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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 5
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<PAGE> PAGE 7
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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SIGNATURE ERIC M. BANHAZL
TITLE TREASURER
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<NAME> GUINNESS FLIGHT INVESTMENT FUNDS INC.
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REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
Guinness Flight Investment Funds, Inc.
In planning and performing our audit of the financial statements and
financial highlights of Guinness Flight China & Hong Kong Fund ("China
Fund"), Guinness Flight Global Government Bond Fund ("Global Bond Fund"),
Guinness Flight Asia Blue Chip Fund ("Blue Chip Fund") and Guinness Flight
Asia Small Cap Fund ("Small Cap Fund"), the only series of Guinness Flight
Investment Funds, Inc., for the year ended December 31, 1996 for the China
Fund and the Global Bond Fund and for the period from April 29, 1996
(commencement of investment operations) through December 31, 1996 for the
Blue Chip Fund and the Small Cap Fund, we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and financial highlights and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Guinness Flight Investment Funds, Inc. is responsible for
establishing and maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control structure
policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance with
management's authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to risk that it may
become inadequate because of the changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design
or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial statements and
financial highlights being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving the internal control
structure, including procedures for safeguarding securities, that we consider
to be material weaknesses as defined above as of December 31, 1996.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
Los Angeles, California
February 3, 1997
