GUINNESS FLIGHT INVESTMENT FUNDS, N-30D, 1999-09-09

GUINNESS FLIGHT INVESTMENT FUNDS
N-30D, 1999-09-09

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GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

July 23, 1999

Dear Guinness Flight Shareholder:

We are pleased to present our semi-annual report for the Guinness Flight
Investment Funds for the period ended June 30, 1999. This report marks the fifth
anniversary of two of the funds, the China & Hong Kong Fund and the Global
Government Bond Fund, both of which launched on June 30, 1994.

The first half of 1999 has been a rewarding period for most of the Guinness
Flight Investment Funds. Five of the seven funds have returned, on a total
return basis, gains in excess of 25% per fund for the six months ended June 30,
1999(1). It is a pleasure to be able to report such positive results given the
disappointments experienced during the depths of the Asian crisis.

The worst of the Asian crisis does indeed appear to be behind us as we see
continuing signs of economic recovery in that region. We began to see evidence
of improvement at the end of the third quarter last year, and while we recognize
that the crisis has not completely passed, the foundations underlying these
economies appear to be getting stronger.

We have shifted the portfolios in the Asia funds from a primarily defensive
to a more strategic positioning that we hope will take advantage of this
recovery. We began this shift last October when our Hong Kong investment team
determined that the Asian recovery was underway. In particular, we have
positioned stronger weightings in growing countries such as South Korea,
Thailand and Taiwan, where imports and consumer confidence are on the rise, and
domestic industrial production has responded to higher demand. Our outlook on
China still remains a positive one, although recovery there has been slow.

Since our first semi-annual report at year-end 1994, we have taken the
opportunity in every report to remind investors that, despite our optimism about
Asia, it is a volatile region. Fortunately, this economic reality has worked to
our advantage thus far this year with a dramatic rebound in Asian markets, but
as we have experienced with the Asian crisis, such volatility can also be an
unpleasant negative. The Asian crisis did not dampen our enthusiasm, however,
and we are pleased that so many of you demonstrated your confidence in the

- ----------
(1) Share prices and returns fluctuate so that you may have a gain or loss when
you redeem your shares. Please remember that past performance is not a
guarantee of future results.
<PAGE>
region, our management and our funds. We remain steadfast in our belief that the
changes underway in Asia are generally positive and provide long-term investors
with an excellent opportunity.

The Guinness Flight Wired IndexTM Fund has gotten off to a fine start. For
the first six months of the year, this fund has produced a total return of
25.59%. Even more impressive is its total return of 40.16% from launch on
December 15, 1998 through June 30, 1999. As the fund's portfolio manager, Doug
Blatch, sums up, "The New Economy is alive and well as companies forge new
alliances, merge with others and embark on global expansion."

Two of the Guinness Flight Funds have not performed as well as the other
funds. Higher interest rates and a buoyant U. S. dollar made the first six
months of 1999 difficult for the Global Government Bond Fund. For the six months
ended June 30, this fund has produced a negative total return of 9.13%. The
performance of the New Europe Fund lagged as well with a negative total return
of 4.03% for the same period. This result is largely due to economic slowdown in
the region coupled with weakness of the Euro.

The portfolio managers for each of the Guinness Flight funds have provided
a more complete analysis in the individual letters that accompany the financial
results for the funds within this semi-annual report.

Please visit our award-winning web site, www.gffunds.com, to get the most
recent information about your funds, your investment adviser and the marketplace
in general. One of the services we provide shareholders is an email service
covering a variety of topics relevant to our range of funds. Please visit our
site to sign up for the email services that interest you. We continue to add
features to our web site and will offer account access in coming months.

Thank you for your ongoing support and participation. We appreciate the
confidence you have placed in us, and we look forward to continuing to serve
you.

Sincerely,

/s/James J. Atkinson

James J. Atkinson, Jr.
President

WIRED(R) IS A REGISTERED TRADEMARK, AND GUINNESS FLIGHT WIRED INDEX(TM) FUND A
SERVICE MARK, OF ADVANCE MAGAZINE PUBLISHERS INC., AND ARE USED WITH PERMISSION
OF ADVANCE MAGAZINE PUBLISHERS, INC. ADVANCE MAGAZINE PUBLISHERS, INC. MAKES NO
WARRANTY, EXPRESS OR IMPLIED, INCLUDING NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, TO ANY PERSON OR ENTITY AS TO THE
RESULTS TO BE OBTAINED FROM OR ANY DATA INCLUDED IN, OR ANY OTHER MATTERS
CONCERNING, THE GUINNESS FLIGHT WIRED INDEX(TM) FUND OR THE TRADEMARKS.

2
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

THE BACKDROP

While the declining interest rate environment during the second half of
1998 was originally dismissed by many investors as a sign that Asia was
following Japan into a deflation- ary spiral, the subsequent sharp recovery in
industrial production and consumer confidence has changed many minds. The
revised outlook for Asia's economies is now one of positive growth.

Along with a rise in domestic demand, we are also seeing a recovery in
exports. The primary reason for the previous slump in external demand was the
sharp reduction in intra-regional trade as a result of the shrinking Asian
economies. Now, as regional economies grow, intra-regional trade is also
growing.

The volume of transactions in the residential property market has increased
sharply this year. Throughout Asia, residential property prices have fallen
sharply, and as lower interest rates have also reduced mortgage rates, property
prices are now more affordable than they have been during the past ten years.

In addition to the positive economic news, the business community in Asia
is also beginning to alter its traditional perspective from a preoccupation
entirely with revenue and market share to one that appreciates the methods and
risks involved in achieving those goals. This approach, while still very new,
should create changes for the better and provide a stronger business
infrastructure.

THE FUND

The defensive positioning of the fund at the end of last year hurt its
performance relative to the MSCI index, as Asian markets have been very strong
due to the economic revival. In particular, the underweight position in Korea,
which benefited from strong foreign buying, contributed significantly to the
underperformance. Defensive stocks held in other markets where an economic
recovery has taken place were also negatively contributing factors.

We made significant changes to the portfolio during the first half of this
year. Most notable was the sharp increase in South Korea weightings. New
purchases included Korea Telecom, SK Telecom, Housing & Commercial Bank, Korea
Electric Power and Pohang Iron & Steel.

In Taiwan, we added to the electronics sector through new holdings in
Asustek Computer and Synnex Technology. The weighting in Silicon Precisionware
was also increased. As we expect Taiwanese trade and industrial production to
increase, we have also added transport company Evergreen Marine to the portfolio
and increased the weighting in China Steel.

Offsetting reductions were made in the Singapore and Philippine weightings.
Because the economic downturn was much less pronounced in these countries, the
upside potential in

3
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND (CONTINUED)

a recovery is not as great. The Hong Kong weighting was also cut back during
this period, reflecting our concerns about the potential for increases in U. S.
interest rates. Within Asia, the Hong Kong economy would be the most pressured
by a U. S. rate increase due to the pegged currency.

THE OUTLOOK

We believe the Asian economies are now growing. One sign of this growth is
the increase in import figures over the last several months throughout Asia.
Indeed, the rate of recovery in Thailand and Korea has been spectacular with
both reporting very strong increases. Every country in Asia that provides
monthly industrial production figures continues to report accelerating growth.
Consumer confidence is expected to improve as the economies recover, which
should further stimulate domestic consumption. Investor confidence has already
risen because of expectations of good profits and a sustainable economic
recovery. There are good reasons to consider that the recovery is sustainable
since corporate profits normally surprise on the upside as an economy comes out
of recession.

Against this backdrop, we have been rotating the fund away from the ultra-
defensive stance of last year. We believe the best returns will be made from the
markets and sectors that have struggled during the recession and therefore will
focus more on banking and industrial sectors in the coming months.

- -- Robert Conlon
Hong Kong

4
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS
AS OF 6/30/99

<TABLE>
<CAPTION>
<S> <C>
# of Holdings in the Portfolio: 52 FUND MANAGERS:
Portfolio Turnover: 46.16% Robert Conlon; Agnes Chow
% of Stocks in Top 10: 34.37%

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
Korea Electric Power Corp. 4.38% Banking 21.20%
HSBC Holdings Plc 4.19% Utilities 13.12%
Development Bank of Telecommunications 12.36%
Singapore 3.76% Real Estate 8.35%
Hutchison Whampoa 3.72% Electronics 7.83%
Housing & Commercial Bank 3.37%
Pohang Iron & Steel Ltd. 3.34% TOP 5 COUNTRIES (% OF NET ASSETS)
Sun Hung Kai Properties Ltd. 3.28% Hong Kong 28.65%
Singapore Airlines Ltd. 2.93% South Korea 16.80%
Cheung Kong 2.74% Singapore 14.71%
Taiwan Semiconductor 2.66% Taiwan 14.53%
Malaysia 6.38%
</TABLE>

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
ASIA BLUE CHIP FUND AND THE MSCI ASIA FREE EX-JAPAN INDEX

Guinness Flight MSCI Asia Free
Asia Blue Chip Fund X-Japan Index
------------------- -------------
4/29/96* $10,000 $10,000
6/30/96 9,904 9,706
9/30/96 9,840 9,372
12/31/96 10,384 9,564
3/31/97 9,880 9,247
6/30/97 10,411 9,815
9/30/97 8,697 8,064
12/31/97 6,471 5,591
3/31/98 6,759 6,065
6/30/98 4,951 4,126
9/30/98 4,661 3,753
12/31/98 5,709 5,017
3/31/99 5,950 5,389
6/30/99 7,450 7,179

* Inception date.

Average Annual Total Return

One Year Since Inception
-------- ---------------

50.49% -8.87%

Past performance is not predictive of future performance

5
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS: 93.79% VALUE
- --------------------------------------------------------------------------------
HONG KONG: 28.65%
30,000 Cheung Kong ..................................... $ 266,799
40,000 CLP Holdings Ltd. ............................... 194,364
100,000 Dairy Farm International Holdings ............... 120,000
20,000 Hang Seng Bank .................................. 223,621
91,300 Hong Kong & China Gas ........................... 132,385
7,500 Hong Kong & China Gas Warrants .................. 1,218
35,000 Hong Kong Electric .............................. 112,777
11,200 HSBC Holdings Plc ............................... 408,526
40,000 Hutchison Whampoa ............................... 362,176
45,000 Johnson Electric Holdings ....................... 185,599
40,500 Smartone Telecommunications ..................... 144,071
20,000 Television Broadcasts Ltd. ...................... 93,831
35,000 Sun Hung Kai Properties ......................... 319,160
46,000 Swire Pacific Ltd. .............................. 227,668
----------
Total Hong Kong ................................. 2,792,195
----------
INDIA: 2.07%
20,000 Mahanagar Tele Nigam GDR ........................ 201,500
----------
INDONESIA: 0.01%
3,080 Bank International Indonesia Warrants ........... 26
----------
MALAYSIA: 6.38%
54,000 Malayan Banking ................................. 139,276
80,000 Malaysian Intern Shipping Corp. ................. 125,792
80,000 Petronas Gas Berhad ............................. 162,896
1,000 RHB Sakura Merchant Bankers ..................... 697
60,000 Telecom Malaysia ................................ 192,760
----------
Total Malaysia .................................. 621,421
----------
PHILIPPINES: 5.22%
50,000 Bank of Philippine Islands ...................... 178,712
50,000 Manila Electric ................................. 180,026
127 Metropolitan Bank & Trust ....................... 1,268
5,000 Philippine Long Distance Telephone ADR .......... 148,750
----------
Total Philippines ............................... 508,756
----------

6
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SINGAPORE: 14.71%
30,000 Development Bank of Singapore - Foreign ......... $ 366,886
41,750 Keppel Corp. Ltd. ............................... 142,374
30,000 Singapore Airlines Ltd - Foreign ................ 285,748
13,000 Singapore Press Holdings ........................ 221,660
100,000 Singapore Telecom Ltd. .......................... 171,684
35,000 United Overseas Bank - Foreign .................. 244,885
----------
Total Singapore ................................. 1,433,237
----------
SOUTH KOREA: 16.80%
10,000 Housing & Commercial Bank GDR ................... 328,365
20,679 Korea Electric Power - GDR ...................... 426,504
3,907 Korea Telecom - GDR ............................. 143,582
10,000 Pohang Iron & Steel - GDR ....................... 325,000
3,933 Samsung Electronics GDR ......................... 211,084
13,000 SK Telecom - GDR ................................ 203,125
----------
Total South Korea ............................... 1,637,660
----------
TAIWAN: 14.53%
11,000 Acer - GDR ...................................... 143,550
14,000 Asustek Computer - GDR .......................... 157,795
9,326 China Steel - GDR ............................... 144,321
6,053 Evergreen Marine - GDR .......................... 77,408
19,360 Fubon Insurance Co. GDR ......................... 242,000
7,968 President Enterprise - GDR ...................... 71,712
13,600 Siliconware Precision GDR ....................... 186,660
6,400 Synnex Tech. - GDR .............................. 133,965
7,500 Taiwan Semiconductor ADR ........................ 258,750
----------
Total Taiwan .................................... 1,416,161
----------
THAILAND: 5.42%
96,500 Electricity Generation .......................... 184,595
10,000 PTT Exploration & Production - Foreign .......... 76,516
50,000 Thai Airways .................................... 94,288
56,000 Thai Farmers Bank - Foreign ..................... 173,220
----------
Total Thailand .................................. 528,619
----------
TOTAL COMMON STOCKS: 93.79%
(Identified Cost $7,309,142) .................. 9,139,575
----------

7
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
PAR VALUE CORPORATE BONDS: 2.44% VALUE
- --------------------------------------------------------------------------------
$100,000 Nan Ya Plastics
1.75% due 07/19/01 ........................... $ 120,906
100,000 Formosa Chemical & Fiber
1.75% due 07/19/01 ........................... 116,918
----------
TOTAL CORPORATE BONDS
(Identified Cost of $253,014): 2.44% ........... 237,824
----------
TOTAL INVESTMENTS IN SECURITIES: 96.23%
(Identified Cost $7,562,156+) .................. 9,377,399
OTHER ASSETS LESS LIABILITIES: 3.77% ............ 367,717
----------
NET ASSETS: 100.00% ............................. $9,745,116
==========
+ Cost for federal income tax purposes is the same.

Net unrealized appreciation consists of:
Gross unrealized appreciation ............................ $2,039,206
Gross unrealized depreciation ............................ (223,963)
----------
$1,815,243
==========

See accompanying notes to financial statements.

8
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS BY INDUSTRY
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
% OF NET
INDUSTRY ASSETS
- --------------------------------------------------------------------------------

Airline ...................................................... 3.90%
Banking ...................................................... 21.20
Chemical ..................................................... 2.44
Computer Equipment ........................................... 1.62
Diversified Operations ....................................... 5.71
Electronics .................................................. 7.83
Food & Beverage .............................................. 0.74
Insurance .................................................... 2.48
Manufacturing ................................................ 6.28
Media ........................................................ 3.24
Micro Computers .............................................. 2.85
Oil/Petroleum Refining ....................................... 0.79
Real Estate .................................................. 8.35
Telecommunications ........................................... 12.36
Transportation ............................................... 2.09
Utilities .................................................... 13.12
Wholesale .................................................... 1.23
------
TOTAL INVESTMENTS IN SECURITIES .............................. 96.23
OTHER ASSETS LESS LIABILITIES ................................ 3.77
------
NET ASSETS ................................................... 100.00%
======

See accompanying notes to financial statements.

9
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

LIABILITIES
Accrued expenses ............................................. 26,913
------------
Total liabilities ................................... 26,913
------------
NET ASSETS ................................................... $ 9,745,116
============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE

($9,745,116/1,054,758 shares outstanding; unlimited
number of shares authorized without par value) ............. $ 9.24
============

SOURCE OF NET ASSETS

Paid-in capital ............................................ $ 11,118,688
Undistributed net investment income ........................ 37,169
Undistributed net realized loss on investments ............. (3,225,995)
Net unrealized appreciation on:
Investments .............................................. 1,815,243
Foreign Currency ......................................... 11
------------
NET ASSETS ................................................... $ 9,745,116
============

See accompanying notes to financial statements.

10
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
For the Six Months
Ended
June 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $5,266) .......... $ 80,583
Interest ..................................................... 13,286
-----------
Total investment income ................................ 93,869
-----------
EXPENSES
Advisory fees (Note 3) ....................................... 41,739
Administration fees (Note 3) ................................. 10,434
Custodian .................................................... 14,364
Accounting ................................................... 25,787
Transfer agent fees .......................................... 19,101
Audit fees ................................................... 8,215
Legal fees ................................................... 997
Insurance .................................................... 393
Trustees' fees ............................................... 2,720
Registration fees ............................................ 7,156
Reports to shareholders ...................................... 2,308
Deferred organization costs amortization ..................... 867
Miscellaneous ................................................ 2,374
-----------
Total expenses ............................................. 136,455
Interest on loans .......................................... 1,364
Commitment fee on credit line (Note 5) ..................... 637
Less: Expenses reimbursed (Note 3) ......................... (55,009)
-----------
Net expenses ............................................... 83,447
-----------
NET INVESTMENT INCOME .................................. 10,422
-----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments ........................... 657,420
Net realized gain from foreign currency ...................... 4,943
Net unrealized appreciation on:

Investments ................................................ 1,500,757
Foreign currency ........................................... 6
-----------
Net Realized and Unrealized Gain on Investments ............ 2,163,126
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 2,173,548
===========

See accompanying notes to financial statements.

11
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
For the Six
Months Ended For the Year
June 30, 1999 Ended
(Unaudited) December 31, 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ................................ $ 10,422 $ 65,896
Net realized gain (loss) from investments ............ 657,420 (3,308,917)
Net realized gain (loss) on foreign currency ......... 4,943 (19,626)
Net unrealized appreciation (depreciation) on:
Investments ........................................ 1,500,757 1,956,562
Foreign currency ................................... 6 (179)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 2,173,548 (1,306,264)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................... -- (49,669)
From net realized gains .............................. -- --
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ -- (49,669)
----------- ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................ 5,543,340 10,665,544
Net asset value of shares issued on
reinvestment of distributions ...................... -- 41,743
Cost of shares redeemed .............................. (5,821,200) (8,419,362)
----------- ------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS ....................................... (277,860) 2,287,925
----------- ------------
TOTAL INCREASE IN NET ASSETS ................... 1,895,688 931,992

NET ASSETS
Beginning of period .................................. 7,849,428 6,917,436
----------- ------------
End of period (including undistributed net
investment income of $37,169 and $26,747,
respectively) ...................................... $ 9,745,116 $ 7,849,428
=========== ============

CHANGES IN SHARES
Shares sold .......................................... 703,701 1,543,963
Shares reinvested from distributions ................. -- 6,798
Shares redeemed ...................................... (757,141) (1,298,746)
----------- ------------
Net Increase (Decrease) ........................ (53,440) 252,015
=========== ============
</TABLE>

See accompanying notes to financial statements.

12
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
April 29,
For the Six For the Year For the Year 1996*
Months Ended Ended Ended Through
June 30, 1999 December 31, December 31, December 31,
(Unaudited) 1998 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 7.08 $ 8.08 $ 12.98 $12.50
------ ------- ------- ------
Income from investment operations:
Net investment income .............. 0.01 0.05 0.02 --
Net realized and unrealized
gain (loss) on investments ........ 2.15 (1.01) (4.91) 0.48
------ ------- ------- ------
Total from investment operations ....... 2.16 (0.96) (4.89) 0.48
------ ------- ------- ------
Less distributions:
From net investment income ......... -- (0.04) (0.01) --
From net realized gains ............ -- -- -- --
------ ------- ------- ------
Total distributions .................... -- (0.04) (0.01) --
------ ------- ------- ------
Net asset value, end of period ......... $ 9.24 $ 7.08 $ 8.08 $12.98
====== ======= ======= ======

Total return ........................... 30.51%++ (11.78)% (37.68)% 3.84%++

Ratios/supplemental data:
Net assets, end of period (in thousands) $9,745 $ 7,849 $ 6,917 $3,687
Ratio of expenses to average net assets:
Before expense reimbursement ....... 3.31%+ 3.85% 4.41% 9.14 %+
After expense reimbursement ........ 1.98%+ 1.98% 1.98% 1.98 %+
Ratio of net investment income to
average net assets:
Before expense reimbursement ......... (1.07)%+ (1.03)% (2.16)% (7.10)%+
After expense reimbursement .......... 0.25 %+ 0.91% 0.28% 0.06 %+
Portfolio turnover rate ................ 46.16 % 77.62% 34.69% 10.97 %
BANK LOANS
Amount outstanding at end of
period (in thousands) ................. $ -- $ -- $ -- n/a
Average amount of bank loans
outstanding during the period
(monthly average) (in thousands) ..... $ -- $ -- $ 121 n/a
Average number of shares outstanding
during the period (monthly average)
(in thousands) ........................ 1,086 -- 479 n/a
Average amount of debt per share
during the period ..................... $ -- $ -- $ 0.25 n/a
</TABLE>

* Commencement of operations.
+ Annualized.
++ Not Annualized.

See accompanying notes to financial statements.

13
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

THE BACKDROP

From September 1998 through to March 1999, Asian stock markets staged sharp
recoveries in response to positive news that clearly indicated economic recovery
in a number of countries in Asia. Industrial production, export and import
figures from Singapore, Thailand, Korea, Taiwan and Malaysia were all stronger
than expected.

Unfortunately, the share prices of small companies were laggards as
liquidity flowed primarily into large companies, creating a valuation gap
between large and small companies. However, investor interest in small companies
increased during the second quarter, as investors sought beneficiaries of the
improving domestic demand. A number of small companies are in these improving
sectors.

THE FUND

The underperformance against the HSBC JC Smaller Asian Companies index was
mainly due to the substantial underweight positions in Taiwan and Korea. Since
the portfolio was consistently pressured by heavy shareholder redemption
throughout 1998 and into the first quarter of 1999, a significant number of
sales had to be made. Cash was not available to make significant changes by
adding shares in Taiwan and Korea. During the last three months, however, the
redemption pressure has abated and we have begun to increase weightings in these
two countries.

Transactions during the first half concentrated on rotating the fund into
consumer and industrial cyclical stocks to make the portfolio more sensitive to
a domestic economic recovery. We added Giordano, the low end clothing retailer,
to the portfolio following a pick up in consumption across in Asia and increased
the weighting in Esprit Holdings, a mid-range retailer. Additionally, as intra-
Asian exports have rebounded along with the continued export growth to the U.S.,
IDT International and ASM Pacific in Hong Kong, and Sunplus Technology,
Microstar and Systex in Taiwan were added. As exporters of capital/consumer
electronic goods, these companies should benefit most from the export recovery.
Among South Korean stocks, we have added Binggrae, Seoul City Gas, Poongsan,
Shinmoorim Paper, Halla Climate Control, Korea Chemical and Woongjin Publishing
to the portfolio, all of which are geared toward a recovery in domestic demand.

Datacraft and Venture in Singapore were trimmed due to their rich
valuations. In May, we lessened the weightings in Dah Sing Financial and Wing
Hang Bank in anticipation of a U. S. interest rate increase. We perceived Hong
Kong to be the most vulnerable to a rate increase due to the pegged currency. In
the short term, this has not worked as the Hong Kong market, led by the banking
sector, has continued to advance. We also reduced such defensive plays as Four
Seas Mercantile and Vitasoy.

14
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND (CONTINUED)

THE OUTLOOK

Further evidence that the region is recovering should bode well for small
companies' share prices going forward. We continue to view any significant
market correction as an opportunity to switch shares within Hong Kong to
companies that are more exposed to the underlying economy which we believe is
stabilizing and will grow in the second half of this year.

The Fund will look to further increase the Taiwanese weighting given the
fundamental improvement in the outlook for exports, earnings and GDP growth, and
the Central Bank's loose monetary policy.

We believe that the Korean economy will also continue to be strong. This
market is undergoing an era of positive corporate cash flow and deleveraging.
Returns on capital should improve and hence, corporate earnings should grow
significantly.

- -- Agnes Chow
Hong Kong

15
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS
AS OF 6/30/99

# of Holdings in the Portfolio: 65 FUND MANAGERS:
Portfolio Turnover: 28.71% Robert Conlon; Agnes Chow
% of Stocks in Top 10: 31.27%

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
HKR International 4.21% Banking 12.01%
Dah Sing Financial 3.43% Consumer Related 10.42%
Glorious Sun Enterprises Ltd. 3.33% Electronics 9.54%
Datacraft Asia Ltd. 3.19% Retail 8.79%
Esprit Holdings Ltd. 3.13% Manufacturing 8.24%
Venture Manufacturing 3.04%
Natsteel Electronics Ltd. 3.03% TOP 5 COUNTRIES (% OF NET ASSETS)
Wing Hang Bank 2.71% Hong Kong 43.04%
Flextech Holdings 2.65% Singapore 16.15%
Equitable Banking Corp. 2.55% South Korea 10.88%
Thailand 9.45%
Malaysia 6.31%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
ASIA SMALL CAP FUND AND THE HSBC JAMES CAPEL SOUTHEAST ASIA SMALLER
COMPANIES INDEX (HSBC JAMES CAPEL SASC INDEX)

GUINNESS FLIGHT HSBC JAMES CAPEL
ASIA SMALL CAP FUND SASC INDEX
------------------- ----------
4/29/96* $10,000 $10,000
6/30/96 10,461 9,530
9/30/96 10,397 9,467
12/31/96 11,308 9,720
3/31/97 12,046 10,336
6/30/97 13,406 9,999
9/30/97 12,504 7,820
12/31/97 7,829 4,464
3/31/98 7,684 5,116
6/30/98 5,005 3,280
9/30/98 4,530 2,921
12/31/98 5,415 3,822
3/31/99 4,916 3,765
6/30/99 6,911 5,888

* Inception date.

Average Annual Total Return

One Year Since Inception
-------- ---------------

38.10% -11.00%

Past performance is not predictive of future performance

16
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS: 99.23% VALUE
- --------------------------------------------------------------------------------
CHINA: 4.62%
1,500,000 Beijing Datang Power - H ................... $ 483,332
466,000 Guandong Kelon Elec Holdings - H ........... 543,561
930,000 Zhejiang Expressway - H .................... 184,594
730,000 Zhejiang Southeast Electric - B ............ 322,660
1,200,000 Zhenhai Refining & Chemical Co. - H ........ 363,465
----------
Total China ................................ 1,897,612
----------
HONG KONG: 43.04%
500,000 ASM Pacific Technology ..................... 335,110
2,358,000 Cafe De Coral Holdings Ltd. ................ 1,033,324
4,100,000 China Pharmaceutical ....................... 829,655
369,214 Dah Sing Financial Holdings ................ 1,406,208
1,900,840 Esprit Holdings Ltd ........................ 1,286,230
1,000,000 Four Seas Mercantile Holdings .............. 386,665
1,316,000 Giordano International Ltd ................. 932,894
4,000,000 Glorious Sun Enterprises Ltd ............... 1,366,217
2,000,000 HKR International Ltd. ..................... 1,727,104
1,700,000 Hung Hing Print Group ...................... 701,153
2,210,000 IDT International .......................... 455,749
740,000 JCG Holdings Ltd ........................... 352,896
240,000 LI & Fung Ltd .............................. 575,358
3,500,000 Moulin International Holdings .............. 374,421
572,000 NG Fung Hong Ltd ........................... 475,521
3,812,000 Quality Healthcare Asia Ltd ................ 741,897
650,000 Shui on Construction ....................... 1,043,029
2,240,000 Shun Tak Holdings Ltd ...................... 599,073
4,508,000 Texwinca Holdings Ltd ...................... 633,322
449,000 Varitronix International Ltd ............... 934,615
1,000,500 Vitasoy International Holdings Ltd ......... 351,397
346,000 Wing Hang Bank ............................. 1,112,655
200,000 Wongs International Warrants ............... 6,136
----------
Total Hong Kong ............................ 17,660,629
----------
MALAYSIA: 6.31%
180,000 Gamuda Berhad .............................. 293,213
1,340,000 Hap Seng Consolidated Berhad ............... 715,474

17
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PHILIPPINES: 3.86%
7,400,000 Cosmos Bottling Corp ....................... 534,823
402,500 Equitable Banking Corp ..................... 1,047,240
----------
Total Philippines .......................... 1,582,063
----------
SINGAPORE: 16.15%
585,000 Avimo Group Ltd ............................ 952,758
138,000 Clipsal Industries Ltd ..................... 213,900
300,000 Datacraft Asia Ltd. ........................ 1,308,000
770,000 Flextech Holdings Ltd ...................... 1,086,547
300,000 GP Batteries ............................... 575,024
284,000 Natsteel Electronics Ltd ................... 1,244,003
162,000 Venture Manufacturing ...................... 1,247,765
----------
Total Singapore ............................ 6,627,997
----------
SOUTH KOREA: 10.88%
23,000 Binggrae Co ................................ 512,878
27,930 Dongwon Securities ......................... 514,182
10,500 Halla Climate Control ...................... 453,760
29,400 Hana Bank .................................. 431,979
4,200 Korea Chemical Co .......................... 377,528
9,300 LG Information & Communication ............. 688,056
35,000 Poongsan ................................... 372,083
12,000 Seoul City Gas Co .......................... 383,751
36,000 Shinmoorim Paper ........................... 354,710
12,350 Woong Jin Publishing ....................... 373,596
----------
Total South Korea .......................... 4,462,523
----------
TAIWAN: 4.92%
49,000 Ambit Microsystems Corp .................... 312,508
373,000 CTCI Corp .................................. 442,288
184,000 D-Link Corp ................................ 441,486

18
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

+ Cost for federal income tax purposes is the same.

Net unrealized appreciation consists of:
Gross unrealized appreciation $10,030,098
Gross unrealized depreciation (3,977,421)
-----------
$ 6,052,677
===========

See accompaying notes to financial statements.

19
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
% OF
NET ASSETS
- --------------------------------------------------------------------------------
Agriculture ................................................. 1.86%
Banking ..................................................... 12.01
Chemical .................................................... 2.02
Computer Equipment .......................................... 0.76
Computers ................................................... 0.91
Construction ................................................ 4.33
Consumer Related ............................................ 10.42
Electronics ................................................. 9.54
Finance ..................................................... 3.70
Food & Beverage ............................................. 7.13
Manufacturing ............................................... 8.24
Materials ................................................... 1.71
Medical Products ............................................ 1.81
Oil/Petroleum Refining ..................................... 0.89
Paper ....................................................... 0.86
Pharmaceuticals ............................................. 2.02
Publishing .................................................. 0.91
Real Estate ................................................. 5.52
Retail ...................................................... 8.79
Technology .................................................. 1.08
Telecommunications .......................................... 4.86
Transportation .............................................. 1.91
Utilities ................................................... 4.51
Wholesale ................................................... 3.44
------
TOTAL INVESTMENTS IN SECURITIES ............................. 99.23
OTHER ASSETS LESS LIABILITIES ............................... 0.77
------
NET ASSETS .................................................. 100.00%
======

See accompanying notes to financial statements.

20
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

LIABILITIES

Payables:
Securities purchased ........................................ 335,114
Unrealized loss on forward foreign currency contracts
(Note 6) .................................................. 496
Due to Advisor (Note 3) ....................................... 621
Accrued expenses .............................................. 85,553
-------------
Total liabilities ...................................... 421,784
-------------
NET ASSETS .................................................... $ 41,033,365
=============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($ 41,033,365/4,778,711 shares outstanding; unlimited number
of shares authorized without par value) ..................... $ 8.59
=============

SOURCE OF NET ASSETS
Paid- in capital ........................................... $ 126,202,979
Undistributed net investment income ........................ 99,750
Undistributed net realized loss on investments ............. (91,314,256)
Net unrealized appreciation (depreciation) on:
Investments .............................................. 6,052,677
Foreign currency ......................................... (7,785)
-------------
NET ASSETS .................................................... $ 41,033,365
=============

See accompanying notes to financial statements.

21
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED
JUNE 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $19,206) .......... $ 458,652
Interest ...................................................... 2,948
------------
Total investment income ................................ 461,600
------------

EXPENSES
Advisory fees (Note 3) ........................................ 182,075
Administration fees (Note 3) .................................. 45,504
Custodian ..................................................... 54,697
Accounting .................................................... 25,787
Transfer agent fees ........................................... 83,276
Audit fees .................................................... 9,172
Legal fees .................................................... 7,307
Insurance ..................................................... 2,880
Trustees' fees ................................................ 5,032
Registration fees ............................................. 7,439
Reports to shareholders ....................................... 17,551
Deferred organization costs amortization ...................... 867
Miscellaneous ................................................. 2,480
------------
Total expenses ......................................... 444,067
Interest expense ....................................... 10,959
Commitment fee on credit line (Note 5) ................. 4,598
Less: Expenses reimbursed (Note 3) ..................... (97,774)
------------
Net expenses ........................................... 361,850
------------
NET INVESTMENT INCOME .................................. 99,750
------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from investments ............................ (9,586,540)
Net realized loss on foreign currency ......................... (29,194)
Net unrealized appreciation (depreciation) on:
Investments ............................................ 16,528,300
Foreign currency ....................................... (6,508)
------------
Net realized and unrealized gain on investments ........ 6,906,058
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 7,005,808
============

See accompanying notes to financial statements.

22
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 1999 ENDED
(UNAUDITED) DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income .............................. $ 99,750 $ 466,396
Net realized loss from investments ................. (9,586,540) (61,850,706)
Net realized loss on foreign currency .............. (29,194) (811,432)
Net unrealized appreciation (depreciation) on:

Investments ................................. 16,528,300 32,795,940

Foreign currency ............................ (6,508) 543,994
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS

RESULTING FROM OPERATIONS ................... 7,005,808 (28,675,808)
------------ -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 5,626,856 43,055,704
Cost of shares redeemed ............................ (21,016,175) (73,441,121)
------------ -------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS ....... (15,389,319) (30,385,417)
------------ -------------
TOTAL DECREASE IN NET ASSETS ................ (8,383,511) (59,061,225)

NET ASSETS
Beginning of period ................................ 49,416,876 108,478,101
------------ -------------
End of period [including undistributed net
investment income of $99,750 and $0, respectively] $ 41,033,365 $ 49,416,876
============ =============

CHANGES IN SHARES
Shares sold ........................................ 773,787 6,060,579
Shares redeemed .................................... (3,343,234) (9,867,240)
------------ -------------
Net Decrease ................................ (2,569,447) (3,806,661)
============ =============
</TABLE>

See accompanying notes to financial statements.

23
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

APRIL 29,
FOR THE SIX FOR THE YEAR FOR THE YEAR 1996*
MONTHS ENDED ENDED ENDED THROUGH
JUNE 30, 1999 DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997 1996
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 6.73 $ 9.73 $ 14.10 $ 12.50
------- -------- -------- -------
Income from investment operations:
Net investment income ................................ 0.02 0.06 0.07 0.02
Net realized and unrealized gain (loss) on investments 1.84 (3.06) (4.38) 1.61
------- -------- -------- -------
Total from investment operations ....................... 1.86 (3.00) (4.31) 1.63
------- -------- -------- -------
Less Distributions:
From net investment income ........................... -- -- -- (0.02)
From net realized gains .............................. -- -- (0.01) (0.01)
Return of capital .................................... -- -- (0.05) --
------- -------- -------- -------
Total Distributions .................................... -- -- (0.06) (0.03)
------- -------- -------- -------
Net asset value, end of period ......................... $ 8.59 $ 6.73 $ 9.73 $ 14.10
======= ======== ======== =======

Total return ........................................... 27.64%++ (30.83)% (30.77)% 13.08 %++

Ratios/supplemental data:
Net assets, end of period (in thousands) ............... $41,033 $ 49,417 $108,478 $50,868

Ratio of expenses to average net assets:
Before expense reimbursement/recoupment 2.53%+ 2.31% 1.76% 3.09%+
After expense reimbursement/recoupment 1.98%+ 1.98% 1.80% 1.98%+

Ratio of net investment income to average net assets:
Before expense reimbursement/recoupment 0.01%+ 0.52% 0.53% (0.76)%+
After expense reimbursement/recoupment 0.55%+ 0.85% 0.49% 0.36%+

Portfolio turnover rate 28.71% 48.95% 52.33% 21.91%

BANK LOANS
Amount outstanding at end of period (in thousands) $ -- $ 810 $ -- n/a
Average amount of bank loans oustanding during the period
(monthly average) (in thousands) $ 654 $ 67 $ -- n/a
Average number of shares outstanding during the period
(monthly average) (in thousands) 5,519 6,566 -- n/a
Average amount of debt per share during the period $ 0.12 $ 0.01 $ -- n/a
</TABLE>

* Commencement of operations.
+ Annualized.
++ Not Annualized.

See accompanying notes to financial statements.

24
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

THE BACKDROP

The Hong Kong stock market rallied strongly in recent months as optimism
has grown that a recovery in Hong Kong's economy is imminent. This optimism has
been fueled by rising liquidity, falling interest rates on deposits and rising
international portfolio flows. Lower interest rates and extremely competitive
pricing in the mortgage market have drawn new homebuyers back to the market, and
residential prices have risen some 17% off the bottom.

Banks, too, are enjoying interest rate spreads at historically high levels
and are managing to repair the damage caused to their profitability during 1998.
Their capital base remains as strong as ever, and the pace of growth in non-
performing loans has slowed with mortgage delinquencies stabilizing.

Although aggregate level sales growth is still sluggish in the mass retail
sector, a look behind the numbers shows that volumes are increasing. Retailers
have reestablished their profit margins following significant cuts in rents and
wages. High-end retailers have yet to see a similar recovery, but their moves to
increase floor space, cut costs, and add new franchises and brands suggest that
they are also positioning themselves for recovery.

THE FUND

In the first half of 1999, the fund outperformed the Hang Seng Index by a
slight margin. We attribute this performance to strong positions in domestic
banks and property companies as well as exposure to the retail and consumer
sectors.

Despite the fund's relative outperformance, total fund return was somewhat
limited by the defensive asset allocation shift in light of an expected increase
in U. S. interest rates in May. We believed that the Hong Kong market, more than
any other in Asia, would correct on this news and as a consequence, we reduced
some of the more aggressive positions. The correction did not happen; in fact,
the market rose 13% in June.

The position in HSBC was cut back in April following its outperformance
during the first quarter, and the proceeds were redistributed into domestic
banks, China Telecom and Shanghai Industrial. The weightings in Citic Pacific
and Esprit were also increased. The tactical move ahead of interest rate rises
involved cutting the most sensitive of the domestic banks namely, Dah Sing, Dao
Heng and Wing Hang banks and the higher beta property stocks such as New World
Development and Sun Hung Kai Properties.

THE OUTLOOK

We expect economic data in Hong Kong to be much more positive in the second
half of this year and have reversed the previous defensive position in the
portfolio to focus back on

25
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND (CONTINUED)

the domestic recovery story. The banking, real estate, and retail sectors should
all experience strong returns, and recovery in other Asian economies, including
that of Japan, will boost domestic demand and trade. In addition, China's
efforts to boost consumption should also help improve Hong Kong's trade numbers.

A longer-term emerging theme is Hong Kong's role as a regional technology
center. Interest has suddenly grown in the Internet and data transmission
businesses. Valuations have run far ahead of themselves in the initial burst of
enthusiasm, but it is clear that the likes of Wharf, Smartone, Hong Kong Telecom
and Hutchison Whampoa will likely make substantial investments in these areas.
In a densely populated area like Hong Kong, they stand a good chance of seeing a
relatively early return.

- -- Edmund Harriss
Hong Kong

26
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS
AS OF 6/30/99

# of Holdings in the Portfolio: 39 FUND MANAGERS:
Portfolio Turnover: 16.90% Edmund Harriss; Adrian Fu
% of Stocks in Top 10: 64.88%

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
HSBC Holding PLC 14.54% Real Estate 18.90%
Hutchison Whampoa 9.53% Foreign Banks 14.55%
China Telecom 8.72% Holding Offices 12.94%
Cheung Kong 7.00% Commercial Banks 12.80%
Hang Seng Bank 6.61% Communication Services 10.39%
Sun Hung Kai Properties Ltd. 4.56%
Hong Kong Electric 3.94% TOP COUNTRIES (% OF NET ASSETS)
CLP Holdings Ltd. 3.77% Hong Kong 98.80%
Henderson Land Development 3.11% China 1.28%
Hong Kong & China Gas 3.10%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
CHINA & HONG KONG FUND AND HANG SENG INDEX

GUINNESS FLIGHT CHINA
& HONG KONG FUND HANG SENG INDEX
--------------------- ---------------
6/30/94* $10,000 $10,000
12/31/94 9,226 9,352
6/30/95 10,040 10,512
12/31/95 11,112 11,501
6/30/96 12,254 12,582
12/31/96 14,933 15,358
6/30/97 17,080 17,351
12/31/97 11,896 12,243
6/30/98 8,634 9,754
12/31/98 10,079 11,455
6/30/99 13,111 15,450

* Inception date.

Average Annual Total Return

One Year Five Years Since Inception
-------- ---------- ---------------

51.86% 5.57% 5.57%

Past performance is not predictive of future performance

27
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

COAL MINING: 0.30%
1,256,000 Yanzhou Coal Mining Co. - H .......................$ 449,228
------------
COMMERCIAL BANKS: 12.80%
807,050 Dah Sing Financial Holding ........................ 3,073,773
837,500 Dao Heng Bank Group Ltd. .......................... 3,756,452
872,000 Hang Seng Bank .................................... 9,749,893
711,000 Wing Hang Bank Ltd. ............................... 2,286,409
------------
Total Commercial Banks ............................ 18,866,527
------------
COMMUNICATION SERVICES: 10.39%
4,631,000 China Telecom ..................................... 12,862,811
695,500 Smartone Telecommuncations ........................ 2,474,116
------------
Total Communication Services ...................... 15,336,927
------------
ELECTRIC SERVICES: 7.94%
1,143,500 CLP Holdings Ltd. ................................. 5,556,373
1,802,000 Hong Kong Electric ................................ 5,806,422
828,000 Huaneng Power - H ................................. 346,839
------------
Total Electric Services ........................... 11,709,634
------------
ELECTRICAL COMPONENTS AND ACCESSORIES: 0.16%
1,093,000 Gold Peak Industrial .............................. 233,853
------------
ELECTRICAL INDUSTRIAL APPARATUS: 2.94%
1,052,000 Johnson Electric Holdings ......................... 4,338,899
------------
FAMILY CLOTHING STORES: 1.25%
2,727,071 Esprit Holdings Ltd. .............................. 1,845,311
------------
FOOD & KINDRED PRODUCTS: 0.23%
400,000 Ng Fung Hong Ltd. ................................. 332,532
------------
FOREIGN BANKS: 14.55%
588,308 HSBC Holding Plc .................................. 21,458,780
------------
GAS PRODUCTION & DISTRIBUTION: 3.13%
3,153,872 Hong Kong & China Gas ............................. 4,573,098
266,308 Hong Kong & China Gas Warrants .................... 43,248
------------
Total Gas Production & Distribution ............... 4,616,346
------------

28
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE

GROCERIES AND RELATED PRODUCTS: 0.26%
1,002,000 Four Seas Mercantile Holdings .....................$ 387,439
------------
GROCERY STORES: 1.56%
1,921,000 Dairy Farm International Holdings ................. 2,305,200
------------
HEAVY CONSTRUCTION: 2.20%
935,000 Cheung Kong Infrastructure ........................ 1,934,196
699,733 New World Infrastructure .......................... 1,316,737
------------
Total Heavy Construction .......................... 3,250,933
------------
HOLDING OFFICES: 12.94%
865,000 Citic Pacific Ltd. ................................ 2,759,340
1,553,000 Hutchison Whampoa ................................. 14,061,499
956,000 Shanghai Industrial Holding Ltd ................... 2,279,520
------------
Total Holding Offices ............................. 19,100,359
------------
HOUSEHOLD APPLIANCES: 0.74%
934,000 Guangdong Kelon Electric .......................... 1,089,455
------------
MISCELLANEOUS MANUFACTURER: 1.47%
1,045,000 Varitronix International Ltd. ..................... 2,175,217
------------
MISCELLANEOUS TRANSPORTATION EQUIPMENT: 0.81%
1,437,000 Cosco Pacific Ltd. ................................ 1,194,621
------------
RADIO AND TELEVISION BROADCASTING: 0.80%
253,000 T. V. Broadcasting Ltd. ........................... 1,186,959
------------
REAL ESTATE: 18.90%
1,162,000 Cheung Kong ....................................... 10,334,014
2,414,000 Hang Lung Development ............................. 2,986,911
798,000 Henderson Land Development ........................ 4,587,241
949,600 HKR International Ltd. ............................ 820,029
811,000 New World Development ............................. 2,430,288
738,000 Sun Hung Kai Properties Ltd. ...................... 6,729,715
------------
Total Real Estate ................................. 27,888,198
------------
REAL ESTATE OPERATORS AND LESSORS: 3.66%
741,000 Hysan Development Company ......................... 1,117,424
520,000 Swire Pacific Ltd. A .............................. 2,573,644

29
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

(Identified Cost $114,006,843+): 100.08% 147,671,405
LIABILITIES LESS OTHER ASSETS: (0.08)% (117,741)
------------
NET ASSETS: 100.00% $147,553,663
============

+ Cost for federal income tax purposes is the same.

Net unrealized appreciation consists of:
Gross unrealized appreciation $ 35,414,201
Gross unrealized depreciation (1,749,639)
------------
$ 33,664,562
============

See accompanying notes to financial statements.

30
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF JUNE 30, 1999 (UNAUDITED)

ASSETS
Investments in securities, at value (cost $114,006,843) ..... $ 147,671,405

Receivables:
Securities sold ........................................... 1,113,619
Fund shares sold .......................................... 59,638
Dividends and interest .................................... 177,233
Unrealized gain on forward foreign currency contracts
(Note 6) ................................................ 159
Prepaid expenses .......................................... 54,320
-------------
Total assets .............................................. 149,076,375
-------------

LIABILITIES
Payables:
Securities purchased ...................................... 348,510
Fund shares redeemed ...................................... 22,545
Bank overdraft ............................................ 856,227
Due to Advisor (Note 3) ................................... 129,109
Other accrued expenses .................................... 166,321
Total liabilities ......................................... 1,522,712
-------------
NET ASSETS .................................................. $ 147,553,663
=============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($ 147,553,663/10,530,327 SHARES OUTSTANDING;
UNLIMITED NUMBER OF SHARES AUTHORIZED WITHOUT
PAR VALUE) ................................................ $ 14.01

SOURCE OF NET ASSETS
Paid- in capital .......................................... $ 198,044,798
Undistributed net investment income ....................... 1,146,185
Undistributed net realized loss on investments ............ (85,301,882)
Net unrealized appreciation on investments ................ 33,664,562
-------------
NET ASSETS .................................................. $ 147,553,663
=============

See accompanying notes to financial statements.

31
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS
ENDED
JUNE 30, 1999
------------------

INVESTMENT INCOME
INCOME
Dividends .................................................... $ 2,443,112
Interest ..................................................... 11,151
------------
Total investment income ............................... 2,454,263
------------

EXPENSES
Advisory fees (Note 3) ....................................... 698,815
Administration fees (Note 3) ................................. 174,704
Custodian .................................................... 87,302
Accounting ................................................... 25,787
Transfer agent fees .......................................... 211,679
Audit fees ................................................... 14,706
Legal fees ................................................... 21,781
Insurance fees ............................................... 8,904
Trustees' fees ............................................... 10,766
Registration fees ............................................ 8,243
Reports to shareholders ...................................... 42,944
Deferred organization costs amortization ..................... 8,753
Miscellaneous ................................................ 4,684
------------
Total expenses ........................................ 1,319,068
Interest on loans ..................................... 27,060
Commitment fee on credit line (Note 5) ................ 13,647
------------
Net expenses .......................................... 1,359,775
------------
NET INVESTMENT INCOME ................................. 1,094,488
------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investments ........................... 1,741,219
Net realized loss from foreign currency ...................... (9,074)
Net unrealized appreciation on:
Investments ........................................... 34,807,296
Foreign currency ...................................... 580
------------
Net realized and unrealized gain on investments ....... 36,540,021
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .. $ 37,634,509
============

See accompanying notes to financial statements.

32
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 1999 ENDED
(UNAUDITED) DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................ $ 1,094,488 $ 3,171,317
Net realized gain (loss) from investments ........ 1,741,219 (80,217,023)
Net realized loss from futures contracts ......... -- (1,315,976)
Net realized loss on foreign currency ............ (9,074) (40,096)
Net unrealized appreciation (depreciation) on:
Investments ............................... 34,807,296 33,981,087
Foreign currency .......................... 580 (630)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............... 37,634,509 (44,421,321)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ....................... -- (3,140,006)
From net realized gains .......................... -- --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....... -- (3,140,006)
------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ........................ 30,819,305 280,201,719
Net asset value of shares issued on
reinvestment of distributions .................... -- 2,903,219
Cost of shares redeemed .......................... (67,709,969) (330,541,963)
------------- -------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS ..... (36,890,664) (47,437,025)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ... 743,845 (94,998,352)

NET ASSETS
Beginning of period .............................. 146,809,818 241,808,170
------------- -------------
End of period (including undistributed net
investment income of $1,146,185 and
$51,696, respectively) ......................... $ 147,553,663 $ 146,809,818
============= =============

CHANGES IN SHARES
Shares sold ...................................... 2,700,922 27,046,226
Shares reinvested from distributions ............. -- 308,245
Shares redeemed .................................. (5,802,730) (32,456,034)
------------- -------------
Net Decrease .............................. (3,101,808) (5,101,563)
============= =============
</TABLE>

See accompanying notes to financial statements.

33
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FROM
MONTHS JUNE 30,
ENDED 1994*
JUNE 30, FOR THE YEARS ENDED DECEMBER 31, THROUGH
1999 -------------------------------------------- Dec. 31,
(UNAUDITED) 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $ 10.77 $ 12.91 $ 17.71 $13.64 $ 11.47 $ 12.50
======== ======== ======== ====== ======= =======

Income from investment operations:
Net investment income ............................... 0.11 0.15 0.20 0.19 0.14 0.04
Net realized and unrealized gain (loss)
on investments .................................... 3.13 (2.14) (3.71) 4.43 2.20 (0.96)
-------- -------- -------- ------ ------- -------
Total from investment operations .................... 3.24 (1.99) (3.51) 4.62 2.34 (0.92)
-------- -------- -------- ------ ------- -------

Less distributions:
From net investment income .......................... -- (0.15) (0.20) (0.19) (0.14) (0.04)
From net realized gains ............................. -- -- (1.09) (0.36) (0.03) (0.07)
-------- -------- -------- ------ ------- -------
Total distributions ................................. -- (0.15) (1.29) (0.55) (0.17) (0.11)
-------- -------- -------- ------ ------- -------
Net asset value, end of period ...................... $ 14.01 $ 10.77 $ 12.91 $17.71 $ 13.64 $ 11.47
======== ======== ======== ====== ======= =======

Total return 30.08%** (15.27)% (20.34)% 34.38% 20.45% (7.74)%**

Ratios/supplemental data:
Net assets, end of period (thousands) ............... $147,554 $146,810 $241,808 $311,521 $55,740 $ 2,287
Ratio of expenses to average net assets:
Before expense reimbursement/recoupment ............. 1.95%+ 1.89% 1.70% 1.78% 3.02%++ 19.92%+
After expense reimbursement/recoupment .............. 1.95%+ 1.89% 1.70% 1.96% 1.98% 2.00%+
Ratio of net investment income to average
net assets:
Before expense reimbursement/recoupment ............. 1.57%+ 1.60% 1.18% 1.57% 0.49% (17.15)%+
After expense reimbursement/recoupment .............. 1.57%+ 1.60% 1.18% 1.39% 1.52% 0.78%+
Portfolio turnover rate ............................. 16.90% 86.59% 53.62% 30.40% 10.89% 27.25%

BANK LOANS
Amount outstanding at end of period (in thousands) .. $ -- $ 4,274 $ -- $ -- n/a n/a
Average amount of bank loans outstanding during the
period (monthly average) (in thousands) ........... $ 1,017 $ 8,765 $ 2,305 $ 1,413 n/a n/a
Average number of shares outstanding during the
period (monthly average) (in thousands) ........... 12,041 18,533 16,944 11,419 n/a n/a
Average amount of debt per share during the period .. $ 0.08 $ 0.47 $ 0.14 $ 0.12 n/a n/a
</TABLE>

* Commencement of operations.
** Not annualized.
+ 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%.

See accompanying notes to financial statements.

34
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

THE BACKDROP

China's economy continues to expand with improving macro-economic data.
Export figures are increasing, and Beijing has made efforts to stimulate the
economy by boosting the stock markets and cutting interest rates. As a result,
stocks rose sharply during the second quarter, to a point where the share prices
of even some poor quality companies increased to uncomfortable levels.

The export growth rate reported for May, up 4.2% from April, was the
strongest over the past 12 months. In particular, the significant pickup in
exports to Japan and Europe has offset the decline in Hong Kong. Recovery of
other Asian economies should provide China with a new area of economic growth.

THE FUND

Despite the solid total return of the fund, its performance lagged the
benchmarks. We attribute this situation to the fund's underweight asset
allocation in Red Chips and H shares, a result of adopting a lower risk profile
than that of the benchmark.

We have subsequently rebalanced the portfolio from infrastructure stocks
(generally China Plays and H shares) to exports-oriented stocks (selected Red
Chips) as well as selective cyclicals (generally H shares) due to the improved
near term outlook of the latter two sectors. We have increased the weighting to
exports-related transport companies including CNAC, Cosco Pacific and China
Merchant due to the recovery of regional demand. We also expect the bottoming of
product prices in selected coal, steel and petrochemicals to benefit the
cyclicals. Angang Newsteel, Beijing Yanhua, Jiangxi Copper and Zhenhai Refining
were purchased as earnings are expected to rebound from this bottoming. Although
we have trimmed the position in infrastructure stocks, we are still overweight
in the sector as we expect them to deliver decent earnings growth.

Beijing's policy of reflating domestic demand through stock market boosting
measures and interest rate cuts has led to a significant increase in the trading
volume in the domestic mainland 'A' share market. China Everbright was purchased
in June as the strong performance of the 'A' share market would benefit its 49%
owned Everbright Securities, one of the largest mainland brokerages. The B
shares market has benefited from improved foreign sentiment as more market
boosting measures are expected from the government. We have increased weightings
of selective, good quality B shares.

Yanzhou Coal, which was accumulated from January to April, was trimmed back
in May because of the rebalancing of the cyclical weighting. Both China Foods
and Shum Yip were sold because of their poor earnings outlooks.

35
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND (CONTINUED)

THE OUTLOOK

We believe that investing in China needs to be a long-term commitment as
the stock market is very volatile, rumor-driven and dominated by retail
investors. With the expected recovery of Asian intra-regional trade in the
second half of 1999 and the continued health of the U. S. economy, China's
exports should strengthen. Further, this export growth should also help ease
concerns of a Renminbi devaluation.

While a larger investment in Red Chips and H shares would have benefited
the Fund in the short term, we believe that Red Chips are likely to underperform
in the longer term since many of the issues arising from the liquidation of
GITIC and the restructuring of Guangdong Enterprises are still unresolved.
Potential cash calls and the general poor quality of some Red Chips businesses
will also make it difficult for their share prices to perform well. With H
shares, most companies in the airline and steel sectors are still expected to
post poor earnings. However, we believe the H share infrastructure, power and
road companies will deliver good performance due to the higher quality of their
earnings growth.

On the domestic demand side, we expect that China will place greater
emphasis on monetary loosening as fixed asset investment growth peaked in
February. We expect more interest rate cuts in the next 12 months. The impact of
rate cuts on consumer consumption should be different this time around as there
is a new policy objective behind the move. Beijing hopes to boost personal
wealth through the stock market. We believe that the direct impact on the real
economy will be limited in the short term because the level of participation for
mainland Chinese investors in the domestic `A' share stock market (20%) is much
lower relative to that in the U. S. (40-50%). Nevertheless, the "feel good"
factor from a strong stock market should improve consumer sentiment.

The upcoming macro-economic data during the next six months will be
critical for assessing whether the exports benefit from the recovery in regional
demand is enough to maintain the pace of overall economic growth. Other
important indicators will be the extent of lower interest rates and whether
there is any effect from the strong `A' share market on domestic consumption.

- -- Adrian Fu
Hong Kong

36
<PAGE>
GUINESS FLIGHT MAINLAND CHINA FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS

AS OF 6/30/99

# of Holdings in Portfolio: 47 FUND MANAGERS:
Portfolio Turnover: 41.08% Robert Conlon; Adrian Fu
% of Stocks in Top 10: 37.71%

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
Cosco Pacific Ltd. 6.20% Electric Power 12.03%
Brilliance China Automotive 4.20% Conglomerates and Diversified
Yanzhou Coal Mining Co. 4.13% Operations 11.96%
China Telecom 3.78% Engineering & Infrastructure 11.88%
Shanghai Industrial Hldg. 3.49% Transport 10.32%
NG Fund Hong Ltd. 3.26% Telecommunications 5.92%
Beijing Datang Power 3.25%
Zhejiang Southeast Electricity 3.19% TOP SHARE TYPES (% OF NET ASSETS)
Guangdong Kelon Electric 3.16% H Shares 48.43%
China Merchants Hai Hong Hldg. 3.05% Red Chip 22.29%
Shenzhen " B" Shares 9.65%
Shanghai B Shares 9.36%
China Plays 4.63%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
MAINLAND CHINA FUND AND THE M.S.C.I. CHINA FREE INDEX

GUINNESS FLIGHT MAINLAND M.S.C.I. CHINA
CHINA FUND FREE INDEX
---------- ----------

11/3/97* $10,000 $10,000
12/31/97 9,450 7,947
3/31/98 10,267 7,806
6/30/98 7,230 5,055
9/30/98 6,728 4,289
12/31/98 7,091 4,464
3/31/99 6,198 3,926
6/30/99 9,524 7,096

* Inception date.

Average Annual Total Return

One Year Since Inception
-------- ---------------

31.75% -2.90%

Past performance is not predictive of future performance

37
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

AUTOMOTIVE MANUFACTURER: 5.08%
528,000 Qingling Motors Company Ltd.- H .................... $ 127,940
39,800 Brilliance China Automotive - N .................... 611,925
------------
Total Automotive Manufacturer ...................... 739,865
------------
CHEMICALS: 1.97%
1,272,000 Beijing Yanhua Petrochem - H ....................... 286,906
------------
COAL MINING: 4.13%
1,682,000 Yanzhou Coal Mining Co. - H ........................ 601,593
------------
CONGLOMERATES & DIVERSIFIED OPERATIONS: 11.96%
506,000 China Merchants Hai Hong Holdings .................. 443,479
118,000 China Resources Enterprises ........................ 208,361
80,000 Citic Pacific Ltd. ................................. 255,199
36,000 Hutchison Whampoa .................................. 325,959
213,000 Shanghai Industrial Holdings ....................... 507,885
Total Conglomerates & Diversified Operations ....... 1,740,883
------------
CONSTRUCTION: 0.82%
132,766 Shenzhen Fangda Co., Ltd. - B ...................... 118,757
------------
CONSUMER RELATED: 3.38%
484,000 Glorious Sun Enterprises ........................... 165,312
488,000 Hengan International Group ......................... 246,873
744,000 Moulin International Holdings ...................... 79,591
------------
Total Consumer Related ............................. 491,776
------------
ELECTRIC POWER: 12.03%
1,466,000 Beijing Datang Power Gen - H ....................... 472,375

18,000 CLP Holdings Ltd. 87,464
446,472 Guangdong Electric Power - B ....................... 307,291
1,002,000 Huaneng Power International Inc. - H ............... 419,725
1,051,000 Zhejiang Southeast Electricity - B ................. 464,542
------------
Total Electric Power ............................... 1,751,397
------------
ELECTRICAL CONSUMER GOODS: 5.60%
394,000 Guangdong Kelon Electric Hldg. - H ................. 459,577

38
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

ELECTRICAL CONSUMER GOODS: (CONTINUED)
373,133 Wuxi Little Swan Co. - B ........................... $ 355,885
------------
Total Electrical Consumer Goods .................... 815,462
------------
ENGINEERING & INFRASTRUCTURE: 11.88%
1,432,000 Anhui Expressway Co. Ltd. - H ...................... 195,642
142,000 Cheung Kong Infrastructure ......................... 293,750
902,000 Jiangsu Expressway Co. Ltd. - H .................... 195,312
195,000 New World Infrastructure ........................... 366,945
162,000 Road King Infrastructure ........................... 114,840
778,000 Shenzen Expressway Co. - H ......................... 164,451
2,000,000 Zhejiang Expressway Co. - H ........................ 396,976
------------
Total Engineering & Infrastructure ................. 1,727,916
------------
FINANCE: 2.61%
380,000 China Everbright Ltd. .............................. 379,576
------------
FOOD & BEVERAGE: 3.90%
570,000 Ng Fung Hong Ltd. .................................. 473,858
180,000 Yantai Changyu Pioneer Wine Co. - B ................ 93,960
------------
Total Food & Beverage .............................. 567,818
------------
MANUFACTURERS/MACHINERY: 4.53%
172,952 China International Marine Containers - B .......... 158,270
230,000 Hung Hing Print Group .............................. 94,862
34,000 Johnson Electric Holdings .......................... 140,230
160,000 Shandong Chenmimg Paper - B ........................ 83,520
350,000 Shanghai Zhenhua Port Machinery Co. - B ............ 182,000
------------
Total Manufacturers/Machinery 658,882
------------
METALS: 1.56%
1,730,000 Jiangxi Copper Co. Ltd. - H ........................ 227,436
------------
OIL REFINING: 1.83%
880,000 Zhenhai Refining & Chem Co. - H .................... 266,541
------------
PHARMACEUTICALS: 2.90%
1,708,000 China Pharmaceutical Enterprises ................... 345,622
476,000 Guangzhou Pharmaceutical - H ....................... 76,689
------------
Total Pharmaceuticals .............................. 422,311
------------

39
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

REAL ESTATE: 0.45%
286,000 China Resources Beijing Land ....................... $ 65,615
------------
STEEL MANUFACTURER: 2.55%
2,486,000 Angang New Steel Co., Ltd. - H ..................... 371,683
------------
TELECOMMUNICATIONS: 5.92%
198,000 China Telecom ...................................... 549,954
305,000 Eastern Communications Co. - B ..................... 311,100
------------
Total Telecommunications ........................... 861,054
------------
TRANSPORT: 10.32%
1,085,000 Cosco Pacific Ltd. ................................. 901,994
1,746,000 China National Aviation ............................ 333,058
392,933 Shanghai Dazhong Taxi Co. - B ...................... 267,194
------------
Total Transport .................................... 1,502,246
------------
WHOLESALE: 0.92%
56,000 LI & Fung Ltd. ..................................... 134,250
------------
TOTAL INVESTMENTS IN SECURITIES: 94.34%
(Identified Cost $11,185,881+) ................... 13,731,967
OTHER ASSETS LESS LIABILITIES: 5.66% ............... 822,490
------------
NET ASSETS: 100.00% ................................ $ 14,554,457
============

+ Cost for federal income tax purposes is the same.

Net unrealized depreciation consists of:
Gross unrealized appreciation .............................. $ 2,947,973
Gross unrealized depreciation .............................. (401,887)
------------
$ 2,546,086
============

See accompanying notes to financial statements.

40
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $11,185,881) ....... $ 13,731,967
Cash ......................................................... 1,029,379
Receivables:
Fund shares sold ........................................... 71,000
Dividends and interest ..................................... 39,128
Due from Advisor (Note 3) .................................. 4,358
Prepaid expenses ............................................. 15,566
Deferred organization costs .................................. 16,126
------------
Total assets ............................................ 14,907,524
------------

LIABILITIES
Payables:
Securities purchased ....................................... 329,069
Unrealized loss on forward foreign currency contracts
(Note 6) ................................................. 36
Accrued expenses ............................................. 23,962
------------
Total liabilities ........................................ 353,067
------------
NET ASSETS ................................................... $ 14,554,457
============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($ 14,554,457/1,239,306 shares outstanding; unlimited
number of shares authorized without par value) ............. $ 11.74
============

SOURCE OF NET ASSETS
Paid-in capital ............................................ $ 16,083,912
Undistributed net investment income ........................ 125,943
Undistributed net realized loss on investments ............. (4,201,419)

Net unrealized appreciation (depreciation) on:
Investments .............................................. 2,546,086

Foreign currency ......................................... (65)
------------
NET ASSETS ................................................... $ 14,554,457
============

See accompanying notes to financial statements.

41
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

INVESTMENT INCOME
INCOME
Dividends ...................................................... $ 209,342
Interest ....................................................... 8,565
-----------
Total investment income ................................. 217,907
-----------
EXPENSES
Advisory fees (Note 3) ......................................... 47,175
Administration fees (Note 3) ................................... 11,787
Custodian ...................................................... 23,459
Accounting ..................................................... 20,906
Transfer agent fees ............................................ 45,753
Audit fees ..................................................... 8,237
Legal fees ..................................................... 1,993
Insurance ...................................................... 786
Trustees' fees ................................................. 3,037
Registration fees .............................................. 8,041
Reports to shareholders ........................................ 6,681
Deferred organization costs amortization ....................... 2,380
Miscellaneous .................................................. 2,414
-----------
Total expenses .......................................... 182,649
Interest on loans ....................................... 112
Commitment fee on credit line (Note 5) .................. 45
Less: Expenses reimbursed (Note 3) ...................... (89,339)
-----------
Net expenses ............................................ 93,467
-----------
NET INVESTMENT INCOME ................................... 124,440
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss from investments ............................. (1,683,929)
Net realized loss from foreign currency ........................ (398)
Net unrealized appreciation (depreciation) on:
Investments ............................................. 4,916,432
Foreign currency ........................................ (44)
-----------
Net realized and unrealized loss on investments ......... 3,232,061
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 3,356,501
===========

See accompanying notes to financial statements.

42
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

Investments ................................. 4,916,432 (2,313,644)

Foreign currency ............................ (44) (44)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS

RESULTING FROM OPERATIONS ................... 3,356,501 (4,676,647)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................... -- (152,968)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ......... -- (152,968)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 3,598,528 7,893,569
Net asset value of shares issued on
reinvestment of distributions ..................... -- 144,254
Cost of shares redeemed ............................ (2,753,691) (9,256,759)
------------ ------------
NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS ...................................... 844,837 (1,218,936)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ..... 4,201,338 (6,048,551)

NET ASSETS
Beginning of period ................................ 10,353,119 16,401,670
------------ ------------
End of period (including undistributed net
investment income of $125,943 and
$1,503, respectively) ............................. $ 14,554,457 $ 10,353,119
============ ============

CHANGES IN SHARES
Shares sold ........................................ 390,133 743,724
Shares issued on reinvestment of dividend
distributions ..................................... -- 16,203
Shares redeemed .................................... (334,950) (967,054)
------------ ------------
Net Increase (Decrease) ..................... 55,183 (207,127)
============ ============
</TABLE>

See accompanying notes to financial statements.

43
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- -----------------------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS NOVEMBER 3,
ENDED FOR THE YEAR 1997*
JUNE 30, ENDED THROUGH
1999 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ........................ $ 8.74 $ 11.79 $ 12.50
------- ------- -------
Income from investment operations:
Net investment income ..................................... 0.10 0.11 0.02
Net realized and unrealized loss on investments .......... 2.90 (3.05) (0.71)
------- ------- -------
Total from investment operations ............................ 3.00 (2.94) (0.69)
------- ------- -------

Less distributions:
From net investment income ................................ -- (0.11) (0.02)
------- ------- -------
Total distributions ......................................... -- (0.11) (0.02)
------- ------- -------
Net asset value, end of period .............................. $ 11.74 $8.74 $ 11.79
======= ===== =======

Total return ................................................ 34.32%++ (24.96)% (5.50)%++
Ratios/supplemental data:
Net assets, end of period (in thousands) .................... $14,554 $10,353 $16,402
Ratio of expenses to average net assets:
Before expense reimbursement .............................. 3.87%+ 3.13% 2.69%+
After expense reimbursement ............................... 1.98%+ 1.98% 1.98%+
Ratio of net investment income to average net assets:
Before expense reimbursement .............................. 0.74%+ (0.05)% 1.17%+
After expense reimbursement ............................... 2.63%+ 1.10% 1.88%+
Portfolio turnover rate ..................................... 41.08% 82.00% --

BANK LOANS
Amount outstanding at end of period (in thousands) .......... $ -- $115 n/a
Average amount of bank loans oustanding during the period
(monthly average) (in thousands) ........................... $ 16 $10 n/a
Average number of shares outstanding during the period
(monthly average) (in thousands) .......................... 1,164 1,403 n/a
Average amount of debt per share during the period .......... $ 0.01 $0.01 n/a
</TABLE>

* Commencement of operations.
++ Not Annualized.
+ Annualized.
See accompanying notes to financial statements.

44
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

THE BACKDROP

European markets regained some strength toward the end of the first half of
1999 after a poor start to the year. Most noticeable was the improvement of the
German economy, suggesting that the region's lackluster 1998 fourth quarter
results were not a sign of worse things to come.

The weakness in the value of the Euro against other currencies, and
especially the U. S. dollar, persisted. As time elapsed, this weakness became a
positive factor in the case for European equities since it presented a further
boost to the competitiveness of European industry. Business confidence survey
results have also grown more positive over the period.

Mergers and acquisitions activity, as well as a record number of new, small
company equities offerings, have had a generally positive influence on the
overall levels of stock market indices in Europe.

THE FUND

The Guinness Flight New Europe Fund outperformed its closest benchmark
index, the FT/S&P Europe dollar adjusted index, through June 30.

We have allocated fund assets toward companies with above average growth
prospects. There were three purchases made of newly listed companies, which very
quickly achieved the price targets we expected. These were Aerospatiale-Matra,
Beate Uhse and TPI. In addition, the fund purchased Karstadt, a retailer in
Germany, which has recently merged with a non-listed competitor and is rapidly
realizing synergies stemming from better purchasing power, a revamp of its
stores and better organization of its mail order businesses.

Due to management changes and unfavorable outlooks, we have sold Telecom
Italia in Italy and National Power in the U. K.

We have increased fund exposure in Eastern Europe. The first half of 1999
was disappointing for investments in this area as many investors in emerging
markets chose to emphasise other areas of the world. With the recent
underperformance of markets such as Poland, Hungary and the Czech Republic
compared to markets in Latin America and the Far East, the Eastern European
markets are now looking very attractively valued.

While we have made a slight shift in emphasis towards smaller companies and
Eastern Europe in the portfolio, the fund still maintains its investment focus
on the beneficiaries of economic and monetary union overall.

45
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND (CONTINUED)

THE OUTLOOK

The improving European economy signals that most of the bad news is likely
behind us. Several factors will drive equity markets over the coming months,
including increased production and domestic demand in France, Germany and Italy;
a further upswing in construction confidence; and increasing car sales, which
are already up 8% in the first half of 1999.

Moreover, loose monetary policy should continue to bring economic benefits
with a positive yield curve and a growth in private sector lending. Europe's
export sector, which is strongly represented in Europe's equity markets, should
also benefit from the rebound in the economic fortunes of not just the South
East Asian economies but that of Japan as well. Likewise, smaller companies have
already started to outperform against this more positive economic backdrop.

We believe the Euro at its June 30 level is markedly undervalued and
therefore the current asset allocation focus on Euro-zone stocks should help the
fund outperform the benchmark index going forward.

We will increase the fund's exposure to the above areas over the coming
months as they offer compelling reasons for investors interested in investing
outside the United States over the next six months to favor European equity
markets.

- -- David Potts
London

46
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS

AS OF 6/30/99
# of Holdings in the Portfolio: 32 FUND MANAGERS:
Portfolio Turnover: 18.28% David Potts; Jeremy Podger;
% of Stocks in Top 10: 43.89% Camilla Reeves

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
Nokia 6.04% Retail 14.93%
Kardstadt 4.86% Telecommunications 13.83%
Kamps 4.85% Insurance 9.35%
Banque National De Paris 4.81% Telecommunications Equip. 8.46%
Mannesmann 4.77% Manufacturing 7.16%
Tieto Corp. 4.02%
Promodes 3.94% TOP 5 COUNTRIES (% OF NET ASSETS)
National Grid Group 3.68% Germany 22.46%
AXA Company 3.59% France 14.76%
Mol Magyar Olay 3.33% United Kingdom 12.59%
Finland 10.06%
Spain 7.77%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
NEW EUROPE FUND AND THE FT/S&P ACTUARIES WORLD INDEX

Guinness Flight FT/S&P Actuaries
New Europe Fund World Index, Europe
--------------- -------------------

11/23/98* $10,000 $10,000
11/30/98 10,088 9,977
12/31/98 10,712 10,062
3/31/99 10,080 10,156
6/30/99 10,280 10,129

* Inception date.

Total Return
Since Inception
- ---------------
2.80%

Past performance is not predictive of future performance.

47
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

CZECH REPUBLIC: 3.16%
763 Ceske Radiokomunikace - GDR .............................. $ 26,324
---------
DENMARK: 2.95%
500 Tele Danmark 'B' ......................................... 24,542
---------
FINLAND: 10.06%
574 Nokia OYJ - K shares ..................................... 50,285
803 Tieto Corp ............................................... 33,436
---------
Total Finland ............................................ 83,721
---------
FRANCE: 14.76%
143 Alcatel .................................................. 20,118
245 AXA Company .............................................. 29,872
481 Banque National De Paris ................................. 40,056
50 Promodes ................................................. 32,800
---------
Total France ............................................. 122,846
---------
GERMANY: 22.46%
185 Daimler Chrysler AG ...................................... 16,016
991 Kamps AG ................................................. 40,344
85 Karstadt AG .............................................. 40,473
260 Mannesmann AG ............................................ 39,659
314 Metro AG ................................................. 19,482
200 Sixt AG .................................................. 13,976
500 Telegate ................................................. 17,006
---------
Total Germany ............................................ 186,956
---------
GREECE: 2.91%
1,000 Panafon Hellenic ......................................... 24,250
---------
HUNGARY: 5.43%
1,150 Mol Magyar Olay-ES Gazi .................................. 27,719
1,500 Synergon Info Systems .................................... 17,475
---------
Total Hungary ............................................ 45,194
---------
ITALY: 5.46%
772 Assicurazione Generali SpA ............................... 26,766

48
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ITALY: (CONTINUED)
830 Rolo Banca SpA ........................................... $ 18,649
---------
Total Italy .............................................. 45,415
---------
NETHERLANDS: 5.09%
299 Equant ................................................... 27,550
290 Heineken ................................................. 14,840
---------
Total Netherlands ........................................ 42,390
---------
PORTUGAL: 1.94%
125 Telecel Comunicacoes Pessoai ............................. 16,104
---------
SPAIN: 7.77%
1,170 Endesa SA ................................................ 24,937
1,250 Funespana SA ............................................. 24,478
1,188 NH Hoteles SA ............................................ 15,207
---------
Total Spain .............................................. 64,622
---------
SWITZERLAND: 2.11%
12 Novartis AG .............................................. 17,526
---------
UNITED KINGDOM: 12.59%
537 Cable & Wireless Plc ..................................... 6,841
1,490 Commercial Union Plc ..................................... 21,187
4,400 National Grid Group Plc .................................. 30,588
4,685 Rolls Royce Plc .......................................... 19,885
3,500 Shell Transport & Trading ................................ 26,249
---------
Total United Kingdom ..................................... 104,750
---------
TOTAL INVESTMENTS IN SECURITIES
(Identified Cost $833,077+): 96.69% .................... 804,640
OTHER ASSETS LESS LIABILITIES: 3.31% ..................... 27,528
---------
NET ASSETS: 100.00% ...................................... $ 832,168
=========

+ Cost for federal income tax purposes is the same.

Net unrealized depreciation consists of:
Gross unrealized appreciation $ 54,723
Gross unrealized depreciation (83,160)
---------
$ (28,437)
=========
See accompanying notes to financial statements.

49
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY
JUNE 30, 1999 (UNAUDITED)

- --------------------------------------------------------------------------------
% OF
INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
Automotive ..................................................... 1.92%
Banking ........................................................ 7.05
Computer Networking ............................................ 3.31
Computer Software .............................................. 6.12
Food/Beverage .................................................. 6.63
Insurance ...................................................... 9.35
Investing ...................................................... 1.83
Manufacturers .................................................. 7.16
Oil/Petroleum Refining ......................................... 6.49
Real Estate .................................................... 2.94
Retail ......................................................... 14.93
Telecommunications ............................................. 13.83
Telecommunications Equipment ................................... 8.46
Utility ........................................................ 6.67
------
TOTAL INVESTMENTS IN SECURITIES ................................ 96.69
OTHER ASSETS LESS LIABILITIES .................................. 3.31
------
NET ASSETS ..................................................... 100.00%
======

See accompanying notes to financial statements.

50
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

LIABILITIES
Payables:
Securities purchased ...................................... 3,618
Due to Advisor (Note 3) .......................................... 7,215
Accrued expenses ................................................. 18,235
---------
Total liabilities ......................................... 29,068
---------
NET ASSETS ................................................ $ 832,168
=========

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($832,168/64,737 shares outstanding; unlimited number
of shares authorized without par value) ................... $ 12.85
=========

SOURCE OF NET ASSETS

Paid-in capital ........................................... $ 858,473
Undistributed net investment income ....................... 565
Undistributed net realized gain on investments ............ 1,716
Net unrealized depreciation on:
Investments ............................................. (28,437)
Foreign Currency ........................................ (149)
---------
NET ASSETS ....................................................... $ 832,168
=========

See accompanying notes to financial statements.

51
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED
JUNE 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $970) .............. $ 7,113
Interest ....................................................... 1,132
--------
Total investment income ................................. 8,245
--------

EXPENSES
Advisory fees (Note 3) ......................................... 3,867
Administration fee (Note 3) .................................... 969
Custodian ...................................................... 13,053
Accounting ..................................................... 12,867
Transfer agent fees ............................................ 11,421
Audit fees ..................................................... 7,742
Legal fees ..................................................... 99
Insurance ...................................................... 28
Trustees' fees ................................................. 2,328
Registration fees .............................................. 8,365
Reports to shareholders ........................................ 155
Miscellaneous .................................................. 2,353
--------
Total expenses .......................................... 63,247
Commitment fee on credit line (Note 5) .................. 36
Less: Expenses reimbursed (Note 3) ...................... (55,603)
--------
Net expenses ............................................ 7,680
--------
NET INVESTMENT INCOME ................................... 565
--------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from foreign currency ........................ 1,629
Net unrealized depreciation on:
Investments ............................................. (44,439)
Foreign currency ........................................ (435)
--------
Net realized and unrealized loss on investments ......... (43,245)
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $(42,680)
========

See accompanying notes to financial statements.

52
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED NOVEMBER 23, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) .................... $ 565 $ (97)
Net realized gain on foreign currency ........... 1,629 87

Net unrealized appreciation (depreciation) on:
Investments ................................... (44,439) 16,002
Foreign currency .............................. (435) 286
--------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS .................................. (42,680) 16,278
--------- ---------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ....................... 786,378 292,695
Cost of shares redeemed ......................... (320,503) --
--------- ---------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS .... 465,875 292,695
--------- ---------

TOTAL INCREASE IN NET ASSETS ............. 423,195 308,973

NET ASSETS
Beginning of period ............................. 408,973 100,000
--------- ---------
End of period (including undistributed net
investment income of $565 and $0,
respectively) ................................. $ 832,168 $ 408,973
========= =========

CHANGES IN SHARES
Shares sold ..................................... 59,108 22,534
Shares redeemed ................................. (24,905) --
--------- ---------
Net Increase ............................. 34,203 22,534
========= =========

* Commencement of operations.

See accompanying notes to financial statements.

53
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

Net realized and unrealized gain (loss)
on investments (0.55) 0.89
------- ------
Total from investment operations (0.54) 0.89
------- ------
Net asset value, end of period $ 12.85 $13.39
======= ======

Total return (4.03)%++ 7.12 %++
Ratios/supplemental data:
Net assets, end of period (in thousands) $ 832 $ 409
Ratio of expenses to average net assets:

Before expense reimbursement 16.31%+ 10.48%+

After expense reimbursement 1.98%+ 1.98%+
Ratio of net investment income to average
net assets:

Before expense reimbursement (14.19)%+ (9.01)%+

After expense reimbursement 0.15%+ (0.46)%+
Portfolio turnover rate 18.28% --%

* Commencement of operations.
+ Annualized.
++ Not Annualized.

See accompanying notes to financial statements.

54
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

THE BACKDROP

The U. S. economy's solid growth path for the first quarter was confirmed
by the 4.5% increase in GDP. This impressive performance was, however, tainted
by the GDP Price Deflator, a measure of inflation. Its increase of 1.4% was the
biggest increase in two years and led to a sell-off in the stock market towards
the end of April. A revised first quarter growth rate of 4.1% was then released
during the same month, indicating a slowing in the U. S. economy.

Concern over the strength of various industries, especially the technology
sector, negatively affected the broader market. While technology stocks had been
driving the NASDAQ Index and the broader market indices, market emphasis turned
from technology into cyclical and financial stocks.

Fears that the Federal Reserve would increase interest rates also put
pressure on equities. Technology stocks with their already high valuations
looked even more stretched in light of increased rates. The second quarter was
especially volatile as the market wrestled with which way interest rates would
go. At one point, the yield on the 30-year Treasury Bond increased to its
highest levels in months as bonds weakened on the back of expected interest rate
hikes.

As a neutral monetary policy became more evident with only a small interest
rate increase, a strong relief rally pushed the S& P500 index to an all time
record high, matching the record levels to which the Dow Jones Industrial Index
had risen earlier in the year.

THE FUND

We employed the full replication method in tracking the Guinness Flight
Wired INDEX(TM) Fund, and as a result, we bought all 40 constituent stocks in
the respective index weightings. Stocks such as Charles Schwab, Sony and Cisco
continue to dominate the performance of the fund and remain in the news due to
their aggressive and innovative strategies.

THE OUTLOOK

The fund is well positioned to track the index into the the remainder of
this year and beyond. The expected tracking error, which decreases as the fund
grows in size, should continue to decrease with daily net inflows.

We believe the U. S. economy will continue to enjoy a healthy relationship
with and within the global economy, as evidenced by the various announcements of
mergers and company expansions during this first half of 1999. American OnLine
recently launched China. com, Disney will expand into Hong Kong with a new theme
park, and Charles Schwab and Japan's Tokio Marine and Fire will soon form a
retail brokerage to service Japanese

55
<PAGE>

GUINNESS FLIGHT WIRED INDEX(TM) FUND (CONTINUED)

investors. We also expect to see increased Internet activities as marketing and
infrastructure innovations reach customers in new ways. The New Economy is alive
and well as companies forge new alliances, merge with others and embark on
global expansion.

- -- Doug Blatch
Cape Town, South Africa

56
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS
AS OF 6/30/99

# of Holdings in the Portfolio: 40 FUND MANAGER:
Portfolio Turnover: 3.40% Doug Blatch
% of Stocks in Top 10: 37.22%

TOP 10 HOLDINGS (% OF NET ASSETS) TOP 5 SECTORS (% OF NET ASSETS)
Charles Schwab & Co., Inc. 4.70% Telecommunications 11.57%
Applied Materials Inc. 4.16% Financial Services 8.43%
Sun Microsystems, Inc. 3.87% Internet/New media 6.76%
First Data Corp. 3.72% Media 6.23%
Sony Corp. 3.64% Software 5.08%
Nokia Corp. 3.64%
Yahoo! Inc. 3.46% TOP 5 COUNTRIES (% OF NET ASSETS)
Enron Corp. 3.42% United States 82.74%
Cisco Systems, Inc. 3.32% United Kingdom 7.87%
America Online 3.29% Finland 3.64%
Australia 3.19%
Germany 2.20%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
WIRED(R) INDEX FUND AND WIRED INDEX(TM) AND NASDAQ COMPOSITE INDEX

Nasdaq
Guinness Flight Wired Wired Composite
Index Fund(R) Index(TM) Index
------------- --------- -----

12/15/98* $10,000 $10,000 $10,000
12/31/98 11,160 11,411 10,898
3/31/99 13,408 13,790 12,233
6/30/99 14,016 14,475 13,350

* Inception date.

Total Return
Since Inception
---------------

40.16%

Past performance is not predictive of future performance.

57
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS: 99.64% VALUE
- --------------------------------------------------------------------------------
AGRI-CHEMICALS: 1.97%
55,039 Monsanto Co. ....................................... $ 2,170,601
------------
AIR TRANSPORT: 2.73%
44,069 AMR Corp. .......................................... 3,007,709
------------
AUTOMOBILE: 2.20%
27,295 DaimlerChrysler AG ................................. 2,425,843
------------
BANKING: 2.93%
37,807 State Street Corp. ................................. 3,227,773
------------
BIOLOGICAL RESEARCH: 0.43%
5,854 Affymetrix Inc. .................................... 289,041
7,140 Incyte Pharmaceuticals Inc. ........................ 188,764
------------
Total Biological Research .......................... 477,805
------------
COMPUTER COMMUNICATION EQUIPMENT: 3.32%
56,700 Cisco Systems Inc. ................................. 3,657,150
------------
COMPUTER MANUFACTURING: 2.40%
71,526 Dell Computer Corp. ................................ 2,646,462
------------
COMPUTER PROCESSING & DATA PREPARATION: 0.46%
20,267 Acxiom Corp. ....................................... 505,408
------------
COMPUTER STORAGE DEVICES: 3.09%
61,858 EMC Corp./Mass. .................................... 3,402,190
------------
COMPUTERS: 3.87%
61,920 Sun Microsystems Inc. .............................. 4,264,740
------------
CONSUMER ELECTRONICS: 3.64%
36,354 Sony Corp. ......................................... 4,012,573
------------
ENERGY/PETROLEUM: 3.42%
46,040 Enron Corp. ........................................ 3,763,770
------------
ENTERTAINMENT: 2.43%
87,045 Walt Disney Company ................................ 2,682,074
------------
FINANCIAL SERVICES: 8.43%
47,171 Charles Schwab & Co. Inc. .......................... 5,182,914

58
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES: (CONTINUED)
83,682 First Data Corp. ................................... $ 4,095,188
------------
Total Financial Services ........................... 9,278,102
------------
HOTELS MANAGEMENT: 2.17%
64,083 Marriott International ............................. 2,395,102
------------
INDUSTRY MACHINERY: 4.16%
62,076 Applied Materials Inc. ............................. 4,585,865
------------
INSURANCE: 2.89%
27,246 American International Group ....................... 3,189,485
------------
INTERNET/NEW MEDIA: 6.76%
32,832 America Online Inc. ................................ 3,627,936
22,154 Yahoo! Inc. ........................................ 3,816,027
------------
Total Internet/New Media ........................... 7,443,963
------------
MEASURING & CONTROLLING DEVICES: 0.75%
41,125 Thermo Electron Corp. .............................. 825,070
------------
MEDIA: 6.23%
99,402 News Corp Cayman ADR ............................... 3,510,133
41,381 Reuters Group Plc- Sponsored ADR ................... 3,354,447
------------
Total Media ........................................ 6,864,580
------------
OIL, GAS SERVICES: 3.29%
56,916 Schlumberger Ltd. .................................. 3,624,838
------------
PHARMACEUTICALS: 2.26%
37,618 Smithkline Beecham Plc ............................. 2,485,139
------------
RETAIL: 2.81%
64,210 Wal-Mart Stores Inc. ............................... 3,098,133
------------
SATELLITE TELECOM: 0.44%
21,022 Globalstar Telecommunication ....................... 487,448
------------
SEMICONDUCTORS: 2.38%
44,100 Intel Corp. ........................................ 2,623,950
------------
SOFTWARE: 5.08%
37,944 Microsoft Corp. .................................... 3,422,075
69,855 Parametric Technology Corp. ........................ 969,238

59
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

OTHER ASSETS LESS LIABILITIES: 0.36% ............... 395,767
------------
NET ASSETS: 100.00% ................................ $110,187,552
============

+ Cost for federal income tax purposes is the same.

Net unrealized appreciation consists of:
Gross unrealized appreciation ................................. $ 11,405,708
Gross unrealized depreciation ................................. (1,674,839)
------------
$ 9,730,869
============

See accompanying notes to financial statements.

60
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $100,060,916) ...... $ 109,791,785
Cash ......................................................... 1,272,512
Receivables:
Fund shares sold ........................................... 426,670
Dividends and interest ..................................... 41,163
Prepaid expenses ............................................. 26,305
-------------
Total assets ......................................... 111,558,435
-------------
LIABILITIES
Payables:
Securities purchased ....................................... 1,210,807
Fund shares redeemed ....................................... 50,280
Due to Advisor (Note 3) ...................................... 83,962
Accrued expenses ............................................. 25,834
-------------
Total liabilities .................................... 1,370,883
-------------
NET ASSETS ................................................... $ 110,187,552
=============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($110,187,552/6,288,348 shares outstanding;
unlimited number of shares authorized without par value) ... $ 17.52
=============

SOURCE OF NET ASSETS
Paid-in capital ............................................ $ 100,580,540
Undistributed net investment loss .......................... (215,183)
Undistributed net realized gain on investments ............. 91,326
Net unrealized appreciation on investments ................. 9,730,869
-------------
NET ASSETS ................................................... $ 110,187,552
=============

See accompanying notes to financial statements.

61
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED
JUNE 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends ...................................................... $ 164,743
Interest ....................................................... 38,455
-----------
Total investment income ................................ 203,198
-----------

EXPENSES
Advisory fees (Note 3) ......................................... 280,445
Administration fees (Note 3) ................................... 16,227
Custodian ...................................................... 71,028
Accounting ..................................................... 18,030
Transfer agent fees ............................................ 14,501
Audit fees ..................................................... 7,780
Legal fees ..................................................... 5,440
Insurance ...................................................... 1,724
Trustees' fees ................................................. 4,283
Registration fees .............................................. 8,743
Reports to shareholders ........................................ 5,558
Miscellaneous .................................................. 2,544
-----------
Total expenses ......................................... 436,303
Commitment fee on credit line (Note 5) ................. 1,366
Less: Expenses reimbursed (Note 3) ..................... (18,033)
-----------
Net expenses ........................................... 419,636
-----------
NET INVESTMENT LOSS ..................................... (216,438)
-----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments ............................. 90,295
Net unrealized appreciation on investments ..................... 9,318,883
-----------
Net realized and unrealized gain on investments ........ 9,409,178
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 9,192,740
===========

See accompanying notes to financial statements.

62
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE SIX DECEMBER 15,
MONTHS ENDED 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------

INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income (loss) ............... $ (216,438) $ 1,255
Net realized gain from investments ......... 90,295 1,031
Net unrealized appreciation on investments . 9,318,883 411,986
------------ ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ..................... 9,192,740 414,272
------------ ----------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .................. 103,886,439 9,038,161
Cost of shares redeemed .................... (12,324,924) (569,136)
------------ ----------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS 91,561,515 8,469,025
------------ ----------
TOTAL INCREASE IN NET ASSETS ....... 100,754,255 8,883,297

NET ASSETS
Beginning of period ........................ 9,433,297 550,000
------------ ----------
End of period [including undistributed net
investment income (loss) of $(215,183)
and $1,255, respectively] ................ $110,187,552 $9,433,297
============ ==========

CHANGES IN SHARES
Shares sold ................................ 6,363,797 677,474
Shares reinvested from distributions ....... -- --
Shares redeemed ............................ (751,554) (45,369)
------------ ----------
Net Increase ....................... 5,612,243 632,105
============ ==========

* Commencement of operations.

See accompanying notes to financial statements.

63
<PAGE>
GUINNESS FLIGHT WIRED INDEX(TM) FUND

FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED DECEMBER 15, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.95 $12.50
-------- ------
Income from investment operations:
Net investment income (loss) (0.04) --
Net realized and unrealized gain on
investments 3.61 1.45
-------- ------
Total from investment operations 3.57 1.45
-------- ------
Net asset value, end of period $ 17.52 $13.95
======== ======
Total return 25.59%++ 11.60%++

Ratios/supplemental data:
Net assets, end of period (thousands) $110,188 $9,433

Ratio of expenses to average net assets:
Before expense reimbursement 1.39%+ 1.97%+
After expense reimbursement 1.35%+ 1.35%+

Ratio of net investment income to average
net assets:
Before expense reimbursement (0.75%)+ 0.02%+
After expense reimbursement (0.71%)+ 0.60%+
Portfolio turnover rate 3.40% 0.11%

* Commencement of operations.
+ Annualized.
++ Not Annualized.

See accompanying notes to financial statements.

64
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

THE BACKDROP

Tentative signs have emerged that global growth has begun to follow the
continuing strong U. S. economic trend, rather than being held back by the
financial crises that have dogged the world economy over the last couple of
years.

The continental European economy is beginning to show signs of a domestic,
demand-led recovery, although the export-oriented economies of Germany and Italy
continue to lag. Interest rate cuts over the last year have increasingly helped
stimulate consumer demand, while the softness of the Euro improved trade
competitiveness.

Loose monetary policy in the U. K. has begun to stimulate consumer
spending, particularly in the housing and equities markets. The surprising 7.9%
first quarter growth rate recorded in Japan cannot be taken at face value alone,
but some semblance of stability has clearly returned to the world's second
largest economy in response to unprecedented government support packages
introduced last year. Latin America is still in the doldrums, but Eastern Europe
looks to be shaking off the impact of last year's Russian devaluation. The Asian
recovery also continues to gain momentum. Against this background, oil and
commod- ity prices are showing renewed signs of life, although core inflation
pressures still remain remarkably subdued in most economies.

In the U. S., the recovery in the global economy has allowed the Federal
Reserve to focus on domestic economic issues, resulting in a tightening of
monetary policy. The robust level of consumer spending remains, although we see
signs that this rate will be slightly more modest in the near future. Mortgage
refinance activity has slowed dramatically from the very high levels reached at
the end of 1998. Meanwhile, the manufacturing sector has recovered and is now
contributing to economic growth. Increased productivity has clearly helped to
offset the inflationary consequences of the labor market's tightness.

As anticipated, the world's Central Banks have pursued policies designed to
avoid a deflation. The bond markets have responded accordingly with interest
rates rising and yield curves tending to steepen.

THE FUND

The Fund had a six-month return of -9.13% at June 30. For the three years
ending June 30, 1999, the Fund had an average annual total return of 5.34%.

THE OUTLOOK

We expect fund performance to improve in the coming months as the bear
market in bonds eases further and the U. S. dollar weakens. The various bond
markets remain attractive in the current, low inflation and global growth
environment.

65
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND (CONTINUED)

While U. S. economic growth should continue at a more modest pace in the
second half of the year, we do not expect a significant slowdown with the
current high level of employment and improving international outlook. The
slightly slower economic activity and rising import prices should cause headline
inflation to rise toward the end of the year, but core inflation should remain
stable. The bond market has spent the last seven months anticipating higher
short rates, as well as higher inflation, and is now better able to take
advantage of this possible economic situation.

In Asia ex-Japan, we believe recovery in the crisis economies will continue
steadily. Most encouraging is the increase in consumer spending, notably in
Korea and Singapore. Together with the increase in exports, retail sales and
property market transactions, these factors should prevent growth from falling
in 2000.

Although the worst of the Japanese recession appears to be over, the
outlook for sustained growth is still problematic. Waning fiscal policy support,
non-self-sustaining private demand, corporate restructuring and weak consumer
spending will be key factors in limiting economic growth. As a result, Japanese
bond yields may eventually rise.

Europe and the U. K. offer more positive news, given the continued strength
of U. S. demand and the recovery in Asia. We are confident that GDP growth,
consumer spending and exports will accelerate next year. Nevertheless, with core
inflation pressures still very subdued, the first rise in interest rates may not
materialize until well into 2000. The fixed interest markets are now discounting
too much bad news, including the expected raise in U. S. interest rates, and
should perform well in the third quarter.

Looking ahead in the currencies markets, we expect the Euro to bottom out
during the third quarter on the back of a strengthening growth outlook in
continental Europe. We have already built up a modest overweight position in the
Euro on value grounds and will look for opportunities to increase this holding
once stronger evidence of a second half growth recovery is apparent. With demand
trends also strengthening in Asia and Japan, the outlook for commodity exporting
currencies should continue to improve. We recently added Canadian dollars to our
existing core positions in the Australian dollar and Swedish krone, and we may
take advantage of recent under-performance of the New Zealand dollar to further
diversify our exposure to this theme.

- -- Michael Daley
London

66
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

FUND HIGHLIGHTS

KEY PORTFOLIO STATISTICS
AS OF 6/30/99

# of Holdings in the Portfolio: 24 FUND MANAGER:
Portfolio Turnover: 122.16% Michael Daley
% of Holdings in Top 10: 30.62%

TOP 5 HOLDINGS (% OF NET ASSETS) CURRENCY ALLOCATION (% OF NET ASSETS)
Deutschland Republic 5.25% Euro 45.65%
1/4/2008 9.88% U.S. Dollar 15.28%
US Treasury Infl. Index Note Yen 15.71%
3.801% 1/15/08 5.52% Sterling 7.90%
Asia Development Bank 5.50% Australian Dollar 7.70%
4/23/2004 5.12%

TOP 5 COUNTRIES (% OF NET ASSETS)
Tokyo Metro 6.125%
3/27/2006 5.07% Supranational 22.59%
Int'l American Development United States 15.50%
Bank 6.375% 10/22/2007 5.03% Germany 9.88%
United Kingdom 7.39%
Japan 5.07%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND AND
THE SALOMON BROTHERS' WORLD GOVERNMENT BOND INDEX

Guinness Flight Global Salomon Brothers' World
Government Bond Fund Government Bond Index
-------------------- ---------------------
6/30/94* $10,000 $10,000
12/31/94 9,767 10,166
6/30/95 10,638 11,879
12/31/95 11,183 12,102
6/30/96 11,197 11,923
12/31/96 11,877 12,540
6/30/97 11,732 12,386
12/31/97 12,218 12,569
6/30/98 12,672 12,919
12/31/98 14,404 14,491
3/31/99 13,672 13,932
6/30/99 13,088 13,451

* Inception date.

Average Annual Total Return

One Year Five Years Since Inception
-------- ---------- ---------------

3.28% 5.53% 5.53%

Past performance is not predictive of future performance.

67
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT GOVERNMENT BONDS: 90.28% VALUE
- --------------------------------------------------------------------------------
AUSTRALIA: 4.95%
A$ 650,000 Australian Government
8.750% 08/18/2008 .......................... $ 502,084
-----------
BELGIUM: 4.79%
BEF 440,247 Belgium Government
5.750% 03/28/2008 .......................... 485,775
-----------
COLUMBIA: 0.46%
GBP 35,000 Republic of Columbia
9.750% 02/11/2008 .......................... 47,063
-----------
CROATIA: 1.25%
US$ 150,000 Croatia Government Nat'l Series B
5.813% 07/31/2006 .......................... 126,375
-----------
FRANCE: 2.39%
FF 224,450 Republic of France - OAT
5.250% 04/25/2008 .......................... 243,012
-----------
GERMANY: 9.88%
DM 927,315 Deutschland Republic
5.250% 01/04/2008 .......................... 1,002,568
-----------
JAPAN: 5.07%
US$ 535,000 Tokyo Metro
6.125% 03/27/2006 .......................... 514,135
-----------
NETHERLANDS: 4.43%
NLG 417,024 Netherlands Government
5.250% 07/15/2008 .......................... 449,147
-----------
NORWAY: 5.04%
NOK 3,990,000 Norwegian Government
5.750% 11/30/2004 .......................... 511,064
-----------
SOUTH AFRICA: 0.99%
US$ 100,000 Republic of South Africa
9.625% 12/15/1999 .......................... 100,500
-----------
SPAIN: 2.08%
ESP 200,000 Spanish Government
5.150% 07/30/2009 .......................... 211,489
-----------

68
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SUPRANATIONAL: 22.59%
US$ 540,000 Asian Development Bank
5.500% 04/23/2004 .......................... $ 519,210

US$ 540,000 European Investment Bank
5.000% 01/12/2004 .......................... 509,760

US$ 520,000 Inter-American Development Bank
6.375% 10/22/2007 .......................... 510,120

JPY 57,000,000 International Bank Recon & Development
2.000% 02/18/2008 .......................... 478,122

US$ 285,000 International Finance Corp.
5.500% 02/18/2003 .......................... 276,308
-----------
Total Supranational ......................... 2,293,520
-----------
SWEDEN: 2.50%
SEK 2,100,000 Kingdom of Sweden Government
5.000% 01/28/2009 .......................... 253,406
-----------
UNITED KINGDOM: 7.39%
(pound) 292,000 United Kingdom Government
8.000% 06/10/2003 .......................... 501,046

(pound) 150,000 United Kingdom Government
5.750% 12/07/2009 .......................... 248,874
-----------
Total United Kingdom ........................ 749,920
-----------
UNITED STATES: 15.50%
JPY 30,000,000 FNMA Global JPY Notes
1.750% 03/26/2008 .......................... 245,938

US$ 503,000 U. S. Treasury Note
6.250% 02/15/2007 .......................... 512,589

US$ 560,000 U. S. Treasury Inflation Index Note
3.625% 01/15/2008 .......................... 559,947

US$ 250,000 U. S. Treasury Bond
6.375% 08/15/2027 .......................... 255,469
-----------
Total United States ......................... 1,573,943
-----------

69
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY
JUNE 30, 1999 (UNAUDITED) CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
VENEZUELA: 0.97%
EUR 100,000 PDVSA Finance
6.250% 02/15/2006 .......................... $ 98,066
-----------
TOTAL GOVERNMENT BONDS
(Identified Cost $9,620,930+): 90.28% ...... 9,162,067

OTHER ASSETS LESS LIABILITIES: 9.72% ........ 986,175
-----------
NET ASSETS: 100.00% ......................... $10,148,242
===========

+ Cost for federal income tax purposes is the same.

Net unrealized depreciation consists of:
Gross unrealized appreciation .................................. $ 22,401
Gross unrealized depreciation .................................. (481,264)
-----------
$ (458,863)
===========

See accompanying notes to financial statements.

70
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF JUNE 30, 1999 (UNAUDITED)

ASSETS
Investments in securities, at value (cost $9,620,930) .......... $ 9,162,067
Cash ........................................................... 1,010,117

Receivable:
Interest ..................................................... 187,476
Due from Advisor ............................................. 8,465
------------
Total assets ................................................. 10,368,125
------------
LIABILITIES
Payables:
Distributions to shareholders ................................ 27,213
Unrealized loss on forward foreign currency contracts (Note 6) 167,326
Accrued expenses ............................................. 25,344
------------
Total liabilities ............................................ 219,883
------------
NET ASSETS ..................................................... $ 10,148,242
============

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($ 10,148,242/839,910 shares outstanding; unlimited
number of shares authorized without par value) ............... $ 12.08
============

SOURCE OF NET ASSETS
Paid-in capital .............................................. $ 10,700,298
Undistributed net investment income .......................... 6,359
Undistributed net realized gain on investments ............... 73,510
Net unrealized depreciation on:
Investments ................................................ (458,863)
Foreign currency ........................................... (173,062)
------------
NET ASSETS ..................................................... $ 10,148,242
============

See accompanying notes to financial statements.

71
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED
JUNE 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Interest ...................................................... $ 253,054
-----------

EXPENSES
Advisory fees (Note 3) ........................................ 40,533
Administration fees (Note 3) .................................. 13,511
Custodian ..................................................... 7,324
Accounting .................................................... 20,686
Transfer agent fees ........................................... 14,237
Audit fees .................................................... 8,185
Legal fees .................................................... 1,327
Insurance fees ................................................ 523
Trustee's fees ................................................ 2,788
Registration fees ............................................. 7,013
Reports to shareholders ....................................... 620
Deferred organization costs amortization ...................... 8,075
Miscellaneous ................................................. 2,480
-----------
Total expenses ......................................... 127,302
Commitment fee on credit line (Note 5) ................. 851
Less: Expenses reimbursed (Note 3) ..................... (87,626)
-----------
Net expenses ........................................... 40,527
-----------
NET INVESTMENT INCOME .................................. 212,527
-----------

REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investments ............................ (65,529)
Net realized loss from foreign currency ....................... (38,715)
Net unrealized depreciation on:
Investments ............................................ (817,278)
Foreign currency ....................................... (344,851)
-----------
Net Realized and Unrealized Loss on Investments ........ (1,266,373)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $(1,053,846)
===========

See accompanying notes to financial statements.

72
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1999 ENDED
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ........................ $ 212,527 $ 422,877
Net realized gain (loss) from investments .... (65,529) 626,392
Net realized loss on foreign currency ........ (38,715) (126,803)

Net unrealized appreciation (depreciation) on:
Investments ................................ (817,278) 270,419
Foreign currency ........................... (344,851) 197,272
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS

RESULTING FROM OPERATIONS .................. (1,053,846) 1,390,157
------------ ------------
NET EQUALIZATION CREDITS ..................... (166) (7,556)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................... (206,001) (417,826)
From net realized gains ...................... -- (318,313)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...... (206,001) (736,139)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .................... 2,975,848 6,879,372
Net asset value of shares issued on
reinvestment of distributions .............. 164,314 686,191
Cost of shares redeemed ...................... (2,932,659) (7,027,191)
------------ ------------
NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS ............................. 207,503 538,372
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .. (1,052,510) 1,184,834

NET ASSETS
Beginning of period .......................... 11,200,752 10,015,918
------------ ------------
End of period (including undistributed net
investment income of $6,359 and $0,
respectively) .............................. $ 10,148,242 $ 11,200,752
============ ============
CHANGES IN SHARES
Shares sold .................................. 230,015 516,058
Shares issued from dividend distributions .... 12,859 52,307
Shares redeemed .............................. (229,733) (551,277)
------------ ------------
Net Increase .......................... 13,141 17,088
============ ============

See accompanying notes to financial statements.

73
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- -----------------------------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FROM
JUNE 30, FOR THE YEAR ENDED DECEMBER 31, JUNE 30, 1994*
1999 ---------------------------------------- THROUGH
(UNAUDITED) 1998 1997 1996 1995 DEC. 31, 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.55 $ 12.37 $ 12.72 $ 12.77 $ 12.00 $ 12.50
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.25 0.58 0.63 0.63 0.69 0.29
Net realized and unrealized gain
(loss) on investments (1.48) 1.58 (0.29) 0.13 1.01 (0.58)
------- ------- ------- ------- ------- -------
Total from investment operations (1.23) 2.16 0.34 0.76 1.70 (0.29)
------- ------- ------- ------- ------- -------

Less distributions:
From net investment income (0.24) (0.58) (0.49) (0.69) (0.65) (0.21)
From net realized gains -- (0.40) (0.11) (0.12) (0.28) --
Return of capital -- -- (0.09) -- -- --
------- ------- ------- ------- ------- -------
Total distributions (0.24) (0.98) (0.69) (0.81) (0.93) (0.21)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 12.08 $ 13.55 $ 12.37 $ 12.72 $ 12.77 $ 12.00
======= ======= ======= ======= ======= =======

Total return (9.13)%+ 17.89% 2.87% 6.21% 14.49% (2.33)%+

Ratios/supplemental data:
Net assets, end of period (thousands) $10,148 $11,201 $10,016 $ 6,564 $ 1,153 $ 751
Ratio of expenses to average net
assets:
Before expense reimbursement 2.36%** 2.76% 3.15% 8.21% 21.52%*** 40.78%**
After expense reimbursement 0.75%** 0.75% 0.75% 1.31% 1.73% 1.75%**
Ratio of net investment income to
average net assets:
Before expense reimbursement 4.30%** 2.44% 2.67% (1.76)% (14.26)% (34.18)%**
After expense reimbursement 3.94%** 4.46% 5.07% 5.14% 5.53% 4.86%**
Portfolio turnover rate 122.16% 166.72% 185.55% 296.51% 202.54% 46.15%
</TABLE>

* Commencement of operations.
+ Not annualized.
** 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.

74
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION

Guinness Flight Investment Funds (the "Trust"), a Delaware business trust, was
organized on April 28, 1997 and registered under the Investment Company Act of
1940 as a non-diversified, open-end management investment company. Currently,
the Funds offer seven separate series portfolios: Guinness Flight Asia Blue Chip
Fund (the "Asia Blue Chip Fund") whose objective is long-term capital
appreciation, Guinness Flight Asia Small Cap Fund (the "Asia Small Cap Fund")
whose objective is long-term capital appreciation, Guinness Flight China & Hong
Kong Fund (the "China & Hong Kong Fund") whose objective is long-term capital
appreciation, Guinness Flight Mainland China Fund ("Mainland China Fund") whose
objective is long-term capital appreciation, Guinness Flight New Europe Fund
("New Europe Fund") whose objective is long-term capital appreciation, Guinness
Flight Wired Index(TM) Fund ("Guinness Flight Wired INDEX(TM) Fund") whose
objective is long-term capital appreciation, and the Guinness Flight Global
Government Bond Fund (the "Global Government Bond Fund") whose objective is to
provide current income and capital appreciation (collectively, the "Funds"). The
China & Hong Kong and Global Government Bond Funds began operations on June 30,
1994, the Asia Blue Chip and Asia Small Cap Funds began operations on April 29,
1996, the Mainland China Fund began operations on November 3, 1997, the New
Europe Fund began operations on November 23, 1998 and the Guinness Flight Wired
INDEX(TM) Fund began operations on December 15, 1998.

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 an 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. Due to the inherent
uncertainty of valuation, the values of securities for which quotations are not
readily available may differ significantly from the values that would have been
used had a ready

75
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

market for the securities existed, and the differences could be material. Short-
term investments are stated at cost, which when combined with accrued interest,
approximates market value. Realized gains and losses from securities
transactions are calculated using the identified cost method.

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
their 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.

Interest income is translated at the exchange rates that existed on 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
they are obligated to exchange currencies at specific future dates and at
specified rates, and are 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. Counter parties to these
forward contracts are major U. S. financial institutions.

C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.

76
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

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 their shareholders. Therefore, no
federal income tax provisions are required.

As of June 30, 1999 for federal income tax purposes, the following Funds
have capital loss carryforwards available to offset future realized capital
gains: the Asia Blue Chip Fund has capital loss carryforwards totaling of
$3,689,792, of which $532,335 expires in 2005 and $3,157,457 expires in 2006;
the Asia Small Cap Fund has capital loss carryforwards totaling of $80,850,770,
of which $17,996,189 expires in 2005 and $62,854,581 expires in 2006; the China
& Hong Kong Fund has a capital loss carryforward of $70,290,227 expiring in 2006
and the Mainland China Fund has a capital loss carryforward of $2,515,925
expiring in 2006. To the extent that such carryforwards are used, no capital
gains distributions will be made.

E. EQUALIZATION. The Global Government Fund follows the accounting practice
known as equalization, by which a portion of the proceeds from sales and the
costs of redemptions 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 & Hong Kong Fund and the Global
Government Bond Fund have each incurred expenses of $58,785 in connection with
their organization. The Asia Blue Chip Fund and the Asia Small Cap Fund have
each incurred expenses of $8,745 in connection with their organization. The
Mainland China Fund has incurred an expense of $23,338 in connection with its
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
the Funds are redeemed by their holders 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.

G. CONCENTRATION OF RISK. The Asia Blue Chip Fund and Asia Small Cap Fund
invest substantially all of their assets in the Asian continent. The China &
Hong Kong Fund and

77
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Mainland China Fund invest substantially all of their 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 New Europe Fund invests
substantially all of its assets in companies located in Europe or that conduct
the majority of their business activities in Europe. The Guinness Flight Wired
INDEX(TM) Fund invests substantially all of its assets in securities of
companies that comprise the Guinness Flight Wired Index Fund.

In 1998, Malaysian government implemented certain foreign exchange control
measures which included the requirement for portfolio capital to be in Malaysia
for at least 12 months prior to repatriation. On February 4, 1999, the 12 month
holding rule was replaced with a graduated levy on the repatriation of capital
invested. These restrictions affected the liquidity and valuation of Malaysian
securities. On June 30, 1999, the Asia Blue Chip Fund and Asia Small Cap Fund
held $621,421 and $2,590,905 in investments of Malaysian securities,
respectively. These investments are valued at their fair values as determined in
good faith by the Board of Trustees of the Funds.

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 periods. Actual results could differ from those estimates.

I. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Funds account for and report
distributions to shareholders in accordance with the American Institute of
Certified Public Accountant's Statement of Position 93-1: DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN AND
RETURN OF CAPITAL DISTRIBUTION BY INVESTMENT COMPANIES. Distributions of net
investment income and realized gains are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are due to differing treatments for items such as wash sales,
net operating losses, capital loss carryforwards and net realized loss on
foreign currency transactions. In the event that distributions exceed the
aggregate amount of undistributed net investment income and net realized gains,
the excess distribution is reclassified as a reduction of paid-in capital, thus
reducing the tax basis of shareholders' interests in the Funds.

78
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

The Trust, on behalf of each Fund, has 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 received a monthly fee equal to the following annual percentages of
daily average net assets:

Asia Blue Chip Fund 1.00%
Asia Small Cap Fund 1.00%
China & Hong Kong Fund 1.00%
Mainland China Fund 1.00%
New Europe Fund 1.00%
Guinness Flight Wired Index Fund 0.90% on the 1st $100 million
0.75% on the next $100-$500 million and
0.60% on net assets greater than $500 million
Global Government Bond Fund 0.75%

The Funds are responsible for their own operating expenses. The Advisor and
Investment Company Administration, L.L.C. ("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 following levels.
Expenses reimbursed from the Advisor for the year ended June 30, 1999 are stated
in the Funds' Statement of Operations:

Asia Blue Chip Fund 1.98%
Asia Small Cap Fund 1.98%
China & Hong Fund Fund 1.98%
Mainland China Fund 1.98%
New Europe Fund 1.98%
Guinness Flight Wired INDEX(TM)
Fund 1.35%
Global Government Bond Fund 0.75%

79
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

The cumulative unreimbursed amounts paid by the Advisor on behalf of the
Funds from their inception to June 30, 1999 are as follows:

Asia Blue Chip Fund $419,319
Asia Small Cap Fund $278,776
Mainland China Fund $261,627
New Europe Fund $ 57,417
Global Government Bond Fund $950,226

Effective December 31, 1997, the Advisor agreed to amend the expense
reimbursement agreement to limit the period within which the Advisor may recoup
the above amounts from the Funds to no later than December 31, 2002, and subject
to the Funds' ability to effect such reimbursement and remain in compliance with
applicable expense limitations. In addition, the possible recoupment period of
any expense reimbursements in each year subsequent to 1997 will be limited to
five years from the year of the reimbursement, and subject to the Funds' ability
to effect such reimbursement and remain in compliance with applicable expense
limitations.

The Administrator provides administrative services to the Funds' under an
Administration Agreement. The Administrator prepares various federal and state
regulatory filings, prepares reports and materials to be supplied to the
Trustees; 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 0.25% of the Funds' average daily net assets,
subject to a $40,000 annual minimum for the China & Hong Fund Fund, an annual
fee equal to 0.05% of the Guinness Flight Wired INDEX(TM) Fund's average daily
net assets, subject to a $20,000 annual minimum and $100,000 allocated on
average daily net assets for the Asia Blue Chip Fund, Asia Small Cap Fund,
Mainland China Fund, New Europe Fund, and the Global Government Bond 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 Funds are also officers and/or Trustees of the
Administrator and Distributor.

80
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Outside Trustees are compensated by the Trust at the total rate of $10,000
(with the exception of chairman who receives $11,000) per year and any travel
expenses incurred.

The Trust approved a Deferred Compensation Plan for Trustees (the "Plan").
Trustees are entitled to receive $2,500 per quarter (with the exception of
chairman who receives $2,750), which is allocated among the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the Plan. If
a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted to reflect a value
been invested in a designated investment. The Funds recognize as trustee expense
amounts accrued as meetings are attended plus the change in the value of the
phantom share account.

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 period ended
June 30, 1999 were:

FUND PURCHASES SALES
- ---- --------- -----

Asia Blue Chip Fund .......................... $ 3,830,158 $ 4,082,672
Asia Small Cap Fund .......................... $11,416,986 $26,875,403
China & Hong Fund Fund ....................... $23,620,680 $58,331,376
Mainland China Fund .......................... $ 4,347,371 $ 3,965,915
New Europe Fund .............................. $ 635,458 $ 129,790
Guinness Flight Wired INDEX(TM) Fund ......... $93,705,824 $ 2,078,579
Global Government Bond Fund .................. $ 5,560,955 $ 1,824,567

Purchases and sales of U. S. Government obligations by the Global
Government Bond Fund were $1,475,178 and $5,092,469, respectively.

NOTE 5 - LINE OF CREDIT

The Funds have a $25 million committed line of credit with a bank that expires
on September 15, 1999. The interest rate on the line of credit at June 30, 1999,
is the bank's base rate of 6.00% and is revised from time to time.

81
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE 6 - FORWARD FOREIGN CURRENCY CONTRACTS

At June 30, 1999, the Funds had entered into forward foreign currency contracts
which obligated the Funds to exchange currencies at specified future dates. At
the maturity of a forward contract, the Funds may either make delivery of the
foreign currency from currency held, if any, from the proceeds of the portfolio
securities sold, or it may terminate its obligation to deliver the foreign
currency at any time by purchasing an offsetting contract. The forward value of
amounts due are netted against the forward value of the currency to be delivered
by the Funds and the net amount is shown as a receivable or payable in the
financial statements. Open forward foreign currency exchange contracts at June
30, 1999 were as follows:

GUINNESS FLIGHT ASIA SMALL CAP FUND

DELIVERY UNREALIZED
CURRENCY RECEIVABLE CURRENCY DELIVERABLE DATE GAIN/(LOSS)
- --------------------------------------------------------------------------------
US$ 29,924 Hong Kong Dollar 232,134 07/02/99 $ (6)
US$ 328,385 Thai Baht 12,084,567 07/02/99 (490)
-----
Total Forward Contracts $(496)
=====

GUINNESS FLIGHT CHINA & HONG KONG FUND

DELIVERY UNREALIZED
CURRENCY RECEIVABLE CURRENCY DELIVERABLE DATE GAIN/(LOSS)
- --------------------------------------------------------------------------------
US$ 1,462,364 Hong Kong Dollar 11,344,146 07/02/99 $ 159
-----
Total Forward Contracts $ 159
=====

GUINNESS FLIGHT MAINLAND CHINA FUND

DELIVERY UNREALIZED
CURRENCY RECEIVABLE CURRENCY DELIVERABLE DATE GAIN/(LOSS)
- --------------------------------------------------------------------------------

US$ 903 Hong Kong Dollar 6,840 05/15/99 $ (21)
US$ 70,724 Hong Kong Dollar 546,631 07/02/99 (15)
-----
Total Forward Contracts $ (36)
=====

82
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

DELIVERY UNREALIZED
CURRENCY RECEIVABLE CURRENCY DELIVERABLE DATE GAIN/(LOSS)
- --------------------------------------------------------------------------------

US$ 1,323,772 Australian Dollar 2,045,911 09/09/99 $ 9,901
US$ 561,610 Canadian Dollar 835,000 09/09/99 (11,577)
US$ 6,475,544 Euro 5,992,955 09/09/99 (133,478)
US$ 2,333,454 British Pound Sterling 1,443,460 09/09/99 (19,491)
US$ 2,414,470 Japanese Yen 284,776,247 09/09/99 (25,162)
US$ 1,088,933 Norwegian Krone 8,457,522 09/09/99 12,392
US$ 580,605 Swedish Krona 4,833,403 09/09/99 4,313
US$ 528,293 Canadian Dollar 770,000 12/09/99 (4,224)
----------
Total Forward Contracts $ (167,326)
==========

NOTE 7 - YEAR 2000 ISSUES

Like other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by the Advisor, Administrator or other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 issue." The Advisor and
Administrator are taking steps that it believes are reasonably designed to
address the Year 2000 issue with respect to computer systems that it uses and to
obtain reasonable assurances that comparable steps are being taken by each
Fund's other major service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Funds. For the six months ended June 30, 1999, the Funds incurred no significant
year 2000 related expenses and do not expect to incur significant year 2000
expenses in the future.

NOTE 8 - FUTURES CONTRACTS

Each Fund may enter into futures contracts to the extent permitted by its
investment policies and objectives. Upon entering into a futures contract, a
Fund is required to make a deposit (initial margin) with its custodian in a
segregated account. Subsequent payments (daily variation margin), which are
dependent on the daily fluctuations in the value of the underlying instrument,
are made or received by a Fund each day and are recorded as unrealized gains

83
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX(TM) FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

or losses until the contracts are closed. When the contract is closed, a Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and a Fund's basis in the contract.
Risks of entering into futures contracts include the possibility that a change
in the value of the contract may not correlate with the changes in the value of
the underlying instruments. Second, it is possible that a lack of liquidity for
futures contracts could exist in the secondary market, resulting in an inability
to close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Fund could lose more than original
margin deposit required to initiate the futures transaction. During the period
ended December 31, 1998, the China & Hong Kong Fund entered in to futures
contracts which resulted in net realized losses of $1,315,976. There was no
other futures trading activity during the year. At June 30, 1999, there were no
open futures contracts.