<PAGE> 1
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
SEMI ANNUAL REPORT June 30, 1996
GUINNESS FLIGHT
<PAGE> 2
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
August 27, 1996
Dear Guinness Flight Fund Shareholder:
We are pleased to provide you with the semi-annual report, covering the six-
month period ending June 30, 1996 for the Guinness Flight China & Hong Kong Fund
and Global Government Bond Fund, and for the period April 29, 1996 (inception)
through June 30, 1996 for the Guinness Flight Asia Blue Chip Fund and the
Guinness Flight Asia Small Cap Fund. To date 1996 has been a good year for the
China & Hong Kong Fund and Global Bond Fund, while our two newest funds posted
satisfactory results given difficult market conditions during the period since
their April 29, 1996 inception. Overall the Guinness Flight Investment Funds
have maintained their steady increase in net assets, which currently exceed $180
million. We continue to welcome new shareholders daily and appreciate the
confidence you have placed in us.
Guinness Flight China & Hong Kong Fund
The China & Hong Kong Fund produced a total return of 10.27% for the six-month
period ending June 30, 1996. This return represents a 0.86% increase over the
9.41% (US$) return posted by the Hang Seng Index for the same period. This
out-performance can be attributed to being fully weighted in the property and
commercial sectors while being underweight in utilities and financial sectors
during the latter part of the period. For the 12-month period ending June 30,
1996, the Fund's total return was 22.05% as compared to 19.71% returned by the
Hang Seng Index. The Hong Kong market had a quiet second quarter compared to the
earlier part of the year when it rose over 8%. Specifically, it has been
effected by concerns of higher U.S. interest rates anticipated for the second
part of 1996.
Guinness Flight Asia Blue Chip Fund
The Asia Blue Chip Fund produced a total return of -0.96% for the period April
29, 1996 (inception) through June 30, 1996. However, Asian markets during the
same period experienced mixed results. The Philippine market and Taiwan rose by
9.8% and 6.2% respectively, while Hong Kong also managed a modest rise of 2.6%.
Singapore and Malaysia, however, fell by 1.3% and 3.3%, respectively, while
Thailand and Indonesia fell by 4.3% and 5.4%, respectively. There was concern
over the possibility of higher U.S. interest rates expressed by Asian investors.
Although there were sharp contrasts between markets, the overall
<PAGE> 3
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
trend was downwards with the Morgan Stanley Capital International Asia "A" share
ex-Japan index falling 2.7%. We feel that against this background, the fall in
the Fund's unit price of just under 1.0% was a satisfactory performance under
these market conditions.
Guinness Flight Asia Small Cap Fund
The Asia Small Cap Fund produced a total return of 4.128% for the period April
29, 1996 (inception) through June 30, 1996 outperforming the Morgan Stanley
Capital International, ex-Japan index which lost 3.64% over the same period. The
out-performance resulted from an overweighting in Hong Kong, Malaysia and the
Philippines in addition to specific stock selection.
Outlook for Asia
Currently, the Hong Kong market is being influenced by two main factors: U.S.
Interest Rates and China. So far, the U.S. Federal Reserve Board has resisted
the temptation to raise rates and it appears that preoccupation with U.S.
interest rates for the second half of 1996 may very well be overdone. Hong Kong,
which tends to be an interest sensitive economy, is on the first leg of a
cyclical upturn where improving consumer confidence and property market recovery
are unlikely to be dampened by similar domestic interest rate increases.
Singapore's interest rates are already so low due to abundant liquidity that a
rate hike should produce little economic impact. In addition, the political risk
for business associated with the handover of Hong Kong is declining as 1997
draws closer. Moving into 1996 we continued to caution that volatility in these
markets would remain, and again, we were not disappointed. However, we still
maintain our bullish attitude toward these markets and feel that uncertain
market conditions in recent months have, and will continue to provide the
long-term investor with an excellent opportunity to take a stake in Asia's
undoubted potential.
Guinness Flight Global Government Bond Fund
The Global Government Bond Fund provided a 0.13% total return for the six-months
ending June 30, 1996 and for the 12-month period ending June 30, 1996 the Fund's
total return equalled 5.25%. This compares favorably to the Salamon Brother's
World Government Bond Index, which for the six months ending June 30, 1996 was
down 1.48% and for the year ending June 30, 1996 was up 0.37%. The Fund
benefited from the global bond market's strong performance during the second
half of 1995 and as such, was well positioned to weather the
<PAGE> 4
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
subsequent sell-off in early 1996. In addition, we correctly anticipated the
recovery in the U.S. Dollar and the peripheral currencies of Europe from the
very undervalued exchange rates reached last Spring.
Outlook
We continue our positive long term view for global bonds. The global climate of
increased competition and technological change has created a dis-inflationary
backdrop which should yield positive results for bond markets over the
long-term. In addition, government action to curtail their borrowing
requirements will tend to reduce the yield premium over inflation demanded by
bond investors. This situation should assist in the rise of bond prices. In the
short-term, a combination of lackluster world growth and an absence of
inflationary pressures will also be supportive in assisting bond prices.
Summary
While there continues to be guarded concern over the outlook for U.S. Interest
Rates in Hong Kong and other Asian markets (ex-Japan), the overall economic
growth in these markets is expected to pick-up, driven by a higher consumption
and a recovery in China. This, in conjunction with an increased comfort level
expressed by businesses as the 1997 handover deadlines draws nearer, continue to
support our optimism for the equities of emerging Asian markets. At the same
time, a recovering U.S. Dollar together with the peripheral currencies of Europe
have provided an environment that should prove to be conducive to bolstering
world bond prices in both the near and long term.
/s/ TIMOTHY GUINNESS /s/ HOWARD FLIGHT
- ------------------------ ----------------------
Timothy Guinness Howard Flight
<PAGE> 5
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
Index to Financial Statements
<TABLE>
<S> <C> <C>
Guinness Flight Asia Blue Chip Fund
Portfolio of Investments............................ 5
Statement of Assets and Liabilities................. 9
Statement of Operations............................. 10
Statement of Changes in Net Assets.................. 11
Financial Highlights................................ 12
Guinness Flight Asia Small Cap Fund
Portfolio of Investments............................ 13
Statement of Assets and Liabilities................. 17
Statement of Operations............................. 18
Statement of Changes in Net Assets.................. 19
Financial Highlights................................ 20
Guinness Flight China & Hong Kong Fund
Portfolio of Investments............................ 21
Statement of Assets and Liabilities................. 25
Statement of Operations............................. 26
Statements of Changes in Net Assets................. 27
Financial Highlights................................ 28
Guinness Flight Global Government Bond Fund
Portfolio of Investments............................ 29
Statement of Assets and Liabilities................. 32
Statement of Operations............................. 33
Statements of Changes in Net Assets................. 34
Financial Highlights................................ 35
Notes to Financial Statements.............................. 36
</TABLE>
4
<PAGE> 6
GUINNESS FLIGHT ASIA BLUE CHIP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares COMMON STOCKS: 88.85% Market Value
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
BANKS & FINANCE: 16.43%
IR 4,000 Bank International Indonesia............... $ 19,764
HKD 2,000 Hang Seng Bank............................. 20,153
HKD 3,200 HSBC Holdings Plc.......................... 48,367
TB 4,000 Krung Thai Bank Ltd........................ 18,751
MR 2,000 Malayan Banking Bhd........................ 19,242
PP 600 Metropolitan Bank & Trust.................. 16,832
SD 2,000 Overseas Chinese Banking Corp FB........... 23,388
SD 100 Overseas Chinese Banking Rights............ 804
------------
167,301
------------
CONGLOMERATES: 2.52%
HKD 3,000 Swire Pacific Ltd "A"...................... 25,676
------------
DIVERSIFIED OPERATIONS: 13.23%
HKD 20,000 First Pacific Co........................... 30,746
MR 20,000 IOI Corporation Bhd........................ 27,741
US$ 4,200 Jardine Matheson Hldgs..................... 30,870
MR 7,000 Kuala Lumpur Kepong Bhd.................... 17,679
MR 10,000 Sime Darby Bhd............................. 27,661
------------
134,697
------------
ELECTRIC UTILITIES: 2.47%
US$ 1,000 Huaneng Power International Inc............ 17,875
US$ 300 Korea Electric Power Corp.................. 7,238
------------
25,113
------------
ELECTRONICS - SEMICONDUCTORS: 1.90%
US$ 800 Samsung Electronics........................ 19,304
------------
ENGINEERING: 2.04%
MR 3,000 United Engineers........................... 20,806
------------
FOOD, BEVERAGE & TOBACCO: 2.64%
US$ 10,000 Want Want Hldgs............................ 26,900
------------
</TABLE>
5
<PAGE> 7
GUINNESS FLIGHT ASIA BLUE CHIP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares Market Value
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
GAS PRODUCTION & DISTRIBUTION: 3.19%
HKD 15,000 Hong Kong & China Gas...................... $ 23,932
MR 2,000 Petronas Gas Bhd........................... 8,579
-----------
32,511
-----------
HOTELS, TOURIST COURTS, MOTELS: 1.65%
HKD 12,000 Shangri-La Asia Ltd........................ 16,820
-----------
INDUSTRIAL: 1.93%
TB 400 Siam Cement Co, Ltd........................ 19,634
-----------
IRON & STEEL FOUNDRIES: 1.91%
US$ 800 Pohang Iron & Steel Ltd.................... 19,500
-----------
LODGING & RESTAURANTS: 2.16%
HKD 40,000 CDL Hotel International.................... 21,962
-----------
MEDIA: 2.21%
HKD 6,000 Television Broadcasts Ltd.................. 22,516
-----------
MISC FOOD PREPARATIONS & KINDRED PROD:
1.96%
US$ 1,000 President Enterprise....................... 20,000
-----------
MOTOR VEHICLES & EQUIPMENT: 1.88%
MR 2,000 Edaran Otomobil Nasional Bhd............... 19,162
-----------
PUBLIC UTILITIES: 1.65%
MR 4,000 Tenaga Nasional Bhd........................ 16,837
-----------
REAL ESTATE: 2.30%
SD 3,000 City Developments.......................... 23,388
-----------
REAL ESTATE - OPERATIONS & LESSORS: 4.71%
HKD 20,000 Amoy Properties Ltd Ord.................... 24,158
US$ 5,000 Hong Kong Land Holdings Ltd................ 11,250
TB 1,000 Land & House Plc Alien Market.............. 12,606
-----------
48,014
-----------
</TABLE>
6
<PAGE> 8
GUINNESS FLIGHT ASIA BLUE CHIP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares Market Value
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
REAL ESTATE - SUBDIVIDERS,
DEVELOPERS & OPERATIVE BUILDERS: 7.13%
HKD 2,000 Cheung Kong................................ $ 14,404
HKD 6,000 New World Development...................... 27,827
HKD 3,000 Sun Hung Kai Properties Ltd................ 30,327
-----------
72,558
-----------
SPECIAL HOLDINGS: 1.11%
PP 6,000 Ayala Corp Class "B"....................... 11,336
-----------
TELECOMMUNICATIONS: 6.77%
HKD 12,000 Hong Kong Telecom.......................... 21,548
US$ 300 PT Indonesia Satellite..................... 10,050
SD 4,000 Singapore Telecom Ltd 100.................. 10,659
MR 3,000 Systems Telekom Malaysia................... 26,699
-----------
68,956
-----------
TRANSPORT: 1.04%
SD 1,000 Singapore Airlines Ltd..................... 10,560
-----------
WHOLESALE TRADE: 6.01%
HKD 5,000 Hutchison Whampoa.......................... 31,456
PP 100,000 Metro Pacific Corp......................... 29,771
-----------
61,227
-----------
Total Common Stocks
(Cost $905,390): 88.85% $ 904,778
-----------
</TABLE>
7
<PAGE> 9
GUINNESS FLIGHT ASIA BLUE CHIP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FORWARD CONTRACTS: 0.00% Unrealized Gain/(Loss)
- -----------------------------------------------------------------------------
Purchase Sell Settlement Date
<S> <C> <C> <C> <C>
US$ 9,155 Malaysian Ringgit 22,860 07/01/96 $ 8.22
US$ 11,970 Singapore Dollar 16,875 07/01/96 (8.65)
US$ 14,027 Malaysian Ringgit 34,998 07/03/96 0.38
----------
Total Forward Contracts...................... (0.05)
----------
Total Investments: (Cost $905,390+) 88.85%... 904,778
Other Assets Less Liabilities: (11.15%)...... 113,570
----------
TOTAL NET ASSETS: 100.00%.................... $1,018,348
==========
+Cost for federal income tax purposes is the same.
Net unrealized depreciation consists of:
Gross unrealized appreciation................ $ 20,884
Gross unrealized depreciation................ (21,496)
----------
Net unrealized depreciation.................. $ (612)
==========
Currency Legend:
HKD Hong Kong dollar
IR Indonesian rupiah
MR Malaysian ringgit
PP Philippine peso
SD Singapore dollar
TB Thai baht
US$ United States dollar
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 10
GUINNESS FLIGHT ASIA BLUE CHIP FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $905,390)....... $ 904,778
Cash...................................................... 221,293
Receivables:
Fund shares sold..................................... 26,122
Dividends and interest............................... 1,428
Prepaid expenses.......................................... 26,525
----------
Total assets......................................... 1,180,146
----------
LIABILITIES
Payables:
Due to Affiliate (Note 3)............................ 20,088
Securities purchased................................. 126,757
Accrued expenses.......................................... 14,953
----------
Total liabilities.................................... 161,798
----------
NET ASSETS................................................ $1,018,348
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,018,348/82,248 shares outstanding; unlimited
number of shares authorized without par value)....... $12.38
======
SOURCE OF NET ASSETS
Paid-in capital...................................... $1,019,820
Accumulated net investment loss...................... (513)
Accumulated net realized loss on investments......... (347)
Net unrealized depreciation on investments........... (612)
----------
Net assets...................................... $1,018,348
==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 11
GUINNESS FLIGHT ASIA BLUE CHIP FUND
STATEMENT OF OPERATIONS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ----------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends................................................ $ 1,711
Interest................................................. 852
-------------
Total Investment Income............................. 2,563
EXPENSES
Advisory fees (Note 3)................................... 944
Administration fee (Note 3).............................. 2,033
Custodian................................................ 3,961
Accounting............................................... 4,849
Transfer agent fees...................................... 4,258
Auditing fees............................................ 2,587
Legal fees............................................... 2,033
Director's fees.......................................... 1,132
Registration fees........................................ 3,394
Reports to shareholders.................................. 565
Miscellaneous............................................ 484
-------------
Total expenses...................................... 26,240
Less: expenses reimbursed (Note 3).................. (23,164)
-------------
Net expenses........................................ 3,076
-------------
NET INVESTMENT LOSS............................ (513)
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss from foreign currency.................. (347)
Net unrealized depreciation on investments............... (612)
-------------
Net realized and unrealized loss on investments..... (959)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ (1,472)
=============
</TABLE>
*Commencement of operations.
See accompanying notes to financial statements.
10
<PAGE> 12
GUINNESS FLIGHT ASIA BLUE CHIP FUND
STATEMENT OF CHANGES IN NET ASSETS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ----------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss...................................... $ (513)
Net realized loss on foreign currency.................... (347)
Net unrealized depreciation on investments............... (612)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ (1,472)
--------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................ 739,293
Cost of shares redeemed.................................. (119,473)
--------------
Net increase from capital share transactions............. 619,820
--------------
TOTAL INCREASE IN NET ASSETS........................ 618,348
NET ASSETS
Beginning of period...................................... 400,000
--------------
End of period (including accumulated net investment
loss of ($513))........................................ $ 1,018,348
==============
CHANGES IN SHARES
Shares sold.............................................. 59,978
Shares redeemed.......................................... (9,731)
--------------
NET INCREASE........................................ $ 50,247
==============
</TABLE>
*Commencement of operations.
See accompanying notes to financial statements.
11
<PAGE> 13
GUINNESS FLIGHT ASIA BLUE CHIP FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of period..................... $ 12.50
---------------
Income from investment operations:
Net investment income.................................. (0.01)
Net realized and unrealized gain (loss) on
investments......................................... (0.11)
---------------
Total from investment operations......................... (0.12)
---------------
Net asset value, end of period........................... $ 12.38
===============
Total return............................................. (0.96)%
Ratios/supplemental data:
Net assets, end of period (thousands).................... $ 1,018
Ratio of expenses to average net assets:+
Before expense reimbursement........................... 24.55%
After expense reimbursement............................ 1.98%
Ratio of net investment income to average net assets:+
Before expense reimbursement........................... (23.07)%
After expense reimbursement............................ (0.50)%
Portfolio turnover rate.................................. 0.00%
Average Commission Rate Paid++........................... $0.0190
</TABLE>
* Commencement of operations.
+ Annualized.
++ A fund is required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary from
period to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.
See accompanying notes to financial statements.
12
<PAGE> 14
GUINNESS FLIGHT ASIA SMALL CAP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares COMMON STOCKS: 88.40% Market Value
<S> <C> <C> <C>
- --------------------------------------------------------------------------
AGRICULTURAL CHEMICALS: 1.11%
IR 20,000 Anwar Sierad.............................. $ 19,801
-----------
AUTO: 3.75%
HKD 12,000 MBM Resources Bhd......................... 22,995
TB 7,000 Thai Stanley Electric Plc................. 44,121
-----------
67,116
-----------
BUILDING MATERIALS, CONSTRUCTION &
ENGINEERING: 10.90%
HKD 150,000 Companion Marble Hldgs Ltd................ 21,510
PP 100,000 Davao Union Cement Corp.-B................ 41,985
HKD 100,000 K Wah International Hldgs................. 18,474
MR 6,000 Metro Kajang Hldgs Bhd.................... 12,147
MR 10,000 Pilecon Engineering Bhd................... 12,427
IR 26,000 PT Citra Marga Nusaphala.................. 39,903
MR 3,000 Road Builder.............................. 13,349
TB 6,000 Tipco Asphalt............................. 35,454
-----------
195,249
-----------
CONSUMER, RETAIL & WHOLESALE TRADE: 24.66%
HKD 250,000 Anex International Hldgs Ltd.............. 15,502
HKD 32,000 Chen Hsong Hldgs.......................... 17,156
HKD 30,000 China-Hong Kong Photo Product Hldgs Ltd... 17,150
HKD 28,000 Dickson Concepts International............ 35,810
HKD 80,000 Gilbert Holdings Ltd...................... 11,368
HKD 10,500 Lung Kee (Bermuda) Hldgs.................. 2,686
HKD 130,000 Moulin International Hldgs................ 54,161
HKD 38,000 NG Fung Hong Ltd.......................... 17,550
IR 10,000 PT Hero Supermarket....................... 9,882
IR 12,000 PT Ramayana Lestari....................... 16,498
HKD 160,000 Pacific Concord Hldgs..................... 36,792
HKD 20,000 QPL International Hldgs Ltd............... 18,732
TB 20,000 Robinson's Department Stores.............. 49,636
US$ 90,000 Shanghai Refrigerator Comp-B.............. 41,580
HKD 154,000 Stelux Hldgs International Ltd............ 34,418
HKD 60,500 Theme International Hldgs Ltd............. 19,930
PP 80,000 Universal Robina Corporation.............. 42,748
-----------
441,599
-----------
</TABLE>
13
<PAGE> 15
GUINNESS FLIGHT ASIA SMALL CAP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares Market Value
<S> <C> <C> <C>
- --------------------------------------------------------------------------
ELECTRONICS: 9.90%
HKD 60,000 ASM Pacific Technology.................... $ 47,281
US$ 25,000 Acer Computer International Ltd........... 48,500
SD 19,000 Aztech Systems Ltd........................ 9,224
US$ 4,000 Clipsal Industries Ltd.................... 11,240
HKD 100,000 Elec & Eltek International................ 19,507
TB 3,000 KCE Electronics........................... 15,718
HKD 8,000 Varitronix International Ltd.............. 16,691
HKD 50,000 Wongs International....................... 9,043
-----------
177,204
-----------
FINANCE: 7.81%
HKD 60,000 Aeon Credit Service (Asia)................ 16,859
MR 3,000 Arab Malaysian Finance.................... 13,109
MR 15,000 Pan Pacific Asia Bhd...................... 46,302
MR 10,000 Public Finance Bhd........................ 18,040
MR 3,200 Public Finance Bhd, Rights................ 1,796
HKD 25,000 Shanghai Industrial Invest................ 30,682
MR 5,000 Tradewinds (Malaysia) Bhd................. 13,029
-----------
139,817
-----------
MEDIA: 3.69%
HKD 28,000 South China Morning Post.................. 19,171
MR 15,000 Star Publications......................... 46,903
-----------
66,074
-----------
REAL ESTATE: 14.03%
HKD 200,000 Allied Properties......................... 30,230
PP 84,000 Belle Corporation......................... 20,198
HKD 50,000 China Resources Enterprises............... 35,203
MR 4,000 IOI Properties Bhd........................ 12,588
HKD 85,000 Lai Sun Development....................... 17,350
HKD 15,000 New Asia Realty & Trust Co "A"............ 48,445
PP 380,000 Universal Rightfield Properties........... 72,519
MR 8,000 Worldwide Hldgs Bhd....................... 14,752
-----------
251,285
-----------
</TABLE>
14
<PAGE> 16
GUINNESS FLIGHT ASIA SMALL CAP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Currency / Shares Market Value
<S> <C> <C> <C>
- --------------------------------------------------------------------------
TELECOMMUNICATIONS: 3.64%
HKD 22,000 Asia Satellite Telecom Hldgs.............. $ 65,226
-----------
TRADING: 1.62%
HKD 12,000 Li & Fung Ltd............................. 11,317
IR 25,000 PT Sinar Mas Agro Res & Tech.............. 17,723
-----------
29,040
-----------
TRANSPORTS: 6.04%
PP 180,000 Asian Terminals Inc....................... 47,405
SD 40,000 Comfort Group Ltd......................... 39,688
HKD 7,000 Hong Kong Aircraft Engineering............ 21,025
-----------
108,118
-----------
TOYS: 1.21%
HKD 200,000 Harbour Ring International Hldgs.......... 21,703
-----------
Total Common Stocks
(Cost $1,524,006): 88.36%................. $ 1,582,232
-----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FORWARD CONTRACTS: 0.00% Unrealized Gain/(Loss)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Purchase Sell Settlement Date
U.S$ 32 Hong Kong Dollar 250 07/01/96 $ 0
U.S$ 40,278 Indonesia Rupiah 93,645,863 07/01/96 (43)
U.S$ 27,828 Singapore Dollar 39,231 07/02/96 (19)
U.S$ 12,723 Thai Baht 322,400 07/02/96 (23)
----------
Total Forward Contracts....................... (85)
----------
Total Investments: (Cost $1,524,006+) 1,582,147
88.36%........................................
Other Assets Less Liabilities: 11.64%......... 208,387
----------
TOTAL NET ASSETS: 100.00%..................... $1,790,534
==========
+Cost for federal income tax purposes is the same.
</TABLE>
15
<PAGE> 17
GUINNESS FLIGHT ASIA SMALL CAP FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized Gain/(Loss)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Net unrealized appreciation consists of:
Gross unrealized appreciation................. $ 91,154
Gross unrealized depreciation................. (32,928)
----------
Net unrealized appreciation................... $ 58,226
==========
Currency Legend:
HKD Hong Kong dollar
IR Indonesian rupiah
MR Malaysian ringgit
PP Philippine peso
SD Singapore dollar
TB Thai baht
US$ United States dollar
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 18
GUINNESS FLIGHT ASIA SMALL CAP FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $1,524,006)..... $1,582,147
Cash...................................................... 452,390
Receivables:
Fund shares sold..................................... 38,899
Dividends and interest............................... 3,295
Prepaid expenses.......................................... 26,530
----------
Total assets......................................... 2,103,261
----------
LIABILITIES
Payables:
Due to Affiliate (Note 3)............................ 19,490
Dividends to shareholders............................ 116
Securities purchased................................. 277,894
Accrued expenses.......................................... 15,227
----------
Total liabilities.................................... 312,727
----------
NET ASSETS................................................ $1,790,534
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,789,884/137,058 shares outstanding; unlimited
number of shares authorized without par value)....... $13.06
======
SOURCE OF NET ASSETS
Paid-in capital...................................... $1,731,348
Undistributed net investment income.................. 894
Undistributed net realized gain on investments....... 114
Net unrealized appreciation (depreciation) on:
Investments..................................... 58,226
Foreign currency................................ (48)
----------
Net assets...................................... $1,790,534
==========
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 19
GUINNESS FLIGHT ASIA SMALL CAP FUND
STATEMENT OF OPERATIONS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ----------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends................................................. $ 4,753
Interest.................................................. 1,841
--------------
Total Investment Income.............................. 6,594
EXPENSES
Advisory fees (Note 3).................................... 1,501
Administration fee (Note 3)............................... 3,233
Custodian................................................. 4,055
Accounting................................................ 4,849
Transfer agent fees....................................... 4,058
Auditing fees............................................. 2,586
Legal fees................................................ 1,684
Director's fees........................................... 1,132
Registration fees......................................... 3,394
Reports to shareholders................................... 566
Miscellaneous............................................. 485
--------------
Total expenses....................................... 27,543
Less: expenses reimbursed (Note 3)................... (24,033)
--------------
Net expenses......................................... 3,510
--------------
NET INVESTMENT INCOME........................... 3,084
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from investments........................ 475
Net realized loss from foreign currency................... (360)
Net unrealized appreciation on investments................ 58,226
Net unrealized loss on foreign currency................... (48)
--------------
Net realized and unrealized gain on investments...... 58,293
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $ 60,727
==============
</TABLE>
*Commencement of operations.
See accompanying notes to financial statements.
18
<PAGE> 20
GUINNESS FLIGHT ASIA SMALL CAP FUND
STATEMENT OF CHANGES IN NET ASSETS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ----------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income..................................... $ 3,084
Net realized gain from investments........................ 475
Net realized loss on foreign currency..................... (360)
Net unrealized appreciation on investments................ 58,226
Net unrealized loss on foreign currency................... (48)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS......................................... 61,377
---------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends paid from net investment income................. (2,190)
---------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................. 1,655,631
Net asset value of shares issued on reinvestment of
distributions........................................ 2,074
Cost of shares redeemed................................... (326,358)
---------------
Net increase from capital share transactions.............. 1,331,347
---------------
TOTAL INCREASE IN NET ASSETS......................... 1,390,534
NET ASSETS
Beginning of period....................................... 400,000
---------------
End of period (including undistributed net investment
income of $244)...................................... $ 1,790,534
===============
CHANGES IN SHARES
Shares sold............................................... 130,396
Shares reinvested from distributions...................... 159
Shares redeemed........................................... (25,497)
---------------
NET INCREASE......................................... $ 105,058
===============
</TABLE>
*Commencement of operations.
See accompanying notes to financials statements.
19
<PAGE> 21
GUINNESS FLIGHT ASIA SMALL CAP FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 29, 1996*
through
June 30, 1996
<S> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of period.................... $ 12.50
----------------
Income from investment operations:
Net investment income................................. 0.03
Net realized and unrealized gain (loss) on
investments........................................ 0.55
----------------
Total from investment operations........................ 0.58
----------------
Less distributions from net investment income........... (0.02)
----------------
Net asset value, end of period.......................... $ 13.06
================
Total return............................................ 4.61%
Ratios/supplemental data:
Net assets, end of period (thousands)................... $ 1,790
Ratio of expenses to average net assets:+
Before expense reimbursement.......................... 17.60%
After expense reimbursement........................... 1.98%
Ratio of net investment income to average net assets:+
Before expense reimbursement.......................... (13.56)%
After expense reimbursement........................... 2.06%
Portfolio turnover rate................................. 2.91%
Average Commission Rate Paid++.......................... $ 0.0029
</TABLE>
* Commencement of operations.
+ Annualized.
++ A fund is required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary from
period to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.
See accompanying notes to financial statements.
20
<PAGE> 22
GUINNESS FLIGHT CHINA & HONG KONG FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares COMMON STOCKS: (97.15%) Market Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------
AIR TRANSPORT, SCHED, &
AIR COURIER SERVICES: 2.40%
HKD 2,166,000 Cathay Pacific Airways Ltd. ........... $ 3,973,413
------------
AUTOMOTIVE DEALERS: 0.54%
HKD 2,672,000 Qingling Motors Company Ltd. .......... 897,484
------------
BANKING: 19.96%
HKD 567,400 Bank of East Asia Hong Kong............ 2,074,401
HKD 457,000 Dao Heng Bank Group Ltd. .............. 1,765,242
HKD 1,001,200 HSBC Holdings Plc. .................... 15,132,952
HKD 1,181,100 Hang Seng Bank......................... 11,901,405
HKD 604,000 Liu Chong Hing Investment Ltd. ........ 596,919
HKD 536,000 Union Bank of Hong Kong................ 564,338
HKD 256,000 Wing Hang Bank Ltd .................... 1,015,302
------------
33,050,559
------------
BUILDING MATERIALS & CONSTRUCTION: 0.31%
HKD 2,174,000 Luoyang Glass Company Ltd. ............ 516,766
------------
CHEMICALS: 0.68%
HKD 2,698,000 Shanghai Petrochemical................. 766,799
HKD 1,616,000 Yizheng Chemical Fibre Co. ............ 356,989
------------
1,123,788
------------
DIVERSIFIED: 11.32%
HKD 1,729,000 Citic Pacific Ltd. .................... 6,991,273
HKD 1,286,000 First Pacific Co. ..................... 1,976,992
HKD 1,818,000 Guangdong Investment Ltd. ............. 1,150,819
HKD 457,733 New World Infrastructure............... 975,693
HKD 132,000 Shanghai Industrial Invest............. 162,000
HKD 875,000 Swire Pacific Ltd. "A"................. 7,488,777
------------
18,745,554
------------
ELECTRICAL EQUIPMENT: 0.00%
US$ 10,800 Shanghai Shangling Electrical 5,702
Appliance - B..........................
------------
</TABLE>
21
<PAGE> 23
GUINNESS FLIGHT CHINA & HONG KONG FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------
ELECTRIC SERVICES: 0.90%
HKD 490,000 Hong Kong Electric..................... $ 1,493,912
------------
ELECTRIC UTILITIES: 2.15%
US$ 30,000 Huaneng Power International Inc. ...... 536,250
HKD 666,500 China Light & Power Co. ............... 3,022,207
------------
3,558,457
------------
FINANCIAL SERVICES: 1.45%
HKD 183,600 Dah Sing Financial Hldgs............... 556,202
HKD 870,000 Manhattan Card Company, Ltd. .......... 415,851
HKD 1,050,000 National Mutual Asia Ltd. ............. 922,391
HKD 350,000 Peregrine Investment Hldgs............. 504,150
HKD 35,000 Peregrine Investment WTS-98............ 4,341
------------
2,402,935
------------
FOOD & BEVERAGE: 0.71%
HKD 1,602,000 Four Seas Mercantile Hldgs............. 724,348
HKD 1,630,000 Tingyi (Cayman Island) Hldg Co. ....... 447,470
------------
1,171,818
------------
GAS PRODUCTION & DISTRIBUTION: 2.72%
HKD 2,783,800 Hong Kong & China Gas.................. 4,441,421
HKD 238,900 Hong Kong & China Gas WTS-97........... 62,497
------------
4,503,918
------------
HOTELS, TOURIST COURTS & MOTELS: 2.64%
HKD 350,000 Assoc. International Hotels............ 250,945
HKD 1,066,500 Hong Kong & Shanghai Hotels............ 1,818,661
US$ 529,000 Shanghai New Asia Group Ltd. B......... 278,254
HKD 1,441,000 Shangri-La Asia Ltd. .................. 2,019,811
------------
4,367,671
------------
</TABLE>
22
<PAGE> 24
GUINNESS FLIGHT CHINA & HONG KONG FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------
INDUSTRIAL: 1.85%
HKD 845,000 Cosco Pacific Ltd. .................... $ 605,852
HKD 966,000 Gold Peak Industrial................... 545,974
US$ 642,000 Inner Mongolia Erdos Cashmere.......... 312,012
HKD 1,535,000 Sinocan Holdings Ltd .................. 674,224
HKD 3,234,000 Yue Yuen Industrial Hldgs.............. 919,136
------------
3,057,198
------------
LODGING & RESTAURANTS: 0.50%
HKD 1,522,000 CDL Hotel International................ 835,643
------------
MOTORCYCLES, BICYCLES, & PARTS: 0.00%
HKD 1,200 Shenzhen China Bicycles Co. - B........ 277
------------
PETROLEUM REFINING: 0.43%
HKD 2,512,000 Zhenhai Refining & Chemical Co. ....... 713,936
------------
REAL ESTATE - AGENTS, BROKERS & MANAGERS 0.49%
HKD 1,160,000 China Resources Enterprises............ 816,717
------------
REAL ESTATE - OPERATIONS & LESSORS: 21.01%
HKD 2,469,000 Amoy Properties Ltd. Ord. ............. 2,982,289
HKD 1,579,000 Cheung Kong............................ 11,372,186
HKD 1,592,000 Sun Hung Kai Properties Ltd. .......... 16,093,273
HKD 1,216,000 Wharf Holdings Ltd. ................... 4,351,413
------------
34,799,161
------------
REAL ESTATE - SUBDIVIDERS, DEVELOPERS &
OPERATIVE BUILDERS: 10.22%
HKD 1,083,000 Henderson Land Company................. 8,114,718
HKD 777,000 Hysan Development Company.............. 2,378,956
HKD 38,850 Hysan Development Company WTS-98....... 20,577
HKD 200,000 New Asia Realty & Trust Co. ........... 645,932
HKD 1,242,000 New World Development.................. 5,760,140
------------
16,920,323
------------
</TABLE>
23
<PAGE> 25
GUINNESS FLIGHT CHINA & HONG KONG FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------
RETAILER: 1.12%
HKD 1,770,000 Esprit Asia Holdings Ltd. ............. $ 560,217
HKD 759,000 Gold Lion Holdings Ltd. ............... 652,049
HKD 1,932,000 Joyce Boutique......................... 648,929
------------
1,861,195
------------
TELECOMMUNICATIONS: 7.19%
HKD 52,000 Asia Satellite Telecom Hldgs........... 154,171
HKD 1,248,000 Chengdu Telecom Cable Co. ............. 182,184
HKD 6,446,400 Hong Kong Telecom. .................... 11,575,747
------------
11,912,102
------------
WHOLESALE - APPAREL, PIECE GOODS,
NOTIONS: 0.21%
HKD 359,000 Giordano Hldgs Ltd. ................... 347,835
------------
WHOLESALE TRADE - MISC. WHOLESALERS: 8.33%
HKD 2,035,000 Hutchison Whampoa...................... 12,802,958
HKD 1,054,000 Li & Fung Ltd. ........................ 993,986
------------
13,796,944
------------
Total Common Stocks
(Cost $154,249,270+): 97.15%........... $160,873,308
Other Assets Less Liabilities: 2.85%... 4,727,504
------------
NET ASSETS: 100.00%.................... $165,600,812
============
+Cost for federal income tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.......... $ 9,611,444
Gross unrealized depreciation.......... (2,987,637)
------------
Net unrealized appreciation............ $ 6,623,807
============
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 26
GUINNESS FLIGHT CHINA & HONG KONG FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost
$154,249,270)........................................ $160,873,308
Cash................................................... 4,232,265
Receivables:
Fund shares sold.................................. 385,415
Dividends and interest............................ 486,437
Prepaid expenses....................................... 64,734
Deferred organizational costs, net..................... 35,358
------------
Total assets...................................... 166,077,517
------------
LIABILITIES
Payables:
Due to Affiliate (Note 3)......................... 125,140
Dividends to shareholders......................... 217,246
Fund shares repurchased........................... 71,635
Accrued expenses....................................... 62,684
------------
Total liabilities................................. 476,705
------------
NET ASSETS............................................. $165,600,812
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($165,600,812/11,267,127 shares outstanding;
unlimited number of shares authorized without par
value)............................................ $14.70
=======
SOURCE OF NET ASSETS
Paid-in capital................................... $159,010,213
Overdistribution of net investment income......... (3,474)
Overdistribution of net realized gain on
investments..................................... (29,734)
Net unrealized appreciation on investments........ 6,623,807
------------
Net assets................................... $165,600,812
============
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 27
GUINNESS FLIGHT CHINA & HONG KONG FUND
STATEMENT OF OPERATIONS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended
June 30, 1996
<S> <C>
- ----------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends............................................. $ 2,811,734
Interest.............................................. 90,176
----------------
Total investment income.......................... 2,901,910
EXPENSES
Advisory fees (Note 3)................................ 699,091
Administration fee (Note 3)........................... 174,773
Custodian............................................. 129,752
Accounting............................................ 24,806
Transfer agent fees................................... 78,270
Auditing fees......................................... 11,969
Legal fees............................................ 32,023
Director's fees....................................... 6,955
Registration fees..................................... 13,235
Reports to shareholders............................... 4,886
Deferred organization costs amortization.............. 5,820
Interest on loans..................................... 3,083
Miscellaneous......................................... 4,106
----------------
Total expenses................................... 1,188,769
Expenses recouped (Note 3)....................... 194,249
----------------
Net expenses..................................... 1,383,018
----------------
NET INVESTMENT INCOME....................... 1,518,892
----------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from investments.................... 2,335,828
Net realized loss from foreign currency............... (28,378)
Net unrealized appreciation on investments............ 3,018,411
----------------
Net realized and unrealized gain on
investments.................................... 5,325,861
----------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $ 6,844,753
================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 28
GUINNESS FLIGHT CHINA & HONG KONG FUND
STATEMENTS OF CHANGES IN NET ASSETS AT JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months For the year
ended June 30, 1996 ended
(Unaudited) December 31, 1995
<S> <C> <C>
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income................... $ 1,518,892 $ 300,352
Net realized gain from investments...... 2,335,828 28,920
Net realized loss on foreign currency... (28,378) (6,121)
Net unrealized appreciation on
investments........................ 3,018,411 3,847,844
------------------- -----------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... 6,844,753 4,170,995
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends paid from net investment
income................................ (1,521,637) (301,331)
Distributions from taxable realized
gains................................. (2,238,341) (123,918)
------------------- -----------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS..................... (3,759,978) (425,249)
------------------- -----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold............... 164,902,229 57,621,477
Net asset value of shares issued on
reinvestment of distributions...... 3,542,814 395,581
Cost of shares redeemed................. (61,669,246) (8,309,577)
------------------- -----------------
Net increase from capital share
transactions.......................... 106,775,797 49,707,481
------------------- -----------------
TOTAL INCREASE IN NET ASSETS....... 109,860,572 53,453,227
NET ASSETS
Beginning of period..................... 55,740,240 2,287,013
------------------- -----------------
End of period [including overdistributed
net investment income of $(3,474)
and $(729), respectively].......... $165,600,812 $55,740,240
=================== =================
CHANGES IN SHARES
Shares sold............................. 11,135,609 4,513,348
Shares reinvested from distributions.... 264,424 29,558
Shares redeemed......................... (4,169,861) (656,232)
------------------- -----------------
NET INCREASE....................... $ 7,230,172 $ 3,886,674
=================== =================
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 29
GUINNESS FLIGHT CHINA & HONG KONG FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months For the year
ended ended
June 30, 1996 December 31,
(Unaudited) 1995
<S> <C> <C>
- ------------------------------------------------------------------------------------
Net asset value, beginning of period........... $ 13.64 $ 11.47
-------------- -----------------
Income from investment operations:
Net investment income........................ 0.14 0.14
Net realized and unrealized gain (loss)
on investments............................. 1.26 2.20
-------------- -----------------
Total from investment operations............... 1.40 2.34
-------------- -----------------
Less distributions:
Dividends from net investment income......... (0.14) (0.14)
Distributions from taxable net capital
gains...................................... (0.20) (0.03)
-------------- -----------------
Total distributions............................ (0.34) (0.17)
-------------- -----------------
Net asset value, end of period................. $ 14.70 $ 13.64
============== =================
Total return................................... 10.27% 20.45%
Ratios/supplemental data:
Net assets, end of period (thousands).......... $ 165,601 $55,740
Ratio of expenses to average net assets:+
Before expense reimbursement (recoupement)... 1.70% 3.02%++
After expense reimbursement.................. 1.98% 1.98%
Ratio of net investment income to average net
assets:+
Before expense reimbursement (recoupement)... 2.44% 0.49%
After expense reimbursement.................. 2.17% 1.52%
Portfolio turnover rate........................ 17.90% 10.89%
Average Commission Rate Paid+++................ $ 0.0080 --
BANK LOANS
Amount outstanding at end of period $(000)..... -- --
Average amount of bank loans outstanding during
the period (monthly average) (000)........... $ 1,413 --
Average number of shares outstanding during the
period (monthly average) (000)............... 10,128 --
Average amount of debt per share during the
period....................................... $ 0.14 --
</TABLE>
+ Annualized
++ Includes indirectly paid expenses. Excluding indirectly paid expenses for
the year ended December 31, 1995, the ratio of expenses to average net
assets before expense reimbursement would have been 3.04%.
+++ For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.
See accompanying notes to financial statements.
28
<PAGE> 30
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount GOVERNMENT BONDS: 69.93% Market Value US$
<C> <S> <C>
- -------------------------------------------------------------------------------
AUSTRALIAN DOLLAR: 1.92%
37,000 Australian Government
12.500% 03/15/97.......................... $ 30,032
-------
BRITISH POUND: 7.39%
40,000 Italy Sterling NCL
10.500% 04/28/14.......................... 70,210
30,000 United Kingdom Gilts
6.000% 08/10/99........................... 45,498
-------
115,708
-------
GERMAN MARKS: 9.71%
225,000 Deutschland Republic
6.875% 05/12/05........................... 152,068
-------
IRISH POUND: 5.17%
18,000 Irish Gilts
8.750% 07/27/97........................... 29,696
30,000 Irish Gilts
9.750% 06/01/98........................... 51,234
-------
80,930
-------
ITALIAN LIRA: 7.72%
180,000,000 BTPS Italian Government
9.500% 02/01/99........................... 120,828
-------
NEW ZEALAND DOLLAR: 4.96%.
55,000 New Zealand Government
10.000% 07/15/97.......................... 38,010
60,000 New Zealand Government
8.000% 02/15/01........................... 39,670
-------
77,680
-------
</TABLE>
29
<PAGE> 31
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Market Value US$
<C> <S> <C>
- -------------------------------------------------------------------------------
NORWEGIAN KRONER: 4.42%
250,000 Government of Norway
9.000% 1/31/99............................ $ 41,594
75,000 Government of Norway
9.500% 10/31/02........................... 13,285
100,000 Norwegian Government
5.750% 11/30/04........................... 14,328
-------
69,207
-------
SPANISH PESETA: 2.58%
4,580,000 Government of Spanish
11.300% 01/15/02.......................... 40,381
-------
SWEDISH KRONA: 5.34%
500,000 Sweden Caisse #1036
10.250% 05/05/00.......................... 83,555
-------
UNITED STATES DOLLAR: 20.72%
50,000 US Treasury Note
6.750% 04/30/00........................... 50,547
130,000 US Treasury Note
6.125% 07/31/00........................... 128,578
135,000 US Treasury Bond
7.875% 11/15/04........................... 145,167
-------
324,292
-------
Total Government Bonds
(Cost $1,094,199): 69.93%................. $ 1,094,681
---------
</TABLE>
30
<PAGE> 32
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS JUNE 30, 1996 (UNAUDITED), CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FORWARD CONTRACTS: (0.73%) Unrealized Gain/(Loss)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
Purchase Sell Settlement Date
US$ 218,738 Australian Dollar 286,851 07/12/96 $ (3,582)
US$ 234,785 Canadian Dollar 319,728 07/12/96 (803)
US$ 690,846 Deutsche Mark 1,007,945 07/12/96 3,699
US$ 119,531 Danish Krone 682,675 07/12/96 1,682
US$ 142,526 Spanish Peseta 15,658,768 07/12/96 (458)
US$ 146,909 French Franc 741,357 07/12/96 (2,568)
US$ 239,509 British Pound Sterling 156,121 07/12/96 (909)
US$ 109,035 Irish Pound 68,646 07/12/96 266
US$ 314,494 Italian Lira 501,803,825 07/12/96 7,640
US$ 162,000 Japanese Yen 17,253,510 07/12/96 (1,408)
US$ 62,229 Netherlands Guilder 100,425 07/12/96 3,252
US$ 118,588 Norwegian Krone 754,226 07/12/96 (2,281)
US$ 112,501 Swedish Krona 765,078 07/12/96 (1,282)
US$ 30,000 Singapore Dollar 41,784 07/12/96 (369)
US$ 205,239 European Currency Unit 163,261 07/12/96 (1,509)
US$ 133,319 Australian Dollar 169,447 10/21/96 (925)
US$ 149,014 Canadian Dollar 202,832 10/21/96 (203)
US$ 101,919 Deutsche Mark 153,699 10/21/96 (1)
US$ 183,027 Danish Krone 1,067,812 10/21/96 1,160
US$ 184,884 Spanish Peseta 23,758,125 10/21/96 (265)
US$ 136,822 French Franc 696,015 10/21/96 495
US$ 104,672 British Pound Sterling 69,473 10/21/96 (2,795)
US$ 92,156 Irish Pound 58,599 10/21/96 (1,605)
US$ 134,755 Italian Lira 212,201,344 10/21/96 (2,600)
US$ 209,899 Japanese Yen 21,990,929 10/21/96 (5,235)
US$ 60,756 Netherlands Guilder 102,192 10/21/96 (305)
US$ 60,489 Norwegian Krone 392,817 10/21/96 109
US$ 85,423 New Zealand Dollar 126,858 10/21/96 (556)
US$ 32,901 Swedish Krona 221,720 10/21/96 (627)
US$ 120,097 European Currency Unit 96,728 10/21/96 609
----------
Total Forward Contracts.......................... (11,374)
----------
Total Investments: (Cost $1,094,199+) 69.20%..... 1,083,307
Other Assets Less Liabilities: 30.80%............ 482,096
----------
TOTAL NET ASSETS: 100.00%........................ $1,565,403
==========
+Cost for federal income tax purposes is the
same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.................... $ 11,447
Gross unrealized depreciation.................... (10,965)
----------
Net unrealized appreciation...................... $ 482
==========
</TABLE>
See accompanying notes to financial statements.
31
<PAGE> 33
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $1,094,199)..... $1,083,307
Cash...................................................... 533,092
Receivables:
Securities sold...................................... 36,855
Interest............................................. 26,695
Prepaid expenses..................................... 1,122
Deferred organizational costs, net........................ 35,357
----------
Total assets......................................... 1,716,428
----------
LIABILITIES
Payables:
Securities purchased................................. 95,949
Dividends payable to shareholders.................... 1,398
Due to Affiliate (Note 3)............................ 27,141
Accrued expenses.......................................... 26,537
----------
Total liabilities.................................... 151,025
----------
NET ASSETS................................................ $1,565,403
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,565,403/126,751 shares outstanding; unlimited
number of shares authorized without par value)....... $12.35
=======
SOURCE OF NET ASSETS
Paid-in capital...................................... $1,575,740
Undistributed net investment income (including
equalization credits of $4,640).................... 9,693
Overdistribution of net realized gain on
investments........................................ (9,084)
Net unrealized appreciation (depreciation) on:
Investments..................................... 482
Foreign currency................................ (11,428)
----------
Net assets...................................... $1,565,403
==========
</TABLE>
See accompanying notes to financial statements.
32
<PAGE> 34
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
STATEMENT OF OPERATIONS AT JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended
June 30, 1996
<S> <C>
- ------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Interest........................................... $ 47,295
------------------------
EXPENSES
Advisory fees (Note 3)............................. 5,334
Administration fee (Note 3)........................ 16,745
Custodian.......................................... 5,392
Accounting......................................... 19,903
Transfer agent fees................................ 17,702
Auditing fees...................................... 7,922
Legal fees......................................... 6,467
Director's fees.................................... 6,955
Registration fees.................................. 9,155
Reports to shareholders............................ 2,030
Deferred organization costs amortization........... 5,820
Miscellaneous...................................... 1,316
------------------------
Total expenses................................ 104,741
Less: expenses reimbursed (Note 3)............ (93,225)
------------------------
Net expenses.................................. 11,516
------------------------
NET INVESTMENT INCOME.................... 35,779
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investments................. 4,364
Net realized gain from foreign currency............ 9,175
Net unrealized depreciation on investments......... (33,070)
Net unrealized loss on foreign currency............ (11,400)
------------------------
Net realized and unrealized loss on
investments................................. (30,931)
------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ 4,848
========================
</TABLE>
See accompanying notes to financial statements.
33
<PAGE> 35
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS AT JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months For the year
ended June 30, 1996 ended
(Unaudited) December 31, 1995
<S> <C> <C>
- -----------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income.................... $ 35,779 $ 55,076
Net realized gain from investments....... 4,364 33,385
Net realized gain (loss) on foreign
currency............................... 9,175 (12,113)
Net unrealized appreciation
(depreciation) on investments.......... (33,070) 52,690
Net unrealized depreciation on foreign
currency............................... (11,400) (28)
---------------- ---------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... 4,848 129,010
---------------- ---------------
NET EQUALIZATION CREDITS................. 4,640 1,667
---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends paid from net investment
income................................. (39,514) (51,665)
Distributions from net capital gains..... (12,536) (25,177)
---------------- ---------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS...................... (52,050) (76,842)
---------------- ---------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 1,083,920 1,144,047
Net asset value of shares issued on
reinvestment of distributions.......... 69,723 44,505
Cost of shares redeemed.................. (699,028) (840,420)
---------------- ---------------
Net increase from capital share
transactions........................... 454,615 348,132
---------------- ---------------
TOTAL INCREASE IN NET ASSETS......... 412,053 401,967
NET ASSETS
Beginning of period...................... 1,153,350 751,383
---------------- ---------------
End of period (including undistributed
net investment income of $9,693 and
$8,667, respectively).................. $1,565,403 $1,153,350
================ ===============
CHANGES IN SHARES
Shares sold.............................. 87,336 90,886
Shares issued from dividend
distributions.......................... 5,585 3,547
Shares redeemed.......................... (56,509) (66,716)
---------------- ---------------
NET INCREASE......................... $ 36,412 $ 27,717
================ ===============
</TABLE>
See accompanying notes to financial statements.
34
<PAGE> 36
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended For the Year
June 30, 1996 ended
(Unaudited) December 31, 1995
<S> <C> <C>
- --------------------------------------------------------------------------------
Net asset value, beginning of period...... $ 12.77 $ 12.00
--------------- --------------
Income from investment operations:
Net investment income................... 0.31 0.69
Net realized and unrealized gain (loss)
on investments....................... 0.01 1.01
--------------- --------------
Total from investment operations.......... 0.32 1.70
--------------- --------------
Less distributions:
Dividends from net investment income.... (0.05) (0.65)
Distributions from net capital gains.... (0.10) (0.28)
--------------- --------------
Total distributions....................... (0.15) (0.93)
--------------- --------------
Net asset value, end of period............ $ 12.95 $ 12.77
=============== ==============
Total return.............................. 0.13% 14.49%
Ratios/supplemental data:
Net assets, end of period (thousands)..... $ 1,565 $ 1,153
Ratio of expenses to average net assets:+
Before expense reimbursement............ 14.75% 21.52%++
After expense reimbursement............. 1.73% 1.73%
Ratio of net investment income to average
net assets:+
Before expense reimbursement............ (8.09)% (14.26)%
After expense reimbursement............. 5.04% 5.53%
Portfolio turnover rate................... 127.15% 202.54%
</TABLE>
+ Annualized
++ Includes indirectly paid expenses. Excluding indirectly paid expenses for the
year ended December 31, 1995, the ratio of expenses to average net assets
before expense reimbursement would have been 21.68%
See accompanying notes to financial statements.
35
<PAGE> 37
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Guinness Flight Investment Funds, Inc. (the "Guinness Funds") is a Maryland
Corporation incorporated on January 7, 1994 and registered under the Investment
Company Act of 1940 (the "1940 Act") as a non-diversified, open-end management
investment company. Currently, the Guinness Funds offer four separate series
portfolios: Guinness Flight Asia Blue Chip Fund (the "Asia Blue Chip Fund"),
Guinness Flight Asia Small Cap Fund (the "Asia Small Cap Fund") Guinness Flight
China & Hong Kong Fund (the "China Fund"), and Guinness Flight Global Government
Bond Fund (the "Global Government Fund") (collectively, the "Funds"). The China
and Global Government Funds began operations on June 30, 1994 and the Asia Blue
Chip and Asia Small Cap Funds began operations on April 29, 1996.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a primary
exchange are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on an exchange
for which there has been no sale are valued at the last reported bid price.
Securities for which quotations are not readily available are valued at their
respective fair values as determined in good faith by the Board of Trustees.
Short-term investments are stated at cost, which when combined with accrued
interest, approximates market value.
U.S. Government securities with less than 60 days remaining to maturity
when acquired by the Fund are valued on an amortized cost basis. U.S. Government
securities with more than 60 days remaining to maturity are valued at the
current market value (using the mean between the bid and asked price) until the
60th day prior to maturity, and are then valued at amortized cost based upon the
value on such date unless the Board determines during such 60 day period that
this amortized cost basis does not represent fair value.
Foreign securities are recorded in the financial statements after
translation to U.S. dollars based on the applicable exchange rate at the end of
the period. The Funds do not isolate that portion of the results of operations
arising as a result of changes in the currency exchange rate from the
fluctuations arising as a result of changes in the market prices of investments
during the period.
36
<PAGE> 38
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Interest income is translated at the exchange rates which existed at the
dates the income was accrued. Exchange gains and losses related to interest
income are included in interest income on the accompanying Statements of
Operations.
B. Forward Foreign Currency Exchange Contracts. The Funds may utilize
forward foreign currency exchange contracts ("forward contracts") under which it
is obligated to exchange currencies at specific future dates and at specified
rates, and is subject to the risks of foreign exchange fluctuations. All
commitments are "marked-to-market" daily and any resulting unrealized gains or
losses are included as unrealized appreciation (depreciation) on foreign
currency denominated assets and liabilities. The Funds record realized gains or
losses at the time the forward contract is settled. Counterparties to these
forward contracts are major U.S. financial institutions.
C. Security Transactions, Dividends and Distributions. As is common in the
industry, security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
D. Federal Income Taxes. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of their taxable income to its shareholders. Therefore, no
federal income tax provision is required.
E. Equalization. The Global Government Fund follows the accounting
practice known as equalization, by which a portion of the proceeds from sales
and costs of redemptions of capital shares, equivalent on a per share basis to
the amount of undistributed net investment income on the date of the
transaction, is credited or charged to undistributed net investment income. As a
result, undistributed net investment income per share is unaffected by sales or
redemptions of the Fund's shares.
F. Deferred Organization Costs. The China Fund and the Global Government
Fund have each incurred expenses of $58,785 in connection with their
organization. These costs have been deferred and are being amortized on a
straight line basis over a period of sixty months from the date the Funds
commenced investment operations. In the event that any of the initial shares of
either Fund are redeemed by the holder during the period of amortization of the
Funds' organization costs, the redemption proceeds will be reduced by any such
unamortized organization costs in the same proportion as the number of initial
shares being redeemed bears to the number of those shares outstanding at the
time of redemption.
37
<PAGE> 39
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
G. Concentration of Risk. The Asia Blue Chip Fund and Asia Small Cap Fund
invests substantially all of its assets in Asian continent. The China Fund
invests substantially all of its assets in securities that are traded in China
or Hong Kong or that are issued by companies that do a substantial part of their
business in China. The Global Government Fund invests substantially in bonds
issued by various European governments. The consequences of political, social or
economic changes in the countries in which the securities are offered or the
issuers conduct their operations may affect the market prices of the Funds'
investments and any income generated, as well as the Funds' ability to
repatriate such amounts.
H. Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
I. Other. Under terms of the Custodial Agreement, the Funds may earn
credits, based on custody cash balances, to applied to custodian fees. For the
six months ended June 30, 1996, there were no such credits.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
Guinness Funds, on behalf of the Funds, entered into an Investment Advisory
Agreement with Guinness Flight Investment Management Limited (the "Advisor"), to
provide the Funds with investment management services. The Advisor furnished all
investment advice, office space and certain administrative services, and
provides certain personnel needed by the Funds. As compensation for its
services, the Advisor was entitled to a monthly fee equal to the following
annual percentages of daily average net assets:
<TABLE>
<S> <C>
Asia Blue Chip Fund 1.00%
Asia Small Cap Fund 1.00%
China Fund 1.00%
Global Government Fund 0.75%
</TABLE>
The Funds are responsible for their own operating expenses. The Advisor and
Administrator have agreed to reimburse each Fund to the extent necessary so that
its ratio of operating expenses to average daily net assets will not exceed the
38
<PAGE> 40
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
following levels. Expenses reimbursed from the Adviser for the six months ended
June 30, 1996 are stated in the Funds' Statement of Operations:
<TABLE>
<S> <C>
Asia Blue Chip Fund 1.98%
Asia Small Cap Fund 1.98%
China Fund 1.98%
Global Government Fund 1.73%
</TABLE>
In addition, the Advisor and Administrator have agreed to limit the Funds'
aggregate annual operating expenses to the most stringent limits prescribed by
any state in which the Funds' shares are offered for sale. Currently, the most
stringent limits prescribed are 2.50% of the first $30 million of net assets and
reduced amounts thereafter.
The Funds will reimburse the Advisor and Administrator in subsequent years when
operating expenses (before reimbursements) are less than the applicable
percentage limitation in effect at the time for each of the Fund.
Investment Company Administration Corporation (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, prepares reports and
materials to be supplied to the Directors; monitors the activities of the Funds'
custodian, transfer agent and accountants; coordinates the preparation and
payment of Fund expenses and reviews the Funds' expense accruals. For its
services, the Administrator receives an annual fee equal to the greater of 0.25
of 1% of the Funds' average daily net assets, subject to a $40,000 annual
minimum for the China Fund and $60,000 for the Asia Blue Chip Fund, Asia Small
Cap Fund and Global Government Fund allocated based on average daily net assets
of each respective fund.
First Fund Distributors, Inc. (the "Distributor") acts as the Funds' principal
underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Guinness Funds are also officers and/or Directors of the
Administrator and Distributor.
39
<PAGE> 41
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, excluding U.S.
Government obligations and short-term investments, for the six months ended June
30, 1996 were:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
---------------------------------- ------------ -----------
<S> <C> <C>
Asia Blue Chip Fund $ 905,358 $ 0
Asia Small Cap Fund $ 1,557,149 $ 33,617
China Fund $125,032,904 $24,164,389
Global Government Fund $ 1,080,735 $ 1,041,393
</TABLE>
Purchases and sales of U.S. Government obligations by the Global Government Fund
were $224,917 and $211,840, respectively.
NOTE 5 - LINE OF CREDIT
The Funds have a $13 million unsecured line of credit with a bank that expires
on October 11, 1996. The interest rate on the line of credit is the bank's base
rate, as revised from time to time.
40
<PAGE> 42
This report is intended for the shareholders of the Guinness Flight
Investment Funds, Inc. and should not be used as sales literature unless
accompanied or preceded by the Funds current prospectus.
