Guinness Atkinson Asia Focus Fund (IASMX) N-CSR/ACertified annual shareholder report (management investment company) (amended)

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) 

225 South Lake Avenue, Suite 216

Pasadena, CA 91101

(Address of principal executive offices) (Zip code)

(Name and address of agent for service)

James J. Atkinson, Jr.

225 South Lake Avenue, Suite 216

Pasadena, CA 91101

Registrant’s telephone number, including area code: (800-915-6566) 

Date of fiscal year end: December 31

Date of reporting period: December 31, 2020

EXPLANATORY NOTE - The Registrant is filing this amendment to its Form N-CSR for the period ended December 31, 2020, originally filed with the Securities and Exchange Commission on March 10, 2021 (Accession Number 0001398344-21-006202), to amend Item 1 (Reports to Stockholders). The purpose of the amendment to Item 1 is (1) to amend the average 10-year total benchmark return in the performance table for the Alternative Energy Fund on page 8 and (2) to amend the “Composition of Net Assets” values of the Statements of Assets and Liabilities for the Global Innovators Fund on page 77. Other than the aforementioned revisions, this Form N-CSR/A does not reflect events occurring after the filing of the original Form N-CSR, or modify or update the disclosures therein in any way.

Item 1. Reports to Stockholders.

The registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), is as follows:

Guinness Atkinson™ Funds

Annual Report

December 31, 2020

TABLE OF CONTENTS

Dear Guinness Atkinson Funds Shareholders,

We can only hope that this last year will be the most tumultuous of our lifetimes. And while it sure didn’t seem like it in the early spring, 2020 turned out to be an excellent year for the stock markets. And, for the most part, an excellent year for the Guinness Atkinson Funds. That didn’t seem remotely possible when the global markets were at their depths. Maybe there is something to long-term investing after all.

The Fund that performed well was the Alternative Energy Fund, which produced an attractive total return for the year of 86.45%. A tip of the hat to the many investors in this Fund who have been long-term investors. We appreciate your loyalty and patience and trust that the last few years have been sufficiently rewarding. We launched the Alternative Energy Fund back in 2006 with the view that the future would belong to sustainable energy. That seems increasingly the case. We’ve now reached the point where sustainable energy is the cheapest form of energy in history.¹ Simple economics should drive the era of clean, green energy.

The Global Innovators Fund continued its impressive long-term performance. The Global Innovators Investor class produced a total return of 36.17% for the year; the Institutional class produced a total return of 36.46%. It seems everyone is talking about innovation lately and investing in innovation has suddenly become the latest thing. We’re delighted that the world is coming around to our view that innovative companies have a competitive edge in the marketplace. The Global Innovators Fund is in its 23^rd year and we know we have many investors that have been in the Fund since the beginning.

The Asian Funds all performed well in 2021. The Asia Focus Fund returned 25.93% for the year; the China & Hong Kong Fund returned 14.54% for the year; Asia Pacific Dividend Builder returned 13.90% for the year and the Renminbi Yuan & Bond Fund returned 8.89% for the year. We continue to believe that Asia’s growth and influence will likely persist throughout this century.

The Guinness Atkinson Dividend Builder Fund returned 12.26% for the year. This Fund stresses high-quality fundamentals as part of its investment process and that approach served us well during the stressful part of 2020. More importantly, we continue to believe that investing in high-quality dividend growers is an excellent investment style during this period of low interest rates.

The one Guinness Atkinson Fund which had a negative year was the Global Energy Fund, which produced a negative total return of 34.22%. The global economic contraction resulting from the pandemic was extremely negative for the price of oil, which at one-point last spring traded at a negative price. Like we said, 2020 was tumultuous.

But what about 2021? Well, we do have our views on what’s ahead and on how the pandemic plays out. It’s an optimistic view, of course, as that is both our nature and because our experience over our careers is that, despite some rather calamitous events and sharp downturns, markets tend to advance. Truthfully, we don’t know what 2021 will bring; we sure didn’t predict most of the events of 2020 a year ago.

We’d be remiss if we didn’t mention SmartETFs, a range of ETFs from Guinness Atkinson. SmartETFs started with our initial ETF, MOTO. SmartETFs Smart Transportation & Technology ETF (MOTO) launched in November 2019. In late 2020 we launched two additional ETFs, SmartETFs Sustainable Energy II ETF (a twin of the Alternative Energy Fund) and SmartETFs Advertising & Marketing Technology ETF (MRAD). We will have more news throughout the year on SmartETFs. For more information please visit www.smartetfs.com.

¹ International Energy Agency (IEA) World Energy Outlook 2020. See page 202 and 214. 

Consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a prospectus or summary prospectus with this and other information, please call (866) 307-5990 or visit our website at www.SmartETFs.com. Read the prospectus or summary prospectus carefully before investing. 

Investing involves risk including the loss of principal.

Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Shares of the SmartETFs Funds are distributed by Foreside Fund Services, LLC.

Throughout this report are detailed commentaries on each of the Guinness Atkinson Funds prepared by our portfolio managers.

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 2021.

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

Sincerely,

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, 2020. Also included in the table is the expense ratio data from the most recent prospectus dated May 1, 2020.

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, 2020.

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, 2020) and are from the most recent audited financials (period ending December 31, 2019) at the time that prospectus was completed. 

Morningstar Ratings as of December 31, 2020

Morningstar Ratings Disclosure

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

For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ 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.)

© 2021 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 July1, 2020 to December 31, 2020.

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.

GUINNESS ATKINSON FUNDS

Expense Examples (Unaudited) - Continued

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

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.

The Guinness Atkinson Alternative Energy Fund is positioned to benefit from the many opportunities associated with the sustainable energy transition that we have discussed. As part of our investment process, we have identified a universe of 231 companies (market capitalisation of over USD$500m) that are most directly exposed to the theme, and classify them into the following four sub-sectors:

Sustainable Energy equities delivered a very strong return in 2020 with the Guinness Atkinson Alternative Energy fund delivering 86.45% return in USD terms while the MSCI World Net Return index delivered 15.90% in 2020. This was the strongest return in recent history and there were some very notable differences to long term performance dynamics.

In terms of 2020 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 2020.

Cash returns for companies in the Displacement sector fell in 2020 as a result of COVID-related business slowdowns. Efficiency businesses such as insulation, heating and lighting are exposed to the broader construction business cycle while alternative fuel businesses (of which nine were held in the fund) suffered profitability pressures from lower transportation fuel demand. Consensus estimates indicate that cash returns will rebound substantially in 2021 as COVID vaccines take hold and the business cycle recovers, taking cash returns back to match historic high levels at around 9%. The Displacement subsector has historically delivered the most stable cash returns within the sustainable energy fund universe.

Within Efficiency, the strongest performers were in the heating and insulation subsectors (up 53% on average) while the lighting and LED subsectors were weaker (up only 27% on average). The fund hailed an number of strong individual performers, including Ameresco (benefitting from increasing investment into US renewable energy efficiency and building upgrade projects), Kingspan (seeing improving outlook for their insulation products as building efficiency becomes a focus for governments) and also Nibe Industrier (benefitting from strongly increasing demand for ground source and air source heat pumps to replace conventional natural gas boilers).

The cash returns of the Electrification sector have been more volatile than the other subsectors as a number of the companies here are exposed to either the global auto manufacturing cycle or the battery metals commodity cycle. This cyclicality was particularly extreme in 2019 and 2020 as the auto cycle slowed and ultimately cash returns are likely to match the levels seen in the middle of the Financial Crisis in 2009. The cyclical weakness together with improving lithium ion battery costs will help to accelerate the transition to EVs and this should result in a CFROI recovery in 2021, albeit to levels slightly below the long run average level.

Within our Electric Vehicles sub sector, the weakest performers were the car component suppliers that suffered in the COVID-related auto slowdown although a recovery in the second half of the year led this group to average 26% annual total rate of return (TRR) in 2020 while those companies focussed on EV electronics fared better. The fund held five companies in this broader space (Aptiv, ON Semiconductor, Sensata, Hella and Gentherm).

Within our Battery sub sector, lithium ion battery manufacturers were the strongest performers, delivering a TRR of 108% on average in 2020. The fund benefitted from exposure to LG Chem and Samsung SDI here. Battery component suppliers were the weakest (+7%) with half of the group suffering negative TRR on average over the year while battery metal commodity companies, such as lithium, cobalt and nickel producers, delivered an average of 58% TRR.

The Generation sector delivered the most robust cash returns in 2020, although it was still down in absolute terms on the 2019 level. Generation has historically delivered the lowest and most stable CFROI since 2007 as utility and power generation businesses typically enjoy longer term pricing stability and are therefore more immune to business cycles. Nonetheless, CFROI should still improve further in 2021, reaching levels last seen in the late 2000s.

Within Generation, IPPs (independent power producers) were noticeably the strongest performers (+74%) with solar-dominated IPPs leading the pack and European IPPs noticeably better than global wind IPP peers. It was not a positive market for all companies however; a number of Latin American hydro IPPs and all of the waste-to-power IPPs in the universe delivered negative returns for 2020. The fund benefitted from its exposure to Albioma and China Longyuan during the year.

The Utility sub sector fared less well, delivering 3% TRR on average, with stronger performance coming from the larger European utilities that are well progressed in their energy transition plans (such as ENEL, Iberdrola and Enel) and weaker performance coming from Brazilian and Japanese utilities. The fund held only two utilities, Iberdrola and NextEra Energy, during the year.

The Installation subsector has historically delivered the most volatile cash return trend as many of the companies are subject to specific and often volatile supply, demand and pricing dynamics. While 2020 saw a clear acceleration in longer term demand expectations for renewable power equipment, the actual operating environment in 2020 worsened, with cash returns falling to just over 5%. Expectations are that demand growth will lead to an improvement in cash returns, with the measure reaching 7.5% and exceeding the most recent peak, seen in 2016.

The average TRR for solar equipment companies was a very impressive 175% in 2020, with Daqo New Energy, Enphase, SunPower and Flat Glass each delivering in excess of 400% TRRs over the year. The fund benefitted from positions in Daqo and EnPhase during the year.

The wind subsector also delivered very well, with an average TRR of 108%. Performance was strong across all of the seven companies in this concentrated subsector with blade manufacturer. The three holdings in the fund (TPI Composites and wind turbine manufacturers Vestas and Siemens Gamesa) delivered the strongest returns in the sub sector.

Other non-solar and wind equipment manufacturers delivered TRRs of 77% on average in 2020. The overall performance was dominated by exceptionally strong returns from the hydrogen and fuel cell-oriented sub sector driven by growing enthusiasm for the hydrogen economy. While all subsectors delivered positive TRRs, there were some pockets of weakness including meter and hydro equipment manufacturers (up only 12% and 9% respectively).

Indicative portfolio contribution analysis (2020)

Source: Bloomberg, Guinness Asset Management

There were five switches in the portfolio during 2020:

During the first quarter, we sold our positions in Quanta Services, Huaneng Renewables, Wasion and Acuity Brands. Huaneng Renewables was acquired by its parent company, the China Huaneng Group, and has been delisted while the other three stocks were sold for company specific reasons; for example concern about near term margin and return progression for Acuity Brands or concern that future pipeline construction activity for Quanta Services might weaken.

In the fourth quarter, we sold our position in Kingspan, an Irish domiciled manufacturer of high-performance insulation and building envelopes with market leading positions in UK, Continental Europe, the Americas and Australasia. We sold these shares as we believed the valuation was becoming too optimistic.

We replaced with positions in NextEra Energy, Itron, SolarEdge, EnPhase and Hubbell Inc.

The sector and geographic weightings of the portfolio at December 31, 2020 were as follows:

2020 was a banner year for the sustainable energy sector as policy makers globally promoted an acceleration of the energy transition to facilitate global decarbonisation, to support economic recovery via post-COVID stimulus packages and to satisfy social demand for a cleaner sustainable energy future. We are in the early stages of a long-run growth trend of the decarbonisation of the energy industry that is likely to provide many attractive investment opportunities. We expect this theme to remain central to the political and post-COVID stimulus debate in 2021 as it offers an economic solution to energy security, urban pollution and carbon emissions for most countries.

Global energy efficiency measures are likely to be below the required long-run trend again in 2021, as a result of low energy prices and weaker global economic activity. Contrasting this, efficiency efforts will remain central to government policy announcements and we expect a particular focus on buildings efficiency. A concerted effort in getting energy intensity improvements back to pre-pandemic levels would save the world economy around $2.5trn in 2021.

Within the electrification sector, we see upside to our expectation of 1,200 GWh of lithium-ion battery manufacturing capacity by 2023 as new capacity is increasingly added outside China. Battery raw materials are likely to be a focus, but government policy around greater lithium ion recycling could alleviate future demand concerns. Electric vehicle sales are likely to increase over 50% to more than 4mn sales in 2021, representing 5% of total light vehicle sales. Battery manufacturers will also see increased demand from solar developers, providing ‘solar + storage’ developments that provide fully dispatchable power for grids.

Solar installations are likely to average around 155 GW globally, up 26 GW on 2019 levels. The start of grid parity projects under the 14^th Five Year Plan in China, the world’s largest installer, means that demand will be more sensitive to module prices this year. Solar manufacturing likely stays oversupplied all year with new capacity being added at lower marginal costs throughout the value chain, potentially keeping module prices lower and skewing global installation rates higher.

Wind installations potentially reach a plateau level of around 73 GW in 2021 with decline in onshore China (as a result of grid parity demands) and growth ex-China (helped by recent US tax credit changes). Significant subsidy free offshore tenders are expected in 2021, especially in Europe, heralding the economic development of a substantial new renewable energy form that could reach 200 GW of installed capacity by the end of the decade.

Improving economics and government support for decarbonisation technologies will continue in 2021 and will remain drivers of future growth for the sector. Long term sector growth will, typically, outstrip global economic growth rates and, therefore, we expect the growth of sustainable energy equities to outstrip the growth rates of global equities as well.

The Guinness portfolio of sustainable energy equities provides exposure to these growth themes and currently trades at a 13% premium to the MSCI World on 2021 P/E multiples and broadly in line on 2021 EV/EBITDA multiples. In aggregate, we expect investor interest in sustainable energy equities to grow further in 2021 as a result of increased individual, social and government pressures for consumers to become more energy efficient and for producers to increase their share of sustainable energy generation.

Jonathan Waghorn and Will Riley
January 2021

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’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 Fund invests in smaller companies, which involves additional risks such as limited liquidity and greater volatility.

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. 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 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, 2020

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, 2020

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

Schedule of Investments

at December 31, 2020

GUINNESS ATKINSON ALTERNATIVE ENERGY FUND

Schedule of Investments

at December 31, 2020

PLC - Public Limited Company

The accompanying notes are an integral part of these financial statements. 

GUINNESS ATKINSON ASIA FOCUS FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

(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 25.93% in the year compared to the benchmark which fell 26.04%. After a weak first half when the Fund fell 7.19% compared to the market which fell 3.36%, the Fund came back strongly in the second half rising 35.68% compared to the market rise of 30.42%.

The COVID-19 pandemic has been the defining event of the past year and looks set to have a significant impact for some time to come. The World bank estimates the global economy contracted 4.4% in the past year and it is likely that China, which recorded 2.3% growth will be the only major economy to have expanded in 2020. China’s rapid economic rebound was led by manufacturing and trade; and Taiwan’s experience has been similar with its dominant technology sector experiencing only minimal disruption. Korea’s more diversified manufacturing economy saw growth in technology but weakness in its car industry, petrochemicals, steel-making and heavy industry. But overall, North Asia has emerged from the pandemic in a better position than many other countries having experienced less disruption and having had to spend less to support their economies. South-east Asia’s smaller economies have had a more challenging time, especially Thailand with its exposure to export manufacturing for the auto sector and its significant exposure to tourism.

The best performing markets during the year were China, Korea and Taiwan with Communication services, Consumer Discretionary, Health care, Technology and Materials the best performing sectors. Energy, Industrials and Real estate were the main laggards. Growth stocks were the best performers for the first ten months of the year which was the case in most markets, not just in Asia. The best performing markets during the year were China, Korea and Taiwan with Communication services, Consumer Discretionary, Health care, Technology and Materials the best performing sectors. Energy, Industrials and Real estate were the main laggards. Growth stocks were the best performers for the first ten months of the year which was the case in most markets, not just in Asia. Value stocks took the lead in the fourth quarter. The strongest sector performer was Information Technology, and in a turnaround from the first three quarters of year was supported by Energy, Financials and Materials. Korea and Indonesia led the way on a country basis both up over 30% with outperformance from also from Thailand, Australia and Taiwan.

The best performing stocks in the portfolio during the year were Novatek Microelectronics (Taiwan) Geely Automobile (China), TSMC (Taiwan), Baidu (China) and Samsung Electronics (Korea). Laggards were Largan Precision (Taiwan), Shenzhen Expressway (China), Anhui Conch Cement, KT&G (Korea) and Corporate Travel Management (Australia).

In 2020 we changed eight positions. We sold AAC Technologies (held since 2013) after it announced a negative profit warning and omitted its final dividend. We also sold Li & Fung (held since 2015) whose business model, which was already under pressure, came under additional pressure from COVID which made its ongoing restructuring even more challenging. In the second half, we sold positions in China Construction Bank (held since 2014), Noah Holdings (held since 2017), Qualcomm (held since 2017), EGCO in Thailand (held since 2003) and Public Bank in Malaysia (held since 2018). The aim has been to increase the portfolio’s earnings’ growth profile.

We have replaced these with JD.com one of China’s largest e-commerce companies, Shenzhou International, a well-diversified textiles and garment manufacturer with operations in China and Vietnam. We also bought six Mainland China share companies Beijing Oriental Yuhong, Inner Mongolia Yili Industrial, Sany Heavy Industry, Venustech Group, Wuxi Lead Intelligent and Nari Technology. This gives the Fund exposure to a diverse range of industries including specialist materials, food, heavy equipment, cybersecurity systems, specialist battery manufacturing equipment and electricity distribution infrastructure.

The Fund is overweight to consumer discretionary, consumer staples, industrials and technology companies and is underweight financials, real estate and utilities. The fund is neutrally weighted to communication services, energy, health care, materials and industrials. On a country basis, the fund is overweight in China, and Australia, neutral to Singapore, Taiwan and Thailand and is underweight in Hong Kong, Indonesia, Korea and Malaysia.

At the end of the year the portfolio was trading on a forward Price Earnings (P/E) multiple of 21.0 times consensus estimated earnings for 2020 and 17.2 times consensus estimated earnings for 2021. This puts the Fund’s P/E on a premium to the market’s valuation of 7.4% based on consensus estimated market earnings for 2020 which we think is justified by the Fund’s earnings growth profile versus the market.

The earnings forecast by the consensus for the portfolio companies indicates a compound annual growth rate (CAGR) over the next three years to 2022 to be 13.3% per annum while that for the market is forecast to be 12.6%. In December consensus estimates for our companies increased for each of the next three years while those for the market came down for each of the next three years. These trends have continued into January with the Fund’s forecast 3-year earnings’ CAGR now 14.9% while that for the market has been scaled back to 11.2%.

The consensus outlook for world economic growth in 2021 is 5.2% and that for the US is 4% following estimated contraction in 2020 of -4.4% and -3.5% respectively. The regional economies of Asia ex Japan are expected by the consensus to expand 5.5% in 2021 following 0.8% growth in 2020. China is the dominant component in this aggregate and the economy there is expected to have grown 2.1% in 2020 and is forecast to grow 8.2% in 2021. The economies of Korea and Taiwan are expected to grow by 3%-4% having experience only modest contraction in 2020 in Korea and 2.4% growth in Taiwan, which is only a little below trend.

This economic differential between the region and the developed economies of Europe and US has been illustrated above in the form of shallower declines and quicker recovery in Purchasing Manager Indices, Consumer Sentiment measures and in market indicators such as earnings revisions and exchange rates. We believe the region is coming out of this pandemic stronger, relative to the rest of the world; economic support in terms of expenditure has been lower as countries, especially those of North Asia, have been more effective in controlling the spread and thus limiting the economic disruption from repeated lockdowns.

Another positive sign to emerge from the past couple of years is that Asia’s role in global supply chains appears to be robust, having been put to the test by US trade tariffs, sanctions and embargoes. This is another reminder, in our view, as to how far the region has come in the last twenty-five years in terms of industrial expertise, transport links and institutional robustness. The recent trade agreement in the region across fourteen countries seems to us a signal a new stage in development within the region and should further diversify it away from economic sensitivity to developed economies.

Edmund Harriss 

January 2021 

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. Investments focused in a single geographic region may be exposed to greater risk and more volatility than investments diversified among various geographies. The Fund invests in smaller companies, which involves additional risks such as limited liquidity and greater volatility.

The MSCI AC (All Country) Far East ex Japan Index is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of the Far East, 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. This index is unmanaged and is not available for investment, and does not incur expenses.

PER or P/E – Price to Earnings ratio is calculated by dividing current price of the stock by the company's trailing twelve months' earnings per share.

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.

Asia Focus Fund 

Growth of $10,000

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 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, 2020

GUINNESS ATKINSON ASIA FOCUS FUND

GUINNESS ATKINSON ASIA FOCUS FUND

Schedule of Investments

at December 31, 2020

GUINNESS ATKINSON ASIA FOCUS FUND

Schedule of Investments

at December 31, 2020

ADR - American Depository Receipt

The accompanying notes are an integral part of these financial statements. 

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

(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 13.90% in 2020 compared to the MSCI AC Pacific ex Japan Net Return Index which rose 23.04%.

The year began with the emergence in China of the Covid-19 virus, which spread rapidly across Asia and then became a global pandemic. The public health responses in North Asia (China/Hong Kong, Korea, Taiwan) and in the developed markets of Australia, New Zealand and Singapore were decisive and in some instances were enforced with draconian rigour. The result has been a shallower economic decline for much of the region and a ‘V-shaped’ economic recovery in China’s case. China’s economy expanded 2.3% in 2020 and is likely to have been the only major economy to have done so. The World Bank and the International Monetary Fund currently estimate the global economy contracted over 4% last year.

In Asia, government responses have reflected the seriousness of the pandemic, in terms of its duration and disruption, and the available means. Across the region, with exceptions of Australia, Singapore and Thailand, the direct spending response has been less than 5% of GDP. In China’s case, the resumption of economic activity was quick, with disruption mostly restricted to the first quarter. China’s strong manufacturing position in terms of both diversity and links to international supply chains led to an unexpectedly strong rebound, in spite of US efforts to restrict China trade. This, and the government’s reluctance to repeat the debt-fuelled growth spree that followed the Global Financial Crisis, has shaped China’s comparatively modest response.

In the first half of the year the Fund fell -9.05% compared to the benchmark which fell -5.10%. In the second half of the year the Fund rose 25.24% versus the benchmark which rose 29.65% which represents 85% upside capture and is in line with how we think the Fund ought to behave. Although underperformance in weaker markets in the first half was disappointing, we feel confident that the businesses are sound with established management teams able to adapt to these new conditions. We have seen this play out over the course of the year with companies in the Consumer, Health Care, Technology and even Financials sector taking on market leadership. Not all share prices have fully recovered their earlier losses and this especially true among the banks, where it appears the market is looking for reported figures before giving a seal of approval. However, operational reports from the likes of DBS, Public Bank and Tisco indicate that while non-performing loans did pick up, banks were already well-provisioned, bad debt did not blow out and pressure is receding. DBS was obliged by the Singapore regulator, along with the rest of the Singapore banking sector, to cap its dividend at 60% of the prior year distribution. This already looks overly cautious and there is a pathway toward full resumption of the dividend.

For other stocks, while operating conditions have been extremely challenging, there have been opportunities to acquire businesses and assets. Both Ascendas REIT and Link REIT have acquired additional properties overseas at attractive valuations, funding this through both debt and equity. DBS has given its India strategy a boost through the acquisition of Lakshmi Vilas Bank at a distressed price. DBS India has now changed from a largely digital business with 30 branches to one that has 550 branches and 900 ATMs. Corporate Travel saw its day-to-day business dry up almost completely earlier in the year, but its flexible business model enabled the company to scale back and conserve its cash reserves. In September, Corporate Travel Management announced its intention to acquire Nebraska-based Transport & Travel Inc (T&T), 60% of whose revenues come from corporate air travel. T&T has low customer concentration and management is looking for efficiencies while aiming to deliver earnings accretion.

During the year we changed eight positions in the Fund. AAC Technologies and Godrej Consumer Products were both sold following their decision to omit a dividend (a final for AAC and a quarterly dividend from Godrej). Neither company needed to do so but a commitment by management to the dividend is a cornerstone of this strategy. We sold Luk Fook as the situation in Hong Kong continues to deteriorate. The company generates most of its revenues from mainland Chinese visitors to its Hong Kong stores and a resumption of Chinese tourist arrivals looks increasingly distant. Li & Fung was sold after further company re-organisation of operating divisions and amongst the management team suggested the road to recovery was going to be longer than we had anticipated. Yangzijiang Shipbuilding was sold on expectations that dividend growth would be flat, at best. Janus Henderson was sold as fee pressure has mounted on the business and PTT was sold at the end of the year following a rebound in the oil price.

We purchased eight new positions. Shenzhou International is a textile and clothing manufacturer with a diverse and high-quality customer base and whose recent dividend was 8.75% higher than last year’s. We have been watching this for a while and we bought it in the depths of the COVID crisis. NetEase is a stock we have followed for a long time in our Asia growth and China strategies, but it has made it into this fund following its decision to pay quarterly dividends. Zhejiang Supor is listed in Shenzhen and is a majority French-owned designer and distributor of kitchenware and cooking appliances. Nien Made Enterprise is a Taiwanese company with operations in China and in Mexico which supplies shutters and blinds to the US, UK, Belgium, Australia and Japan. Inner Mongolia Yili Industrial is a Mainland China-listed dairy company. Over the past five years its dividend has grown at an average annual rate of 15%, which it also delivered in the last twelve months. Suofeiya Home Collection is the third Mainland-listed Chinese company added to the portfolio. The company makes home furnishings including cupboards, sofas and beds. Suofeiya has paid and grown its dividend each year since 2012 and over the last five years. Metcash is an Australian food wholesaler with the third-largest position in the market. Korean Reinsurance has generated a real return on equity in above 12% for over 20 years. It is the leading reinsurer in Korea, the second largest in Asia and 11th largest in the world.

The Fund is overweight to consumer discretionary, consumer staples, financials, health care and technology companies and is underweight communication services and industrials as well as energy, and materials which, typically for cyclical reasons, are unable to sustain our minimum return on capital requirements. The fund has an overweight to real estate through its holdings in real estate investment trusts. On a country basis, the fund is most notably underweight in Australia, China, Hong Kong and Korea and overweight in Singapore, Taiwan and Thailand. Our US position consists of Qualcomm (smartphone chips) and Aflac (health insurer).

At the end of the year the portfolio was trading on a forward Price Earnings (P/E) multiple of 13.9 times consensus estimated earnings for 2020 and 12.0 times consensus estimated earnings for 2021. This puts the Fund on a discount to the market of 30% based on consensus estimated market earnings for 2020. This represents the widest discount to the market valuation we have seen on this Fund since it was launched and, in our view, represents a genuine value opportunity. Growth stocks have roared away while Value stocks have been left behind, even though the outlook for earnings, cash flows and dividends appear to us to be robust for our portfolio companies.

The earnings forecast by the consensus for the portfolio companies, which is subject to change, indicates a compound annual growth rate (CAGR) over the next three years to 2022. However, the forecast growth rate for the portfolio is on a rising trend as analysts’ forecasts for those stocks are rising whereas the forecast growth rate for the market is being clipped back as analysts have tempered some of their earlier optimism. In December, consensus estimates for our companies increased for each of the next three years, while those for the market were scaled back over the same period, with the heaviest cuts made for the upcoming results season. This divergence in earnings forecast direction between the portfolio and the market has continued into January. This reinforces our opinion that the valuation gap between the portfolio and the market is too great and that as companies report their results we hope and expect them to support analysts’ growing optimism.

The consensus outlook for world economic growth in 2021 is 5.2% and for the US 4%, following estimated contraction in 2020 of -4.4% and -3.5% respectively. The regional economies of Asia ex Japan are expected by the consensus to expand 5.5% in 2021 following 0.8% growth in 2020. China is the dominant component in this aggregate and the economy there is expected to have grown 2.1% in 2020 and is forecast to grow 8.2% in 2021. The economies of Korea and Taiwan are expected to grow by 3%-4%, having experienced only modest contraction in 2020 in Korea and 2.4% growth in Taiwan, which is only a little below trend.

Another positive sign to emerge from the past couple of years is that Asia’s role in global supply chains appears to be robust, having been put to the test by US trade tariffs, sanctions and embargoes. This is reminder, in our view, of how far the region has come in the last 25 years in terms of industrial expertise, transport links and institutional robustness. The recent trade agreement between fourteen countries seems to us to signal a new stage in regional development.

We therefore believe that Asia represents a good long-term investment prospect supported by stronger economies than investors have given credit for. Asian markets still trade at a significant discount to developed markets and within Asia, an enormous gap has opened up between Growth stocks that have become market favourites and dividend stocks whose businesses appear to have been doing much better than expected and about which analysts are becoming increasingly positive.

Edmund Harriss 

January 2021

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 small- or mid-cap companies, which involve additional risks such as limited liquidity and greater volatility than larger companies. When inflation rate is greater than expected, that markets may respond differently to changes in the inflation rate than the Advisor expects, or inflation may manifest in such a way that the Fund is unable to provide reasonable protection against inflation.

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.

PER or P/E – Price to Earnings ratio is calculated by dividing current price of the stock by the company's trailing twelve months' earnings per share.

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.

Asia Pacific Dividend Builder Fund

Growth of $10,000

Average Annual Total Return

Periods Ended December 31, 2020

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 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, 2020

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

Schedule of Investments

at December 31, 2020

GUINNESS ATKINSON ASIA PACIFIC DIVIDEND BUILDER FUND

Schedule of Investments

at December 31, 2020

PLC - Public Limited Company

REIT - Real Estate Investment Trust

The accompanying notes are an integral part of these financial statements.

GUINNESS ATKINSON CHINA & HONG KONG FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

For the Fund’s current one-year expense ratio, please refer to the Financial Highlights sect 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 2020 the Fund rose 14.54% compared to the Hang Seng Composite Index which rose 15.90%. The Fund’s underperformance came in the first quarter, where the Fund fell 18.73% while the benchmark fell 14.17%. In the subsequent three quarters, the Fund increased 40.94% while the benchmark increased 35.04%.

Market Review

COVID-19 was the dominant event in 2020, leading to lockdowns and travel restrictions across the world. In its World Economic Outlook in Oct-20, the IMF projected world GDP to fall 4.4% in 2020. Though China’s initial response to COVID-19 was poor, it managed to successfully contain the virus and we have seen a V-shaped recovery. Though there were occasional outbreaks of COVID-19 in China, a combination of a strict initial lockdown, mass testing and stringent border control meant life has broadly returned to normal. As a result, China’s GDP grew 2.3% in 2020.

In China, we saw strong performance in the Information Technology, Health Care, Consumer Staples, Consumer Discretionary and Communication Services sectors. Large cap Internet names were significant drivers of performance as their businesses were less affected by COVID-19.

China Returns by Sector (USD)

(Data covers 12/31/19 – 12/31/20) (Source – Bloomberg, Guinness Asset Management calculations)

Fund Review

The best performing stocks in the Fund were Geely (total return of +78.4%), Baidu (+71.4%) and JD.com (+68.5%).

The market rewarded companies in the electric vehicle (EV) industry and so Geely was a beneficiary of this rerating. In December, 5% of the cars the company sold were some form of an EV. Along with Volvo, which is owned by Geely’s parent company, Geely developed a platform for EVs called “Sustainable Experience Architecture“ (SEA). SEA allows Geely to make EVs ranging from sedans and SUVs to pickup trucks, and should be supplied with batteries from leading suppliers CATL and LG Chem. Meanwhile, Geely’s total sales volume fell 3% in 2020 which we regard as a good result given COVID-19. The company is now targeting total sales to increase 16% in 2021.

Baidu is a company which has struggled with changes in its competitive landscape but we felt the stock was undervalued so continued to hold it. Its core search business is under pressure as companies like Tencent and Bytedance create “walled gardens”, meaning they cannot be indexed by Baidu’s search algorithm. In an attempt to driver users to its own apps, Baidu significantly increased its spending on content and traffic acquisition costs. However, much of this spending did not drive meaningful growth and combined with a slowdown in the core business, the share price was weak in 2019. In 2020, management cut back on wasteful spending and the focus shifted towards driving sales within the company’s apps. Margins for the core business rose throughout the year which led to a gradual rerating. In December, reports indicated Baidu was considering making electric vehicles, most likely in partnership with an existing automobile manufacturer. Baidu is already considered to be one of China’s most advanced companies in autonomous driving and the news led to a sharp rise in the share price.

We bought JD.com, one of China’s largest e-commerce companies, in May. JD is different from Alibaba in that it has built its own logistics platform so has more control over the quality of its service and the amount of inventory it holds. This means that during the worst of the lockdown, JD was better stocked than its peers and its delivery services were less interrupted. JD was initially known for selling electronics but has branched out into apparel and more recently groceries, and so has seen very strong demand this year. The purchase of JD.com gives the Fund more exposure to e-commerce, an industry which did very well in 2020.

The weakest stocks in the Fund, which were still held at the end of the year, were China Overseas Land & Investment (total return of -41.6%), Venustech (-30.1%) and Shenzhen Expressway (-29.6%).

China Overseas Land & Investment (COLI) is a more conservative property developer which has likely suffered a derating due to its conservative nature. Competitors with more debt have been more richly rewarded by the market despite the risks of this higher debt. This risk came into play in October as the government started implementing its “Three Red Lines” regulations which imposed leverage caps on property developers. Though indebted developers have three years to meet these requirements, they are likely required to change their strategy in the short-term which may lower future growth prospects. COLI passes the new regulations and so should not be impacted by the new rules. COLI is attractive to us because of management’s focus on the business’ ROE rather than on maximising sales growth - at this moment in time, it this approach which is out of favour with the market. Adding to the negative sentiment, COLI’s parent company, China State Construction Group, was designated as a “Communist Chinese military company” by the President of the United States. As a subsidiary of China State Construction Group, there is a possibility that COLI could also be designated as a “Communist Chinese military company” which would mean American investors are not able to buy the stock. This news led to further weakness for the share price, and COLI is now trading at its cheapest ever valuation, on a forward-looking basis.

Venustech is a new addition to the Fund but so far has performed poorly. It provides cybersecurity services and tests for the government, telecom and financial sectors. Third quarter results were weaker than expected due to delays in government projects. We expect that these delays should be resolved in time for fourth quarter results and this was reflected in a recent update, where management said orders accelerated in October and November. Venustech expect revenue to rise 20-25% in 2020 with particularly high growth in newer segments such as cloud security.

13 positions were sold and 11 were bought.

The positions sold were: Travelsky, CNOOC, Tongda, AAC Technologies, Dali Foods, Qualcomm, Yangzijiang, BOC HK, China Construction Bank, Noah Holdings, Haitian International, Hollysys Automation and Haier Electronics.

The positions bought were: Supor, JD.com, Oriental Yuhong, Yili, Suofeiya, Venustech, CSPC Pharmaceutical, Sany Heavy Industry, Lead Intelligent, Nari Technology and Haier Smart Home.

The focus for 2021 is to continue shifting the Fund towards structural growth areas. Areas of interest include healthcare, cloud services, factory automation, import substitution in the semiconductor supply chain, electric vehicles, renewable energy and capital markets. Though we are interested in these themes, we intend to keep on investing in business which we believe have a competitive advantage.

To be clear, we are not interested in businesses which are persistently loss making. We are not interested in businesses where management have laid out a good story but the financials indicate the cashflow is not coming through. We are looking for businesses which are already profitable and are in an industry that can grow over the long-term.

As of December 31, 2020, based on consensus earnings estimates, the portfolio is expected to grow earnings over the next three years. The Fund trades at a forward price earnings multiple of 18.3x consensus estimated earnings for 2020, and 15.0x consensus estimated earnings for 2021. This is broadly in line with the valuation for MSCI China. We think the Fund’s increasing focus on structural growth makes it an attractive proposition.

Edmund Harriss

January 2021

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.

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, 2020

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 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, 2020

GUINNESS ATKINSON CHINA & HONG KONG FUND

GUINNESS ATKINSON CHINA & HONG KONG FUND

Schedule of Investments

at December 31, 2020

The accompanying notes are an integral part of these financial statements.

GUINNESS ATKINSON CHINA & HONG KONG FUND

Schedule of Investments

at December 31, 2020

* Non-income producing security.

ADR - American Depository Receipt

The accompanying notes are an integral part of these financial statements. 

GUINNESS ATKINSON DIVIDEND BUILDER FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

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 2020 the Guinness Atkinson Dividend Builder Fund produced a total return of 12.26% (USD), compared to the MSCI World Net Index return of 15.90%. The Fund therefore underperformed the Index by 3.64%.

Equity markets began 2020 buoyant but saw a sharp sell-off at the end of Q1 as increasing Covid-19 cases induced global lockdowns and deeper recession fears. The Fund’s stringent focus on companies exhibiting persistent profitability and balance sheet strength provided it with the defensive characteristics required to preserve capital – and outperform – in this down-market. In fact, since launch, the Fund has outperformed in each of the largest drawdowns, capturing only 66% of market downside on average.

Unprecedented monetary and fiscal stimulus, later combined with vaccine optimism, drove equity markets higher between Q2 and year-end. This was led by growth stocks in general, and in particular ‘US Big Tech’ which increasingly benefitted from ‘stay-at-home’ orders. The Fund managed to keep up with rising markets overall, and this is attributed to having a roughly equal balance between cyclical and defensive exposures.

The only blip for ‘growth’ came in November where we saw a significant rotation into value stocks driven primarily by two factors:

First, the initial uncertainty about the US Presidential election dissipated as it became clear that Democratic candidate, Joe Biden, had secured enough votes to claim the Presidency, and the Democrats also retained control of the House. Although President Trump was slow to concede, early fears of social unrest did not materialize. Weighing up the prospect of possibly greater corporate taxes vs greater fiscal stimulus, fewer trade war tweets and generally lower uncertainty, the markets on balance cheered the election outcome.

As Joe Biden started to announce his cabinet, one notable appointment was that of Janet Yellen to head up the Treasury. Having the former chair of the Fed in charge of government spending is an indication of fiscal and monetary policy co-ordination in the years ahead, and that was seen as a positive for markets after a period in which central banks had been forced to do all the heavy lifting in terms of economic stimulus.

The second major positive for shares in November was the announcement that three vaccines, from Pfizer/BioNTech, Moderna and Oxford/AstraZeneca, showed positive trial results with high efficacy. These vaccines received regulatory approval and began rolling out in December, in turn sparking optimism that unconstrained social and economic life could perhaps return in the not-too-distant future.

The big question going into 2021 is whether the strong equity run may continue and what exactly may lead to its downfall. As ever, rather than trying to pick which way the macro or political winds will blow in the near term, we maintain our focus on companies that can deliver a sustainable, rising income stream alongside capital growth over the long term.

Dividend Update

Overall, in 2020, dividend-orientated strategies lagged the market given that a significant proportion of companies suspended or reduced their dividend payments in light of the economic ‘sudden stop’ caused by the worldwide response to COVID.

Broadly, the dividend cuts seen in 2020 were concentrated in companies affected by (i) significant loss of revenues from COVID lockdowns (airlines, travel & leisure, retail, energy), (ii) regulatory pressure (European banks, insurance), (iii) government pressure (French state-owned businesses in particular), (iv) companies with weak balance sheets conserving capital by reducing or cancelling dividend payments.

The Fund has an overweight to Europe (including UK) and an underweight to the US, yet the dividend actions of our holdings were very robust across all regions:

Out of our 35 holdings:

Overall, the Fund dividend distribution saw a modest decline. This was owed to the changes we made to the portfolio holdings in February and March, rather than the dividend actions of our investee companies: we sold 3 stocks which previously offered a high dividend yield, but where we identified a risk of a dividend cut and capital depreciation due to the implications of the pandemic.

In the coming years we believe income will be more in demand, but dependable and sustainable income will be harder to find, which we believe will be positive for the dividend paying companies that we own.

This is evident in that the forward dividend yield of the MSCI World Index is currently estimated at 1.9% and 2.1% respectively for 2021 and 2022; that is, the dividend is not expected to recover to pre-pandemic levels until at least 2023, showing that many companies who cut their dividend in 2020 will not necessarily begin paying at their previous levels any time soon. In contrast, a number of holdings in the fund have already announced dividend growth plans for 2021 and we are confident that all our holdings have the ability to grow their dividends in 2021.

The trailing twelve months’ dividend distributed by the fund was $0.422 per share. Using the closing price of the fund at the quarter end ($22.77) gives a trailing dividend yield of 1.9% (net).

Activity

In 2020 we sold 3 positions and replaced them with 3 new positions, leaving the portfolio with 35 positions.

Portfolio Positioning

The effect of these changes was to reduce our exposure to the Energy, Communications and Consumer Discretionary sectors, whilst increasing our exposure to Consumer Staples, Healthcare and Industrials. The changes also reduced our exposure to Europe and increased our exposure to the US.

We continue to maintain a fairly even balance between quality defensive and quality cyclical/growth companies. We have approximately 50% in quality defensive companies (e.g. Consumer Staples and Healthcare companies) and around 50% in quality cyclical or growth-oriented companies (e.g. Industrials, Financials, Consumer Discretionary, Information Technology, etc.) Within Financials, however, we do not own any Banks, which helps to dampen the cyclicality of our Financials.

The Fund also has zero weighting to Energy, Utilities, Materials, and Real Estate. The largest overweight is to Consumer Staples.

Geographically, the Fund is diversified around the world with 51% in the US, 39% in Europe and 9% in Asia-Pacific. Within the Asia-Pacific region we have one company listed in Hong Kong (Anta Sports), one company listed in Taiwan (Taiwan Semiconductor) and one company listed in Australia (Sonic Healthcare).

Outlook

Based on the measures, holistically, the high-conviction fund had companies which are on average better quality at better value versus the index and with a higher dividend yield. The fund at the end of the year was trading on 17.9x 2021 expected earnings; a discount of 16.4% to the broad market with a dividend yield premium of 44%.

As we look ahead to 2021, whilst the news of effective vaccines is unquestionably good news and markets are likely to put expected near-term economic weakness in the context of better times on the horizon, investors should appreciate there is still some uncertainty around the extent to which these vaccines are a panacea, and how soon they may be delivered. Within equities, the market’s renewed appetite for value stocks makes sense in the context of the vaccine, but whether the move away from growth will be sustained is still uncertain. Questions also remain around the outlook for inflation and interest rates, which have underpinned higher valuations for equities in general. We believe the holdings we have selected in the Fund remain very robust and are well placed to weather most whatever the new year brings; our perpetual approach of focusing on quality compounders and dividend-growers should continue to stand us in good stead in our search for rising income streams and long-term capital growth.

As ever we would like to thank you for your continued support and wish you all a safe and prosperous 2021.

Matthew Page & Ian Mortimer

January 2021

The Fund’s strategy of investing in dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and could reduce or eliminate the payment of dividends in the future or the anticipated acceleration of dividends could not occur. 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 Fund invests in small- or mid-cap companies, which involve additional risks such as limited liquidity and greater volatility than larger companies. When inflation rate is greater than expected, that markets may respond differently to changes in the inflation rate than the Advisor expects, or inflation may manifest in such a way that the Fund is unable to provide reasonable protection against inflation.

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. This index is unmanaged and is not available for investment, and does not incur expenses.

The EURO STOXX 50 Index, Europe's leading blue-chip index for the Eurozone, provides a blue-chip representation of supersector leaders in the region. The index covers 50 stocks from 8 Eurozone countries: Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands and Spain. This index is unmanaged and is not available for investment, and does not incur expenses.

The FTSE 100 Index comprises the 100 most highly capitalized blue chip companies listed on London Stock Exchange. This index is unmanaged and is not available for investment, and does not incur expenses.

PER or P/E – Price to Earnings ratio is calculated by dividing current price of the stock by the company's trailing twelve months earnings per share.

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

Dividend yield is calculated by annualizing the last quarterly dividend paid and dividing it by the current share price.

Diversification does not assure a profit nor protect against loss in a declining market.

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. 

Dividend Builder Fund

Growth of $10,000

Average Annual Total Return

Periods Ended December 31, 2020

*Inception date 03/30/12.

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 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, 2020

GUINNESS ATKINSON DIVIDEND BUILDER FUND

GUINNESS ATKINSON DIVIDEND BUILDER FUND

Schedule of Investments

at December 31, 2020

GUINNESS ATKINSON DIVIDEND BUILDER FUND

Schedule of Investments

at December 31, 2020

PLC - Public Limited Company

The accompanying notes are an integral part of these financial statements.

GUINNESS ATKINSON GLOBAL ENERGY FUND

ANNUAL REPORT FOR THE PERIOD ENDED

DECEMBER 31, 2020

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.

Despite some recovery in the fourth quarter, weakness in the oil price (spot and long-dated) led to very poor returns for energy equities in 2020.

As ever, the performance of the MSCI World Energy Index was only part of the story, with 2020 seeing divergence between the energy equity subsectors.

Global energy equity subsectors: median total return in 2020 (%)

Source: Bloomberg; Guinness Atkinson Asset Management

A quick tour of some of the main energy sub-sectors paints a picture for the overall performance of energy equities in 2020:

Indicative portfolio contribution analysis (2020)

Source: Bloomberg; Guinness Atkinson Asset Management

The underperformance of the Fund versus the Index can be explained in broad terms by the Index’s heavy composition bias (c.50% vs 20% in our portfolio) towards the big five ‘super-major’ oil and gas companies (Exxon, Chevron, Royal Dutch Shell, TOTAL and BP). Super-majors were not spared from poor performance in 2020 but, on average, they performed better than oil producers, services and refining sectors. Regular observers of the energy fund sector will recognise this explanation as it has recurred over the last few years. Put simply, in the energy bear market that has persisted since 2014, large defensive integrated oil & gas companies have offered a defensive haven that other sectors have not matched.

On a stock by stock basis in the fund, we saw relative outperformance from Enbridge (-16%), with the market appreciating its large, diversified base of midstream assets across North America. Chevron (-28%), Equinor (-14%), and Total (-18%) proved to be our strongest integrated names, the consistent factor being better than peer-average balance sheets going into the COVID crisis. Amongst our E&P holdings, large-caps fared better than small-caps, as Canadian Natural Resources (-22%) also benefited from diversified production profiles and relatively low financial gearing.

The weakest performers in the portfolio tended to be our higher-cost exploration and production names, plus exposure to oil services. In the energy services sector, Helix Energy (-58%) suffered from an expected slowdown in international offshore spending, whilst Schlumberger (-45%) is also experiencing a sharp contraction in revenues across all divisions, on and offshore. In the E&P sector, Devon Energy (-37%), Occidental Petroleum (-68%; disposed of during the period) and Oasis Petroleum (-80%); disposed of during the period) sold off more than sector peers due to concerns over balance sheet strength.

2. ACTIVITY

The following companies were sold from the portfolio in the first half of 2020:

The following companies were purchased for the portfolio in March:

In general, the switches can be characterised as a move away North American shale oil & gas companies with higher operating costs and weaker balance sheets than average for our portfolio. In their place, we moved to larger, better capitalised international oil & gas companies, which are likely to weather better the current environment.

There were no further stock switches in the second half of 2020, though the portfolio was actively rebalanced.

3. PORTFOLIO POSITION

The sector and geographic weightings of the portfolio at December 31, 2020 were as follows:

4. MARKET BACKGROUND

The year of 2020 provided a series of events that can reasonably be described as the biggest oil shock in living memory. OPEC started the period with modest production quota cuts, which they anticipated would be needed to keep markets balanced. The scale of the demand contraction caused by the COVID-19 crisis, compounded for a short period by a sharp ramp in OPEC+ production, then created an unprecedented supply surplus. At the most extreme point in April 2020, this sent the WTI oil price into negative territory. There followed an aggressive and coordinated response from OPEC+ to bring the oil market back into balance.

Global oil demand in the first half of 2020 is estimated to have contracted by around 11m b/day, thanks to the spread of COVID-19 mitigation measures initially in China, then around the world. At the most acute points of the crisis, in April, it was reported that 118 countries, representing 92% of global GDP, had enacted some form of social distancing. As a result, transportation took a disproportionate hit. Oil demand in April is estimated to have been down by around 23m b/day, then down 19m b/day in May and around 13m b/day in June. Not surprisingly, the jet fuel and kerosene demand sector, serving the aviation industry, saw the sharpest decline.

OPEC, plus non-OPEC partners, met in early March 2020 with the key discussion point being a response to falling oil demand as a result of the spread of COVID-19. Despite Saudi’s proposal for a further quota cut, negotiations with Russia quickly broke down and the meeting concluded with no agreement around an extension to production quotas, and an abandonment of existing quotas. OPEC chose to ‘punish’ Russia by promising a significant spike in output for April, the scale of which would normally be enough alone to create significant downward pressure on the oil price. As it happened, April’s excess production (c2.5m b/day) came at the peak of the COVID-19 demand shock, creating oversupply picture in excess of 20m b/day.

By April, it quickly became apparent that OPEC’s actions were unsustainable, and all parties involved in the OPEC+ agreement, plus some additional non-OPEC partners, were forced back into negotiation. A deal was struck on April 12th for OPEC+ to cut their production by 9.7m b/day, representing a 23% cut to the baseline production level of October 2019. Given the number of countries involved, the April deal was a more complex agreement than anything that OPEC has delivered historically. The duration of the agreement was also impressive; OPEC+ agreed to a headline cut of 9.7m b/day for two months, then 7.7m b/day for six months and a further 5.7m b/day for sixteen months. This was longer and larger in duration than most had been expecting. Whilst not enough to stave off significant inventory builds in the second quarter, it indicated a strong desire to support prices through a potentially extended period of demand loss.

With the worst of the COVID lockdowns lifted in the second half of 2020, oil demand recovered somewhat, though demand for the year as a whole is expected to be down by nearly 9m b/day.

Turning to non-OPEC oil supply, and 2020 was initially expected to be a year of production growth, led by large project completions in Norway and Brazil. The very sharp fall in oil prices changed that landscape rapidly, with non-OPEC declines coming through to complement the commitments made by OPEC.

The fall in oil prices created a two-fold response from non-OPEC producers: one driven by geology and the other investment led. The geology behind onshore conventional oil is such that oilfield pressure tends to degrade when production is shut-in. The fields most affected have been mature, depleted and heavier/sourer reservoirs in places like the US, Canada, Russia and Latin America. The scale of permanent production loss looks to be around 1m b/day.

For US shale oil, there has been less permanent damage from production shut-ins, but the fall in capital expenditure by US E&P companies, when combined with high natural decline rates, has resulted in a meaningful decline in production, beyond temporary shut-ins.

Thanks to the events described above, spot oil prices in 2020 were exceptionally volatile. Brent started the year at $66/bl, drifted lower over January and February towards $50/bl, before dropping precipitously following the OPEC meeting in early March. The Brent spot price dropped to a low of $19/bl on April 21, before recovering steadily through the summer back to around $40/bl. Brent prices remained at around the $40/bl level until November, when the promise of effective COVID vaccines brought hope for a recovery in demand, and lift oil prices to around $50/bl. For the year as a whole, Brent averaged $43/bl, down from $64/bl in 2019. The Brent futures curve fell over the period, with the five year forward Brent price declining from $57/bl to $49/bl.

The ride in WTI oil prices was even more volatile, with the structure of forward settlements contributing to WTI spot dislocating from Brent and turning negative for the first time, falling to -$38/bl on April 20. WTI spot ultimately recovered to $49/bl by the end of the year.

Brent spot vs five year forward oil prices ($/bl, 2017-20)

Source: Bloomberg; Guinness Atkinson Asset Management

For natural gas, the year was marked by weak prices across the globe, as the COVID-19 related demand impact arrived on the back of a warm northern hemisphere winter, which left gas in storage already at elevated levels. One silver lining for the US gas market has been a fall in associated gas supply from the US shale oil producers, given the shut-ins seen in that industry. But against this, there has been a fall in exports of US gas via LNG, with European and Asian gas prices (both hovering around the $2/mcf for the middle part of the year) being too low to incentivise the trade. Gas prices did stage a rally in the fourth quarter, however, as news of COVID vaccines gave greater hope for demand growth in 2021.

5. OUTLOOK

Following the extraordinarily challenging conditions of 2020, OPEC will be looking this year to manage supply back into the market as the oil demand recovery allows. They will be hoping to reduce global inventories, and stabilise oil at a price which closes the fiscal deficits being endured by most of its members. We believe the oil price desired by OPEC at around $60-70/bl, though they will likely settle for an average price in the $50s/bl in the shorter term, given the precariousness of oil demand.

The path for oil demand will vary region by region, as developed markets plus China and India vaccinate widely through the second half of 2021, whilst other emerging countries remain more exposed to COVID. There is likely to be strength in petrochemical feedstock demand, plus an inflection in gasoline and diesel demand next year. However, the ongoing weakness in jet fuel recovery implies a longer period before jet demand reaches its previous peak. Overall, the IEA forecast demand in 2021 of around 97m b/day, up by nearly 6m b/day versus 2020. And for global oil demand to reach its previous peak of 100m b/day, we probably need to wait until around the middle of 2022.

OPEC+’s task in the months ahead is to be dynamic with supply, reacting to a recovery in oil demand that is likely to be erratic. We have already seen an example of this at the start of January 2021, with Saudi offering unilaterally to remove an additional 1m b/day from the market for February and March, in response to European lockdowns. Iran and Venezuela look to be the main wildcards within OPEC, with President elect Biden likely to take a more dovish stance than President Trump. Saudi as OPEC ‘kingpin’ requires over $80/bl to create fiscal breakeven in 2021. They recognise that an $80/bl price is currently unsustainable but they will work to raise the price as close to their fiscal breakeven as is sustainable.

We expect little threat to OPEC from US shale production, where average production this year will be lower than in 2020. Non-OPEC (ex US shale) will take its share of the OPEC+ quota increases, but beyond that, there will be no major roll-out of large new projects, the cycle having peaked in 2020.

Energy equity valuations remain at depressed levels. The MSCI World Energy Index now trades on a price to book ratio of 1.2x, the lowest level (bar earlier in 2020) since 1986. This compares to the S&P500 on 4.2x, consistent with mid-2001. The relative P/B vs the S&P500 is at a 55 year low. We believe that improving ROCE would drive a higher P/B ratio.

Energy equities offer attractive upside if our oil price and profitability scenario plays out. We believe energy equities currently discount an oil price of around $45/bl. Adopting $60/bl Brent as a long-term oil price (consistent with the bottom end of OPEC’s desired range), we see 80-90% upside across the energy complex.

Will Riley, Jonathan Waghorn & Tim Guinness

January 2021

The Fund invests in foreign securities, which involve political, economic, currency risks, greater volatility, and differences in accounting methods. These risks are greater for emerging markets. The Fund invests in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The 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 MSCI World Energy 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. 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. This index is unmanaged and is not available for investment, and do not incur expenses.

MCF is an abbreviation denoting a thousand cubic feet of natural gas.

Price to Book Ratio (P/B Ratio) a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.

P/E – Price to Earnings ratio is calculated by dividing current price of the stock by the company’s trailing twelve months earnings per share.

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.

Global Energy Fund

Growth of $10,000

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 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, 2020

GUINNESS ATKINSON GLOBAL ENERGY FUND