) 25,000 Mitsubishi Rayon Company, Limited 249,824 228,067 9,420 ACS, Actividades De Construccion y Servicios, SA 209,654 437,138 8,500 Mori Seiki Co., Ltd. 173,048 206,019 9,040 Banco de Sabadell SA 283,398 352,003 38,000 Nachi-Fujikoshi Corp. 198,335 240,035 11,320 Enagas 171,756 268,694 27,000 Nippon Shokubai Company Ltd. 248,730 368,898 7,950 Fadesa Inmobiliaria SA 253,426 303,249 9,500 Nippon System Development Co., Ltd. 379,158 366,757 19,780 Inmobiliaria Urbis SA 312,519 572,770 6,800 Nissin Kogyo Co. Ltd. 137,201 139,341 11,300 Sol Melia, SA 193,130 202,815 24,000 NTN Toyo Bearing Company, Limited 159,775 212,290 5,510 Union Electrica Fenosa SA 243,563 237,339 10,500 OSG Corporation 155,743 196,667 1,667,446 2,374,008 31,000 Rengo Co., Ltd. 287,671 260,583 Sweden (1.7%) 5,500 Ricoh Leasing Company Ltd. 157,292 177,123 9,200 Getinge AB 154,592 174,162 4,200 Ryohin Keikaku Co. 274,895 385,215 11,700 Nobia AB 212,072 422,098 7,500 Sumisho Lease Company Ltd. 249,704 464,874 12,200 Wihlborgs Fastigheter AB 213,536 233,274 11,000 Suruga Bank, Ltd. 159,961 166,063 55,800 WM Data AB 183,569 191,050 11,900 Tamron Co. Ltd. 227,547 221,081 8,500 Toho Pharmaceutical Co., Ltd 190,858 167,974 763,769 1,020,584 30,000 Toshiba Machine Co., Ltd. 238,265 380,708 Switzerland (5.3%) 9,000 Tsumura & Co. 258,145 286,534 2,120 Actelion Ltd. 271,674 237,754 6,100 ULVAC, Inc. 185,993 233,426 730 Banque Cantonale Vaudosie 217,270 277,772 13,400 Urban Corporation 178,283 179,850 950 Barry Callebaut AG 334,189 445,844 7,100 XEBIO Co., Ltd. 251,213 271,456 200 Geberit AG 178,140 257,169 14,000 Yaskawa Electric Corp. 153,504 182,254 480 Georg Fischer AG 249,732 229,396 18,000 ZEON Corporation 271,251 239,781 500 Kuoni Reisen Holding AG 254,757 312,237 10,005,318 11,653,584 3,990 Phonak Holding AG 268,757 277,094 736 Rieter Holding AG 268,905 314,890 Netherlands (4.4%) 327 Sika AG 185,628 404,274 4,540 Alberts Industries NV 200,838 371,774 360 Sulzer AG 187,653 299,818 14,640 Buhrmann NV 172,274 235,888 800 Valora Holding AG 194,009 192,793 5,910 DSM NV 268,581 273,937 8,560 Fugro NV 334,320 411,104 2,610,714 3,249,041 20,700 Koninklijke BAM Groep NV 177,187 457,528 11,240 SBM Offshore NV 279,378 333,609 6,300 Univar NV 318,304 332,063 3,710 USG People NV 201,101 316,342 1,951,983 2,732,245 Norway (2.0%) 3,100 Aker Yards AS 159,939 243,567 15,200 Cermaq ASA 234,860 228,399 22,700 Tandberg Television ASA 182,389 418,951 18,800 TGS Nopec Geophysical Company ASA 289,560 369,419 866,748 1,260,336

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Statement of Investment Portfolio as at June 30, 2006 (unaudited) No. of Average Market Shares Issuer Cost ($) Value ($)

United Kingdom (19.0%) 17,110 Admiral Group PLC 154,646 218,719 13,470 Alliance Unichem PLC 205,414 283,463 32,990 Amlin PLC 181,854 160,242 10,950 Barratt Developments PLC 147,402 213,536 35,800 Bodycote International PLC 182,404 186,884 46,090 British Airways PLC 264,981 324,841 14,170 Burren Energy PLC 242,132 254,259 37,500 Cattles PLC 289,473 254,198 22,170 Charter PLC 139,583 368,561 11,680 Chemring Group PLC 160,274 281,573 19,140 Close Brothers Group PLC 339,136 358,826 27,290 Cookson Group PLC 256,701 295,468 34,700 Croda International PLC 353,984 314,041 19,580 CSR PLC 206,285 507,651 17,010 Enterprise Inns PLC 187,150 332,037 65,520 First Choice Holidays PLC 276,678 308,557 21,140 Green King PLC 283,906 357,966 36,060 Inchcape PLC 165,985 350,241 29,350 Informa PLC 228,878 260,526 70,990 International Power PLC 371,429 415,758 9,070 Kier Group PLC 149,000 281,374 32,610 Laird Group PLC 270,795 262,154 46,740 Michael Page International PLC 246,897 337,690 12,830 Morgan Sindall PLC 227,718 302,203 83,100 Northgate Information Solutions PLC 123,589 132,753 9,880 Persimmon PLC 177,040 250,957 93,200 Regus Group PLC 208,553 210,074 62,976 Restaurant Group PLC 207,291 263,201 8,870 Schroders PLC 160,836 184,385 20,230 SIG PLC 227,643 366,962 17,710 Speedy Hire PLC 184,021 319,433 32,810 Sportingbet PLC 209,458 265,864 49,300 Taylor Nelson Sofres PLC 264,976 236,376 39,700 The Carphone Warehouse PLC 150,246 259,359 38,620 Tullow Oil PLC 135,541 303,560 17,760 United Business Media PLC 234,013 236,622 13,320 Vedanta Resources PLC 273,563 372,719 14,500 Victrex PLC 154,184 229,886 8,801 Viridian Group PLC 142,152 173,366 23,250 WH Smith PLC 194,126 233,393 23,110 Wolfson Microelectronics PLC 178,514 212,781 10,010 Wolverhampton & Dudley Breweries PLC 250,165 265,141 9,008,616 11,747,600 Short Term Notes (0.1%) 33,138 33,120 Total Investments (97.4%) 45,713,453 60,218,613 Futures Contracts Value - Schedule 1 (0.0%) 27,384 Other Assets, Less Liabilities (2.6%) 1,576,982 Total Net Assets (100.0%) 61,822,979 Net Asset Value Per Unit $21.16

Schedule 1 Futures Contracts Value

Expiration Exercise Market Futures Contracts Date Country Price $ Value $

MSCI Pan – Euro Index 16 09/15/06 Europe (16,304) 3,338 TOPIX Index 1 09/07/06 Japan 147,037 154,779 130,733 158,117 Exercise Price (130,733) Total Futures Contracts Value 27,384

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 815,101 $ 710,058 Investments at market value $60,218,613 $ 57,847,981 Interest 1,812 1,400 Cash 1,297,075 1,171,742 Securities lending income 8,827 11,228 Margin deposits – 1,966 Income (loss) from derivatives (13,547) – Receivable on open futures contracts 27,384 9,210 Less: Foreign withholding taxes (71,462) (80,913) Subscriptions receivable 159,948 203,501 740,731 641,773 Receivable for securities sold 414,639 80,579 Accrued investment income 75,158 50,643 Expenses Legal fees – 1,072 62,192,817 59,365,622 Audit fees 8,045 8,578 Liabilities Custody fees 85,293 55,138 Margin Payable 14,940 – Interest 5,485 158 Payable for securities purchased 134,563 10,179 Filing fees 6,456 6,887 Redemptions payable 127,988 81,290 Unitholder reporting costs 11,589 10,628 Accrued expenses 92,347 98,987 Unitholder administration and service fees 50,704 47,155 369,838 190,456 167,572 129,616 Net assets representing unitholders’ equity $61,822,979 $ 59,175,166 Rebated and absorbed expenses – (22,682) Number of units outstanding 2,922,184 3,035,674 Net expenses 167,572 106,934 Net investment income (loss) 573,159 534,839 Net asset value per unit $ 21.16 $ 19.49 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 5,060,968 1,527,503 Net realized gain (loss) on foreign exchange 28,150 (26,837) Increase (decrease) in unrealized appreciation (depreciation) of investments (331,873) 1,177,557 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange and futures 26,771 (7,537) Net gain (loss) on investments 4,784,016 2,670,686 Increase (Decrease) in Net Assets from Operations $5,357,175 $3,205,525 Increase (decrease) in net assets from operations per unit $ 1.79 $ 1.31

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $ 59,175,166 $34,512,290 Increase (decrease) in net assets from operations 5,357,175 3,205,525 64,532,341 37,717,815 Unit Transactions: Proceeds from issue 11,173,241 14,513,919 Payments on redemption (13,882,603) (7,130,069) (2,709,362) 7,383,850 Increase (decrease) in net assets 2,647,813 10,589,375 Net Assets, End of Period $ 61,822,979 $45,101,665

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market No. of Average Market Shares Issuer Cost ($) Value ($) Shares Issuer Cost ($) Value ($)

Austria (0.9%) United States (42.2%) 10,600 Erste Bank der Oesterreichischen Sparkassen 14,800 3M Co. 1,478,165 1,332,866 AG 503,853 663,619 27,600 Abbott Laboratories 1,429,032 1,342,054 Canada (3.7%) 10,623 Air Products and Chemicals Inc. 645,142 757,110 44,200 EnCana Corporation 980,959 2,594,257 26,000 American International Group, Inc. 2,253,913 1,711,859 42,400 Analog Devices, Inc. 1,940,309 1,519,451 Egypt (0.6%) 11,800 Automatic Data Processing, Inc. 652,483 596,670 8,600 Orascom Telecom Holding SAE GDR 403,794 391,231 25,400 Caterpillar Inc. 892,025 2,109,348 France (8.1%) 77,500 Cisco Systems, Inc. 1,675,809 1,687,636 16,300 Dassault Systemes SA 1,237,594 968,245 25,600 Colgate-Palmolive Company 1,809,691 1,709,786 4,633 L’Air Liquide SA 839,339 1,003,799 24,300 Emerson Electric Co. 1,997,972 2,270,790 14,600 L’Oréal SA 1,699,148 1,533,239 12,650 Exxon Mobil Corporation 775,912 865,326 7,235 LVMH Moet Hennessy Louis Vuitton SA 677,694 799,911 20,400 General Electric Company 929,248 749,708 26,300 Sanofi-Synthelabo SA ADR 1,372,017 1,428,103 18,730 Kinder Morgan, Inc. 1,215,861 2,086,098 5,825,792 5,733,297 24,769 Medco Health Solutions, Inc. 1,294,944 1,581,927 20,100 Medtronic, Inc. 1,326,878 1,051,548 Hong Kong (6.1%) 13,700 Praxair, Inc. 584,203 824,877 408,000 China Merchants Holdings International 26,300 QUALCOMM Incorporated 815,606 1,175,033 Company Limited 906,688 1,386,493 33,100 Schlumberger Limited 1,212,080 2,402,982 45,400 China Mobile (Hong Kong) Limited ADR 1,440,064 1,448,267 5,300 Synthes, Inc. 681,556 710,657 657,800 Li & Fung Ltd. 1,257,531 1,493,109 13,200 The Coca-Cola Company 838,870 633,168 3,604,283 4,327,869 31,900 The TJX Companies Inc. 988,634 813,096 Israel (0.9%) 18,850 Viacom Inc. Cl. B 898,376 753,276 18,300 Teva Pharmaceutical Industries Ltd. ADR 856,250 644,578 15,300 Wells Fargo & Company 1,150,115 1,144,351 Japan (13.8%) 27,486,824 29,829,617 6,600 Fanuc Ltd. 767,256 663,760 Total Investments (98.2%) 61,017,329 69,394,743 6,000 Hirose Electric Co., Ltd. 626,918 810,112 Foreign Currency Spot Contracts 64,900 JSR Corporation 1,808,459 1,835,459 (Schedule 1) (0.0%) — (3,228) 6,400 Keyence Corporation 1,398,114 1,823,895 36,500 Nomura Holdings, Inc. 809,469 765,026 Total Portfolio (98.2%) 61,017,329 69,391,515 110,000 Sumitomo Realty & Development Co., Ltd. 1,828,106 3,037,088 Other Assets, Less Liabilities (1.8%) 1,279,467 49,000 Yokogawa Electric Corporation 1,063,736 782,705 Total Net Assets (100.0%) 70,670,982 8,302,058 9,718,045 Net Asset Value Per Unit $11.76 Mexico (0.9%) 17,700 America Movil SA de CV Series L ADR 445,742 656,403 ADR – American Depository Receipt Netherlands (2.0%) GDR – Global Depository Receipt 95,730 Qiagen NV 1,430,407 1,439,138 South Africa (1.6%) Schedule 1 26,300 Sasol 631,782 1,131,093 Foreign Currency Spot Contracts Value (Capital) South Korea (1.9%) 7,100 Kookmin Bank ADR 335,236 657,544 Due Credit Market 2,010 Samsung Electronics Co., Ltd. GDR 428,531 702,304 Contracts Pay Receive Date Rating Value ($) 763,767 1,359,848 Spot Currency Contracts Spain (1.2%) 1 99,070 Euro Dollar 139,351 Canadian $ 07/04/06 A+ (1,803) 11,700 Bankinter SA 635,403 838,837 1 13,659,327 Japanese Yen 132,166 Canadian $ 07/04/06 A+ (843) 1 118,724 U.S. $ 131,796 Canadian $ 07/05/06 A+ (582) Switzerland (7.0%) 8,300 Alcon Inc. 1,081,925 912,031 Total Foreign Currency Spot Contracts Value (3,228) 16,720 Nestlé SA ADR 1,345,054 1,460,986 14,900 Novartis AG 825,743 896,898 4,800 Roche Holding AG 691,811 882,233 10,000 Swiss Re 856,071 776,752 4,800,604 4,928,900 United Kingdom (7.3%) 61,900 Pearson PLC 1,290,292 938,369 41,100 Rio Tinto PLC 1,652,020 2,403,587 66,100 Standard Chartered PLC 1,403,499 1,796,055 4,345,811 5,138,011

Portfolio Advisor: Harding Loevner Management, L.P. -Percentages other than rates shown relate investments at market value to total net assets of the Fund. The accompanying notes are an integral part of these ﬁnancial statements. -For equities, all common shares unless otherwise noted. Pinnacle Global Equity Fund

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005 2006 2005 Investment Income Assets Dividends $ 695,933 $ 677,945 Investments at market value $ 69,394,743 $ 67,603,628 Interest 4,450 5,819 Cash 301,704 158,206 Securities lending income 5,934 6,961 Subscriptions receivable 834,389 136,461 Less: Foreign withholding taxes (39,862) (83,193) Receivable for securities sold 132,378 – 666,455 607,532 Accrued investment income 146,301 74,934 Expenses 70,809,515 67,973,229 Legal fees – 1,072 Liabilities Audit fees 8,046 8,578 Payable on open forward contracts 3,228 – Custody fees 10,165 11,576 Redemptions payable 84,677 164,448 Interest 1,872 4,813 Accrued expenses 50,628 50,277 Filing fees 6,456 6,887 138,533 214,725 Unitholder reporting costs 25,572 13,491 Unitholder administration and service fees 75,021 49,424 Net assets representing unitholders’ equity $ 70,670,982 $ 67,758,504 127,132 95,841 Number of units outstanding 6,010,858 5,862,722 Net investment income (loss) 539,323 511,691 Net asset value per unit $ 11.76 $ 11.56 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 1,092,245 145,161 Net realized gain (loss) on foreign exchange (108,597) (58,568) Increase (decrease) in unrealized appreciation (depreciation) of investments (343,491) 1,235,018 Increase (decrease) in unrealized appreciation (depreciation) of foreign exchange (2,075) 4,970 Net gain (loss) on investments 638,082 1,326,581 Increase (Decrease) in Net Assets from Operations $ 1,177,405 $ 1,838,272 Increase (decrease) in net assets from operations per unit $ 0.20 $ 0.30

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005

Net Assets, Beginning of Period $ 67,758,504 $ 64,284,663 Increase (decrease) in net assets from operations 1,177,405 1,838,272 68,935,909 66,122,935 Unit Transactions: Proceeds from issue 11,306,161 13,638,912 Payments on redemption (9,571,088) (15,921,932) 1,735,073 (2,283,020) Increase (decrease) in net assets 2,912,478 (444,748) Net Assets, End of Period $ 70,670,982 $ 63,839,915

Portfolio Advisor: Harding Lovner Management, L.P. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Balanced Income Portfolio

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market Units Issuer Cost ($) Value ($)

Mutual Funds (90.3%) 133,907 Pinnacle American Core-Plus Bond Fund 1,052,935 993,593 31,599 Pinnacle Canadian Growth Equity Fund 505,093 510,318 13,746 Pinnacle Canadian Mid Cap Value Equity Fund 207,325 203,024 19,139 Pinnacle Canadian Value Equity Fund 335,348 351,958 21,056 Pinnacle Global Equity Fund 245,460 247,623 36,014 Pinnacle High Yield Income Fund 372,014 357,254 205,711 Pinnacle Income Fund 2,201,818 2,137,335 9,377 Pinnacle International Small to Mid Cap Value Equity Fund 187,416 198,412 Total Investments (90.3%) 5,107,409 4,999,517 Other Assets, Less Liabilities (9.7%) 538,738 Total Net Assets (100.0%) 5,538,255 Net Asset Value Per Unit $10.08

Portfolio Advisor: Scotia Capital Inc. -Percentages other than rates shown relate investments at market value to total net The accompanying notes are an integral part of these ﬁnancial statements. assets of the Fund. Pinnacle Balanced Income Portfolio

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005* 2006 2005 Investment Income Assets Interest $ 705 $ 8 Investments at market value $4,999,517 $ 1,953,206 Income from underlying funds 66,113 2,876 Cash 589,500 221,456 66,818 2,884 Subscriptions receivable 49,755 – Receivable for securities sold 1,012 – Expenses Accrued investment income 19,295 691 Management fees 35,159 932 Legal fees – 660 5,659,079 2,175,353 Audit fees 7,054 3,168 Liabilities Custody fees 4,959 – Payable for securities purchased 92,038 – Interest 9 264 Redemptions payable 14,005 – Filing fees 6,456 3,520 Accrued expenses 14,781 23,190 Unitholder reporting costs 54 6,160 120,824 23,190 Unitholder administration and service fees 9,668 13,269 Net assets representing unitholders’ equity $5,538,255 $ 2,152,163 63,359 27,973 Rebated and absorbed expenses (19,319) (26,806) Number of units outstanding 549,348 211,140 Net expenses 44,040 1,167 Net asset value per unit $ 10.08 $ 10.19 Net investment income (loss) 22,778 1,717 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 3,766 – Increase (decrease) in unrealized appreciation (depreciation) of investments (105,892) 3,750 Net gain (loss) on investments (102,126) 3,750 Increase (Decrease) in Net Assets from Operations $ (79,348) $ 5,467 Increase (decrease) in net assets from operations per unit $ (0.23) $ 0.21

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005*

Net Assets, Beginning of Period $2,152,163 $ – Increase (decrease) in net assets from operations (79,348) 5,467 2,072,815 5,467 Unit Transactions: Proceeds from issue 3,498,341 351,650 Payments on redemption (32,901) – 3,465,440 351,650 Increase (decrease) in net assets 3,386,092 357,117 Net Assets, End of Period $5,538,255 $357,117

* For the period since inception to June 30, 2005

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market Units Issuer Cost ($) Value ($)

Mutual Funds (90.3%) 144,098 Pinnacle American Large Cap Growth Equity Fund 1,005,457 953,925 98,201 Pinnacle American Value Equity Fund 985,001 1,018,339 317,344 Pinnacle Canadian Growth Equity Fund 5,042,636 5,125,112 69,528 Pinnacle Canadian Mid Cap Value Equity Fund 1,046,896 1,026,929 71,577 Pinnacle Canadian Small Cap Equity Fund 1,318,888 1,418,651 183,981 Pinnacle Canadian Value Equity Fund 3,168,480 3,383,405 169,793 Pinnacle Global Equity Fund 1,969,507 1,996,766 168,777 Pinnacle Global Real Estate Securities Fund 2,642,594 2,793,265 307,061 Pinnacle High Yield Income Fund 3,180,257 3,046,041 982,640 Pinnacle Income Fund 10,563,327 10,209,629 148,024 Pinnacle International Equity Fund 1,650,636 1,706,713 47,677 Pinnacle International Small to Mid Cap Value Equity Fund 918,638 1,008,849 Total Investments (90.3%) 33,492,317 33,687,624 Other Assets, Less Liabilities (9.7%) 3,608,607 Total Net Assets (100.0%) 37,296,231 Net Asset Value Per Unit $10.63

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005* 2006 2005 Investment Income Assets Interest $ 5,697 $ 78 Investments at market value $33,687,624 $ 16,062,321 Income from underlying funds 298,711 18,176 Cash 3,723,863 2,109,284 304,408 18,254 Subscriptions receivable 330,552 470 Receivable for securities sold 38,445 – Expenses Accrued investment income – 2,888 Management fees 325,239 8,478 Legal fees – 660 37,780,484 18,174,963 Audit fees 7,054 3,168 Liabilities Custody fees 9,917 – Payable for securities purchased 412,391 453,610 Interest 73 264 Redemptions payable 3,000 6,139 Filing fees 6,456 3,520 Accrued expenses 68,862 30,180 Unitholder reporting costs 418 6,160 484,253 489,929 Unitholder administration and service fees 10,879 13,269 Net assets representing unitholders’ equity $37,296,231 $ 17,685,034 360,036 35,519 Rebated and absorbed expenses – (25,154) Number of units outstanding 3,508,038 1,684,624 Net expenses 360,036 10,365 Net asset value per unit $ 10.63 $ 10.50 Net investment income (loss) (55,628) 7,889 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 37,306 530 Increase (decrease) in unrealized appreciation (depreciation) of investments 5,985 25,504 Net gain (loss) on investments 43,291 26,034 Increase (Decrease) in Net Assets from Operations $(12,337) $ 33,923 Increase (decrease) in net assets from operations per unit $ – $ 0.16

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005*

Net Assets, Beginning of Period $17,685,034 $ – Increase (decrease) in net assets from operations (12,337) 33,923 17,672,697 33,923 Unit Transactions: Proceeds from issue 23,139,417 6,376,284 Payments on redemption (3,515,883) (3,126) 19,623,534 6,373,158 Increase (decrease) in net assets 19,611,197 6,407,081 Net Assets, End of Period $37,296,231 $6,407,081

* For the period since inception to June 30, 2005

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market Shares Issuer Cost ($) Value ($)

Mutual Funds (89.6%) 162,674 Pinnacle American Core-Plus Bond Fund 1,292,358 1,207,038 45,586 Pinnacle American Large Cap Growth Equity Fund 318,690 301,780 13,089 Pinnacle American Mid Cap Growth Equity Fund 197,127 189,273 18,608 Pinnacle American Value Equity Fund 187,398 192,963 51,545 Pinnacle Canadian Growth Equity Fund 817,338 832,447 16,962 Pinnacle Canadian Mid Cap Value Equity Fund 255,643 250,530 9,890 Pinnacle Canadian Small Cap Equity Fund 181,856 196,017 31,251 Pinnacle Canadian Value Equity Fund 539,593 574,704 15,827 Pinnacle Global Equity Fund 184,476 186,123 31,538 Pinnacle High Yield Income Fund 325,462 312,853 89,512 Pinnacle Income Fund 962,359 930,032 60,342 Pinnacle International Equity Fund 675,863 695,739 17,544 Pinnacle International Small to Mid Cap Value Equity Fund 341,612 371,240 Total Investments (89.6%) 6,279,775 6,240,739 Other Assets, Less Liabilities (10.4%) 724,498 Total Net Assets (100.0%) 6,965,237 Net Asset Value Per Unit $10.38

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005* 2006 2005 Investment Income Assets Interest $ 1,064 $ 22 Investments at market value $6,240,739 $ 2,732,576 Income from underlying funds 52,272 4,524 Cash 623,249 366,841 53,336 4,546 Subscriptions receivable 202,320 – Receivable for securities sold 1,750 – Expenses Accrued investment income – 1,117 Management fees 61,203 2,302 Legal fees – 660 7,068,058 3,100,534 Audit fees 7,054 3,168 Liabilities Custody fees 8,679 – Payable for securities purchased 26,514 75,421 Interest 14 264 Redemptions payable 79,039 – Filing fees 6,456 3,520 Accrued expenses (2,732) 23,657 Unitholder reporting costs 83 6,160 102,821 99,078 Unitholder administration and service fees 10,006 13,270 Net assets representing unitholders’ equity $6,965,237 $ 3,001,456 93,495 29,344 Rebated and absorbed expenses (18,674) (26,529) Number of units outstanding 671,136 289,455 Net expenses 74,821 2,815 Net asset value per unit $ 10.38 $ 10.37 Net investment income (loss) (21,485) 1,731 Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 3,213 57 Increase (decrease) in unrealized appreciation (depreciation) of investments (59,114) 5,073 Net gain (loss) on investments (55,901) 5,130 Increase (Decrease) in Net Assets from Operations $(77,386) $ 6,861 Increase (decrease) in net assets from operations per unit $ (0.15) $ 0.12

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005*

Net Assets, Beginning of Period $3,001,456 $ – Increase (decrease) in net assets from operations (77,386) 6,861 2,924,070 6,861 Unit Transactions: Proceeds from issue 4,369,468 896,348 Payments on redemption (328,301) (4,853) 4,041,167 891,495 Increase (decrease) in net assets 3,963,781 898,356 Net Assets, End of Period $6,965,237 $898,356

* For the period since inception to June 30, 2005

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market Units Issuer Cost ($) Value ($)

Mutual Funds (90.2%) 69,575 Pinnacle American Large Cap Growth Equity Fund 485,747 460,589 27,373 Pinnacle American Value Equity Fund 275,792 283,859 150,677 Pinnacle Canadian Growth Equity Fund 2,407,141 2,433,428 31,496 Pinnacle Canadian Mid Cap Value Equity Fund 476,361 465,194 24,807 Pinnacle Canadian Small Cap Equity Fund 460,770 491,665 89,350 Pinnacle Canadian Value Equity Fund 1,561,068 1,643,155 39,504 Pinnacle Global Equity Fund 461,020 464,567 58,811 Pinnacle Global Real Estate Securities Fund 923,384 973,316 47,670 Pinnacle High Yield Income Fund 492,504 472,882 144,615 Pinnacle Income Fund 1,552,029 1,502,549 22,878 Pinnacle International Small to Mid Cap Value Equity Fund 450,873 484,102 Total Investments (90.2%) 9,546,689 9,675,306 Other Assets, Less Liabilities (9.8%) 1,034,987 Total Net Assets (100.0%) 10,710,293 Net Asset Value Per Unit $11.06

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005* 2006 2005 Investment Income Assets Interest $ 1,560 $ 10 Investments at market value $ 9,675,306 $ 4,099,127 Income from underlying funds 42,347 2,045 Cash 943,739 659,502 43,907 2,055 Subscriptions receivable 205,590 278,693 Accrued investment income – 761 Expenses Management fees 103,771 2,364 10,824,635 5,038,083 Legal fees – 660 Liabilities Audit fees 7,054 3,168 Payable for securities purchased 101,626 235,745 Custody fees 7,439 – Accrued expenses 12,716 24,541 Interest 19 264 114,342 260,286 Filing fees 6,456 3,520 Unitholder reporting costs 105 6,160 Net assets representing unitholders’ equity $10,710,293 $ 4,777,797 Unitholder administration and service fees 10,008 13,270 Number of units outstanding 968,273 440,707 134,852 29,406 Net asset value per unit $ 11.06 $ 10.84 Rebated and absorbed expenses (10,877) (26,581) Net expenses 123,975 2,825 Net investment income (loss) (80,068) (770) Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 14,370 – Increase (decrease) in unrealized appreciation (depreciation) of investments 68,092 12,860 Net gain (loss) on investments 82,462 12,860 Increase (Decrease) in Net Assets from Operations $ 2,394 $ 12,090 Increase (decrease) in net assets from operations per unit $ – $ 0.24

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005*

Net Assets, Beginning of Period $ 4,777,797 $ – Increase (decrease) in net assets from operations 2,394 12,090 4,780,191 12,090 Unit Transactions: Proceeds from issue 6,536,002 989,845 Payments on redemption (605,900) – 5,930,102 989,845 Increase (decrease) in net assets 5,932,496 1,001,935 Net Assets, End of Period $10,710,293 $1,001,935

* For the period since inception to June 30, 2005

Statement of Investment Portfolio as at June 30, 2006 (unaudited)

No. of Average Market Units Issuer Cost ($) Value ($)

Mutual Funds (89.8%) 84,458 Pinnacle American Large Cap Growth Equity Fund 589,536 559,113 16,106 Pinnacle American Mid Cap Growth Equity Fund 246,779 232,898 22,649 Pinnacle American Mid Cap Value Equity Fund 230,290 223,089 41,530 Pinnacle American Value Equity Fund 425,807 430,666 29,154 Pinnacle Canadian Growth Equity Fund 471,891 470,831 11,835 Pinnacle Canadian Mid Cap Value Equity Fund 180,327 174,805 9,306 Pinnacle Canadian Small Cap Equity Fund 177,744 184,448 22,932 Pinnacle Canadian Value Equity Fund 417,044 421,727 69,199 Pinnacle Global Equity Fund 826,469 813,784 18,190 Pinnacle Global Real Estate Securities Fund 291,842 301,049 29,820 Pinnacle High Yield Income Fund 304,403 295,815 83,283 Pinnacle Income Fund 890,919 865,307 58,769 Pinnacle International Equity Fund 671,776 677,601 8,844 Pinnacle International Small to Mid Cap Value Equity Fund 183,580 187,145 Total Investments (89.8%) 5,908,407 5,838,278 Other Assets, Less Liabilities (10.2%) 663,937 Total Net Assets (100.0%) 6,502,215 Net Asset Value Per Unit $10.59

Statement of Net Assets as at June 30, 2006 Statement of Operations for the six month periods (unaudited) and December 31, 2005 (audited) ended June 30, (unaudited) June 30, December 31, 2006 2005* 2006 2005 Investment Income Assets Interest $ 936 $ 8 Investments at market value $5,838,278 $ 1,059,977 Income from underlying funds 24,181 676 Cash 664,417 191,858 25,117 684 Subscriptions receivable 7,600 150,000 Accrued investment income – 664 Expenses Management fees 52,792 1,167 6,510,295 1,402,499 Legal fees – 660 Liabilities Audit fees 7,054 3,168 Payable for securities purchased 14,451 39,606 Custody fees 7,439 – Accrued expenses (6,371) 24,243 Interest 8 264 8,080 63,849 Filing fees 6,456 3,520 Unitholder reporting costs 38 6,160 Net assets representing unitholders’ equity $6,502,215 $ 1,338,650 Unitholder administration and service fees 9,825 13,269 Number of units outstanding 613,825 126,600 83,612 28,208 Net asset value per unit $ 10.59 $ 10.57 Rebated and absorbed expenses (20,540) (26,814) Net expenses 63,072 1,394 Net investment income (loss) (37,955) (710) Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investments 8,621 – Increase (decrease) in unrealized appreciation (depreciation) of investments (86,257) 4,872 Net gain (loss) on investments (77,636) 4,872 Increase (Decrease) in Net Assets from Operations $(115,591) $ 4,162 Increase (decrease) in net assets from operations per unit $ (0.30) $ 0.17

Statement of Changes in Net Assets for the six month periods ended June 30, (unaudited) 2006 2005*

Net Assets, Beginning of Period $1,338,650 $ – Increase (decrease) in net assets from operations (115,591) 4,162 1,223,059 4,162 Unit Transactions: Proceeds from issue 5,664,532 335,729 Payments on redemption (385,376) – 5,279,156 335,729 Increase (decrease) in net assets 5,163,565 339,891 Net Assets, End of Period $6,502,215 $339,891

* For the period since inception to June 30, 2005

1. The Funds The following funds are referred to herein individually as a ‘‘Fund’’ and collectively as the ‘‘Funds’’. The Funds listed below are open- ended mutual fund trusts.

Fund Inception Date

Pinnacle Short Term Income Fund 3-Sep-97 Pinnacle Income Fund 3-Sep-97 Pinnacle High Yield Income Fund 3-Sep-97 Pinnacle American Core-Plus Bond Fund 28-Jan-02 Pinnacle Global Real Estate Securities Fund 28-Jan-02 Pinnacle Strategic Balanced Fund 3-Sep-97 Pinnacle Global Tactical Asset Allocation Fund 3-Sep-97 Pinnacle Canadian Value Equity Fund 3-Sep-97 Pinnacle Canadian Mid Cap Value Equity Fund 28-Jan-02 Pinnacle Canadian Growth Equity Fund 3-Sep-97 Pinnacle Canadian Small Cap Equity Fund 3-Sep-97 Pinnacle American Value Equity Fund 3-Sep-97 Pinnacle American Mid Cap Value Equity Fund 28-Jan-02 Pinnacle American Large Cap Growth Equity Fund 18-Jan-01 Pinnacle American Mid Cap Growth Equity Fund 3-Sep-97 Pinnacle International Equity Fund 3-Sep-97 Pinnacle International Small To Mid Cap Value Equity Fund 28-Jan-02 Pinnacle Global Equity Fund 3-Sep-97 (the ‘‘Pinnacle Funds’’) Pinnacle Balanced Income Portfolio 22-Apr-05 Pinnacle Conservative Balanced Growth Portfolio 22-Apr-05 Pinnacle Balanced Growth Portfolio 22-Apr-05 Pinnacle Conservative Growth Portfolio 22-Apr-05 Pinnacle Growth Portfolio 22-Apr-05 (the ‘‘Pinnacle Portfolios’’)

Related Party Transactions Scotia Capital Inc. is the Manager, Trustee, and Principal Distributor of the Pinnacle Funds and is the Manager and Trustee of the Pinnacle Portfolios. The primary custodian for the Funds is State Street Trust Company (Canada). At June 30 2006, the Manager held the following units in these funds.

Fund 2006

Pinnacle Balanced Income Portfolio 15,373.955 Pinnacle Balanced Growth Portfolio 15,370.286 Pinnacle Growth Portfolio 15,329.722

2. Significant Accounting Policies These financial statements, prepared in accordance with Canadian generally accepted accounting principles, include estimates and assumptions made by the Manager that may affect the reported amounts of assets, liabilities, income and expenses during the reporting period. Actual results may differ from these estimates. The following is a summary of significant accounting policies followed by the Funds:

(a) Valuation of Investments Listed securities are valued at their closing sale price on the valuation date. In the absence of recorded sales on that day, they are valued at the average of the last recorded bid and ask prices where appropriate. Unlisted securities are valued in the same manner, based on price quotations from recognized investment dealers. Short term ﬁxed income securities are valued at cost which, together with accrued interest, approximates market value. When price quotations are not available, the fair market value of the investment is determined by the Manager. 62

In December 2005, the Manager expanded its use of fair value pricing to value foreign securities held in the Funds.

(b) Investment Transactions and Income Recognition Investment transactions are accounted for on the trade date and any realized gains and losses from such transactions are calculated on an average cost basis. Dividend income and distributions from underlying funds is recognized on the ex-dividend date and interest income on an accrual basis.

(c) Foreign Exchange Foreign currency amounts are translated into Canadian dollars as follows: Market value of investments, forward currency contracts, and other assets and liabilities at the closing rate of exchange on each business day; income, expenses and purchases, sales and settlements of investments at the rate of exchange prevailing on the respective dates of such transactions.

(d) Futures, Forwards and Option Contracts Futures, forward and option contracts are valued on each business day according to the gain or loss that would be realized if the contracts were closed out, unless daily limits are in effect in which case they are valued based on the current market value of the underlying interest. Any payments made to satisfy the initial and variation margin are reﬂected as a receivable balance. Margin consisting of assets other than cash is noted in the Statements of Investment Portfolio. Gains or losses arising from futures, forward and option contracts are recorded as unrealized gains (losses) on investments until the contracts are closed out or expired, at which time the gains (losses) are realized.

(e) Securities Lending Some of the Funds may enter into securities lending transactions. These transactions involve the temporary exchange of securities for collateral with a commitment to redeliver the same securities on a future date. The income earned from these securities lending transactions is included in interest income and is recorded as earned. The market value of the securities lent and collateral held is determined on a daily basis. The securities lending arrangements can be terminated by the borrower, the agent or the Fund at any time.

(f) Comparative Figures Certain comparative ﬁgures have been reclassiﬁed to conform to the current year presentation.

(g) Net Asset Value Per Unit Net asset value per unit is calculated at the end of each day on which the Manager is open for business by dividing the net assets of each Fund by its outstanding units.

(h) 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 a Fund’s ability to manage its investment portfolio and meet redemption requests. For example, the Funds may enter into dollar rolls (principally in TBAs) in which the Funds purchase a security. The price of the securities and the date when securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of that forward commitment transaction prior to settlement if it is appropriate to do so and realize short term gains (or losses) upon such sale. When affecting such transactions, cash or cash equivalents in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction is settled. A forward commitment transaction involves a risk of loss if the value of the securities to be purchased declines prior to the settlement date or the other party to the transaction fails to complete the transaction.

(i) Termination of Funds The Pinnacle All Equity Portfolio was terminated on March 30, 2006. On or prior to termination, the unitholder received cash for their units. The Pinnacle Global Tactical Asset Allocation Fund will be terminated on or about September 1, 2006. On the termination date the Fund will be liquidated and unitholders will receive cash for their units. 63

3. Income Taxes The Funds qualify as mutual fund trusts under the Income Tax Act (Canada). In accordance with the terms of the Funds’ declarations of trust, it is intended that all of the net income for tax purposes and sufficient net realized capital gains will be paid or payable to unitholders in the taxation year so that no income tax is payable by the Funds (after taking into account applicable capital gains refunds). In the event income taxes are paid by the Funds, these are reflected in administrative expenses. The following Funds have net capital loss carry forwards as at December 15, 2005. Losses may be carried forward indefinitely to reduce future net realized capital gains. Non-capital losses may be applied against future taxable income, and will expire on the date indicated.

Fund Gross Capital Loss Non-Capital Loss Expiry Date

Pinnacle American Core-Plus Bond Fund $ 5,928,995 $ – Pinnacle Global Real Estate Securities Fund $ 477,289 $ – Pinnacle Strategic Balanced Fund $ 6,763,640 $ – Pinnacle Global Tactical Asset Allocation Fund $ 144 $ – Pinnacle Canadian Value Equity Fund $ 5,978,739 $ – Pinnacle Canadian Small Cap Growth Equity Fund $ 582,401 $ – Pinnacle American Value Equity Fund $ 23,657,828 $ – Pinnacle American Large Cap Growth Equity Fund $ 13,665,359 $ – Pinnacle American Mid Cap Growth Equity Fund $ 51,427,270 $ 102,003 December 15, 2008 Pinnacle American Mid Cap Growth Equity Fund $ $ 62,374 December 15, 2009 Pinnacle American Mid Cap Growth Equity Fund $ $ 202,890 December 15, 2010 Pinnacle American Mid Cap Growth Equity Fund $ $ 109,856 December 15, 2015 Pinnacle International Equity Fund $ 31,936,624 $ – Pinnacle Global Equity Fund $ 25,870,036 $ –

4. Distributions to Unitholders It is the policy of the Funds to make distributions to unitholders as follows:

Pinnacle Short Term Income Fund The taxable net investment income is allocated and distributed to unitholders on a daily basis.

Pinnacle Income Fund, Pinnacle High Yield Income Fund, Pinnacle American Core-Plus Bond Fund and Pinnacle Strategic Balanced Fund The taxable net investment income is allocated and distributed to unitholders on a quarterly basis. The net realized capital gains are distributed to unitholders annually.

Pinnacle Global Real Estate Securities Fund, Pinnacle Global Tactical Asset Allocation Fund, Pinnacle Canadian Value Equity Fund, Pinnacle Canadian Mid Cap Value Equity Fund, Pinnacle Canadian Growth Equity Fund, Pinnacle Canadian Small Cap Growth 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 International Equity Fund, Pinnacle International Small to Mid Cap Value Equity Fund, Pinnacle Global Equity Fund, Pinnacle Balanced Income Portfolio, Pinnacle Conservative Balanced Growth Portfolio, Pinnacle Balanced Growth Portfolio, Pinnacle Conservative Growth Portfolio and Pinnacle Growth Portfolio The taxable net investment income and the net realized capital gains are distributed to unitholders annually. The distributions are reinvested in additional units of the Funds unless a unitholder elects to receive his or her proportionate share of any distributions in cash. 64

5. Unitholders’ Equity The Funds have an unlimited number of units authorized (no par value) for issue. Unitholders have the right under the Funds’ declarations of trust to require the Trustee to redeem their units at the current net asset value per unit as described in the Funds’ simpliﬁed prospectuses. For the six month periods ended June 30, 2006 and 2005, the following numbers of units were issued and redeemed:

2006 2005 Units Units Units Units Fund Issued (i) Redeemed (ii) Issued (i) Redeemed (ii)

Pinnacle Short Term Income Fund 746,144 944,448 847,700 917,552 Pinnacle Income Fund 5,489,843 1,352,915 3,440,120 1,449,117 Pinnacle High Yield Income Fund 2,575,993 1,164,125 2,401,819 1,213,465 Pinnacle American Core-Plus Bond Fund 2,025,463 923,916 1,911,854 1,412,831 Pinnacle Global Real Estate Securities Fund 847,184 655,285 – – Pinnacle Strategic Balanced Fund NA NA 787,893 957,252 Pinnacle Global Tactical Asset Allocation Fund 26,170 188,492 53,259 319,672 Pinnacle Canadian Value Equity Fund 856,105 1,023,464 819,582 1,092,199 Pinnacle Canadian Mid Cap Value Equity Fund 434,345 455,779 504,045 330,119 Pinnacle Canadian Growth Equity Fund 1,277,941 1,364,352 1,266,910 1,218,503 Pinnacle Canadian Small Cap Growth Equity Fund 595,996 553,379 954,321 504,966 Pinnacle American Value Equity Fund 793,770 913,132 1,281,825 2,096,343 Pinnacle American Mid Cap Value Equity Fund 330,331 302,949 386,509 446,960 Pinnacle American Large Cap Growth Equity Fund 1,556,332 912,127 1,783,490 1,599,154 Pinnacle American Mid Cap Growth Equity Fund 391,067 352,377 847,172 641,382 Pinnacle International Equity Fund 1,153,931 1,086,323 3,013,986 9,682,024 Pinnacle International Small to Mid Cap Value Equity Fund 525,099 638,589 878,346 432,891 Pinnacle Global Equity Fund 941,444 793,309 1,280,947 1,492,712 Pinnacle Balanced Income Portfolio 341,448 3,240 34,980 – Pinnacle Conservative Balanced Growth Portfolio 2,151,038 327,624 625,788 305 Pinnacle Balanced Growth Portfolio 412,625 30,944 88,786 473 Pinnacle Conservative Growth Portfolio 581,165 53,598 96,726 – Pinnacle Growth Portfolio 522,267 35,042 33,152 –

(i) Includes reinvested distributions. (ii) Included in units redeemed are redemptions related to payment of the Pinnacle Program Fee.

6. Operating Expenses The Funds are responsible for all expenses relating to the operations and conduct of business of the Funds. These expenses include: taxes, interest, brokerage commissions for the purchase and sale of portfolio securities, legal, audit, trustee, custodial and 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 the average daily net assets of the respective Fund is referred to as the ‘‘operating expense ratio’’. The operating expense ratio of each Pinnacle Fund may not exceed 0.50% on an annualized basis as speciﬁed in the Pinnacle Funds’ simpliﬁed prospectus.

7. Pinnacle Program Fee Each unitholder of the Pinnacle Funds has agreed to pay, on a quarterly basis, a negotiated asset based fee for all services in respect of their investment in the Pinnacle Funds. These fees are paid to Scotia Capital Inc. by redemption of units held in the Pinnacle Funds, unless otherwise determined by Scotia Capital Inc. 65

8. Management Fees – Pinnacle Portfolios The Pinnacle Portfolios’ management fees are calculated and paid daily. The Manager is entitled to a maximum annual management fee as follows:

Portfolio Maximum Annual Management Fee (%)

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%

9. Securities Lending The Pinnacle Funds have entered into a securities lending program with their custodian, State Street Trust Company (Canada). The aggregate market value of all securities loaned by a Pinnacle Fund cannot exceed 50% of the net assets of the Pinnacle Fund. The Pinnacle Funds receive collateral of at least 102% of the value of the securities on loan. Collateral is received in the form of debt obligations of the Government of Canada, Canadian provincial and municipal governments or ﬁnancial institutions, and is not included in the Statements of Investment Portfolio. The aggregated dollar values of the securities that are on loan and the collateral received by the Pinnacle Funds as at June 30, 2006 are as follows:

Market Value of Market Value Fund Securities Loaned of Collateral Received

Pinnacle Income Fund $ 107,259,082 $ 115,275,056 Pinnacle High Yield Income Fund $ 1,172,358 $ 1,257,441 Pinnacle Strategic Balanced Fund $ 192,731 $ 205,860 Pinnacle Canadian Value Equity Fund $ 9,616,442 $ 10,128,145 Pinnacle Canadian Mid Cap Value Equity Fund $ 3,411,196 $ 3,623,412 Pinnacle Canadian Growth Equity Fund $ 3,881,367 $ 4,120,782 Pinnacle Canadian Small Cap Growth Equity Fund $ 80,080 $ 84,378 Pinnacle American Value Equity Fund $ 3,147,723 $ 3,445,487 Pinnacle American Large Cap Growth Equity Fund $ 477,565 $ 507,497 Pinnacle American Mid Cap Growth Equity Fund $ 20,548 $ 21,900 Pinnacle American Mid Cap Value Equity Fund $ 427,118 $ 453,683 Pinnacle International Equity Fund $ 4,441,719 $ 4,668,566 Pinnacle International Small to Mid Cap Value Equity Fund $ 1,191,077 $ 1,251,358 Pinnacle Global Real Estate Securities Fund $ 988,923 $ 1,053,996 66

10. Brokerage Fees & Soft Dollars The total brokerage fees and commissions on the purchase and sale of investments for the six month period are set out below. In addition, where ascertainable, disclosure of soft dollar arrangements is also provided.

2006 2005 Commissions Commissions 2006 2005 Fund Paid Paid Soft Dollars Soft Dollars

Pinnacle Short Term Income Fund – $ – $ – $ – Pinnacle Income Fund – $ – $ – $ – Pinnacle High Yield Income Fund $ 9,231 $ 7,326 $ – $ – Pinnacle American Core-Plus Bond Fund $ 296 $ 74 $ – $ – Pinnacle Global Real Estate Securities Fund $ 43,745 $ 67,728 $ – $ 2,485 Pinnacle Strategic Balanced Fund $ 28,119 $ 74,937 $ 2,101 $ – Pinnacle Global Tactical Asset Allocation Fund $ – $ – $ – $ – Pinnacle Canadian Value Equity Fund $ 12,686 $ 26,231 $ – $ – Pinnacle Canadian Mid Cap Value Equity Fund $ 27,868 $ 70,642 $ – $ 25 Pinnacle Canadian Growth Equity Fund $ 514,303 $ 757,224 $ 6,194 $ 19,446 Pinnacle Canadian Small Cap Equity Fund $ 36,035 $ 67,045 $ 4,361 $ 13,230 Pinnacle American Value Equity Fund $ 26,080 $ 65,445 $ – $ – Pinnacle American Mid Cap Value Equity Fund $ 33,207 $ 81,943 $ – $ 21,811 Pinnacle American Large Cap Growth Equity Fund $ 48,305 $ 53,668 $ – $ – Pinnacle American Mid Cap Growth Equity Fund $ 31,467 $ 71,137 $ 5,416 $ 17,856 Pinnacle International Equity Fund $ 71,045 $ 236,358 $ 3,150 $ 6,817 Pinnacle International Small to Mid Cap Value Equity Fund $ 60,569 $ 95,648 $ – $ – Pinnacle Global Equity Fund $ 23,540 $ 97,771 $ 20,885 $ – Pinnacle Balanced Income Portfolio $ – $ – $ – $ – Pinnacle Conservative Balanced Growth Portfolio $ – $ – $ – $ – Pinnacle Balanced Growth Portfolio $ – $ – $ – $ – Pinnacle Conservative Growth Portfolio $ – $ – $ – $ – Pinnacle Growth Portfolio $ – $ – $ – $ –

Soft dollar commissions are arrangements under which products or services other than execution of securities transactions are obtained by a portfolio adviser from or through a broker-dealer. Notice to Unitholders 67

Redemption Procedures You may at any time sell your units back to a Fund by following the procedures referred to below unless, at that time, the Fund’s obligation to purchase your units has been temporarily suspended by the Fund with, where necessary, the prior consent of the Ontario Securities Commission. Your request to have the Fund buy back your units constitutes a ‘‘redemption’’ by the Fund when completed. The redemption price for the units which are the subject of your sell order will be the net asset value next determined following receipt of your sell order by the Fund. Payment for your units sold will be made by the Fund not later than the third business day after receipt by the Fund of your sell order. The Fund cannot accept sell orders specifying a forward date or price, and sell orders will not be implemented before the Fund has actually received payment for units issued to you under a prior purchase order. To sell your units back to a Fund, you must contact your ScotiaMcLeod advisor, who will forward the order to the Fund on your behalf. All sell orders will be processed in the order in which they are received. Pursuant to National Instrument 81–102, if a unitholder fails to provide the Fund with a duly completed application for redemption within 10 business days of the date on which net asset value was determined for purposes of the redemption, National Instrument 81–102 states that the Fund shall be deemed to have received and accepted on the next business day an order for the purchase of the equivalent number of mutual fund units being redeemed and will apply the amount of the redemption proceeds to payment of the issue price of the mutual fund units. If the amount of the issue price of such mutual fund units is less than the redemption proceeds, National Instrument 81–102 permits the Fund to retain the excess. If the amount of the issue price of such mutual fund units exceeds the redemption proceeds, National Instrument 81–102 requires the primary distributor of the Fund to pay to the Fund the amount of the deﬁciency. The distributor of the Fund is entitled to collect such amount, together with its costs, charges and expenses in so doing and interest thereon from you.

Reinvestment of Distributions Distributions are automatically reinvested in additional units of the Funds unless Scotia Capital Inc. is otherwise directed in writing by the unitholder. The unitholder may choose to receive distributions by cheque or direct deposit to a bank account. Building Relationships for Life

Cert no. SW-COC-1161

TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF. 54D 11795E 08/06