Guinness Atkinson Asia Focus Fund (IASMX) N-CSRCertified annual shareholder report (management investment company)

Guinness Atkinson^TM Funds
Annual Report

December 31, 2019

TABLE OF CONTENTS

Dear Guinness Atkinson Funds Shareholders,

If only every year in the financial markets was like 2019. All of the Guinness Atkinson Funds provided positive total returns for the year, led by the Global Innovators Fund up 37.00% (investor class) and 37.35% (institutional class). We believe that innovation drives economic growth and that innovative companies have a competitive edge. The performance for the Global Innovators Fund, both last year and over the long term, supports this thesis. Importantly, we don't just view innovation as big disruptive change. We also believe that companies can develop a competitive edge with the systematic application of smaller, less disruptive innovation.

Our Asian Funds continued to benefit from the increasing influence and growth of Asia. With one-third of the world's population Asia continued its multi decade emergence and the long term results of our range of Asian Funds reflect that. If you're not familiar with it, we encourage you to take a look at the Asia Pacific Dividend Builder Fund. This Fund focuses on quality companies throughout the region that pay dividends and we seek to invest in companies that we believe have a likelihood of increasing their dividends.

Speaking of dividends, our Dividend Builder Fund had another excellent year. This Fund also focuses on quality companies with dividend growth potential. This Fund produced a total return of 26.71% in 2019.

We'd also like to highlight the Alternative Energy Fund. The recent performance off this Fund has been excellent, 30.29% total return in 2019 and an annualized total return of 9.91% over the last three years ending December 31, 2019. We believe the future looks bright for alternative energy as rising environmental concerns converge with increasingly lower prices for alternative energy.

Our investment team has provided a detailed commentary for each of the Guinness Atkinson Funds adjacent to each Fund's financial results.

As usual, we appreciate the confidence you have placed in us and our management team and look ahead to what we hope is a great 2020.

We encourage you to visit gafunds.com for the latest news and announcements on the Guinness Atkinson Funds.

The table below provides total return data for each of the Funds over the one, three, five, ten year and from inception periods through December 31, 2019. Also included in the table is the expense ratio data from the most recent prospectus dated May 1, 2019.

Periods of greater than one year are average annualized returns; one year and shorter period returns are actual returns. All returns are for the periods ending December 31, 2019.

Performance data shown for the Global Innovators, Institutional Class (GINNX), prior to its launch date on December 31, 2015, uses performance data from the Global Innovators, Investor Class (IWIRX).

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 the 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.

Each of the Asia Focus Fund, the Asia Pacific Dividend Builder Fund, the China & Hong Kong Fund, and the Renminbi Yuan & Bond Fund imposes a 2% redemption fee on shares held less than 30 days. Performance data quoted does not reflect this fee. If it had, total return would be lower.

Expense ratios are from the most recent prospectus (dated May 1, 2019) and are from the most recent audited financials (period ending December 31, 2018) at the time that prospectus was completed.

Morningstar Ratings As Of December 31, 2019

Morningstar Ratings Disclosure

Global Innovators Fund ratings shown were given for the Investor Share Class.

The Morningstar Rating^TM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. 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. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10- year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

© 2020 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is proprietary to Morningstar (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.

GUINNESS ATKINSON FUNDS

Expense Examples (Unaudited)

As a shareholder of the Funds, you incur two types of costs: (1) redemption fees (applicable to the Asia Focus Fund, the Asia Pacific Dividend Builder Fund, the China & Hong Kong Fund, and the Renminbi Yuan & Bond Fund); 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 July 1, 2019 to December 31, 2019.

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 ratios 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.

*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 (184), 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.

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND Annual Report for the period ended December 31, 2019

1.  Performance

AVERAGE ANNUALIZED TOTAL RETURNS

For the Fund's current one-year expense ratios, please refer to the Financial Highlights section of this report.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund 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, or calling (800) 915-6565.

2019 was positive for alternative energy equities, with your fund delivering a total return of 30.2%, outperforming the MSCI World Net Total Return Index (+27.7%) by 2.5%.

Jonathan Waghorn and Will Riley joined Edward Guinness as co-managers of the Guinness Alternative Energy Fund at the start of 2019. Will and Jonathan are also co-managers of the Guinness Global Energy Fund and have been managing funds in the energy sector since 2010 and 2008. This has included coverage of the alternative energy sector and investing in alternative energy stocks.

Effective May 1, 2019 the benchmark for the fund has changed from the Wilderhill Clean Energy Index (the ECO Index) to the MSCI World Net Return Index since the MSCI World Index is more representative of the Fund's investment strategies. The fund now considers companies involved in the entire alternative energy value chain (including the generation of renewable energy as well as its consumption and storage). The Wilderhill Clean Energy Index is a very specialist and volatile index and, given the portfolio management changes, it no longer represents the full extent of the investment universe for the fund. Since the Fund is not an index fund, is not designed to track the MSCI World Index, there will be periods of divergence between the fund and the MSCI World Equity Index. However, the portfolio managers believe that the growth and improving economics of alternative energy companies provides the potential for the fund to outperform global equities, in general, on a three to five-year view.

In terms of 2019 performance, as ever, there was significant divergence between the equity sub sectors so we provide a tour of our four key subsectors to highlight their share price performance trends in 2019 and their current valuation outlook.

The Displacement sector of our universe contained 28 equities with businesses focused on energy efficiency and covering multiple technologies. The majority of these technologies have fared well so far in 2019 with the median equity delivering a return of around 15% (those focused on energy efficiency delivered stronger returns while those focused on alternative fuels were weaker). Better performing technology areas included LED equipment manufacturing companies, waste management companies and heating efficiency companies.

Companies participating in the ethanol market, mainly in the US, experienced a volatile year despite a positive macro tailwind as US ethanol mandates expanded in 2019 to 20bn gallons (with 16bn gallons from corn ethanol). However, the sector was buffeted by political crosswinds, with ethanol prices falling sharply mid-year as the US government announced plans to reduce the number of refineries needing to blend in ethanol, then rallying on a possible reversal of that plan. The ethanol subsector of our universe delivered a total return of 10% in 2019 with a number of companies including Future Fuel and The Andersons delivering negative total returns.

Electrification was generally the weakest of the alternative energy subsectors in 2019, with companies involved in the battery supply chain producing particularly poor total returns. Our universe of Electrification equities contained 65 companies with nearly one third of them delivering a negative total return for the year so far, and the median equity delivering around a 10% return.

Electric vehicle component manufacturers, particularly on the high-tech side, delivered the best total returns. The shift to a cleaner, safer, and more efficient auto sector is positive news for many of the more sophisticated component manufacturers (e.g. of thermal management systems, power management and sensors) which are seeing their dollar content per vehicle rise. Physical

ALTERNATIVE ENERGY FUND

car component manufacturers delivered a 16% total return while those manufacturing electronic car components delivered close to 30% total return.

Many of the producers of key battery metals, such as lithium and cobalt, suffered as the prices of those metal fell in 2019, after a strong run-up in 2017/18. Spot lithium carbonate prices fell by more than 20% in 2019 to around $10,000/mt amid a global glut of supply. Lithium supply, spurred by high prices, has been growing more quickly than demand, even with the acceleration in lithium-ion battery manufacturing for electric vehicles. Similarly, cobalt prices have dropped this year (albeit only back to the level at the start of 2017) as the cobalt market has looked in better balance than many had anticipated. Our alternative energy universe contained 10 raw materials companies and only one, Toyo Tanso, delivered a positive total return over the year.

Battery manufacturers were also held back as the race for lower battery costs (to make electric vehicles competitive with combustion engine vehicles) resulted in profit margins remaining low. Only GS Yuasa, Panasonic and Samsung SDI sneaked out positive returns for the year.

The Generation sector of our investment universe contained 50 equities with key business areas being either IPPs (independent power producers) or utilities. As a whole, the Generation sector performed very well in 2019, delivering a total return of over 20% which left it as the joint best-performing subsector of the four (broadly in line with the Installation sub sector).

Within Generation, utility companies delivered around a 25% total return while the IPPs performed particularly well, delivering a slightly higher total return. The overall strength was driven in part by falling interest rates and interest rate expectations, which lowered long-term discount rates in the sector. Wind and solar IPPs were assisted by continued falls in the cost of variable renewable energy developments, making them increasingly cost competitive versus incumbent sources of power generation. Allied to this, there was also growing positive sentiment towards the growth that can be achieved in wind and solar over the next few years.

Solar IPPs, both residential and utility-focused, were the strongest subsector within IPPs as the pace of expansion accelerated. Residential solar in the US, for example, has grown by around 25% in 2019 and is expected to grow by a similar rate in 2020.

The Installation subsector of our universe contained 53 companies that are involved in the supply chain associated with growth in renewable electricity generation. On the whole, these companies had a positive year and many recovered strongly from poor performance suffered in 2018. In 2019, they delivered a total average return of around 25%, with some subsectors in negative territory (grid storage companies and hydroelectric equipment manufacturers, for example) while some specialist subsectors have so far returned in excess of 50% total return.

For upstream solar, non-Chinese polysilicon manufacturers were weak as intense competition in the sector saw polysilicon prices fall (by around 20%). Chinese polysilicon manufacturers, which have expanded capacity rapidly at the lower end of the cost curve, performed better. Solar wafer and module manufacturers suffered in 2018 as a Chinese pull-back on solar subsidies dented demand in the sector. However, they bounced back well in 2019 as global demand for solar installations picked up by over 10%. The solar PV inverter sector was also particularly strong; smaller US players benefitted from Huawei's withdrawal from the US inverter market.

Wind equipment installers generally did well in 2019, benefitting in particular from the sharp rise in offshore wind developments (more than doubling from 4GW in 2018 to 9GW in 2019) and tax incentives in the US and China, which drove strong uptake of onshore wind in 2019 and 2020.

ALTERNATIVE ENERGY FUND

2019 Indicative portfolio contribution analysis

Source: Bloomberg, Guinness Atkinson

Overall, alternative energy equities delivered a strong return in 2019. Underlying alternative energy company profitability continued to improve; our portfolio of alternative energy equities likely delivered in excess of 10% return on capital employed in 2019, up from 9% in 2018 and materially higher than the post-financial crisis level of 6% in 2009.

ALTERNATIVE ENERGY FUND

2.  Activity

There were twelve switches in the portfolio during the first quarter of 2019:

Stocks that were added to the portfolio:

ALTERNATIVE ENERGY FUND

Stocks that were sold from the portfolio:

There were no other stock switches during the year but the portfolio was actively rebalanced on several occasions.

ALTERNATIVE ENERGY FUND

3.  Portfolio Position

The sector and geographic weightings of the portfolio at December 31, 2019 were as follows:

4.  Outlook

We expect the 'energy transition' theme to remain central to political debate in 2020 and beyond as it offers an economic solution to energy security, urban pollution and carbon emissions for most countries.

Despite pushes for greater efficiency, world energy demand will grow again in 2020. Renewables will likely have satisfied only one-third of total global energy demand growth over the five years up to end-2020. Carbon emissions, from the combustion of fossil fuels, will reach new peaks. A ratcheting of carbon prices, to reward the development of lower carbon investments, is inevitable if governments keep to their Paris Agreement commitments.

We need to see energy efficiency take a centre stage. The slowdown in energy efficiency gains since 2015 is unlikely to be turned around in 2020 unless energy prices rise (forcing consumers to be more efficient) or social pressures on energy consumption, sustainability and carbon emissions broaden. Whilst we expect to see new appliance efficiency standards, new building insulation codes and a stronger take up of heat pumps and LEDs, we need to see an acceleration of government-mandated energy efficiency measures.

We expect the rate of cost reduction in lithium ion batteries to slow somewhat in 2020 as raw material deflation slows. On our estimates, the raw materials in a lithium ion battery currently cost over $100/kWh, leaving little room for all additional costs and margin for the manufacturers. Despite the higher manufacturing cost of EVs, the global auto industry will nearly double the size of its EV model range in 2020 with higher battery costs having to be either passed on to consumers or subsidised by government.

Solar installations will grow from 129GW in 2019 to 137GW in 2020 with China still being dominant (at 40GW), although less dominant than in previous years. The supply chain is likely to remain reasonably loose, although more concentrated than in recent years. Higher-cost players and those reliant on older technologies (such as multi rather than mono-silicon based solar modules) are likely to see profitability under pressure.

Wind installations will grow from 68GW in 2019 to 71GW in 2020 as changes in Chinese feed-in tariffs and lower US tax credits cause slower growth after a bumper year in 2019. The supply chain for wind is more consolidated than for solar, but pricing is still likely to remain under pressure as manufacturers compete for the limited market growth in 2020.

ALTERNATIVE ENERGY FUND

Our portfolio of alternative energy equities is likely to witness further ROCE (return on capital employed) improvement in 2020 as a result of top line growth and improving underlying economics. While near-term profitability will be impacted by the arrival and removal of individual subsidies and incentives, we believe that ROCE should improve from 2019 levels.

If ROCE achieves 12% and the stock market were to reflect it sustainably in the valuation of the equities, we would expect the portfolio to offer about 50% valuation upside. Coupled with P/E and EV/EBITDA metrics that are 10-20% lower than the MSCI World, we believe that the Guinness Atkinson Alternative Energy portfolio offers reasonably valued, concentrated exposure to an attractive 'mega trend'.

Portfolio managers

The Fund invests in foreign securities, which involves political, economic and currency risks, greater volatility, and differences in accounting methods. These risks are greater for emerging markets. The Fund invests in smaller and mid-cap companies, which involve additional risks such as limited liquidity and greater volatility than investments in larger companies. Fund's focus on the energy sector to the exclusion of other sectors exposes the Fund to greater market risk and potential monetary losses than if the Fund's assets were diversified among various sectors.

The Wilderhill Clean Energy Index (ECO) is a modified equal US dollar-weighted index of publicly traded companies whose businesses stand to benefit substantially from societal transition toward the use of cleaner energy and conservation. These indices are unmanaged, not available for investment and do not incur expenses. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay. These indices are unmanaged, not available for investment and do not incur expenses.

Please refer to the Schedule of Investments for details on Fund holdings. Current and future portfolio holdings are subject to risk.

The information provided herein represents the opinion of Guinness Atkinson Asset Management, Inc. for the period stated and is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Opinions, Fund holdings and sector allocations are subject to change at any time, and are not recommendations to buy or sell any security.

ALTERNATIVE ENERGY FUND

Growth of $10,000

  Average Annual Total Return
  Periods Ended December 31, 2019

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.

Total returns for certain periods reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Returns reflect the reinvestment of distributions made by the Fund, if any. The graph and the performance table above do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares.

The Wilderhill Clean Energy Index (ECO) is a modified equal dollar weighted index comprised of publicly traded companies whose businesses stand to benefit substantially from societal transition toward the use of cleaner energy and conservation. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay.

FUND HIGHLIGHTS at December 31, 2019
GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

SCHEDULE OF INVESTMENTS
at December 31, 2019

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

*  Non-income producing security.

PLC - Public Limited Company

GUINNESS ATKINSON ASIA FOCUS FUND Annual Report for the period ended December 31, 2019

1.  Performance

ANNUALIZED TOTAL RETURNS

(All performance data given in USD terms)

For the Fund's current one-year expense ratio, please refer to the Financial Highlights section of this report.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund 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, or calling (800) 915-6565.

The fund rose 29.20% in 2019 compared to the benchmark which rose 19.45%. Chinese and Taiwanese positions led this performance where the Fund had exposure to technology, materials, health care and education.

Performance for both the market and the Fund was characterized by strong rallies at the beginning and end of the year and marked weakness in the middle. The twists and turns in the trade dispute between the US and China resulted in significant valuation contractions and expansions in amongst our north Asia and technology holdings. Trade was not the only issue. China is also in the midst of a structural growth deceleration which has been exacerbated both by trade matters and by China's need to address legacy debt issues. Indeed, most countries have had to contend with political or economic headwinds this year whether it be Korea's trade dispute with Japan coupled with slowing domestic growth, banking issues in India along with signs of religious tensions, slower domestic growth and currency strength in Thailand and never mind North Korea and upheavals in Hong Kong...there has been plenty to occupy the mind.

The best performing markets to which the Fund had exposure over the year were Australia, China and Taiwan. Only New Zealand did better. From a top down perspective, in a year when trade tensions were running high it may seem counter-intuitive that the best markets were the safer havens alongside those perceived to be in the eye of the storm but of course, they have followed rather different paths. The explanation lies in the sharp recovery in the last three months of the year as President Trump pared back his trade rhetoric. In China, this was evident most especially amongst consumer discretionary names. Chinese real estate, health care, technology, materials and even consumer staples, which together account for 20% of the China Index, also rose. Australia's performance however, was much more broad-based and spread across the year. All sectors outperformed apart from, utilities, technology and the troubled financial sector.

Whereas consumer discretionary sector performance in Asia was largely led by China, the best performing sector in the region overall was information technology and Taiwanese technology in particular. Technology accounts for 63% of MSCI Taiwan and accounts for over 50% of technology's weight in the regional benchmark. The sector's rally began in September was driven initially by an improving outlook for semiconductors, especially in memory chips which was augmented by a better reception to the new iPhone, by rising hopes for 5G telephony and the consequential boost to the component supply chain as well as by reduced trade concerns.

Among our leading stocks, there were four that more than doubled during the year. China Lesso, a manufacturer of plastic pipes, pipe fittings and building materials and New Oriental Education recovered from heavy price falls at the end of 2018, as steady earnings growth continued to come through. Elite Material manufactures copper clad laminates which are used to make printed circuit boards (PCBs), specialising in halogen free laminates which are environmentally friendly. Elite's share price surged as it regained its market share to provide Substrate-like PCBs (SLPs) for the iPhone, which is a high margin business. Sino Biopharmaceutical was one of the weaker stocks in 2018. One of Sino Biopharmaceutical's best-selling drugs, Runzhong, saw its price cut significantly but sales only fell moderately, implying significant volume growth in volume. Consequently, the company's results over the year were better than expected.

ASIA FOCUS FUND

On the weak side, Li & Fung fell 27% in 2019. The manufacturing supply chain business continues to be weak due to the struggles the traditional retail sector is facing but they argue that argue in a world where trade disputes may become more prevalent, there is still room for a sourcing agent such as Li & Fung. Chinese internet search engine, Baidu fell 20%. The core advertising business unexpectedly slowed in the first quarter of the year. The company moved to cut costs and focus more on extracting cash from its existing user base, delivering a visible improvement. Chinese wealth manager, Noah, fell following a credit issue in one of its wealth management products. Direct harm to the business is limited since such products are not guaranteed but the stock's valuation compressed as investors stepped back. Finally, contact lens maker St Shine Optical fell on moderating growth expectations and the headwinds caused by excess capacity manufacturing capacity. Its main markets are Japan and US but China has recently become a bright spot for the company and so capacity may well be directed to serve that market.

2.  Portfolio Changes

Two stocks went out of the portfolio. Glow Energy (held since October 2007) was an independent electricity producer in Thailand; it was acquired by Thailand's state-owned energy conglomerate, PTT. The other was China Minsheng Bank (held since January 2014). We see macro-economic conditions becoming more challenging for Chinese heavy industry and we see government efforts to lighten the burden by cutting interest rates to be headwinds for the banks.

In place of these we bought two new positions. We bought Ping An Insurance, a financial conglomerate the bulk of which is made up of life insurance, property and casualty insurance and banking. We think this company is well-placed for the structural story that we think is underway in China with its ageing and increasingly wealthy population. Secondly, we added Alibaba to the portfolio. This stock has performed extremely well in recent years and had "run away" from us earnings have grown and we think they have the potential to continue to do so; a spike in trade tensions created a bit of a pullback in the share price and we took the opportunity to add it to the portfolio.

3.  Portfolio Position

On a country basis, the replacement of one Thai position and one Chinese name with two Chinese names has increased our China weighting. On a sector basis, exposure to financial institutions has been maintained but the exposure to commercial banking has been replaced by insurance. Utility exposure has been halved to one position in favour of an increase to consumer discretionary.

Compared to the benchmark, the Fund is overweight relative to Australia, China Taiwan and Thailand. China's overweight position is almost matched exactly by the underweight position in Hong Kong; the other main underweight position is Korea with additional small underweights to Indonesia, Philippines and Singapore. On a sector basis, our three overweight positions are in technology, health care and consumer discretionary offset by matching underweight positions in real estate, financials, consumer staples and materials.

4.  Outlook

Consensus earnings estimates for the portfolio indicated an earnings contraction of around 3.9% in 2019 but for a potential rebound to 11.5% growth in 2020 followed by 13.4% in 2021. These estimates can, and probably will, change significantly in the months ahead. The contraction is 2019 is largely due to profit decline in technology names AAC Technologies, Catcher Technology and Samsung Electronics but is also attributable to some Chinese names like Geely Automotive. However, these earnings declines were expected and their share prices have been moving higher in anticipation of recovery next year.

It is undeniable that most countries in Asia are experiencing downward pressure on economic growth and given the size of the Chinese and Indian economies where pressure is perhaps greater, we would expect to see regional economic growth in 2020 to be slower than that of 2019, which in turn is likely to be down on 2018. Numbers collected by Bloomberg however still paint a reasonable picture: regional growth was 6.0% in 2018 and is expected to fall to 5.3% in 2019 and then to 5.2% in 2020 followed by 5.4% in 2021. The 2019 drop should not come as a surprise given the degree to which the trade dispute has distorted demand and exacerbated China's cyclical deceleration. The good news is that most countries have room to respond through monetary policy (interest rates) and fiscal moves (tax cuts, stimulus and spending).

We think that there is still plenty of growth to be found but that we have to look deeper than the headline GDP figures. Structural trends supporting consumption are still in place as are technological developments supporting consumer businesses (retail distribution, financial services and logistics). The advent of 5G telephony is having an impact right across the supply chain from network infrastructure, through personal devices to application services and we think will create a structural uplift to the technology sector in the next few years. Our approach means that we think we can evolve this strategy to incorporate more

ASIA FOCUS FUND

countries in the region as it develops while maintaining our requirement for quality management as evidenced by historically higher returns on capital, sustained over time.

Edmund Harriss

The Fund invests in foreign securities, which will involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for emerging markets The Asia Pacific stock markets may experience periods of volatility and instability. Some domestic China "A" Shares are available through the Hong Kong Stock Connect or Shenzhen Stock Connect, which may be subject to risks of trading suspensions, quota limitations and additional risk. The Fund may invest in small-cap or mid-cap companies, which involves additional risks such as limited liquidity and greater volatility, than in larger companies.

The MSCI AC Pacific Ex-Japan Index is a market capitalization weighted index that monitors the performance of stocks from the Pacific region, excluding Japan. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay. The index is unmanaged and not available for investment, and do not incur expenses.

Please refer to the Schedule of Investments for details on Fund holdings. Does Current and future portfolio holdings are subject to risk.

The information provided herein represents the opinion of Guinness Atkinson Asset Management, Inc. for the period stated and it is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Opinions, Fund holdings and sector allocations are subject to change at any time, and are not recommendations to buy or sell any security.

ASIA FOCUS FUND

Growth of $10,000

  Average Annual Total Return
  Periods Ended December 31, 2019

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.

Total returns for certain periods reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Returns reflect the reinvestment of distributions made by the Fund, if any. The graph and the performance table above do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares. The Fund imposes a 2% redemption fee on shares held less than 30 days.

The MSCI All Country Far East Free ex-Japan Index (MSCI AC Far East Free ex-Japan Index) is a free float-adjusted, capitalization-weighted index that is designed to measure equity market performance of the Far East region excluding Japan. The index referenced in this chart is not available for investment and does not incur expenses. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay.

FUND HIGHLIGHTS at December 31, 2019
GUINNESS ATKINSON ASIA FOCUS FUND

SCHEDULE OF INVESTMENTS
at December 31, 2019

GUINNESS ATKINSON ASIA FOCUS FUND

*  Non-income producing security.

ADR - American Depository Receipt

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND Annual Report for the period ended December 31, 2019

1.  Performance

ANNUALIZED TOTAL RETURNS

(All performance data given in USD terms)

For the Fund's current one-year expense ratio, please refer to the Financial Highlights section of this report.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund 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, or calling (800) 915-6565.

The fund rose 20.33% in 2019 compared to the benchmark which rose 20.30%. In the context of a Fund style which expect to lag strongly rising markets, we think capturing the rise was a very good outcome. The fund delivered a reported dividend yield of 3.01% as of the year end. Capital growth accounted for approximately 80% of the annual return and the dividend, 20%.

Performance was bookended by strong rallies at the beginning and end of the year and marked weakness in the middle. The ebb and flow of the trade dispute between the US and China resulted in significant valuation contractions and expansions in amongst our north Asia and technology holdings. Trade was not the only issue. China is also in the midst of a structural growth deceleration which has been exacerbated both by trade matters and by China's need to address legacy debt issues. Indeed, most countries have had to contend with political or economic headwinds this year whether it be Korea's trade dispute with Japan coupled with slowing domestic growth, banking issues in India along with signs of religious tensions, slower domestic growth and currency strength in Thailand and never mind North Korea and upheavals in Hong Kong...there has been plenty to occupy the mind.

The best performing markets over the year were Australia, New Zealand, China and Taiwan. From a top down perspective, in a year when trade tensions were running high it may seem counter-intuitive that the best markets were the safer havens alongside those perceived to be in the eye of the storm but of course, they have followed rather different paths. The explanation lies in the sharp recovery in the last three months of the year as President Trump pared back his trade rhetoric. In China, this was evident most especially amongst consumer discretionary names. Chinese real estate, health care, technology, materials and even consumer staples, which together account for 20% of the China Index, also rose. Australia's performance however, was much more broad-based and spread across the year. Most sectors outperformed apart from, utilities, technology and the troubled financial sector.

Whereas consumer discretionary sector performance in Asia was largely led by China, the best performing sector in the region overall was information technology and Taiwanese technology in particular. Technology accounts for 63% of MSCI Taiwan and accounts for over 50% of technology's weight in the regional benchmark. The sector's rally began in September was driven initially by an improving outlook for semiconductors, especially in memory chips which was augmented by a better reception to the new iPhone, by rising hopes for 5G telephony and the consequential boost to the component supply chain as well as by reduced trade concerns.

Stock market returns in India, Indonesia, Malaysia and Thailand were notably weaker on slowing domestic growth while Singapore benefitted from its developed market and relatively safer haven status. Korea was weaker last year as the country faced trade pressures on two fronts, from Japan as well as the overspill from the China/US dispute. Thailand has been an interesting case this year because economic growth has been held back by its unusually strong currency, up 9% against the dollar, which closed the year below THB30 to US$1 for the first time since 1996.

2.  Portfolio Changes

We sold Asustek Computer (held since Jun 2012) which has been undergoing a reorganisation to realign its component manufacturing business and its branded consumer electronics division which is split between computers and tablets on the one hand and smartphones on the other. Progress has been slow and the smartphone side has struggled to keep pace first with the growth of Apple and Samsung and subsequently with arrival of the Chinese makers.

ASIA PACIFIC DIVIDEND BUILDER FUND

We took the decision to reduce Chinese banking exposure selling China Minsheng Bank (held since Dec 2013) and Industrial & Commercial Bank of China (held since Feb 2011). We see macro-economic conditions becoming more challenging for Chinese heavy industry and we see government efforts to lighten the burden by cutting interest rates to be headwinds for the banks. We do not see China slipping toward anything like a financial crisis but we also see these banks as fully valued.

Pacific Textiles (held since Dec 2013) has failed to meet our expectations and we now think offers little prospect for growth. Environmental matters had put this stock on our watch list and with weaker demand prospects also becoming evident we concluded the high dividend was insufficient compensation. The final position sold was Delta Electronics Thailand (held since Mar 2006) by means of a tender to the parent company which sought to take full ownership of the business.

In their places we bought China Medical System, a pharmaceutical distributor of both branded and generic drugs. China Resources Gas (CRG) is one of the few utility companies that make it into our universe. Its focus is on the provision of gas to urban household customers. Ping An Insurance is a financial conglomerate the bulk of which is made up of life insurance, property and casualty insurance and banking. We think this company is well-placed for the structural story that we think is underway in China with its ageing and increasingly wealthy population.

Godrej Consumer Products is an Indian consumer staples company whose products fall into four broad categories: Soap, hair care, household insecticides (mosquito repellent) and air care (fresheners). A little over half their revenue comes from India, with Indonesia, Africa, Middle East, US and Latin America the other main markets. Tech Mahindra was the final new purchase. It has the highest exposure to telecoms of the Indian IT consultants. We believe the dynamics for this sector are about to change with the advent of 5G which is based on different technology, requiring different hardware and with wider application than just smartphones.

3.  Portfolio Position

The main change to the portfolio on a country basis has been the introduction of two Indian companies at the expense of one Thai position and one Taiwanese. On a sector basis, the changes made included a utility name, China Resources Gas, for the first time since we sold Thai Tap Water in 2014. The addition of Godrej Consumer Products brings our Consumer Staples exposure to two positions (5.5%). The purchase of China Medical System added a third name to healthcare exposure alongside Sonic Healthcare and St Shine Optical. Financial exposure has been adjusted by scaling back Chinese banking exposure and the addition of Chinese insurer, Ping An. This has brought our overall Chinese financials exposure down from four positions to three. Finally, the Fund's technology exposure has been realigned a little by the sale of Taiwanese manufacturer, Asustek and the purchase of Indian IT consultant, Tech Mahindra.

Compared to the benchmark, the Fund was underweight relative to Australia, China and Korea and is overweight relative to Singapore, Taiwan and Thailand. On a sector basis, underweight exposures to communication services, industrials and materials were matched by overweight exposure to consumer discretionary, health care, technology and real estate.

4.  Outlook

Consensus earnings estimates for the portfolio indicate a compound average annual growth rate in profits for the 3 years 2018-2021 of 6.2%. This is the product of estimated earnings growth for the portfolio's holdings of 3.3% for full year 2019 followed by 6.6% for 2020 and 8.8% for 2021. These estimates can, and probably will, change significantly in the months ahead. We expect the companies in the portfolio to stick to their dividend distribution policies and thus, so long as profits are expected to grow, we would hope to see another year of underlying core dividend growth.

It is undeniable that most countries in Asia are experiencing downward pressure on economic growth and given the size of the Chinese and Indian economies where pressure is perhaps greater, we would expect to see regional economic growth in 2020 to be slower than that of 2019, which in turn is likely to be down on 2018. Numbers collected by Bloomberg however still paint a reasonable picture: economic growth in Asia ex Japan growth was 6.0% in 2018 and is expected to fall to 4.3% in 2019 and then to 4.2% in 2020 followed by 4.5% in 2021. The 2019 drop should not come as a surprise given the degree to which the trade dispute has distorted demand and exacerbated China's cyclical deceleration. The good news is that most countries, with the exceptions of India and Indonesia, have room to respond through monetary policy (interest rates) and fiscal moves (tax cuts, stimulus and spending).

We believe there to be a solid and growing crop of companies in Asia with operating track records that good enough for us to be confident of a growing source of dividends. Domestic Chinese A shares, for example are as yet an untapped source for us in this

ASIA PACIFIC DIVIDEND BUILDER FUND

strategy but a large number of companies are now accessible to international investors and some are of undoubted interest to us. Our approach means that we think we can evolve this strategy to incorporate other areas in the region as it develops while maintaining our requirement for quality management as evidenced by historically higher returns on capital, sustained over time.

Edmund Harriss

The Fund invests in foreign securities, which will involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for emerging markets. The Asia Pacific stock markets may experience periods of volatility and instability. Some domestic China "A" Shares are available through the Hong Kong Stock Connect or Shenzhen Stock Connect, which may be subject to risks of trading suspensions, quota limitations and additional risk. The Fund may invest in small-cap or mid-cap companies, which involves additional risks such as limited liquidity and greater volatility, than in larger companies.

The MSCI AC Pacific Ex-Japan Index is a market capitalization weighted index that monitors the performance of stocks from the Pacific region, excluding Japan. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay. The index is unmanaged and not available for investment, and do not incur expenses.

Earnings growth is not a measure of the Fund's future performance.

Please refer to the Schedule of Investments for details on Fund holdings. Does Current and future portfolio holdings are subject to risk.

The information provided herein represents the opinion of Guinness Atkinson Asset Management, Inc. for the period stated and it is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Opinions, Fund holdings and sector allocations are subject to change at any time, and are not recommendations to buy or sell any security.

ASIA PACIFIC DIVIDEND BUILDER FUND

Growth of $10,000

  Average Annual Total Return
  Periods Ended December 31, 2019

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.

Total returns reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Returns reflect the reinvestment of distributions made by the Fund, if any. The graph and the performance table above do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares. The Fund imposes a 2% redemption fee on shares held less than 30 days.

The MSCI All Country Pacific Free ex-Japan Index (MSCI AC Pacific ex-Japan Index) is a free float-adjusted, capitalization-weighted index that is designed to measure equity market performance in the Pacific region including Japan. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay.

FUND HIGHLIGHTS at December 31, 2019
GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

SCHEDULE OF INVESTMENTS
at December 31, 2019

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

PLC - Public Limited Company

REIT - Real Estate Investment Trust

GUINNESS ATKINSON CHINA & HONG KONG FUND Annual Report for the period ended December 31, 2019

1.  Performance

AVERAGE ANNUALIZED TOTAL RETURNS

For the Fund's current one-year expense ratio, please refer to the Financial Highlights section of this report.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund 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, or calling (800) 915-6565.

In 2019 the Fund rose 30.00% compared to the Hang Seng Composite Index which rose 15.36%.

The fourth quarter of 2018 saw sharp falls for many of the Fund's holdings, most of which we felt were unwarranted. This meant that at the end of 2018 the Fund was valued at 8.3x forward earnings. However, we remained confident in our holdings given their ability to achieve a persistently high return on capital over time and in our belief they would continue to achieve these returns. Furthermore, more than half of the Fund's holdings traded on valuations that incorporated minimal expectations for future growth.

Over the course of 2019, the multiple the market was willing to pay for the companies in the Fund increased significantly. The Fund ended the year valued at 11.5x on forward earnings, a 38% increase from the previous year. The sharp recovery in the Fund's valuation is likely linked to the solid earnings profile of the companies it holds, in what is a tougher operating environment in China. The Fund's portfolio is expected to grow earnings by 4% for 2019, based on consensus earnings estimates while consensus estimates for the broad market are suggesting a contraction.

China's economic growth target was lowered from "about 6.5%" in 2018 to 6.0-6.5% in 2019. Policymakers know the pitfalls of unsustainable economic growth, driven by debt accumulation, but are facing a tricky balancing act. Reducing the pace of growth too dramatically could lead to job losses and potential social instability. Reducing the pace of growth insufficiently will lead to further debt creation, some of which is likely to be written off at a significant cost in the long term. The trade war with the US further added pressure to the economy.

Policymakers shifted the focus away from deleveraging and towards stabilising growth. The required reserve ratio (commercial bank deposits required to be placed with the central bank) was cut several times in 2019, aiming to boost liquidity. Interest rates were cut moderately in order to lower funding costs. Large state-owned banks historically have not been very effective in lending to smaller and medium-sized businesses and so despite looser monetary policy, we sense they are still finding it hard to obtain credit.

In 2019, the there was an increase in the number of debt defaults in China. The government is much more willing in letting larger firms default, making it clear it will not implicitly guarantee debt. Tewoo Group, a large commodities trader backed by the local government in Tianjin is one such case. This is in fact a welcome development as it reinforces the concept of risk and reduces the dangers from moral hazard. But it has made us reluctant to further increase exposure to affected industries, such as banks and heavy industrials.

There are also a couple of other factors to bear in mind. The US and China have agreed to a 'Phase One' deal which has eased fears of further deterioration in relations. Its scope is fairly limited and leaves out important points of contention which will eventually need to be addressed – this is not likely to be a smooth process. Secondly, China's demographic shift toward a shrinking labour force and ageing population has a significant influence over long term industrial, tax and welfare policies. The country's working age population has already peaked while the birth rate continues to fall. This is one of the motivations behind the "Made in 2025" plan, as producing more complex goods should generate funds to provide for the country's growing group of pensioners.

Though we have outlined the risks present in China, we must not forget the opportunities present in the country. China's economic growth over the foreseeable future is still likely to be well above that of developed economies. The impact of the trade dispute

CHINA & HONG KONG FUND

reinforces the need to develop a higher degree of self-sufficiency in technology. The focus on pillar industries such as electric vehicles and sustainable energy is supported by the weight of demand afforded by its sizeable domestic market. The application of technology to consumer businesses is evident from the growth in online retail and in payment platforms. As investment in these areas continues, we can see a path toward greater improvements in productivity which are essential if China is not to be bogged down in the middle-income trap.

The Fund is set up to invest in A shares, which opens up the universe to interesting ideas that are less prevalent in the offshore market. The companies in the onshore universe are, on average, growing earnings at a faster rate than in the offshore universe which makes them particularly appealing. There are just over 100 A shares which make it into the quality universe, with good diversification between sectors. Financials make up less than 10% of the A share universe compared to 37% of the Shanghai Composite. There is solid representation in our A share universe from the Consumer Discretionary, Consumer Staples, Health Care, Industrials and Information Technology sectors.

The best performing stocks were China Lesso (total return of +170.74%), New Oriental Education (+121.22%) and Sino Biopharmaceutical (+114.42%). China Lesso is a manufacturer of plastic pipes, pipe fittings and building materials. The forward price/earnings multiple that the market had been assigning to the stock fell from a high of 8.5x in 2017 to just above 4.0 at the end of 2018. The company has consistently grown earnings since we launched the Fund and so to us, it was puzzling that the market was assigning such a low value to the business. Over the course of 2019, the valuation rebounded. The business is expected to show rising earnings for 2019 as the government is investing in a number of infrastructure projects to reduce water pollution and is also pushing the country's energy consumption towards gas. Both factors should lead to greater demand for pipes.

New Oriental Education provides tutoring services in China. Like others in the Fund, the company's valuation fell sharply in 2018 and then partly recovered in 2019, along with strong earnings growth. Management is targeting revenue growth of approximately 30% in the next financial year. We think margins should rise over time as the business has pricing power – for example, in the summer promotion, the company doubled its prices compared to 2018 but still managed to grow enrolments by 4%. Secondly, efficiency should increase as learning centres which were opened in the past year or two are beginning to reach the target level of utilisation.

Sino Biopharmaceutical was amongst the Fund's weakest stocks in 2018. The government has been cutting prices for drugs, with greater cuts for unbranded drugs. Both companies, however, have done better than expected in 2019. One of Sino Biopharmaceutical's best-selling products, Runzhong, saw its price cut significantly but sales have only fallen, implying significant growth in volume. Sales of oncology products have accelerated, driven by anlotinib which was originally approved to treat small cell lung cancer, but is now also approved to treat soft tissue sarcoma, another type of cancer. China Medical System also reported good results and has signed deals with other pharmaceutical companies to sell newer, more innovative drugs.

The weakest stocks were Pacific Textiles (total return of -20.54%), Baidu (-20.30%) and Noah (-18.35%). Pacific Textiles is a manufacturer of knitted fabrics which started off in China but, like its peers, has diversified into Vietnam to take advantage of lower labour costs. This expansion into Vietnam has not been a success. Problems have plagued the company's factory in the country, ranging from protests over the way the land was acquired, to a shutdown of the factory so new water pipes could be installed to meet tougher environmental regulations. We believed the business would find it difficult to grow revenue in the medium term and so sold the stock.

Baidu has been spending a lot on content and traffic acquisition costs to build scale for iQiyi (the Chinese Netflix) and its newer apps, such as Baijiahao (a newsfeed app). This was fine in the past as the core business of advertising was highly cash generative, supporting these growing businesses. However, during the first quarter the ad business unexpectedly slowed down. Management believed advertising inventory in the market increased towards the end of the first quarter, lowering prices. Since then, the growth in costs slowed considerably as the company ensured marketing met "stringent ROI criteria". The focus shifted more towards in-app monetisation and several encouraging examples were given. For example, a well-known e-commerce company used Baidu's Smart Mini Programs (a stripped-down version of its app accessible within Baidu) to give away coupons. It saw its sales conversion rate improve 2.5x compared to its HTML page. Baidu now thinks demand for advertisements is stabilising and though the business faces challenges, we think the share price is being overly pessimistic.

Noah announced that one of its credit funds was in default. The Fund was worth 2% of Gopher's (Noah's asset management business) AUM and there is no indication that Noah itself is responsible for reimbursement. Noah is sensibly stepping away from distribution of single counterparty credit products where the funds are lent to a single entity, and moving into offering fixed income products with greater underlying diversification. This is in preparation for new rules coming into effect in the coming

CHINA & HONG KONG FUND

years which will increase regulation and oversight. Publicly offered funds will only be able to invest in standardised products. The holdings of a fund must be entrusted to an independent custodian and must be transacted on approved exchanges. Financial products will eventually have to regularly disclose their net asset value (NAV), moving China's fund industry closer to developed market practices.

2.  Activity

Four switches were made. Due to slower economic growth and rising level of defaults, we thought it was likely that ICBC and China Minsheng Bank would have to increase bad debt provisions. This has the effect of reducing earnings growth. Though valuations for both banks looked low relative to their history, we thought this reflected our view that earnings growth would be hard to come by. Stock specific issues were the ultimate trigger for selling both positions. In the case of ICBC, its move to take a large stake in the Bank of Jinzhou was troubling as Jinzhou was facing issues with its credit quality. In the case of China Minsheng Bank, the return on capital had dipped and we thought it was unlikely to return to its previous levels. Therefore we sold ICBC and China Minsheng Bank.

In addition to the sale of Pacific Textiles, we sold VTech. VTech is well known for its toys and electronic learning products but also makes phones and is engaged in contract manufacturing services. Though VTech's Asian business is growing rapidly, we thought persistent weakness elsewhere in the business meant the prospects for earnings growth was remote. The residential phones business is in a long-term structural decline. Logistics issues in Europe and tough market conditions meant sale of Vtech branded toys fell. We felt that there were better opportunities elsewhere in the universe with a much greater likelihood of earnings growth.

3.  Outlook

Consensus earnings estimates for the portfolio indicate a compound average annual growth rate in profits for the three years 2018-2021 of 8%. This is the product of estimated earnings growth for the portfolio's holdings of 4% for full year 2019 followed by 10% for 2020 and 12% for 2021. These estimates are, of course, likely to change significantly in the months ahead.

It is undeniable that China is experiencing downward pressure on economic growth. So it is important that we remain vigilant on valuations and ensure that especially for potential new entrants into the Fund, growth expectations are reasonable and we do not overpay for growth. A good example is the Consumer Staples sector, where very few offshore companies make it through into our quality universe. In the onshore market, there are more companies which pass the quality test but valuations are at their highest since 2010 and forecasted returns on capital are well above their long- and short-term averages. Due to the fact the A share market is dominated by retail investors, companies that do not meet expectations can see significant multiple de-ratings and this is something we would like to avoid in the Fund.

On the manufacturing side, the new 5G telecom standard is likely to have a big impact. Initially we should see this amongst the component manufacturers because the new standard requires an upgrade to the whole system from transmission through to reception. However, over time the application of this technology opens up opportunities for commercial and industrial users as well as consumers. We think this process is one that will last for several years (i.e. a secular, rather than cyclical uplift).

Domestic Chinese A shares, are as yet an untapped source for us in this strategy but a large number of companies are of undoubted interest to us. Our approach means that we think we can evolve this strategy to incorporate A shares, while maintaining our requirement for quality management as evidenced by historical above average returns on capital.

Edmund Harriss

The Fund invests in foreign securities, which involve political, economic and currency risks, greater volatility, and differences in accounting methods. These risks are greater for emerging markets. The China and/or Hong Kong stock markets in which the Fund invests may experience periods of volatility and instability. These fluctuations may cause a security to be worth less than it was at the time of purchase. Market risk applies to individual securities, a particular sector or the entire economy. China and/or Hong Kong stocks may fall out of favor with investors, the value of Chinese currencies may decline relative to the U.S. dollar and/or China or Hong Kong stock markets may decline generally. The Fund invests in invest in small-cap or mid-cap, which involve additional risks such as limited liquidity and greater volatility, than investments in larger companies.

CHINA & HONG KONG FUND

The Hang Seng Composite Index is a market capitalization weighted index that covers about 95% of the total market capitalization of companies listed on the main board of the Hong Kong Stock Exchange. This index is unmanaged, not available for investment and does not incur expenses.

Please refer to the Schedule of Investments for details on Fund holdings. Current and future portfolio holdings are subject to risk.

The information provided herein represents the opinion of Guinness Atkinson Asset Management, Inc. for the period stated and it is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Opinions, Fund holdings and sector allocations are subject to change at any time, and are not recommendations to buy or sell any security.

CHINA & HONG KONG FUND

Growth of $10,000

  Average Annual Total Return
  Periods Ended December 31, 2019

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.

Total returns for certain periods reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Returns reflect the reinvestment of distributions made by the Fund, if any. The graph and the performance table above do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares. The Fund imposes a 2% redemption fee on shares held less than 30 days.

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 index referenced in this chart is not available for investment and does not incur expenses. Net Return reflects deduction for withholding tax but reflects no deduction for fees and expenses. Net Return is net of local withholding taxes that any investor would pay.

FUND HIGHLIGHTS at December 31, 2019
GUINNESS ATKINSON CHINA & HONG KONG FUND

SCHEDULE OF INVESTMENTS
at December 31, 2019

GUINNESS ATKINSON CHINA & HONG KONG FUND