<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08360
---------
GUINNESS ATKINSON FUNDS
-----------------------
(Exact name of registrant as specified in charter)
21550 Oxnard Street, Suite 750, Woodland Hills, CA 91367
--------------------------------------------------------
(Address of principal executive offices) (Zip code)
James J. Atkinson, Jr.
21550 Oxnard Street, Suite 750, Woodland Hills, CA 91367
--------------------------------------------------------
(Name and address of agent for service)
(800) 915-6566
--------------
Registrant's telephone number, including area code
Date of fiscal year end: DECEMBER 31
-----------
Date of reporting period: JUNE 30, 2005
-------------
<Page>
ITEM 1. REPORT TO STOCKHOLDERS.
<Page>
[GRAPHIC]
[GUINNESS ATKINSON FUNDS LOGO]
SEMI-ANNUAL REPORT
JUNE 30, 2005
- - ASIA FOCUS FUND
- - CHINA & HONG KONG FUND
- - GLOBAL INNOVATORS FUND
- - GLOBAL ENERGY FUND
[GRAPHIC]
<Page>
GUINNESS ATKINSON FUNDS
SEMI-ANNUAL REPORT
June 30, 2005
TABLE OF CONTENTS
<Table>
3 President's Letter to Shareholders
7 Asia Focus Fund
13 China & Hong Kong Fund
19 Global Innovators Fund
24 Global Energy Fund
30 Statements of Assets and Liabilities
31 Statements of Operations
32 Statements of Changes in Net Assets
34 Financial Highlights
38 Notes to Financial Statements
47 Guinness Atkinson Funds Information
</Table>
2
<Page>
AUGUST 15, 2005
Dear Guinness Atkinson Funds Shareholders,
Welcome. We're pleased to provide you with this semi-annual report covering the
six month period ending June 30, 2005. While a number of you reading this report
have been investing in the Guinness Atkinson Funds for a number of years, we
welcome the many shareholders that have joined us recently, in particular the
shareholders that have invested in the Global Energy Fund in the last year.
Whether you're a newer or more seasoned investor in the Guinness Atkinson Funds
we look forward to continuing to serve you.
One year ago in this report we celebrated the 10th anniversary of the launch of
the China & Hong Kong Fund. We proudly pointed out that the China & Hong Kong
Fund had become a leader in its category over its 10 year life. Now, one year
later, we're celebrating the one year anniversary of the launch of the Global
Energy Fund. We cannot help but notice that the Global Energy Fund has finished
its first year as the leader in its category. For the one year period ending
June 30, 2005, the Global Energy Fund finished number one among 115 Natural
Resource funds based on total return tracked by Morningstar. We're the first to
admit that one year is a rather brief period of time, and that past performance
is not indicative of future results. It is nice to know, though, that over its
brief life it has been the top performer in its category.
Returns for each of the four Guinness Atkinson Funds are listed in the table
below. These figures represent average annualized returns for the periods ending
June 30, 2005, with the exception of the one year returns for each of the Funds
and the "From Inception" return for the Global Energy Fund, which are actual
returns.
<Table>
<Caption>
FUND (INCEPTION DATE) 1-YEAR 3-YEAR 5-YEAR 10-YEAR FROM INCEPTION
- ------------------------------------------------------------------------------------------------------
Asia Focus (April 29, 1996) 27.18% 18.82% 7.60% -.94%
China & Hong Kong (June 30, 1994) 22.31% 19.36% 4.21% 7.23% 6.59%
Global Energy Fund (June 30, 2004) 60.40% -- -- -- 60.40%
Global Innovators Fund (December 15, 1998) 5.64% 10.73% -10.83% -- 1.92%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUNDS MAY BE LOWER OR
HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH END MAY BE OBTAINED BY VISITING www.gafunds.com. Total returns reflect a
fee waiver in effect and in the absence of this waiver, the total returns would
be lower.
THE ASIA FOCUS AND THE CHINA & HONG KONG FUNDS IMPOSE A 2% REDEMPTION FEE ON
SHARES HELD LESS THAN 90 DAYS. THE GLOBAL ENERGY AND GLOBAL INNOVATORS FUNDS
IMPOSE A 1% REDEMPTION FEE ON SHARES HELD LESS THAN 30 DAYS.
GLOBAL ENERGY FUND
Our decision to launch the Global Energy Fund last year was predicated on our
long-term view that the price of oil and other forms of energy were likely to
increase. Our view was based on the recognition that the global demand for
energy was set to increase dramatically over the long term and that the ability
to produce energy was likely to be subject to constraint. We did not anticipate
that the demand growth and capacity constraints would begin to converge within
the first year of the Fund's life. Despite the excitement - and with the
explicit recognition that day-to-day supply and demand can move quickly in both
directions - we still regard the Global Energy Fund as a long-term opportunity.
Growth from the developed world, particularly the U.S., coupled with growing
demand from rapidly developing China (not to mention India), will continue to
put pressure on demand and with OPEC (Organization of the Petroleum Exporting
Countries) and most oil producing nations at or near production capacity it is
not difficult to forecast higher oil prices.
Later in this report, Tim Guinness provides an analysis of the Global Energy
Fund including his views on the market and provides some details regarding his
investment strategy.
3
<Page>
GLOBAL INNOVATORS FUND
The Global Innovators Fund, which can be associated with the phrase New Economy,
has continued to stay true to its roots, investing in companies that exhibit
innovation, globalism, the intelligent use of technology and other New Economy
attributes. We continue to believe that the economy in the 21st century is
markedly different from the manufacturing economy of the 20th century. This New
Economy is both more difficult because of its sheer speed and competitiveness
while simultaneously offering unprecedented profit opportunity to those that
"get it," to use a cliche circa 1999. Tim Guinness provides a review and an
analysis of the Fund in his report adjacent to the financial results for the
Global Innovators Fund.
CHINA & HONG KONG FUND
We've been saying the same thing about China for over a decade now, namely that
the world's largest country is transitioning from an agrarian economy to a first
class economic superpower. When we made that point 11 years ago it was met with
a fair amount of skepticism. Today the questions about China assume that it will
be an economic superpower. The questions raised today relate to China's impact
on the global environment or China's demand for global resources. While these
are important questions, even we are surprised at how what was once viewed
skeptically - China's potential ascension to economic superpower status - is now
largely assumed. In reality the truth about China is, as always, more nuanced.
China still has some difficult economic (and political) issues to sort out and
the transition still has many years to run. We are, however, as committed to our
belief as ever. We strongly believe that the opportunity presented by China's
transition is unprecedented. Never before has the world's largest country moved
so rapidly up the economic ladder, nor has an economic expansion meant so much
for so many. China's rising economy has literally moved hundreds of millions
from a subsistence level to what can only be described as middle class levels or
higher. As fund managers we tend to focus on economic statistics, but the human
story that accompanies the economic success is very real.
Edmund Harriss, who has guided this Fund as lead manager since 1998, continues
to demonstrate his skill in the management of this Fund. His comments on China
and the portfolio are included in his letter accompanying the financial results
for the Fund later in this report.
ASIA FOCUS FUND
Like our other Funds, the Asia Focus Fund seeks to capitalize on an area of
dramatic change. With one-third of the world's population, the Asia story is
very much like China's: a vast and varied region undergoing a dynamic economic
transition. And like the transition underway in China, the economic growth in
Asia is lifting the standard of living for hundreds of millions.
Edmund Harriss offers his comments and outlook on the Asia Focus Fund beginning
on page 7.
We recognize that by investing in the Guinness Atkinson Funds you are explicitly
demonstrating your faith in our ability as managers and in our firm - indeed in
us as individuals. We appreciate the confidence you have demonstrated in us and
confirm for you that we take that responsibility seriously on a daily basis. As
always, we appreciate the opportunity to serve you.
Sincerely,
/s/ Timothy Guinness /s/ James Atkinson
Timothy Guinness James Atkinson
4
<Page>
MORNINGSTAR RATINGS
Below is a table listing the Morningstar star ratings for the three Guinness
Atkinson Funds that have at least a three year history. We have seen steady
improvement in these star ratings over the last two years. The Asia Focus Fund
and the China & Hong Kong Fund both have a four star rating overall which were
derived from a weighted average of the Funds' three, five and ten-year risk
adjusted return measures.
<Table>
<Caption>
FUND OVERALL 3-YEAR 5-YEAR 10-YEAR
- ----------------------------------------------------------------------------------------------
Asia Focus Fund 4**** 4**** 4****
(70 funds) (70 funds) (63 funds)
China & Hong Kong Fund 4**** 4**** 3*** 4****
(70 funds) (70 funds) (63 funds) (28 funds)
Global Innovators Fund 3*** 4**** 2**
(1,074 funds) (1,074 funds) (817 funds)
</Table>
(C)2005 Morningstar, Inc. All Rights Reserved. The information contained herein:
(1) is proprietary to Morningstar and/or its content providers; (2) may not be
copied or distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible for any
damages or losses arising from any use of this information. PAST PERFORMANCE IS
NO GUARANTEE OF FUTURE RESULTS.
For each fund with at least a three-year history, Morningstar calculates a
Morningstar Rating(TM) based on a Morningstar Risk-Adjusted Return measure that
accounts for variation in a fund's monthly performance (including the effects of
sales charges, loads, and redemption fees), placing more emphasis on downward
variations and rewarding consistent performance. The top 10% of funds in each
category receive 5 stars, the next 22.5% receive 4 stars the next 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each
share class is counted as a fraction of one fund within this scale and rated
separately, which may cause slight variations in distribution percentages.)
Morningstar Rankings represent a fund's total return percentile rank relative to
all funds that have the same Morningstar Category. The highest percentile rank
is one (1) and the lowest is one hundred (100). Morningstar Rankings are based
on Morningstar total returns, which includes both income and capital gains or
losses, and are not adjusted for sales charges or redemption fees.
THE FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVES GREATER VOLATILITY AND
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
5
<Page>
GUINNESS ATKINSON FUNDS
EXPENSE EXAMPLES (UNAUDITED)
As a shareholder of the Funds, you incur two types of costs: (1) redemption
fees; and (2) ongoing costs, including advisory fees; and other Fund expenses.
The Examples below are intended to help you understand your ongoing costs (in
dollars) of investing in the Funds and to compare these costs with the ongoing
costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of
the period shown and held for the entire period from January 1, 2005 to June 30,
2005.
ACTUAL EXPENSES
For each Fund, the first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each Fund, the second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
PLEASE NOTE THAT THE EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT YOUR
ONGOING COSTS ONLY AND DO NOT REFLECT ANY REDEMPTION FEES. THEREFORE, THE SECOND
LINE FOR EACH FUND OF THE TABLE IS USEFUL IN COMPARING ONGOING COSTS ONLY, AND
WILL NOT HELP YOU DETERMINE THE RELATIVE TOTAL COSTS OF OWNING DIFFERENT FUNDS.
IN ADDITION, IF THESE REDEMPTION FEES WERE INCLUDED, YOUR COSTS WOULD HAVE BEEN
HIGHER.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT ACCOUNT DURING PERIOD* DURING PERIOD*
VALUE VALUE (01/01/05 TO (01/01/05 TO
(01/01/05) (06/30/05) 06/30/05) 06/30/05)
- -----------------------------------------------------------------------------------------------------------------
Guinness Atkinson Asia Focus Fund Actual $ 1,000.00 $ 1,080.80 $ 10.22 1.98%
Guinness Atkinson Asia Focus Fund Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,014.98 $ 9.89 1.98%
Guinness Atkinson China & Hong Kong Fund Actual $ 1,000.00 $ 1,046.30 $ 8.42 1.66%
Guinness Atkinson China & Hong Kong Fund Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,016.56 $ 8.30 1.66%
Guinness Atkinson Global Innovators Fund Actual $ 1,000.00 $ 981.50 $ 8.20 1.67%
Guinness Atkinson Global Innovators Fund Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,016.51 $ 8.35 1.67%
Guinness Atkinson Global Energy Fund Actual $ 1,000.00 $ 1,314.80 $ 8.32 1.45%+
Guinness Atkinson Global Energy Fund Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,017.60 $ 7.25 1.45%+
</Table>
* EXPENSES ARE EQUAL TO THE FUNDS' ANNUALIZED EXPENSE RATIO AS INDICATED,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS IN MOST RECENT FISCAL HALF-YEAR PERIOD (181), THEN DIVIDED BY THE
NUMBER OF DAYS IN THE FISCAL YEAR (365) (TO REFLECT THE ONE-HALF YEAR PERIOD).
+ NET OF FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS. IF THOSE FEE WAIVERS AND/OR
EXPENSE REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE FUND'S ACTUAL EXPENSES WOULD
HAVE BEEN HIGHER.
6
<Page>
ASIA FOCUS FUND FOR THE PERIOD ENDED JUNE 30, 2005
1. PERFORMANCE
AVERAGE ANNUALIZED TOTAL RETURNS
<Table>
<Caption>
SINCE
6 MONTHS 1 YEAR INCEPTION
(ACTUAL) (ACTUAL) 3 YEARS 5 YEARS 29 APRIL 1996
- -------------------------------------------------------------------------------------------------
Fund 8.08% 27.18% 18.82% 7.60% -0.94%
BENCHMARK INDEX:
MSCI AC Far East Free Ex Japan 5.65% 25.56% 15.69% 3.33% -1.37%
S&P 500 -0.81% 6.31% 8.25% -2.37% 8.47%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY VISITING www.gafunds.com.
THE FUND IMPOSES A 2% REDEMPTION FEE ON SHARES HELD LESS THAN 90 DAYS. Total
returns reflect a fee waiver in effect and in the absence of this waiver, the
total returns would be lower.
Asian markets have had a good first half in 2005. High oil prices, slower
investment in China and uncertain demand in key export markets have all been
evident and yet by the end of the period markets had begun to pick up. We are
pleased to report that the Fund rose 8.08% compared to the benchmark return of
5.65% and that the Fund remains ahead of its benchmark over one, three and five
years.
The slowdown in Chinese investment growth was, as we expected, confined to
specific sectors such as construction and industrial materials such as steel
cement and aluminium. Aggregate Chinese economic growth has remained above 9%
and exports have continued to defy expectations and have grown over 30%. There
has also been a recovery in the new orders component of the Institute of Supply
Managers (ISM) survey which is a leading indicator for Asian exports. Since then
we have seen technology stocks stage a recovery albeit a more moderate one than
in previous cycles.
Korea and Thailand were the best performing markets in the first quarter of
2005. In Korea, exports grew much faster than the market has been expecting and
most recent indications are that the domestic economy is finally turning onto a
mild recovery path. Thailand was similarly boosted by expectations of government
spending and a resumption of the privatization program following a landslide
election win in February. However, Thai stock market performance has faded as
the economy has been weighed down by high oil prices necessitating the removal
of diesel fuel subsidies. This has hurt the small business sector and caused
consumer spending to weaken.
In the second quarter Taiwan and Hong Kong were the leading performers. In
Taiwan the technology sector has staged a rally in anticipation of a turn in the
technology cycle. Foundries' capacity utilization has increased, the Dataram
Corp. (DRAM) spot price has stabilised and there has also been a pick up in
demand on the consumer electronics side which has boosted manufacturers of Thin
Film Transistor Liquid Crystal Displays (which gives the best resolution of the
flat screen technologies), and of Integrated Circuit drivers. In Hong Kong there
has been a rotation into large cap stocks both in the Commercial & Industrial
sector and the Property sector. This is partly a function of moderating
expectations for further interest rate increases, a desire to increase Chinese
exposure and also of an improving domestic economy in Hong Kong where the office
market is showing an improvement with low new supply and positive rent
reversions.
2. PORTFOLIO POSITION
The portfolio remains positioned similarly to how it was at the year end. The
Fund has the bulk of its investments in China, Hong Kong, Korea, Singapore and
Taiwan. The Fund has increased exposure to Singapore and reduced somewhat
exposure to Thailand. The fund is well-diversified across a dozen sectors with
the bulk of assets in the consumer, energy, industrial, materials and technology
sectors. We remain focused on Asia's growth story which is presently being
driven by exports but will increasingly become a consumer story. We are
concentrating on those stocks that have generated improving returns on
investment, are growing their earnings and offer value.
7
<Page>
3. OUTLOOK & STRATEGY
We are still waiting for the peak in US interest rates and we expect this to
occur in August/September. The greatest risk to Asian growth is continued high
oil prices. We have already seen Thailand and Indonesia forced to roll back
diesel fuel subsidies. The China Daily is also forecasting a drop in oil demand
from China as a result of higher prices.
We still see Asian economic growth of 5% in 2005, which although is 1% less than
last year, is significantly above that of developed markets. China is still
going to exert an enormous influence in the region providing one of the main
markets for Asian exports (mostly for onward processing). Investment growth has
slowed from peak levels but is still strong; so while demand for lower end steel
has fallen as construction has slowed, demand for higher end products and
capital goods has remained firm.
Our expectations for the rest of the year are that China's growth will remain
stronger for longer. Slower growth toward the 8% level is not necessarily a bad
thing if profit margins improve at the same time. We expect regional exports to
show steady growth of around 15% but we do not expect to see a return to the
25-30% rates seen in 2003. (An exception to this is China which continues to
confound expectations with 30%+ growth). However, Asian domestic consumption is
still weak. Therefore, we expect that Asian currency policies, while allowing
for some appreciation, will still be managed with a view to maintaining export
growth.
Asian currencies appreciated significantly against the US Dollar in 2004 lead by
the Korean Won and the Taiwanese Dollar. Since the end of June we have also seen
the Chinese Yuan revalue and Malaysia end its pegged currency regime. However,
we do not expect this to herald a significant change in Asian currency policy.
The reason is the weakness in Asian domestic demand. As long as this persists
policy will be geared toward maintaining a favourable environment for export
growth which, it is hoped, will feed through to higher incomes and ultimately
higher domestic spending. Indeed this is what is happening in China.
Consequently, we expect Asian central banks to continue to intervene and
therefore we don't see any imminent removal of support for US Treasuries.
/s/ Edmund Harriss
Edmund Harriss
Portfolio Manager 08 AUGUST 2005
The MSCI AC Far East Free Ex Japan Index is a market-capitalization weighted
index of over 450 stocks traded in eight Asian markets, excluding Japan. The
Standard & Poor's 500 Index is a market- capitalization weighted index composed
of 500 widely held common stocks of U.S. companies. These indices are unmanaged,
not available for investment and do not incur expenses.
THE FUND INVESTS IN FOREIGN SECURITIES WHICH INVOLVES GREATER VOLATILITY AND
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings and sector allocations are subject to change at any time are not
recommendations to buy or sell any security.
8
<Page>
FUND HIGHLIGHTS AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON ASIA FOCUS FUND
<Table>
# of Holdings in Portfolio: 46
Portfolio Turnover: 5.0%
% of Stocks in Top 10: 44.7%
</Table>
FUND MANAGERS:
Edmund Harriss;
Timothy W.N. Guinness
TOP 10 HOLDINGS (% OF NET ASSETS)
<Table>
Samsung Electronics 8.5%
Esprit Holdings Ltd 5.8%
Techtronic Industries Co 5.6%
Posco 4.3%
Taiwan Semiconductor
Manufacturing Co Ltd 4.2%
Yanzhou Coal Mining Co. Ltd 3.6%
Neptune Orient Lines Ltd. 3.3%
China Steel Corp 3.3%
Hyundai Mobis 3.2%
Petrochina Co. Ltd 3.0%
</Table>
COUNTRY ALLOCATION (% OF NET ASSETS)
<Table>
China 12.6%
Hong Kong 25.3%
Indonesia 1.1%
Korea 24.6%
Malaysia 2.4%
Singapore 11.7%
Taiwan 14.8%
Thailand 6.0%
</Table>
SECTOR BREAKDOWN (% OF INVESTMENTS)
<Table>
Semiconductors 16.4%
Oil&Gas 9.9%
Iron/Steel 9.3%
Distribution/Wholesale 7.8%
Hand/Machine Tools 5.6%
Agriculture 5.4%
Telecommunications 5.3%
Chemicals 4.5%
Electronics 4.2%
Transportation 4.2%
Banks 4.1%
Coal 3.6%
Auto Parts&Equipment 3.3%
Computers 2.4%
Engineering&Construction 2.0%
Miscellaneous Manufactur 1.9%
Building Materials 1.8%
Textiles 1.6%
Electric 1.5%
Biotechnology 1.4%
Electrical Compo&Equip 1.1%
Real Estate 1.0%
Home Furnishings 0.9%
Machinery-Diversified 0.8%
</Table>
9
<Page>
SCHEDULE OF INVESTMENTS IN SECURITIES
AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON ASIA FOCUS FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 98.6% VALUE
CHINA: 12.6%
342,000 China Shipping Development Co., Ltd. $ 255,227
2,076,000 China Telecom 747,925
1,288,000 PetroChina Co., Ltd. 969,493
1,420,000 Sinopec Shanghai Petrochemical 479,612
460,000 Sinopec Zhenhai Refining & Chemical Company Ltd. 432,069
1,468,800 Yanzhou Coal Mining Co., Ltd. 1,152,830
-------------
4,037,156
-------------
HONG KONG: 26.2%
470,000 Chen Hsong Holdings, Ltd. 269,111
1,411,000 CNOOC, Ltd. 853,292
666,000 EganaGoldpfeil Holdings Ltd. 151,677
257,840 Esprit Holdings, Ltd. 1,866,146
766,700 Giant Wireless Technology 230,015
694,000 Global Bio-Chem Technology Group Co., Ltd. 428,621
114,250 Global Bio-Chem Technology Group Co., Ltd., warrants, Exp 5/31/07* 1,882
27,863 HSBC Holdings Plc 451,722
158,000 Kingboard Chemicals Holdings Ltd. 519,423
540,000 Midland Holdings, Ltd. 302,243
1,838,837 Skyworth Digital Holdings, Ltd+^ 269,725
2,030,000 Solomon Systech International Ltd. 718,293
195,000 Surface Mount Technology Holdings, Ltd. 81,670
713,000 Techtronic Industries Co. 1,788,945
1,531,811 Victory City International Holdings, Ltd 502,595
-------------
8,435,360
-------------
INDONESIA: 1.1%
676,000 Bank Danamon Indonesia Tbk PT 354,710
-------------
MALAYSIA: 2.4%
280,000 IOI Corp. Berhad 773,684
-------------
SINGAPORE: 10.7%
630,000 First Engineering, Ltd. 454,732
76,669 Jardine Cycle & Carriage, Ltd. 601,218
566,000 Jurong Technologies Industrial 591,790
478,000 Neptune Orient Lines, Ltd. 1,062,033
440,000 Singapore Telecommunications 718,826
48,300 Surface Mount Technology, warrants, Exp 8/29/09* 3,587
-------------
3,432,186
-------------
SOUTH KOREA: 24.8%
11,500 Daelim Industrial Co. 624,131
10,000 Honam Petrochemical Corp. 421,631
15,250 Hyundai Mobis 1,036,789
38,000 INI Steel Co. 526,674
23,420 Korea Tobacco & Ginseng Corp. 927,096
5,500 LG Electronics, Inc. 352,526
7,700 POSCO 1,370,520
</Table>
See accompanying Notes to Financial Statements.
10
<Page>
<Table>
<Caption>
SHARES COMMON STOCKS: 98.6% CONTINUED VALUE
SOUTH KOREA: 24.8% CONTINUED
5,660 Samsung Electronics Co. Ltd. $ 2,719,486
-------------
7,978,853
-------------
TAIWAN: 14.8%
1,043,616 China Steel Corp. 1,061,136
91,000 High Tech Computer Corp. 775,388
126,499 HON HAI Precision Industry 663,148
100,960 Novatek Microelectronics Corp. Ltd. 431,726
591,844 Taishin Financial Holdings Co. Ltd. 497,734
764,745 Taiwan Semiconductor Manufacturing Co. Ltd. 1,341,999
-------------
4,771,131
-------------
THAILAND: 6.0%
247,500 Electricity Generating Public Co., Ltd. 479,709
94,000 PTT Exploration & Production Public Co. Ltd. 874,525
99,000 Siam Cement Co., Ltd. 580,448
-------------
1,934,682
-------------
TOTAL COMMON STOCKS
(cost $20,789,160) 31,717,762
-------------
TOTAL INVESTMENTS IN SECURITIES
(cost $20,789,160+): 98.6% 31,717,762
Other Assets less Liabilities: 1.4% 437,024
-------------
NET ASSETS: 100.0% $ 32,154,786
=============
</Table>
* NON-INCOME PRODUCING SECURITY.
+ FAIR VALUED UNDER PROCEDURES ESTABLISHED BY BOARD OF TRUSTEES.
^ ILLIQUID SECURITY.
See accompanying Notes to Financial Statements.
11
<Page>
SCHEDULE OF INVESTMENTS BY INDUSTRY
AT JUNE 30, 2005 (UNAUDITED)
ASIA FOCUS FUND
<Table>
<Caption>
INDUSTRY % OF NET ASSETS
Agricultural Biotech 1.4%
Agricultural Operations 2.4
Audio/Video Products 0.8
Auto/Trk Prts&Equip-Orig 3.2
Bldg Prod-Cement/Aggreg 1.8
Building-Heavy Construct 1.9
Chemicals-Other 1.6
Coal 3.6
Commer Banks Non-US 4.1
Computers 2.4
Distribution/Wholesale 7.7
Electric Products-Misc 9.5
Electric-Generation 1.5
Electronic Compo-Misc 4.1
Mach Tools&Rel Products 5.6
Machinery-General Indust 0.8
Misc Manufacturer 0.5
Oil Comp-Explor&Prodtn 5.4
Oil Comp-Integrated 4.0
Oil Refining&Marketing 1.3
Petrochemicals 2.8
Rubber/Plastic Products 1.4
Semicon Compo-Intg Circu 7.7
Steel-Producers 9.2
Telecom Services 4.6
Textile-Products 1.6
Tobacco 2.9
Transport-Marine 4.1
Wireless Equipment 0.7
---------------
TOTAL INVESTMENTS IN SECURITIES 98.6
Other Assets less Liabilities 1.4
---------------
Net Assets 100.00%
===============
</Table>
See accompanying Notes to Financial Statements.
12
<Page>
CHINA & HONG KONG FUND FOR THE PERIOD ENDED JUNE 30, 2005
1. PERFORMANCE
AVERAGE ANNUALIZED TOTAL RETURNS
<Table>
<Caption>
6 MONTHS 1 YEAR
(ACTUAL) (ACTUAL) 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------
Fund 4.63% 22.31% 19.36% 4.21% 7.23%
BENCHMARK INDEX:
Hang Seng Composite 2.27% 21.40% 16.72% N/A N/A
Hang Seng 2.00% 20.21% 14.66% 0.85% 7.84%
S&P 500 -0.81% 6.31% 8.25% -2.37% 9.93%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY VISITING www.gafunds.com.
THE FUND IMPOSES A 2% REDEMPTION FEE ON SHARES HELD LESS THAN 90 DAYS. Total
returns reflect a fee waiver in effect and in the absence of this waiver, the
total returns would be lower
The past year has been momentous for China and for investors in China. The
performance of China's economy through 2004 and 2005 shows just how far China
has come on the road towards the creation of a market economy. For the first
time ever China's economy has been through a boom followed by a period of
administered restraint without the economy going bust. Growth has remained above
9%; inflation did rise 5.3%; non-performing loans did not skyrocket at the
banks; businesses were able to gain access to credit and inventories did not
build up; incomes and wages rose, profits rose and exports kept on growing at
more than 30%. During this period China continued to recapitalize its banking
sector and began the privatization process by listing the Bank of
Communications. Three weeks after the period under review China revalued its
currency and moved towards the creation of a flexible currency regime. We now
have proof, if proof were needed, that China's economy has critical mass, depth
and momentum.
The Fund's performance over the first six months of 2005 has been satisfactory
and we are pleased to able to report that the Fund is ahead of its benchmark
over all periods. The modesty of the appreciation however, reflects a broadly
cautious view toward China's immediate prospects that, as outlined above, we
believe is not warranted. Already we have seen a number of the most vociferous
market analysts who were warning of ever more aggressive tightening and sharp
rises in interest rates in 2004 being forced to reverse their positions as it
becomes clear that the original measures have worked. Analysts have become more
bullish.
In fact the authorities have already eased and we have seen a recovery in both
credit growth and money supply. However, there is still official caution towards
the real estate markets specifically in Beijing and Shanghai. Company
performance over the period has been good with overall industrial profit growth
hitting a low of 17% in the first quarter before picking up to 19% in the second
quarter. The investment boom has left an overhang of excess capacity in the
worst affected sectors especially in steel, cement and aluminium. This excess
capacity combined with a significant drop in new construction growth has meant
falling margins. It has also, temporarily, turned China into a net exporter of
steel.
The export manufacturing sector has continued to perform well particularly
amongst the higher-end electronics manufacturers. The textile sector is having a
much harder time suffering from low margins, intense competition and quota
restrictions. However, it is notable that China's drive to move into more
value-added production has made electronics rather than textiles China's largest
exports.
2. PORTFOLIO POSITION
The portfolio remains heavily skewed toward China with a mix of H shares, red
chips and China plays. We prefer to invest in companies traded on the Hong Kong
Stock Exchange because of the broad range of choice. Hong Kong-listed stocks
also trade more cheaply than those listed in Shanghai and Shenzhen as well as
offering greater liquidity and transparency of information. Across sectors the
portfolio is heavily exposed to industrial and consumer stocks as well as
services, which includes both transportation and telecom. In keeping with our
positive view on energy prices, the Fund also has positions in oil, refining and
coal companies.
13
<Page>
3. OUTLOOK & STRATEGY
Policy has now moved from a tightening bias to a neutral position. Nevertheless,
the authorities remain cautious on certain sectors, especially property. Beijing
and Shanghai are two areas where property prices and property speculation are
judged to have been excessive. However, this is not true across the whole of
China and policies reflect that. We would also expect to see controls on
investment in previously overheated sectors to remain in place. There is a
positive effort to steer new investment toward power and transport, for example,
and away from steel, cement and construction.
We do expect to see slower aggregate economic growth from over 9% to around 8%
in coming years. This is not a bad thing and we would hope that the focus will
shift away from growth to profitability. The privatization of the banking sector
with its focus on restructuring, recapitalization and reduction of
non-performing loans will contribute to that shift.
The recent move in the Renminbi exchange rate is significant because it marks an
official change of thinking. Clearly, the timing of the move was the result of
the pressures building in the US Congress and also because of the imminent visit
of President Hu Jintao to the United States. However, China is moving toward the
creation of a flexible currency. We have begun with a small administrative
revaluation that makes little difference to any economic variable and the
creation of a framework that allows a fluctuation of +/- 0.3% against a basket
of currencies, the constituents and weights of which are undisclosed. At the
moment the currency is being managed within very tight bands but in time we
expect these to widen.
For the rest of this year we expect to see continuing strong export growth but
muted import growth as a result of the excess capacity created by the investment
boom in 2002-3. We also expect to see falling margins and product prices in
those sectors. The consumer sector is holding up well and we expect this to
continue. Headline inflation in China is expected to be modest but we do expect
to see rising labour costs begin to feed through. Basic manufacturing wages are
increasing 8-10% a year with wages for skilled workers rising faster.
Chinese stocks have been subdued while uncertainties have persisted about the
likely impact of China's efforts to slow the economy. Earnings have continued to
grow throughout the 2004-5 period and valuations do not fully reflect that. More
importantly, they also reflect a volatility that is showing every sign of
moderating.
/s/ Edmund Harriss
Edmund Harriss
Portfolio Manager 08 AUGUST 2005
The Hang Seng Composite Index is a market-capitalization weighted index that
comprises the top 200 companies listed on the Hong Kong Stock Exchange, based on
the average market-capitalization for the past twelve months. The Hang Seng
Composite Index commenced on January 3, 2000 and therefore does not have
five-year returns or returns since the Fund's inception. The Hang Seng Index is
a barometer of the Hong Kong Stock Market which comprises 33 constituent stocks,
whose aggregate market-capitalization accounts for about 70% of the total
market-capitalization of the Stock Exchange of Hong Kong Limited. The Standard &
Poor's 500 Index is a market-capitalization weighted index composed of 500
widely held common stocks of U.S. companies. These indices are unmanaged, not
available for investment and do not incur expenses.
THE FUND INVESTS IN FOREIGN SECURITIES WHICH INVOLVES GREATER VOLATILITY AND
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings and sector allocations are subject to change at any time and are not
recommendations to buy or sell any security
14
<Page>
FUND HIGHLIGHTS AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON CHINA & HONG KONG FUND
<Table>
# of Holdings in Portfolio: 45
Portfolio Turnover: 3.9%
% of Stocks in Top 10: 54.3%
</Table>
FUND MANAGERS:
Edmund Harriss;
Timothy W.N. Guinness
TOP 10 HOLDINGS (% OF NET ASSETS)
<Table>
Esprit Holdings Ltd 8.5%
Techtronic Industries Co 8.0%
HSBC Holdings Plc 6.9%
CNOOC Ltd 5.8%
PetroChina Co. Ltd 5.5%
CLP Holdings Ltd 4.5%
China Mobile (Hong Kong) Ltd 4.4%
Swire Pacific Ltd 4.2%
Yanzhou Coal Mining Co. Ltd 3.6%
Denway Motors Ltd 2.9%
</Table>
ASSET ALLOCATION (% OF NET ASSETS)
<Table>
China Plays 19.6%
H Shares 23.0%
Red Chips 18.5%
Hong Kong 38.3%
</Table>
SECTOR BREAKDOWN (% OF INVESTMENTS)
<Table>
Oil&Gas 15.4%
Banks 10.7%
Holding Companies-Divers 10.5%
Telecommunications 8.6%
Distribution/Wholesale 8.6%
Hand/Machine Tools 8.1%
Electric 7.0%
Chemicals 4.0%
Real Estate 3.8%
Coal 3.6%
Auto Manufacturers 2.9%
Commercial Services 2.6%
Transportation 2.5%
Semiconductors 2.2%
Machinery-Diversified 1.8%
Textiles 1.5%
Biotechnology 1.5%
Iron/Steel 1.4%
Home Furnishings 1.1%
Airlines 0.6%
Miscellaneous Manufactur 0.5%
Electronics 0.4%
Computers 0.3%
Retail 0.3%
Pharmaceuticals 0.0%
</Table>
15
<Page>
SCHEDULE OF INVESTMENTS IN SECURITIES
AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON CHINA & HONG KONG FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 99.6% VALUE
AGRICULTURAL BIOTECHNOLOGY: 1.5%
2,700,000 Global Bio-Chem Technology Group Co., Ltd. $ 1,667,546
337,500 Global Bio-Chem Technology Group Co., Ltd., warrant, Exp 5/31/07* 5,558
-------------
1,673,104
-------------
AIRLINES: 0.6%
2,140,000 China Southern Airlines Co., Ltd. 702,145
-------------
AUDIO/VIDEO PRODUCTS: 1.1%
8,619,550 Skyworth Digital Holdings, Ltd + ^ 1,264,335
-------------
AUTO - CARS/LIGHT TRUCKS: 2.9%
9,314,000 Denway MotorsLtd. 3,325,615
-------------
BUILDING - HEAVY CONSTRUCTION: 2.3%
270,000 Cheung Kong 2,631,596
-------------
COAL: 3.6%
5,155,200 Yanzhou Coal Mining Co., Ltd. 4,046,207
-------------
COMMERCIAL BANKS: 10.6%
253,850 Dah Sing Financial Holdings 1,698,452
485,477 HSBC Holdings Plc 7,870,675
379,400 Wing Hang Bank, Ltd. 2,501,866
-------------
12,070,993
-------------
COMPUTERS: 0.3%
5,388,000 Group Sense International, Ltd. 388,229
-------------
DISTRIBUTION/WHOLESALE: 8.6%
1,342,071 Esprit Holdings, Ltd. 9,713,390
-------------
DIVERSIFIED OPERATIONS: 10.3%
1,314,983 China Merchants Holdings International Co., Ltd. 2,597,176
252,000 Hutchison Whampoa 2,294,034
536,500 Swire Pacific, Ltd.-Class A 4,728,606
579,000 Wharf Holdings, Ltd. 2,030,102
-------------
11,649,918
-------------
ELECTRIC - GENERATION: 1.3%
2,000,000 Datang International Power Gen. Co., Ltd. 1,505,423
-------------
ELECTRIC - INTEGRATED: 5.7%
886,000 CLP Holdings, Ltd. 5,084,420
299,000 Hong Kong Electric Holdings 1,365,754
-------------
6,450,174
-------------
ELECTRIC PRODUCTS: 0.2%
300,000 Gome Electric Appliances Holdings, Ltd. 250,904
-------------
</Table>
See accompanying Notes to Financial Statements.
16
<Page>
<Table>
<Caption>
SHARES COMMON STOCKS: 99.6% CONTINUED VALUE
ELECTRONIC COMPONENTS - MISCELLANEOUS: 0.4%
1,052,000 Suface Mount Technology Holdings, Ltd. $ 440,599
352,800 Suface Mount Technology Holdings, Ltd., warrants, Exp 8/29/09* 26,199
-------------
466,798
-------------
ELECTRONICS: 2.8%
950,000 Kingboard Chemicals Holdings Ltd. 3,123,110
-------------
MACHINERY - DIVERSIFIED: 1.8%
3,510,000 Chen Hsong Holdings, Ltd. 2,009,740
-------------
MACHINERY TOOLS & RELATED PRODUCTS: 8.0%
3,636,000 Techtronic Industries Co. 9,122,866
-------------
MEDICAL - DRUGS: 0.0%
1,240,000 Far East Pharmaceutical Technology* 10,849
-------------
MISCELLANEOUS MANUFACTURER: 0.5%
2,322,000 EganaGoldpfeil (Holdings) Ltd. 528,820
-------------
OIL & GAS: 11.3%
10,957,000 CNOOC, Ltd. 6,626,166
8,256,000 PetroChina Co., Ltd. 6,214,388
-------------
12,840,554
-------------
OIL REFINING: 2.8%
3,326,000 Sinopec Zhenhai Refining & Chemical Company Ltd. 3,124,049
-------------
PETROCHEMICALS: 2.5%
3,570,000 China Petroleum & Chemical Corp. 1,401,009
4,204,000 Sinopec Shanghai Petrochemical 1,419,923
-------------
2,820,932
-------------
REAL ESTATE: 1.4%
200,000 Hopewell Holdings 506,955
20,000 Hopewell Holdings, warrants, Exp 8/5/06* 3,706
2,000,000 Midland Holdings, Ltd. 1,119,417
-------------
1,630,078
-------------
RENTAL AUTO/EQUIPMENT: 2.6%
1,531,000 Cosco Pacific, Ltd. 2,994,274
-------------
RETAIL: 0.3%
820,000 Glorious Sun Enterprises, Ltd. 374,554
-------------
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS: 2.2%
7,000,000 Solomon Systech International Ltd. 2,476,872
-------------
STEEL PRODUCERS: 1.4%
4,880,000 Maanshan Iron & Steel 1,569,758
-------------
TELECOMMUNICATIONS: 8.6%
1,335,000 China Mobile (Hong Kong), Ltd. 5,032,939
9,200,000 China Telecom Corp. Ltd. 3,314,505
4,628,200 Giant Wireless Technology 1,388,487
-------------
9,735,931
-------------
TEXTILES: 1.5%
5,205,931 Victory City International Holdings, Ltd 1,708,093
-------------
</Table>
See accompanying Notes to Financial Statements.
17
<Page>
CHINA & HONG KONG FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 99.6% CONTINUED VALUE
TRANSPORTATION: 2.5%
2,621,000 China Shipping Container Lines Co., Ltd. $ 1,121,325
2,276,000 China Shipping Development Co., Ltd. 1,698,529
-------------
2,819,854
-------------
TOTAL COMMON STOCKS
(cost $66,512,128) 113,029,165
-------------
TOTAL INVESTMENTS IN SECURITIES
(cost $66,512,128+): 99.6% 113,029,165
Other Assets less Liabilities: 0.4% 432,585
-------------
NET ASSETS: 100.0% $ 113,461,750
=============
</Table>
* NON-INCOME PRODUCING SECURITY.
+ FAIR VALUED UNDER PROCEDURES ESTABLISHED BY BOARD OF TRUSTEES.
^ ILLIQUID SECURITY.
See accompanying Notes to Financial Statements.
18
<Page>
GLOBAL INNOVATORS FUND FOR THE PERIOD ENDED JUNE 30, 2005
1. PERFORMANCE
AVERAGE ANNUALIZED TOTAL RETURNS
<Table>
<Caption>
SINCE
6 MONTHS 1 YEAR INCEPTION
(ACTUAL) (ACTUAL) 3 YEARS 5 YEARS 15 DECEMBER 1998
- -----------------------------------------------------------------------------------------------
Fund -1.85% 5.64% 10.73% -10.83% 1.92%
BENCHMARK INDEX:
S&P 500 -0.81% 6.31% 8.25% -2.37% 1.89%
NASDAQ Composite -5.12% 1.10% 12.58% -11.91% 0.73%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUNDS MAY BE LOWER OR
HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH END MAY BE OBTAINED BY VISITING www.gafunds.com. THE FUND IMPOSES A 1%
REDEMPTION FEE ON SHARES HELD LESS THAN 30 DAYS.
Total returns reflect a fee waiver in effect and in the absence of this waiver,
the total returns would be lower.
The Global Innovators Fund in the first six months of 2005 produced a return of
- -1.85%. This compares favourably to the return of the NASDAQ Index of -5.12%,
but is a little below the return for the S&P500 Index of -0.81%. It is pleasing
to note that the total return since launch continues to exceed that of BOTH its
benchmark indices which is of course our longer term aim.
2. ACTIVITY
The period under review saw a small increase in the weighting of the portfolio
towards internet stocks which we had previously reduced on valuation grounds and
the addition of the one oil stock in the universe given the strong outlook for
energy prices.
To achieve this we bought Ameritrade, BP, Amazon, and Apple Computer and we sold
News Corporation, and Sabre Holdings to make room for these. In the event
Ameritrade was then later sold after takeover speculation caused a sharp rise in
its stock price.
In addition other holdings were trimmed or added to bring them to equal weighted
positions and the holdings in Honda, Toyota, American International Group,
Microsoft, Citigroup, Vodafone and Pfizer were halved, and now represent half a
unit each. Our thinking here was that these are very large companies and whilst
they do meet our criteria of being in the old Wired 40 universe we want to
increasingly emphasize companies that are of a size that have the scope to grow
much faster than the broad economy for an extended period of time.
3. PORTFOLIO POSITION
The Portfolio now consists of 29 holdings.
The portfolio on the 30 June, by our calculations, had a PER (2005) of 16.0X
(very similar to the S&P500 at 30th June of 16.3X) with earnings which are
projected to grow by 11% in 2005 (23% in the US and flat for non US companies
where 2005 earnings' growth has been hit at Samsung and Sony). Furthermore the
stocks held by the portfolio were at that date on average 27% undervalued versus
the market when we applied our discounted cash flow model to the individual
constituents.
The better performing holdings have been Cemex, Taiwan Semiconductors, Samsung,
Nvidia and Cable & Wireless. The worst performing holdings have been Toyota, Sun
Microsystems, Checkpoint, and Acxiom.
The most notable changes have been the increase in the exposure to computer,
brought about by the purchase of Apple Computer, and the increase in exposure to
the internet with the purchase of Amazon. The purchase of BP has also given the
fund an exposure to oil. There has been a decrease in exposure to Media with the
sale of News Corp and a decrease in exposure to auto manufacturers, brought
about by the halving of the holdings of Honda and Toyota.
Geographically, there has been a reduction in the Japan and Australia exposure
and an increase particularly in exposure to the UK and the US.
19
<Page>
GLOBAL INNOVATORS FUND
4. INVESTMENT APPROACH
In managing the Global Innovators Fund we seek companies that exhibit New
Economy characteristics using stocks that are in or have once been in the Wired
40 as our starting point. We pay close attention to four factors in screening
all stocks considered for purchase. These four factors are: (a) value, meaning a
disciplined quantitative methodology used to rank all companies on similar basis
projecting their internal cash flows using consensus forecast and historic trend
data and applying a common overall market determined discount rate to imply fair
value and compare this to actual price); (b) business quality (quantitatively
ranking companies for the attractiveness of their return on capital metrics);
(c) improving results (1 and 3 month earnings estimates revisions); and (d) good
recent market price performance (looking particularly for above trend momentum
and rising volatility). This screening approach is supported by appropriate due
diligence both on the quality of the quantitative inputs to the screening
process, and of a more traditional form. Also top down "thematic" judgements
will be used in the process of evaluating potential Fund purchases and a regular
sell discipline involving review of large movers in the portfolio is also
employed.
We hope that over the months and years to come investors will find their faith
in our fund management and in the prospects for this fund with its focus on the
future in particular should be rewarded.
/s/ Tim Guinness
Tim Guinness 05 AUGUST 2005
The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is
widely recognized as representative of the equity market in general. The NASDAQ
Composite Index is a market capitalization weighted index that is designed to
represent the performance of the National Market System which includes over
5,000 stocks traded only over-the-counter and not on an exchange. These indices
are unmanaged, not available for investment and do not incur expenses.
PER - Price to Earnings ratio is calculated by dividing current price of the
stock by the company's trailing months' earnings per share.
THE FUND INVESTS IN FOREIGN SECURITIES WHICH WILL INVOLVE GREATER VOLATILITY,
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings and sector allocations are subject to change at any time and are not
recommendations to buy or sell any security.
20
<Page>
FUND HIGHLIGHTS AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON GLOBAL INNOVATORS FUND
<Table>
# of Holdings in Portfolio: 29
Portfolio Turnover: 19.5%
% of Stocks in Top 10: 43.1%
</Table>
FUND MANAGERS:
Timothy W.N. Guinness;
Edmund Harriss
TOP 10 HOLDINGS (% OF NET ASSETS)
<Table>
Cable & Wireless Plc 4.8%
Cemex SA de CV 4.6%
Taiwan Semiconductor 4.5%
State Street Corp 4.3%
L-3 Communications Holdings, Inc. 4.3%
Nokia Corp 4.2%
Nvidia Corp 4.2%
BP PLC SPONS ADR 4.1%
Oracle Corp 4.1%
First Data Corp 4.0%
</Table>
TOP 5 COUNTRIES (% OF NET ASSETS)
<Table>
United States 63.9%
United Kingdom 9.7%
Mexico 4.6%
Taiwan 4.5%
Finland 4.2%
</Table>
SECTOR BREAKDOWN (% OF INVESTMENTS)
<Table>
Software 13.9%
Computers 12.0%
Telecommunications 11.2%
Semiconductors 8.9%
Internet 7.4%
Building Materials 4.7%
Aerospace/Defense 4.4%
Banks 4.4%
Oil&Gas 4.2%
Retail 4.0%
Advertising 3.8%
Electronics 3.8%
Auto Manufacturers 3.8%
Home Furnishings 3.7%
Iron/Steel 3.4%
Insurance 2.3%
Pharmaceuticals 2.1%
Diversified Finan Serv 2.0%
</Table>
21
<Page>
SCHEDULE OF INVESTMENTS IN SECURITIES
AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON GLOBAL INNOVATORS FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 97.8% VALUE
ADVERTISING AGENCIES: 3.8%
26,470 WPP Group Plc $ 1,351,293
-------------
AEROSPACE/DEFENSE: 4.3%
20,000 L-3 Communications Holdings, Inc. 1,531,600
-------------
AUTO MANUFACTURERS: 3.7%
27,600 Honda Motor Company ADR 679,236
9,200 Toyota Motor Corp. 657,708
-------------
1,336,944
-------------
BLAST FURN/MILL: 3.3%
25,900 Nucor Corp. 1,181,558
-------------
COMMERCIAL BANKS: 6.3%
15,600 Citigroup, Inc. 721,188
32,374 State Street Corp. 1,562,045
-------------
2,283,233
-------------
COMMUNICATIONS EQUIPMENT: 4.2%
91,742 Nokia Corp. 1,526,587
-------------
COMPUTER INTEGRATED SYSTEMS DESIGN: 3.8%
368,090 Sun Microsystems, Inc.* 1,372,976
-------------
COMPUTER RELATED SERVICES: 3.5%
59,400 Acxiom Corp. 1,240,272
-------------
DATA PROCESSING AND PREPARATION: 4.0%
36,264 First Data Corp. 1,455,637
-------------
E-COMMERCE/PRODUCTS: 3.7%
40,700 Amazon.Com, Inc.* 1,346,356
-------------
ELECTRICAL COMPONENTS & EQUIPMENT: 3.7%
5,600 Samsung Electronics Co., Ltd. 1,339,800
-------------
ELECTRONIC COMPUTERS: 7.9%
38,110 Apple Computer, Inc.* 1,402,829
36,500 Dell, Inc.* 1,442,115
-------------
2,844,944
-------------
FIRE, MARINE, AND CASUALTY INSURANCE: 2.3%
14,105 American International Group, Inc. 819,501
-------------
OIL & GAS PRODUCERS: 4.1%
23,500 BP Amoco Plc ADR 1,465,930
-------------
PHARMACEUTICALS: 2.1%
27,010 Pfizer, Inc. 744,936
-------------
</Table>
See accompanying Notes to Financial Statements.
22
<Page>
<Table>
<Caption>
SHARES COMMON STOCKS: 97.8% CONTINUED VALUE
PREPACKAGED SOFTWARE: 9.6%
63,500 Check Point Software Technologies, Ltd.* $ 1,257,300
29,228 Microsoft Corp. 726,023
110,430 Oracle Corp.* 1,457,676
-------------
3,440,999
-------------
RADIO & TV COMMUNICATIONS EQUIPMENT: 3.6%
37,808 Sony Corp. 1,302,108
-------------
RADIOTELEPHONE COMMUNICATIONS: 1.9%
29,460 Lucent Technologies, warrants, Exp 12/10/07* 22,684
27,758 Vodafone Group Plc. 675,075
-------------
697,759
-------------
READY-MIXED CONCRETE: 4.6%
39,136 Cemex SA de CV 1,660,149
-------------
SEMICONDUCTORS: 8.7%
56,800 Nvidia Corp.* 1,517,696
176,308 Taiwan Semiconductor Manufacturing Co. Ltd. 1,607,925
-------------
3,125,621
-------------
TELECOMMUNICATION SERVICES: 4.8%
215,500 Cable & Wireless PLC 1,717,535
-------------
VARIETY STORE: 3.9%
31,300 Costco Wholesale Corp. 1,402,866
-------------
TOTAL COMMON STOCKS
(cost $33,322,138) 35,188,604
-------------
TOTAL INVESTMENTS IN SECURITIES
(cost $33,322,138+): 97.8% 35,188,604
Other Assets less Liabilities: 2.2% 787,070
-------------
NET ASSETS: 100.0% $ 35,975,674
=============
</Table>
* NON-INCOME PRODUCING SECURITY.
See accompanying Notes to Financial Statements.
23
<Page>
GLOBAL ENERGY FUND FOR THE PERIOD ENDED JUNE 30, 2005
1. PERFORMANCE
AVERAGE ANNUALIZED TOTAL RETURNS
<Table>
<Caption>
SINCE
6 MONTHS 1 YEAR INCEPTION
(ACTUAL) (ACTUAL) 30 JUNE 2004
- ----------------------------------------------------------------------
Fund 31.48% 60.40% 60.40%
BENCHMARK INDEX:
S&P 500 -0.81% 6.31% 6.31%
MSCI World Energy Index 15.58%* 34.05%* 34.05%*
</Table>
* Price return, excludes dividends
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUNDS MAY BE LOWER OR
HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH END MAY BE OBTAINED BY VISITING www.gafunds.com.
Total returns reflect a fee waiver in effect and in the absence of this waiver,
the total returns would be lower. THE FUND IMPOSES A 1% REDEMPTION FEE ON SHARES
HELD LESS THAN 30 DAYS.
The Global Energy Fund in the first six months of 2005 produced a total return
of 31.48%. This compares favourably to the price return of the MSCI World Energy
Index of 15.58%, and is also well ahead of the broad US market which marked time
as exemplified by the S&P500 Index's small negative total return of -0.81%.
2. ACTIVITY
The period under review saw relatively modest activity. We switched out of
Suncor, one of the two leading oil sands mining companies, into Encana after
Suncor announced that 50% of its production was out of action for up to 9 months
due to a fire at its upgrader. Encana is a leading Canadian gas exploration and
production company and also is the leading company in non mining oil sands
activity. We bought and then took a profit on Unocal after Chevron bid for it.
We added Tesoro an independent refiner benefiting from higher refining margins
especially at the heavy oil "complex" end. And lastly we added OPTI a pure oil
sands company which is developing a process to source the energy needed to
extract and upgrade oil sands from the oil sands themselves. It is the only core
holding which does not have sizeable current production and earnings but we
believe the prospective returns from their project could be very substantial
indeed. In addition we added three very small holdings in Dragon Oil, Afren and
Granby all small caps which were bought for "research" reasons although it goes
without saying we expect them to perform too. Afren will give us a better
insight to what is happening in West Africa, Dragon likewise in offshore
Turkmenistan (in the Caspian); and Granby in what opportunities are emerging in
the North Sea from recycled fallow acreage.
3. PORTFOLIO POSITION
The Portfolio now consists of 28 core holdings, each broadly equally weighted,
comprising almost 99% of the portfolio (ignoring cash) and six "research"
holdings in small cap stocks comprising in aggregate a little over 1%.
The portfolio on the 30 June, by our calculations, had a PER (2005) of 10.8X
(which compares with a broad market PER (2005) based on the S&P500 index of
16.3X at that date).
The better performing holdings over the first six months of 2005 have been
Canadian Natural Resources, Encana, and Nexen all Canadian stocks, Venture
Production a North Sea focussed company, OMV Austria's largest oil company and
Petrochina all of which returned over 40%. Whilst it is interesting that none of
these were US exploration and production or mid cap integrated companies of
which we hold a good number these by and large were also pretty good
contributors with seven returning over 30%. The worst performing holdings have
been the two larger integrated oil & gas companies we held - Shell and Chevron -
as well as one of our emerging market stocks - Repsol - and our only oil service
stock Abbot a platform and land drilling company which was hit by problems in
one part of its business early in the year.
24
<Page>
Sectoral weightings have only changed modestly. The major change was the
introduction of some pure refining exposure, deriving from the purchase of
Tesoro an independent refiner.
Geographically, there has been a nudging up of the exposure to Canada as the
result of increasing our core Canadian holdings from 6 to 7.
4. MARKET BACKGROUND
During the period under review both the oil price and the price of gas
strengthened very considerably. The price of West Texas Intermediate (WTI)
averaged $51.8 per barrel versus an average of $41.7 in the whole of 2004 and
likewise the price of Henry Hub gas averaged $6.68 against $5.80 in 2004.
Neither moved in a straight line and WTI, for example, after moving from around
$42 to $56 in March corrected to $46.5 before moving up to hit $60 in June. The
reasons for this have been widely aired in the press. Put shortly world oil
demand growth remains well above the trend of most of the last 30 years fuelled
particularly by Asian demand growth, whilst non OPEC supply growth is struggling
in the face of the maturing of the traditional non OPEC sources notably North
America and the North Sea. OPEC meanwhile is producing at levels nearer to its
capacity than for many years. Higher oil and gas prices are in turn boosting the
profits of all participants in the oil and gas industry whether pure exploration
and production companies, or integrated companies or oil & gas service and
equipment companies.
5. OUTLOOK
The key question for investors like ourselves is where do energy prices go from
here, and if it is that they will stay around these much higher levels or even
rise further will energy companies such as those we own continue to enjoy good
and increasing returns as a result.
We are firmly in the camp that believes that we are witnessing a major repricing
of fossil fuels that has further to run in the medium term because they are a
finite resource and not inexhaustible. World demand growth has real legs as Asia
(and then the rest of the undeveloped world) moves down the path of raising its
standard of living to developed world levels. We are beginning to approach the
point where it will just not be practicable to continue to meet the resulting
world demand for energy from fossil fuels alone and that higher prices are the
mechanism by which this problem has to be solved.
We further believe that, notwithstanding the risk that some of the potential
profits that could arise to oil & gas companies from this will be taken by
governments, the future for oil & gas companies over at least the next 30 years
is pretty bright. Furthermore it is even better for investors potentially as oil
& gas companies are not priced to reflect this rosy future. We obviously also
recognise that the oil price is inherently volatile as small amounts of over and
under supply can cause large price moves so the adjustment process will not
necessarily be smooth.
We hope that over the months and years to come investors will find their faith
in our fund management and in the prospects for this fund with its focus on the
investing in companies that will flourish in a high and rising energy price
world in particular should be rewarded.
/s/ Tim Guinness
Tim Guinness 05 AUGUST 2005
SHORT-TERM PERFORMANCE, IN PARTICULAR, IS NOT A GOOD INDICATION OF THE FUND'S
FUTURE PERFORMANCE AND AN INVESTMENT SHOULD NOT BE MADE BASED SOLELY ON RETURNS.
The MSCI World Index is an unmanaged index composed of more than 1,400 stocks
listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the
Far East. The S&P 500 Index is a broad based unmanaged index of 500 stocks,
which is widely recognized as representative of the equity market in general.
These indices are unmanaged, not available for investment and do not incur
expenses.
PER - Price to Earnings ratio is calculated by dividing current price of the
stock by the company's trailing months' earnings per share.
THE FUND INVESTS IN FOREIGN SECURITIES WHICH WILL INVOLVE GREATER VOLATILITY,
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings and sector allocations are subject to change at any time and are not
recommendations to buy or sell any security.
25
<Page>
FUND HIGHLIGHTS AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON GLOBAL ENERGY FUND
<Table>
# of Holdings in Portfolio: 36
Portfolio Turnover: 23.1%
% of Stocks in Top 10: 33.8%
</Table>
FUND MANAGERS:
Timothy W.N. Guinness;
Edmund Harriss
TOP 10 HOLDINGS (% OF NET ASSETS)
<Table>
OMV AG 3.6%
Abbot Group Plc 3.5%
Royal Dutch Petroleum Co. 3.4%
Petroleo Brasileiro SA 3.4%
Peabody Energy Corp. 3.4%
Petro-Canada 3.3%
Canadian Natural Resources Ltd. 3.3%
Newfield Exploration Co. 3.3%
ConocoPhillips 3.3%
Andarko Petroleum Corp. 3.3%
</Table>
TOP 5 COUNTRIES (% OF NET ASSETS)
<Table>
United States 45.9%
Canada 22.9%
United Kingdom 7.0%
Austria 3.6%
Netherlands 3.4%
</Table>
SECTOR BREAKDOWN (% OF INVESTMENTS)
<Table>
Oil&Gas 92.4%
Coal 3.6%
Miscellaneous Manufacturer 3.7%
Machinery-Diversified 0.3%
</Table>
26
<Page>
SCHEDULE OF INVESTMENTS IN SECURITIES
AT JUNE 30, 2005 (UNAUDITED)
GUINNESS ATKINSON GLOBAL ENERGY FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 92.8% VALUE
COAL: 3.3%
8,990 Peabody Energy Corp. $ 467,840
-------------
DIVERSIFIED MANUFACTURING OPERATIONS: 3.5%
106,291 Abbot Group Plc 485,107
-------------
ENERGY: 0.0%
600 Imperial Energy Corp.* 3,040
-------------
MACHINERY - GENERAL INDUSTRY: 0.3%
299,356 Shandong Molong Petroleum Machinery Co. Ltd. 38,130
-------------
OIL & GAS: 9.7%
8,286 Burlington Resources, Inc. 457,719
8,086 ChevronTexaco Corp. 452,169
8,518 Marathon Oil Corp. 454,606
-------------
1,364,494
-------------
OIL & GAS - FIELD SERVICES: 3.4%
10,315 Petroleo Brasileiro SA, ADR 474,903
-------------
OIL & GAS EXPLORATION & PRODUCTION: 30.2%
41,572 Afren PLC* 26,838
5,585 Anadarko Petroleum Corp. 458,808
12,694 Canadian Natural Resources 459,886
6,085 Canadian Oil Sands Trust 447,325
8,965 Devon Energy Corp. 454,346
31,759 Dragon Oil Plc* 61,083
11,446 EnCana Corp. 451,377
15,799 Granby Oil & Gas Plc* 22,949
6,200 Grey Wolf Exploration, Inc.* 15,885
11,528 Newfield Exploration Co.* 459,852
14,549 Nexen, Inc. 441,611
20,729 OPTI Canada, Inc.* 452,451
66,637 Venture Production, Plc* 441,254
-------------
4,193,665
-------------
OIL & GAS PRODUCERS: 36.0%
4,251 Amerada Hess Corp. 452,774
19,853 Chesapeake Energy Corp. 452,648
7,998 ConocoPhillips 459,805
5,864 Occidental Petroleum Corp. 451,117
1,144 OMV AG 498,251
7,145 Petro-Canada 464,945
648,000 Petrochina Co. Ltd. 479,338
17,828 Repsol SA 456,404
7,330 Royal Dutch Petroleum Co. 478,883
16,497 Sasol Ltd. 444,926
17,088 Shell Canada, Ltd. 458,589
-------------
5,097,680
-------------
</Table>
See accompanying Notes to Financial Statements.
27
<Page>
GLOBAL ENERGY FUND
<Table>
<Caption>
SHARES COMMON STOCKS: 92.8% CONTINUED VALUE
OIL - EXPLORATION & PRODUCTION: 3.2%
7,019 Apache Corp. $ 453,427
-------------
OIL REFINING & MARKETING: 3.2%
9,690 Tesoro Petroleum Corp. 450,779
-------------
TOTAL COMMON STOCKS
(cost $11,517,195) 13,029,065
-------------
<Caption>
PRINCIPAL
AMOUNT BOND: 0.1%
CORPORATE BOND: 0.1%
$ 14 OMV AG, 1.500%, 12/01/08 $ 6,562
-------------
TOTAL BOND
(cost $5,706) 6,562
-------------
TOTAL INVESTMENTS IN SECURITIES
(cost $11,522,901): 92.9% 13,035,627
Other Assets less Liabilities: 7.1% 998,947
-------------
NET ASSETS: 100.0% $ 14,034,574
=============
</Table>
* NON-INCOME PRODUCING SECURITY.
See accompanying Notes to Financial Statements.
28
<Page>
(This page is Intentionally Left Blank)
29
<Page>
STATEMENTS OF ASSETS AND LIABILITIES
AT JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
ASIA CHINA & GLOBAL GLOBAL
FOCUS HONG KONG INNOVATORS ENERGY
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities, at cost $ 20,789,160 $ 66,512,128 $ 33,322,138 $ 11,522,901
=============== =============== =============== ===============
Investments in securities, at value $ 31,717,762 $ 113,029,165 $ 35,188,604 $ 13,035,627
Cash 413,792 343,021 823,904 795,762
Cash denominated in foreign currency (cost of $11,051,
$53,184, $0, $79,696, respectively) 11,183 53,204 -- 78,348
Receivables:
Securities sold -- -- -- 38,719
Fund shares sold 30,012 59,107 383 316,592
Due to advisor -- -- -- --
Dividends and interest 120,384 459,396 96,279 6,104
Tax Reclaim -- -- 6,802 500
Prepaid expenses 13,536 20,468 11,536 13,941
--------------- --------------- --------------- ---------------
Total assets 32,306,669 113,964,362 36,127,508 14,285,593
--------------- --------------- --------------- ---------------
LIABILITIES
Payables:
Securities purchased -- -- -- 208,211
Unrealized loss on forward foreign currency contracts -- 10 -- 846
Fund shares redeemed 23,543 216,839 9,295 8,978
Due to advisor 39,514 90,957 27,312 16,139
Accrued administration expense 13,637 41,682 1,385 1,624
Accrued shareholder servicing plan fees 3,763 15,593 -- --
Other accrued expenses 54,527 105,052 86,137 13,781
Deferred trustees' compensation 16,899 32,479 27,705 1,440
--------------- --------------- --------------- ---------------
Total liabilities 151,883 502,612 151,834 251,019
--------------- --------------- --------------- ---------------
NET ASSETS $ 32,154,786 $ 113,461,750 $ 35,975,674 $ 14,034,574
=============== =============== =============== ===============
NUMBER OF SHARES ISSUED AND OUTSTANDING (unlimited
shares authorized no par value) 2,861,096 5,840,864 2,707,436 699,942
=============== =============== =============== ===============
NET ASSET VALUE PER SHARE $ 11.24 $ 19.43 $ 13.29 $ 20.05
=============== =============== =============== ===============
COMPONENTS OF NET ASSETS
Paid-in capital $ 106,997,423 $ 109,973,705 $ 81,361,714 $ 12,561,629
Undistributed net investment income 295,172 1,840,442 41,492 5,844
Accumulated net realized loss on investments
and foreign currency (86,070,171) (44,889,779) (47,293,998) (44,561)
Net unrealized appreciation (depreciation) on:
Investments 10,928,602 46,517,037 1,866,466 1,512,726
Foreign Currency 3,760 20,345 -- (1,064)
--------------- --------------- --------------- ---------------
Net Assets $ 32,154,786 $ 113,461,750 $ 35,975,674 $ 14,034,574
=============== =============== =============== ===============
</Table>
See accompanying Notes to Financial Statements.
30
<Page>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
ASIA CHINA & GLOBAL GLOBAL
FOCUS HONG KONG INNOVATORS ENERGY
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends* $ 605,187 $ 2,110,809 $ 357,932 $ 41,493
Interest 1,428 5,524 768 2,755
--------------- --------------- --------------- ---------------
Total income 606,615 2,116,333 358,700 44,248
--------------- --------------- --------------- ---------------
EXPENSES
Advisory fees (Note 3) 157,471 546,815 170,554 23,837
Administration fees (Note 3) 34,279 112,389 9,475 9,830
Transfer agent fees 20,742 59,044 54,711 11,180
Custody fees 10,164 26,559 4,965 10,542
Fund accounting fees 19,100 30,449 18,619 21,273
Audit fees 8,300 8,320 8,218 5,414
Legal fees 10,916 36,246 11,649 814
Trustees' fees 9,342 13,715 7,880 3,731
Shareholder servicing plan fees (Note 4) 7,381 24,254 -- --
Reports to shareholders 9,729 23,378 14,175 1,220
Registration expense 9,144 9,805 6,399 10,425
Interest expense 776 1,500 3,946 548
Insurance expense 3,211 11,884 4,414 219
Miscellaneous 1,915 3,820 2,203 1,177
--------------- --------------- --------------- ---------------
Total expenses 302,470 908,178 317,208 100,209
Plus: Expenses recouped (Note 3) 8,973 -- -- --
Less: Fees waived and expenses absorbed (Note 3) -- -- -- (61,805)
--------------- --------------- --------------- ---------------
Net expenses 311,443 908,178 317,208 38,404
--------------- --------------- --------------- ---------------
Net investment income 295,172 1,208,155 41,492 5,844
--------------- --------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY
Net realized gain (loss) on:
Investments 643,796 826,071 2,069,783 (26,970)
Foreign currency (4,973) 7,692 -- (22,705)
Net unrealized gain (loss) on:
Investments 1,409,707 2,824,513 (2,961,762) 1,381,312
Foreign currency 1,514 20,309 -- (376)
--------------- --------------- --------------- ---------------
Net realized and unrealized gain (loss) on investments
and foreign currency 2,050,044 3,678,585 (891,979) 1,331,261
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting from
operations $ 2,345,216 $ 4,886,740 $ (850,487) $ 1,337,105
=============== =============== =============== ===============
</Table>
* NET OF FOREIGN TAX WITHHELD OF $52,411 FOR ASIA FOCUS FUND, $22,533 FOR GLOBAL
INNOVATORS FUND AND $2,654 FOR THE GLOBAL ENERGY FUND.
See accompanying Notes to Financial Statements.
31
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
ASIA FOCUS FUND
----------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2005* DECEMBER 31, 2004
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income (loss) $ 295,172 $ 186,059
Net realized gain (loss) on:
Investments 643,796 2,349,444
Foreign currency (4,973) (30,192)
Net unrealized gain (loss) on:
Investments 1,409,707 (136,100)
Foreign currency 1,514 2,026
-------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,345,216 2,371,237
-------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- (172,805)
-------------- -----------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS -- (172,805)
-------------- -----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 3,352,303 12,640,796
Proceeds from shares reinvested -- 167,123
Cost of shares redeemed (4,160,578) (20,567,670)
Redemption fee proceeds (Note 3) 6,453 11,759
-------------- -----------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS (801,822) (7,747,992)
-------------- -----------------
Total increase (decrease) in net assets 1,543,394 (5,549,560)
NET ASSETS
Beginning of period 30,611,392 36,160,952
-------------- -----------------
End of period $ 32,154,786 $ 30,611,392
============== =================
Accumulated net investment income $ 295,172 $ --
CAPITAL SHARE ACTIVITY
Shares sold 301,965 1,291,009
Shares issued on reinvestment -- 17,158
Shares issued on merger -- --
Shares redeemed (384,067) (2,167,957)
-------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (82,102) (859,790)
============== =================
</Table>
* UNAUDITED.
# COMMENCEMENT OF OPERATIONS.
See accompanying Notes to Financial Statements.
32
<Page>
<Table>
<Caption>
CHINA & HONG KONG FUND GLOBAL INNOVATORS FUND
---------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2005* DECEMBER 31, 2004 JUNE 30, 2005* DECEMBER 31, 2004
-------------- ----------------- -------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income (loss) $ 1,208,155 $ 1,372,112 $ 41,492 $ (76,669)
Net realized gain (loss) on:
Investments 826,071 1,995,959 2,069,783 (1,351,843)
Foreign currency 7,692 (1,991) -- --
Net unrealized gain (loss) on:
Investments 2,824,513 7,462,797 (2,961,762) 5,745,903
Foreign currency 20,309 35 -- --
-------------- ----------------- -------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,886,740 10,828,912 (850,487) 4,317,391
-------------- ----------------- -------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- (1,625,722) -- --
-------------- ----------------- -------------- -----------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS -- (1,625,722) -- --
-------------- ----------------- -------------- -----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 8,323,054 22,166,286 408,303 1,300,643
Proceeds from shares reinvested -- 1,584,631 -- --
Cost of shares redeemed (12,089,076) (37,199,616) (5,637,235) (13,341,802)
Redemption fee proceeds (Note 3) 17,278 28,630 215 772
-------------- ----------------- -------------- -----------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS (3,748,744) (13,420,069) (5,228,717) (12,040,387)
-------------- ----------------- -------------- -----------------
Total increase (decrease) in net assets 1,137,996 (4,216,879) (6,079,204) (7,722,996)
NET ASSETS
Beginning of period 112,323,754 116,540,633 42,054,878 49,777,874
-------------- ----------------- -------------- -----------------
End of period $ 113,461,750 $ 112,323,754 $ 35,975,674 $ 42,054,878
============== ================= ============== =================
Accumulated net investment income $ 1,840,442 $ 632,287 $ 41,492 $ --
CAPITAL SHARE ACTIVITY
Shares sold 445,126 1,250,352 31,134 104,942
Shares issued on reinvestment -- 89,124 -- --
Shares issued on merger -- -- -- --
Shares redeemed (653,643) (2,222,373) (430,078) (1,076,691)
-------------- ----------------- -------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (208,517) (882,897) (398,944) (971,749)
============== ================= ============== =================
<Caption>
GLOBAL ENERGY FUND
----------------------------------
SIX MONTHS JUNE 30, 2004#
ENDED THROUGH
JUNE 30, 2005* DECEMBER 31, 2004
-------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income (loss) $ 5,844 $ 257
Net realized gain (loss) on:
Investments (26,970) 6,917
Foreign currency (22,705) (2,060)
Net unrealized gain (loss) on:
Investments 1,381,312 131,414
Foreign currency (376) (688)
-------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,337,105 135,840
-------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- --
-------------- -----------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS -- --
-------------- -----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 14,795,258 2,199,078
Proceeds from shares reinvested -- --
Cost of shares redeemed (3,747,042) (705,921)
Redemption fee proceeds (Note 3) 14,514 5,742
-------------- -----------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS 11,062,730 1,498,899
-------------- -----------------
Total increase (decrease) in net assets 12,399,835 1,634,739
NET ASSETS
Beginning of period 1,634,739 --
-------------- -----------------
End of period $ 14,034,574 $ 1,634,739
============== =================
Accumulated net investment income $ 5,844 $ --
CAPITAL SHARE ACTIVITY
Shares sold 809,518 157,815
Shares issued on reinvestment -- --
Shares issued on merger -- --
Shares redeemed (216,742) (50,649)
-------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 592,776 107,166
============== =================
</Table>
33
<Page>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
<Table>
<Caption>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
ASIA FOCUS FUND JUNE 30, 2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.40 $ 9.51 $ 5.80 $ 6.18 $ 5.16 $ 9.51
----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.10 0.06 0.06 (0.05) 0.01 --
Net realized and unrealized gain (loss)
on investments and foreign currency 0.74 0.89 3.61 (0.37) 1.01 (4.35)
----------------------------------------------------------------------------------
Total from investment operations 0.84 0.95 3.67 (0.42) 1.02 (4.35)
----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
From net investment income -- (0.06) -- -- -- --
----------------------------------------------------------------------------------
Total distributions -- (0.06) -- -- -- --
----------------------------------------------------------------------------------
Redemption Fee Proceeds --(2) --(2) 0.04 0.04 -- --
----------------------------------------------------------------------------------
Net asset value, end of period $ 11.24 $ 10.40 $ 9.51 $ 5.80 $ 6.18 $ 5.16
==================================================================================
Total return 8.08%(4) 10.01% 63.97% (6.15)% 19.77% (45.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 32.2 $ 30.6 $ 36.2 $ 16.5 $ 17.1 $ 14.2
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived/expenses recouped 1.92%(3) 2.04% 2.16% 2.62% 3.08% 2.67%
After fees waived/expenses recouped 1.98%(3) 1.98% 1.95% 1.98% 1.98% 1.98%
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS:
Before fees waived/expenses recouped 1.93%(3) 0.51% 0.75% (1.26)% (0.89)% (0.71)%
After fees waived/expenses recouped 1.87%(3) 0.57% 0.96% (0.62)% 0.21% (0.02)%
Portfolio turnover rate 5.00%(4) 32.41% 114.90% 188.96% 43.91% 61.77%
</Table>
(1) UNAUDITED.
(2) AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
See accompanying Notes to Financial Statements.
34
<Page>
<Table>
<Caption>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
CHINA & HONG KONG FUND JUNE 30, 2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.57 $ 16.81 $ 10.17 $ 11.67 $ 15.75 $ 17.65
----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.21 0.25 0.20 0.13 0.09 0.05
Net realized and unrealized gain (loss)
on investments and foreign currency 0.65 1.78 6.44 (1.66) (3.79) (1.28)
----------------------------------------------------------------------------------
Total from investment operations 0.86 2.03 6.64 (1.53) (3.70) (1.23)
----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
From net investment income -- (0.27) -- -- (0.38) (0.67)
----------------------------------------------------------------------------------
Total distributions -- (0.27) -- -- (0.38) (0.67)
----------------------------------------------------------------------------------
Redemption Fee Proceeds --(2) --(2) --(2) 0.03 -- --
----------------------------------------------------------------------------------
Net asset value, end of period $ 19.43 $ 18.57 $ 16.81 $ 10.17 $ 11.67 $ 15.75
==================================================================================
Total return 4.63%(4) 12.16% 65.29% (12.85)% (23.45)% (6.97)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 113.5 $ 112.3 $ 116.5 $ 56.9 $ 76.8 $ 118.5
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.66%(3) 1.67% 1.81% 2.02% 1.85% 1.76%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 2.21%(3) 1.26% 2.01% 1.08% 0.56% 0.13%
Portfolio turnover rate 3.85%(4) 15.37% 28.57% 60.95% 31.54% 38.83%
</Table>
(1) UNAUDITED.
(2) AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
See accompanying Notes to Financial Statements.
35
<Page>
<Table>
<Caption>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
GLOBAL INNOVATORS FUND JUNE 30, 2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.54 $ 12.21 $ 8.98 $ 13.04 $ 18.38 $ 23.52
----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss 0.01 (0.02) (0.08) (0.08) (0.14) (0.19)
Net realized and unrealized gain (loss)
on investments (0.26) 1.35 3.31 (3.98) (5.20) (3.45)
----------------------------------------------------------------------------------
Total from investment operations (0.25) 1.33 3.23 (4.06) (5.34) (3.64)
----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
From net realized gains -- -- -- -- -- (1.50)
----------------------------------------------------------------------------------
Total distributions -- -- -- -- -- (1.50)
----------------------------------------------------------------------------------
Redemption Fee Proceeds --(2) --(2) --(2) --(2) -- --
----------------------------------------------------------------------------------
Net asset value, end of period $ 13.29 $ 13.54 $ 12.21 $ 8.98 $ 13.04 $ 18.38
==================================================================================
Total return (1.85)%(4) 10.89% 35.97% (31.13)% (29.05)% (16.78)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 36.0 $ 42.1 $ 49.8 $ 45.9 $ 79.3 $ 153.0
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 1.67%(3) 1.68% 1.76% 2.03% 1.46% 1.23%
After fees waived 1.67%(3) 1.68% 1.56% 1.35% 1.35% 1.24%
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET
ASSETS:
Before fees waived 0.22%(3) (0.17)% (0.90)% (1.34)% (0.89)% (0.79)%
After fees waived 0.22%(3) (0.17)% (0.70)% (0.66)% (0.78)% (0.80)%
Portfolio turnover rate 19.52%(4) 50.57% 0.00% 54.15% 50.03% 27.41%
</Table>
(1) UNAUDITED.
(2) AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
See accompanying Notes to Financial Statements.
36
<Page>
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
<Table>
<Caption>
SIX MONTHS JUNE 30, 2004(2)
ENDED THROUGH
JUNE 30, DECEMBER 31,
GLOBAL ENERGY FUND 2005(1) 2004
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.25 $ 12.50
---------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.01 --(3)
Net realized and unrealized gain (loss) on investments and foreign currency 4.77 2.70
---------------------------------
Total from investment operations 4.78 2.70
---------------------------------
Redemption fee proceeds 0.02 0.05
---------------------------------
Net asset value, end of period $ 20.05 $ 15.25
=================================
Total return 31.48%(4) 22.00%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 14.0 $ 1.6
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 3.78%(5) 17.36%(5)
After fees waived 1.45%(5) 1.45%(5)
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
Before fees waived (2.11)%(5) (15.84)%(5)
After fees waived 0.22%(5) 0.07%(5)
Portfolio turnover rate 23.10%(4) 9.96%(4)
</Table>
(1) UNAUDITED.
(2) COMMENCEMENT OF OPERATIONS.
(3) AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(4) NOT ANNUALIZED.
(5) ANNUALIZED.
See accompanying Notes to Financial Statements.
37
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1
ORGANIZATION
Guinness Atkinson Funds (the "Trust"), 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 four separate series all of whose long-term objective is capital
appreciation: Guinness Atkinson Asia Focus Fund (the "Asia Focus Fund"),
Guinness Atkinson China & Hong Kong Fund (the "China & Hong Kong Fund"),
Guinness Atkinson Global Innovators Fund (the "Global Innovators Fund"), and
Guinness Atkinson Global Energy Fund (the "Global Energy Fund"), each a "Fund"
and collectively, the "Funds". The China & Hong Kong Fund began operations on
June 30, 1994, the Asia Focus Fund began operations on April 29, 1996, the
Global Innovators Fund began operations on December 15, 1998, and the Global
Energy Fund began operations on June 30, 2004.
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 accounting
principles generally accepted in the United States of America.
A. SECURITY VALUATION. Investments in securities traded on a principal exchange
(U.S. or foreign) or Nasdaq are valued at the official closing price on each
day that the exchanges are open for trading; securities traded on an exchange
or Nasdaq for which there have been no sales, and other over-the-counter
securities are valued at the mean between the bid and asked prices.
Securities for which quotations are not readily available are valued at their
respective fair values as determined in good faith by, or under procedures
established by, the Board of Trustees. 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.
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
resulting from changes in the currency exchange rate from the fluctuations
resulting from changes in the market prices of investments.
Foreign dividend income is translated using the exchange rate in existence on
the date the income is accrued. Exchange gains and losses related to the
translation of interest income are included in dividend 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. 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. Risks may arise upon entering these contracts from the potential
inability of a counter party to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar or other currencies. Counterparties to these contracts are major
U.S. financial institutions.
C. SECURITY TRANSACTIONS, DIVIDEND INCOME 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 provision is required.
E. CONCENTRATION OF RISK. Asia Focus Fund invests substantially all of its
assets in the Asian continent. The China & Hong Kong 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 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.
38
<Page>
F. USE OF ESTIMATES. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
G. INDEMNIFICATIONS. Under the Funds' organizational documents, its current and
former officers and trustees are indemnified against certain liabilities
arising out of the performance of their duties to the Funds. In addition, in
the normal course of business, the Funds enter into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the
Funds that have not yet occurred or that would be covered by other parties.
NOTE 3
COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
The Trust, on behalf of each Fund, entered into an Investment Advisory Agreement
with Guinness Atkinson Asset Management, LLC (the "Advisor") on April 26, 2003,
which provided the Funds with investment management services under an investment
advisory agreement. The Advisor furnishes all investment advice, office space,
facilities, and most of the personnel needed by the Funds. As compensation for
its services, the Advisor is entitled to a monthly fee at the following annual
rates based upon the average daily net assets of the Funds:
<Table>
Asia Focus Fund 1.00%
China & Hong Kong Fund 1.00%
Global Innovators Fund 0.90% on the first $100 million
0.75% on the next $100 to $500 million and
0.60% on assets over $500 million
Global Energy Fund 0.90%
</Table>
The Funds are responsible for their own operating expenses. Effective April 26,
2003, the Advisor has contractually agreed to limit the Funds' total operating
expenses by reducing all or a portion of their fees and reimbursing the Funds'
for expenses so that its ratio of expenses to average daily net assets will not
exceed the following levels:
<Table>
Asia Focus Fund 1.98%
China & Hong Kong Fund 1.98%
Global Innovators Fund 1.88%
Global Energy Fund 1.45%
</Table>
Prior to April 26, 2003, the operating expense limit for the Global Innovators
Fund was 1.35% and there was no operating expense limit for the China & Hong
Kong Fund.
To the extent that the Advisor waives its fees and/or absorbs expenses to
satisfy this cap, it may seek repayment of a portion or all of such amounts at
any time within three fiscal years after the fiscal year in which such amounts
were waived or absorbed, subject to the applicable cap.
For the six months ended June 30, 2005, the Advisor waived fees and absorbed
expenses of $61,805 in the Global Energy Fund. The Advisor recouped expenses of
$8,973 from the Asia Focus Fund during the six months ended June 30, 2005.
At June 30, 2005, the Advisor may recapture a portion of the following amounts
that has been paid and/or waived on behalf of the Funds no later than the dates
as stated below:
<Table>
<Caption>
FUNDS: DECEMBER 31, 2007 DECEMBER 31, 2008 TOTAL
- --------------------------------------------------------------------------------------------
Asia Focus Fund $ 9,027 $ -- $ 9,027
Global Energy Fund $ 60,587 $ 61,805 $ 122,392
</Table>
39
<Page>
CONSIDERATION OF THE BOARD IN APPROVING THE CONTINUATION OF THE TRUST'S
INVESTMENT ADVISORY AGREEMENT
At an in-person meeting held on May 6, 2005, the Board of Trustees (the
"Trustees" or the "Board") of Guinness Atkinson Funds (the "Trust") considered
the annual approval of the continuation of the investment advisory agreement
(the "Agreement") between the Trust, on behalf of the Guinness Atkinson Asia
Focus Fund ("Asia Focus Fund"), the Guinness Atkinson China & Hong Kong Fund
("China & Hong Kong Fund"), the Guinness Atkinson Global Innovators Fund
("Global Innovators Fund") (each a "Fund), and Guinness Atkinson Asset
Management, LLC (the "Adviser").
The investment advisory agreement for the Guinness Atkinson Global Energy Fund
(another series of the Trust), which became effective June 30, 2004 and has an
initial two year term, will be considered for continuation in 2006.
At the meeting, the Trustees discussed with counsel to the Trust and counsel to
the Trustees who are not "interested persons" (as defined by the Investment
Company Act of 1940, as amended (the "1940 Act")), of the Trust (the
"Independent Trustees"), their fiduciary duty under the 1940 Act in reviewing
the Agreement and their obligation to obtain all information relevant to their
consideration thereof. The Board discussed the fees payable by each Fund under
the Agreement, the duties of the Trustees under, and the fiduciary standards
established by, Section 36(b) of the 1940 Act, the legislative history of the
amendments to the 1940 Act, the history of management fee standards and
regulations, positions taken thereon by the Securities and Exchange Commission
and Congress, the criteria generally considered in evaluating the reasonableness
of fees, and lawsuits illustrating the courts' application and interpretation of
the applicable fiduciary standards.
The Trustees reviewed information concerning the historical performance of each
Fund and each Fund's comparison funds, the annualized expense ratios as a
percentage of average net assets of each fund in the comparison group,
historical expense ratio comparisons, and certain financial information about
the Adviser, including the profitability of the Funds to the Adviser. The
Trustees also discussed with counsel to the Trust the comparability criteria for
the Funds and the funds comprising the comparison groups.
The Board also discussed the Adviser's profitability and the firm's retention of
key personnel.
After the Independent Trustees had met with their counsel in executive session,
the full Board made the following determinations with respect to the Funds.
ASIA FOCUS FUND. The Board compared the Asia Focus Fund's 1.00% annual advisory
fee to comparable fees charged to an independently-selected peer group of eight
similar mutual funds and considered the fact that the fee was at the median
advisory fee of 1.00% for the peer group and slightly higher than the 0.95%
average fee. The Board also compared the Fund's total annual expense ratio of
1.98% to the peer group median of 1.50% and the average of 1.56% and considered
the fact that the Adviser was willing to waive its fees and reimburse expenses
if the Fund's expenses exceeded 1.98% through April 25, 2006. The Board also
considered the fact that, at approximately $33 million in assets, the Fund was
considerably smaller than all but one of the funds in its peer group, which
ranged from approximately $12 million in assets to $908 million, with an average
of $356 million. The Board then compared the Fund's performance for the
three-months, one-year, three-years and five-years ended March 31, 2005 to that
of the peer group for the same periods and considered the fact that the Fund
outperformed or equaled the median performance of the peer group of
similarly-managed funds for the three month, one-year, three-year and five-year
periods.
Having concluded that: (1) the Asia Focus Fund's advisory fees were within the
range of fees charged to comparable mutual funds; (2) the Fund's somewhat higher
total expenses were attributable to the Fund's relatively small size; (3) the
Adviser's willingness to limit the Fund's expense ratio through April 25, 2006
would provide stability to the Fund's expenses during that period; and (4) the
Fund had outperformed its peers based on the median performance during the past
three and five years; the Board determined that it was in the best interests of
the Fund's shareholders to approve the continuation of the Agreement with
respect to this Fund.
CHINA & HONG KONG FUND. The Board compared the China & Hong Kong Fund's 1.00%
annual advisory fee to comparable fees charged to an independently-selected peer
group of seven similar mutual funds and considered the fact that the fee was the
same as the median advisory fee of 1.00% and the below the average fee of 1.03%.
The Board also compared the Fund's total annual expense ratio of 1.67% to the
peer group median of 1.73% and the average of 1.75% and considered the fact that
the Adviser was willing, through April 25, 2006, to waive its fees or reimburse
expenses if the Fund's expense ratio exceeded 1.98%. The Board also considered
the fact that, at approximately $109 million in assets, the Fund was the median
of the funds in its peer group, which ranged from approximately $19 million in
assets to $321 million, with an average of $121 million. The Board then compared
the Fund's performance for the one-year, three-years, five-years and ten-years
ended March 31, 2005 to that of the peer group for the same periods and
considered the fact that the Fund outperformed the median performance of the
peer group of similarly-managed funds.
Having concluded that: (1) the China & Hong Kong Fund's advisory fees were
within the range of fees charged to comparable mutual funds; (2) the Fund's
total expenses were lower than those of its peers; (3) the Adviser's willingness
to limit the Fund's expense ratio through April 25, 2006 would provide stability
to the Fund's expenses during that period; and (4) the Fund had outperformed its
peers during the past one-year, three-years, five-years and ten-years; the Board
determined that it was in the best interests of the Fund's shareholders to
approve the continuation of the Agreement with respect to this Fund.
40
<Page>
GLOBAL INNOVATORS FUND. The Board compared the Global Innovators Fund's 0.90%
annual advisory fee to comparable fees charged to an independently-selected peer
group of 14 similar mutual funds and considered the fact that the fee was higher
than the peer group's median advisory fee of 0.75% and average fee of 0.77%. The
Board also compared the Fund's total annual expense ratio of 1.68% to the peer
group median of 1.33% and the average of 1.30% and considered the fact that the
Adviser was willing, through April 25, 2006, to waive its fees or reimburse
expenses if the Fund's expense ratio exceeded 1.88%. The Board also considered
the fact that, at approximately $44 million in assets, the Fund was considerably
smaller than the average asset size of $475 million and somewhat smaller than
the median of $62 million. The Board then compared the Fund's performance for
the three-months, one-year, three-years and five-years ended March 31, 2005 to
that of the peer group for the same periods and considered the fact that the
Fund outperformed the median and average performance of the peer group of
similarly-managed funds for the three-year period.
Having concluded that: (1) the Global Innovators Fund's advisory fees were
higher that the median and the average for the range of fees charged to
comparable mutual funds; (2) the Fund's total expenses were higher than all but
one of the funds in its peer group; and (3) the fact that the Fund had
outperformed its peers for only the past three-year period, but lagged its peers
for both the median and average for the past five-year period; the Board
determined that it was in the best interests of the Fund's shareholders to
approve the continuation of the Agreement with respect to this Fund.
Under certain circumstances, a redemption fee of 1-2% will be charged to
shareholders of the Funds who redeem shares purchased less than 30 or 90 days
prior to redemption.
U.S. Bancorp Fund Services, LLC (the "Administrator") acts as the Funds'
administrator under an administration agreement. The Administrator prepares
various federal and state regulatory filings, reports and returns for the Funds;
prepares reports and materials to be supplied to the Trustees; monitors the
activities of the Funds' custodian, transfer agent and accountants; coordinates
the preparation and payment of the Funds' expenses and reviews the Funds'
expense accruals. Effective April 30, 2005, the Administrator receives a monthly
fee from each Fund at the following annual rates:
<Table>
<Caption>
FUND ASSET BASED FEE
- -----------------------------------------------------------------------------------------------------------
China & Hong Kong Fund 0.10% on 1st $100 million of average daily net assets
0.05% on next $100 million of average daily net assets
0.03% thereafter.
subject to $40,000 annual minimum.
Asia Focus Fund 0.10% on 1st $100 million of average daily net assets
0.05% on next $100 million of average daily net assets
0.03% thereafter.
subject to $20,000 annual minimum.
Global Innovators Fund 0.05% of average daily net assets subject to $20,000 annual minimum
Global Energy Fund 0.05% of average daily net assets subject to $20,000 annual minimum
</Table>
Prior to April 30, 2005, each of the Asia Focus Fund and the China & Hong Kong
Fund paid the Administrator a monthly fee at the annual rate of 0.25% of its
average daily net assets, subject to an annual minimum of $20,000 for the Asia
Focus Fund and $40,000 annual minimum for the China & Hong Kong Fund.
Quasar Distributors, LLC (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.
On August 14, 1998, the Trust approved a Deferred Compensation Plan for Trustees
(the "Plan"). Trustees can elect to receive payment in cash or defer payments
provided for in the Plan. If a trustee elects to defer payment, the Plan
provides for the creation of a deferred payment account (Phantom Share Account).
This account accumulates the deferred fees earned, and the value of the account
is adjusted at the end of each quarter to reflect the value that would have been
earned if the account had been invested in designated investments. The Funds
recognize as trustee expense amounts accrued as meetings are attended plus the
change in value of the Phantom Share Account.
For the period ended June 30, 2005, the change in the value of the phantom share
account included unrealized appreciation (depreciation) were as follows:
<Table>
Asia Focus Fund $ 2,594
China & Hong Kong Fund $ (17)
Global Innovators Fund $ (32)
Global Energy Fund $ (304)
</Table>
41
<Page>
Certain officers of the Funds are also officers and/or Directors of the Advisor
and Administrator. The Trust's Chief Compliance Officer receives an annual fee
of $18,000 from the Funds.
NOTE 4
SHAREHOLDER SERVICING PLAN
Each Fund has adopted a Shareholder Servicing Plan to pay a fee at an annual
rate of up to 0.25% of its daily average net assets of shares service by
shareholder servicing agents who provide administrative and support services to
their customers. Currently, only the Asia Focus Fund and the China & Hong Kong
Fund imposed this shareholder servicing fee effective April 30, 2005.
NOTE 5
INVESTMENT TRANSACTIONS
The following table presents purchases and sales of securities during the six
months ended June 30, 2005, excluding short-term investments, to indicate the
volume of transactions in each Fund.
<Table>
<Caption>
FUND PURCHASES SALES
- ---------------------------------------------------------------------
Asia Focus Fund $ 1,571,978 $ 2,531,407
China & Hong Kong Fund 4,249,350 4,360,629
Global Innovators Fund 7,462,768 13,338,530
Global Energy Fund 11,315,589 1,274,879
</Table>
NOTE 6
FORWARD FOREIGN CURRENCY CONTRACTS
In order to hedge their portfolio and to protect them against possible
fluctuations in foreign exchange rates pending the settlement of securities
transactions, the Funds may enter into forward currency contracts which obligate
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 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 June 30, 2005 were as follows:
<Table>
<Caption>
CURRENCY
RECEIVABLE DELIVERY UNREALIZED
FUNDS CURRENCY AMOUNT (DELIVERABLE) DATE LOSS
- ----------------------------------------------------------------------------------------------------
China & Hong Kong Fund US$ $ 53,204 Hong Kong 07/01/05 $ (10)
Dollar (413,500)
Global Energy Fund US$ $ 12,284 British 07/01/05 $ (238)
Pound 6,850
Global Energy Fund US$ $ 468,063 Euro 469,532 07/01/05 $ 4,014
Global Energy Fund US$ $ 568,063 Euro (469,532) 07/01/05 $ (4,014)
Global Energy Fund US$ $ 70,305 South Africa 07/01/05 $ (608)
Rand 469,532
Global Energy Fund US$ $ 517 Canadian 07/01/05 $ (3)
Dollar (634)
</Table>
42
<Page>
NOTE 7
TAX MATTERS
As of June 30, 2005, the tax basis of investments were as follows:
<Table>
<Caption>
CHINA & GLOBAL GLOBAL
ASIA FOCUS HONG KONG INNOVATORS ENERGY
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------
Cost of investment for tax purposes $ 20,789,160 $ 66,512,128 $ 33,322,138 $ 1,522,901
Gross tax unrealized appreciation 11,337,662 47,841,318 4,461,264 1,524,764
Gross tax unrealized (depreciation) (409,061) (1,324,281) (2,594,798) (12,019)
Net tax unrealized appreciation on investment 10,928,601 46,517,037 1,866,466 1,512,744
Net tax appreciation on derivatives and foreign-currency
denominated assets and liabilities 3,760 20,345 -- (1,064)
Net tax unrealized appreciation $ 10,932,362 $ 46,537,382 $ 1,866,466 $ 1,511,680
</Table>
As of December 31, 2004, the following funds have capital loss carryforwards
available to offset future realized capital gains:
<Table>
<Caption>
CHINA & GLOBAL GLOBAL
ASIA FOCUS HONG KONG INNOVATORS ENERGY
CAPITAL LOSSES EXPIRING IN: FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------
2005 $ (12,822,714) $ -- $ -- $ --
2006 (62,854,581) (31,801,345) -- --
2007 (7,599,516) -- -- --
2008 -- -- (1,603,620) --
2009 (2,794,130) -- (17,621,884) --
2010 (638,053) (3,556,242) (19,915,748) --
2011 -- (10,213,093) (8,376,172) --
2012 -- -- (1,846,357) --
Total (86,708,994) (45,570,680) (49,363,781) --
</Table>
For the China & Hong Kong Fund ($3,332,384) of the ($10,213,093) capital loss
carryforward expiring in 2011 was acquired in the reorganization with the
Mainland China Fund.
ADDITIONAL INFORMATION (UNAUDITED)
PROXY VOTING PROCEDURES
The Advisor of the Funds vote proxies relating to portfolio securities in
accordance with procedures that have been approved by the Board of Trustees of
the Funds. You may obtain a description of these procedures, free of charge, by
calling "toll-free" 1-800-915-6565. This information is also available through
the Securities and Exchange Commission's website at http://www.sec.gov.
PROXY VOTING RECORDS
Information regarding how the advisor of the Funds voted proxies relating to
portfolio securities during the latest 12-month period ended June 30 is
available, without charge, by calling toll-free, 1-800-915-6565. This
information is also available through the Securities and Exchange Commission's
website at http://www.sec.gov.
43
<Page>
FORM N-Q DISCLOSURE
The Funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. The Funds' Form N-Q is available on the Securities and Exchange
Commission's website at http://www.sec.gov. The Funds' Form N-Q may be reviewed
and copied at the Commission's Public Reference Room in Washington, DC, and
information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330. This information is also available, without charge, by
calling toll-free, 1-800-915-6565.
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TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust is set forth
below. The Statement of Additional Information (SAI) includes additional
information about the Trustees and is available without charge, upon request, by
calling toll free (800) 915-6565.
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION(S) FUND COMPLEX
NAME, ADDRESS, HELD WITH PRINCIPAL OCCUPATION(S) DURING THE OVERSEEN BY OTHER DIRECTORSHIPS
AND AGE TRUSTS DATE ELECTED+ PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
Timothy W.N. Trustee August 1998 Chairman of Guinness Asset 4 Guinness Investec Global Strategy
Guinness Management Ltd., investment Atkinson Funds Fund Limited, Investec
19 Lord North Street adviser in London, since 2003. International Accumulation
London, SWIP 3LD Chairman/CIO of Guinness Atkinson, Fund Limited, Investec
U.K. since November 2002. Joint Select Funds Plc, Investec
(58) Chairman of Investec Asset High Income Trust Plc, SR
Management Ltd. September 1998 to Europe Investment Trust
March 2003. Plc. Atlantis Japan Growth
Fund Ltd., New Boathouse
Capital Ltd. Guinness
Asset Management Ltd.
James I. Fordwood* Trustee April 1994 CFO and Managing Member of Prima 4 Guinness J.L. Energy, Inc.,
21550 Oxnard Street, Marketing LLC (network of Atkinson Funds Intoil, Inc., Fior
Suite 750 convenience stores) D'Italia.
Woodland Hills, CA
91367
(58)
Dr. Gunter Dufey* Trustee April 1994 Pacific International Business 4 Guinness Independent director, four
21550 Oxnard Street, Associates, a consulting firm in Atkinson Funds subsidiaries of GMAC in
Suite 750 Singapore since 2002. Professor the United States and
Woodland Hills, CA (em.) of MBS at The University of Canada.
91367 Michigan, where he served from
(65) 1968-2002.
Dr. Bret A. Herscher* Trustee April 1994 President of Pacific Consultants, 4 Guinness Strawberry Tree Inc.
21550 Oxnard Street, a technical and technology Atkinson Funds
Suite 750 management consulting company
Woodland Hills, CA serving the Electronic industry
91367 and venture capital community that
(45) he co-founded.
J. Brooks Reece, Jr.* Trustee April 1994 Vice President of Adcole Corp. a 4 Guinness Adcole Far East Ltd.
21550 Oxnard Street, manufacturer of precision Atkinson Funds
Suite 750 measuring machines and sun angle
Woodland Hills, CA sensors for space satellites.
91367
(58)
</Table>
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* Not an "interested person", as defined in the 1940 Act of the Funds.
+ Trustees and officers of the Fund serve until their resignation, removal or
retirement.
45
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<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION(S) FUND COMPLEX
NAME, ADDRESS, HELD WITH PRINCIPAL OCCUPATION(S) DURING THE OVERSEEN BY OTHER DIRECTORSHIPS
AND AGE TRUSTS DATE ELECTED+ PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
Jim Atkinson President April 2003 Chief Executive Officer and N/A N/A
21550 Oxnard Street, Director of Guinness Atkinson
Suite 750 since November 2002. Principal of
Woodland Hills, CA ORBIS Marketing, a mutual fund
91367 marketing and advertising firm
(48) since November 2001. President of
MAXfunds.com from September 2000
to March 2001. Managing Director
of Guinness Flight Global Asset
Management US (1993-2000).
Rita Dam Treasurer November 2004 Vice President, U.S. Bancorp Fund N/A N/A
2020 E. Financial Way, and Services, LLC. since July 2001.
Suite 100 Secretary Vice President of the Investment
Glendora, CA Company Administration LLC
91741 (1994-July 2001).
(39)
Max Rottersman Chief September President of Fund Forensics since N/A N/A
9 Mink Drive Compliance 2004 2004. Principal of
Hanover, NH Officer ReportsAutomation.com, specialists
03755 in financial data mining and
(44) reporting from 2000-2004.
</Table>
- ----------
+ Trustees and officers of the Fund serve until their resignation, removal or
retirement.
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GUINNESS ATKINSON FUNDS INFORMATION
BOARD OF TRUSTEES CONTACT GUINNESS ATKINSON FUNDS
J. Brooks Reece, Jr., Chairman P.O. Box 701
Dr. Gunter Dufey Milwaukee, WI 53201-0701
James I. Fordwood Shareholder Services: 800-915-6566
Timothy W.N. Guinness Literature Request: 800-915-6565
Dr. Bret A. Herscher Website: www.gafunds.com
Email: mail@gafunds.com
GUINNESS ATKINSON FUNDS
<Table>
<Caption>
FUND CUSIP TICKER FUND#
- ------------------------------------------------------------------------
Asia Focus Fund 402031 10 8 IASMX 1096
China & Hong Kong Fund 402031 20 7 ICHKX 1094
Global Innovators Fund 402031 30 6 IWIRX 1095
Global Energy Fund 402031 40 5 GAGEX 1098
</Table>
Quasar Distributors, LLC distributors, Milwaukee, WI 53202
This report is intended for shareholders of the Guinness Atkinson Funds and may
not be used as literature unless preceded or accompanied by a current
prospectus.
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www.gafunds.com
<Page>
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual report.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedules of Investments are included as part of the report to shareholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES.
Not applicable to open-end investment companies.
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ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President/Chief Executive Officer and Treasurer/Chief
Financial Officer have reviewed the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940 (the "Act")) as of a date within 90 days of the filing of this report,
as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934. Based on their review, such
officers have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed in this
report is appropriately recorded, processed, summarized and reported and
made known to them by others within the Registrant and by the Registrant's
service provider.
(b) There were no significant changes in the Registrant's internal controls
over financial reporting that occurred during the Registrant's last fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS SUBJECT OF THE
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS TO
SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. Not applicable.
(2) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002. Filed herewith.
(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23c-1 UNDER
THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON
BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end
investment companies.
(b) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished herewith.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Guinness Atkinson Funds
----------------------------------
By (Signature and Title) /s/ James J. Atkinson, Jr.
---------------------------------------------------
James J. Atkinson, Jr., President
Date September 7, 2005
----------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James J. Atkinson, Jr.
---------------------------------------------------
James J. Atkinson, Jr., President
Date September 7, 2005
--------------------
By (Signature and Title)* /s/ Rita Dam
--------------------------------------------
Rita Dam, Treasurer
Date September 7, 2005
------------------
* Print the name and title of each signing officer under his or her signature.