GUINNESS FLIGHT INVESTMENT FUNDS, N-30D, 2000-03-06

GUINNESS FLIGHT INVESTMENT FUNDS
N-30D, 2000-03-06

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<PAGE>

ANNUAL REPORT December 31, 1999

- --------------------------------------------------------------------------

GUINNESS FLIGHT
INVESTMENT FUNDS

ASIA BLUE CHIP FUND

ASIA SMALL CAP FUND

CHINA & HONG KONG FUND

INTERNET.COM INDEX -TM- FUND

MAINLAND CHINA FUND

NEW EUROPE FUND

WIRED INDEX -TM- FUND

GLOBAL GOVERNMENT BOND FUND

- --------------------------------------------------------------------------

INVESTEC
GUINNESS FLIGHT

<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT WIRED INDEX-TM- FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

DEAR GUINNESS FLIGHT SHAREHOLDER

We are once again pleased to present our annual report for the Guinness
Flight Investment Funds. 1999 was an exciting and rewarding year for most of the
Funds; all but one of the Funds had exceptional years. And, as long time
shareholders in our Asian Funds will happily acknowledge, it was an especially
gratifying year.

The Wired Index-TM- Fund had an outstanding year. The Fund both performed
well, finishing the year with a total return of 68.68%, and, we are pleased to
add, received a warm reception from investors. By year-end the Fund has grown to
$164 million.

On July 31st, we launched the latest addition to the Guinness Flight
Investment Funds, the internet.com Index-TM- Fund. And, despite the less than
one-year track record, this Fund posted the greatest total return of any of the
Guinness Flight Funds during the year, 82.08%.

Led by the China & Hong Kong Fund, all of the Asian Funds enjoyed a good
year. The China & Hong Kong Fund returned 66.27%; the Asia Blue Chip 61.16%; the
Asia Small Cap Fund 42.43% and the Mainland China Fund 32.20%. Our Asian equity
team in Hong Kong has correctly been bullish on these markets since October of
1998. Now that these markets have advanced past their pre-crisis levels it is
easy to forget just how gloomy the environment was in the fall of 1998 and how
courageous their call was.

The New Europe Fund provided a total return of 19.79%. The only
disappointment among the Funds was the negative 7.97% total return posted by the
Global Government Bond Fund.

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 the annual report.

We recognize that our implicit service contract with you as a shareholder
covers more than investment management and that we have an obligation to
communicate with you on a regular basis. The Internet has emerged as an ideal
medium for these communications and we are taking full advantage of this medium.
We encourage you to visit our web site at WWW.GFFUNDS.COM. In addition to
regular and frequent updates we provide a series of opt in email services
designed to keep you informed. You can sign up for these updates on the web
site.

1
<PAGE>
The focal point of our Fund family is the future. The signposts of change
seem to pass by at an ever increasing rate and while the future is obscured by
the horizon the view is clear far enough ahead to see that the future is going
to be profoundly different from the present. The incredible growth of Asia, the
development of the New Economy and the emergence of the Internet as the greatest
and most dynamic communications medium ever are just some of the amazing changes
taking place early in the 21st Century. We are pleased to be able to offer you
opportunities to participate in this change and look forward to continuing to
serve your investing needs.

Sincerely,

/s/ James J. Atkinson, Jr.
James J. Atkinson, Jr.
Director
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

THE BACKDROP

The economic backdrop in Asia has continued to improve throughout 1999 and
Asia is now reporting very strong economic growth. Exports are growing at the
fastest rate in the last five years with the electronics industry being
particularly strong. Imports, a sign of domestic demand, are also staging a
sharp rebound. Asia has made a much stronger economic recovery than even the
most optimistic of forecasters had expected and this should lead to better
profit growth.

All of the region's stock markets generated positive returns during 4Q99
with the best returns coming from Thailand, Hong Kong and South Korea. The
Philippines and China were relative under performers, probably due to lackluster
economic news and Y2K worries respectively. Surprisingly Taiwan also under
performed the regional index even though the stock market is heavily weighted
towards the technology sector. Taiwan's stock market is still dominated by local
investors and therefore did not respond to the global enthusiasm for technology
companies.

THE FUND

The Fund recorded a twelve-month performance of 61.16% to December 31, 1999.
The strong recent performance has resulted in the Fund catching-up with the
index over the twelve-month period.

Portfolio activity during the final months of 1999 was minimized with
transactions primarily as a result of flows into or out of the Fund. The
weighting in the electronics industry was further increased through the purchase
in Ritek of Taiwan, a CD/DVD manufacturer. In Hong Kong the weighting in
Hutchison Whampoa was increased and Cable & Wireless HK Telecom was added to the
portfolio. The net result of these transactions has been a significant increase
in the telecoms weighting in the Fund. Cathay Pacific was also added to the
portfolio as we expect a sharp recovery in profits due to higher load and yield
factors.

We have rotated the Fund away from the ultra-defensive stance held until the
second quarter of 1999. Hence, we have bought shares in the banking, electronics
and telecoms sectors. Defensive food, plantation and utility stocks have been
sold.

THE OUTLOOK

Asia has made a very sharp economic recovery. Imports have been growing very
rapidly throughout Asia and every country that reports monthly industrial
production figures has reported strong growth. Industrial production is at
record levels in most Asian countries. Consumer confidence is expected to
improve as the economies recover. This should stimulate domestic consumption.
The low end of the retailing sector is already benefiting from

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

better demand. Along with the recovery in domestic demand we are also seeing a
recovery in the external sector. The primary reason for the slump in external
demand was the sharp reduction in intra-regional trade as a result of the
shrinking Asian economies. Asia did not lose market share in extra-regional
trade. As the regional economies are now growing intra-regional trade is in the
process of rapidly recovering. Most commentators expect 2000 to be a year of
strong global growth. If this proves to be correct Asia's economies will be
major beneficiaries.

- -- Robert Conlon

Hong Kong

4
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 43
Portfolio Turnover: 82.34%
% of Stocks in Top 10: 45.46%
</TABLE>

FUND MANAGERS:
Robert Conlon; Agnes Chow

<TABLE>
<CAPTION>
TOP 10 HOLDINGS (% OF NET ASSETS)
<S> <C>
- ------------------------------------
SK Telecom Co. 7.79%
Hutchison Whampoa 6.74%
Samsung Electronics GDR 6.27%
DBS Group Hld. 4.24%
Taiwan Semiconductor ADR 3.80%
Hong Kong Telecom 3.62%
Cheung Kong 3.53%
Korea Electric Power Corp.
GDR 3.22%
Pohang Iron & Steel Ltd.
GDR 3.22%
Housing & Commercial Bank
GDR 3.03%
<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Banking 22.03%
Telecommunications 17.14%
Electronics 14.05%
Real Estate 8.89%
Utilities 7.02%
<CAPTION>
TOP 5 COUNTRIES (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Hong Kong 28.67%
South Korea 26.16%
Singapore 16.69%
Taiwan 14.99%
Malaysia 4.75%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
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
<S> <C> <C>
Guinness Flight Asia MSCI Asia Free
Blue Chip Fund Ex-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 $5,860
6/30/98 $4,951 $3,925
9/30/98 $4,661 $3,611
12/31/98 $5,709 $5,062
3/31/99 $5,950 $5,316
6/30/99 $7,450 $7,304
9/30/99 $6,781 $6,543
12/31/99 $9,200 $8,069
* Inception date.
Average Annual Total Return
One Year Since Inception
61.16% -2.24%
Past performance is not predictive of future performance
</TABLE>

5
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 97.57%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
HONG KONG: 28.67%
60,000 Cathay Pacific Airways................................ $ 106,909
30,000 Cheung Kong........................................... 381,127
50,000 Dao Heng Bank Group Ltd............................... 257,944
20,000 Hang Seng Bank........................................ 228,355
135,200 Hong Kong Telecom..................................... 390,485
18,000 HSBC Holdings Plc..................................... 252,412
50,000 Hutchison Whampoa..................................... 726,874
45,000 Johnson Electric Holdings............................. 288,885
18,000 Sun Hung Kai Properties Ltd........................... 187,572
46,000 Swire Pacific Ltd. A.................................. 271,633
------------
Total Hong Kong....................................... 3,092,196
------------
INDONESIA: 0.00%
3,471 Bank International Indonesia Wts...................... --
------------
MALAYSIA: 4.75%
36,000 Commerce Asset-Holding Berhad......................... 92,368
81,000 Malayan Banking....................................... 287,764
80,000 Malaysian Intern Shipping Corp........................ 131,579
------------
Total Malaysia........................................ 511,711
------------
PHILIPPINES: 2.52%
25,000 Bank Of Philippine Islands............................ 72,364
25,000 Manila Electric....................................... 71,740
5,000 Philippine Long Distance Telephone ADR................ 127,501
------------
Total Philippines..................................... 271,605
------------
SINGAPORE: 16.69%
22,000 Chartered Semiconductor............................... 120,204
27,890 DBS Group Hld......................................... 457,158
60,000 DBS Land Ltd.......................................... 118,163
14,700 Overseas Chinese Banking.............................. 135,041
26,000 Singapore Airlines.................................... 295,047
13,000 Singapore Press Holdings.............................. 281,777
100,000 Singapore Telecom Ltd................................. 206,544
</TABLE>

See accompanying notes to financial statements.

6
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
SINGAPORE: (CONTINUED)
21,120 United Overseas Bank.................................. $ 186,409
------------
Total Singapore....................................... 1,800,343
------------
SOUTH KOREA: 26.16%
10,975 Housing & Commercial Bank GDR......................... 326,515
3,907 Korea Telecom Corp. GDR............................... 283,990
20,679 Korea Electric Power Corp. GDR........................ 347,667
10,000 Pohang Iron & Steel Ltd. GDR.......................... 347,500
22,629 SK Telecom Co......................................... 840,105
5,533 Samsung Electronics GDR............................... 676,409
------------
Total South Korea..................................... 2,822,186
------------
TAIWAN: 14.99%
14,000 Asustek Computer GDR.................................. 147,815
22,650 Acer, Inc. GDR........................................ 322,763
9,326 China Steel Corp. GDR................................. 139,657
8,697 Evergreen Marine GDR.................................. 71,574
10,000 Ritek Corp............................................ 115,750
16,728 Siliconware Precision GDR............................. 242,138
6,400 Synnex Tech. GDR...................................... 168,217
9,225 Taiwan Semiconductor ADR.............................. 409,358
------------
Total Taiwan.......................................... 1,617,272
------------
THAILAND: 3.79%
150,000 Krung Thai Bank Public Co., Ltd....................... 78,727
152,000 Thai Farmers Bank - Foreign........................... 254,478
50,000 Thai Airways.......................................... 75,737
------------
Total Thailand........................................ 408,942
------------
TOTAL COMMON STOCKS: 97.57%
(Identified Cost $6,751,337)........................ 10,524,255
------------
</TABLE>

See accompanying notes to financial statements.

7
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PAR VALUE
CORPORATE BONDS: 1.48%
VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
TAIWAN: 1.48%
$100,000 Nan Ya Plastics $ 159,159
1.75% due 7/19/01...................................
------------
TOTAL CORPORATE BONDS: 1.48% (Identified Cost
$129,103)
TOTAL INVESTMENTS IN SECURITIES: 99.05%
(Identified Cost $6,880,440+)....................... 10,683,414
OTHER ASSETS LESS LIABILITIES: 0.95%.................. 102,930
------------
NET ASSETS: 100.00%................................... $ 10,786,344
============
</TABLE>

<TABLE>
<C><S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.................... $ 3,939,178
Gross unrealized depreciation.................... (136,204)
-----------
$ 3,802,974
===========
ADR - American depositary receipt.
GDR - Global depositary receipt.
</TABLE>

See accompanying notes to financial statements.

8
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY (UNAUDITED)

DECEMBER 31, 1999

See accompanying notes to financial statements.

9
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $6,880,440)....... $10,683,414
Cash........................................................ 115,370
Receivables:
Fund shares sold........................................ 14,734
Dividends and interest.................................. 15,541
Prepaid expenses............................................ 5,279
Deferred organization costs, net............................ 2,317
-----------
Total assets............................................ 10,836,655
-----------

LIABILITIES
Payables:
Fund shares redeemed.................................... 16,840
Due to Advisor (Note 3)................................. 9,439
Accrued expenses............................................ 24,032
-----------
Total liabilities....................................... 50,311
-----------
NET ASSETS.................................................. $10,786,344
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($10,786,344/944,930 shares outstanding; unlimited
number of shares authorized without par value).......... $11.41
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $10,174,916
Undistributed net investment income..................... 37,205
Accumulated net realized loss on investments............ (3,232,837)
Net unrealized appreciation on:
Investments......................................... 3,802,974
Foreign currency.................................... 4,086
-----------
NET ASSETS.................................................. $10,786,344
===========
</TABLE>

See accompanying notes to financial statements.

10
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $12,357)........ $ 165,878
Interest.................................................... 20,902
----------
Total investment income................................. 186,780
----------

EXPENSES
Advisory fees (Note 3)...................................... 88,646
Administration fees (Note 3)................................ 22,161
Custodian................................................... 21,304
Accounting.................................................. 52,069
Transfer agent fees......................................... 40,918
Audit fees.................................................. 13,377
Legal fees.................................................. 3,255
Insurance................................................... 792
Trustees' fees.............................................. 5,218
Registration fees........................................... 5,002
Reports to shareholders..................................... 5,450
Deferred organization costs amortization.................... 1,748
Miscellaneous............................................... 2,671
----------
Total expenses.......................................... 262,611
Interest expense........................................ 2,210
Commitment fee on credit line........................... 638
Less: Expenses reimbursed (Note 3)...................... (89,137)
----------
Net expenses............................................ 176,322
----------
NET INVESTMENT INCOME............................... 10,458
----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments............................ 660,815
Net realized loss on foreign currency....................... (5,294)
Net change in unrealized appreciation on:
Investments............................................. 3,488,488
Foreign currency........................................ 4,081
----------
Net realized and unrealized gain on investments......... 4,148,090
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $4,158,548
==========
</TABLE>

See accompanying notes to financial statements.

11
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND

STATEMENTS OF CHANGES IN NET ASSETS

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income............... -- (49,669)
----------------- -----------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 8,273,165 10,665,544
Net asset value of shares issued on
reinvestment of distributions.......... -- 41,743
Cost of shares redeemed (9,494,797) (8,419,362)
----------------- -----------
NET INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS..................... (1,221,632) 2,287,925
----------------- -----------
TOTAL INCREASE IN NET ASSETS......... 2,936,916 931,992

NET ASSETS
Beginning of year........................ 7,849,428 6,917,436
----------------- -----------
End of year (including undistributed net
investment income of $37,205 and
$26,747, respectively)................. $ 10,786,344 $ 7,849,428
================= ===========

CHANGES IN CAPITAL SHARES
Shares sold.............................. 996,270 1,543,963
Shares reinvested from distributions..... -- 6,798
Shares redeemed.......................... (1,159,538) (1,298,746)
----------------- -----------
Net Increase (Decrease).............. (163,268) 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 YEAR FOR THE YEAR FOR THE YEAR 1996*
ENDED ENDED ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 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..... 0.02 0.05 0.02 --
Net realized and
unrealized gain (loss)
on investments.......... 4.31 (1.01) (4.91) 0.48
------- ------- ------- -------
Total from investment
operations................ 4.33 (0.96) (4.89) 0.48
------- ------- ------- -------
Less Distributions:
From net investment
income.................. -- (0.04) (0.01) --
------- ------- ------- -------
Net asset value, end of
period.................. $ 11.41 $ 7.08 $ 8.08 $ 12.98
======= ======= ======= =======
Total return................ 61.16 % (11.78)% (37.68)% 3.84 %++
Ratios/supplemental data:
Net assets, end of period
(thousands)................ $10,786 $ 7,849 $ 6,917 $ 3,687
Ratio of expenses to average
net assets:
Before expense
reimbursement........... 2.99 % 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........... (0.89)% (1.03)% (2.16)% (7.10)%+
After expense
reimbursement........... 0.12 % 0.91 % 0.28 % 0.06 %+
Portfolio turnover rate..... 82.34 % 77.62 % 34.69 % 10.97 %++
BANK LOANS
Amount outstanding at end of
period (thousands)......... $ --^ $ -- $ -- n/a
Average amount of bank loans
oustanding during the
period (monthly average)
(thousands)................ $ --^ $ -- $ 121 n/a
Average number of shares
outstanding during the
period (monthly average)
(thousands)................ --^ -- 479 n/a
Average amount of debt per
share during the period.... $ --^ $ -- $ 0.25 n/a
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
+ Annualized.
++ Not annualized.
^ The Fund's line of credit expired June 15, 1999.
</TABLE>

See accompanying notes to financial statements.

13
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

THE BACKDROP

The Asian stock markets rallied in the final months of 1999 on the back of
rosy expectations for the technology sector. This was largely due to higher
confidence levels in Asia's economic recovery and enthusiasm for Asia's
technology and telecoms sectors. The economic backdrop in Asia has continued to
improve throughout 1999 and Asia is now reporting very strong economic growth.
Exports are growing at the fastest rate in the last five years with the
electronics industry being particularly strong. Imports, a sign of domestic
demand, are also staging a sharp rebound. Asia has made a much stronger economic
recovery than even the most optimistic of forecasters had expected and this
should lead to better profit growth.

THE FUND

The Fund posted a twelve-month return of 42.43% to December 31, 1999.
Telecom and technology stocks such as Samsung Electronics, SK Telecom, Johnson
Electric and Hutchison were the major beneficiaries of the technology euphoria
during the period and drove the MSCI Index higher. The Fund significantly
outperformed the Smaller Companies Index as the Fund's core holdings in the
technology sector in Singapore and some economic recovery plays in Malaysia
performed superbly. We also made use of earthquake-induced weakness in Taiwan to
increase weighting in the Taiwanese technology sector and the Thai component of
the portfolio rebounded nicely during the quarter as the non-performing loans
within the banking sector started to stabilize. We will continue to rotate from
defensive counters into the technology and telecom related stocks in Hong Kong
and Korea.

During the last six months, the stock market rally in Asia has broadened
from the interest rate sensitive sectors to include the consumer, manufacturing
and export sectors. Share prices have recovered sharply as the real economies in
Asia have picked up. Our emphasis on the technology sector and on stocks that
should be prime beneficiaries of the economic recovery has worked well and as a
consequence the Fund outperformed both indices.

In the next three months, reflecting our expectation of a sustainable
recovery in Asia, the Fund will continue to overweight the technology and
consumer related sectors as we believe these sectors will be the market leaders
within the smaller companies universe.

THE OUTLOOK

The transformation in Asia from the deep recession two years ago to the
world's fastest growing region has exceeded most economists' expectations. The
common feature across the Region last year was enormous current account
surpluses, lower-than pre-crisis interest rates

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

and stabilized currencies. Assuming that global market conditions remain
favorable, particularly in Japan, the regional recovery should be sustainable
although the pace will differ greatly by country. The 3Q99 GDP report has
confirmed the recovery in Hong Kong and prompted economists to revise upward
their forecasts for both 1999 and 2000. Signs of recovery are abundant in China.
The pick up in retail sales, the stabilization of the deflationary trend and
continuous improvements in exports are all bullish indicators. In Taiwan,
business has returned to normal after the September earthquake with the growth
exports and industrial production being re-established. However, growth in Korea
will probably moderate, as 1999's levels are unsustainable. Though the
Indonesian and Thai economies have been gaining momentum since last year, we are
still cautious about the outlook for their banking systems.

- -- Agnes Chow
Hong Kong

15
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 57
Portfolio Turnover: 67.24%
% of Stocks in Top 10: 33.67%
</TABLE>

FUND MANAGERS:
Robert Conlon; Agnes Chow

<TABLE>
TOP 10 HOLDINGS (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Ambit Microsystems Corp. 3.97%
Datacraft Asia Ltd. 3.97%
Venture Manufacturing 3.65%
Esprit Holdings Ltd 3.44%
JCG Holdings Ltd. 3.33%
Great Wall Tech 3.13%
Pantech 3.10%
HKR International Ltd. 3.07%
Giordano International Ltd. 3.01%
Glorious Sun Enterprises
Ltd. 3.00%
TOP 5 SECTORS (% OF NET ASSETS)
- ------------------------------------
Electronics 14.98%
Retail 9.09%
Banking 8.95%
Consumer Related 8.38%
Telecommunications 8.17%
TOP 5 COUNTRIES (% OF NET ASSETS)
- ------------------------------------
Hong Kong 36.18%
Singapore 16.03%
Taiwan 15.26%
South Korea 13.42%
Malaysia 7.73%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
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)
<S> <C> <C>
Guiness Flight Asia HSBC James
Small Cap Fund Capel SASC
Index
4/29/96* $10,000 $10,000
6/30/1996 $10,461 $9,530
9/30/1996 $10,397 $9,467
12/31/1996 $11,308 $9,720
3/31/1997 $12,046 $10,336
6/30/1997 $13,406 $9,999
9/30/1997 $12,504 $7,820
12/31/1997 $7,829 $4,464
3/31/1998 $7,684 $5,116
6/30/1998 $5,005 $3,280
9/30/1998 $4,530 $2,921
12/31/1998 $5,415 $3,822
03/31/99 $4,916 $3,765
06/30/99 $6,911 $5,900
09/30/99 $6,517 $5,138
12/31/99 $7,712 $5,478
* Inception date.
Average Annual Total Return
One Year Since Inception
42.43% -6.82%
Past performance is not predictive of future performance
</TABLE>

16
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 102.04%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
CHINA: 4.07%
1,214,000 Great Wall Tech....................................... $ 1,179,171
466,000 Guangdong Kelon Electric Holdings - H................. 353,712
-----------
Total China........................................... 1,532,883
-----------
HONG KONG: 36.18%
500,000 ASM Pacific Technology................................ 887,688
800,000 Cafe De Coral Holdings................................ 321,626
5,100,000 China Pharmaceutical Enterprises...................... 642,995
510,000 China Pharmaceuticals Wts............................. 9,186
277,214 Dah Sing Financial Holdings........................... 1,105,575
1,200,840 Esprit Holdings Ltd................................... 1,297,704
1,100,000 Giordano International Ltd............................ 1,132,124
3,000,000 Glorious Sun Enterprises Ltd.......................... 1,128,908
1,650,400 HKR International Ltd................................. 1,157,170
1,700,000 Hung Hing Print Group................................. 639,714
3,867,500 IDT International..................................... 447,800
2,230,000 JCG Holdings Ltd...................................... 1,255,146
960,000 Pine Technology....................................... 185,257
1,752,000 Quality Healthcare Asia Ltd........................... 676,187
500,000 Shui On Construction.................................. 736,524
2,740,000 Shun Tak Holdings. Ltd................................ 521,703
4,508,000 Texwinca Holdings Ltd................................. 695,948
230,000 Wing Hang Bank Ltd.................................... 787,083
200,000 Wongs International Wts............................... 2,624
-----------
Total Hong Kong....................................... 13,630,962
-----------
MALAYSIA: 7.73%
180,000 Gamuda Berhad......................................... 400,263
670,000 Hap Seng Consolidated Bhd............................. 454,895
400,000 Hong Leong Bank....................................... 578,947
184,000 Malakoff Berhad....................................... 484,211
400,000 Public Finance - Foreign.............................. 454,737
84,000 Unisem Berhad......................................... 539,368
-----------
Total Malaysia........................................ 2,912,421
-----------
</TABLE>

See accompanying notes to financial statements.

17
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
PHILIPPINES: 3.59%
7,400,000 Cosmos Bottling Corp.................................. $ 454,249
402,500 Equitable Banking Corp................................ 898,908
-----------
Total Philippines..................................... 1,353,157
-----------
SINGAPORE: 16.03%
295,000 Avimo Group Ltd....................................... 534,914
138,000 Clipsal Industries Ltd................................ 152,459
180,000 Datacraft Asia Ltd.................................... 1,494,000
540,000 First Capital Corp.................................... 719,784
770,000 Flextech Holdings Ltd................................. 864,545
170,000 Natsteel Electronics Ltd.............................. 898,229
120,000 Venture Manufacturing................................. 1,376,163
-----------
Total Singapore....................................... 6,040,094
-----------
SOUTH KOREA: 13.42%
27,930 Dongwon Securities.................................... 602,629
8,400 Korea Chemical Co..................................... 547,424
77,800 Korea Circuit Co...................................... 681,735
7,000 Korea Thrunet Co. Ltd................................. 416,500
52,000 Pantech............................................... 1,167,767
12,000 Seoul City Gas Co..................................... 221,929
13,280 Shinsegae Department Stores........................... 671,310
242,480 Woong Jin Publishing.................................. 747,406
-----------
Total South Korea..................................... 5,056,700
-----------
TAIWAN: 15.26%
201,250 Ambit Microsystems Corp............................... 1,495,734
250,000 Chroma ATE Inc.*...................................... 733,652
447,600 CTCI Corp............................................. 304,111
202,400 D-Link Corp........................................... 439,018
168,000 Micro Star International Co........................... 932,440
88,000 Prodisc International................................. 412,632
130,000 Systex Corp........................................... 887,400
</TABLE>

See accompanying notes to financial statements.

18
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

<TABLE>
<C><S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.................................... $11,493,222
Gross unrealized depreciation.................................... (3,604,861)
-----------
$ 7,888,361
===========
</TABLE>

See accompanying notes to financial statements.

19
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY (UNAUDITED)

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
% OF
INDUSTRY NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Agriculture................................................. 1.29%
Banking..................................................... 8.95
Cable TV.................................................... 1.60
Chemical.................................................... 1.45
Computer Equipment.......................................... 7.10
Computers................................................... 2.36
Construction................................................ 3.83
Consumer Related............................................ 8.38
Electronics................................................. 14.98
Finance..................................................... 7.96
Food & Beverage............................................. 2.41
Manufacturing............................................... 5.46
Materials................................................... 1.70
Medical Products............................................ 1.79
Pharmaceuticals............................................. 1.73
Publishing.................................................. 1.98
Real Estate................................................. 6.14
Retail...................................................... 9.09
Technology.................................................. 2.26
Telecommunications.......................................... 8.17
Transportation.............................................. 1.38
Utilities................................................... 0.59
Wholesale................................................... 1.44
------
TOTAL INVESTMENTS IN SECURITIES............................. 102.04
LIABILITIES LESS OTHER ASSETS............................... (2.04)
------
NET ASSETS.................................................. 100.00%
======
</TABLE>

See accompanying notes to financial statements.

20
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $30,555,803)...... $ 38,444,164
Receivables:
Dividends and interest.................................. 22,176
Fund shares sold........................................ 58,296
Due from Advisor (Note 3)................................... 22,824
Prepaid expenses............................................ 52,344
Deferred organization costs, net............................ 2,317
------------
Total assets............................................ 38,602,121
------------

LIABILITIES
Payables:
Fund shares redeemed.................................... 93,310
Distributions to shareholders........................... 34,875
Cash overdraft (Note 5)..................................... 716,574
Accrued expenses............................................ 83,441
------------
Total liabilities....................................... 928,200
------------
NET ASSETS.................................................. $ 37,673,921
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($37,673,921/3,959,833 shares outstanding; unlimited
number of shares authorized without par value).......... $9.51
-----
------
SOURCE OF NET ASSETS
Paid-in capital......................................... $119,108,000
Accumulated net realized loss on investments............ (89,323,527)
Net unrealized appreciation on:
Investments......................................... 7,888,361
Foreign currency.................................... 1,087
------------
NET ASSETS.................................................. $ 37,673,921
============
</TABLE>

See accompanying notes to financial statements.

21
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $35,315)........ $ 906,791
Interest.................................................... 19,323
-----------
Total investment income................................. 926,114
-----------

EXPENSES
Advisory fees (Note 3)...................................... 371,860
Administration fee (Note 3)................................. 92,950
Custodian................................................... 82,191
Accounting.................................................. 49,780
Transfer agent fees......................................... 171,632
Audit fees.................................................. 20,332
Legal fees.................................................. 9,942
Insurance................................................... 6,500
Trustees' fees.............................................. 7,993
Registration fees........................................... 15,001
Reports to shareholders..................................... 39,652
Deferred organization costs amortization.................... 1,748
Miscellaneous............................................... 11,271
-----------
Total expenses.......................................... 880,852
Interest expense........................................ 14,151
Commitment fee on credit line........................... 3,077
Less: Expenses reimbursed (Note 3)...................... (152,568)
-----------
Net expenses............................................ 745,512
-----------
NET INVESTMENT INCOME............................... 180,602
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments............................ (7,588,710)
Net realized loss on foreign currency....................... (36,295)
Net change in unrealized appreciation on:
Investments............................................. 18,363,984
Foreign currency........................................ 2,364
-----------
Net realized and unrealized gain on investments......... 10,741,343
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $10,921,945
===========
</TABLE>

See accompanying notes to financial statements.

22
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

STATEMENTS OF CHANGES IN NET ASSETS

DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............... (296,390) --
------------ ------------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 11,051,386 43,055,704
Net asset value of shares issued on
reinvestment of distributions.......... 261,515 --
Cost of shares redeemed.................. (33,681,411) (73,441,121)
------------ ------------
NET DECREASE FROM CAPITAL SHARE
TRANSACTIONS........................... (22,368,510) (30,385,417)
------------ ------------
TOTAL DECREASE IN NET ASSETS......... (11,742,955) (59,061,225)

NET ASSETS
Beginning of year........................ 49,416,876 108,478,101
------------ ------------
End of year (including undistributed net
investment income of $0 and $0,
respectively).......................... $ 37,673,921 $ 49,416,876
============ ============

CHANGES IN CAPITAL SHARES
Shares sold.............................. 1,407,392 6,060,579
Shares reinvested from distributions..... 27,499 --
Shares redeemed.......................... (4,823,217) (9,867,240)
------------ ------------

Net Decrease......................... (3,388,326) (3,806,661)
============ ============
</TABLE>

See accompanying notes to financials statements.

23
<PAGE>
GUINNESS FLIGHT ASIA SMALL CAP FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
APRIL 29,
FOR THE YEAR FOR THE YEAR FOR THE YEAR 1996*
ENDED ENDED ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 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............ 0.05 0.06 0.07 0.02
Net realized and unrealized gain
(loss) on investments.......... 2.81 (3.06) (4.38) 1.61
------- ------- -------- -------
Total from investment operations... 2.86 (3.00) (4.31) 1.63
------- ------- -------- -------
Less distributions:
From net investment income....... (0.08) -- -- (0.02)
From taxable net realized
gains.......................... -- -- (0.01) (0.01)
Return of capital................ -- -- (0.05) --
------- ------- -------- -------
Total distributions................ (0.08) -- (0.06) (0.03)
------- ------- -------- -------
Net asset value, end of period..... $ 9.51 $ 6.73 $ 9.73 $ 14.10
======= ======= ======== =======
Total return....................... 42.43 % (30.83)% (30.77)% 13.08 %++
Ratios/supplemental data:
Net assets, end of period
(thousands)...................... $37,674 $49,417 $108,478 $50,868
Ratio of expenses to average net
assets:
Before expense reimbursement/
recoupment..................... 2.39 % 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..................... 0.07 % 0.52 % 0.53 % (0.76)%+
After expense reimbursement/
recoupment..................... 0.48 % 0.85 % 0.49 % 0.36 %+
Portfolio turnover rate............ 67.24 % 48.95 % 52.33 % 21.91 %++
BANK LOANS
Amount outstanding at end of period
(thousands)...................... $ --^ $ 810 n/a n/a
Average amount of bank loans
oustanding during the period
(monthly average) (thousands).... $ 654^ $ 67 n/a n/a
Average number of shares
outstanding during the period
(monthly average) (thousands).... 5,519^ 6,566 n/a n/a
Average amount of debt per share
during the period................ $ 0.12^ $ 0.01 n/a n/a
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
+ Annualized.
++ Not annualized.
^ The Fund's line of credit expired June 15, 1999.
</TABLE>

See accompanying notes to financial statements.

24
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

THE BACKDROP

Although Chinese stocks consolidated following the strong performance in
November due to China's impending accession into the World Trade Organization,
the combination of strong market growth potential in China unleashed by the WTO
entry and the emergence of a global investment theme in technology and the
Internet has resulted in technology and telecom stocks being the focus of
attention. Improvements in exports and consumer confidence are helping China
absorb excess production capacity and inventory. The provisional full year 1999
industrial production growth of 8.8% has maintained the level achieved in 1998.

The economic recovery in Asia is now feeding through into Hong Kong's
economy as GDP growth of 4.5% in 3Q99 illustrated. A turnaround in China trade
was the main growth driver, but private consumption is also starting to increase
again. Changes to the Hang Seng Index in December reflect the underlying changes
taking place, namely the reduction in the importance of property and a growing
emphasis on communications and technology. In the real estate sector, secondary
market prices have risen and the outlook has improved further following the
government's recent decision to gradually reduce the supply of public housing
and switch supply to the private sector.

China Telecom continued its strong run that has seen it more than double
during the final quarter while Cheung Kong and Hutchison Whampoa rose more than
50%. The property sector staged a rally in the latter part of the year as the
developers announced plans to diversify into technology ventures. Property
prices are also expected to rally in 2000. That and a series of land premium
agreements provided more fundamental support. By contrast, the banking sector
lagged the performance of the overall market.

THE FUND

Taking the year as a whole, the Fund did much better over the second half
outperforming the Hang Seng Index by 0.84% than it did over the first where it
under performed by 6.6%. The underweight position in HSBC, particularly in the
first quarter, and the mistaken cautious stance taken during the second quarter
in anticipation of rising U.S. Interest Rates were the main problems in the
first half. In the second half of the year there was an improvement on the
first, due to the underweight position in HSBC now helping performance,
increased weightings in telecommunications and the timely addition of Cathay
Pacific Airways. Over the year as a whole 10 Hang Seng Index stocks
outperformed, of which two were only added in December (see below the changes to
the index). The top performers were led by China Telecom followed by Television
Broadcasts, Johnson Electric, Hutchison Whampoa and Cathay Pacific. One of the
Fund's problems was, notwithstanding the purchases, it was underweight in China
Telecom and in Cathay Pacific (until the latter part of year).

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

There were a number of changes made to the Hang Seng Index during the period
with the additions of Smartone Telecommunications, Dao Heng Bank and Johnson
Electric. These stocks accounted for almost 10% of the portfolio prior to their
inclusion in the benchmark. Guangdong Investment, Hong Kong & Shanghai Hotels,
and Hopewell were deleted. In addition the components of the sub-sectors were
altered with telecommunications companies, now accounting for 18% of the index,
being switched from utilities into the Commercial and Industrial sector. This is
designed to reflect Hong Kong's new commercial focus away from real estate and
towards the creation of a regional technology and communications hub.

The Guinness Flight China & Hong Kong Fund posted a twelve-month return of
66.27% at December 31. For the five years ending December 31, 1999, the Fund had
an average annual total return of 12.68%

THE OUTLOOK

The outlook for the Hong Kong economy in the coming year remains very
positive with Private Consumption expected to stage a recovery in addition to
the ongoing recovery in Trade that has been evident in the third and fourth
quarters of 1999. Overall GDP is forecast to grow between 4 - 4.5% in 2000.
Against this backdrop banking should do well with a resumption in corporate loan
demand (credit growth has so far been restricted to the highly competitive
mortgage market) and real estate should perform well as consumer confidence
returns. The Fund is overweight in domestic banks (heavily underweight HSBC) and
overweight in residential property developers.

- -- Edmund Harriss
Hong Kong

26
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 35
Portfolio Turnover: 29.49%
% of Stocks in Top 10: 70.41%
</TABLE>

FUND MANAGERS:
Edmund Harriss; Adrian Fu

<TABLE>
<CAPTION>
TOP 10 HOLDINGS (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Hutchison Whampoa 12.72%
China Telecom 12.50%
HSBC Holdings Plc 10.46%
Cheung Kong 8.32%
Hang Seng Bank 6.09%
Sun Hung Kai Properties
Ltd. 4.71%
Hong Kong Telecom 4.69%
Johnson Electric Holdings 4.13%
Henderson Land Development 3.83%
Dao Heng Bank Group Ltd. 2.96%
<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Real Estate 19.35%
Holding Offices 14.26%
Communication Services 13.95%
Commercial Banks 12.89%
Foreign Banks 10.46%
<CAPTION>
TOP COUNTRIES (% OF NET ASSETS)
- ------------------------------------
<S> <C>
Hong Kong 100.33%
China 0.32%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE GUINNESS FLIGHT CHINA & HONG KONG FUND AND HANG SENG INDEX
<S> <C> <C>
Guinness Flight China & Hong Kong Hang Seng
Fund Index
6/30/94* $10,000 $10,000
9/30/1994 $10,616 $10,871
12/31/1994 $9,226 $9,352
3/31/1995 $9,274 $9,805
6/30/1995 $10,040 $10,512
9/30/1995 $10,680 $11,014
12/31/1995 $11,112 $11,501
3/31/1996 $12,066 $12,510
6/30/1996 $12,254 $12,582
9/30/1996 $13,054 $13,589
12/31/1996 $14,933 $15,358
3/31/1997 $13,828 $14,311
6/30/1997 $17,080 $17,351
9/30/1997 $16,595 $17,183
12/31/1997 $11,896 $12,243
3/31/1998 $11,803 $13,151
6/30/1998 $8,634 $9,754
9/30/1998 $7,990 $8,987
12/31/1998 $10,079 $11,455
3/31/1999 $10,603 $12,493
6/30/1999 $13,111 $15,450
9/30/1999 $12,680 $14,538
12/31/1999 $16,759 $19,366
* Inception date.
Average Annual Total Return
One Year Five Years Since Inception
66.27% 12.68% 9.83%
Past performance is not predictive of future performance
</TABLE>

27
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 100.65%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
AIRLINES: 2.30%
2,112,000 Cathay Pacific Airways............................... $ 3,763,180
------------
COMMERCIAL BANKS: 12.89%
961,050 Dah Sing Financial Holdings.......................... 3,832,825
937,500 Dao Heng Bank Group Ltd.............................. 4,836,453
872,000 Hang Seng Bank....................................... 9,956,259
711,000 Wing Hang Bank Ltd................................... 2,433,115
------------
Total Commercial Banks............................... 21,058,652
------------
COMMUNICATION SERVICES: 13.95%
3,267,000 China Telecom........................................ 20,426,631
490,000 Smartone Telecommunications.......................... 2,363,952
------------
Total Communication Services......................... 22,790,583
------------
ELECTRIC SERVICES: 3.51%
700,000 CLP Holdings Ltd..................................... 3,223,980
801,000 Hong Kong Electric................................... 2,504,092
------------
Total Electric Services.............................. 5,728,072
------------
ELECTRICAL COMPONENTS & ACCESSORIES: 1.07%
1,800,000 Great Wall Tech...................................... 1,748,360
------------
ELECTRICAL INDUSTRIAL APPARATUS: 4.13%
1,052,000 Johnson Electric Holdings............................ 6,753,480
------------
FAMILY CLOTHING STORES: 2.49%
2,999,071 Esprit Holdings Ltd.................................. 3,240,988
800,000 Giordano International Ltd........................... 823,363
------------
Total Family Clothing Stores......................... 4,064,351
------------
FOREIGN BANKS: 10.46%
1,218,924 HSBC Holdings Plc.................................... 17,092,849
------------
GAS PRODUCTION & DISTRIBUTION: 1.39%
1,657,872 Hong Kong & China Gas................................ 2,271,496
------------
</TABLE>

See accompanying notes to financial statements.

28
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
GROCERY STORES: 0.43%
774,000 Dairy Farm International Holdings.................... $ 696,600
------------
HEAVY CONSTRUCTION: 1.65%
935,000 Cheung Kong Infrastructure........................... 1,804,322
699,733 New World Infrastructure............................. 895,709
------------
Total Heavy Construction............................. 2,700,031
------------
HOLDING OFFICES: 14.26%
665,000 Citic Pacific Ltd.................................... 2,502,412
1,430,000 Hutchison Whampoa.................................... 20,788,627
------------
Total Holding Offices................................ 23,291,039
------------
HOUSEHOLD APPLIANCES: 0.31%
670,000 Guangdong Kelon Electric Holdings - H................ 508,555
------------
MISC. MANUFACTURER: 0.43%
307,000 Varitronix International Ltd......................... 706,973
------------
MISC. TRANSPORTATION EQUIPMENT: 0.62%
1,225,000 Cosco Pacific Ltd.................................... 1,016,499
------------
RADIO & TELEVISION BROADCASTING: 1.06%
253,000 Television Broadcasts Ltd............................ 1,725,074
------------
REAL ESTATE: 19.35%
1,070,000 Cheung Kong.......................................... 13,593,529
1,174,000 Hang Lung Development................................ 1,329,114
975,000 Henderson Land Development........................... 6,259,166
949,600 HKR International Ltd................................ 665,807
400,000 New World Development................................ 900,553
2,052,000 Sino Land Company.................................... 1,181,359
738,000 Sun Hung Kai Properties Ltd.......................... 7,690,467
------------
Total Real Estate.................................... 31,619,995
------------
REAL ESTATE OPERATORS & LESSORS: 2.77%
520,000 Swire Pacific Ltd. A................................. 3,070,629
624,000 Wharf Holdings Ltd................................... 1,449,016
------------
Total Real Estate Operators & Lessors................ 4,519,645
------------
</TABLE>

See accompanying notes to financial statements.

29
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

<TABLE>
<C><S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation................................ $ 66,194,962
Gross unrealized depreciation................................ (2,830,623)
------------
$ 63,364,339
============
</TABLE>

See accompanying notes to financial statements.

30
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $101,070,978)..... $164,435,317
Receivables:
Fund shares sold........................................ 166,876
Dividends and interest.................................. 22,658
Prepaid expenses............................................ 40,012
------------
Total assets............................................ 164,664,863
------------

LIABILITIES
Payables:
Dividends to shareholders............................... 200,840
Fund shares redeemed.................................... 233,493
Due to Advisor (Note 3)................................. 135,829
Cash overdraft (Note 5)..................................... 587,999
Accrued expenses............................................ 135,094
------------
Total liabilities....................................... 1,293,255
------------
NET ASSETS.................................................. $163,371,608
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($163,371,608/9,255,713 shares outstanding; unlimited
number of shares authorized without par value).......... $17.65
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $180,285,229
Accumulated net realized loss on investments............ (80,277,953)
Net unrealized appreciation (depreciation) on:
Investments........................................... 63,364,339
Foreign currency...................................... (7)
------------
NET ASSETS.................................................. $163,371,608
============
</TABLE>

See accompanying notes to financial statements..

31
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- ---------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends................................................... $ 4,670,294
Interest.................................................... 19,709
-----------
Total investment income................................. 4,690,003
-----------

EXPENSES
Advisory fees (Note 3)...................................... 1,419,339
Administration fees (Note 3)................................ 354,835
Custodian................................................... 153,473
Accounting.................................................. 49,618
Transfer agent fees......................................... 360,593
Audit fees.................................................. 24,623
Legal fees.................................................. 47,543
Insurance fees.............................................. 18,727
Trustees' fees.............................................. 10,189
Registration fees........................................... 29,052
Reports to shareholders..................................... 88,669
Deferred organization costs amortization.................... 6,118
Miscellaneous............................................... 15,005
-----------
Total expenses.......................................... 2,577,784
Interest expense........................................ 41,571
Commitment fee on credit line........................... 11,358
-----------
Net expenses............................................ 2,630,713
-----------
NET INVESTMENT INCOME............................... 2,059,290
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments............................ 6,767,295
Net realized loss on foreign currency....................... (11,221)
Net change in unrealized appreciation on:
Investments............................................. 64,507,073
Foreign currency........................................ 573
-----------
Net realized and unrealized gain on investments......... 71,263,720
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $73,323,010
===========
</TABLE>

See accompanying notes to financial statements.

32
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

STATEMENTS OF CHANGES IN NET ASSETS

DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............... (2,356,556) (3,140,006)
------------ ------------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 51,982,170 280,201,719
Net asset value of shares issued on
reinvestment of distributions.......... 2,155,716 2,903,219
Cost of shares redeemed.................. (108,542,550) (330,541,963)
------------ ------------
NET DECREASE FROM CAPITAL SHARE
TRANSACTIONS........................... (54,404,664) (47,437,025)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................. 16,561,790 (94,998,352)
------------ ------------

NET ASSETS
Beginning of year........................ 146,809,818 241,808,170
------------ ------------
End of year (including undistributed net
investment income of $0 and $51,696,
respectively).......................... $163,371,608 $146,809,818
============ ============

CHANGES IN CAPITAL SHARES
Shares sold.............................. 4,077,661 27,046,226
Shares reinvested from distributions..... 122,137 308,245
Shares redeemed.......................... (8,576,220) (32,456,034)
------------ ------------

Net Decrease......................... (4,376,422) (5,101,563)
============ ============
</TABLE>

See accompanying notes to financial statements.

33
<PAGE>
GUINNESS FLIGHT CHINA & HONG KONG FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.77 $ 12.91 $ 17.71 $ 13.64 $ 11.47
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income........................... 0.23 0.15 0.20 0.19 0.14
Net realized and unrealized gain (loss) on
investments................................... 6.91 (2.14) (3.71) 4.43 2.20
--------- --------- --------- --------- ---------
Total from investment operations.................. 7.14 (1.99) (3.51) 4.62 2.34
--------- --------- --------- --------- ---------

Less distributions:
From net investment income...................... (0.26) (0.15) (0.20) (0.19) (0.14)
From taxable net realized gains................. -- -- (1.09) (0.36) (0.03)
--------- --------- --------- --------- ---------
Total distributions............................... (0.26) (0.15) (1.29) (0.55) (0.17)
--------- --------- --------- --------- ---------
Net asset value, end of period.................... $ 17.65 $ 10.77 $ 12.91 $ 17.71 $ 13.64
========= ========= ========= ========= =========
Total return...................................... 66.27% (15.27)% (20.34)% 34.38% 20.45%

Ratios/supplemental data:
Net assets, end of period (thousands)............. $ 163,372 $ 146,810 $ 241,808 $ 311,521 $ 55,740
Ratio of expenses to average net assets:
Before expense reimbursement (recoupment)....... 1.86% 1.89% 1.70% 1.78% 3.02%+
After expense reimbursement (recoupment)........ 1.86% 1.89% 1.70% 1.96% 1.98%
Ratio of net investment income to average net
assets:
Before expense reimbursement (recoupment)....... 1.45% 1.60% 1.18% 1.57% 0.49%
After expense reimbursement (recoupment)........ 1.45% 1.60% 1.18% 1.39% 1.52%
Portfolio turnover rate......................... 29.49% 86.59% 53.62% 30.40% 10.89%
BANK LOANS
Amount outstanding at end of period (thousands)... $ --^ $ 4,274 -- -- n/a
Average amount of bank loans oustanding during the
period (monthly average) (thousands)............ $ 1,017^ $ 8,765 $ 2,305 $ 1,413 n/a
Average number of shares outstanding during the
period (monthly average) (thousands)............ 12,041^ 18,533 16,944 11,419 n/a
Average amount of debt per share during the
period.......................................... $ 0.08^ $ 0.47 $ 0.14 $ 0.12 n/a
</TABLE>

- ----------------------------------------

<TABLE>
<S> <C>
+ 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%
^ The Fund's line of credit expired June 15, 1999.
</TABLE>

See accompanying notes to financial statements.

34
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

THE BACKDROP

Moving into the final months of 1999, the market was under pressure from a
number of quarters: investors became concerned that recent weakness could lead
to a fully-fledged correction; nervousness about the 5 October Federal Open
Market Committee (FOMC) meeting in early October; and a series of corporate
profit warnings.

In October the FOMC again decided to keep the federal funds rate unchanged
at 5.25%, however, the Committee announced that its monetary policy stance would
change to a tightening bias. The November meeting resulted in the long awaited
rate hike to 5.50% and a neutral bias. With that rate hike behind the market and
little prospect of another during 1999, the market rallied yet higher for the
remainder of the year. Underlying this surge was economic data pointing to US
GDP growth in the region of 5.5%

The ISDEX ended the year quite strongly as the broad markets closed at
record highs on the last trading day of the century. The month of December was
notably strong as companies generated a good deal of positive news flow.
Contrary to the expectation of a seasonal slowdown, companies unveiled products
and announced new corporate alliances.

At the end of the previous 3Q99, many companies reported better than
expected earnings, including AOL, Yahoo! and Amazon.com. Earnings at Amazon.com
were up 135%, however, the company reported losses as a result of heavy
investment in marketing expenditure. Other companies reported numbers largely in
line with expectations though some earnings, such as eBay, were below the
Street's "whisper number."

Amongst movers and shakers, Cisco announced that it would join forces with
Siemens AG to upgrade Switzerland's telecom network beginning in January 2000.
Separately, the company unveiled enhanced virtual private network products for
higher speed access.

Another Nasdaq giant, Yahoo!, ramped up as it prepared to join the S&P500
index. About the same time, it was ranked the most-accessed portal in European
countries, in addition to its prominence in North America. This prominence has
made Yahoo! a destination of choice for main street retailers looking to
leverage its reach.

Securing transactions for online customers was Verisign, whose price
followed the likes of Yahoo! upwards. That share has climbed 258% in 4Q99. Also
contributing to the price move was an announcement that Verisign was involved in
enhancing protocols for WAP (Wireless Application Protocol) so that the market
for securing mobile internet transactions would also be dominated by them. In
the same business, Check Point Software also posted hefty gains of 135% as
network security companies came into the limelight.

Weighing negatively on the Fund and the index, were such major counters as
Amazon.com. Amazon.com in particular, suffered movement out of e-tailers and
into other

35
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND (CONTINUED)

Internet issues. However, Amazon.com has about 23% of unique web users visiting
it, which is powerful web reach, and should continue to place the company at the
fore of investors' minds.

Overall, investors in 1999 coveted shares of companies poised to take
advantage of the Internet, whether as purveyors or as builders of parts of it.
Closer inspection also suggests that it is the biggest and hottest stocks that
have thrived. Going into the year 2000, analysts are suggesting that technology
stocks are set to continue their strong performance if Asian and Latin American
countries continue to recover from the crises of 1998.

THE FUND

From its inception on July 31, 1999 to December 31, 1999 the Fund posted an
82.08% return.

The full replication method was employed in tracking the Internet.com index.
As a result all 50 constituent stocks were bought in the respective index
weightings.

THE OUTLOOK

It is difficult not to be bullish on the Internet. While we do not wish to
engage in more of the 'hype' surrounding it, the Internet remains fundamentally
the most dynamic and powerful communication medium ever. It is a very young
medium and it is changing at a rate so rapid that the phrase "Internet Time" has
entered the lexicon. The potential of the Internet and the extremely rapid rate
of change embodied in the industry simultaneously represent risk and reward. The
Internet industry as a whole is a growth industry. But the rapid rate of change
means that some of today's obvious winners may not be tomorrow's winners.

- -- Doug Blatch
Cape Town, South Africa

internet.com Disclaimer: internet.com is a trademark, "ISDEX" is a
registered trademark, and ISDEX and internet.com are service marks of
internet.com Corporation, and are used solely with the express permission of
internet.com. internet.com makes no warranty, express or implied, including
warranties of merchantability or fitness for a particular purpose or otherwise,
to any person or entity as to the results to be obtained from, the performance
of or any data included in, or any other matters concerning the ISDEX Index or
the trademarks or service marks described above. Under the license agreement,
internet.com is partially compensated for its license to Investec Guinness
Flight and the Fund of the service mark and trademarks described above based on
the total assets invested in the Fund.

36
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 50
Portfolio Turnover: 13.30%
% of Stocks in Top 10: 59.78%
</TABLE>

FUND MANAGER:
Doug Blatch
<TABLE>
<CAPTION>
TOP 10 HOLDINGS (% OF NET ASSETS)
- ----------------------------------------
<S> <C>
Yahoo!, Inc. 10.10%
Cisco Systems, Inc. 9.67%
America Online, Inc. 9.59%
CMGI, Inc. 6.55%
Broadcom Corp. 5.46%
Amazon.Com, Inc. 4.99%
VeriSign, Inc. 3.77%
Juniper Networks 3.39%
At Home Corp. 3.14%
eBay, Inc. 3.12%

<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
Content 26.98%
Software 25.69%
Enablers 24.25%
Etailers and e-commerce 13.61%
Security 6.28%
<CAPTION>

TOP COUNTRIES (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
United States 97.32%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND AND INTERNET
INDEX AND NASDAQ COMPOSITE INDEX
<S> <C> <C> <C>
Guinness Flight
Internet.com Internet Nasdaq
Fund Index Composite Index
7/31/1999* $11,256 $11,541 $10,408
12/31/99 $18,208 $18,833 $15,422
*Inception date.
Total Return
Since Inception 82.08%
Past performance is not predictive of future performance
</TABLE>

37
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 97.32%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
ACCESS: 0.51%
2,690 Earthlink Network, Inc.*................................. $ 114,325
5,300 Prodigy Communications Corp.*............................ 102,688
-----------
Total Access............................................. 217,013
-----------
CONTENT: 26.98%
10,160 CMGI, Inc.*.............................................. 2,813,050
6,070 CNET, Inc.*.............................................. 344,473
3,720 Doubleclick, Inc.*....................................... 941,393
2,300 Go2net, Inc.*............................................ 200,100
3,980 Infospace.com, Inc.*..................................... 851,720
8,860 Inktomi Corp.*........................................... 786,325
2,440 iVillage, Inc.*.......................................... 49,410
2,750 Network Solutions, Inc.*................................. 598,297
3,100 S1 Corp.*................................................ 242,188
1,950 Sportsline USA, Inc.*.................................... 97,744
5,370 StarMedia Network, Inc.*................................. 215,136
1,840 24/7 Media, Inc.*........................................ 103,500
10,020 Yahoo!, Inc.*............................................ 4,335,529
-----------
Total Content............................................ 11,578,865
-----------
ENABLERS: 24.25%
7,510 Ariba, Inc.*............................................. 1,332,086
8,600 Broadcom Corp.*.......................................... 2,342,425
38,730 Cisco Systems, Inc.*..................................... 4,148,950
5,790 IXL Enterprises Inc.*.................................... 321,345
4,280 Juniper Networks*........................................ 1,455,200
4,260 net2phone inc*........................................... 195,694
7,090 usweb corp*.............................................. 315,062
6,370 Verio, Inc.*............................................. 294,214
-----------
Total Enablers........................................... 10,404,976
-----------
ETAILERS & E-COMMERCE: 13.61%
28,150 Amazon.Com, Inc.*........................................ 2,142,918
14,410 Ameritrade Holding Corp.*................................ 312,517
2,970 Beyond.com Corp.*........................................ 23,203
</TABLE>

See accompanying notes to financial statements.

38
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
ETAILERS & E-COMMERCE: (CONTINUED)
10,680 eBay, Inc.*.............................................. $ 1,337,002
9,890 etoys*................................................... 259,613
20,190 E*trade Group, Inc.*..................................... 527,464
3,760 GOTO.com Inc.*........................................... 220,900
5,660 mp3.com*................................................. 179,351
12,100 Priceline.com, Inc.*..................................... 573,238
6,880 Ticketmaster Online-CitySearch, Inc.*.................... 264,450
-----------
Total Etailers & e-commerce.............................. 5,840,656
-----------
SECURITY: 6.28%
3,000 Check Point Software Technology*......................... 596,250
3,360 ISS Group, Inc.*......................................... 238,980
3,190 RSA Security Inc.*....................................... 247,225
8,470 VeriSign, Inc.*.......................................... 1,617,241
-----------
Total Security........................................... 2,699,696
-----------
SOFTWARE: 25.69%
54,560 America Online, Inc.*.................................... 4,115,869
31,410 At Home Corp.*........................................... 1,346,704
6,330 Broadvision, Inc.*....................................... 1,076,495
3,480 Concentric Network Corp.*................................ 107,228
14,080 Exodus Communications, Inc.*............................. 1,250,480
12,120 Healtheon Corp.*......................................... 454,500
1,990 Intraware Inc.*.......................................... 159,074
8,390 Lycos, Inc.*............................................. 667,529
5,260 Mindspring Enterprises, Inc.*............................ 138,897
2,990 Open Market, Inc.*....................................... 134,924
5,370 Psinet, Inc.*............................................ 331,598
6,150 RealNetworks, Inc.*...................................... 739,922
</TABLE>

See accompanying notes to financial statements.

39
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

<TABLE>
<C><S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation............... $12,599,884
Gross unrealized depreciation............... (1,146,087)
-----------
$11,453,797
===========
</TABLE>

See accompanying notes to financial statements.

40
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $30,311,967)...... $41,765,764
Cash........................................................ 353,564
Receivables:
Securities sold......................................... 1,679,564
Fund shares sold........................................ 1,362,443
Dividends and interest.................................. 3,609
Prepaid expenses............................................ 5,787
-----------
Total assets............................................ 45,170,731
-----------

LIABILITIES
Payables:
Securities purchased.................................... 2,161,740
Fund shares redeemed.................................... 27,227
Due to Advisor (Note 3)................................. 28,177
Accrued expenses............................................ 37,841
-----------
Total liabilities....................................... 2,254,985
-----------
NET ASSETS.................................................. $42,915,746
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($42,915,746/1,885,674 shares outstanding; unlimited
number of shares authorized without par value).......... $22.76
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $31,085,278
Undistributed net realized gain on investments.......... 376,671
Net unrealized appreciation on investments.............. 11,453,797
-----------
NET ASSETS.................................................. $42,915,746
===========
</TABLE>

See accompanying notes to financial statements.

41
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

STATEMENT OF OPERATIONS

EXPENSES
Advisory fees (Note 3)...................................... 59,986
Administration fees (Note 3)................................ 8,332
Custody..................................................... 35,801
Accounting.................................................. 5,704
Transfer agent fees......................................... 15,784
Audit fees.................................................. 577
Legal fees.................................................. 600
Insurance fees.............................................. 228
Trustees' fees.............................................. 1,756
Registration fees........................................... 18,332
Reports to shareholders..................................... 11,753
Miscellaneous............................................... 1,124
-----------
Total expenses.......................................... 159,977
Interest expense........................................ 182
Less: Expenses reimbursed (Note 3)...................... (69,971)
-----------
Net expenses............................................ 90,188
-----------
NET INVESTMENT LOSS................................. (80,252)
-----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments............................ 376,671
Net change in unrealized appreciation on investments........ 11,453,797
-----------
Net realized and unrealized gain on investments......... 11,830,468
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $11,750,216
===========
</TABLE>

<TABLE>
<C><S> <C>
* Commencement of operations.
</TABLE>

See accompanying notes to financial statements.

42
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
JULY 31, 1999*
THROUGH
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss......................................... $ (80,252)
Net realized gain on investments............................ 376,671
Net change in unrealized appreciation on investments........ 11,453,797
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... 11,750,216
-----------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................... 36,248,408
Net asset value of shares issued on reinvestment of
distributions............................................. --
Cost of shares redeemed..................................... (6,082,878)
-----------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS................ 30,165,530
-----------
TOTAL INCREASE IN NET ASSETS............................ 41,915,746

NET ASSETS
Beginning of period......................................... 1,000,000
-----------
End of period (including undistributed net investment income
of $0).................................................... $42,915,746
===========

CHANGES IN CAPITAL SHARES
Shares sold................................................. 2,168,975
Shares reinvested from distributions........................ --
Shares redeemed............................................. (363,301)
-----------

Net Increase............................................ 1,805,674
===========
</TABLE>

<TABLE>
<C><S> <C>
* Commencement of operations.
</TABLE>

See accompanying notes to financial statements.

43
<PAGE>
GUINNESS FLIGHT INTERNET.COM INDEX-TM- FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
JULY 31, 1999*
THROUGH
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period........................ $ 12.50
-------
Income from investment operations:
Net investment loss....................................... (0.04)
Net realized and unrealized gain on investments........... 10.30
-------
Total from investment operations............................ 10.26
-------
Net asset value, end of period.............................. $ 22.76
=======
Total return................................................ 82.08 %++

Ratios/supplemental data:
Net assets, end of period (thousands)....................... $42,916
Ratio of expenses to average net assets:
Before expense reimbursement.............................. 2.38 %+
After expense reimbursement............................... 1.34 %+
Ratio of net investment loss to average net assets:
Before expense reimbursement.............................. (2.23)%+
After expense reimbursement............................... (1.19)%+
Portfolio turnover rate..................................... 13.30 %++
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
+ Annualized.
++ Not Annualized.
</TABLE>

See accompanying notes to financial statements.

44
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

THE BACKDROP

Chinese stocks in general remained weak over 4Q99 despite positive news
including China's November agreement with the US on W.T.O., strong export
recovery and a stable Renminbi. 4Q99 began with China stocks performing poorly
as the W.T.O. negotiations with the U.S. were expected to fail. This was
followed by a sharp rally in November when China and the U.S. finally signed a
trade agreement. But profit taking and concerns over Y2K caused Chinese shares
to fall back in December. Technology and telecom shares were the best
performers. This was due to the potentially high market growth in China as well
as the emergence of a global investment theme in technology following the strong
performance of the Nasdaq market.

THE FUND

The Fund recorded a twelve-month return of 32.20% to December 31, 1999. The
Fund has outperformed the MSCI China Free Index, the Hang Seng China Enterprises
Index and the "B" share indices as we have increased weighting in technology and
telecom stocks. Legend Holdings and China Telecom, two of our core holdings,
surged 162% and 103% respectively over the final quarter of 1999.

The weighting in the technology and telecom sectors was increased based on
our optimism in these sectors that is built on the expectation that home
personal computers and wireless communication products have very low penetration
rates in China and the impending accession of China to W.T.O. will further
accelerate the development of the telecom and technology markets. Additionally,
we have increased the weighting in consumer companies due to the improvement in
consumer demand. We have also increased the weighting in transport stocks, which
will benefit from the strong exports recovery as well as the expected increase
in trade flows. We have trimmed the auto manufacturer stocks because entry into
the W.T.O. is expected to dramatically increase competition. We have trimmed the
energy and infrastructure stocks because of the slowdown in fixed asset
investment growth.

THE OUTLOOK

The government released provisional data showing that China's GDP growth
slowed from 7.8% in 1998 to 7.1% in 1999. The slowdown in GDP growth was in line
with market expectations as the strong GDP growth in 1998 was mainly
attributable to the government's spending on infrastructure projects, which has
slowed since November 1998 (fixed asset investment growth has slowed from 14.1%
in 1998 to 7.8% in 1999). But there are more signs to suggest that the economy
appears to be bottoming out with exports recovering, imports rising and
deflationary worries easing.

45
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND (CONTINUED)

The pace of recovery in China's export growth has continued to surprise the
market (28.8% in November, 18.2% in October, 18.6% in September, 15% in 3Q99).
This was in response to an increase in Asian demand and robust U.S. demand,
particularly for China's light industrial products, including textile, garment
and consumer electronics products. With China's impending accession into the
World Trade Organization, China's export growth should improve further.

On the domestic side, there are continued signs of an improvement in
consumer demand due to the income-boosting measures by the government in
September. Nominal retail sales have improved from 6.4% in 1H99 to 7.2% in 2H99
(full year nominal retail sales 6.8%). The deflationary environment also appears
to have stabilized (retail prices -2.6% year on year in November, -2.8% in
October) despite the ongoing economic reform. We believe the government will
come up with more reflationary policies to maintain the momentum in the recovery
of consumer confidence.

The pickup in exports, the improvement in consumer demand and the ongoing
State Owned Enterprises reform are helping China to absorb the excess production
capacity and inventory. The provisional full year 1999 industrial production
growth of 8.8% has maintained the level achieved in 1998. If the recovery trend
in consumption and exports continues going forward, we will see higher
industrial production and GDP growth. Hopefully, Chinese stocks will be re-rated
by international investors as confidence in the economy improves.

We believe that investing in China needs to be long term as the stock market
is dominated by retail investors and is rumor driven. A long-term investment
strategy should be based on both top down and bottom up analysis. Looking ahead,
we believe that the China market will appreciate as the economic backdrop is
steadily improving. With the recovery in consumer confidence and the opening up
of the telecom market with China's impending accession into WTO, we believe that
consumption and technology-oriented stocks (including telecoms) will lead the
stock market.

- -- Adrian Fu
Hong Kong

46
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 39
Portfolio Turnover: 99.39%
% of Stocks in Top 10: 54.13%
</TABLE>

FUND MANAGER:
Robert Conlon; Adrian Fu
<TABLE>
<CAPTION>
- ----------------------------------------
TOP 10 HOLDINGS (% OF NET ASSETS)
- ----------------------------------------
<S> <C>
Legend Holdings Ltd. 9.31%
China Merchants Hai Hong
Holdings 6.47%
Cosco Pacific Ltd. 6.09%
Great Wall Tech 5.61%
TCL International 5.42%
Yizheng Chemical Fibre Co. 5.37%
China Telecom 5.25%
Hutchison Whampoa 4.07%
China Everbright 3.84%
Huaneng Power
International - H 2.70%

<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
Diversified Operations 13.14%
Transportation 10.28%
Electronics 9.99%
Computers 9.31%
Electric Power 8.08%
<CAPTION>
TOP SHARE TYPES (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
H Shares 47.26%
Red Chip 37.51%
Shanghai B Shares 5.15%
Shenzhen B Shares 5.03%
China Plays 3.88%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
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
<S> <C>
Guinness Flight Mainland
China Fund
11/3/1997* $10,000
12/31/97 $9,450
3/31/98 $10,267
6/30/98 $7,230
9/30/98 $6,728
12/31/98 $7,091
3/31/99 $6,198
6/30/99 $9,524
9/30/99 $8,932
12/31/99 $9,373
*Inception date.
Average Annual Total Return
One Year Since Inception
32.20% -2.95%
Past performance is not predictive of future performance

<CAPTION>
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
<S> <C>
M.S.C.I. China
Free Index
11/3/1997* $10,000
12/31/97 $7,947
3/31/98 $7,806
6/30/98 $5,055
9/30/98 $4,289
12/31/98 $4,464
3/31/99 $3,926
6/30/99 $7,096
9/30/99 $5,899
12/31/99 $4,907
*Inception date.
Average Annual Total Return
One Year
32.20%
Past performance is not predictive of future performance
</TABLE>

47
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 100.19%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
AIRLINES: 0.95%
560,000 China Southern Air.................................... $ 122,475
-----------
AUTOMOTIVE MANUFACTURER: 2.30%
68,500 Brilliance China Automotive - N....................... 222,625
608,000 Quingling Motors Company Ltd. - H..................... 73,526
-----------
Total Automotive Manufacturer......................... 296,151
-----------
CHEMICALS: 6.96%
1,762,000 Beijing Yanhua Petrochem - H.......................... 204,014
2,468,000 Yizheng Chemical Fibre Co............................. 690,583
-----------
Total Chemicals....................................... 894,597
-----------
COAL MINING: 2.60%
1,208,000 Yanzhou Coal Mining Co. - H........................... 334,131
-----------
COMPUTER EQUIPMENT: 5.61%
742,000 Great Wall Tech....................................... 720,713
-----------
COMPUTERS: 9.31%
482,000 Legend Holdings Ltd................................... 1,196,784
-----------
DIVERSIFIED OPERATIONS: 13.14%
1,010,000 China Merchants Hai Hong Holdings..................... 831,597
36,000 Hutchison Whampoa..................................... 523,350
157,000 Shanghai Industrial Holdings Ltd...................... 328,219
-----------
Total Diversified Operations.......................... 1,683,166
-----------
CONSUMER RELATED: 4.85%
646,000 Glorious Sun Enterprises Ltd.......................... 243,091
132,000 Beijing Enterprises................................... 208,029
622,000 Hengan International Group............................ 172,044
-----------
Total Consumer Related................................ 623,164
-----------
ELECTRIC POWER: 8.08%
860,000 Beijing Datang Power - H.............................. 141,618
714,472 Guangdong Electric Power - B.......................... 332,740
1,456,000 Huaneng Power International - H....................... 346,533
</TABLE>

See accompanying notes to financial statements.

48
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC POWER: (CONTINUED)
905,000 Zhejiang Southeast Electricity - B.................... $ 217,200
-----------
Total Electric Power.................................. 1,038,091
-----------
ELECTRONICS: 9.99%
394,000 Guangdong Kelon Electric Holdings - H................. 299,060
914,000 Nanjing Panda Electronics............................. 229,294
304,000 Pine Technology....................................... 58,665
994,000 TCL International..................................... 696,938
-----------
Total Electronics..................................... 1,283,957
-----------
ENGINEERING & INFRASTRUCTURE: 4.15%
902,000 Jiangsu Expressway Co. Ltd. - H....................... 147,375
1,254,000 Shenzen Expressway Co. - H............................ 198,433
1,240,000 Zhejiang Expressway Co. - H........................... 188,241
-----------
Total Engineering & Infrastructure.................... 534,049
-----------
FINANCE: 3.84%
600,000 China Everbright...................................... 494,018
-----------
FOOD & BEVERAGE: 2.55%
636,000 Ng Fung Hong Ltd...................................... 327,287
-----------
MANUFACTURERS/MACHINERY: 0.90%
172,952 China International Marine Containers - B............. 115,702
-----------
METALS: 2.32%
2,664,000 Jiangxi Copper - H.................................... 298,171
-----------
PHARMACEUTICALS: 2.60%
296,000 China Pharmaceuticals Wts............................. 5,331
2,610,000 China Pharmaceutical Enterprises...................... 329,062
-----------
Total Pharmaceuticals................................. 334,393
-----------
</TABLE>

See accompanying notes to financial statements.

49
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

<TABLE>
<C><S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.................... $ 2,990,034
Gross unrealized depreciation.................... (1,655,416)
-----------
$ 1,334,618
===========
</TABLE>

See accompanying notes to financial statements.

50
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $11,541,467)...... $12,876,085
Receivables:
Fund shares sold........................................ 66,800
Dividends and interest.................................. 353
Prepaid expenses............................................ 11,862
Deferred organization costs, net............................ 13,707
-----------
Total assets............................................ 12,968,807
-----------

LIABILITIES
Payables:
Distributions to shareholders........................... 7,731
Fund shares redeemed.................................... 26,403
Due to Advisor (Note 3)................................. 7,679
Cash overdraft (Note 5)..................................... 43,383
Accrued expenses............................................ 31,960
-----------
Total liabilities....................................... 117,156
-----------
NET ASSETS.................................................. $12,851,651
===========

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($12,851,651/1,120,056 shares outstanding; unlimited
number of shares authorized without par value).......... $11.47
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $15,086,468
Undistributed net investment income..................... 2,240
Accumulated net realized loss on investments............ (3,571,674)
Net unrealized appreciation (depreciation) on:
Investments......................................... 1,334,618
Foreign currency.................................... (1)
-----------
NET ASSETS.................................................. $12,851,651
===========
</TABLE>

See accompanying notes to financial statements.

51
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends................................................... $ 305,776
Interest.................................................... 14,381
----------
Total investment income................................. 320,157
----------

EXPENSES
Advisory fees (Note 3)...................................... 114,272
Administration fees (Note 3)................................ 28,561
Custodian................................................... 36,411
Accounting.................................................. 41,168
Transfer agent fees......................................... 78,992
Audit fees.................................................. 22,367
Legal fees.................................................. 4,618
Insurance................................................... 1,478
Trustees' fees.............................................. 4,861
Registration fees........................................... 20,507
Reports to shareholders..................................... 17,454
Deferred organization costs amortization.................... 4,799
Miscellaneous............................................... 3,608
----------
Total expenses.......................................... 379,096
Interest expense........................................ 1,089
Commitment fee on credit line........................... 935
Less: Expenses reimbursed (Note 3)...................... (154,800)
----------
Net expenses............................................ 226,320
----------
NET INVESTMENT INCOME............................... 93,837
----------

REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments............................ (1,053,620)
Net realized loss on foreign currency....................... (962)
Net change in unrealized appreciation on:
Investments............................................. 3,704,964
Foreign currency........................................ 20
----------
Net realized and unrealized gain on investments......... 2,650,402
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $2,744,239
==========
</TABLE>

See accompanying notes to financial statements.

52
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

STATEMENTS OF CHANGES IN NET ASSETS

DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............... (93,100) (152,968)
----------- -----------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 9,273,394 7,893,569
Net asset value of shares issued on
reinvestment of distributions.......... 85,368 144,254
Cost of shares redeemed.................. (9,511,369) (9,256,759)
----------- -----------
NET DECREASE FROM CAPITAL SHARE
TRANSACTIONS........................... (152,607) (1,218,936)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................. 2,498,532 (6,048,551)

NET ASSETS
Beginning of year........................ 10,353,119 16,401,670
----------- -----------
End of year (including undistributed net
investment income
of $2,240 and $1,503, respectively).... $12,851,651 $10,353,119
=========== ===========

CHANGES IN CAPITAL SHARES
Shares sold.............................. 888,050 743,724
Shares issued on reinvestment of dividend
distributions.......................... 7,445 16,203
Shares redeemed.......................... (959,562) (967,054)
----------- -----------
Net Decrease......................... (64,067) (207,127)
=========== ===========
</TABLE>

See accompanying notes to financial statements.

53
<PAGE>
GUINNESS FLIGHT MAINLAND CHINA FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
NOVEMBER 3,
FOR THE YEAR FOR THE YEAR 1997*
ENDED ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 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........... 0.09 0.11 0.02
Net realized and unrealized gain
(loss) on investments......... 2.72 (3.05) (0.71)
------- ------- -------
Total from investment operations.... 2.81 (2.94) (0.69)
------- ------- -------
Less distributions:
From net investment income...... (0.08) (0.11) (0.02)
------- ------- -------
Net asset value, end of period...... $ 11.47 $ 8.74 $ 11.79
======= ======= =======
Total return........................ 32.20 % (24.96)% (5.50)%**
Ratios/supplemental data:
Net assets, end of period
(thousands)....................... $12,852 $10,353 $16,402
Ratio of expenses to average net
assets:
Before expense reimbursement.... 3.33 % 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.... (0.53)% (0.05)% 1.17 %+
After expense reimbursement..... 0.82 % 1.10 % 1.88 %+
Portfolio turnover rate............. 99.39 % 82.00 % --**
BANK LOANS
Amount outstanding at end of period
(thousands)....................... $ --^ $ 115 n/a
Average amount of bank loans
oustanding during the period
(monthly average) (thousands)..... $ 16^ $ 10 n/a
Average number of shares outstanding
during the period (montly average)
(thousands)....................... 1,164^ 1,403 n/a
Average amount of debt per share
during the period................. $ 0.01^ $ 0.01 n/a
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
** Not annualized.
+ Annualized.
^ The Fund's line of credit expired June 15, 1999.
</TABLE>

See accompanying notes to financial statements.

54
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

THE BACKDROP

At the start of the 1999 investors were not especially sanguine about the
immediate future of the European economy, notwithstanding very low interest
rates, a determination by governments to loosen fiscal policy (after years of
preparation for the launch of the Euro) and a steadily improving world economy.
Unemployment levels throughout the year have been on a decreasing trend.

Inflation at the same time was, and still is, remarkably low. The
introduction of new technologies, amongst which mobile telephony and the
Internet can be cited as the best examples, have served to bolster the
productivity of the industrialized world. New technologies and their associated
millennium bug threat did however cause temporary changes in monetary policy in
the final quarter which served to increase the world economy's liquidity and
perhaps also help push European markets to new heights.

It goes almost without saying that at the end of 1999, investors
apprehensions have switched around completely and the fears are now of
over-heating economies globally and increasing rates of inflation. Indeed bond
markets have experienced one of their worst bear markets in recent times.

The strength that was seen in the value of the Euro during the middle of
1999 was totally reversed and on New Year's Eve stood at 1.0062, a fall of
13.97% from its January level of 1.1697. Whilst this has naturally undermined
the translation into dollars of the gains European markets, it has served to
bolster significantly the competitiveness of European industry. At the same time
the acceleration of the domestic European economy has continued, driven by
improvements in capital expenditure, consumption and less restrictive fiscal
policies. Partly in response to this and also an increase in money supply, the
European Central Bank increased interest rates to three percent.

Mergers and acquisitions activity was still in evidence during the year.
Vodafone's hostile take-over bid for Mannesmann is the clearest example of this.
Equity issuance by contrast abated somewhat ahead of the change in millennium.

THE FUND

The Guinness Flight New Europe Fund outperformed its closest benchmark
index, the FT/S&P Europe dollar adjusted index, through December 31, 1999. The
Fund posted a twelve-month return of 19.79%.

We continued our strategy of emphasizing growth-oriented companies. Existing
holdings were largely maintained and supplemented with new investments typically
in the fields of technology, media and telecommunications. Investments were made
in five initial public

55
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND (CONTINUED)

offerings and, as has been seen elsewhere in the world, each attained
significant growth on their first days of trading. Three of these IPO
investments exceeded our target valuations and profits were taken.

THE OUTLOOK

The outlook for European markets is more mixed after the surge in markets
witnessed during the last months of 1999. Technology, media and
telecommunications companies have helped cause overall markets to attain new
heights at a time when bond markets continue in their bear phase.

- -- David Potts
London

56
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 29
Portfolio Turnover: 116.92%
% of Stocks in Top 10: 52.12%
</TABLE>

FUND MANAGER:
Jeremy Podger; David Potts
<TABLE>
<CAPTION>
- ------------------------------------------
TOP 10 HOLDINGS (% OF NET ASSETS)
- ------------------------------------------
<S> <C>
Mannesmann AG 6.35%
Nokia OYJ - K Shares 5.92%
Banque National De Paris 5.40%
Tele Danmark 'B' 5.40%
Shell Transport & Trading 5.30%
Kamps AG 5.19%
CGU 5.04%
Skandia Forsakrings AB Free 4.58%
ST Microelectronics 4.55%
Lagardere Groupe 4.39%

<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
<S> <C>
- ------------------------------------------
Telecommunications Equipment 14.43%
Banking 12.15%
Oil/Petroleum Refining 11.12%
Food/Beverage 9.92%
Manufacturers 9.71%
<CAPTION>
TOP 5 COUNTRIES (% OF NET ASSETS)
<S> <C>
- ------------------------------------------
Germany 23.51%
United Kingdom 16.67%
France 16.25%
Netherlands 13.14%
Finland 5.92%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
NEW EUROPE FUND AND THE FT/S&P ACTUARIES WORLD INDEX
<S> <C>
Guinness Flight New Europe Fund
11/23/1998* $10,000
11/30/98 $10,088
12/31/98 $10,712
3/31/99 $10,080
6/30/99 $10,280
9/30/99 $10,600
12/31/99 $12,832
*Inception date.
Average Annual Total Return
One Year Since Inception
19.79% 25.34%
Past performance is not predictive of future performance

<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
NEW EUROPE FUND AND THE FT/S&P ACTUARIES WORLD INDEX
<S> <C>
FT/S&P Actuaries World Index,
Europe
11/23/1998* $10,000
11/30/98 $9,977
12/31/98 $10,062
3/31/99 $10,156
6/30/99 $10,129
9/30/99 $10,248
12/31/99 $11,801
*Inception date.
Average Annual
One Year
19.79%
Past performance is not predictive of future performance
</TABLE>

57
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 99.20%
VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
DENMARK: 5.40%
720 Tele Danmark 'B'............................................ $ 53,481
--------
FINLAND: 5.92%
324 Nokia OYJ - K Shares........................................ 58,685
--------
FRANCE: 16.25%
581 Banque National De Paris.................................... 53,552
900 Bouygues Offshore........................................... 33,780
150 Carrefour Supermarche....................................... 27,637
800 Lagardere Groupe............................................ 43,470
47 Thomson Multimedia.......................................... 2,530
--------
Total France................................................ 160,969
--------
GERMANY: 23.51%
293 Epcos....................................................... 21,817
741 Kamps AG.................................................... 51,448
850 Karstadt Quelle............................................. 34,555
260 Mannesmann AG............................................... 62,895
500 Telegate.................................................... 29,081
1,000 Zapf Creation AG............................................ 33,206
--------
Total Germany............................................... 233,002
--------
GREECE: 2.60%
2,000 Panafon Hellenic............................................ 25,800
--------
HUNGARY: 2.44%
1,150 Mol Magyar Olay - ES Gazi................................... 24,150
--------
ITALY: 3.39%
1,730 Rolo Banca SpA.............................................. 33,590
--------
NETHERLANDS: 13.14%
1,200 Buhrmann.................................................... 18,052
299 Equant...................................................... 33,908
550 Ing Groep N.V............................................... 33,173
293 ST Microelectronics......................................... 45,050
--------
Total Netherlands........................................... 130,183
--------
</TABLE>

See accompanying notes to financial statements.

58
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

PORTFOLIO OF INVESTMENTS BY COUNTRY

<TABLE>
<C> <S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation..................................... $207,699
Gross unrealized depreciation..................................... (42,622)
--------
$165,077
========
</TABLE>

See accompanying notes to financial statements.

59
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY (UNAUDITED)

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
% OF
INDUSTRY NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Banking..................................................... 12.15%
Chemicals................................................... 1.92
Computer Networking......................................... 3.42
Computer Software........................................... 0.10
Diversified Operations...................................... 4.39
Electronics................................................. 4.80
Food/Beverage............................................... 9.92
Insurance................................................... 9.62
Investing................................................... 1.35
Manufacturers............................................... 9.71
Oil/Petroleum Refining...................................... 11.12
Retail...................................................... 3.49
Telecommunications.......................................... 8.12
Telecommunications Equipment................................ 14.43
Utility..................................................... 2.84
Wholesale................................................... 1.82
------
TOTAL INVESTMENTS IN SECURITIES............................. 99.20
OTHER ASSETS LESS LIABILITIES............................... 0.80
------
NET ASSETS.................................................. 100.00%
======
</TABLE>

See accompanying notes to financial statements.

60
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $817,840)......... $ 982,917
Cash........................................................ 27,851
Receivables:
Dividends and interest.................................. 804
Prepaid expenses............................................ 7,331
----------
Total assets............................................ 1,018,903
----------

LIABILITIES
Due to Advisor (Note 3)..................................... 7,167
Accrued expenses............................................ 20,908
----------
Total liabilities....................................... 28,075
----------

NET ASSETS.................................................. $ 990,828
==========

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($990,828/61,762 shares outstanding; unlimited number of
shares authorized without par value).................... $16.04
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $ 817,282
Undistributed net realized gain on investments.......... 8,486
Net unrealized appreciation (depreciation) on:
Investments......................................... 165,077
Foreign currency.................................... (17)
----------
NET ASSETS.................................................. $ 990,828
==========
</TABLE>

See accompanying notes to financial statements.

61
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $1,104)......... $ 9,629
Interest.................................................... 1,787
--------
Total investment income................................. 11,416
--------

EXPENSES
Advisory fees (Note 3)...................................... 8,292
Administration fee (Note 3)................................. 2,075
Custodian................................................... 21,649
Accounting.................................................. 22,811
Transfer agent fees......................................... 20,306
Audit fees.................................................. 11,974
Legal fees.................................................. 378
Insurance................................................... 164
Trustees' fees.............................................. 5,473
Registration fees........................................... 28,356
Reports to shareholders..................................... 2,177
Miscellaneous............................................... 2,846
--------
Total expenses.......................................... 126,501
Interest expense........................................ 452
Commitment fee on credit line........................... 61
Less: Expenses reimbursed (Note 3)...................... (110,572)
--------
Net expenses............................................ 16,442
--------
NET INVESTMENT LOSS................................. (5,026)
--------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments............................ 11,745
Net realized loss on foreign currency....................... (3,346)
Net change in unrealized appreciation on:
Investments............................................. 149,075
Foreign currency........................................ (303)
--------
Net realized and unrealized gain on investments......... 157,171
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $152,145
========
</TABLE>

See accompanying notes to financial statements.

62
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
NOVEMBER 23,
FOR THE YEAR 1998*
ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
- ---------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment loss..................... $ (5,026) $ (97)
Net realized gain on investments........ 11,745 --
Net realized gain (loss) on foreign
currency.............................. (3,346) 87
Net change in unrealized appreciation
on:
Investments......................... 149,075 16,002
Foreign currency.................... (303) 286
---------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... 152,145 16,278
---------- --------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold............... 1,602,173 292,695
Cost of shares redeemed................. (1,172,463) --
---------- --------
NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS.......................... 429,710 292,695
---------- --------
TOTAL INCREASE IN NET ASSETS........ 581,855 308,973

NET ASSETS
Beginning of period..................... 408,973 100,000
---------- --------
End of period (including undistributed
net investment income of $0 and $0,
respectively)......................... $ 990,828 $408,973
========== ========

CHANGES IN CAPITAL SHARES
Shares sold............................. 118,230 22,534
Shares redeemed......................... (87,002) --
---------- --------
Net Increase........................ 31,228 22,534
========== ========
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
</TABLE>

See accompanying notes to financial statements.

63
<PAGE>
GUINNESS FLIGHT NEW EUROPE FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FOR THE YEAR NOVEMBER 23, 1998*
ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.... $ 13.39 $12.50
------- ------
Income from investment operations:
Net investment loss................. (0.08) --
Net realized and unrealized gain on
investments....................... 2.73 0.89
------- ------
Total from investment operations........ 2.65 0.89
------- ------
Net asset value, end of period.......... $ 16.04 $13.39
======= ======
Total return............................ 19.79 % 7.12 %++

Ratios/supplemental data:
Net assets, end of period (thousands)... $ 991 $ 409
Ratio of expenses to average net assets:
Before expense reimbursement........ 15.29 % 10.48 %+
After expense reimbursement......... 1.98 % 1.98 %+
Ratio of net investment loss to average
net assets:
Before expense reimbursement........ (13.92)% (9.01)%+
After expense reimbursement......... (0.61)% (0.46)%+
Portfolio turnover rate................. 116.92 % -- ++
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
+ Annualized.
++ Not Annualized.
</TABLE>

See accompanying notes to financial statements.

64
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

THE BACKDROP

The first week of October saw Federal Reserve Chairman Alan Greenspan
indicating that the Federal Open Market Committee (FOMC) meeting's decision was
to keep rates unchanged at 5.25%. However, the monetary policy stance was moved
to a tightening bias.

The Wired Index-TM- rose with the limited rally driven by technology shares
which then propelled the technology laden Nasdaq index to a new record high.
Yahoo! reported better than expected third quarter earnings, which boosted its
share price and improved sentiment across the broader internet sector.

The market then sold off after concerns that third quarter earnings
expectations might be on the optimistic side. Intel, a bellwether technology
stock, reported earnings below that which the market was expecting and this led
to a broad decline across other technology stocks. There were also fears of
rising inflation amid a spike up in bond yields and commodity prices. The yield
on the key 30-year treasury bond rose to the highest level since October 1997.

When Producer Price Inflation (PPI) figures were released which were much
worse than expectations, the market sold off heavily. Dell warned that it would
not meet its fourth quarter earnings due to increased chip prices stemming from
the Taiwanese earthquake.

However, sentiment began to improve when Consumer Price Inflation (CPI)
figures were in line with expectations. A strong rally led by the financial
stocks then ensued after Washington drew a step closer to key banking reform
legislation. The insurance conglomerate, American International Group (AIG)
surged on this news.

Key companies reporting third quarter earnings in excess of market
expectations included Microsoft, EMC, America OnLine, Nokia, State Street,
Affymetrix, Sun Microsystems, MCI WorldCom, Lucent and Charles Schwab.

The Wired Index ended on a very firm undertone as third quarter GDP was
announced at 4.8%, which was stronger than the market expected. After the key
Employment cost index showed, that despite the fact that the economy was growing
strongly, costs were being held in check, which led many analysts to suggest
that this indicated improved US productivity. With many of the key companies in
the index having reported better than expected earnings, the market surged
powerfully upward posting 2 of its biggest consecutive daily gains.

After the strong performance of the Wired Index towards the latter part of
October, November commenced with a small bout of profit taking. Walt Disney
reported a drop in fourth quarter profits due to slumping home video and product
licensing revenue. It indicated that it would only be able to return to its
previous long-term growth rate of 20% in over a year's time.

65
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND (CONTINUED)

A number of the constituent companies posted earnings exceeding the market's
expectations. Cisco Systems matched the Wall Street's so called 'whisper number'
by posting profits of $837 million. Highlighting the quality of this company is
the fact that in the 39 earnings' reports since the company went public, it has
never missed analyst forecasts. This share's performance boosted the performance
of technology shares in general.

The world's largest retailer, WalMart, beat analyst expectations whilst Dell
Computers came in line with the market. Dell became the number one PC supplier
in the US for the first time.

Applied Materials topped earnings expectations and forecast strong demand in
coming year.

The tight US labour market was confirmed again with the release of the
unemployment rate data, which came in at a 40-year low of 4.1%. However, average
hourly earnings came in lower than expected. Inflationary fears were then
further allayed with the release of unit labour costs, which were also lower
than expected. Together with improved productivity figures, the market rallied
strongly. The rally in technology stocks was particularly strong which powered
the index to new record highs.

The US Federal Reserve (Fed), at its Federal Open Market Committee meeting
on 16 November, increased rates by 25 basis points as a preemptive move to
combat any inflationary pressures. The Fed also announced that it was changing
its bias from tightening to neutral. This was generally expected by the market
and with rate uncertainty out the way, the index continued upward.

The strength in the US economy was confirmed by the announcement that GDP
grew by 5.5%.

The year ended on a very firm undertone on the back of strong gains to the
technology shares in the index (particularly internet related counters), the
outcome of the December Fed FOMC meeting where rates and the monetary bias were
left unchanged and the increasing confidence that Y2k fears were overdone.

The Wired Index posted a number of successive record highs as the surge in
technology related counters reached unprecedented levels towards year end.

THE FUND

The Fund recorded a twelve-month performance of 68.68% to December 31, 1999.

66
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND (CONTINUED)

We employed the full replication method in tracking the Wired Index-TM-, and
as a result, we bought all 40 constituent stocks in the respective index
weightings. Stocks such as Sony, Yahoo! and Cisco continue to dominate the
performance of the Fund and remain in the news due to their aggressive and
innovative strategies.

THE OUTLOOK

When Dow Jones added Microsoft and Intel to the Dow 30 the Wall Street
Journal noted that New Economy stocks were being added to the index. And well
they should have. It is difficult to ignore the changes brought about by the New
Economy. The changes--and prosperity--brought about by the emergence of the
Industrial Economy over a century ago took time. The emergence of the New
Economy will also take time. We are quite positive on the outlook for the New
Economy and look forward to the future.

- -- Doug Blatch
Cape Town, South Africa

Wired Disclaimer: Wired-Registered Trademark- is a registered trademark, and
Wired Index-TM- 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 Wired Index-TM- or the trademarks.

67
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 41
Portfolio Turnover: 39.82%
% of Stocks in Top 10: 35.95%
</TABLE>

FUND MANAGER:
Doug Blatch
<TABLE>
<CAPTION>
- ----------------------------------------
TOP 10 HOLDINGS (% OF NET ASSETS)
- ----------------------------------------
<S> <C>
Nokia Corp. 3.66%
Yahoo!, Inc. 3.65%
Schlumberger Ltd. 3.61%
Cable & Wireless Plc 3.61%
DaimlerChrysler AG 3.60%
Enron Corp. 3.60%
Smithkline Beecham Plc 3.58%
Qwest Communications 3.57%
Wal-Mart Stores, Inc. 3.54%
Applied Materials, Inc. 3.53%

<CAPTION>
TOP 5 SECTORS (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
Telecommunications 14.21%
Internet/New Media 7.11%
Financial Services 5.93%
Software 5.13%
Media 4.50%
<CAPTION>
TOP 5 COUNTRIES (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
United States 80.95%
United Kingdom 9.43%
Finland 3.66%
Germany 3.60%
Australia 2.26%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
WIRED INDEX-TM- FUND AND WIRED INDEX-TM-
AND NASDAQ COMPOSITE INDEX
<S> <C>
Guinness Flight Wired
Index -TM- Fund
12/15/1998* $10,000
12/31/1998 $11,160
3/31/1999 $13,408
6/30/1999 $14,016
9/30/1999 $13,440
12/31/1999 $18,824
*Inception date.
Average Annual Total Return
One Year Since Inception
68.68% 83.31%
Past performance is not predictive of future performance

<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
WIRED INDEX-TM- FUND AND WIRED INDEX-TM-
AND NASDAQ COMPOSITE INDEX
<S> <C>
Wired
Index-TM-
12/15/1998* $10,000
12/31/1998 $11,411
3/31/1999 $13,790
6/30/1999 $14,475
9/30/1999 $13,908
12/31/1999 $19,549
*Inception date.
Average Annual
One Year
68.68%
Past performance is not predictive of future performance

<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GUINNESS FLIGHT
WIRED INDEX-TM- FUND AND WIRED INDEX-TM-
AND NASDAQ COMPOSITE INDEX
Nasdaq Composite Index
12/15/1998* $10,000
12/31/1998 $10,898
3/31/1999 $12,233
6/30/1999 $13,350
9/30/1999 $13,648
12/31/1999 $20,224
*Inception date.
Average Annual
One Year
68.68%
Past performance is not predictive of future performance
</TABLE>

68
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
SHARES
COMMON STOCKS: 99.90%
VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
AGRI-CHEMICALS: 2.64%
121,539 Monsanto Co....................................... $ 4,329,827
------------
AIR TRANSPORTATION: 1.16%
28,369 AMR Corp.*........................................ 1,900,723
------------
AUTOMOBILE: 3.60%
75,495 DaimlerChrysler AG................................ 5,907,484
------------
BANKING: 1.36%
30,607 State Street Corp................................. 2,236,224
------------
BIOLOGICAL RESEARCH: 0.71%
4,954 Affymetrix, Inc.*................................. 840,632
5,440 INCYTE Pharmaceuticals, Inc.*..................... 326,400
------------
Total Biological Research......................... 1,167,032
------------
COMPUTER COMMUNICATION EQUIPMENT: 3.53%
54,000 Cisco Systems, Inc.*.............................. 5,784,750
------------
COMPUTER MANUFACTURING: 3.47%
111,526 Dell Computer Corp.*.............................. 5,687,826
------------
COMPUTER PROCESSING & DATA PREPARATION: 0.24%
16,467 Acxiom Corp.*..................................... 395,208
------------
COMPUTER STORAGE DEVICES; 3.50%
52,558 EMC Corp./Mass*................................... 5,741,962
------------
COMPUTERS: 3.46%
73,240 Sun Microsystems, Inc.*........................... 5,671,523
------------
CONSUMER ELECTRONICS: 3.48%
20,054 Sony Corp......................................... 5,710,377
------------
ENERGY/PETROLEUM: 3.60%
133,080 Enron Corp........................................ 5,905,425
------------
ENTERTAINMENT: 3.53%
197,745 Walt Disney Company............................... 5,784,041
------------
FINANCIAL SERVICES: 5.93%
150,442 Charles Schwab & Co., Inc......................... 5,773,212
</TABLE>

See accompanying notes to financial statements.

69
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
SHARES
VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES: (CONTINUED)
80,282 First Data Corp................................... $ 3,958,906
------------
Total Financial Services.......................... 9,732,118
------------
HOTEL MANAGEMENT: 0.90%
46,983 Marriott International Class A.................... 1,482,901
------------
INDUSTRY MACHINERY: 3.53%
45,676 Applied Materials, Inc.*.......................... 5,786,578
------------
INSURANCE: 3.50%
53,057 American International Group...................... 5,736,788
------------
INTERNET/NEW MEDIA: 7.11%
75,164 America Online, Inc.*............................. 5,670,184
13,854 Yahoo!, Inc.*..................................... 5,994,453
------------
Total Internet/New Media.......................... 11,664,637
------------
MEASURING & CONTROLLING DEVICES: 0.28%
30,325 Thermo Electron Corp.*............................ 454,875
------------
MEDIA: 4.50%
96,802 News Corp. Cayman ADR............................. 3,702,677
45,481 Reuters Group Plc - Sponsored ADR................. 3,675,433
------------
Total Media....................................... 7,378,110
------------
OIL, GAS SERVICES: 3.86%
105,316 Schlumberger Ltd.................................. 5,924,025
12,181 Transocean Sedco Forex Inc.*...................... 410,332
------------
Total Oil, Gas Services........................... 6,334,357
------------
</TABLE>

See accompanying notes to financial statements.

70
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
SHARES
VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS: 3.58%
91,218 Smithkline Beecham Plc............................ $ 5,877,860
------------
RETAIL: 3.54%
84,010 Wal-Mart Stores, Inc.............................. 5,807,191
------------
SATELLITE TELECOMMUNICATIONS: 0.42%
15,722 Globalstar Telecommunication*..................... 691,768
------------
SEMICONDUCTORS: 3.48%
69,300 Intel Corp........................................ 5,704,256
------------
SOFTWARE: 5.13%
49,044 Microsoft Corp.*.................................. 5,725,887
51,555 Parametric Technology Corp.*...................... 1,395,207
47,015 Peoplesoft*....................................... 1,002,007
8,082 Wind River Systems*............................... 296,003
------------
Total Software.................................... 8,419,104
------------
SPECIALTY STEEL: 0.56%
16,671 Nucor Corp........................................ 913,779
------------
TELECOMMUNICATIONS: 14.21%
111,832 Cable & Wireless Plc.............................. 5,920,107
76,980 Lucent Technologies............................... 5,759,066
108,666 MCI Worldcom, Inc.*............................... 5,766,090
136,218 Qwest Communications*............................. 5,857,373
------------
Total Telecommunications.......................... 23,302,636
------------
</TABLE>

See accompanying notes to financial statements.

71
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

PORTFOLIO OF INVESTMENTS BY INDUSTRY

<TABLE>
<C> <S> <C>
* Non-income producing security.
+ Cost for federal tax purposes is the same.
Net unrealized appreciation consists of:
Gross unrealized appreciation.......................... $ 41,374,215
Gross unrealized depreciation.......................... (2,151,339)
------------
$ 39,222,876
============
ADR - American depositary receipt.
</TABLE>

See accompanying notes to financial statements.

72
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $124,624,555)..... $163,847,431
Cash........................................................ 1,400,563
Receivables:
Securities sold......................................... 30,461,967
Fund shares sold........................................ 695,641
Dividends and interest.................................. 42,823
Prepaid expenses............................................ 28,109
------------
Total assets............................................ 196,476,534
------------

LIABILITIES
Payables:
Securities purchased.................................... 32,247,292
Distribution to shareholders............................ 277
Fund shares redeemed.................................... 60,348
Due to Advisor (Note 3)................................. 120,411
Accrued expenses............................................ 34,069
------------
Total liabilities....................................... 32,462,397
------------
NET ASSETS.................................................. $164,014,137
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($164,014,137/6,971,926 shares outstanding; unlimited
number of shares authorized without par value).......... $23.52
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $114,059,433
Undistributed net realized gain on investments.......... 10,731,828
Net unrealized appreciation on investments.............. 39,222,876
------------
NET ASSETS.................................................. $164,014,137
============
</TABLE>

See accompanying notes to financial statements.

73
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEAR
ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends (net of foreign taxes withheld of $7,601)......... $ 366,980
Interest.................................................... 50,402
-----------
Total investment income................................. 417,382
-----------

EXPENSES
Advisory fees (Note 3)...................................... 821,521
Custody..................................................... 108,496
Administration fees (Note 3)................................ 46,286
Accounting.................................................. 45,840
Transfer agent fees......................................... 114,565
Legal fees.................................................. 24,784
Insurance................................................... 8,055
Audit....................................................... 10,474
Reports to shareholders..................................... 36,544
Registration fees........................................... 24,137
Trustees' fees.............................................. 9,919
Miscellaneous............................................... 6,646
-----------
Total expenses.......................................... 1,257,267
Interest expense........................................ 2,990
Commitment fee on credit line........................... 5,032
Less: Expenses reimbursed (Note 3)...................... (27,776)
-----------
Net expenses............................................ 1,237,513
-----------
NET INVESTMENT LOSS................................. (820,131)
-----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments............................ 10,730,797
Net change in unrealized appreciation on investments........ 38,810,890
-----------
Net realized and unrealized gain on investments......... 49,541,687
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $48,721,556
===========
</TABLE>

See accompanying notes to financial statements.

74
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

STATEMENT OF CHANGES IN NET ASSETS

DISTRIBUTIONS TO SHAREHOLDERS
From net investment income.............. (2,789) --
------------ ----------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold............... 146,353,712 9,038,161
Net asset value of shares issued on
reinvestment of distributions......... 2,512 --
Cost of shares redeemed................. (40,494,151) (569,136)
------------ ----------

NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS.......................... 105,862,073 8,469,025
------------ ----------
TOTAL INCREASE IN NET ASSETS........ 154,580,840 8,883,297

NET ASSETS
Beginning of period..................... 9,433,297 550,000
------------ ----------
End of period (including undistributed
net investment income of $0 and
$1,255, respectively)................. $164,014,137 $9,433,297
============ ==========

CHANGES IN CAPITAL SHARES
Shares sold............................. 8,643,254 677,474
Shares reinvested from distributions.... 107 --
Shares redeemed......................... (2,347,540) (45,369)
------------ ----------

Net Increase........................ 6,295,821 632,105
============ ==========
</TABLE>

* Commencement of operations.

See accompanying notes to financial statements.

75
<PAGE>
GUINNESS FLIGHT WIRED INDEX-TM- FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FOR THE YEAR DECEMBER 15, 1998*
ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.... $ 13.95 $12.50
-------- ------
Income from investment operations:
Net investment income (loss).......... (0.12) 0.00+
Net realized and unrealized gain on
investments......................... 9.69 1.45
-------- ------
Total from investment operations........ 9.57 1.45
-------- ------
Less distribution:
From net investment income............ 0.00 + --
-------- ------
Net asset value, end of period.......... $ 23.52 $13.95
======== ======
Total return............................ 68.68 % 11.60%++
Ratios/supplemental data:
Net assets, end of period (thousands)... $164,014 $9,433
Ratio of expenses to average net assets:
Before expense reimbursement.......... 1.38 % 1.97%+
After expense reimbursement........... 1.35 % 1.35%+
Ratio of net investment income to
average net assets:
Before expense reimbursement.......... (0.92)% 0.02%+
After expense reimbursement........... (0.89)% 0.60%+
Portfolio turnover rate................. 39.82 % 0.11%++
</TABLE>

<TABLE>
<S> <C>
* Commencement of operations.
+ Amount represent less than $0.01 per share.
+ Annualized.
++ Not annualized.
</TABLE>

See accompanying notes to financial statements.

76
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

THE BACKDROP

The positive forces driving government bonds higher in 1998 reversed in 1999
in spectacular fashion. Depressed oil prices proved temporary as a combination
of better production control from OPEC and increased demand from the stronger
global economy pushed the average oil price up by 35%. The flight away from
risky asset markets such as emerging markets and corporate debt also reversed
creating less demand for high quality government paper. And finally the major
central banks around the globe reversed their easing moves put in place at the
height of the perceived liquidity crisis.

So as the global bond markets moved through 1999 they had to contend with
the fear of rising headline inflation, less demand for government bonds and
increases in official short rates. These factors transpired to turn 1999 into
the worst bear market for bonds since 1994. However, unlike 1994, the sell off
was less uniform. Of the major markets the US fared worse with a fall of 2.45%
in local currency terms, with Europe down 2.08% and the UK only down 1.2%. The
Japanese bond market actually posted a positive 4.83% return in the year as its
bear phase started much earlier in the last quarter of 1998. Also because the
Japanese economy remained lackluster and in need of continued monetary stimulus,
the Japanese bond market was not affected by rising official interest rates as
the Bank of Japan maintained its zero interest rate policy.

THE FUND

The Fund recorded a negative twelve-month return of 7.97% to December 31,
1999. For three years ending December 31, 1999, the Fund had an average annual
total return of 3.73% and an average annual total return of 6.30% over five
years to December 31, 1999.

THE OUTLOOK

With disruptions making the US data difficult to read, the efforts of the
Fed to achieve a soft landing for the US economy will be difficult. The Fed has
made it very clear that it is concerned with the risk that the economy will
over-heat if growth does not slow. With the still-present disinflationary
undertone and the distortions caused by Y2K, they will continue to take a
cautious stance, raising rates only modestly.

Meanwhile, in Japan the Bank of Japan maintains a very accommodative
monetary policy, and appears to be slowly yielding to pressure from both inside
and outside Japan to loosen further by increasing the quantity of money in
circulation, in order to prevent the nascent recovery being stifled by continued
strength in the Yen. Overall, both fiscal and monetary policy remain
encouragingly pro-active and supportive, and there is no reason not to expect a
continued stabilization of real GDP growth at around the +1.0% level over the

77
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND (CONTINUED)

next few quarters, although this number will naturally vary somewhat
quarter-to-quarter. Equally, however, it appears that a genuine real GDP growth
breakout of, say, 3% plus is still relatively unlikely, though not impossible.

Industrial and consumer surveys in the Eurozone point to a continued
improvement in the economy. Germany's IFO survey suggests that industrialists
are experiencing excellent trading conditions and that they expect this
environment to persist. French consumer confidence is the highest since records
began and leading indicators from the smaller countries display reason for
optimism throughout the Eurozone. This, together with the loose monetary
combination of low interest rates and a weak currency, has drawn us to the
conclusion that real GDP growth will be an above consensus 3 1/4% in 2000.

We continue to believe that the Euro is fundamentally undervalued. This
situation should correct in the first half of 2000 and we expect the Euro to
appreciate to around 1.10 US Dollars. Although this will tighten monetary
conditions to an extent, the ECB will need to push up interest rates in order to
keep ahead of any inflationary threat. The headline rate of inflation may drift
up in the early months of 2000 as the increased price of oil feeds through into
the economy, but it is unlikely to breach the ECB's threshold of 2% in 2000,
provided that interest rates rise to about 4% by the end of the year.

The ECB have specified that they believe trend growth in the Eurozone
remains at around 2.5%. In that case, by our forecasts, growth will be well
above trend next year. Unless substantial reforms are undertaken to solve some
of Euroland's fiscal and labour market problems (which is unlikely, but not
impossible), then there may be the need for even higher interest rates in 2001.

In the UK the recent strength of consumer spending should moderate into the
New Year. The usual indicators of monetary policy (I.E., interest rates, the
shape of the yield curve, the performance of Sterling and broad money growth)
are all flagging tight conditions. However, the slowdown will only be modest.
The January sales period should be strong insofar as consumers have delayed
purchases to take advantages of further cuts in the prices of manufactured
goods. In addition, the housing market is advancing strongly, and this is
traditionally a major stimulus to consumer sentiment. So 2000 as a whole should
return a rate of consumer spending growth of over 3%. In addition, external
demand should improve, as Asia and Europe continue their recovery. So exports
should pick up somewhat. Total GDP will likely grow at a little over 1.75% for
1999 compared with 1998; but it should have moved to well above trend growth by
late 2000.

This means that it will be increasingly difficult to achieve further
significant reductions in inflation, even though there are still some
competition-induced downward pressures in retailing. In part, the MPC will be
influenced by Sterling, which should remain generally

78
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND (CONTINUED)

strong. However, the authorities will undoubtedly be looking towards higher
short-term interest rates in the months ahead. We are currently expecting base
rates to be at least 6.25% by the end of 2000.

In summary, government bond markets will struggle in the first few months of
2000 as strong synchronized economic growth combines with tighter monetary
policies and higher headline inflation. The higher yields available will prove
attractive once there are clear signs that economic growth has stopped
accelerating and that the central banks are close to ending their current bout
of monetary tightening. The current increase in inflationary expectations is
unlikely to be sustained over the medium-term paving the way for lower bond
yields once again.

- -- Michael Daley
London

79
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
# of Holdings in Portfolio: 24
Portfolio Turnover: 166.99%
% of Positions in Top 5: 41.12%
</TABLE>

FUND MANAGER:
Michael Daley
<TABLE>
<CAPTION>
- ----------------------------------------
TOP 5 HOLDINGS (% OF NET ASSETS)
- ----------------------------------------
<S> <C>
Bundesobligaion 3.250%
02/17/2004 12.82%
Deutschland Republic 5.250%
01/4/2008 9.25%
United Kingdom Government
8.000% 06/10/2003 7.54%
International Bank Recon &
Development 2.000%
02/18/2008 6.44%
US Treasury Note 5.625%
11/30/2000 5.07%

<CAPTION>
CURRENCY ALLOCATION (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
US Dollar 37.56%
Euro 32.30%
Yen 15.85%
Sterling 10.09%
<CAPTION>
TOP 5 COUNTRIES (% OF NET ASSETS)
<S> <C>
- ----------------------------------------
Supranational 26.40%
Germany 25.21%
United States 24.58%
United Kingdom 7.54%
Spain 3.93%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
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
<S> <C> <C>
Guinness Flight Salomon Brothers'
Global Government World Government
Bond Fund Bond Index
6/30/94* $10,000 $10,000
9/30/1994 $9,754 $10,117
12/31/1994 $9,767 $10,166
3/31/1995 $10,093 $11,278
6/30/1995 $10,638 $11,879
9/30/1995 $10,809 $11,755
12/31/1995 $11,183 $12,102
3/31/1996 $11,083 $11,875
6/30/1996 $11,197 $11,923
9/30/1996 $11,378 $12,248
12/31/1996 $11,877 $12,540
3/31/1997 $11,485 $12,021
6/30/1997 $11,732 $12,386
9/30/1997 $12,055 $12,543
12/31/1997 $12,218 $12,569
3/31/1998 $12,298 $12,668
6/30/1998 $12,672 $12,919
9/30/1998 $14,059 $13,994
12/31/1998 $14,404 $14,491
3/31/1999 $13,672 $13,932
6/30/1999 $13,088 $13,451
9/30/1999 $13,453 $14,061
12/31/1999 $13,255 $13,873
* Inception date.
Average Annual Total Return
One Year Five Years Since Inception
- -7.97% 6.30% 5.25%
Past performance is not predictive of future performance
</TABLE>

80
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS

DECEMBER 31, 1999 CONTINUED

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
PRINCIPAL AMOUNT
GOVERNMENT BONDS: 95.80%
VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C>
COLUMBIA: 0.53%
L 35,000 Republic of Columbia $ 47,671
9.750%, 02/11/2008..............................
----------
CROATIA: 1.32%
US$ 129,816 Croatia Government National Series B 119,431
6.456%, 07/31/2006..............................
----------
FRANCE: 2.57%
EUR 260,000 France OAT 232,846
4.000%, 10/25/2009..............................
----------
GERMANY: 25.21%
EUR 1,220,000 Bundesobligaion 1,160,106
3.250%, 02/17/2004..............................
EUR 837,315 Deutschland Republic 837,072
5.250%, 01/04/2008..............................
Y 28,000,000 KFW International Finance 283,673
2.050%, 09/21/2009..............................
----------
Total Germany..................................... 2,280,851
----------
ITALY: 2.58%
EUR 250,000 Buoni del Tesoro Poliennai 233,450
4.500%, 05/01/2009..............................
----------
SPAIN: 3.93%
EUR 360,000 Bonos Y Oblig del Estado 355,186
4.500%, 07/30/2004..............................
----------
SUPRANATIONAL: 26.40%
Y 26,000,000 European Investment Bank 267,482
2.125%, 09/20/2007..............................
L 120,000 European Investment Bank 182,348
5.500%, 12/07/2009..............................
US$ 480,000 European Investment Bank 448,800
5.000%, 01/12/2004..............................
US$ 230,000 Intelsat 231,265
7.375%, 08/06/2002..............................
</TABLE>

See accompanying notes to financial statements.

81
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS

DECEMBER 31, 1999 CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
PRINCIPAL AMOUNT
VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C>
SUPRANATIONAL: (CONTINUED)
US$ 470,000 Inter-American Development Bank $ 450,494
6.375%, 10/22/2007..............................
US$ 235,000 International Finance Corp. 225,835
5.500%, 02/18/2003..............................
Y 57,000,000 International Bank Recon & Development 582,498
2.000%, 02/18/2008..............................
----------
Total Supranational............................... 2,388,722
----------
UNITED KINGDOM: 7.54%
L 402,000 United Kingdom Government 682,636
8.000%, 06/10/2003..............................
----------
UNITED STATES: 24.58%
US$ 200,000 FNMA 176,416
5.250%, 01/15/2009..............................
Y 30,000,000 FNMA Global JPY NTS 299,971
1.750%, 03/26/2008..............................
US$ 180,000 U.S. Treasury Bond 245,138
10.625%, 08/15/2015.............................
US$ 460,000 U.S. Treasury 458,418
5.625%, 11/30/2000..............................
US$ 453,000 U.S. Treasury Note 445,922
6.250%, 02/15/2007..............................
US$ 180,000 U.S. Treasury Note 180,788
6.625%, 05/15/2007..............................
US$ 420,000 U.S. Treasury Inflation Index Note 416,617
3.625%, 01/15/2008..............................
----------
Total United States............................... 2,223,270
----------
</TABLE>

See accompanying notes to financial statements.

82
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

PORTFOLIO OF INVESTMENTS

<TABLE>
<C> <S> <C>
+ Cost of federal tax purposes is the same.
Net unrealized depreciation consists of:
Gross unrealized appreciation..................................... $ 154,290
Gross unrealized depreciation..................................... (396,040)
----------
$ (241,750)
==========
</TABLE>

See accompanying notes to financial statements.

83
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at value (cost $8,909,331)....... $8,667,581
Cash........................................................ 452,249
Receivables:
Interest................................................ 192,937
Fund shares sold........................................ 23
Unrealized gain on forward contracts (Note 6)........... 61,503
Prepaid expenses............................................ 6,313
----------
Total assets............................................ 9,380,606
----------

LIABILITIES
Payables:
Securities purchased.................................... 279,178
Fund shares redeemed.................................... 22,816
Due to advisor (Note 3)................................. 7,137
Accrued expenses............................................ 23,910
----------
Total liabilities....................................... 333,041
----------
NET ASSETS.................................................. $9,047,565
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($9,047,565/751,080 shares outstanding; unlimited
number of shares authorized without par value).......... $12.05
------
-------
SOURCE OF NET ASSETS
Paid-in capital......................................... $9,597,678
Undistributed net investment income..................... 93,794
Accumulated net realized loss on investments............ (457,758)
Net unrealized appreciation (depreciation) on:
Investments......................................... (241,750)
Foreign currency.................................... 55,601
----------
NET ASSETS.................................................. $9,047,565
==========
</TABLE>

See accompanying notes to financial statements.

84
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENT OF OPERATIONS

EXPENSES
Advisory fees (Note 3)...................................... 77,237
Administration fees (Note 3)................................ 25,746
Custodian................................................... 17,325
Accounting.................................................. 39,292
Transfer agent fees......................................... 32,214
Audit fees.................................................. 13,427
Legal fees.................................................. 2,655
Insurance fees.............................................. 824
Trustee's fees.............................................. 5,283
Registration fees........................................... 2,141
Reports to shareholders..................................... 2,762
Deferred organization costs amortization.................... 6,118
Miscellaneous............................................... 2,094
-----------
Total expenses.......................................... 227,118
Interest expense........................................ 362
Commitment fee on credit line........................... 349
Less: Expenses reimbursed (Note 3)...................... (150,597)
-----------
Net expenses............................................ 77,232
-----------
NET INVESTMENT INCOME............................... 409,444
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments............................ (381,115)
Net realized loss on foreign currency....................... (254,397)
Net change in unrealized depreciation on investments.... (600,165)
Net change in unrealized depreciation on foreign
currency.............................................. (116,188)
-----------
Net realized and unrealized loss on investments......... (1,351,865)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ (942,421)
===========
</TABLE>

See accompanying notes to financial statements.

85
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income.................... $ 409,444 $ 422,877
Net realized gain (loss) on
investments............................ (381,115) 626,392
Net realized loss on foreign currency.... (254,397) (126,803)
Net change in unrealized appreciation
(depreciation) on investments.......... (600,165) 270,419
Net change in unrealized appreciation
(depreciation) on foreign currency..... (116,188) 197,272
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.......... (942,421) 1,390,157
----------- -----------
NET EQUALIZATION CREDITS................. (1,608) (7,556)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............... (314,042) (417,826)
From taxable net realized gains.......... -- (318,313)
Return of capital........................ (41,970) --
----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS....................... (356,012) (736,139)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................ 6,512,566 6,879,372
Net asset value of shares issued on
reinvestment of distributions.......... 327,900 686,191
Cost of shares redeemed.................. (7,693,612) (7,027,191)
----------- -----------
NET INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS..................... (853,146) 538,372
----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................. (2,153,187) 1,184,834
NET ASSETS
Beginning of year........................ 11,200,752 10,015,918
----------- -----------
End of year (including undistributed net
investment income of $93,794 and $0,
respectively).......................... $ 9,047,565 $11,200,752
=========== ===========
CHANGES IN CAPITAL SHARES
Shares sold.............................. 521,188 516,058
Shares issued from dividend
distributions.......................... 26,276 52,307
Shares redeemed.......................... (623,153) (551,277)
----------- -----------
Net Increase (Decrease).............. (75,689) 17,088
=========== ===========
</TABLE>

See accompanying notes to financial statements.

86
<PAGE>
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

FINANCIAL HIGHLIGHTS

FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $ 13.55 $ 12.37 $ 12.72 $ 12.77 $ 12.00
------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... 0.50 0.58 0.63 0.63 0.69
Net realized and unrealized gain
(loss) on investments......................... (1.57) 1.58 (0.29) 0.13 1.01
------- ------- ------- ------- -------
Total from investment operations.................. (1.07) 2.16 0.34 0.76 1.70
------- ------- ------- ------- -------

Less distributions:
From net investment income...................... (0.43) (0.58) (0.49) (0.69) (0.65)
From taxable net realized gains................. -- (0.40) (0.11) (0.12) (0.28)
Return of capital............................... (0.00)+ -- (0.09) -- --
------- ------- ------- ------- -------
Total distributions............................... (0.43) (0.98) (0.69) (0.81) (0.93)
------- ------- ------- ------- -------
Net asset value, end of year...................... $ 12.05 $ 13.55 $ 12.37 $ 12.72 $ 12.77
======= ======= ======= ======= =======
Total return...................................... (7.97)% 17.89% 2.87% 6.21% 14.49%

Ratios/supplemental data:
Net assets, end of period (thousands)............. $ 9,048 $11,201 $10,016 $ 6,564 $ 1,153
Ratio of expenses to average net assets:
Before expense reimbursement.................... 2.22 % 2.76% 3.15% 8.21% 21.52%***
After expense reimbursement..................... 0.75 % 0.75% 0.75% 1.31% 1.73%
Ratio of net investment income to average net
assets:
Before expense reimbursement.................... 2.51 % 2.44% 2.67% (1.76)% (14.26)%
After expense reimbursement..................... 3.98 % 4.46% 5.07% 5.14% 5.53%
Portfolio turnover rate........................... 166.99 % 166.72% 185.55% 296.51% 202.54%
</TABLE>

<TABLE>
<S> <C>
+ Amount represent less than $0.01 per share.
*** 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%
</TABLE>

See accompanying notes to financial statements.

87
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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"), formerly the Guinness Flight
Investment Funds Inc. (a Maryland corporation incorporated on January 7, 1994),
was organized on April 28, 1997 as a Delaware business Trust and registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. Currently, the Trust offers eight separate
series: 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 internet.com
Index-TM- Fund (the "internet.com Index-TM- 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 ("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, the Wired Index-TM- Fund
began operations on December 15, 1998 and the internet.com Index-TM- Fund began
operations on July 31, 1999.

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. Securities traded on a primary exchange or Nasdaq
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 or Nasdaq
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.

88
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------
Due to the inherent uncertainty of valuation, those estimated values of not
readily marketable securities may differ significantly from the values that
would have been used had a ready market for the securities existed. 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 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 of Trustees determines during such 60 day period that
amortized cost 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.
Foreign interest income is translated using the exchange rate in existence on
the date the income is accrued. Exchange gains and losses relating to the
translation of interest income are included in interest income on the
accompanying Statement of Operations.

B. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Funds may utilize
forward foreign currency exchange contracts ("forward contracts") to hedge
against foreign exchange fluctuations on foreign denominated investments under
which they are obligated to exchange currencies at specific future dates and at
specified rates, subject to the risks of foreign exchange fluctuations. All
commitments are "marked-to-market" daily and any resulting unrealized gains or
losses are included as unrealized appreciation (depreciation) on foreign
currency denominated assets and liabilities. The Funds record realized gains or
losses at the time the forward contract is settled. Counterparties to these
contracts are major U.S. financial institutions.

89
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------

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.

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 December 31, 1999, the following Funds have capital loss
carryforward's available to offset future realized capital gains: the Asia Blue
Chip Fund has a capital loss carryforward of $3,118,823 expiring in 2006, the
Asia Small Cap Fund has a capital loss carryforward of $88,450,286, of which
$17,996,189 expires in year 2005, $62,854,581 expires in year 2006 and
$7,599,516 expires in 2007; the China & Hong Kong Fund has a capital loss
carryforward of $63,563,064 expiring in 2006, the Mainland China Fund has a
capital loss carryforward of $3,564,330, of which $2,515,925 expires in year
2006 and $1,048,405 expires in year 2007 and the Global Government Bond Fund has
a capital loss carryforward of $350,080 expiring in year 2007. To the extent
that such carryforward's are used, no capital gains distributions will be made.

E. EQUALIZATION. The Global Government Bond Fund follows the accounting
practice known as equalization by which a portion of the proceeds from sales and
the cost 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 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

90
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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 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 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 Wired
Index-TM- Fund invests substantially all of its assets in securities of
companies that comprise the Wired Index-TM-. The internet.com Index-TM- Fund
invests substantially all of its assets in securities of companies that comprise
the internet.com Index-TM-. The consequences of political, social or economic
changes in the countries or business sectors in which the securities are offered
or the issuers conduct their operations may affect the market prices of the
Funds' investments and any income generated, as well as the Funds' ability to
repatriate such amounts.

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 which were valued at their fair values as determined in good faith by
the board of Trustees. On December 31, 1999, the Asia Blue Chip fund and Asia
Small Cap Fund held $511,711 and $2,912,421 of Malaysian securities,
respectively, or 4.75% and 7.73% of their net assets, respectively. These
investments are valued at their fair values as determined in good faith by the
Board of Trustees.

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.

91
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------

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 93-2: 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.

For the year ended December 31, 1999, reclassifications among the components
of net assets are as follows:

<TABLE>
<CAPTION>
UNDISTRIBUTED
NET
INVESTMENT PAID-IN
INCOME CAPITAL
------------- -------
<S> <C> <C>
Asia Small Cap Fund $115,788 $(115,788)
China & Hong Kong Fund $245,570 $(245,570)
internet.com Index-TM- Fund $ 80,252 $ (80,252)
New Europe Fund $ 5,026 $ (5,026)
Wired Index-TM- Fund $821,665 $(821,665)
</TABLE>

NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

The Trust, on behalf of each Fund, entered into an Investment Advisory Agreement
with Investec Guinness Flight Global Asset Management Limited (the "Advisor"),
formerly Guinness Flight Investment Management Limited, to provide the Funds
with investment management services. The Advisor furnished all investment
advice, office space and certain

92
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------
administrative services and provides certain personnel needed by the Funds. As
compensation for its services, the Advisor was entitled to a monthly fee equal
to the following annual percentages of daily average net assets:

<TABLE>
<S> <C> <C>
Asia Blue Chip Fund 1.00%
Asia Small Cap Fund 1.00%
China & Hong Kong Fund 1.00%
internet.com Index-TM- Fund 0.90% on the 1st $100 million
0.75% on the next $100-$500 million and
0.60% on assets > $500 million
Mainland China Fund 1.00%
New Europe Fund 1.00%
Wired Index-TM- Fund 0.90% on the 1st $100 million
0.75% on the next $100-$500 million and
0.60% on assets > $500 million
Global Government Bond Fund 0.75%
</TABLE>

The Funds are responsible for their own operating expenses. The Advisor and
Administrator have agreed to reimburse each Fund to the extent necessary so that
its ratio of operating expenses to average daily net assets will not exceed the
following levels. Expenses reimbursed from the Advisor for the year ended
December 31, 1999 are stated in the Funds' Statement of Operations:
<TABLE>
<S> <C> <C>

Asia Blue Chip Fund 1.98%
Asia Small Cap Fund 1.98%
China & Hong Kong Fund 1.98%
internet.com Index-TM- Fund 1.35%
Mainland China Fund 1.98%
New Europe Fund 1.98%
Wired Index-TM- Fund 1.35%
Global Government Bond Fund 0.75%
</TABLE>

Expenses reimbursed by the Advisor through December 31, 1997 may be recouped
from the Funds through December 31, 2002, and are subject to the Funds' ability
to effect

93
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------
such reimbursement and remain in compliance with applicable expense limitations.
In addition, the 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 are subject to the Funds' ability to effect such
reimbursement and remain in compliance with applicable expense limitations.

The cumulative unreimbursed amounts paid by the Advisor on behalf of the
Funds from their inception to December 31, 1999 are as follows:

<TABLE>
<S> <C>
Asia Blue Chip Fund $ 453,447
Asia Small Cap Fund $ 333,570
internet.com Index-TM- Fund $ 69,971
Mainland China Fund $ 327,088
New Europe Fund $ 112,386
Global Government Bond Fund $1,013,197
Wired Index-TM- Fund $ 28,990
</TABLE>

Investment Company Administration, L.L.C. (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, prepares reports and
materials to be supplied to the

94
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------
Trustees; monitors the activities of the Funds' custodian, transfer agent and
accountants; coordinates the preparation and payment of the Funds' expenses and
reviews the Funds' expense accruals. For its services, the Administrator
receives the following:

<TABLE>
<CAPTION>
FUND ASSET BASED FEE
- ---- ---------------
<S> <C>
China & Hong Kong Fund 0.25% of average daily net
assets subject to $40,000
annual minimum.

Asia Blue Chip Fund, Asia Small 0.25% of average daily net
Cap Fund, China & Hong Kong assets.
Fund, Global Government Bond
Fund and Mainland China Fund

Wired Index-TM- Fund and 0.05% of average daily net
internet.com Index-TM- Fund assets.
</TABLE>

The Funds, excluding the China & Hong Kong Fund, are subject to a total
annual minimum fee of $140,000.

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.

95
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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 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 year ended
December 31, 1999 were:

<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---- --------- -----
<S> <C> <C>
Asia Blue Chip Fund $ 7,054,128 $ 8,050,785
Asia Small Cap Fund $ 24,699,989 $46,263,147
China & Hong Kong Fund $ 41,746,193 $94,918,439
internet.com Index-TM- Fund $ 32,495,853 $ 2,560,558
Mainland China Fund $ 11,120,121 $11,189,375
New Europe Fund $ 1,402,935 $ 921,042
Global Government Bond Fund $ 14,504,399 $14,767,302
Wired Index-TM- Fund $143,935,292 $38,637,182
</TABLE>

Purchases and sales of U.S. Government obligations by the Global Government
Bond Fund were $4,259,110 and $7,008,694 respectively.

NOTE 5 - LINE OF CREDIT

On March 1, 1999 the Funds amended their line of credit agreement with a bank to
reduce the credit commitment from $50 million to $25 million. When the credit
line expired on June 15, 1999 the Funds did not renew it and have been using the
custodian bank's overdraft facility to meet their liquidity needs.

NOTE 6 - FORWARD FOREIGN CURRENCY CONTRACTS

At December 31, 1999 the Funds had entered into forward contracts which
obligated them 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, or from the proceeds of the portfolio
securities sold. It may also terminate its obligation to deliver the foreign
currency at any time by purchasing an offsetting contract. The forward value of

96
<PAGE>
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT INTERNET.COM INDEX-TM- 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
- --------------------------------------------------------------------------------
amounts due are netted against the forward value of the currency to be delivered
and the net amount is shown as a receivable or payable in the financial
statements. Open forward contracts at December 31, 1999 were as follows:

GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
DELIVERY UNREALIZED
CURRENCY RECEIVABLE CURRENCY DELIVERABLE DATE GAIN/(LOSS)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
US$ 466,307 Australian Dollar 706,986 02/09/00 $ (1,885)
US$ 499,047 Swiss Franc 730,000 02/09/00 38,321
US$ 6,526,847 European Currency Unit 6,142,991 02/09/00 7,638
US$ 810,532 British Pound Sterling 487,529 02/09/00 6,691
US$ 1,354,598 Japanese Yen 141,743,942 02/09/00 12,641
US$ 274,490 Norwegian Krone 2,130,000 02/09/00 (8,434)
US$ 40,000 Swedish Krona 322,760 02/09/00 (1,916)
US$ 54,588 Australian Dollar 85,629 05/11/00 1,702
US$ 521,241 Canadian Dollar 765,182 05/11/00 10,597
US$ 467,229 Swiss Franc 715,795 05/11/00 (10,759)
US$ 1,106,278 European Currency Unit 1,078,130 05/11/00 16,850
US$ 198,337 British Pound Sterling 122,449 05/11/00 524
US$ 370,497 Japanese Yen 37,858,365 05/11/00 (8,199)
US$ 208,307 Norwegian Krone 1,649,791 05/11/00 (2,080)
US$ 221,038 New Zealand Dollar 434,259 05/11/00 6,177
US$ 466,543 Swedish Krona 3,876,976 05/11/00 (6,365)
--------
Total Forward Contracts $ 61,503
========
</TABLE>

97
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
GUINNESS FLIGHT INVESTMENT FUNDS

We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Guinness Flight Investment Funds,
(comprising, respectively, the 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 internet.com Index-TM- Fund and Guinness
Flight Global Government Bond Fund) (collectively, the "Funds"), as of
December 31, 1999, the related statements of operations, the statements of
changes in net assets, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective series constituting Guinness Flight Investment Funds as
of December 31, 1999, the results of their operations, the changes in their net
assets fiscal years in the period then ended, and the financial highlights for
each of the periods referred to above, in conformity with accounting principles
generally accepted in the United States.

/s/ Ernst & Young

Los Angeles, California
February 4, 2000

98
<PAGE>

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USEFUL GUINNESS FLIGHT PHONE NUMBERS

Shareholder Service Line: 1-800-915-6566

Fund Literature Line: 1-800-915-6565

Automated OneCall Center: 1-800-915-6564

Website: http://www.gffunds.com

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MC40-102-0200

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