Annual Report KraneShares CICC China Leaders 100 Index ETF KraneShares CSI China Internet ETF KraneShares Bosera MSCI China A Share ETF KraneShares E Fund China Commercial Paper ETF KraneShares MSCI All China Index ETF KraneShares MSCI One Belt One Road Index ETF KraneShares Emerging Markets Consumer Technology Index ETF KraneShares MSCI China Clean Technology Index ETF (Formerly, KraneShares MSCI China Environment Index ETF) KraneShares Electric Vehicles and Future Mobility Index ETF KraneShares MSCI All China Health Care Index ETF KraneShares CCBS China Corporate High Yield Bond USD Index ETF KraneShares Emerging Markets Healthcare Index ETF KraneShares MSCI Emerging Markets ex China Index ETF KraneShares MSCI China ESG Leaders Index ETF KraneShares Global Carbon ETF (Formerly KFA Global Carbon ETF) KraneShares CICC China 5G & Semiconductor Index ETF KraneShares CICC China Consumer Leaders Index ETF KraneShares SSE STAR Market 50 Index ETF March 31, 2021 |
Table of Contents
1 | ||
4 | ||
Schedules of Investments/Consolidated Schedule of Investments |
||
71 | ||
75 | ||
78 | ||
90 | ||
98 | ||
104 | ||
108 | ||
111 | ||
117 | ||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
120 | |
123 | ||
128 | ||
140 | ||
145 | ||
147 | ||
149 | ||
151 | ||
Statements of Assets and Liabilities/Consolidated Statement of Assets and Liabilities |
153 | |
Statements of Operations/Consolidated Statements of Operations |
159 | |
Statements of Changes in Net Assets/Consolidated Statements of Changes in Net Assets |
165 | |
180 | ||
Notes to Financial Statements/Consolidated Notes to Financial Statements |
186 | |
218 | ||
221 | ||
224 | ||
225 | ||
231 | ||
234 | ||
236 |
The Funds file their complete schedules of Fund holdings with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT within sixty days after the end of the period. The Funds’ Form N-PORT reports are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that KraneShares Trust uses to determine how to vote proxies relating to Fund securities, as well as information relating to how the Funds voted proxies relating to Fund securities during the most recent 12-month year ended June 30, are available (i) without charge, upon request, by calling 855-857-2638; and (ii) on the Commission’s website at http://www.sec.gov.
Fund shares may only be purchased or redeemed from a Fund in large Creation Unit aggregations. Investors who cannot transact in Creation Units of a Fund’s shares must buy or sell Fund shares in the secondary market at their market price, which may be at a premium or discount to a Fund’s net asset value, with the assistance of a broker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying Fund shares and receive less than net asset value when selling Fund shares.
Dear Shareholders:
We are pleased to send you the Annual Report for KraneShares Exchange-traded funds (“ETFs”) for the 12-month period ended March 31, 2021.
For the period, the ETFs delivered the following returns:
Fund |
Return |
Underlying
|
Morningstar | ||||||
KraneShares CICC China Leaders 100 Index ETF (KFYP) |
28.90 |
% |
32.82 |
%(a) |
50.39 |
%(1) | |||
KraneShares CSI China Internet ETF (KWEB) |
67.77 |
% |
69.26 |
%(b) |
50.39 |
%(1) | |||
KraneShares Bosera MSCI China A Share ETF (KBA) |
50.00 |
% |
51.10 |
%(c) |
50.39 |
%(1) | |||
KraneShares E Fund China Commercial Paper ETF (KCNY) |
9.91 |
% |
10.72 |
%(d) |
13.47 |
%(2) | |||
KraneShares MSCI All China Index ETF (KALL) |
47.97 |
% |
45.82 |
%(e) |
50.39 |
%(1) | |||
KraneShares MSCI One Belt One Road Index ETF (OBOR) |
65.82 |
% |
67.58 |
%(f) |
27.03 |
%(3) | |||
KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ) |
67.85 |
% |
69.26 |
%(g) |
62.08 |
%(4) | |||
KraneShares MSCI China Clean Technology Index ETF (KGRN) |
143.03 |
% |
133.24 |
%(h) |
50.39 |
%(1) | |||
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) |
122.46 |
% |
124.89 |
%(i) |
73.58 |
%(5) | |||
KraneShares MSCI All China Health Care Index ETF (KURE) |
61.06 |
% |
63.50 |
%(j) |
50.39 |
%(1) | |||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (KCCB) |
12.32 |
% |
12.75 |
%(k) |
19.30 |
%(6) | |||
KraneShares Emerging Markets Healthcare Index ETF (KMED) |
60.18 |
% |
62.23 |
%(l) |
62.08 |
%(4) | |||
KraneShares MSCI Emerging Markets ex China Index ETF (KEMX) |
71.19 |
% |
68.77 |
%(m) |
62.08 |
%(4) | |||
KraneShares MSCI China ESG Leaders Index ETF (KESG) |
29.05 |
%^ |
30.84 |
%(n) |
N/A |
(1) | |||
KraneShares Global Carbon ETF (KRBN) |
41.95 |
%^ |
41.52 |
%(o) |
N/A |
(N/A) | |||
KraneShares CICC China 5G & Semiconductor Index ETF (KFVG) |
-7.68 |
%^ |
-6.81 |
%(p) |
N/A |
(1) | |||
KraneShares CICC China Consumer Leaders Index ETF (KBUY) |
3.28 |
%^ |
4.12 |
%(q) |
N/A |
(1) | |||
KraneShares SSE STAR Market 50 Index ETF (KSTR) |
-15.76 |
%^ |
-16.59 |
%(r) |
N/A |
(1) |
* Return as of March 31, 2021
^ Return period since Fund inception (less than one-year period):
KraneShares MSCI China ESG Leaders Index ETF, the Fund commenced operations on July 28, 2020.
KraneShares Global Carbon ETF, the Fund commenced operations on July 29, 2020.
KraneShares CICC China 5G & Semiconductor Index ETF, the Fund commenced operations on November 23, 2020.
KraneShares CICC China Consumer Leaders Index ETF, the Fund commenced operations on December 8, 2020.
KraneShares SSE STAR Market 50 Index ETF, the Fund commenced operations on January 26, 2021.
Morningstar |
Morningstar Peer Group Name |
|||
(1) |
50.39% |
U.S. ETF China Region |
||
(2) |
13.47% |
U.S. ETF Emerging Markets Local Currency Bond |
||
(3) |
27.03% |
U.S. ETF Infrastructure |
||
(4) |
62.08% |
U.S. ETF Diversified Emerging Markets |
||
(5) |
73.58% |
U.S. ETF Industrials |
||
(6) |
19.30% |
U.S. ETF Emerging Markets Bond |
1
Shareholder Letter (Unaudited) (continued)
(a) The underlying index for KraneShares CICC China Leaders 100 Index ETF.
(b) The underlying index for KraneShares CSI China Internet ETF.
(c) The underlying index for KraneShares Bosera MSCI China A Share ETF.
(d) The underlying index for KraneShares E Fund China Commercial Paper ETF.
(e) The underlying index for KraneShares MSCI All China Index ETF.
(f) The underlying index for KraneShares MSCI One Belt One Road Index ETF.
(g) The underlying index for KraneShares Emerging Markets Consumer Technology Index ETF.
(h) The underlying index for KraneShares MSCI China Clean Technology Index ETF.
(i) The underlying index for KraneShares Electric Vehicles and Future Mobility Index ETF.
(j) The underlying index for KraneShares MSCI All China Health Care Index ETF.
(k) The underlying index for KraneShares CCBS China Corporate High Yield Bond USD Index ETF
(l) The underlying index for KraneShares Emerging Markets Healthcare Index ETF.
(m) The underlying index for KraneShares MSCI Emerging Markets ex China Index ETF.
(n) The underlying index for KraneShares MSCI China ESG Leaders Index ETF.
(o) The underlying index for KraneShares Global Carbon ETF.
(p) The underlying index for KraneShares CICC China 5G & Semiconductor Index ETF.
(q) The underlying index for KraneShares CICC China Consumer Leasers Index ETF.
(r) The underlying index for KraneShares SSE Star Market 50 Index ETF.
The Morningstar Fund China Region Category portfolios invest almost exclusively in stocks from China, Taiwan, and Hong Kong. These portfolios invest at least 70% of total assets in equities and invest at least 75% of stock assets in one specific region or a combination of China, Taiwan, and/or Taiwan.
The Morningstar Fund Diversified Emerging Markets Category portfolios tend to divide their assets among 20 or more nations, although they tend to focus on the emerging markets of Asia and Latin America rather then those of the Middle East, Africa, or Europe. These portfolios invest predominantly in emerging market equities, but some funds also invest in both equities and fixed income instruments among emerging markets.
The Morningstar Fund Emerging Markets Bond portfolios invest more than 65% of their assets in foreign bonds from developing countries. The largest portion of the emerging-markets bond market comes from Latin America, followed by Eastern Europe. Africa, the Middle East, and Asia make up the rest.
The Morningstar Fund Industrials Category portfolios seek capital appreciation by investing in equity securities of US or non-US companies that are engaged in services related to cyclical industries. This includes and is not limited to companies in aerospace and defense, automotive, chemicals, construction, environmental services, machinery, paper and transportation.
The Morningstar Fund Infrastructure Category portfolios invest more than 60% of their assets in stocks of companies engaged in infrastructure activities. Industries considered to be part of the infrastructure sector include: oil & gas midstream; waste management; airports; integrated shipping; railroads; shipping & ports; trucking; engineering & construction; infrastructure operations; and the utilities sector.
The Morningstar Fund Emerging Markets Local Currency Bond Category portfolios invest more than 65% of their assets in foreign bonds from developing countries in the local currency. Funds in this category have a mandate to maintain exposure to currencies of emerging markets. The largest portion of the emerging markets bond market comes from Latin America, followed by Eastern Europe, Africa, the Middle East, and Asia.
2
Shareholder Letter (Unaudited) (concluded)
We are encouraged by the steady progress being made by China to increase access to local and Mainland Chinese markets for international investors, as well as by the heightened demand and awareness of these markets by the global investor community.
• We believe that China will continue to grow and be an essential element of a well-designed investment portfolio.
• We believe that investors should have low-cost§, transparent tools to obtain exposure to Chinese equity and fixed income markets.
• China’s capital markets have fully recovered from the COVID-19 pandemic and, despite near-term volatility due to concerns surrounding inflation and new regulations, we believe the further development of China’s capital markets offers a long-term value proposition.
• We are dedicated to helping investors obtain more complete passive market exposures and more balanced investment portfolios.
§ Buying and selling shares of the KraneShares ETFs will result in brokerage commissions.
Thank you for investing with us.
Jonathan Krane, CEO
March 31, 2021
3
The KraneShares CICC China Leaders 100 Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the CSI CICC Select 100 Index (the ‘‘Underlying Index’’).
The Underlying Index takes a smart-beta1 approach to systematically investing in companies listed in Mainland China. The strategy is based on China International Capital Corporation (“CICC”)’s latest research on China’s capital markets. This quantitative approach reflects CICC’s top down and bottom up research process, seeking to deliver the 100 leading companies in Mainland China.
China review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Mainland Chinese equities followed global equities higher in the second half of 2020 and lower in the first quarter of 2021 accompanied by inflation concerns and an increase in volatility. A strong economy that fully recovered from the global pandemic within the period led to gains in Mainland Chinese equities for the period. KFYP benefited from the barbell of strong performance of consumer staples and discretionary on one side, and financials, materials, and industrials on the other, all of which performed strongly within China A shares.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
1 Smart beta is an investment style where a manager passively follows an index designed to take advantage of perceived systematic biases or inefficiencies in the market.
4
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Leaders 100 Index ETF (continued)
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 28.90%, while the Underlying Index increased by 32.82%.
At the end of the reporting period, the Fund held 25.75% of the portfolio in the Consumer Discretionary sector and 18.91% in the Industrials sector.
5
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Leaders 100 Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One
Year |
Three
Year |
Five
Year |
Annualized
| |||||||||||||||||||||
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
| |||||||||||||||||
KraneShares CICC China Leaders 100 Index ETF |
28.90 |
% |
32.62 |
%‡ |
4.68 |
%‡ |
5.61 |
%‡ |
11.88 |
%‡ |
13.08 |
%‡ |
10.69 |
%‡ |
10.87 |
%‡ | ||||||||
Hybrid KFYP Index (Net)** |
N/A |
|
32.82 |
%‡ |
N/A |
|
6.06 |
%‡ |
N/A |
|
11.85 |
%‡ |
N/A |
|
10.84 |
%‡ | ||||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.29 |
%‡ |
N/A |
|
13.97 |
%‡ |
* The Fund commenced operations on July 22, 2013.
** The Hybrid KFYP Index (Net) consists of the CSI China Overseas Five Year Plan Index from the inception of the Fund through May 31, 2016, the Zacks New China Index from June 1, 2016 through November 1, 2018, and the CSI CICC Select 100 Index going forward. From June 1, 2016 to November 1, 2018, the Fund sought to provide investment results that, before fees and expenses, corresponded generally to the price and yield performance of the Zacks New China Index. Prior to June 1, 2016, the Fund was known as the KraneShares CSI New China ETF and sought to provide investment results that, before fees and expenses, corresponded generally to the price and yield performance of the CSI Overseas China Five-Year Plan Index. Hybrid KFYP Index (Net) Reflects reinvested dividends net of withholding taxes, but reflects no deduction for fees, expenses, or other taxes.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
6
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Leaders 100 Index ETF (concluded)
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.69%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
7
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CSI China Internet ETF
The KraneShares CSI China Internet ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the CSI Overseas China Internet Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to measure the performance of the investable universe of publicly traded China-based companies whose primary business or businesses are in the Internet and Internet-related sectors (‘‘China Internet Companies’’), as defined by the index sponsor, China Securities Index Co., Ltd. (‘‘CSI’’).
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
US and Hong Kong listed China internet equities enjoyed strong performance in the second half of 2020, though experienced a correction from historic highs in the first quarter of 2021 due to inflation concerns, reopening, a rotation into value/cyclical sectors, new regulations and the unwinding of leveraged bets. The strategy’s largest sector allocations, Communication Services and Consumer Discretionary, drove the Fund’s returns for the period.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
8
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CSI China Internet ETF (continued)
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 67.77%, while the Underlying Index increased by 69.26%.
At the end of the reporting period, the Fund held 44.01% of the portfolio in the Consumer Discretionary sector and 36.76% in the Communication Services sector.
9
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CSI China Internet ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One
Year |
Three
Year |
Five
Year |
Annualized
| |||||||||||||||||||||
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
| |||||||||||||||||
KraneShares CSI China Internet ETF |
67.77 |
% |
69.34 |
%‡ |
8.67 |
%‡ |
8.98 |
%‡ |
17.43 |
%‡ |
17.59 |
%‡ |
16.54 |
%‡ |
16.69 |
%‡ | ||||||||
CSI Overseas China Internet Index |
N/A |
|
69.26 |
%‡ |
N/A |
|
9.25 |
%‡ |
N/A |
|
17.59 |
%‡ |
N/A |
|
16.71 |
%‡ | ||||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.29 |
%‡ |
N/A |
|
14.10 |
%‡ |
* The Fund commenced operations on July 31, 2013.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.73%. Please note that one cannot invest directly in an unmanaged
10
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CSI China Internet ETF (concluded)
index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
11
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Bosera MSCI China A Share ETF
The KraneShares Bosera MSCI China A Share ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the MSCI China A Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to track the progressive partial inclusion of A shares in the MSCI Emerging Markets Index over time. The index is designed for global investors accessing the A shares market using the Stock Connect framework and is calculated using China A Stock Connect listings based on the offshore renminbi (“RMB”) exchange rate (CNH).
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Mainland Chinese equities followed global equities higher in the second half of 2020 and lower in the first quarter of 2021 accompanied by inflation concerns and a surge in volatility. A strong economy that fully recovered from the global pandemic within the period led to gains in Mainland Chinese equities for the period. China’s exports surged nearly 40% year-over-year in the first quarter of 2021 as global economies began to reopen, which helped power aggregate demand in China’s economy. While 2020’s performance was characterized by the work from home and shelter-in-place trade, late 2020 and early 2021 saw a comeback in consumer staples, which now represent the second largest sector held in the portfolio and was the largest contributor to the Fund’s performance for the period. The Fund was also strongly supported by the strength of Financials, Industrials and Health Care.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
12
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Bosera MSCI China A Share ETF (continued)
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 50.00%, while the Underlying Index increased by 51.10%.
At the end of the reporting period, the Fund held 22.11% of the portfolio in the Financials sector and 19.29% in the Consumer Staples sector.
13
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Bosera MSCI China A Share ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One
Year |
Three
Year |
Five
Year |
Annualized
| |||||||||||||||||||||
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
| |||||||||||||||||
KraneShares Bosera MSCI China A Share ETF |
50.00 |
% |
51.23 |
%‡ |
10.62 |
%‡ |
10.37 |
%‡ |
10.22 |
%‡ |
10.44 |
%‡ |
11.19 |
%‡ |
11.32 |
%‡ | ||||||||
Hybrid KBA Index (Net)** |
N/A |
|
51.10 |
%‡ |
N/A |
|
10.52 |
%‡ |
N/A |
|
10.06 |
%‡ |
N/A |
|
12.30 |
%‡ | ||||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.29 |
%‡ |
N/A |
|
13.44 |
%‡ |
* The Fund commenced operations on March 4, 2014.
** The Hybrid KBA Index consists of the MSCI China A Index from the inception of the Fund through October 23, 2014, the MSCI China A International Index from October 23, 2014 through December 26, 2017, the MSCI China A Inclusion Index from December 26, 2017 to May 29, 2019, and the MSCI China A Index going forward. From October 23, 2014 through December 26, 2017, the Fund sought investment results that, before fees and expenses, corresponded to the price and yield performance of the MSCI China A International Index. Prior to October 23, 2014, the Fund sought investment results that, before fees and expenses, corresponded to the price and yield performance of the MSCI China A Index.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the
14
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Bosera MSCI China A Share ETF (concluded)
future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, as supplemented, the Fund’s gross operating expense ratio is 0.79% and its net expense ratio is 0.59% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.20% of the Fund’s average daily net assets until August 1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
15
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares E Fund China Commercial Paper ETF
The KraneShares E Fund China Commercial Paper ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the CSI Diversified High Grade Commercial Paper Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to track the performance of high-grade on-shore renminbi (“RMB”)-denominated (or “CNY”) commercial paper that is issued by corporate issuers in the People’s Republic of China’s (“China” or the “PRC”) and traded in the Chinese Inter-bank Bond Market (“CIBM”). For purposes of the Underlying Index, high-grade commercial paper is commercial paper that is issued by an issuer whose long-term bonds are rated AAA or equivalent by a Chinese credit rating agency; or commercial paper that is rated at least A-1 or equivalent by a Chinese credit rating agency and is issued by an issuer whose long-term bonds are rated at least AA+ or equivalent by a Chinese credit rating agency. All constituents in the Underlying Index are unsecured bonds. To qualify for inclusion in the Underlying Index, commercial paper issue must have at least RMB 600 million outstanding and a remaining term to final maturity of no more than one year (365 days) and no less than one month.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
China commercial paper was a source of stability for the global bond market during the global pandemic. Following the resumption of normal economic activity in China early in the reporting period, the Fund saw strong performance. The 7.5% appreciation in the Renminbi against the US dollar during the period also contributed to the Fund’s positive performance for the period.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
16
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares E Fund China Commercial Paper ETF (continued)
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 9.91%, while the Underlying Index increased by 10.72%.
At the end of the reporting period, the Fund held 100.00% of the portfolio in cash.
17
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares E Fund China Commercial Paper ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One
Year |
Three
Year |
Five
Year |
Annualized
| |||||||||||||||||||||
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
|
Net
Asset |
Market
| |||||||||||||||||
KraneShares E Fund China Commercial Paper ETF |
9.91 |
% |
10.56 |
%‡ |
1.38 |
%‡ |
1.46 |
%‡ |
2.59 |
%‡ |
2.59 |
%‡ |
1.87 |
%‡ |
1.85 |
%‡ | ||||||||
CSI Diversified High Grade Commercial Paper Index |
N/A |
|
10.72 |
%‡ |
N/A |
|
1.78 |
%‡ |
N/A |
|
3.12 |
%‡ |
N/A |
|
2.59 |
%‡ | ||||||||
S&P U.S. Treasury Bill 3-6 Month Index** |
N/A |
|
0.15 |
%‡ |
N/A |
|
1.63 |
%‡ |
N/A |
|
1.29 |
%‡ |
N/A |
|
1.06 |
%‡ | ||||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.29 |
%‡ |
N/A |
|
13.11 |
%‡ |
* The Fund commenced operations on December 2, 2014.
** Index added to provide a fixed income benchmark for fixed income funds.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment
18
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares E Fund China Commercial Paper ETF (concluded)
of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.70% and its net expense ratio is 0.58% due to a Fee Waiver Agreement whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.12% of the Fund’s average daily net assets until August 1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
19
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Index ETF
The KraneShares MSCI All China Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of a specific foreign equity securities index. The Fund’s current index is the MSCI China All Shares Index (the “Underlying Index”).
The Underlying Index seeks to track the equity market performance of companies based in China and listed in Mainland China, Hong Kong, and the United States. Companies available for inclusion must be headquartered in China and meet the market capitalization minimums required by the MSCI Global Investable Market Indexes Methodology.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
China equities across all listing venues followed global equities higher in the second half of 2020 and lower in the first quarter of 2021 accompanied by inflation concerns and an increase in volatility. A strong economy that fully recovered from the global pandemic within the period led to gains in many equities whose revenues are primarily sourced from Mainland China. China’s exports surged nearly 40% year-over-year in the first quarter of 2021 as global economies began to reopen, which helped power aggregate demand in China’s economy. Mainland listed Chinese A shares contributed the most to performance, followed by US listed shares and then Hong Kong listed shares.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
20
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Index ETF (continued)
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 47.97%, while the Underlying Index increased by 45.82%.
At the end of the reporting period, the Fund held 29.07% of the portfolio in the Consumer Discretionary sector and 19.36% in the Financials sector.
21
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Five Year |
Annualized | |||||||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||||||
KraneShares MSCI All China Index ETF |
47.97 |
% |
49.77 |
%‡ |
10.18 |
%‡ |
10.00 |
%‡ |
12.42 |
%‡ |
12.44 |
%‡ |
7.82 |
%‡ |
8.00 |
%‡ | ||||||||
Hybrid KALL Index (Net)** |
N/A |
|
45.82 |
%‡ |
N/A |
|
9.88 |
%‡ |
N/A |
|
12.57 |
%‡ |
N/A |
|
8.22 |
%‡ | ||||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.29 |
%‡ |
N/A |
|
13.28 |
%‡ |
* The Fund commenced operations on February 12, 2015.
** The Hybrid KALL Index (Net) consists of the FTSE Emerging incl. China Overseas non-R/QFII GDP Weighted Index from the inception of the Fund through July 31, 2018, and the MSCI China All Shares Index going forward. Prior to July 31, 2018, the Fund was known as the KraneShares FTSE Emerging Markets Plus ETF and sought to provide investment results that, before fees and expenses, corresponded generally to the price and yield performance of the FTSE Emerging incl. China Overseas non-R/QFII GDP Weighted Index.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment
22
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Index ETF (concluded)
of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.69% and its net expense ratio is 0.49% due to an a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.20% of the Fund’s average daily net assets until August 1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
23
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI One Belt One Road Index ETF
The KraneShares MSCI One Belt One Road Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, track the price and yield performance of the MSCI Global China Infrastructure Exposure Index (the “Underlying Index”).
The Underlying Index aims to identify potential beneficiaries of the One Belt One Road (“OBOR”) initiative based on how their geography, revenue, and sector attributes align with the broad theme. OBOR seeks to capture the economic growth and monetize the potential upside for the companies involved in China’s One Belt One Road initiative.
Global/Emerging Markets Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Global companies poised to benefit from China’s One Belt One Road Initiative (also known as the Belt & Road Initiative) rebounded strongly from their lows during the coronavirus pandemic. Most projects under the initiative have now resumed work following pandemic-induced disruptions. Metals and mining companies made the largest contribution to the Fund’s performance during the period as metals prices rose sharply in the first quarter of 2021.
We see three key positive catalysts for Emerging Markets equities in the year to come:
• Vaccine distribution may improve in Emerging economies following the US decision to waive patent restrictions on vaccines globally and is the key to a full recovery in emerging economies.
• The normalization of commodity prices and their meteoric rise in 2021 is likely to benefit commodities exporting countries such as Indonesia, Chile, and Argentina.
• The COVID-19 pandemic turbocharged the adoption of E-Commerce across emerging economies. We believe E-Commerce companies in Emerging Markets such as Mercado Libre are likely to retain users and continue to grow revenues as these economies continue to move online.
Emerging Markets Overview (April 1, 2020 to March 31, 2021)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were up for the period, returning +58.86%.
24
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI One Belt One Road Index ETF (continued)
• The best performing sectors across the Emerging Market equity market included Information Technology (+103.94%), Materials (+96.45%), and Consumer Discretionary (+61.54%).
• The worst performing sectors across the Emerging Market equity market included Real Estate (+20.20%), Utilities (+30.44%), and Consumer Staples (+34.12%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 65.82% while the Underlying Index increased by 67.58%.
At the end of the reporting period, the Fund held 33.84% of the portfolio in the Industrials sector and 33.52% in the Materials sector.
25
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI One Belt One Road Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Annualized | ||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||
KraneShares MSCI One Belt One Road Index ETF |
65.82 |
% |
69.66 |
%‡ |
7.23 |
%‡ |
7.01 |
%‡ |
6.84 |
%‡ |
7.13 |
%‡ | ||||||
MSCI Global China Infrastructure Exposure Index (Net) |
N/A |
|
67.58 |
%‡ |
N/A |
|
9.02 |
%‡ |
N/A |
|
8.46 |
%‡ | ||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
16.51 |
%‡ |
* The Fund commenced operations on September 7, 2017.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus,
26
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI One Belt One Road Index ETF (concluded)
as supplemented, the Fund’s operating expense ratio is 0.80%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
27
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Consumer Technology Index ETF
The KraneShares Emerging Markets Consumer Technology Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, track the price and yield performance of the Solactive Emerging Markets Consumer Technology Index (the “Underlying Index”).
The Underlying Index selects companies from 26 eligible countries within emerging markets whose primary business or businesses are internet retail, internet software/services, purchase, payment processing, or software for internet and E-Commerce transactions.
Global/Emerging Markets Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Consumer technology platforms all over the world saw tremendous expansion by all metrics during the pandemic and that expansion was reflected in their share prices. In the developing world, that momentum continued into 2021. However, emerging markets consumer technology equities followed global growth equities lower in the first quarter of 2021 amid inflation concerns, reopening, a rotation into value/cyclical sectors, and heightened volatility.
We see three key positive catalysts for Emerging Markets equities in the year to come:
• Vaccine distribution may improve in Emerging economies following the US decision to waive patent restrictions on vaccines globally and is the key to a full recovery in emerging economies.
• The normalization of commodity prices and their meteoric rise in 2021 is likely to benefit commodities exporting countries such as Indonesia, Chile, and Argentina.
• The COVID-19 pandemic turbocharged the adoption of E-Commerce across emerging economies. We believe E-Commerce companies in Emerging Markets such as Mercado Libre are likely to retain users and continue to grow revenues as these economies continue to move online.
Emerging Markets Overview (April 1, 2020 to March 31, 2021)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were up for the period, returning +58.86%.
28
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Consumer Technology Index ETF (continued)
• The best performing sectors across the Emerging Market equity market included Information Technology (+103.94%), Materials (+96.45%), and Consumer Discretionary (+61.54%).
• The worst performing sectors across the Emerging Market equity market included Real Estate (+20.20%), Utilities (+30.44%), and Consumer Staples (+34.12%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 67.85%, while the Underlying Index increased by 69.26%.
At the end of the reporting period, the Fund held 42.87% of the portfolio in the Communication Services sector and 41.04% in the Consumer Discretionary sector.
29
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Consumer Technology Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Annualized | ||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||
KraneShares Emerging Markets Consumer Technology Index ETF |
67.85 |
% |
67.94 |
%‡ |
8.03 |
%‡ |
7.81 |
%‡ |
8.69 |
%‡ |
8.81 |
%‡ | ||||||
Solactive Emerging Markets Consumer Technology Index |
N/A |
|
69.26 |
%‡ |
N/A |
|
8.82 |
%‡ |
N/A |
|
10.00 |
%‡ | ||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
15.73 |
%‡ |
* The Fund commenced operations on October 11, 2017.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in
30
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Consumer Technology Index ETF (concluded)
the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.81% and its net expense ratio is 0.61% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.20% of the Fund’s average daily net assets until August 1, 2021.
Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
31
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China Clean Technology Index ETF
The KraneShares MSCI China Clean Technology Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of a specific foreign equity securities the MSCI China IMI Environment 10/40 Index (the “Underlying Index”).
The Underlying Index is comprised of securities that derive at least 50% of their revenues from environmentally beneficial products and services. The Underlying Index is based on five key Clean Technology environmental themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention and Energy Efficiency. The Underlying Index aims to serve as a benchmark for investors seeking exposure to Chinese companies that focus on contributing to a more environmentally sustainable economy by making efficient use of scarce natural resources or by mitigating the impact of environmental degradation. Constituent selection is based on data from MSCI Environment, Social, and Governance (ESG).
China review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
China clean technology equities outperformed global equities significantly in the second half of 2020 though came off of historic highs in the first quarter of 2021 due to inflation concerns and heightened volatility. However, they nonetheless maintained significant outperformance versus broader benchmarks. The growth of electric vehicles companies led the way in clean technology and contributed substantially to the Fund’s performance for the period.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
32
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China Clean Technology Index ETF (continued)
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 143.03%, while the Underlying Index increased by 133.24%.
At the end of the reporting period, the Fund held 28.38% of the portfolio in the Industrials sector and 26.37% in the Consumer Discretionary sector.
33
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China Clean Technology Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Annualized | ||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||
KraneShares MSCI China Clean Technology Index ETF |
143.03 |
% |
146.55 |
%‡ |
22.32 |
%‡ |
22.30 |
%‡ |
17.45 |
%‡ |
17.97 |
%‡ | ||||||
MSCI China IMI Environment 10/40 Index (Net) |
N/A |
|
133.24 |
%‡ |
N/A |
|
21.03 |
%‡ |
N/A |
|
16.46 |
%‡ | ||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
15.80 |
%‡ |
* The Fund commenced operations on October 12, 2017.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.79%. Please note that one cannot invest directly in an
34
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China Clean Technology Index ETF (concluded)
unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
35
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Electric Vehicles and Future Mobility Index ETF
The KraneShares Electric Vehicles and Future Mobility Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the Solactive Electric Vehicles and Future Mobility Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to track the performance of companies engaged in the production of electric vehicles and/or their components, or engaged in other initiatives that may change the future of mobility. The Underlying Index includes issuers engaged in the electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing and/or electric infrastructure businesses.
Global/Emerging Markets Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Despite the pandemic and a slumping global automotive industry, electric vehicle (EV) sales achieved 43% growth from 2019 to 2020, mostly due to strong adoption in Europe and China. For the first time in many years, Europe outpaced China in EV demand. Cost reduction, stricter emissions regulations, government incentives, and the rollout of new and affordable models are bringing EVs within reach of the mass consumer. Makers of cars and semiconductors made the greatest contributions to the Fund’s performance for the period.
We see three key positive catalysts for Emerging Markets equities in the year to come:
• Vaccine distribution may improve in Emerging economies following the US decision to waive patent restrictions on vaccines globally and is the key to a full recovery in emerging economies.
• The normalization of commodity prices and their meteoric rise in 2021 is likely to benefit commodities exporting countries such as Indonesia, Chile, and Argentina.
• The COVID-19 pandemic turbocharged the adoption of E-Commerce across emerging economies. We believe E-Commerce companies in Emerging Markets such as Mercado Libre are likely to retain users and continue to grow revenues as these economies continue to move online.
36
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
Emerging Markets Overview (April 1, 2020 to March 31, 2021)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were up for the period, returning +58.86%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+103.94%), Materials (+96.45%), and Consumer Discretionary (+61.54%).
• The worst performing sectors across the Emerging Market equity market included Real Estate (+20.20%), Utilities (+30.44%), and Consumer Staples (+34.12%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 122.46%, while the Underlying Index increased by 124.89%.
At the end of the reporting period, the Fund held 39.23% of the portfolio in the Consumer Discretionary sector and 33.38% in the Information Technology sector.
37
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Annualized | ||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||
KraneShares Electric Vehicles and Future Mobility Index ETF |
122.46 |
% |
125.40 |
%‡ |
23.31 |
%‡ |
22.95 |
%‡ |
19.05 |
%‡ |
19.16 |
%‡ | ||||||
Solactive Electric Vehicles and Future Mobility Index |
N/A |
|
124.89 |
%‡ |
N/A |
|
23.67 |
%‡ |
N/A |
|
19.25 |
%‡ | ||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
13.72 |
%‡ |
* The Fund commenced operations on January 18, 2018.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in
38
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Electric Vehicles and Future Mobility Index ETF (concluded)
the Fund’s prospectus, the Fund’s operating expense ratio is 0.72%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
39
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Health Care Index ETF
The KraneShares MSCI All China Health Care Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, track the price and yield performance of a specific foreign equity securities index. The Fund’s current index is the MSCI China All Shares Health Care 10/40 Index (the “Underlying Index”).
The Underlying Index is a free float adjusted market capitalization weighted index designed to track the equity market performance of Chinese companies engaged in the health care sector. The securities in the Index include all types of publicly issued shares of Chinese issuers, which are listed in Mainland China, Hong Kong and United States. Issuers eligible for inclusion must be classified under the Global Industry Classification Standard as engaged in the healthcare sector. The issuers included in the Underlying Index may include small-cap, mid-cap and large-cap companies.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Health care was the second-best performing sector in China in 2020. Growth in China’s healthcare sector was broad as most sub-industries saw positive developments. Life sciences companies performed best in 2020 followed by medical devices, health care technology, and biotechnology. However, health care distribution companies’ operations were disrupted by the pandemic and struggled as a result. Meanwhile, the gulf between pharmaceutical companies with robust, innovative drug pipelines and those that remain dependent on generics widened.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
40
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Health Care Index ETF (continued)
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 61.06%, while the Underlying Index increased 63.50%.
At the end of the reporting period, the Fund held 100% of the portfolio in the Health Care sector.
41
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Health Care Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Three Year |
Annualized | ||||||||||||||||
Net Asset |
Market |
Net Asset |
Market |
Net Asset |
Market | |||||||||||||
KraneShares MSCI All China Health Care Index ETF |
61.06 |
% |
63.78 |
%‡ |
13.11 |
%‡ |
13.04 |
%‡ |
14.67 |
%‡ |
15.26 |
%‡ | ||||||
MSCI China All Shares Health Care 10/40 Index |
N/A |
|
63.50 |
%‡ |
N/A |
|
13.65 |
%‡ |
N/A |
|
15.50 |
%‡ | ||||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
16.78 |
%‡ |
N/A |
|
13.55 |
%‡ |
* The Fund commenced operations on January 31, 2018.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.79% and its net expense ratio
42
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI All China Health Care Index ETF (concluded)
is 0.65% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.14% of the Fund’s average daily net assets until August 1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
43
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF
The KraneShares CCBS China Corporate High Yield Bond USD Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, track the price and yield performance of a specific fixed income securities index. The Fund’s current index is the Solactive USD China Corporate High Yield Bond Index (the “Underlying Index”).
The Underlying Index seeks to track the performance of outstanding high yield debt securities denominated in U.S. dollars issued by Chinese companies. For purposes of the Underlying Index, Chinese companies include companies that conduct the majority of their business activities in, are headquartered in or have the majority of their business assets, profits, or revenues in China or Hong Kong as determined by the index provider, Solactive, AG (“Index Provider”).
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
China USD-denominated high yield corporate bonds were a rare source of yield throughout the period amid a low interest rate environment globally. The period saw the Fund recover from its March 2020 low as economic activity returned to normal in China and many issuers in the Fund saw their incomes rise and their credit quality improve as a result.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
44
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (continued)
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 12.32%, while the Underlying Index increased by 12.75%.
At the end of the reporting period, the Fund held 51.10% of the portfolio in the Industrials sector and 28.01% in cash.
45
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Annualized | |||||||||||
Net Asset |
Market |
Net Asset |
Market | |||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
12.32 |
% |
10.36 |
%‡ |
4.97 |
%‡ |
4.89 |
%‡ | ||||
Solactive USD China Corporate High Yield Bond Index |
N/A |
|
12.75 |
%‡ |
N/A |
|
6.40 |
%‡ | ||||
Lipper China Region Funds Classification |
N/A |
|
57.88 |
%‡ |
N/A |
|
14.83 |
%‡ |
* The Fund commenced operations on June 26, 2018.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.70%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated
46
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (concluded)
objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
47
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Healthcare Index ETF
The KraneShares Emerging Markets Healthcare Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the Solactive Emerging Markets Healthcare Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to track the equity market performance of companies engaged in the health care sector in various emerging markets. The issuers include small-cap, mid-cap, and large-cap companies involved in hospital management, healthcare management, pharmaceutical manufacturing, and biotechnology, among other sub-industries.
Global/Emerging Markets Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Emerging markets health care companies enjoyed positive share price performance for the period as the pandemic caused an increase in demand for healthcare services in the developing world. Pharmaceuticals and biotechnology made the greatest contributions to the Fund’s performance for the period.
We see three key positive catalysts for Emerging Markets equities in the year to come:
• Vaccine distribution may improve in Emerging economies following the US decision to waive patent restrictions on vaccines globally and is the key to a full recovery in emerging economies.
• The normalization of commodity prices and their meteoric rise in 2021 is likely to benefit commodities exporting countries such as Indonesia, Chile, and Argentina.
• The COVID-19 pandemic turbocharged the adoption of E-Commerce across emerging economies. We believe E-Commerce companies in Emerging Markets such as Mercado Libre are likely to retain users and continue to grow revenues as these economies continue to move online.
Emerging Markets Overview (April 1, 2020 to March 31, 2021)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were up for the period, returning +58.86%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+103.94%), Materials (+96.45%), and Consumer Discretionary (+61.54%).
• The worst performing sectors across the Emerging Market equity market included Real Estate (+20.20%), Utilities (+30.44%), and Consumer Staples (+34.12%).
48
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Healthcare Index ETF (continued)
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 60.18%, while the Underlying Index increased by 62.23%.
At the end of the reporting period, the Fund held 100% of the portfolio in the Health Care sector.
49
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Healthcare Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Annualized | |||||||||||
Net Asset |
Market |
Net Asset |
Market | |||||||||
KraneShares Emerging Markets Healthcare Index ETF |
60.18 |
% |
61.48 |
%‡ |
12.57 |
%‡ |
12.93 |
%‡ | ||||
Solactive Emerging Markets Healthcare Index |
N/A |
|
62.23 |
%‡ |
N/A |
|
13.55 |
%‡ | ||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
14.87 |
%‡ |
* The Fund commenced operations on August 29, 2018.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.80%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated
50
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Emerging Markets Healthcare Index ETF (concluded)
objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
51
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI Emerging Markets ex China Index ETF
The KraneShares MSCI Emerging Markets ex China Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specific equity securities index. The Fund’s current index is the MSCI Emerging Markets ex China Index (the “Underlying Index”).
The Underlying Index is a free float-adjusted market capitalization weighted index designed to track the equity market performance of mid- and large-cap companies of emerging market countries, excluding China. The Underlying Index is based on the MSCI Emerging Markets Index (“universe”), but excludes the securities of Chinese issuers.
Global/Emerging Markets Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Emerging market equities outside of China recovered from their March 2020 lows during the period as internet-based companies lead the way. However, emerging markets equities also experienced an increase in volatility as investors rotated to value/cyclical stocks in developed markets. That being said, emerging markets equities were buoyed somewhat by inflation fears in developed economies and the possibility of a weaker dollar in 2021. The information technology and financial sectors made the greatest contribution to the Fund’s performance for the period.
We see three key positive catalysts for Emerging Markets equities in the year to come:
• Vaccine distribution may improve in Emerging economies following the US decision to waive patent restrictions on vaccines globally and is the key to a full recovery in emerging economies.
• The normalization of commodity prices and their meteoric rise in 2021 is likely to benefit commodities exporting countries such as Indonesia, Chile, and Argentina.
• The COVID-19 pandemic turbocharged the adoption of E-Commerce across emerging economies. We believe E-Commerce companies in Emerging Markets such as Mercado Libre are likely to retain users and continue to grow revenues as these economies continue to move online.
Emerging Markets Overview (April 1, 2020 to March 31, 2021)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were up for the period, returning +58.86%.
52
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
• The best performing sectors across the Emerging Market equity market included Information Technology (+103.94%), Materials (+96.45%), and Consumer Discretionary (+61.54%).
• The worst performing sectors across the Emerging Market equity market included Real Estate (+20.20%), Utilities (+30.44%), and Consumer Staples (+34.12%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 71.19%, while the Underlying Index increased by 68.77%.
At the end of the reporting period, the Fund held 33.18% of the portfolio in the Information Technology sector and 21.28% in the Financials sector.
53
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
One Year |
Annualized | |||||||||||
Net Asset |
Market |
Net Asset |
Market | |||||||||
KraneShares MSCI Emerging Markets ex China Index ETF |
71.19 |
% |
70.23 |
%‡ |
14.06 |
%‡ |
14.16 |
%‡ | ||||
MSCI Emerging Markets Ex China Index |
N/A |
|
68.77 |
%‡ |
N/A |
|
11.70 |
%‡ | ||||
S&P 500 Index |
N/A |
|
56.35 |
%‡ |
N/A |
|
19.72 |
%‡ |
* The Fund commenced operations on April 12, 2019.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, as supplemented, the Fund’s gross operating expense ratio is 0.60% and its net expense ratio is 0.25% due to a Fee Waiver whereby the Fund’s investment manager, Krane
54
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI Emerging Markets ex China Index ETF (concluded)
Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.35% of the Fund’s average daily net assets until August 1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
55
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China ESG Leaders Index ETF
The KraneShares MSCI China ESG Leaders Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specific equity securities index. The Fund’s current index is the MSCI China ESG Leaders 10/40 Index (the “Underlying Index”).
The Underlying Index is designed to provide exposure to companies with high Environmental, Social and Governance (ESG) ratings relative to their sector peers. The Underlying Index consists of large and mid-cap companies in China. In order to ensure diversification, the Underlying Index limits individual constituent weights to 10% and sector weights to 40% of its composition.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Chinese companies with high MSCI ESG ratings performed well during the period. Many high ESG-rated companies are engaged in internet services businesses and continued to benefit from pandemic induced trends such as work from home. Internet services companies and electric vehicles manufacturers contributed the most to the Fund’s performance for the period.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
56
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China ESG Leaders Index ETF (continued)
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 29.05%, while the Underlying Index increased by 29.46%.
At the end of the reporting period, the Fund held 26.63% of the portfolio in the Consumer Discretionary sector and 16.07% in the Financials sector.
57
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares MSCI China ESG Leaders Index ETF (concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
Cumulative | ||||||
Net Asset |
Market | |||||
KraneShares MSCI China ESG Leaders Index ETF |
29.05 |
% |
31.05 |
%‡ | ||
MSCI China ESG Leaders 10/40 Index |
N/A |
|
29.46 |
%‡ |
* The Fund commenced operations on July 28, 2020.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.59%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
58
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Global Carbon ETF
The KraneShares Global Carbon ETF (the “Fund”) seeks to provide a total return that, before fees and expenses, exceeds that of the IHS Markit Global Carbon Index (the ‘‘Index’’) over a complete market cycle.
The Index offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long the price of carbon while supporting responsible investing.
Carbon Credits Market Review
Carbon Credits markets worldwide have had a phenomenal rise over the past year as auction prices rose across carbon markets in the US and Europe. Futures prices in the EU’s Emissions Trading System (ETS) have risen the most out of the three markets tracked by the IHS Markit Global Carbon Index and the EU’s ETS was the largest contributor to the Fund’s performance. Meanwhile, the American Petroleum Institute (API), one of the most powerful lobbyists in the United States, expressed support for carbon pricing to reduce emissions.1 The API’s announcement removes a formidable roadblock to the widespread expansion of emissions trading systems in the United States. The past year also saw the opening of new markets for carbon credits in the UK and China.
We see three key positive catalysts for carbon credits markets in the year to come:
• The opening of carbon markets in the UK and China. China’s National Emissions Trading System (ETS) alone accounts for over 6% of global greenhouse gas emissions.
• The European Union is putting into law a target of reducing net greenhouse gas emissions by at least 55% by 2030 and a net-zero target by 2050.
• The Biden administration has set the social cost benchmark for emitting one ton of CO2 at $51 and directed federal agencies to incorporate this benchmark into all climate impact analyses.2 The new measure, though abstract, is far higher than current prices for carbon credits.
Carbon Credits Market Overview (April 1, 2020 to March 31, 2021)
• European Union carbon allowances were sold at auction for an average price of €19.05 on May 14, 2020 compared to the March 31,2021 price of €25.92, an increase of 36.06%.3
• Carbon allowances offered as part of the Regional Greenhouse Gas Initiative (RGGI) in the Eastern United States were sold at $5.65 on March 11, 2020 and at $7.60 on March 3, 2021, an increase of 34.51%.4
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 41.95%, while the Index increased by 41.52%.
70.49% of the portfolio was exposed to the European Union Allowance (EUA) 2021 Future and 14.08% was exposed to the California Carbon Allowance (CCA) Vintage 2021 Future.
1. Mann, Ted. “Oil Trade Group is Poised to Endorse Carbon Pricing,” The Wall Street Journal. March 1, 2021.
2. Chemnick, Jean. “Cost of Carbon Pollution Pegged at $51 a Ton,” Scientific American. March 1, 2021.
3. Data from EMBER as of 3/31/2021.
4. Auction prices sourced from the Regional Greenhouse Gas Initiative (RGGI).
59
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares Global Carbon ETF (concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
Cumulative | ||||||
Net Asset |
Market | |||||
KraneShares Global Carbon ETF |
41.95 |
% |
43.45 |
%‡ | ||
IHS Markit Global Carbon Index |
N/A |
|
41.52 |
%‡ |
* The Fund commenced operations on July 29, 2020.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.79%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
60
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China 5G & Semiconductor Index ETF
The KraneShares CICC China 5G & Semiconductor Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specific equity securities index. The Fund’s current index is the CICC China 5G and Semiconductor Leaders Index (the “Underlying Index”).
The Underlying Index is designed to track the performance of companies engaged in the 5G and semiconductor related businesses, including 5G equipment, semiconductors, electronic components and big data centers.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Chinese companies engaged in the 5G development and semiconductor industries came under pressure from the Fund’s launch on November 24, 2020 amid a global rotation into value/cyclical stocks that was not lost on Chinese investors. Nonetheless, these companies still possess strong growth potential as China’s government continues to prioritize 5G development and import substitution in the semiconductor industry, as alluded to in the 14th Five Year Plan. The current global semiconductor shortage has only also increased pressure on China’s chipmakers to develop the capacity to produce more advanced microchips. As such, we believe that the downdraft during the period has created an attractive entry point for long-term investors.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
61
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China 5G & Semiconductor Index ETF (continued)
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund decreased by -7.68%, while the Underlying Index decreased by -6.81%.
At the end of the reporting period, the Fund held 94.29% of the portfolio in the Information Technology sector and 5.71% in cash.
62
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China 5G & Semiconductor Index ETF (continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
Cumulative | ||||||
Net Asset |
Market | |||||
KraneShares CICC China 5G & Semiconductor Index ETF |
-7.68 |
% |
-7.00 |
%‡ | ||
CICC China 5G And Semiconductor Leaders Index |
N/A |
|
-6.81 |
%‡ | ||
S&P 500 Index |
N/A |
|
11.65 |
%‡ |
* The Fund commenced operations on November 23, 2020.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.79% and its net expense ratio is 0.65% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.14% of the Fund’s average daily net assets until August 1, 2021.
63
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China 5G & Semiconductor Index ETF (concluded)
Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
64
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Consumer Leaders Index ETF
The KraneShares CICC China Consumer Leaders Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specific equity securities index. The Fund’s current index is the CICC China Consumer Leaders Index (the “Underlying Index”).
The Underlying Index consists of the investable universe of publicly traded China-based companies whose primary business or businesses are in the consumption-related industries such as home appliance, food & beverage, apparel & clothing, hotels, restaurants, and duty-free goods.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Chinese companies engaged in consumer products sectors saw strong performance during the period as China resumed normal economic activity relatively early in the period. They also benefitted from a burgeoning preference for local brands in certain product categories. Companies in the alcoholic beverages, electronics, and appliances industries contributed the most to the Fund’s performance for the period.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
65
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Consumer Leaders Index ETF (continued)
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund increased by 3.28%, while the Underlying Index increased by 4.12%.
At the end of the reporting period, the Fund held 61.47% of the portfolio in the Consumer Staples sector and 38.47% in the Consumer Discretionary sector.
66
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares CICC China Consumer Leaders Index ETF (concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
Cumulative | |||||
Net Asset |
Market | ||||
KraneShares CICC China Consumer Leaders Index ETF |
3.28 |
% |
4.44%‡ | ||
CICC China Consumer Leaders Index |
N/A |
|
4.12%‡ | ||
S&P 500 Index |
N/A |
|
8.12%‡ |
* The Fund commenced operations on December 8, 2020.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.69%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
67
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares SSE STAR Market 50 Index ETF
The KraneShares SSE STAR Market 50 Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Shanghai Stock Exchange (SSE) Science and Technology Innovation Board 50 Index (the “Underlying Index”).
The Underlying Index is comprised of the 50 largest companies listed on the SSE Science and Technology Innovation Board (STAR Market) as determined by market capitalization and liquidity.
China Review
Global equity markets continued their upward trend in the second half of 2020, powered by growth and technology stocks as pandemic-induced trends favorable to the internet sector persisted worldwide. In 2021, vaccine availability turbocharged a global economic recovery, leading to a cyclical/value rotation that placed considerable pressure on growth stocks. This downside pressure was compounded by the March wind-down of leveraged bets. Meanwhile, the yield on the 10-Year US Treasury bond increased by nearly 0.75% in the first three months of 2021 from 0.92% to 1.64% despite no action from the US Federal Reserve (the Fed), accompanied by a rise in inflation in the United States. Growth and technology stocks in China followed a similar trajectory, reaching all-time highs before falling significantly. However, rates and inflation in China did not follow the US. This is a consequence of both China’s monetary response to the pandemic, which was more tactical, and China’s economy having recovered from the pandemic before the end of 2020, meaning that China experienced the inflationary effect of recovery earlier. Equity markets in the US, Europe, and China have pulled back from levels seen at the end of 2020 and beginning of 2021, though remain above pre-pandemic levels.
Companies listed on the STAR Board of the Shanghai Stock Exchange came under pressure from the Fund’s launch on January 27, 2021 to the end of the period amid a global rotation into value/cyclical stocks that was not lost on Chinese investors. Nonetheless, these companies still possess strong growth potential as China’s leading science and technology recent IPOs. As such, we believe that the downdraft during the period has created an attractive entry point for long-term investors.
We see four key positive catalysts for China’s equity and bond markets in the year to come:
• With the release of the 14th Five Year Plan (FYP), we now know that China’s government will continue to support “new economy” sectors such as internet services, electric vehicles, green energy and technology, and communication services. Consumer products could also see a boost from the government’s desire to upgrade the consumption habits of China’s population.
• Foreign inflows into China’s Mainland equity market are outpacing MSCI inclusion, providing a potential long-term tailwind for the market.
• Domestic participation in China’s Mainland equity market is also likely to increase over the next few years as domestic household assets move from real estate into equities, leading to a potential tailwind for the market. Real estate investment accounts for, on average, nearly 60% of Chinese household savings compared to 33% in the United States.
• Although the yield differential between China and the United States has narrowed over the past year, China’s 10-year government bond still offers a nearly 150 basis-point yield pickup over the 10-Year US Treasury.
68
Management Discussion of Fund Performance (Unaudited) (continued)
KraneShares SSE STAR Market 50 Index ETF (continued)
China capital market overview (April 1, 2020 to March 31, 2021)
• China’s equity market, as measured by the MSCI China All Shares Index, was up for the period, returning +45.82%, while China’s currency, the renminbi (RMB) appreciated 7.5% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Discretionary (+100.11%), Information Technology (+71.16%), and Consumer Staples (+64.25%).
• The worst performing sectors across China’s equity markets were Real Estate (+15.12%), Financials (+20.16%), and Utilities (+32.24%).
By the Fund’s fiscal year end on March 31, 2021 (the “reporting period”), the NAV of the Fund decreased by -15.76%, while the Underlying Index decreased by -16.59%.
At the end of the reporting period, the Fund held 64.39% of the portfolio in the Information Technology sector and 14.69% in the Health Care sector.
69
Management Discussion of Fund Performance (Unaudited) (concluded)
KraneShares SSE STAR Market 50 Index ETF (concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 2021*
Cumulative | ||||||
Net Asset |
Market | |||||
KraneShares SSE Star Market 50 Index ETF |
-15.76 |
% |
-15.16 |
%‡ | ||
SSE Science & Technology Innovation Board 50 Index |
N/A |
|
-16.59 |
%‡ |
* The Fund commenced operations on January 26, 2021.
‡ Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.89%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
70
Shares |
Value | ||||
COMMON STOCK — 100.0%‡ |
|
||||
CHINA — 100.0% |
|
||||
Communication Services — 5.3% |
|
||||
China South Publishing & Media Group, Cl A |
24,800 |
$ |
39,650 | ||
Focus Media Information Technology, Cl A |
354,000 |
|
500,689 | ||
Oriental Pearl Group, Cl A |
70,600 |
|
103,406 | ||
Wasu Media Holding, Cl A |
19,200 |
|
24,288 | ||
|
668,033 | ||||
Consumer Discretionary — 25.8% |
|
||||
Anhui Zhongding Sealing Parts, Cl A |
25,200 |
|
38,177 | ||
Changchun Faway Automobile Components, Cl A |
18,500 |
|
26,335 | ||
Chongqing Zongshen Power Machinery, Cl A |
23,800 |
|
25,972 | ||
Chow Tai Seng Jewellery, Cl A |
10,000 |
|
53,313 | ||
FAWER Automotive Parts, Cl A |
24,300 |
|
27,592 | ||
Guangdong Xinbao Electrical Appliances Holdings, Cl A |
11,000 |
|
58,678 | ||
Guangzhou Automobile Group, Cl A |
31,900 |
|
49,640 | ||
Haier Smart Home, Cl A |
130,400 |
|
619,684 | ||
Hisense Home Appliances Group, Cl A |
15,600 |
|
39,801 | ||
Huayu Automotive Systems, Cl A |
54,300 |
|
228,167 | ||
Lao Feng Xiang, Cl A |
4,400 |
|
37,212 | ||
Midea Group, Cl A |
54,500 |
|
683,036 | ||
SAIC Motor, Cl A |
120,800 |
|
362,150 | ||
Shanghai Yuyuan Tourist Mart Group, Cl A |
53,500 |
|
87,411 | ||
TCL Technology Group, Cl A |
483,500 |
|
688,272 | ||
Weifu High-Technology Group, Cl A |
17,200 |
|
62,077 | ||
Wuchan Zhongda Group, Cl A |
87,300 |
|
64,665 | ||
Xiamen Comfort Science & Technology Group, Cl A |
15,000 |
|
39,436 | ||
Xiamen Intretech, Cl A |
4,700 |
|
45,896 | ||
|
3,237,514 |
The accompanying notes are an integral part of the financial statements.
71
Schedule of Investments March 31, 2021
KraneShares CICC China Leaders 100 Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Staples — 8.7% |
|
||||
Beijing Dabeinong Technology Group, Cl A |
101,100 |
$ |
129,742 | ||
Henan Shuanghui Investment & Development, Cl A |
35,800 |
|
223,709 | ||
Inner Mongolia Yili Industrial Group, Cl A |
115,000 |
|
701,617 | ||
Tecon Biology |
25,900 |
|
42,633 | ||
|
1,097,701 | ||||
Energy — 2.8% |
|
||||
China Shenhua Energy, Cl A |
113,601 |
|
348,013 | ||
Financials — 8.9% |
|
||||
Avic Capital, Cl A |
184,400 |
|
112,418 | ||
China Merchants Securities, Cl A |
127,800 |
|
382,746 | ||
GF Securities, Cl A |
101,900 |
|
243,366 | ||
Guotai Junan Securities, Cl A |
155,400 |
|
384,639 | ||
|
1,123,169 | ||||
Health Care — 5.2% |
|
||||
China Animal Healthcare*(A)(B)(C) |
4,000 |
|
— | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A |
13,400 |
|
49,955 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A |
19,300 |
|
81,922 | ||
Jinyu Bio-Technology, Cl A |
38,800 |
|
113,008 | ||
Shanghai Kehua Bio-Engineering, Cl A |
14,100 |
|
32,557 | ||
Xiamen Kingdomway Group, Cl A |
8,400 |
|
50,455 | ||
Yunnan Baiyao Group, Cl A |
17,600 |
|
323,260 | ||
|
651,157 | ||||
Industrials — 18.9% |
|
||||
Beijing New Building Materials, Cl A |
34,900 |
|
229,575 | ||
Camel Group, Cl A |
23,100 |
|
37,495 | ||
China Gezhouba Group, Cl A |
95,200 |
|
109,982 | ||
China Meheco, Cl A |
18,300 |
|
38,546 | ||
China Railway Group, Cl A |
350,800 |
|
315,983 | ||
CNHTC Jinan Truck, Cl A |
9,200 |
|
53,563 | ||
Fujian Longking, Cl A |
25,700 |
|
37,799 | ||
Fujian Longma Environmental Sanitation Equipment, Cl A |
14,400 |
|
40,602 | ||
Hangcha Group, Cl A |
11,900 |
|
42,440 | ||
Hangxiao Steel Structure, Cl A |
44,500 |
|
28,282 | ||
Jiangsu Expressway, Cl A |
17,100 |
|
25,932 | ||
Jiangsu Linyang Energy, Cl A |
36,100 |
|
39,010 | ||
Ningbo Zhoushan Port, Cl A |
108,900 |
|
69,212 | ||
Shandong Hi-speed, Cl A |
21,500 |
|
20,644 | ||
Shanghai Construction Group, Cl A |
153,400 |
|
70,841 | ||
Shanghai Hanbell Precise Machinery, Cl A |
7,400 |
|
28,207 | ||
Shanghai Mechanical and Electrical Industry, Cl A |
11,100 |
|
32,651 | ||
Shanghai Tunnel Engineering, Cl A |
64,900 |
|
54,008 | ||
Sichuan Road & Bridge, Cl A |
65,600 |
|
60,689 | ||
TangShan Port Group, Cl A |
102,100 |
|
42,793 | ||
Weichai Power, Cl A |
165,100 |
|
484,138 | ||
Xiamen C & D, Cl A |
59,200 |
|
75,971 | ||
Xinjiang Goldwind Science & Technology, Cl A |
95,100 |
|
205,384 | ||
Zhejiang Wanliyang, Cl A |
23,200 |
|
26,590 | ||
Zhejiang Weixing New Building Materials, Cl A |
21,700 |
|
83,543 |
The accompanying notes are an integral part of the financial statements.
72
Schedule of Investments March 31, 2021
KraneShares CICC China Leaders 100 Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials (continued) |
|
||||
Zhejiang Yankon Group, Cl A |
24,200 |
$ |
14,606 | ||
Zhuzhou Kibing Group, Cl A |
55,500 |
|
109,373 | ||
|
2,377,859 | ||||
Information Technology — 2.7% |
|
||||
Chaozhou Three-Circle Group, Cl A |
37,500 |
|
239,362 | ||
Hanergy Thin Film Power Group*(A)(B)(C) |
65,064 |
|
— | ||
MLS, Cl A |
25,600 |
|
51,893 | ||
Shenzhen Topband, Cl A |
31,200 |
|
52,545 | ||
|
343,800 | ||||
Materials — 9.9% |
|
||||
China Lumena New Materials(A)(B)(C) |
718 |
|
— | ||
CSG Holding |
47,247 |
|
45,294 | ||
DeHua TB New Decoration Materials, Cl A |
18,700 |
|
30,838 | ||
Fangda Special Steel Technology, Cl A |
37,100 |
|
50,551 | ||
Guangdong Tapai Group, Cl A |
24,600 |
|
46,267 | ||
Hongda Xingye, Cl A |
62,400 |
|
33,287 | ||
Inner Mongolia Junzheng Energy & Chemical Industry Group, Cl A |
116,200 |
|
93,510 | ||
ORG Technology, Cl A |
58,300 |
|
47,804 | ||
Shenzhen Jinjia Group, Cl A |
30,300 |
|
44,841 | ||
Tianhe Chemicals Group*(A)(B)(C) |
40,000 |
|
— | ||
Xinyangfeng Agricultural Technology, Cl A |
22,400 |
|
60,735 | ||
Yintai Gold, Cl A |
57,400 |
|
77,948 | ||
Zibo Qixiang Tengda Chemical, Cl A |
24,500 |
|
33,383 | ||
Zijin Mining Group, Cl A |
463,100 |
|
678,995 | ||
|
1,243,453 | ||||
Real Estate — 10.4% |
|
||||
China Merchants Shekou Industrial Zone Holdings, Cl A |
109,100 |
|
204,026 | ||
China Vanke, Cl A |
160,000 |
|
731,573 | ||
Financial Street Holdings, Cl A |
41,200 |
|
42,888 | ||
Gemdale, Cl A |
77,700 |
|
142,227 | ||
Greenland Holdings, Cl A |
125,700 |
|
107,094 | ||
Shanghai Lujiazui Finance & Trade Zone Development, Cl A |
30,300 |
|
50,198 | ||
Shanghai Shimao, Cl A |
38,800 |
|
25,665 | ||
|
1,303,671 | ||||
Utilities — 1.4% |
|
||||
Hubei Energy Group, Cl A |
67,200 |
|
65,959 | ||
Shenergy, Cl A |
84,500 |
|
79,848 | ||
Shenzhen Gas, Cl A |
19,900 |
|
22,838 | ||
|
168,645 | ||||
TOTAL CHINA |
|
12,563,015 | |||
TOTAL
COMMON STOCK |
|
12,563,015 | |||
TOTAL
INVESTMENTS — 100.0% |
|
12,563,015 | |||
OTHER ASSETS LESS LIABILITIES — 0.0% |
|
6 | |||
NET ASSETS — 100% |
$ |
12,563,021 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
The accompanying notes are an integral part of the financial statements.
73
Schedule of Investments March 31, 2021
KraneShares CICC China Leaders 100 Index ETF (concluded)
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $0 and represents 0.0% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $0 and represents 0.0% of Net Assets. (Unaudited)
Cl — Class
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
China |
|
|
|
|
||||||||
Communication Services |
$ |
668,033 |
$ |
— |
$ |
— |
$ |
668,033 | ||||
Consumer Discretionary |
|
3,237,514 |
|
— |
|
— |
|
3,237,514 | ||||
Consumer Staples |
|
1,097,701 |
|
— |
|
— |
|
1,097,701 | ||||
Energy |
|
348,013 |
|
— |
|
— |
|
348,013 | ||||
Financials |
|
1,123,169 |
|
— |
|
— |
|
1,123,169 | ||||
Health Care |
|
651,157 |
|
— |
|
— |
|
651,157 | ||||
Industrials |
|
2,377,859 |
|
— |
|
— |
|
2,377,859 | ||||
Information Technology |
|
343,800 |
|
— |
|
— |
|
343,800 | ||||
Materials |
|
1,243,453 |
|
— |
|
— |
|
1,243,453 | ||||
Real Estate |
|
1,303,671 |
|
— |
|
— |
|
1,303,671 | ||||
Utilities |
|
168,645 |
|
— |
|
— |
|
168,645 | ||||
Total Common Stock |
|
12,563,015 |
|
— |
|
— |
|
12,563,015 | ||||
Total Investments in Securities |
$ |
12,563,015 |
$ |
— |
$ |
— |
$ |
12,563,015 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
74
Shares |
Value | ||||
COMMON STOCK — 99.5%‡ |
|
||||
CHINA — 90.4% |
|
||||
Communication Services — 33.0% |
|
||||
Autohome ADR |
440,778 |
$ |
41,111,364 | ||
Baidu ADR* |
976,566 |
|
212,451,933 | ||
Bilibili ADR* |
1,362,218 |
|
145,839,059 | ||
China Literature*(A) |
3,767,200 |
|
37,287,016 | ||
DouYu International Holdings ADR* |
1,175,678 |
|
12,238,808 | ||
HUYA ADR*(A) |
522,421 |
|
10,176,761 | ||
iQIYI ADR* |
2,171,509 |
|
36,090,480 | ||
JOYY ADR |
418,997 |
|
39,272,589 | ||
Momo ADR |
1,083,487 |
|
15,970,598 | ||
NetEase ADR |
1,560,243 |
|
161,110,692 | ||
Tencent Holdings |
5,049,275 |
|
396,176,932 | ||
Tencent Music Entertainment Group ADR* |
3,672,462 |
|
75,248,746 | ||
Weibo ADR* |
502,023 |
|
25,332,081 | ||
|
1,208,307,059 | ||||
Consumer Discretionary — 40.8% |
|
||||
Alibaba Group Holding ADR* |
1,656,294 |
|
375,531,539 | ||
Alibaba Group Holding* |
800 |
|
22,638 | ||
Baozun ADR* |
425,460 |
|
16,227,044 | ||
Dada Nexus ADR* |
664,950 |
|
18,046,743 | ||
GSX Techedu ADR*(A) |
705,728 |
|
23,910,065 | ||
JD.com ADR* |
1,844,800 |
|
155,571,984 | ||
Meituan, Cl B* |
7,104,200 |
|
272,491,616 | ||
Pinduoduo ADR* |
1,745,500 |
|
233,687,540 | ||
TAL Education Group ADR* |
2,243,513 |
|
120,813,175 | ||
Trip.com Group ADR* |
4,346,505 |
|
172,251,993 | ||
Vipshop Holdings ADR* |
3,503,150 |
|
104,604,059 | ||
|
1,493,158,396 | ||||
Financials — 3.9% |
|
||||
Lufax Holding ADR*(A) |
5,412,702 |
|
78,592,433 | ||
ZhongAn Online P&C Insurance, Cl H*(A) |
10,351,200 |
|
62,444,453 | ||
|
141,036,886 |
The accompanying notes are an integral part of the financial statements.
75
Schedule of Investments March 31, 2021
KraneShares CSI China Internet ETF (continued)
Shares |
Value | |||||
COMMON STOCK (continued) |
|
| ||||
Health Care — 3.7% |
|
| ||||
Alibaba Health Information Technology* |
29,548,000 |
$ |
83,614,404 |
| ||
Ping An Healthcare and Technology* |
4,186,200 |
|
52,499,469 |
| ||
|
136,113,873 |
| ||||
Industrials — 0.4% |
|
| ||||
51job ADR* |
248,382 |
|
15,548,713 |
| ||
Information Technology — 3.9% |
|
| ||||
Agora ADR*(A) |
516,404 |
|
25,959,629 |
| ||
Chindata Group Holdings ADR* |
1,080,067 |
|
17,864,308 |
| ||
Kingsoft |
6,750,000 |
|
44,800,597 |
| ||
Kingsoft Cloud Holdings ADR* |
646,127 |
|
25,405,714 |
| ||
Weimob* |
13,428,000 |
|
30,018,669 |
| ||
|
144,048,917 |
| ||||
Real Estate — 4.7% |
|
| ||||
KE Holdings ADR* |
3,008,078 |
|
171,400,284 |
| ||
TOTAL CHINA |
|
3,309,614,128 |
| |||
|
| |||||
HONG KONG — 9.1% |
|
| ||||
Communication Services — 4.1% |
|
| ||||
Alibaba Pictures Group* |
99,604,000 |
|
12,939,827 |
| ||
Archosaur Games*(A) |
1,817,000 |
|
3,608,549 |
| ||
Kuaishou Technology, Cl B* |
3,838,600 |
|
133,311,295 |
| ||
|
149,859,671 |
| ||||
Consumer Discretionary — 3.6% |
|
| ||||
JD Health International* |
7,548,950 |
|
108,265,913 |
| ||
Koolearn Technology Holding*(A) |
2,958,000 |
|
6,734,444 |
| ||
Tongcheng-Elong Holdings* |
8,038,000 |
|
18,134,597 |
| ||
|
133,134,954 |
| ||||
Information Technology — 1.4% |
|
| ||||
Ming Yuan Cloud Group Holdings*(A) |
8,573,000 |
|
39,091,235 |
| ||
Yeahka*(A) |
1,578,000 |
|
10,859,032 |
| ||
|
49,950,267 |
| ||||
TOTAL HONG KONG |
|
332,944,892 |
| |||
TOTAL
COMMON STOCK |
|
3,642,559,020 |
| |||
|
| |||||
SHORT-TERM INVESTMENT(B)(C) — 5.4% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.030% |
199,656,233 |
|
199,656,233 |
| ||
TOTAL
SHORT-TERM INVESTMENT |
|
199,656,233 |
| |||
TOTAL
INVESTMENTS — 104.9% |
|
3,842,215,253 |
| |||
OTHER ASSETS LESS LIABILITIES — (4.9)% |
|
(179,955,220 |
) | |||
NET ASSETS — 100% |
$ |
3,662,260,033 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
76
Schedule of Investments March 31, 2021
KraneShares CSI China Internet ETF (concluded)
(A) This security or a partial position of this security is on loan at March 31, 2021. The total market value of securities on loan at March 31, 2021 was $192,461,874.
(B) The rate shown is the 7-day effective yield as of March 31, 2021.
(C) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2021 was $199,656,233.
ADR — American Depositary Receipt
Cl — Class
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
77
Shares |
Value | ||||
COMMON STOCK — 99.9%‡ |
|
||||
CHINA — 99.9% |
|
||||
Communication Services — 1.6% |
|
||||
Beijing Enlight Media, Cl A |
399,159 |
$ |
728,819 | ||
Beijing Kunlun Tech, Cl A |
159,414 |
|
576,069 | ||
China Film, Cl A |
211,621 |
|
457,031 | ||
China South Publishing & Media Group, Cl A |
244,211 |
|
390,443 | ||
Focus Media Information Technology, Cl A |
1,997,232 |
|
2,824,836 | ||
G-bits Network Technology Xiamen, Cl A |
9,608 |
|
545,023 | ||
Giant Network Group, Cl A |
229,487 |
|
507,857 | ||
Leo Group, Cl A |
919,006 |
|
411,796 | ||
Mango Excellent Media, Cl A |
242,020 |
|
2,143,846 | ||
NanJi E-Commerce, Cl A |
333,793 |
|
467,021 | ||
Oriental Pearl Group, Cl A |
464,526 |
|
680,378 | ||
Perfect World, Cl A |
264,901 |
|
798,595 | ||
Wuhu Sanqi Interactive Entertainment Network Technology Group, Cl A |
288,931 |
|
967,037 | ||
Zhejiang Century Huatong Group, Cl A* |
1,014,165 |
|
1,102,084 | ||
|
12,600,835 | ||||
Consumer Discretionary — 7.9% |
|
||||
BYD, Cl A |
247,109 |
|
6,195,803 | ||
Changzhou Xingyu Automotive Lighting Systems, Cl A |
37,301 |
|
1,074,482 | ||
China Tourism Group Duty Free, Cl A |
265,603 |
|
12,390,381 | ||
Chongqing Changan Automobile, Cl A |
606,934 |
|
1,312,625 | ||
Ecovacs Robotics, Cl A* |
63,755 |
|
1,326,367 | ||
FAW Jiefang Group, Cl A |
418,103 |
|
695,861 | ||
Fuyao Glass Industry Group, Cl A |
272,489 |
|
1,913,719 | ||
Great Wall Motor, Cl A |
303,043 |
|
1,391,618 | ||
Guangdong Xinbao Electrical Appliances Holdings, Cl A |
90,800 |
|
484,363 |
The accompanying notes are an integral part of the financial statements.
78
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Discretionary (continued) |
|
||||
Haier Smart Home, Cl A |
858,275 |
$ |
4,078,677 | ||
Hangzhou Robam Appliances, Cl A |
128,926 |
|
717,609 | ||
Huayu Automotive Systems, Cl A |
428,879 |
|
1,802,139 | ||
Jason Furniture Hangzhou, Cl A |
85,977 |
|
1,055,646 | ||
Joyoung, Cl A |
104,387 |
|
489,861 | ||
Kuang-Chi Technologies, Cl A |
292,990 |
|
902,923 | ||
Liaoning Cheng Da, Cl A |
208,009 |
|
646,422 | ||
Midea Group, Cl A |
477,939 |
|
5,989,899 | ||
NavInfo, Cl A |
310,179 |
|
688,793 | ||
Ningbo Joyson Electronic, Cl A |
185,875 |
|
510,213 | ||
Ningbo Tuopu Group, Cl A |
143,420 |
|
730,958 | ||
Offcn Education Technology, Cl A |
223,495 |
|
959,558 | ||
Oppein Home Group, Cl A |
54,005 |
|
1,297,282 | ||
SAIC Motor, Cl A |
1,059,767 |
|
3,177,104 | ||
Shandong Linglong Tyre, Cl A |
186,588 |
|
1,330,903 | ||
Shanghai Jinjiang International Hotels, Cl A |
116,000 |
|
981,223 | ||
Shanghai Yuyuan Tourist Mart Group, Cl A |
440,169 |
|
719,169 | ||
Shenzhen MTC, Cl A |
616,000 |
|
499,470 | ||
Shenzhen Overseas Chinese Town, Cl A |
1,115,982 |
|
1,733,198 | ||
Songcheng Performance Development, Cl A |
355,781 |
|
1,162,584 | ||
Suning.com, Cl A |
1,266,059 |
|
1,327,575 | ||
Suofeiya Home Collection, Cl A |
61,884 |
|
310,589 | ||
TCL Technology Group, Cl A |
1,909,200 |
|
2,717,784 | ||
Wangfujing Group, Cl A |
105,637 |
|
483,330 | ||
Weifu High-Technology Group, Cl A |
113,574 |
|
409,899 | ||
Wuchan Zhongda Group, Cl A |
688,830 |
|
510,229 | ||
Xiamen Intretech, Cl A |
51,852 |
|
506,334 | ||
Zhejiang Semir Garment, Cl A |
305,888 |
|
472,268 | ||
Zhejiang Supor, Cl A |
74,265 |
|
809,861 | ||
|
63,806,719 | ||||
Consumer Staples — 19.3% |
|
||||
Angel Yeast, Cl A |
112,010 |
|
943,034 | ||
Anhui Gujing Distillery, Cl A |
52,050 |
|
1,667,279 | ||
Anhui Kouzi Distillery, Cl A |
81,558 |
|
770,682 | ||
Beijing Dabeinong Technology Group, Cl A |
570,700 |
|
732,380 | ||
Beijing Shunxin Agriculture, Cl A |
100,890 |
|
721,631 | ||
Beijing Yanjing Brewery, Cl A |
383,342 |
|
428,844 | ||
By-health, Cl A |
215,198 |
|
938,695 | ||
C&S Paper, Cl A |
178,458 |
|
702,822 | ||
Chacha Food, Cl A |
69,015 |
|
515,519 | ||
Chongqing Brewery, Cl A |
65,688 |
|
1,114,189 | ||
Chongqing Fuling Zhacai Group, Cl A |
107,357 |
|
687,385 | ||
DaShenLin Pharmaceutical Group, Cl A |
89,211 |
|
1,141,311 | ||
Foshan Haitian Flavouring & Food, Cl A |
367,284 |
|
8,945,312 | ||
Fu Jian Anjoy Foods, Cl A |
32,251 |
|
1,025,158 | ||
Fujian Sunner Development, Cl A |
169,133 |
|
663,777 |
The accompanying notes are an integral part of the financial statements.
79
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Staples (continued) |
|
||||
Guangdong Haid Group, Cl A |
222,029 |
$ |
2,639,496 | ||
Heilongjiang Agriculture, Cl A |
241,700 |
|
576,511 | ||
Henan Shuanghui Investment & Development, Cl A |
392,797 |
|
2,454,532 | ||
Inner Mongolia Yili Industrial Group, Cl A |
827,675 |
|
5,049,660 | ||
Jiangsu King’s Luck Brewery JSC, Cl A |
170,607 |
|
1,275,418 | ||
Jiangsu Yanghe Brewery Joint-Stock, Cl A |
204,818 |
|
5,141,365 | ||
Jiangxi Zhengbang Technology, Cl A |
420,013 |
|
968,542 | ||
JiuGui Liquor, Cl A |
44,000 |
|
1,020,399 | ||
Jonjee Hi-Tech Industrial And Commercial Holding, Cl A |
108,314 |
|
799,495 | ||
Juewei Food, Cl A |
82,700 |
|
970,539 | ||
Kweichow Moutai, Cl A |
170,789 |
|
52,294,565 | ||
Laobaixing Pharmacy Chain JSC, Cl A |
55,460 |
|
579,011 | ||
Luzhou Laojiao, Cl A |
200,546 |
|
6,877,837 | ||
Muyuan Foods, Cl A |
510,004 |
|
7,775,361 | ||
New Hope Liuhe, Cl A |
612,851 |
|
1,868,106 | ||
Proya Cosmetics, Cl A |
27,259 |
|
662,032 | ||
Qianhe Condiment and Food, Cl A |
90,484 |
|
510,259 | ||
Sanquan Food, Cl A |
108,754 |
|
374,934 | ||
Shanghai Bairun Investment Holding Group, Cl A |
72,710 |
|
1,207,918 | ||
Shanghai Jahwa United, Cl A |
91,100 |
|
666,741 | ||
Shanxi Xinghuacun Fen Wine Factory, Cl A |
119,226 |
|
6,047,432 | ||
Sichuan Swellfun, Cl A |
66,421 |
|
724,120 | ||
Toly Bread, Cl A |
76,840 |
|
560,033 | ||
Tongwei, Cl A |
583,480 |
|
2,911,531 | ||
Tsingtao Brewery, Cl A |
96,324 |
|
1,242,587 | ||
Wens Foodstuffs Group |
867,241 |
|
2,236,438 | ||
Wuliangye Yibin, Cl A |
528,179 |
|
21,572,488 | ||
Yifeng Pharmacy Chain, Cl A |
72,220 |
|
976,333 | ||
Yihai Kerry Arawana Holdings, Cl A* |
171,915 |
|
2,030,113 | ||
Yonghui Superstores, Cl A |
1,294,954 |
|
1,342,085 | ||
Yuan Longping High-tech Agriculture, Cl A |
179,257 |
|
487,129 | ||
|
154,841,028 | ||||
Energy — 1.6% |
|
||||
China Merchants Energy Shipping, Cl A |
916,959 |
|
729,520 | ||
China Petroleum & Chemical, Cl A |
3,467,484 |
|
2,288,332 | ||
China Shenhua Energy, Cl A |
747,978 |
|
2,291,404 | ||
COSCO SHIPPING Energy Transportation, Cl A |
471,604 |
|
477,268 | ||
Guanghui Energy, Cl A |
918,929 |
|
434,170 | ||
Offshore Oil Engineering, Cl A |
601,640 |
|
415,386 | ||
PetroChina, Cl A |
2,937,995 |
|
1,925,468 | ||
Shaanxi Coal Industry, Cl A |
1,133,898 |
|
1,911,375 | ||
Shanxi Coking Coal Energy Group, Cl A |
557,392 |
|
425,613 | ||
Shanxi Lu’an Environmental Energy Development, Cl A |
406,862 |
|
380,123 | ||
Shanxi Meijin Energy, Cl A |
554,700 |
|
606,169 | ||
Yantai Jereh Oilfield Services Group, Cl A |
130,259 |
|
693,860 | ||
Yanzhou Coal Mining, Cl A |
335,503 |
|
676,508 | ||
|
13,255,196 |
The accompanying notes are an integral part of the financial statements.
80
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Financials — 22.1% |
|
||||
Agricultural Bank of China, Cl A |
10,136,907 |
$ |
5,252,924 | ||
Avic Capital, Cl A |
1,213,752 |
|
739,957 | ||
Bank of Beijing, Cl A |
2,877,198 |
|
2,104,882 | ||
Bank of Chengdu, Cl A |
491,500 |
|
843,487 | ||
Bank of China, Cl A |
4,780,300 |
|
2,440,713 | ||
Bank of Communications, Cl A |
5,341,299 |
|
4,029,664 | ||
Bank of Hangzhou, Cl A |
806,680 |
|
2,076,575 | ||
Bank of Jiangsu, Cl A |
2,042,253 |
|
2,013,866 | ||
Bank of Nanjing, Cl A |
1,361,626 |
|
2,100,173 | ||
Bank of Ningbo, Cl A |
817,444 |
|
4,843,965 | ||
Bank of Shanghai, Cl A |
1,933,201 |
|
2,589,898 | ||
Caitong Securities, Cl A |
488,308 |
|
829,079 | ||
Changjiang Securities, Cl A |
752,272 |
|
809,462 | ||
China Construction Bank, Cl A |
1,305,426 |
|
1,462,367 | ||
China Everbright Bank, Cl A |
5,417,484 |
|
3,368,795 | ||
China Galaxy Securities, Cl A |
584,549 |
|
922,100 | ||
China Great Wall Securities, Cl A |
281,368 |
|
467,860 | ||
China Life Insurance, Cl A |
377,739 |
|
1,831,929 | ||
China Merchants Bank, Cl A |
2,807,201 |
|
21,863,069 | ||
China Merchants Securities, Cl A |
1,009,847 |
|
3,024,370 | ||
China Minsheng Banking, Cl A |
4,825,640 |
|
3,714,181 | ||
China Pacific Insurance Group, Cl A |
931,340 |
|
5,371,259 | ||
China Zheshang Bank, Cl A |
2,274,500 |
|
1,410,903 | ||
Chongqing Rural Commercial Bank, Cl A |
1,203,400 |
|
777,665 | ||
CITIC Securities, Cl A |
1,448,910 |
|
5,275,629 | ||
CSC Financial, Cl A |
376,400 |
|
1,824,862 | ||
Dongxing Securities, Cl A |
375,210 |
|
626,189 | ||
East Money Information, Cl A |
1,171,783 |
|
4,868,439 | ||
Everbright Securities, Cl A |
531,533 |
|
1,316,438 | ||
First Capital Securities, Cl A |
571,717 |
|
670,948 | ||
Founder Securities, Cl A* |
1,120,111 |
|
1,485,241 | ||
GF Securities, Cl A |
805,396 |
|
1,923,513 | ||
Guangzhou Yuexiu Financial Holdings Group, Cl A |
249,696 |
|
533,932 | ||
Guolian Securities, Cl A* |
219,200 |
|
508,812 | ||
Guosen Securities, Cl A |
566,616 |
|
1,032,849 | ||
Guotai Junan Securities, Cl A |
1,022,614 |
|
2,531,130 | ||
Guoyuan Securities, Cl A |
593,663 |
|
697,607 | ||
Haitong Securities, Cl A |
1,313,787 |
|
2,216,610 | ||
Hithink RoyalFlush Information Network, Cl A |
72,900 |
|
1,326,626 | ||
Huaan Securities, Cl A |
492,554 |
|
479,702 | ||
Huatai Securities, Cl A |
1,001,095 |
|
2,587,723 | ||
Huaxi Securities, Cl A |
357,131 |
|
541,586 | ||
Huaxia Bank, Cl A |
1,744,815 |
|
1,712,584 | ||
Hubei Biocause Pharmaceutical, Cl A |
672,145 |
|
423,087 | ||
Industrial & Commercial Bank of China, Cl A |
7,337,826 |
|
6,195,750 | ||
Industrial Bank, Cl A |
2,826,962 |
|
10,379,430 | ||
Industrial Securities, Cl A |
911,258 |
|
1,173,586 | ||
Jiangsu Changshu Rural Commercial Bank, Cl A |
372,749 |
|
431,764 |
The accompanying notes are an integral part of the financial statements.
81
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Financials (continued) |
|
||||
Nanjing Securities, Cl A |
501,540 |
$ |
775,104 | ||
New China Life Insurance, Cl A |
283,666 |
|
2,099,004 | ||
Northeast Securities, Cl A |
318,364 |
|
418,262 | ||
Oceanwide Holdings, Cl A |
589,063 |
|
246,894 | ||
Orient Securities, Cl A |
811,735 |
|
1,096,137 | ||
Pacific Securities, Cl A |
927,500 |
|
458,011 | ||
People’s Insurance Group of China, Cl A |
804,894 |
|
728,688 | ||
Ping An Bank, Cl A |
2,640,841 |
|
8,858,884 | ||
Ping An Insurance Group of China, Cl A |
1,474,234 |
|
17,683,079 | ||
Postal Savings Bank of China, Cl A |
3,653,400 |
|
3,268,527 | ||
Qingdao Rural Commercial Bank, Cl A |
755,849 |
|
509,183 | ||
SDIC Capital, Cl A |
575,080 |
|
1,071,066 | ||
Sealand Securities, Cl A |
740,747 |
|
504,655 | ||
Shanghai Pudong Development Bank, Cl A |
3,994,187 |
|
6,690,257 | ||
Shanxi Securities, Cl A |
488,495 |
|
523,398 | ||
Shenwan Hongyuan Group, Cl A |
3,066,581 |
|
2,168,648 | ||
Sinolink Securities, Cl A |
411,400 |
|
847,103 | ||
SooChow Securities, Cl A |
527,993 |
|
776,555 | ||
Southwest Securities, Cl A |
904,200 |
|
642,195 | ||
Tianfeng Securities, Cl A |
907,100 |
|
696,791 | ||
Western Securities, Cl A |
608,033 |
|
816,432 | ||
Zheshang Securities, Cl A |
491,682 |
|
959,204 | ||
|
177,491,257 | ||||
Health Care — 11.2% |
|
||||
Aier Eye Hospital Group, Cl A |
560,823 |
|
5,064,434 | ||
Apeloa Pharmaceutical, Cl A |
160,397 |
|
695,497 | ||
Asymchem Laboratories Tianjin, Cl A |
32,924 |
|
1,449,545 | ||
Autobio Diagnostics, Cl A |
40,633 |
|
680,107 | ||
Beijing Tiantan Biological Products, Cl A |
170,533 |
|
848,870 | ||
Betta Pharmaceuticals, Cl A |
54,500 |
|
881,808 | ||
BGI Genomics, Cl A |
54,420 |
|
1,018,612 | ||
Changchun High & New Technology Industry Group, Cl A |
54,862 |
|
3,785,538 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A |
104,439 |
|
465,751 | ||
China National Accord Medicines, Cl A |
50,730 |
|
325,510 | ||
China National Medicines, Cl A |
102,600 |
|
529,325 | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A |
133,047 |
|
495,996 | ||
Chongqing Zhifei Biological Products, Cl A |
217,713 |
|
5,723,544 | ||
Da An Gene of Sun Yat-Sen University, Cl A |
119,201 |
|
552,839 | ||
Dong-E-E-Jiao, Cl E |
88,809 |
|
511,370 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A |
191,139 |
|
811,318 | ||
Guangzhou Kingmed Diagnostics Group, Cl A |
62,339 |
|
1,207,122 | ||
Guangzhou Wondfo Biotech, Cl A |
46,533 |
|
582,975 | ||
Hangzhou Tigermed Consulting, Cl A |
50,910 |
|
1,164,741 | ||
Huadong Medicine, Cl A |
238,039 |
|
1,337,999 | ||
Hualan Biological Engineering, Cl A |
248,157 |
|
1,503,420 | ||
Hubei Jumpcan Pharmaceutical, Cl A |
120,680 |
|
367,308 | ||
Humanwell Healthcare Group, Cl A |
222,100 |
|
1,041,919 |
The accompanying notes are an integral part of the financial statements.
82
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Health Care (continued) |
|
||||
Intco Medical Technology, Cl A |
47,554 |
$ |
1,171,165 | ||
Jafron Biomedical, Cl A |
108,447 |
|
1,256,168 | ||
Jiangsu Hengrui Medicine, Cl A |
725,547 |
|
10,183,446 | ||
Jiangsu Yuyue Medical Equipment & Supply, Cl A |
136,236 |
|
544,844 | ||
Jilin Aodong Pharmaceutical Group, Cl A |
158,095 |
|
383,599 | ||
Jinyu Bio-Technology, Cl A |
152,955 |
|
445,493 | ||
Joincare Pharmaceutical Group Industry, Cl A |
265,434 |
|
518,634 | ||
Jointown Pharmaceutical Group, Cl A* |
254,977 |
|
701,447 | ||
Lepu Medical Technology Beijing, Cl A |
242,211 |
|
1,081,998 | ||
Livzon Pharmaceutical Group, Cl A |
84,711 |
|
539,159 | ||
Maccura Biotechnology, Cl A |
75,616 |
|
468,249 | ||
Meinian Onehealth Healthcare Holdings, Cl A |
545,508 |
|
1,282,042 | ||
Nanjing King-Friend Biochemical Pharmaceutical, Cl A |
105,880 |
|
645,492 | ||
Ovctek China, Cl A |
82,600 |
|
1,134,913 | ||
Shandong Buchang Pharmaceuticals, Cl A |
155,155 |
|
539,869 | ||
Shandong Pharmaceutical Glass |
80,709 |
|
488,348 | ||
Shanghai Fosun Pharmaceutical Group, Cl A |
273,524 |
|
1,658,770 | ||
Shanghai Pharmaceuticals Holding, Cl A |
261,459 |
|
781,444 | ||
Shanghai RAAS Blood Products, Cl A |
764,345 |
|
866,721 | ||
Shenzhen Hepalink Pharmaceutical Group, Cl A |
141,400 |
|
368,737 | ||
Shenzhen Kangtai Biological Products, Cl A |
93,018 |
|
1,941,963 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A |
137,751 |
|
8,379,230 | ||
Shenzhen Salubris Pharmaceuticals, Cl A |
142,266 |
|
820,916 | ||
Shijiazhuang Yiling Pharmaceutical, Cl A |
163,769 |
|
614,770 | ||
Sichuan Kelun Pharmaceutical, Cl A |
195,670 |
|
658,774 | ||
Tianjin Chase Sun Pharmaceutical, Cl A |
408,519 |
|
255,900 | ||
Tonghua Dongbao Pharmaceutical, Cl A |
276,706 |
|
523,368 | ||
Topchoice Medical, Cl A* |
43,506 |
|
1,661,015 | ||
Walvax Biotechnology, Cl A |
210,044 |
|
1,446,670 | ||
Winning Health Technology Group, Cl A |
290,263 |
|
725,967 | ||
WuXi AppTec, Cl A |
290,519 |
|
6,207,822 | ||
Yifan Pharmaceutical, Cl A |
167,721 |
|
520,198 | ||
Yunnan Baiyao Group, Cl A |
173,781 |
|
3,191,847 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A |
81,850 |
|
3,579,784 | ||
Zhejiang Huahai Pharmaceutical, Cl A |
197,722 |
|
774,772 | ||
Zhejiang NHU, Cl A |
292,118 |
|
1,702,078 | ||
Zhejiang Wolwo Bio-Pharmaceutical, Cl A |
71,191 |
|
639,734 | ||
|
89,750,894 | ||||
Industrials — 12.1% |
|
||||
AECC Aviation Power, Cl A |
367,245 |
|
2,551,774 | ||
Avic Aviation High-Technology, Cl A |
189,400 |
|
739,564 | ||
AVIC Electromechanical Systems, Cl A |
528,593 |
|
784,688 | ||
AVICOPTER, Cl A |
80,000 |
|
616,473 | ||
Beijing New Building Materials, Cl A |
229,728 |
|
1,511,166 | ||
Beijing Originwater Technology, Cl A |
430,478 |
|
526,845 | ||
Beijing-Shanghai High Speed Railway, Cl A |
1,559,100 |
|
1,390,102 | ||
China Aerospace Times Electronics, Cl A |
369,802 |
|
402,424 | ||
China Avionics Systems, Cl A |
262,207 |
|
603,046 |
The accompanying notes are an integral part of the financial statements.
83
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials (continued) |
|
||||
China Eastern Airlines, Cl A |
1,270,300 |
$ |
1,057,099 | ||
China Gezhouba Group, Cl A |
626,421 |
|
723,689 | ||
China Railway Group, Cl A |
2,771,000 |
|
2,495,978 | ||
China Southern Airlines, Cl A |
1,253,502 |
|
1,312,498 | ||
Contemporary Amperex Technology, Cl A |
316,833 |
|
15,557,228 | ||
COSCO SHIPPING Holdings, Cl A* |
1,309,764 |
|
2,698,898 | ||
Daqin Railway, Cl A |
2,022,985 |
|
2,161,361 | ||
Dongfang Electric, Cl A |
378,186 |
|
732,601 | ||
East Group, Cl A |
314,600 |
|
308,309 | ||
Eve Energy, Cl A |
256,845 |
|
2,941,825 | ||
Fangda Carbon New Material, Cl A* |
517,762 |
|
643,928 | ||
Gotion High-tech, Cl A |
174,168 |
|
956,422 | ||
Guangdong Kinlong Hardware Products, Cl A |
43,500 |
|
1,099,434 | ||
Guangzhou Baiyun International Airport, Cl A |
322,009 |
|
654,697 | ||
Hefei Meiya Optoelectronic Technology, Cl A |
91,824 |
|
591,849 | ||
Hongfa Technology, Cl A |
101,272 |
|
762,179 | ||
Inner Mongolia First Machinery Group, Cl A |
229,694 |
|
345,528 | ||
Jiangsu Hengli Hydraulic, Cl A |
177,610 |
|
2,421,389 | ||
Jiangsu Zhongtian Technology, Cl A |
417,077 |
|
727,844 | ||
Metallurgical Corp of China, Cl A |
2,416,021 |
|
1,259,342 | ||
NARI Technology, Cl A |
628,751 |
|
2,984,104 | ||
Power Construction Corp of China, Cl A |
2,081,791 |
|
1,307,227 | ||
Sany Heavy Industry, Cl A |
1,153,129 |
|
6,001,853 | ||
SF Holding, Cl A |
619,959 |
|
7,655,471 | ||
Shanghai Construction Group, Cl A |
1,211,530 |
|
559,492 | ||
Shanghai Electric Group, Cl A |
1,389,844 |
|
1,175,644 | ||
Shanghai International Airport, Cl A |
130,959 |
|
1,155,661 | ||
Shanghai International Port Group, Cl A |
1,261,308 |
|
918,895 | ||
Shanghai M&G Stationery, Cl A |
126,055 |
|
1,640,913 | ||
Shenzhen Airport, Cl A |
278,926 |
|
377,502 | ||
Shenzhen Inovance Technology, Cl A |
233,941 |
|
3,048,877 | ||
Siasun Robot & Automation, Cl A |
212,223 |
|
366,471 | ||
Sinotrans, Cl A |
595,922 |
|
390,548 | ||
Spring Airlines, Cl A |
124,661 |
|
1,131,624 | ||
STO Express, Cl A |
208,155 |
|
292,506 | ||
Sungrow Power Supply, Cl A |
198,178 |
|
2,168,082 | ||
Sunwoda Electronic, Cl A |
214,300 |
|
634,617 | ||
Suzhou Gold Mantis Construction Decoration, Cl A |
364,841 |
|
526,031 | ||
TBEA, Cl A |
505,389 |
|
861,931 | ||
Topsec Technologies Group, Cl A |
159,370 |
|
483,852 | ||
Weichai Power, Cl A |
815,169 |
|
2,390,394 | ||
XCMG Construction Machinery, Cl A |
1,065,787 |
|
1,232,903 | ||
Xiamen C & D, Cl A |
389,518 |
|
499,869 | ||
Xinjiang Goldwind Science & Technology, Cl A |
469,700 |
|
1,014,395 | ||
Yantai Eddie Precision Machinery, Cl A |
81,247 |
|
745,825 | ||
YTO Express Group, Cl A |
429,900 |
|
731,876 |
The accompanying notes are an integral part of the financial statements.
84
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials (continued) |
|
||||
Yunda Holding, Cl A |
394,362 |
$ |
843,876 | ||
Zhejiang Chint Electrics, Cl A |
292,258 |
|
1,616,925 | ||
Zhejiang Dingli Machinery, Cl A |
65,940 |
|
967,814 | ||
Zhejiang Sanhua Intelligent Controls, Cl A |
488,800 |
|
1,536,160 | ||
Zhejiang Weixing New Building Materials, Cl A |
214,043 |
|
824,045 | ||
Zhengzhou Yutong Bus, Cl A |
301,136 |
|
658,615 | ||
Zoomlion Heavy Industry Science and Technology, Cl A |
962,360 |
|
1,864,231 | ||
|
97,186,409 | ||||
Information Technology — 11.8% |
|
||||
360 Security Technology, Cl A |
648,153 |
|
1,375,098 | ||
Accelink Technologies, Cl A |
94,600 |
|
320,370 | ||
Addsino, Cl A |
218,471 |
|
615,336 | ||
AVIC Jonhon Optronic Technology, Cl A |
149,500 |
|
1,540,298 | ||
Beijing BDStar Navigation, Cl A |
69,099 |
|
454,959 | ||
Beijing E-Hualu Information Technology, Cl A |
88,244 |
|
337,848 | ||
Beijing Shiji Information Technology, Cl A |
96,985 |
|
436,501 | ||
Beijing Sinnet Technology, Cl A |
209,916 |
|
549,329 | ||
Beijing Thunisoft, Cl A |
110,813 |
|
320,387 | ||
BOE Technology Group, Cl A |
4,607,845 |
|
4,403,339 | ||
Chaozhou Three-Circle Group, Cl A |
247,131 |
|
1,577,432 | ||
China Greatwall Technology Group, Cl A |
398,381 |
|
902,265 | ||
China National Software & Service, Cl A |
67,242 |
|
548,803 | ||
China TransInfo Technology, Cl A |
215,125 |
|
517,058 | ||
DHC Software, Cl A |
423,719 |
|
480,471 | ||
Fiberhome Telecommunication Technologies, Cl A |
159,138 |
|
446,281 | ||
Foxconn Industrial Internet, Cl A |
991,219 |
|
2,170,916 | ||
GCL System Integration Technology, Cl A* |
796,740 |
|
400,726 | ||
Gigadevice Semiconductor Beijing, Cl A |
64,073 |
|
1,668,718 | ||
GoerTek, Cl A |
441,249 |
|
1,825,872 | ||
GRG Banking Equipment, Cl A |
327,767 |
|
569,491 | ||
Guangzhou Haige Communications Group, Cl A |
313,365 |
|
483,334 | ||
Guangzhou Shiyuan Electronic Technology, Cl A |
90,879 |
|
1,805,059 | ||
Hangzhou First Applied Material, Cl A |
87,245 |
|
1,142,355 | ||
Hangzhou Silan Microelectronics, Cl A |
179,500 |
|
662,880 | ||
Hengtong Optic-electric, Cl A |
321,315 |
|
600,397 | ||
Huagong Tech, Cl A |
136,603 |
|
432,636 | ||
Hundsun Technologies, Cl A |
142,069 |
|
1,818,844 | ||
Iflytek, Cl A |
298,920 |
|
2,201,854 | ||
Ingenic Semiconductor, Cl A |
53,099 |
|
493,504 | ||
JA Solar Technology, Cl A* |
144,707 |
|
636,947 | ||
JCET Group, Cl A |
218,100 |
|
1,136,505 | ||
Lakala Payment, Cl A |
108,885 |
|
500,016 | ||
Lens Technology, Cl A |
676,666 |
|
2,694,825 | ||
Leyard Optoelectronic, Cl A |
345,964 |
|
380,702 | ||
Lingyi iTech Guangdong, Cl A |
958,100 |
|
1,194,485 | ||
LONGi Green Energy Technology, Cl A |
519,057 |
|
6,961,686 | ||
Luxshare Precision Industry, Cl A |
950,177 |
|
4,899,178 |
The accompanying notes are an integral part of the financial statements.
85
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Information Technology (continued) |
|
||||
Maxscend Microelectronics, Cl A |
20,220 |
$ |
1,876,788 | ||
NAURA Technology Group, Cl A |
67,517 |
|
1,477,076 | ||
Ninestar, Cl A |
144,600 |
|
547,881 | ||
OFILM Group, Cl A |
366,505 |
|
484,301 | ||
Sanan Optoelectronics, Cl A |
609,331 |
|
2,161,986 | ||
Sangfor Technologies, Cl A |
55,410 |
|
2,085,940 | ||
SG Micro, Cl A |
21,195 |
|
747,181 | ||
Shanghai Baosight Software, Cl A |
116,518 |
|
1,037,637 | ||
Shengyi Technology, Cl A |
311,416 |
|
1,078,365 | ||
Shennan Circuits, Cl A |
66,443 |
|
891,449 | ||
Shenzhen Goodix Technology, Cl A |
62,129 |
|
1,061,113 | ||
Shenzhen Kaifa Technology, Cl A |
200,162 |
|
583,597 | ||
Shenzhen SC New Energy Technology, Cl A |
43,527 |
|
718,661 | ||
Shenzhen Sunway Communication, Cl A |
130,845 |
|
566,160 | ||
Suzhou Dongshan Precision Manufacturing, Cl A |
232,592 |
|
649,437 | ||
Thunder Software Technology, Cl A |
57,517 |
|
1,068,165 | ||
Tianjin 712 Communication & Broadcasting, Cl A |
105,040 |
|
548,638 | ||
Tianjin Zhonghuan Semiconductor, Cl A |
412,574 |
|
1,778,900 | ||
Tianma Microelectronics, Cl A |
334,278 |
|
713,268 | ||
Tianshui Huatian Technology, Cl A |
372,639 |
|
663,358 | ||
TongFu Microelectronics, Cl A |
180,785 |
|
536,745 | ||
Unigroup Guoxin Microelectronics, Cl A |
82,375 |
|
1,343,245 | ||
Unisplendour, Cl A |
388,994 |
|
1,176,255 | ||
Universal Scientific Industrial Shanghai, Cl A |
197,800 |
|
583,343 | ||
Visionox Technology, Cl A* |
186,360 |
|
267,559 | ||
Wangsu Science & Technology, Cl A |
333,599 |
|
326,928 | ||
Will Semiconductor Shanghai, Cl A |
117,328 |
|
4,590,691 | ||
Wingtech Technology, Cl A |
169,200 |
|
2,527,221 | ||
Wuhan Guide Infrared, Cl A |
216,550 |
|
1,181,896 | ||
Wuhu Token Science, Cl A |
332,800 |
|
376,868 | ||
WUS Printed Circuit Kunshan, Cl A |
234,450 |
|
598,167 | ||
Wuxi Lead Intelligent Equipment, Cl A |
123,405 |
|
1,485,667 | ||
Wuxi Taiji Industry, Cl A |
286,585 |
|
361,223 | ||
Yealink Network Technology, Cl A |
102,221 |
|
1,062,063 | ||
Yonyou Network Technology, Cl A |
444,890 |
|
2,421,359 | ||
Zhejiang Dahua Technology, Cl A |
407,623 |
|
1,532,656 | ||
Zhejiang Jingsheng Mechanical & Electrical, Cl A |
174,791 |
|
877,525 | ||
Zhongji Innolight, Cl A |
96,910 |
|
520,501 | ||
ZTE, Cl A(A)(B)(C) |
522,094 |
|
2,333,079 | ||
|
94,349,597 | ||||
Materials — 8.7% |
|
||||
Aluminum Corp of China, Cl A* |
1,779,700 |
|
1,022,598 | ||
Anhui Conch Cement, Cl A |
544,309 |
|
4,249,148 | ||
Baoshan Iron & Steel, Cl A |
3,030,304 |
|
3,731,765 | ||
BBMG, Cl A |
1,134,612 |
|
510,136 | ||
Beijing Oriental Yuhong Waterproof Technology, Cl A |
320,382 |
|
2,498,132 | ||
Chifeng Jilong Gold Mining, Cl A* |
226,200 |
|
500,583 | ||
China Jushi, Cl A |
476,396 |
|
1,394,075 |
The accompanying notes are an integral part of the financial statements.
86
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Materials (continued) |
|
||||
China Molybdenum, Cl A |
2,404,018 |
$ |
1,934,587 | ||
China Northern Rare Earth Group High-Tech, Cl A |
494,221 |
|
1,440,210 | ||
Ganfeng Lithium, Cl A |
148,565 |
|
2,134,326 | ||
GEM, Cl A |
650,900 |
|
849,190 | ||
Guangdong HEC Technology Holding, Cl A |
409,963 |
|
309,915 | ||
Guangdong Hongda Blasting, Cl A |
101,898 |
|
481,753 | ||
Guangzhou Tinci Materials Technology, Cl A |
74,057 |
|
921,141 | ||
Hengli Petrochemical, Cl A |
798,202 |
|
3,568,138 | ||
Hengyi Petrochemical, Cl A |
500,807 |
|
1,118,213 | ||
Hesteel, Cl A |
1,444,859 |
|
519,702 | ||
Huaxin Cement, Cl A |
185,160 |
|
669,953 | ||
Hunan Valin Steel, Cl A |
833,982 |
|
889,757 | ||
Inner Mongolia BaoTou Steel Union, Cl A |
6,203,400 |
|
1,474,929 | ||
Inner Mongolia Junzheng Energy & Chemical Industry Group, Cl A |
1,148,145 |
|
923,948 | ||
Jiangsu Shagang, Cl A |
300,134 |
|
413,066 | ||
Jiangsu Yangnong Chemical, Cl A |
41,899 |
|
765,794 | ||
Jiangxi Copper, Cl A |
282,271 |
|
951,630 | ||
Kingfa Sci & Tech, Cl A |
350,026 |
|
1,158,182 | ||
Lomon Billions Group, Cl A |
261,185 |
|
1,137,698 | ||
Pangang Group Vanadium Titanium & Resources, Cl A* |
1,168,731 |
|
391,881 | ||
Rongsheng Petro Chemical, Cl A |
765,442 |
|
3,212,868 | ||
Shandong Gold Mining, Cl A |
491,742 |
|
1,597,120 | ||
Shandong Hualu Hengsheng Chemical, Cl A |
221,184 |
|
1,265,844 | ||
Shandong Nanshan Aluminum, Cl A |
1,658,390 |
|
872,012 | ||
Shandong Sinocera Functional Material, Cl A |
130,900 |
|
847,103 | ||
Shandong Sun Paper Industry JSC, Cl A |
357,138 |
|
855,668 | ||
Shanghai Putailai New Energy Technology, Cl A |
66,009 |
|
955,748 | ||
Shanxi Taigang Stainless Steel, Cl A |
774,932 |
|
539,755 | ||
Shenzhen Capchem Technology, Cl A |
55,678 |
|
648,666 | ||
Sinoma Science & Technology, Cl A |
228,199 |
|
810,723 | ||
Sinopec Shanghai Petrochemical, Cl A |
831,040 |
|
447,109 | ||
Skshu Paint, Cl A |
36,256 |
|
1,100,743 | ||
Tangshan Jidong Cement, Cl A(A)(B)(C) |
185,120 |
|
402,619 | ||
Tongkun Group, Cl A |
290,222 |
|
913,413 | ||
Tongling Nonferrous Metals Group, Cl A |
1,432,304 |
|
582,859 | ||
Transfar Zhilian, Cl A |
443,079 |
|
489,594 | ||
Wanhua Chemical Group, Cl A |
427,073 |
|
6,873,576 | ||
Weihai Guangwei Composites, Cl A |
70,377 |
|
743,543 | ||
Xiamen Tungsten, Cl A |
191,180 |
|
534,390 | ||
Yintai Gold, Cl A |
377,743 |
|
512,969 | ||
Yunnan Energy New Material, Cl A |
119,531 |
|
2,038,942 | ||
Zhejiang Huayou Cobalt, Cl A* |
165,359 |
|
1,732,424 | ||
Zhejiang Juhua, Cl A |
367,204 |
|
516,006 | ||
Zhejiang Longsheng Group, Cl A |
442,471 |
|
976,495 | ||
Zhongjin Gold, Cl A |
659,479 |
|
838,270 | ||
Zijin Mining Group, Cl A |
2,672,563 |
|
3,918,499 | ||
|
70,187,408 |
The accompanying notes are an integral part of the financial statements.
87
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Real Estate — 2.8% |
|
||||
China Fortune Land Development, Cl A |
532,430 |
$ |
509,611 | ||
China Merchants Property Operation & Service, Cl A |
144,175 |
|
433,984 | ||
China Merchants Shekou Industrial Zone Holdings, Cl A |
898,208 |
|
1,679,725 | ||
China Vanke, Cl A |
1,323,199 |
|
6,050,108 | ||
Financial Street Holdings, Cl A |
406,487 |
|
423,140 | ||
Gemdale, Cl A |
614,307 |
|
1,124,463 | ||
Greenland Holdings, Cl A |
1,103,708 |
|
940,335 | ||
Jiangsu Zhongnan Construction Group, Cl A |
514,141 |
|
546,959 | ||
Jinke Properties Group, Cl A |
726,566 |
|
729,755 | ||
Poly Developments and Holdings Group, Cl A |
1,628,358 |
|
3,531,600 | ||
RiseSun Real Estate Development, Cl A |
591,450 |
|
581,426 | ||
Seazen Holdings, Cl A |
306,860 |
|
2,282,322 | ||
Shanghai Lingang Holdings, Cl A |
180,935 |
|
505,753 | ||
Shanghai Zhangjiang High-Tech Park Development, Cl A |
210,645 |
|
535,506 | ||
Xinhu Zhongbao, Cl A |
1,170,068 |
|
545,694 | ||
Yango Group, Cl A |
560,642 |
|
519,524 | ||
Youngor Group, Cl A |
629,775 |
|
779,396 | ||
Zhongtian Financial Group, Cl A |
953,050 |
|
429,956 | ||
|
22,149,257 | ||||
Utilities — 0.8% |
|
||||
Huadian Power International, Cl A |
923,585 |
|
520,829 | ||
Huaneng Power International, Cl A |
997,610 |
|
670,527 | ||
Luenmei Quantum, Cl A |
207,453 |
|
331,674 | ||
SDIC Power Holdings, Cl A |
923,252 |
|
1,397,289 | ||
Shanghai Electric Power, Cl A |
356,092 |
|
424,410 | ||
Shenergy, Cl A |
668,304 |
|
631,513 | ||
Shenzhen Energy Group, Cl A |
539,452 |
|
922,492 | ||
Sichuan Chuantou Energy, Cl A |
598,936 |
|
1,144,708 | ||
|
6,043,442 | ||||
TOTAL CHINA |
|
801,662,042 | |||
TOTAL
COMMON STOCK |
|
801,662,042 | |||
TOTAL
INVESTMENTS — 99.9% |
|
801,662,042 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
|
701,689 | |||
NET ASSETS — 100% |
$ |
802,363,731 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $2,735,698 and represents 0.3% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $2,735,698 and represents 0.3% of Net Assets. (Unaudited)
Cl — Class
JSC — Joint-Stock Company
The accompanying notes are an integral part of the financial statements.
88
Schedule of Investments March 31, 2021
KraneShares Bosera MSCI China A Share ETF (concluded)
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
China |
|
|
|
|
||||||||
Communication Services |
$ |
12,600,835 |
$ |
— |
$ |
— |
$ |
12,600,835 | ||||
Consumer Discretionary |
|
63,806,719 |
|
— |
|
— |
|
63,806,719 | ||||
Consumer Staples |
|
154,841,028 |
|
— |
|
— |
|
154,841,028 | ||||
Energy |
|
13,255,196 |
|
— |
|
— |
|
13,255,196 | ||||
Financials |
|
177,491,257 |
|
— |
|
— |
|
177,491,257 | ||||
Health Care |
|
89,750,894 |
|
— |
|
— |
|
89,750,894 | ||||
Industrials |
|
97,186,409 |
|
— |
|
— |
|
97,186,409 | ||||
Information Technology |
|
92,016,518 |
|
— |
|
2,333,079 |
|
94,349,597 | ||||
Materials |
|
69,784,789 |
|
— |
|
402,619 |
|
70,187,408 | ||||
Real Estate |
|
22,149,257 |
|
— |
|
— |
|
22,149,257 | ||||
Utilities |
|
6,043,442 |
|
— |
|
— |
|
6,043,442 | ||||
Total Common Stock |
|
798,926,344 |
|
— |
|
2,735,698 |
|
801,662,042 | ||||
Total Investments in Securities |
$ |
798,926,344 |
$ |
— |
$ |
2,735,698 |
$ |
801,662,042 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, the transfers in and out of Level 3 occurred due to a halt in trading of these securities.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
89
Shares |
Value | ||||
COMMON STOCK — 99.8%‡ |
|
||||
CHINA — 95.1% |
|
||||
Communication Services — 14.4% |
|
||||
Autohome ADR |
380 |
$ |
35,443 | ||
Baidu ADR* |
1,562 |
|
339,813 | ||
Focus Media Information Technology, Cl A |
24,800 |
|
35,076 | ||
iQIYI ADR* |
2,161 |
|
35,916 | ||
JOYY ADR |
367 |
|
34,399 | ||
Momo ADR |
821 |
|
12,101 | ||
NetEase ADR |
2,810 |
|
290,161 | ||
Oriental Pearl Group, Cl A |
14,440 |
|
21,150 | ||
Tencent Holdings |
29,958 |
|
2,350,569 | ||
Tencent Music Entertainment Group ADR* |
2,182 |
|
44,709 | ||
Weibo ADR* |
378 |
|
19,074 | ||
|
3,218,411 | ||||
Consumer Discretionary — 29.0% |
|
||||
Alibaba Group Holding ADR* |
10,101 |
|
2,290,200 | ||
ANTA Sports Products |
13,000 |
|
212,028 | ||
BYD, Cl A |
4,000 |
|
100,293 | ||
BYD, Cl H |
6,500 |
|
137,868 | ||
China Grand Automotive Services Group, Cl A |
5,100 |
|
1,920 | ||
China Tourism Group Duty Free, Cl A |
3,900 |
|
181,935 | ||
Chongqing Changan Automobile, Cl A |
27,400 |
|
59,258 | ||
Dongfeng Motor Group, Cl H |
26,000 |
|
24,146 | ||
Fuyao Glass Industry Group, Cl A |
14,300 |
|
100,431 | ||
Geely Automobile Holdings |
38,000 |
|
96,681 | ||
Great Wall Motor, Cl H |
39,500 |
|
109,490 | ||
Guangzhou Automobile Group, Cl H |
28,000 |
|
23,518 | ||
Haier Smart Home, Cl A |
14,400 |
|
68,431 |
The accompanying notes are an integral part of the financial statements.
90
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Discretionary (continued) |
|
||||
Haier Smart Home, Cl H |
19,000 |
$ |
76,005 | ||
Huayu Automotive Systems, Cl A |
7,900 |
|
33,196 | ||
Huazhu Group ADR* |
887 |
|
48,696 | ||
JD.com ADR* |
6,800 |
|
573,444 | ||
Meituan, Cl B* |
16,900 |
|
648,223 | ||
NavInfo, Cl A |
11,700 |
|
25,981 | ||
New Oriental Education & Technology Group ADR* |
11,700 |
|
163,800 | ||
NIO ADR* |
12,570 |
|
489,979 | ||
Pinduoduo ADR* |
2,028 |
|
271,509 | ||
SAIC Motor, Cl A |
12,857 |
|
38,544 | ||
Shenzhen Overseas Chinese Town, Cl A |
31,200 |
|
48,456 | ||
Shenzhou International Group Holdings |
6,500 |
|
134,691 | ||
Suning.com, Cl A |
22,200 |
|
23,279 | ||
Suofeiya Home Collection, Cl A |
5,300 |
|
26,600 | ||
TAL Education Group ADR* |
2,287 |
|
123,155 | ||
Trip.com Group ADR* |
3,394 |
|
134,504 | ||
Vipshop Holdings ADR* |
3,341 |
|
99,762 | ||
Yum China Holdings |
2,094 |
|
123,986 | ||
|
6,490,009 | ||||
Consumer Staples — 8.2% |
|
||||
Anhui Gujing Distillery, Cl A |
2,400 |
|
76,877 | ||
China Mengniu Dairy |
17,000 |
|
97,306 | ||
China Resources Beer Holdings |
24,000 |
|
188,155 | ||
Foshan Haitian Flavouring & Food, Cl A |
5,160 |
|
125,673 | ||
Guangdong Haid Group, Cl A |
8,900 |
|
105,804 | ||
Henan Shuanghui Investment & Development, Cl A |
8,900 |
|
55,615 | ||
Inner Mongolia Yili Industrial Group, Cl A |
13,100 |
|
79,923 | ||
Jiangsu Yanghe Brewery Joint-Stock, Cl A |
2,700 |
|
67,776 | ||
Kweichow Moutai, Cl A |
1,400 |
|
428,672 | ||
Luzhou Laojiao, Cl A |
3,900 |
|
133,753 | ||
Muyuan Foods, Cl A |
10,430 |
|
159,012 | ||
New Hope Liuhe, Cl A |
23,400 |
|
71,328 | ||
Shanxi Xinghuacun Fen Wine Factory, Cl A |
2,400 |
|
121,734 | ||
Sun Art Retail Group |
19,500 |
|
15,952 | ||
Tingyi Cayman Islands Holding |
24,000 |
|
44,083 | ||
Want Want China Holdings |
39,000 |
|
29,246 | ||
Yonghui Superstores, Cl A |
27,300 |
|
28,294 | ||
|
1,829,203 | ||||
Energy — 1.4% |
|
||||
China Oilfield Services, Cl H |
26,000 |
|
26,754 | ||
China Petroleum & Chemical, Cl A |
48,100 |
|
31,743 | ||
China Petroleum & Chemical, Cl H |
160,500 |
|
85,468 | ||
China Shenhua Energy, Cl H |
19,500 |
|
40,182 | ||
Offshore Oil Engineering, Cl A |
32,600 |
|
22,508 | ||
PetroChina, Cl A |
29,800 |
|
19,530 | ||
PetroChina, Cl H |
127,984 |
|
46,258 |
The accompanying notes are an integral part of the financial statements.
91
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Energy (continued) |
|
||||
Shaanxi Coal Industry, Cl A |
20,800 |
$ |
35,062 | ||
Shanxi Lu’an Environmental Energy Development, Cl A |
13,000 |
|
12,146 | ||
|
319,651 | ||||
Financials — 16.6% |
|
||||
Agricultural Bank of China, Cl A |
118,400 |
|
61,355 | ||
Agricultural Bank of China, Cl H |
182,397 |
|
72,964 | ||
Avic Capital, Cl A |
39,100 |
|
23,837 | ||
Bank of Beijing, Cl A |
50,700 |
|
37,091 | ||
Bank of China, Cl A |
62,900 |
|
32,115 | ||
Bank of China, Cl H |
417,396 |
|
158,917 | ||
Bank of Communications, Cl A |
78,000 |
|
58,846 | ||
Bank of Communications, Cl H |
53,000 |
|
33,745 | ||
Bank of Hangzhou, Cl A |
24,800 |
|
63,841 | ||
Bank of Jiangsu, Cl A |
40,400 |
|
39,838 | ||
Bank of Nanjing, Cl A |
26,100 |
|
40,257 | ||
Bank of Ningbo, Cl A |
12,800 |
|
75,849 | ||
Bank of Shanghai, Cl A |
33,904 |
|
45,421 | ||
Changjiang Securities, Cl A |
37,800 |
|
40,674 | ||
China CITIC Bank, Cl H |
53,000 |
|
26,928 | ||
China Construction Bank, Cl A |
22,200 |
|
24,869 | ||
China Construction Bank, Cl H |
558,000 |
|
469,399 | ||
China Everbright Bank, Cl A |
97,500 |
|
60,629 | ||
China Life Insurance, Cl H |
39,483 |
|
81,562 | ||
China Merchants Bank, Cl A |
31,300 |
|
243,771 | ||
China Merchants Bank, Cl H |
25,000 |
|
190,850 | ||
China Merchants Securities, Cl A |
16,900 |
|
50,613 | ||
China Minsheng Banking, Cl A |
57,200 |
|
44,025 | ||
China Minsheng Banking, Cl H |
59,000 |
|
34,226 | ||
China Pacific Insurance Group, Cl A |
9,200 |
|
53,059 | ||
CITIC Securities, Cl A |
20,700 |
|
75,371 | ||
Everbright Securities, Cl A |
18,200 |
|
45,076 | ||
Founder Securities, Cl A* |
31,200 |
|
41,370 | ||
GF Securities, Cl A |
9,200 |
|
21,972 | ||
Guosen Securities, Cl A |
20,800 |
|
37,915 | ||
Guotai Junan Securities, Cl A |
14,300 |
|
35,395 | ||
Haitong Securities, Cl A |
22,100 |
|
37,287 | ||
Huatai Securities, Cl A |
11,800 |
|
30,502 | ||
Huaxia Bank, Cl A |
33,900 |
|
33,274 | ||
Hubei Biocause Pharmaceutical, Cl A |
22,200 |
|
13,974 | ||
Industrial & Commercial Bank of China, Cl A |
91,000 |
|
76,836 | ||
Industrial Bank, Cl A |
35,200 |
|
129,240 | ||
Industrial Securities, Cl A |
48,069 |
|
61,907 | ||
New China Life Insurance, Cl A |
3,900 |
|
28,858 | ||
New China Life Insurance, Cl H |
7,900 |
|
30,586 | ||
Noah Holdings ADR* |
807 |
|
35,831 | ||
Orient Securities, Cl A |
24,700 |
|
33,354 | ||
PICC Property & Casualty, Cl H |
49,510 |
|
42,922 | ||
Ping An Bank, Cl A |
36,391 |
|
122,076 |
The accompanying notes are an integral part of the financial statements.
92
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Financials (continued) |
|
||||
Ping An Insurance Group of China, Cl A |
18,000 |
$ |
215,906 | ||
Ping An Insurance Group of China, Cl H |
32,500 |
|
386,892 | ||
Shanghai Pudong Development Bank, Cl A |
52,000 |
|
87,100 | ||
Shenwan Hongyuan Group, Cl A |
58,600 |
|
41,441 | ||
|
3,729,766 | ||||
Health Care — 6.0% |
|
||||
3SBio* |
13,000 |
|
11,488 | ||
Alibaba Health Information Technology* |
28,000 |
|
79,234 | ||
Beijing Tongrentang, Cl A |
1,544 |
|
7,048 | ||
Changchun High & New Technology Industry Group, Cl A |
2,400 |
|
165,603 | ||
China Medical System Holdings |
14,000 |
|
27,696 | ||
China Traditional Chinese Medicine Holdings |
28,000 |
|
17,468 | ||
CSPC Pharmaceutical Group |
61,520 |
|
74,383 | ||
Dong-E-E-Jiao, Cl E |
5,200 |
|
29,942 | ||
Genscript Biotech* |
24,000 |
|
42,231 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A |
4,000 |
|
16,979 | ||
Huadong Medicine, Cl A |
5,080 |
|
28,554 | ||
Hualan Biological Engineering, Cl A |
10,480 |
|
63,491 | ||
Jiangsu Hengrui Medicine, Cl A |
9,180 |
|
128,846 | ||
Meinian Onehealth Healthcare Holdings, Cl A |
12,860 |
|
30,223 | ||
Shanghai Fosun Pharmaceutical Group, Cl A |
6,600 |
|
40,025 | ||
Shanghai Fosun Pharmaceutical Group, Cl H |
6,000 |
|
25,584 | ||
Shanghai Pharmaceuticals Holding, Cl A |
13,000 |
|
38,854 | ||
Sichuan Kelun Pharmaceutical, Cl A |
4,000 |
|
13,467 | ||
Sinopharm Group, Cl H |
10,400 |
|
25,176 | ||
Tasly Pharmaceutical Group, Cl A |
1,500 |
|
3,077 | ||
Tonghua Dongbao Pharmaceutical, Cl A |
9,100 |
|
17,212 | ||
Wuxi Biologics Cayman* |
16,000 |
|
200,349 | ||
Yunnan Baiyao Group, Cl A |
2,600 |
|
47,754 | ||
Zai Lab ADR* |
380 |
|
50,703 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A |
2,400 |
|
104,966 | ||
Zhejiang NHU, Cl A |
7,800 |
|
45,448 | ||
|
1,335,801 | ||||
Industrials — 5.5% |
|
||||
51job ADR* |
237 |
|
14,836 | ||
AECC Aviation Power, Cl A |
6,600 |
|
45,860 | ||
AVIC Electromechanical Systems, Cl A |
13,000 |
|
19,298 | ||
Beijing Capital International Airport, Cl H |
24,000 |
|
18,676 | ||
China Conch Venture Holdings |
13,000 |
|
61,117 | ||
China Eastern Airlines, Cl A |
44,300 |
|
36,865 | ||
China Everbright Environment Group |
26,323 |
|
17,809 | ||
China Gezhouba Group, Cl A |
18,300 |
|
21,142 | ||
China Merchants Port Holdings |
24,741 |
|
37,934 | ||
China Railway Group, Cl H |
39,000 |
|
20,618 | ||
China Southern Airlines, Cl A |
17,000 |
|
17,800 | ||
CITIC |
30,780 |
|
29,139 | ||
COSCO SHIPPING Holdings, Cl A* |
49,400 |
|
101,794 | ||
Daqin Railway, Cl A |
30,000 |
|
32,052 |
The accompanying notes are an integral part of the financial statements.
93
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials (continued) |
|
||||
Fosun International |
19,500 |
$ |
27,289 | ||
Guangzhou Baiyun International Airport, Cl A |
13,000 |
|
26,431 | ||
Jiangsu Expressway, Cl H |
26,000 |
|
32,373 | ||
Metallurgical Corp of China, Cl A |
74,100 |
|
38,624 | ||
Power Construction Corp of China, Cl A |
33,900 |
|
21,287 | ||
Sany Heavy Industry, Cl A |
23,400 |
|
121,793 | ||
Shanghai International Airport, Cl A |
2,600 |
|
22,944 | ||
Shanghai International Port Group, Cl A |
23,400 |
|
17,047 | ||
Shenzhen International Holdings |
21,475 |
|
35,965 | ||
Suzhou Gold Mantis Construction Decoration, Cl A |
14,400 |
|
20,762 | ||
Weichai Power, Cl A |
29,788 |
|
87,350 | ||
Xinjiang Goldwind Science & Technology, Cl A |
18,249 |
|
39,412 | ||
Zhejiang Chint Electrics, Cl A |
6,500 |
|
35,961 | ||
Zhejiang Sanhua Intelligent Controls, Cl A |
18,112 |
|
56,921 | ||
Zhengzhou Yutong Bus, Cl A |
11,744 |
|
25,685 | ||
Zhuzhou CRRC Times Electric, Cl H |
5,200 |
|
19,397 | ||
Zoomlion Heavy Industry Science and Technology, Cl A |
29,800 |
|
57,727 | ||
ZTO Express Cayman ADR |
2,458 |
|
71,651 | ||
|
1,233,559 | ||||
Information Technology — 5.4% |
|
||||
AAC Technologies Holdings |
6,500 |
|
32,732 | ||
Aisino, Cl A |
1,600 |
|
3,090 | ||
BOE Technology Group, Cl A |
84,600 |
|
80,845 | ||
DHC Software, Cl A |
17,000 |
|
19,277 | ||
GDS Holdings ADR* |
508 |
|
41,194 | ||
Hanergy Thin Film Power Group*(A)(B)(C) |
4,364 |
|
— | ||
Hengtong Optic-electric, Cl A |
6,600 |
|
12,332 | ||
Iflytek, Cl A |
5,300 |
|
39,040 | ||
Kingdee International Software Group |
26,000 |
|
80,597 | ||
Kingsoft |
24,000 |
|
159,291 | ||
Lenovo Group |
52,000 |
|
73,976 | ||
LONGi Green Energy Technology, Cl A |
10,280 |
|
137,877 | ||
Luxshare Precision Industry, Cl A |
20,674 |
|
106,597 | ||
OFILM Group, Cl A |
11,682 |
|
15,437 | ||
Sanan Optoelectronics, Cl A |
14,300 |
|
50,738 | ||
Sunny Optical Technology Group |
5,100 |
|
116,242 | ||
Tianma Microelectronics, Cl A |
13,000 |
|
27,739 | ||
TravelSky Technology, Cl H |
12,000 |
|
28,061 | ||
Unigroup Guoxin Microelectronics, Cl A |
3,700 |
|
60,334 | ||
Yonyou Network Technology, Cl A |
9,225 |
|
50,208 | ||
Zhejiang Dahua Technology, Cl A |
9,100 |
|
34,216 | ||
ZTE, Cl H |
13,000 |
|
33,008 | ||
|
1,202,831 | ||||
Materials — 3.2% |
|
||||
Anhui Conch Cement, Cl A |
6,500 |
|
50,742 | ||
Anhui Conch Cement, Cl H |
10,000 |
|
65,021 | ||
Baoshan Iron & Steel, Cl A |
32,600 |
|
40,146 | ||
BBMG, Cl A |
50,700 |
|
22,795 |
The accompanying notes are an integral part of the financial statements.
94
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Materials (continued) |
|
||||
China Molybdenum, Cl H |
105,000 |
$ |
63,612 | ||
China National Building Material, Cl H |
28,000 |
|
40,409 | ||
China Northern Rare Earth Group High-Tech, Cl A |
18,300 |
|
53,328 | ||
China Resources Cement Holdings |
26,000 |
|
29,195 | ||
Ganfeng Lithium, Cl A |
3,900 |
|
56,029 | ||
Hesteel, Cl A |
57,200 |
|
20,574 | ||
Inner Mongolia BaoTou Steel Union, Cl A |
114,500 |
|
27,224 | ||
Rongsheng Petro Chemical, Cl A |
14,100 |
|
59,184 | ||
Shandong Hualu Hengsheng Chemical, Cl A |
7,800 |
|
44,640 | ||
Sinopec Shanghai Petrochemical, Cl A |
58,600 |
|
31,528 | ||
Tianqi Lithium, Cl A |
1,140 |
|
6,564 | ||
Zhejiang Huayou Cobalt, Cl A |
2,480 |
|
25,982 | ||
Zhejiang Longsheng Group, Cl A |
19,500 |
|
43,035 | ||
Zijin Mining Group, Cl A |
32,600 |
|
47,798 | ||
|
727,806 | ||||
Real Estate — 3.3% |
|
||||
China Evergrande Group |
13,000 |
|
24,748 | ||
China Fortune Land Development, Cl A |
2,420 |
|
2,316 | ||
China Merchants Shekou Industrial Zone Holdings, Cl A |
15,600 |
|
29,173 | ||
China Overseas Land & Investment |
31,839 |
|
82,726 | ||
China Resources Land |
24,214 |
|
117,263 | ||
China Vanke, Cl A |
15,543 |
|
71,068 | ||
China Vanke, Cl H |
9,000 |
|
35,250 | ||
CIFI Holdings Group |
53,195 |
|
51,591 | ||
Gemdale, Cl A |
18,200 |
|
33,314 | ||
Greenland Holdings, Cl A |
31,200 |
|
26,582 | ||
Guangzhou R&F Properties |
10,800 |
|
14,253 | ||
KWG Group Holdings |
18,773 |
|
32,116 | ||
Longfor Group Holdings |
13,000 |
|
86,115 | ||
Poly Developments and Holdings Group, Cl A |
22,200 |
|
48,148 | ||
Seazen Holdings, Cl A |
5,200 |
|
38,676 | ||
Shimao Group Holdings |
7,000 |
|
22,014 | ||
Xinhu Zhongbao, Cl A |
54,700 |
|
25,511 | ||
|
740,864 | ||||
Utilities — 2.1% |
|
||||
Beijing Enterprises Water Group |
52,000 |
|
19,731 | ||
China Gas Holdings |
18,600 |
|
76,200 | ||
China Longyuan Power Group, Cl H |
26,000 |
|
35,316 | ||
China Resources Gas Group |
6,000 |
|
33,263 | ||
China Resources Power Holdings |
24,000 |
|
31,858 | ||
ENN Energy Holdings |
3,982 |
|
63,870 | ||
Guangdong Investment |
40,000 |
|
65,136 | ||
Huadian Power International, Cl A |
44,200 |
|
24,925 | ||
Huaneng Power International, Cl H |
89,077 |
|
31,623 | ||
SDIC Power Holdings, Cl A |
23,400 |
|
35,415 | ||
Sichuan Chuantou Energy, Cl A |
23,500 |
|
44,914 | ||
|
462,251 | ||||
TOTAL CHINA |
|
21,290,152 |
The accompanying notes are an integral part of the financial statements.
95
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
HONG KONG — 4.7% |
|
||||
Communication Services — 0.1% |
|
||||
Alibaba Pictures Group* |
260,000 |
$ |
33,777 | ||
Consumer Discretionary — 0.1% |
|
||||
Brilliance China Automotive Holdings(A)(B)(C) |
28,000 |
|
26,291 | ||
Energy — 0.1% |
|
||||
Yanzhou Coal Mining, Cl H |
26,000 |
|
30,768 | ||
Financials — 2.7% |
|
||||
China Cinda Asset Management, Cl H |
180,504 |
|
37,613 | ||
China Galaxy Securities, Cl H |
65,500 |
|
40,440 | ||
China Huarong Asset Management, Cl H |
298,000 |
|
39,097 | ||
China Pacific Insurance Group, Cl H |
18,400 |
|
72,540 | ||
China Taiping Insurance Holdings |
10,600 |
|
21,597 | ||
CITIC Securities, Cl H |
13,000 |
|
29,931 | ||
Far East Horizon |
14,000 |
|
16,819 | ||
GF Securities, Cl H |
26,000 |
|
39,864 | ||
Huatai Securities, Cl H |
15,800 |
|
24,225 | ||
Industrial & Commercial Bank of China, Cl H |
375,441 |
|
269,468 | ||
People’s Insurance Group of China, Cl H |
52,452 |
|
17,002 | ||
|
608,596 | ||||
Health Care — 0.5% |
|
||||
Hutchison China MediTech ADR* |
1,772 |
|
50,059 | ||
Sino Biopharmaceutical |
63,500 |
|
63,545 | ||
|
113,604 | ||||
Information Technology — 0.2% |
|
||||
Kingboard Holdings |
7,000 |
|
37,816 | ||
Materials — 0.3% |
|
||||
Nine Dragons Paper Holdings |
40,000 |
|
58,551 | ||
Real Estate — 0.7% |
|
||||
China Jinmao Holdings Group |
52,000 |
|
20,869 | ||
Country Garden Holdings |
63,612 |
|
81,658 | ||
Sunac China Holdings |
13,000 |
|
55,766 | ||
|
158,293 | ||||
TOTAL HONG KONG |
|
1,067,696 | |||
TOTAL
COMMON STOCK |
|
22,357,848 | |||
TOTAL
INVESTMENTS — 99.8% |
|
22,357,848 | |||
OTHER ASSETS LESS LIABILITIES — 0.2% |
|
44,093 | |||
NET ASSETS — 100% |
$ |
22,401,941 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $26,291 and represents 0.1% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $26,291 and represents 0.1% of Net Assets. (Unaudited)
The accompanying notes are an integral part of the financial statements.
96
Schedule of Investments March 31, 2021
KraneShares MSCI All China Index ETF (concluded)
ADR — American Depositary Receipt
Cl — Class
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
China |
|
|
|
|
||||||||
Communication Services |
$ |
3,218,411 |
$ |
— |
$ |
— |
$ |
3,218,411 | ||||
Consumer Discretionary |
|
6,490,009 |
|
— |
|
— |
|
6,490,009 | ||||
Consumer Staples |
|
1,829,203 |
|
— |
|
— |
|
1,829,203 | ||||
Energy |
|
319,651 |
|
— |
|
— |
|
319,651 | ||||
Financials |
|
3,729,766 |
|
— |
|
— |
|
3,729,766 | ||||
Health Care |
|
1,335,801 |
|
— |
|
— |
|
1,335,801 | ||||
Industrials |
|
1,233,559 |
|
— |
|
— |
|
1,233,559 | ||||
Information Technology |
|
1,202,831 |
|
— |
|
— |
|
1,202,831 | ||||
Materials |
|
727,806 |
|
— |
|
— |
|
727,806 | ||||
Real Estate |
|
740,864 |
|
— |
|
— |
|
740,864 | ||||
Utilities |
|
462,251 |
|
— |
|
— |
|
462,251 | ||||
Hong Kong |
|
|
|
|
||||||||
Communication Services |
|
33,777 |
|
— |
|
— |
|
33,777 | ||||
Consumer Discretionary |
|
— |
|
— |
|
26,291 |
|
26,291 | ||||
Energy |
|
30,768 |
|
— |
|
— |
|
30,768 | ||||
Financials |
|
608,596 |
|
— |
|
— |
|
608,596 | ||||
Health Care |
|
113,604 |
|
— |
|
— |
|
113,604 | ||||
Information Technology |
|
37,816 |
|
— |
|
— |
|
37,816 | ||||
Materials |
|
58,551 |
|
— |
|
— |
|
58,551 | ||||
Real Estate |
|
158,293 |
|
— |
|
— |
|
158,293 | ||||
Total Common Stock |
|
22,331,557 |
|
— |
|
26,291 |
|
22,357,848 | ||||
Total Investments in Securities |
$ |
22,331,557 |
$ |
— |
$ |
26,291 |
$ |
22,357,848 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, the transfers in and out of Level 3 occurred due to a halt in trading of these securities.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
97
Shares |
Value | ||||
COMMON STOCK — 98.5%‡ |
|
||||
CHINA — 38.6% |
|
||||
Financials — 4.5% |
|
||||
Bank of Chengdu, Cl A |
17,000 |
$ |
29,174 | ||
Bank of Guiyang, Cl A |
14,727 |
|
18,316 | ||
Bank of Hangzhou, Cl A |
27,500 |
|
70,791 | ||
Bank of Jiangsu, Cl A |
69,555 |
|
68,588 | ||
Bank of Nanjing, Cl A |
45,591 |
|
70,320 | ||
Bank of Ningbo, Cl A |
27,646 |
|
163,823 | ||
Chongqing Rural Commercial Bank, Cl H |
36,425 |
|
15,696 | ||
Qingdao Rural Commercial Bank, Cl A |
26,000 |
|
17,515 | ||
|
454,223 | ||||
Industrials — 21.3% |
|
||||
Avic Aviation High-Technology, Cl A |
6,300 |
|
24,600 | ||
Beijing New Building Materials, Cl A |
7,708 |
|
50,704 | ||
Beijing-Shanghai High Speed Railway, Cl A |
53,000 |
|
47,255 | ||
China Communications Services, Cl H |
38,000 |
|
17,058 | ||
China Conch Venture Holdings |
25,000 |
|
117,532 | ||
China Gezhouba Group, Cl A |
20,950 |
|
24,203 | ||
China Lesso Group Holdings |
16,000 |
|
34,410 | ||
China Railway Group, Cl H |
56,500 |
|
29,869 | ||
China Railway Hi-tech Industry, Cl A |
8,376 |
|
11,515 | ||
Contemporary Amperex Technology, Cl A |
11,200 |
|
549,946 | ||
Daqin Railway, Cl A |
68,932 |
|
73,647 | ||
Dongfang Electric, Cl A |
13,500 |
|
26,151 | ||
Gotion High-tech, Cl A |
6,300 |
|
34,596 | ||
Guangdong Kinlong Hardware Products, Cl A |
1,600 |
|
40,439 | ||
Jiangsu Expressway, Cl H |
18,000 |
|
22,412 | ||
Jiangsu Hengli Hydraulic, Cl A |
6,200 |
|
84,526 | ||
Metallurgical Corp of China, Cl A |
81,700 |
|
42,586 | ||
NARI Technology, Cl A |
22,100 |
|
104,888 | ||
Sany Heavy Industry, Cl A |
39,500 |
|
205,591 | ||
Shanghai Construction Group, Cl A |
41,300 |
|
19,073 | ||
Shanghai Electric Group, Cl A |
49,000 |
|
41,448 |
The accompanying notes are an integral part of the financial statements.
98
Schedule of Investments March 31, 2021
KraneShares MSCI One Belt One Road Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials (continued) |
|
||||
Shanghai International Port Group, Cl A |
42,710 |
$ |
31,116 | ||
Shenzhen Inovance Technology, Cl A |
8,300 |
|
108,171 | ||
Shenzhen International Holdings |
17,125 |
|
28,680 | ||
Siasun Robot & Automation, Cl A |
7,200 |
|
12,433 | ||
Sinotruk Hong Kong |
10,500 |
|
31,468 | ||
Suzhou Gold Mantis Construction Decoration, Cl A |
11,900 |
|
17,158 | ||
TBEA, Cl A |
17,575 |
|
29,974 | ||
Topsec Technologies Group, Cl A |
5,500 |
|
16,698 | ||
XCMG Construction Machinery, Cl A |
35,148 |
|
40,660 | ||
Xinjiang Goldwind Science & Technology, Cl H |
12,000 |
|
22,535 | ||
Yangzijiang Shipbuilding Holdings |
52,900 |
|
50,396 | ||
Yantai Eddie Precision Machinery, Cl A |
2,800 |
|
25,703 | ||
Zhejiang Expressway, Cl H |
24,000 |
|
21,270 | ||
Zhejiang Weixing New Building Materials, Cl A |
7,400 |
|
28,489 | ||
Zhengzhou Yutong Bus, Cl A |
10,697 |
|
23,395 | ||
Zhuzhou CRRC Times Electric, Cl H |
8,300 |
|
30,960 | ||
Zoomlion Heavy Industry Science and Technology |
20,400 |
|
29,126 | ||
|
2,150,681 | ||||
Materials — 4.5% |
|
||||
Anhui Conch Cement, Cl H |
19,000 |
|
123,539 | ||
Beijing Oriental Yuhong Waterproof Technology, Cl A |
10,986 |
|
85,662 | ||
China National Building Material, Cl H |
57,000 |
|
82,262 | ||
China Northern Rare Earth Group High-Tech, Cl A |
17,024 |
|
49,609 | ||
China Resources Cement Holdings |
38,000 |
|
42,670 | ||
Guangdong Hongda Blasting, Cl A |
3,600 |
|
17,020 | ||
Huaxin Cement, Cl A |
6,000 |
|
21,709 | ||
Tangshan Jidong Cement, Cl A(A)(B)(C) |
5,400 |
|
11,745 | ||
Yintai Gold, Cl A |
13,100 |
|
17,790 | ||
|
452,006 | ||||
Utilities — 8.3% |
|
||||
Beijing Enterprises Holdings |
8,000 |
|
28,246 | ||
China Gas Holdings |
40,200 |
|
164,689 | ||
China Longyuan Power Group, Cl H |
47,000 |
|
63,840 | ||
China Power International Development |
68,000 |
|
15,831 | ||
China Resources Gas Group |
13,500 |
|
74,841 | ||
China Resources Power Holdings |
28,635 |
|
38,011 | ||
ENN Energy Holdings |
11,900 |
|
190,873 | ||
GD Power Development, Cl A |
73,800 |
|
25,758 | ||
Huadian Power International, Cl A |
31,442 |
|
17,731 | ||
Huaneng Power International, Cl H |
55,000 |
|
19,525 | ||
Kunlun Energy |
60,000 |
|
63,053 | ||
SDIC Power Holdings, Cl A |
31,506 |
|
47,682 | ||
Shenergy, Cl A |
22,919 |
|
21,658 | ||
Shenzhen Energy Group, Cl A |
18,700 |
|
31,978 | ||
Sichuan Chuantou Energy, Cl A |
20,184 |
|
38,577 | ||
|
842,293 | ||||
TOTAL CHINA |
|
3,899,203 |
The accompanying notes are an integral part of the financial statements.
99
Schedule of Investments March 31, 2021
KraneShares MSCI One Belt One Road Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
INDIA — 2.0% |
|
||||
Industrials — 0.6% |
|
||||
AIA Engineering |
2,193 |
$ |
61,569 | ||
Materials — 1.4% |
|
||||
PI Industries |
4,427 |
|
136,730 | ||
TOTAL INDIA |
|
198,299 | |||
|
|||||
INDONESIA — 3.6% |
|
||||
Energy — 0.6% |
|
||||
Adaro Energy |
733,800 |
|
59,361 | ||
Materials — 3.0% |
|
||||
Aneka Tambang |
426,800 |
|
66,114 | ||
Barito Pacific* |
1,419,100 |
|
93,792 | ||
Indah Kiat Pulp & Paper |
140,200 |
|
100,867 | ||
Pabrik Kertas Tjiwi Kimia |
55,400 |
|
39,762 | ||
|
300,535 | ||||
TOTAL INDONESIA |
|
359,896 | |||
|
|||||
ISRAEL — 4.1% |
|
||||
Industrials — 2.0% |
|
||||
Elbit Systems |
1,416 |
|
200,721 | ||
Materials — 2.1% |
|
||||
ICL Group |
36,489 |
|
214,139 | ||
TOTAL ISRAEL |
|
414,860 | |||
|
|||||
JORDAN — 0.2% |
|
||||
Financials — 0.2% |
|
||||
Arab Bank |
3,852 |
|
21,732 | ||
TOTAL JORDAN |
|
21,732 | |||
|
|||||
KAZAKHSTAN — 0.8% |
|
||||
Energy — 0.8% |
|
||||
NAC Kazatomprom JSC GDR |
3,216 |
|
79,276 | ||
TOTAL KAZAKHSTAN |
|
79,276 | |||
|
|||||
KUWAIT — 1.4% |
|
||||
Industrials — 1.4% |
|
||||
Agility Public Warehousing KSC |
57,559 |
|
138,256 | ||
TOTAL KUWAIT |
|
138,256 | |||
|
|||||
MALAYSIA — 3.1% |
|
||||
Industrials — 0.8% |
|
||||
Sime Darby |
138,500 |
|
80,164 | ||
Materials — 2.3% |
|
||||
Petronas Chemicals Group |
122,100 |
|
235,572 | ||
TOTAL MALAYSIA |
|
315,736 | |||
|
|||||
PHILIPPINES — 3.2% |
|
||||
Industrials — 3.2% |
|
||||
International Container Terminal Services |
53,210 |
|
132,648 | ||
JG Summit Holdings |
156,712 |
|
192,914 | ||
TOTAL PHILIPPINES |
|
325,562 |
The accompanying notes are an integral part of the financial statements.
100
Schedule of Investments March 31, 2021
KraneShares MSCI One Belt One Road Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
POLAND — 3.5% |
|
||||
Materials — 3.5% |
|
||||
KGHM Polska Miedz |
7,335 |
$ |
353,552 | ||
TOTAL POLAND |
|
353,552 | |||
|
|||||
RUSSIA — 11.0% |
|
||||
Energy — 4.6% |
|
||||
Rosneft |
50,850 |
|
384,411 | ||
Surgutneftegas |
177,400 |
|
81,161 | ||
|
465,572 | ||||
Materials — 6.4% |
|
||||
MMC Norilsk Nickel PJSC |
1,665 |
|
524,510 | ||
Polymetal International |
6,065 |
|
119,182 | ||
|
643,692 | ||||
TOTAL RUSSIA |
|
1,109,264 | |||
|
|||||
SINGAPORE — 9.9% |
|
||||
Financials — 6.5% |
|
||||
Oversea-Chinese Banking |
74,412 |
|
650,745 | ||
Industrials — 3.4% |
|
||||
Keppel |
32,300 |
|
127,892 | ||
Singapore Airlines |
28,200 |
|
116,486 | ||
Singapore Technologies Engineering |
34,600 |
|
100,174 | ||
|
344,552 | ||||
TOTAL SINGAPORE |
|
995,297 | |||
|
|||||
SOUTH AFRICA — 12.4% |
|
||||
Materials — 12.4% |
|
||||
Anglo American Platinum |
2,683 |
|
391,042 | ||
Impala Platinum Holdings |
38,705 |
|
717,496 | ||
Kumba Iron Ore |
3,464 |
|
142,747 | ||
TOTAL SOUTH AFRICA |
|
1,251,285 | |||
|
|||||
THAILAND — 3.9% |
|
||||
Energy — 0.6% |
|
||||
IRPC |
520,600 |
|
61,972 | ||
Materials — 3.3% |
|
||||
Indorama Ventures |
81,200 |
|
115,629 | ||
PTT Global Chemical |
109,612 |
|
220,101 | ||
|
335,730 | ||||
TOTAL THAILAND |
|
397,702 | |||
|
|||||
TURKEY — 0.4% |
|
||||
Industrials — 0.4% |
|
||||
Turk Hava Yollari AO* |
27,830 |
|
42,874 | ||
TOTAL TURKEY |
|
42,874 | |||
|
|||||
UNITED ARAB EMIRATES — 0.4% |
|
||||
Industrials — 0.4% |
|
||||
Air Arabia PJSC |
117,166 |
|
40,191 | ||
TOTAL UNITED ARAB EMIRATES |
|
40,191 | |||
TOTAL
COMMON STOCK |
|
9,942,985 |
The accompanying notes are an integral part of the financial statements.
101
Schedule of Investments March 31, 2021
KraneShares MSCI One Belt One Road Index ETF (continued)
Shares |
Value | ||||
PREFERRED STOCK — 0.9% |
|
||||
RUSSIA — 0.9% |
|
||||
Energy — 0.9% |
|
||||
Surgutneftegas PJSC(D) |
173,300 |
$ |
96,381 | ||
TOTAL
PREFERRED STOCK |
|
96,381 | |||
TOTAL
INVESTMENTS — 99.4% |
|
10,039,366 | |||
OTHER ASSETS LESS LIABILITIES — 0.6% |
|
59,693 | |||
NET ASSETS — 100% |
$ |
10,099,059 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $11,745 and represents 0.1% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $11,745 and represents 0.1% of Net Assets. (Unaudited)
(D) Currently, no stated interest rate.
CL — Class
GDR — Global Depositary Receipt
JSC — Joint-Stock Company
PJSC — Public Joint-Stock Company
The accompanying notes are an integral part of the financial statements.
102
Schedule of Investments March 31, 2021
KraneShares MSCI One Belt One Road Index ETF (concluded)
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
China |
|
|
|
|
||||||||
Financials |
$ |
454,223 |
$ |
— |
$ |
— |
$ |
454,223 | ||||
Industrials |
|
2,150,681 |
|
— |
|
— |
|
2,150,681 | ||||
Materials |
|
440,261 |
|
— |
|
11,745 |
|
452,006 | ||||
Utilities |
|
842,293 |
|
— |
|
— |
|
842,293 | ||||
India |
|
198,299 |
|
— |
|
— |
|
198,299 | ||||
Indonesia |
|
359,896 |
|
— |
|
— |
|
359,896 | ||||
Israel |
|
414,860 |
|
— |
|
— |
|
414,860 | ||||
Jordan |
|
21,732 |
|
— |
|
— |
|
21,732 | ||||
Kazakhstan |
|
79,276 |
|
— |
|
— |
|
79,276 | ||||
Kuwait |
|
138,256 |
|
— |
|
— |
|
138,256 | ||||
Malaysia |
|
315,736 |
|
— |
|
— |
|
315,736 | ||||
Philippines |
|
325,562 |
|
— |
|
— |
|
325,562 | ||||
Poland |
|
353,552 |
|
— |
|
— |
|
353,552 | ||||
Russia |
|
1,109,264 |
|
— |
|
— |
|
1,109,264 | ||||
Singapore |
|
995,297 |
|
— |
|
— |
|
995,297 | ||||
South Africa |
|
1,251,285 |
|
— |
|
— |
|
1,251,285 | ||||
Thailand |
|
397,702 |
|
— |
|
— |
|
397,702 | ||||
Turkey |
|
42,874 |
|
— |
|
— |
|
42,874 | ||||
United Arab Emirates |
|
40,191 |
|
— |
|
— |
|
40,191 | ||||
Total Common Stock |
|
9,931,240 |
|
— |
|
11,745 |
|
9,942,985 | ||||
Preferred Stock |
|
|
|
|
||||||||
Russia |
|
96,381 |
|
— |
|
— |
|
96,381 | ||||
Total Preferred Stock |
|
96,381 |
|
— |
|
— |
|
96,381 | ||||
Total Investments in Securities |
$ |
10,027,621 |
$ |
— |
$ |
11,745 |
$ |
10,039,366 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, the transfer in Level 3 occurred due to a halt in trading of these securities.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
103
Shares |
Value | ||||
COMMON STOCK — 99.9%‡ |
|
||||
ARGENTINA — 3.7% |
|
||||
Consumer Discretionary — 3.7% |
|
||||
MercadoLibre* |
2,771 |
$ |
4,079,300 | ||
TOTAL ARGENTINA |
|
4,079,300 | |||
|
|||||
AUSTRALIA — 0.7% |
|
||||
Consumer Discretionary — 0.7% |
|
||||
Webjet(A) |
194,706 |
|
827,501 | ||
TOTAL AUSTRALIA |
|
827,501 | |||
|
|||||
BRAZIL — 12.0% |
|
||||
Consumer Discretionary — 3.1% |
|
||||
Arco Platform, Cl A* |
28,718 |
|
727,714 | ||
B2W Cia Digital* |
253,470 |
|
2,733,685 | ||
|
3,461,399 | ||||
Financials — 2.6% |
|
||||
XP, Cl A* |
75,925 |
|
2,860,095 | ||
Information Technology — 6.3% |
|
||||
Cielo |
1,502,180 |
|
992,935 | ||
Pagseguro Digital, Cl A* |
56,115 |
|
2,598,124 | ||
StoneCo, Cl A* |
40,580 |
|
2,484,308 | ||
TOTVS |
165,300 |
|
849,495 | ||
|
6,924,862 | ||||
TOTAL BRAZIL |
|
13,246,356 | |||
|
|||||
CHINA — 34.9% |
|
||||
Communication Services — 12.5% |
|
||||
Baidu ADR* |
15,393 |
|
3,348,747 | ||
Bilibili ADR* |
27,161 |
|
2,907,857 | ||
NetEase |
189,800 |
|
3,862,184 | ||
Tencent Holdings |
47,575 |
|
3,732,837 | ||
|
13,851,625 |
The accompanying notes are an integral part of the financial statements.
104
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Consumer Technology Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Discretionary — 19.9% |
|
||||
Alibaba Group Holding* |
136,900 |
$ |
3,873,972 | ||
JD.com, Cl A* |
93,000 |
|
3,851,848 | ||
Meituan, Cl B* |
98,300 |
|
3,770,435 | ||
New Oriental Education & Technology Group* |
154,500 |
|
2,112,477 | ||
Pinduoduo ADR* |
26,165 |
|
3,502,970 | ||
TAL Education Group ADR* |
38,388 |
|
2,067,194 | ||
Trip.com Group ADR* |
72,035 |
|
2,854,747 | ||
|
22,033,643 | ||||
Health Care — 2.5% |
|
||||
Alibaba Health Information Technology |
990,000 |
|
2,801,484 | ||
TOTAL CHINA |
|
38,686,752 | |||
|
|||||
EGYPT — 0.7% |
|
||||
Information Technology — 0.7% |
|
||||
Fawry for Banking & Payment Technology Services SAE* |
370,131 |
|
779,707 | ||
TOTAL EGYPT |
|
779,707 | |||
|
|||||
GERMANY — 2.7% |
|
||||
Consumer Discretionary — 2.7% |
|
||||
Delivery Hero* |
22,603 |
|
2,935,455 | ||
TOTAL GERMANY |
|
2,935,455 | |||
|
|||||
GREECE — 2.6% |
|
||||
Consumer Discretionary — 2.6% |
|
||||
OPAP |
215,960 |
|
2,926,507 | ||
TOTAL GREECE |
|
2,926,507 | |||
|
|||||
INDIA — 4.5% |
|
||||
Communication Services — 2.9% |
|
||||
Affle India* |
10,569 |
|
788,955 | ||
Info Edge India |
41,892 |
|
2,452,628 | ||
|
3,241,583 | ||||
Consumer Discretionary — 0.8% |
|
||||
MakeMyTrip* |
26,356 |
|
832,322 | ||
Industrials — 0.8% |
|
||||
IndiaMart InterMesh |
7,852 |
|
831,012 | ||
TOTAL INDIA |
|
4,904,917 | |||
|
|||||
JAPAN — 2.7% |
|
||||
Communication Services — 2.7% |
|
||||
Nexon |
93,400 |
|
3,034,443 | ||
TOTAL JAPAN |
|
3,034,443 | |||
|
|||||
MALAYSIA — 0.8% |
|
||||
Information Technology — 0.8% |
|
||||
My EG Services |
1,786,000 |
|
848,528 | ||
TOTAL MALAYSIA |
|
848,528 | |||
|
The accompanying notes are an integral part of the financial statements.
105
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Consumer Technology Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
RUSSIA — 5.8% |
|
||||
Communication Services — 5.0% |
|
||||
Mail.Ru Group GDR* |
114,070 |
$ |
2,612,203 | ||
Yandex, Cl A* |
45,233 |
|
2,897,626 | ||
|
5,509,829 | ||||
Industrials — 0.8% |
|
||||
HeadHunter Group ADR |
27,600 |
|
936,192 | ||
TOTAL RUSSIA |
|
6,446,021 | |||
|
|||||
SOUTH AFRICA — 3.8% |
|
||||
Consumer Discretionary — 3.8% |
|
||||
Naspers, Cl N |
17,355 |
|
4,150,873 | ||
TOTAL SOUTH AFRICA |
|
4,150,873 | |||
|
|||||
SOUTH KOREA — 16.8% |
|
||||
Communication Services — 15.2% |
|
||||
Com2uSCorp |
7,241 |
|
1,081,272 | ||
Kakao |
7,234 |
|
3,183,152 | ||
NAVER |
8,904 |
|
2,966,033 | ||
NCSoft |
3,516 |
|
2,712,143 | ||
Netmarble |
27,210 |
|
3,101,471 | ||
NHN* |
14,356 |
|
919,646 | ||
Pearl Abyss* |
3,428 |
|
933,216 | ||
Studio Dragon* |
10,614 |
|
936,902 | ||
Webzen* |
27,941 |
|
1,023,330 | ||
|
16,857,165 | ||||
Consumer Discretionary — 0.8% |
|
||||
Lotte Tour Development* |
50,914 |
|
841,256 | ||
Information Technology — 0.8% |
|
||||
Douzone Bizon |
10,021 |
|
869,505 | ||
NHN KCP* |
499 |
|
22,090 | ||
|
891,595 | ||||
TOTAL SOUTH KOREA |
|
18,590,016 | |||
|
|||||
TAIWAN — 7.4% |
|
||||
Communication Services — 4.4% |
|
||||
International Games System |
36,000 |
|
957,628 | ||
Sea ADR* |
17,732 |
|
3,958,315 | ||
|
4,915,943 | ||||
Consumer Discretionary — 3.0% |
|
||||
momo.com |
95,000 |
|
3,296,183 | ||
TOTAL TAIWAN |
|
8,212,126 | |||
|
|||||
UNITED ARAB EMIRATES — 0.8% |
|
||||
Information Technology — 0.8% |
|
||||
Network International Holdings |
145,229 |
|
828,735 | ||
TOTAL UNITED ARAB EMIRATES |
|
828,735 | |||
TOTAL
COMMON STOCK |
|
110,497,237 |
The accompanying notes are an integral part of the financial statements.
106
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Consumer Technology Index ETF (concluded)
Shares |
Value | |||||
SHORT-TERM INVESTMENT(B)(C) — 0.7% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.030% |
770,626 |
$ |
770,626 |
| ||
TOTAL
SHORT-TERM INVESTMENT |
|
770,626 |
| |||
TOTAL
INVESTMENTS — 100.6% |
|
111,267,863 |
| |||
OTHER ASSETS LESS LIABILITIES — (0.6)% |
|
(663,587 |
) | |||
NET ASSETS — 100% |
$ |
110,604,276 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) This security or a partial position of this security is on loan at March 31, 2021. The total market value of securities on loan at March 31, 2021 was $732,703.
(B) The rate shown is the 7-day effective yield as of March 31, 2021.
(C) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2021 was $770,626.
ADR — American Depositary Receipt
Cl — Class
GDR — Global Depositary Receipt
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
107
Shares |
Value | ||||
COMMON STOCK — 99.7%‡ |
|
||||
CHINA — 96.6% |
|
||||
Consumer Discretionary — 26.4% |
|
||||
BYD, Cl A |
58,100 |
$ |
1,456,750 | ||
BYD, Cl H |
400,000 |
|
8,484,201 | ||
NIO ADR* |
285,311 |
|
11,121,423 | ||
Niu Technologies ADR* |
62,879 |
|
2,304,515 | ||
Tianneng Power International |
1,333,885 |
|
2,518,691 | ||
XPeng ADR* |
188,313 |
|
6,875,308 | ||
Yadea Group Holdings |
2,026,694 |
|
4,499,449 | ||
|
37,260,337 | ||||
Industrials — 27.8% |
|
||||
Beijing-Shanghai High Speed Railway, Cl A |
1,367,300 |
|
1,219,092 | ||
China Conch Venture Holdings |
1,821,500 |
|
8,563,413 | ||
China Everbright Environment Group |
7,406,216 |
|
5,010,862 | ||
Contemporary Amperex Technology, Cl A |
260,750 |
|
12,803,424 | ||
CT Environmental Group(A)(B)(C) |
329,000 |
|
1,058 | ||
Dongjiang Environmental, Cl H |
349,000 |
|
239,267 | ||
Dynagreen Environmental Protection Group, Cl H |
730,000 |
|
361,505 | ||
East Group, Cl A |
293,200 |
|
287,337 | ||
Gotion High-tech, Cl A |
166,900 |
|
916,510 | ||
Sungrow Power Supply, Cl A |
179,200 |
|
1,960,461 | ||
Xinjiang Goldwind Science & Technology, Cl A |
447,335 |
|
966,094 | ||
Xinjiang Goldwind Science & Technology, Cl H |
1,563,804 |
|
2,936,740 | ||
Zhuzhou CRRC Times Electric, Cl H |
1,058,400 |
|
3,948,009 | ||
|
39,213,772 | ||||
Information Technology — 23.0% |
|
||||
GCL System Integration Technology, Cl A |
736,800 |
|
370,578 | ||
GCL-Poly Energy Holdings |
18,411,000 |
|
4,688,921 | ||
JA Solar Technology, Cl A |
134,500 |
|
592,020 | ||
JinkoSolar Holding ADR* |
72,500 |
|
3,022,525 | ||
Kingsoft Cloud Holdings ADR* |
110,005 |
|
4,325,397 | ||
LONGi Green Energy Technology, Cl A |
449,224 |
|
6,025,073 |
The accompanying notes are an integral part of the financial statements.
108
Schedule of Investments March 31, 2021
KraneShares MSCI China Clean Technology Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Information Technology (continued) |
|
||||
Sanan Optoelectronics, Cl A |
543,230 |
$ |
1,927,451 | ||
Wuxi Lead Intelligent Equipment, Cl A |
110,200 |
|
1,326,693 | ||
Xinyi Solar Holdings |
6,181,588 |
|
10,161,580 | ||
|
32,440,238 | ||||
Real Estate — 11.7% |
|
||||
China Evergrande Group |
3,906,000 |
|
7,435,741 | ||
Shimao Group Holdings |
2,501,500 |
|
7,867,010 | ||
SOHO China |
4,058,500 |
|
1,242,433 | ||
|
16,545,184 | ||||
Utilities — 7.7% |
|
||||
Beijing Enterprises Water Group |
9,706,500 |
|
3,683,113 | ||
China Datang Renewable Power, Cl H |
4,066,000 |
|
774,033 | ||
China Everbright Greentech |
1,215,000 |
|
493,848 | ||
China Everbright Water |
1,645,257 |
|
300,006 | ||
China Longyuan Power Group, Cl H |
4,196,800 |
|
5,700,494 | ||
|
10,951,494 | ||||
TOTAL CHINA |
|
136,411,025 | |||
|
|||||
HONG KONG — 3.1% |
|
||||
Industrials — 0.6% |
|
||||
China High Speed Transmission Equipment Group |
834,000 |
|
842,105 | ||
Information Technology — 0.2% |
|
||||
Wasion Holdings |
1,005,000 |
|
310,247 | ||
Real Estate — 1.1% |
|
||||
Yuexiu Real Estate Investment Trust† |
3,157,000 |
|
1,616,173 | ||
Utilities — 1.2% |
|
||||
Beijing Energy International Holding* |
8,852,000 |
|
284,650 | ||
Canvest Environmental Protection Group |
1,247,000 |
|
575,826 | ||
Concord New Energy Group |
10,820,000 |
|
779,374 | ||
|
1,639,850 | ||||
TOTAL HONG KONG |
|
4,408,375 | |||
TOTAL
COMMON STOCK |
|
140,819,400 | |||
TOTAL
INVESTMENTS — 99.7% |
|
140,819,400 | |||
OTHER ASSETS LESS LIABILITIES — 0.3% |
|
353,931 | |||
NET ASSETS — 100% |
$ |
141,173,331 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
† Real Estate Investment Trust
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $1,058 and represents 0.0% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $1,058 and represents 0.0% of Net Assets. (Unaudited)
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
109
Schedule of Investments March 31, 2021
KraneShares MSCI China Clean Technology Index ETF (concluded)
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
China |
|
|
|
|
||||||||
Consumer Discretionary |
$ |
37,260,337 |
$ |
— |
$ |
— |
$ |
37,260,337 | ||||
Industrials |
|
39,212,714 |
|
— |
|
1,058 |
|
39,213,772 | ||||
Information Technology |
|
32,440,238 |
|
— |
|
— |
|
32,440,238 | ||||
Real Estate |
|
16,545,184 |
|
— |
|
— |
|
16,545,184 | ||||
Utilities |
|
10,951,494 |
|
— |
|
— |
|
10,951,494 | ||||
Hong Kong |
|
4,408,375 |
|
— |
|
— |
|
4,408,375 | ||||
Total Common Stock |
|
140,818,342 |
|
— |
|
1,058 |
|
140,819,400 | ||||
Total Investments in Securities |
$ |
140,818,342 |
$ |
— |
$ |
1,058 |
$ |
140,819,400 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
110
Shares |
Value | ||||
COMMON STOCK — 95.6%‡ |
|
||||
AUSTRALIA — 1.0% |
|
||||
Materials — 1.0% |
|
||||
Iluka Resources |
355,010 |
$ |
1,949,535 | ||
TOTAL AUSTRALIA |
|
1,949,535 | |||
|
|||||
AUSTRIA — 0.9% |
|
||||
Information Technology — 0.9% |
|
||||
ams |
91,887 |
|
1,839,400 | ||
TOTAL AUSTRIA |
|
1,839,400 | |||
|
|||||
CANADA — 0.9% |
|
||||
Industrials — 0.9% |
|
||||
Ballard Power Systems* |
72,990 |
|
1,779,961 | ||
TOTAL CANADA |
|
1,779,961 | |||
|
|||||
CHILE — 2.0% |
|
||||
Materials — 2.0% |
|
||||
Antofagasta |
168,424 |
|
3,927,105 | ||
TOTAL CHILE |
|
3,927,105 | |||
|
|||||
CHINA — 19.9% |
|
||||
Communication Services — 2.9% |
|
||||
Baidu ADR* |
26,775 |
|
5,824,901 | ||
Consumer Discretionary — 12.5% |
|
||||
BYD, Cl H |
170,500 |
|
3,616,391 | ||
Foryou |
437,788 |
|
1,846,247 | ||
Huizhou Desay Sv Automotive, Cl A |
157,762 |
|
2,062,072 | ||
Kuang-Chi Technologies, Cl A |
982,840 |
|
3,028,870 | ||
Li Auto ADR* |
117,662 |
|
2,941,550 | ||
NIO ADR* |
158,385 |
|
6,173,847 | ||
Tianneng Power International(A) |
1,036,000 |
|
1,956,213 | ||
XPeng ADR*(A) |
84,272 |
|
3,076,771 | ||
|
24,701,961 |
The accompanying notes are an integral part of the financial statements.
111
Schedule of Investments March 31, 2021
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials — 3.5% |
|
||||
Camel Group, Cl A |
1,076,116 |
$ |
1,746,728 | ||
Gotion High-tech, Cl A |
336,989 |
|
1,850,533 | ||
Shenzhen Center Power Tech, Cl A |
739,600 |
|
1,699,867 | ||
Zhejiang Narada Power Source, Cl A* |
1,004,700 |
|
1,681,340 | ||
|
6,978,468 | ||||
Information Technology — 1.0% |
|
||||
Shanghai Belling, Cl A |
886,701 |
|
2,031,201 | ||
TOTAL CHINA |
|
39,536,531 | |||
|
|||||
FRANCE — 0.1% |
|
||||
Information Technology — 0.1% |
|
||||
STMicroelectronics |
6,168 |
|
235,527 | ||
TOTAL FRANCE |
|
235,527 | |||
|
|||||
GERMANY — 11.3% |
|
||||
Consumer Discretionary — 9.2% |
|
||||
Bayerische Motoren Werke |
76,500 |
|
7,954,346 | ||
Daimler |
85,021 |
|
7,595,282 | ||
Hella GmbH & KGaA |
49,495 |
|
2,781,749 | ||
|
18,331,377 | ||||
Information Technology — 2.1% |
|
||||
Infineon Technologies |
99,763 |
|
4,239,209 | ||
TOTAL GERMANY |
|
22,570,586 | |||
|
|||||
HONG KONG — 1.0% |
|
||||
Consumer Discretionary — 1.0% |
|
||||
Brilliance China Automotive Holdings(B)(C)(D) |
2,170,000 |
|
2,037,572 | ||
TOTAL HONG KONG |
|
2,037,572 | |||
|
|||||
JAPAN — 2.7% |
|
||||
Consumer Discretionary — 1.8% |
|
||||
Furukawa Battery(A) |
118,700 |
|
1,834,748 | ||
Mitsubishi Motors |
626,800 |
|
1,786,805 | ||
|
3,621,553 | ||||
Industrials — 0.9% |
|
||||
GS Yuasa |
68,300 |
|
1,854,299 | ||
TOTAL JAPAN |
|
5,475,852 | |||
|
|||||
NETHERLANDS — 2.1% |
|
||||
Information Technology — 2.1% |
|
||||
NXP Semiconductors |
20,311 |
|
4,089,417 | ||
TOTAL NETHERLANDS |
|
4,089,417 | |||
|
|||||
PERU — 3.2% |
|
||||
Materials — 3.2% |
|
||||
Southern Copper |
93,958 |
|
6,376,929 | ||
TOTAL PERU |
|
6,376,929 | |||
|
The accompanying notes are an integral part of the financial statements.
112
Schedule of Investments March 31, 2021
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
SOUTH KOREA — 3.9% |
|
||||
Consumer Discretionary — 0.9% |
|
||||
Sebang Global Battery |
26,891 |
$ |
1,850,947 | ||
Industrials — 1.0% |
|
||||
Doosan Fuel Cell* |
43,537 |
|
1,973,446 | ||
Information Technology — 2.0% |
|
||||
Samsung SDI |
6,709 |
|
3,912,472 | ||
TOTAL SOUTH KOREA |
|
7,736,865 | |||
|
|||||
SWEDEN — 0.9% |
|
||||
Industrials — 0.9% |
|
||||
PowerCell Sweden*(A) |
58,294 |
|
1,724,148 | ||
TOTAL SWEDEN |
|
1,724,148 | |||
|
|||||
SWITZERLAND — 2.1% |
|
||||
Information Technology — 2.1% |
|
||||
STMicroelectronics |
106,409 |
|
4,067,016 | ||
TOTAL SWITZERLAND |
|
4,067,016 | |||
|
|||||
TAIWAN — 3.1% |
|
||||
Consumer Discretionary — 2.0% |
|
||||
Cub Elecparts |
252,284 |
|
2,144,144 | ||
Tung Thih Electronic |
171,000 |
|
1,809,905 | ||
|
3,954,049 | ||||
Information Technology — 1.1% |
|
||||
Parade Technologies |
49,000 |
|
2,103,704 | ||
TOTAL TAIWAN |
|
6,057,753 | |||
|
|||||
UNITED KINGDOM — 2.0% |
|
||||
Industrials — 2.0% |
|
||||
Ceres Power Holdings* |
121,951 |
|
2,113,279 | ||
ITM Power* |
288,767 |
|
1,886,467 | ||
TOTAL UNITED KINGDOM |
|
3,999,746 | |||
|
|||||
UNITED STATES — 38.5% |
|
||||
Communication Services — 3.6% |
|
||||
Alphabet, Cl A* |
3,457 |
|
7,130,132 | ||
Consumer Discretionary — 7.6% |
|
||||
Aptiv |
26,633 |
|
3,672,691 | ||
Arcimoto*(A) |
96,100 |
|
1,271,403 | ||
ElectraMeccanica Vehicles*(A) |
332,146 |
|
1,561,086 | ||
Gentex |
81,834 |
|
2,919,019 | ||
Gentherm* |
23,587 |
|
1,748,033 | ||
QuantumScape, Cl A*(A) |
49,162 |
|
2,199,999 | ||
Visteon* |
14,438 |
|
1,760,714 | ||
|
15,132,945 | ||||
Industrials — 3.4% |
|
||||
Ballard Power Systems* |
41,454 |
|
1,008,990 | ||
Bloom Energy, Cl A* |
64,160 |
|
1,735,528 | ||
FuelCell Energy* |
112,483 |
|
1,620,880 | ||
Plug Power* |
65,908 |
|
2,362,143 | ||
|
6,727,541 |
The accompanying notes are an integral part of the financial statements.
113
Schedule of Investments March 31, 2021
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
Shares |
Value | |||||
COMMON STOCK (continued) |
|
| ||||
Information Technology — 22.1% |
|
| ||||
Advanced Micro Devices* |
86,170 |
$ |
6,764,345 |
| ||
Ambarella* |
16,633 |
|
1,669,787 |
| ||
Analog Devices |
47,052 |
|
7,296,824 |
| ||
Cirrus Logic* |
24,527 |
|
2,079,644 |
| ||
Maxim Integrated Products |
34,247 |
|
3,129,148 |
| ||
MicroVision*(A) |
107,210 |
|
1,988,746 |
| ||
NVIDIA |
13,471 |
|
7,192,571 |
| ||
SiTime* |
18,422 |
|
1,816,409 |
| ||
Skyworks Solutions |
22,709 |
|
4,166,647 |
| ||
Texas Instruments |
40,623 |
|
7,677,341 |
| ||
|
43,781,462 |
| ||||
Materials — 1.8% |
|
| ||||
Freeport-McMoRan |
110,220 |
|
3,629,545 |
| ||
TOTAL UNITED STATES |
|
76,401,625 |
| |||
TOTAL
COMMON STOCK |
|
189,805,568 |
| |||
|
| |||||
PREFERRED STOCK — 4.2% |
|
| ||||
GERMANY — 4.2% |
|
| ||||
Consumer Discretionary — 4.2% |
|
| ||||
Porsche Automobil Holding(E) |
32,405 |
|
3,443,686 |
| ||
Volkswagen(E) |
17,163 |
|
4,812,942 |
| ||
|
8,256,628 |
| ||||
TOTAL GERMANY |
|
8,256,628 |
| |||
TOTAL
PREFERRED STOCK |
|
8,256,628 |
| |||
|
| |||||
SHORT-TERM INVESTMENT(F)(G) — 5.5% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.030% |
10,993,789 |
|
10,993,789 |
| ||
TOTAL
SHORT-TERM INVESTMENT |
|
10,993,789 |
| |||
TOTAL
INVESTMENTS — 105.3% |
|
209,055,985 |
| |||
OTHER ASSETS LESS LIABILITIES — (5.3)% |
|
(10,486,201 |
) | |||
NET ASSETS — 100% |
$ |
198,569,784 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) This security or a partial position of this security is on loan at March 31, 2021. The total market value of securities on loan at March 31, 2021 was $10,578,384.
(B) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $2,037,572 and represents 1.0% of Net Assets.
(C) Level 3 security in accordance with fair value hierarchy.
(D) Security considered illiquid. The total value of such securities as of March 31, 2021 was $2,037,572 and represents 1.0% of Net Assets. (Unaudited)
(E) Currently, no stated interest rate.
The accompanying notes are an integral part of the financial statements.
114
Schedule of Investments March 31, 2021
KraneShares Electric Vehicles and Future Mobility Index ETF (continued)
(F) The rate shown is the 7-day effective yield as of March 31, 2021.
(G) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2021 was $10,993,789.
ADR — American Depositary Receipt
Cl — Class
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3 |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
Australia |
$ |
1,949,535 |
$ |
— |
$ |
— |
$ |
1,949,535 | ||||
Austria |
|
1,839,400 |
|
— |
|
— |
|
1,839,400 | ||||
Canada |
|
1,779,961 |
|
— |
|
— |
|
1,779,961 | ||||
Chile |
|
3,927,105 |
|
— |
|
— |
|
3,927,105 | ||||
China |
|
39,536,531 |
|
— |
|
— |
|
39,536,531 | ||||
France |
|
235,527 |
|
— |
|
— |
|
235,527 | ||||
Germany |
|
22,570,586 |
|
— |
|
— |
|
22,570,586 | ||||
Hong Kong |
|
|
|
|
||||||||
Consumer Discretionary |
|
— |
|
— |
|
2,037,572 |
|
2,037,572 | ||||
Japan |
|
5,475,852 |
|
— |
|
— |
|
5,475,852 | ||||
Netherlands |
|
4,089,417 |
|
— |
|
— |
|
4,089,417 | ||||
Peru |
|
6,376,929 |
|
— |
|
— |
|
6,376,929 | ||||
South Korea |
|
7,736,865 |
|
— |
|
— |
|
7,736,865 | ||||
Sweden |
|
1,724,148 |
|
— |
|
— |
|
1,724,148 | ||||
Switzerland |
|
4,067,016 |
|
— |
|
— |
|
4,067,016 | ||||
Taiwan |
|
6,057,753 |
|
— |
|
— |
|
6,057,753 | ||||
United Kingdom |
|
3,999,746 |
|
— |
|
— |
|
3,999,746 | ||||
United States |
|
76,401,625 |
|
— |
|
— |
|
76,401,625 | ||||
Total Common Stock |
|
187,767,996 |
|
— |
|
2,037,572 |
|
189,805,568 | ||||
Preferred Stock |
|
|
|
|
||||||||
Germany |
|
8,256,628 |
|
— |
|
— |
|
8,256,628 | ||||
Total Preferred Stock |
|
8,256,628 |
|
— |
|
— |
|
8,256,628 | ||||
Short-Term Investment |
|
10,993,789 |
|
— |
|
— |
|
10,993,789 | ||||
Total Investments in Securities |
$ |
207,018,413 |
$ |
— |
$ |
2,037,572 |
$ |
209,055,985 |
The accompanying notes are an integral part of the financial statements.
115
Schedule of Investments March 31, 2021
KraneShares Electric Vehicles and Future Mobility Index ETF (concluded)
The following is a reconciliation of the investments in which significant unobservable inputs (Level 3) were used in determining value:
Common Stock | |||
Beginning balance as of March 31, 2020 |
$ |
— | |
Accrued discounts/premiums |
|
— | |
Realized gain/(loss) |
|
— | |
Change in unrealized appreciation/(depreciation) |
|
— | |
Purchases |
|
— | |
Sales |
|
||
Transfer into Level 3 |
|
2,037,572 | |
Transfer out of Level 3 |
|
— | |
Ending balance as of March 31, 2021 |
$ |
2,037,572 |
For the year ended March 31, 2021, the transfers in and out of Level 3 occurred due to a halt in trading of these securities.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
116
Shares |
Value | ||||
COMMON STOCK — 99.9%‡ |
|
||||
CHINA — 96.4% |
|
||||
Health Care — 96.4% |
|
||||
3SBio* |
772,000 |
$ |
682,188 | ||
Aier Eye Hospital Group, Cl A |
722,648 |
|
6,525,772 | ||
AK Medical Holdings |
238,000 |
|
303,070 | ||
Alibaba Health Information Technology* |
2,362,000 |
|
6,683,945 | ||
Apeloa Pharmaceutical, Cl A |
205,792 |
|
892,334 | ||
Asymchem Laboratories Tianjin, Cl A |
43,703 |
|
1,924,112 | ||
Autobio Diagnostics, Cl A |
51,408 |
|
860,456 | ||
BeiGene ADR* |
27,847 |
|
9,692,984 | ||
Beijing Tiantan Biological Products, Cl A |
229,718 |
|
1,143,478 | ||
Beijing Tongrentang, Cl A |
181,590 |
|
828,907 | ||
Betta Pharmaceuticals, Cl A |
73,863 |
|
1,195,101 | ||
BGI Genomics, Cl A |
72,927 |
|
1,365,019 | ||
CanSino Biologics, Cl A* |
13,045 |
|
731,659 | ||
CanSino Biologics, Cl H* |
39,400 |
|
1,489,958 | ||
Changchun High & New Technology Industry Group, Cl A |
70,908 |
|
4,892,730 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A |
142,856 |
|
637,074 | ||
China Medical System Holdings |
792,000 |
|
1,566,794 | ||
China National Accord Medicines, Cl A |
67,353 |
|
432,171 | ||
China National Medicines, Cl A |
135,655 |
|
699,860 | ||
China Resources Pharmaceutical Group |
905,500 |
|
564,886 | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A |
178,690 |
|
666,152 | ||
China Traditional Chinese Medicine Holdings |
1,658,000 |
|
1,034,324 | ||
Chongqing Zhifei Biological Products, Cl A |
276,049 |
|
7,257,162 | ||
CSPC Pharmaceutical Group |
5,440,889 |
|
6,578,518 | ||
Da An Gene of Sun Yat-Sen University, Cl A |
157,092 |
|
728,572 | ||
Dong-E-E-Jiao, Cl A |
3,600 |
|
20,729 | ||
Dong-E-E-Jiao, Cl E |
119,040 |
|
685,443 | ||
Genscript Biotech* |
520,000 |
|
914,997 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A |
252,940 |
|
1,073,642 | ||
Guangzhou Kingmed Diagnostics Group, Cl A |
82,899 |
|
1,605,243 | ||
Guangzhou Wondfo Biotech, Cl A |
62,752 |
|
786,169 | ||
Hangzhou Tigermed Consulting, Cl A |
69,450 |
|
1,588,907 | ||
Hangzhou Tigermed Consulting, Cl H* |
74,400 |
|
1,470,880 | ||
Hansoh Pharmaceutical Group* |
726,000 |
|
3,478,510 | ||
Huadong Medicine, Cl A |
328,841 |
|
1,848,390 | ||
Hualan Biological Engineering, Cl A |
348,447 |
|
2,111,011 | ||
Hubei Jumpcan Pharmaceutical, Cl A |
160,529 |
|
488,594 | ||
Humanwell Healthcare Group, Cl A |
294,400 |
|
1,381,094 | ||
Hutchison China MediTech ADR* |
44,924 |
|
1,269,103 | ||
Innovent Biologics* |
580,500 |
|
5,887,545 |
The accompanying notes are an integral part of the financial statements.
117
Schedule of Investments March 31, 2021
KraneShares MSCI All China Health Care Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Health Care (continued) |
|
||||
Intco Medical Technology, Cl A |
62,129 |
$ |
1,530,120 | ||
Jafron Biomedical, Cl A |
143,790 |
|
1,665,555 | ||
Jiangsu Hengrui Medicine, Cl A |
951,738 |
|
13,358,161 | ||
Jiangsu Yuyue Medical Equipment & Supply, Cl A |
184,710 |
|
738,705 | ||
Jilin Aodong Pharmaceutical Group, Cl A |
209,834 |
|
509,138 | ||
Jinxin Fertility Group |
836,000 |
|
1,797,930 | ||
Jinyu Bio-Technology, Cl A |
201,177 |
|
585,944 | ||
Joincare Pharmaceutical Group Industry, Cl A |
364,545 |
|
712,288 | ||
Jointown Pharmaceutical Group, Cl A* |
345,806 |
|
951,320 | ||
Lepu Medical Technology Beijing, Cl A |
334,300 |
|
1,493,375 | ||
Livzon Pharmaceutical Group, Cl A |
114,959 |
|
731,678 | ||
Maccura Biotechnology, Cl A |
101,000 |
|
625,439 | ||
Meinian Onehealth Healthcare Holdings, Cl A |
713,183 |
|
1,676,108 | ||
Microport Scientific |
418,000 |
|
2,352,256 | ||
Nanjing King-Friend Biochemical Pharmaceutical, Cl A |
135,917 |
|
828,611 | ||
Ovctek China, Cl A |
104,110 |
|
1,430,457 | ||
Ping An Healthcare and Technology* |
307,400 |
|
3,855,128 | ||
Shandong Buchang Pharmaceuticals, Cl A |
208,883 |
|
726,818 | ||
Shandong Pharmaceutical Glass |
109,800 |
|
664,369 | ||
Shandong Weigao Group Medical Polymer, Cl H |
1,492,000 |
|
2,943,910 | ||
Shanghai Fosun Pharmaceutical Group, Cl A |
364,129 |
|
2,208,238 | ||
Shanghai Fosun Pharmaceutical Group, Cl H |
315,000 |
|
1,343,150 | ||
Shanghai Pharmaceuticals Holding, Cl A |
342,994 |
|
1,025,134 | ||
Shanghai Pharmaceuticals Holding, Cl H |
460,600 |
|
904,084 | ||
Shanghai RAAS Blood Products, Cl A |
1,007,734 |
|
1,142,709 | ||
Shenzhen Hepalink Pharmaceutical Group, Cl A |
191,428 |
|
499,197 | ||
Shenzhen Kangtai Biological Products, Cl A |
123,298 |
|
2,574,127 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A |
182,899 |
|
11,125,529 | ||
Shenzhen Salubris Pharmaceuticals, Cl A |
188,065 |
|
1,085,189 | ||
Shijiazhuang Yiling Pharmaceutical, Cl A |
222,093 |
|
833,712 | ||
Sichuan Kelun Pharmaceutical, Cl A |
265,115 |
|
892,579 | ||
Sinopharm Group, Cl H |
802,000 |
|
1,941,442 | ||
SSY Group |
918,000 |
|
534,898 | ||
Tasly Pharmaceutical Group, Cl A |
125,892 |
|
258,262 | ||
Tianjin Chase Sun Pharmaceutical, Cl A |
554,146 |
|
347,123 | ||
Tonghua Dongbao Pharmaceutical, Cl A |
373,191 |
|
705,862 | ||
Topchoice Medical, Cl A* |
58,341 |
|
2,227,401 | ||
Walvax Biotechnology, Cl A |
293,600 |
|
2,022,158 | ||
Winning Health Technology Group, Cl A |
398,900 |
|
997,676 | ||
WuXi AppTec, Cl A |
388,984 |
|
8,311,827 | ||
WuXi AppTec, Cl H |
165,820 |
|
3,261,180 | ||
Wuxi Biologics Cayman* |
1,457,135 |
|
18,245,933 | ||
Xiamen Kingdomway Group, Cl A |
109,755 |
|
659,246 | ||
Yifan Pharmaceutical, Cl A |
226,788 |
|
703,398 | ||
Yunnan Baiyao Group, Cl A |
236,945 |
|
4,351,985 | ||
Zai Lab ADR* |
43,970 |
|
5,866,917 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A |
109,724 |
|
4,798,878 | ||
Zhejiang Huahai Pharmaceutical, Cl A |
258,172 |
|
1,011,645 |
The accompanying notes are an integral part of the financial statements.
118
Schedule of Investments March 31, 2021
KraneShares MSCI All China Health Care Index ETF (concluded)
Shares |
Value | |||||
COMMON STOCK (continued) |
|
| ||||
Health Care (continued) |
|
| ||||
Zhejiang Jiuzhou Pharmaceutical, Cl A |
142,300 |
$ |
829,136 |
| ||
Zhejiang NHU, Cl A |
365,590 |
|
2,130,175 |
| ||
Zhejiang Wolwo Bio-Pharmaceutical, Cl A |
94,736 |
|
851,313 |
| ||
TOTAL CHINA |
|
206,854,896 |
| |||
|
| |||||
HONG KONG — 3.5% |
|
| ||||
Health Care — 3.5% |
|
| ||||
Pharmaron Beijing, Cl H |
73,200 |
|
1,383,131 |
| ||
Sino Biopharmaceutical |
6,064,750 |
|
6,069,079 |
| ||
TOTAL HONG KONG |
|
7,452,210 |
| |||
TOTAL
COMMON STOCK |
|
214,307,106 |
| |||
|
| |||||
SHORT-TERM INVESTMENT(A)(B) — 0.2% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.030% |
292,977 |
|
292,977 |
| ||
TOTAL
SHORT-TERM INVESTMENT |
|
292,977 |
| |||
TOTAL
INVESTMENTS — 100.1% |
|
214,600,083 |
| |||
OTHER ASSETS LESS LIABILITIES — (0.1)% |
|
(136,032 |
) | |||
NET ASSETS — 100% |
$ |
214,464,051 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) The rate shown is the 7-day effective yield as of March 31, 2021.
(B) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2021 was $292,977.
ADR — American Depositary Receipt
Cl — Class
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
119
Schedule of Investments March 31, 2021
KraneShares CCBS China Corporate High Yield Bond USD Index ETF
Face Amount |
Value | |||||
CORPORATE OBLIGATIONS — 71.0% |
|
|
||||
CHINA — 46.1% |
|
|
||||
Consumer Discretionary — 2.2% |
|
|
||||
Fortune Star BVI |
|
|
||||
6.850%, 07/02/2024 |
$ |
200,000 |
$ |
211,500 | ||
Financials — 31.3% |
|
|
||||
Agile Group Holdings |
|
|
||||
8.375%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+11.254%‡ |
|
200,000 |
|
208,444 | ||
Bank of Communications |
|
|
||||
3.800%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.345%‡ |
|
300,000 |
|
308,977 | ||
Central Plaza Development |
|
|
||||
5.750%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+8.066%‡ |
|
200,000 |
|
196,967 | ||
CFLD Cayman Investment |
|
|
||||
8.600%, 04/08/2024 |
|
200,000 |
|
74,620 | ||
China Evergrande Group |
|
|
||||
9.500%, 03/29/2024 |
|
200,000 |
|
170,100 | ||
China Mengniu Dairy |
|
|
||||
3.000%, 07/18/2024 |
|
200,000 |
|
209,904 | ||
Country Garden Holdings |
|
|
||||
8.000%, 01/27/2024 |
|
200,000 |
|
212,644 | ||
Easy Tactic |
|
|
||||
8.625%, 02/27/2024 |
|
200,000 |
|
186,088 | ||
Kaisa Group Holdings |
|
|
||||
9.375%, 06/30/2024 |
|
600,000 |
|
575,361 | ||
KWG Group Holdings |
|
|
||||
7.875%, 09/01/2023 |
|
200,000 |
|
206,400 | ||
Ronshine China Holdings |
|
|
||||
7.350%, 12/15/2023 |
|
200,000 |
|
189,100 | ||
Shimao Group Holdings |
|
|
||||
6.125%, 02/21/2024 |
|
300,000 |
|
315,150 |
The accompanying notes are an integral part of the financial statements.
120
Schedule of Investments March 31, 2021
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (continued)
Face Amount |
Value | |||||
CORPORATE OBLIGATIONS (continued) |
|
|
||||
Financials (continued) |
|
|
||||
Sunac China Holdings |
|
|
||||
8.350%, 04/19/2023 |
$ |
200,000 |
$ |
208,092 | ||
|
|
3,061,847 | ||||
Industrial — 2.0% |
|
|
||||
Suzhou City Construction Investment Group Holding |
|
|
||||
4.600%, 09/05/2022 |
|
200,000 |
|
199,341 | ||
Real Estate — 8.4% |
|
|
||||
China Aoyuan Group |
|
|
||||
7.950%, 02/19/2023 |
|
200,000 |
|
207,094 | ||
China SCE Group Holdings |
|
|
||||
7.000%, 05/02/2025 |
|
200,000 |
|
201,535 | ||
Redsun Properties Group |
|
|
||||
9.700%, 04/16/2023 |
|
200,000 |
|
208,100 | ||
Well Hope Development |
|
|
||||
3.875%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+6.927%‡ |
|
200,000 |
|
204,747 | ||
|
|
821,476 | ||||
Technology — 2.2% |
|
|
||||
Lenovo Group |
|
|
||||
4.750%, 03/29/2023 |
|
200,000 |
|
211,992 | ||
TOTAL CHINA |
|
|
4,506,156 | |||
|
|
|||||
HONG KONG — 24.9% |
|
|
||||
Consumer Discretionary — 4.5% |
|
|
||||
Li & Fung |
|
|
||||
5.250%‡ |
|
200,000 |
|
134,100 | ||
Melco Resorts Finance |
|
|
||||
4.875%, 06/06/2025(A) |
|
300,000 |
|
308,250 | ||
|
|
442,350 | ||||
Financials — 18.2% |
|
|
||||
AIA Group |
|
|
||||
3.125%, 03/13/2023 |
|
200,000 |
|
208,876 | ||
Bank of East Asia |
|
|
||||
5.875%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.257%‡ |
|
250,000 |
|
266,277 | ||
China CITIC Bank International |
|
|
||||
7.100%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.151%‡ |
|
200,000 |
|
218,738 | ||
FWD Group |
|
|
||||
0.000%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.865%‡ |
|
300,000 |
|
274,036 | ||
Nanyang Commercial Bank |
|
|
||||
5.000%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.205%‡ |
|
550,000 |
|
563,746 | ||
NWD Finance BVI |
|
|
||||
5.750%‡ |
|
250,000 |
|
252,056 | ||
|
|
1,783,729 |
The accompanying notes are an integral part of the financial statements.
121
Schedule of Investments March 31, 2021
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (concluded)
Face Amount |
Value | |||||
CORPORATE OBLIGATIONS (continued) |
|
|
||||
Industrial — 2.2% |
|
|
||||
Celestial Miles |
|
|
||||
5.750%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+8.205%‡ |
$ |
200,000 |
$ |
212,100 | ||
TOTAL HONG KONG |
|
|
2,438,179 | |||
TOTAL
CORPORATE OBLIGATIONS |
|
|
6,944,335 | |||
TOTAL
INVESTMENTS — 71.0% |
|
|
6,944,335 | |||
OTHER ASSETS LESS LIABILITIES — 29.0% |
|
|
2,841,646 | |||
NET ASSETS — 100% |
|
$ |
9,785,981 |
‡ Perpetual security with no stated maturity date.
(A) Securities sold within the terms of a private placement memorandum, exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “accredited investors.” The total market value of such securities as of March 31, 2021 was $308,250 and represented 3.1% of the Net Assets of the Fund.
BVI — British Virgin Islands
VAR — Variable Rate
As of March 31, 2021, all of the Fund’s investments were considered Level 2 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
122
Shares |
Value | ||||
COMMON STOCK — 98.8%‡ |
|
||||
BRAZIL — 3.7% |
|
||||
Health Care — 3.7% |
|
||||
Fleury |
2,700 |
$ |
12,296 | ||
Hapvida Participacoes e Investimentos |
29,000 |
|
76,316 | ||
Notre Dame Intermedica Participacoes |
4,900 |
|
71,985 | ||
Odontoprev |
4,300 |
|
10,028 | ||
Qualicorp Consultoria e Corretora de Seguros |
2,300 |
|
12,399 | ||
TOTAL BRAZIL |
|
183,024 | |||
|
|||||
CHINA — 48.7% |
|
||||
Consumer Staples — 1.3% |
|
||||
By-health, Cl A |
4,800 |
|
20,937 | ||
DaShenLin Pharmaceutical Group, Cl A |
2,000 |
|
25,587 | ||
Fu Jian Anjoy Foods, Cl A |
600 |
|
19,072 | ||
|
65,596 | ||||
Health Care — 47.4% |
|
||||
3SBio* |
8,000 |
|
7,069 | ||
Aier Eye Hospital Group, Cl A |
13,170 |
|
118,930 | ||
Aier Eye Hospital Group, Cl A |
400 |
|
3,612 | ||
AK Medical Holdings |
4,000 |
|
5,094 | ||
Akeso* |
2,000 |
|
12,631 | ||
Alphamab Oncology* |
3,000 |
|
4,345 | ||
Autobio Diagnostics, Cl A |
1,300 |
|
21,759 | ||
BeiGene* |
3,600 |
|
93,167 | ||
Beijing Tiantan Biological Products, Cl A |
3,720 |
|
18,517 | ||
Betta Pharmaceuticals, Cl A |
1,200 |
|
19,416 | ||
BGI Genomics, Cl A* |
1,200 |
|
22,461 | ||
CanSino Biologics, Cl H* |
400 |
|
15,126 | ||
Changchun High & New Technology Industry Group, Cl A |
1,200 |
|
82,801 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A |
2,600 |
|
11,595 | ||
China Biologic Products Holdings* |
121 |
|
14,328 | ||
China Evergrande New Energy Vehicle Group* |
25,500 |
|
189,583 | ||
China Medical System Holdings |
9,000 |
|
17,804 | ||
Chongqing Zhifei Biological Products, Cl A |
5,413 |
|
142,304 | ||
CStone Pharmaceuticals* |
3,000 |
|
3,569 | ||
Genetron Holdings ADR* |
285 |
|
6,116 | ||
Genscript Biotech* |
6,000 |
|
10,558 | ||
Guangzhou Kingmed Diagnostics Group, Cl A |
1,300 |
|
25,173 | ||
Hangzhou Tigermed Consulting, Cl H |
300 |
|
5,931 | ||
Hansoh Pharmaceutical Group |
18,000 |
|
86,244 | ||
Huadong Medicine, Cl A |
5,240 |
|
29,454 | ||
Hualan Biological Engineering, Cl A |
5,490 |
|
33,260 |
The accompanying notes are an integral part of the financial statements.
123
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Healthcare Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Health Care (continued) |
|
||||
Humanwell Healthcare Group, Cl A |
4,800 |
$ |
22,518 | ||
Hygeia Healthcare Holdings |
1,600 |
|
11,618 | ||
I-Mab ADR* |
201 |
|
9,742 | ||
InnoCare Pharma* |
3,000 |
|
7,008 | ||
Innovent Biologics* |
4,500 |
|
45,640 | ||
Intco Medical Technology, Cl A |
1,100 |
|
27,091 | ||
Jiangsu Hengrui Medicine, Cl A |
15,966 |
|
224,091 | ||
Jinxin Fertility Group |
6,000 |
|
12,904 | ||
Kangji Medical Holdings |
4,000 |
|
4,769 | ||
Legend Biotech ADR* |
382 |
|
11,086 | ||
Lepu Medical Technology Beijing, Cl A |
5,422 |
|
24,221 | ||
Lifetech Scientific* |
12,000 |
|
5,510 | ||
Livzon Pharmaceutical Group, Cl H |
1,000 |
|
4,264 | ||
Luye Pharma Group |
11,000 |
|
7,032 | ||
Microport Scientific |
5,000 |
|
28,137 | ||
Nanjing King-Friend Biochemical Pharmaceutical, Cl A |
2,840 |
|
17,314 | ||
Ocumension Therapeutics* |
1,500 |
|
4,428 | ||
Ovctek China, Cl A |
1,700 |
|
23,358 | ||
Peijia Medical* |
2,000 |
|
6,367 | ||
Ping An Healthcare and Technology* |
3,300 |
|
41,386 | ||
Shandong Weigao Group Medical Polymer, Cl H |
12,000 |
|
23,678 | ||
Shanghai Fosun Pharmaceutical Group, Cl H |
1,500 |
|
6,396 | ||
Shanghai Junshi Biosciences, Cl H* |
600 |
|
6,267 | ||
Shanghai Pharmaceuticals Holding, Cl H |
3,000 |
|
5,888 | ||
Shanghai RAAS Blood Products, Cl A |
20,700 |
|
23,473 | ||
Shenzhen Kangtai Biological Products, Cl A |
2,100 |
|
43,842 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A |
3,900 |
|
237,232 | ||
Sichuan Kelun Pharmaceutical, Cl A |
4,400 |
|
14,814 | ||
Sihuan Pharmaceutical Holdings Group |
29,000 |
|
7,610 | ||
Sinopharm Group, Cl H |
4,400 |
|
10,651 | ||
Topchoice Medical, Cl A* |
1,000 |
|
38,179 | ||
Venus MedTech Hangzhou, Cl H* |
500 |
|
4,055 | ||
Viva Biotech Holdings |
5,500 |
|
4,740 | ||
Walvax Biotechnology, Cl A |
4,900 |
|
33,749 | ||
WuXi AppTec, Cl H |
832 |
|
16,363 | ||
Wuxi Biologics Cayman* |
11,781 |
|
147,519 | ||
Yunnan Baiyao Group, Cl A |
4,000 |
|
73,468 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A |
1,900 |
|
83,098 | ||
Zhejiang Huahai Pharmaceutical, Cl A |
4,650 |
|
18,221 | ||
Zhejiang NHU, Cl A |
6,300 |
|
36,708 | ||
|
2,375,282 | ||||
TOTAL CHINA |
|
2,440,878 | |||
|
|||||
HUNGARY — 1.0% |
|
||||
Health Care — 1.0% |
|
||||
Richter Gedeon Nyrt |
1,582 |
|
46,734 | ||
TOTAL HUNGARY |
|
46,734 |
The accompanying notes are an integral part of the financial statements.
124
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Healthcare Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
INDIA — 13.1% |
|
||||
Health Care — 13.1% |
|
||||
Apollo Hospitals Enterprise |
1,106 |
$ |
43,909 | ||
Aurobindo Pharma |
4,648 |
|
56,026 | ||
Cadila Healthcare |
8,293 |
|
50,009 | ||
Cipla* |
6,744 |
|
75,185 | ||
Divi’s Laboratories* |
2,172 |
|
107,623 | ||
Dr Reddy’s Laboratories |
1,422 |
|
87,832 | ||
Laurus Labs |
4,527 |
|
22,414 | ||
Lupin |
3,892 |
|
54,321 | ||
Sun Pharmaceutical Industries |
19,601 |
|
160,264 | ||
TOTAL INDIA |
|
657,583 | |||
|
|||||
INDONESIA — 1.2% |
|
||||
Health Care — 1.2% |
|
||||
Kalbe Farma |
383,500 |
|
41,452 | ||
Mitra Keluarga Karyasehat |
111,100 |
|
20,117 | ||
TOTAL INDONESIA |
|
61,569 | |||
|
|||||
MALAYSIA — 5.3% |
|
||||
Health Care — 5.3% |
|
||||
Hartalega Holdings |
30,100 |
|
64,824 | ||
IHH Healthcare |
72,900 |
|
93,531 | ||
Supermax |
26,080 |
|
23,964 | ||
Top Glove |
76,400 |
|
83,282 | ||
TOTAL MALAYSIA |
|
265,601 | |||
|
|||||
POLAND — 0.2% |
|
||||
Health Care — 0.2% |
|
||||
Mercator Medical |
97 |
|
8,530 | ||
TOTAL POLAND |
|
8,530 | |||
|
|||||
SOUTH AFRICA — 1.3% |
|
||||
Health Care — 1.3% |
|
||||
Aspen Pharmacare Holdings* |
3,870 |
|
37,834 | ||
Life Healthcare Group Holdings* |
12,804 |
|
16,042 | ||
Netcare* |
12,273 |
|
11,844 | ||
TOTAL SOUTH AFRICA |
|
65,720 | |||
|
|||||
SOUTH KOREA — 21.8% |
|
||||
Consumer Staples — 0.2% |
|
||||
Kolmar BNH |
246 |
|
11,955 | ||
Health Care — 21.6% |
|
||||
Alteogen* |
330 |
|
26,126 | ||
Bukwang Pharmaceutical |
589 |
|
12,282 | ||
Cellivery Therapeutics* |
134 |
|
15,096 | ||
Celltrion* |
816 |
|
233,961 | ||
Celltrion Healthcare* |
1,259 |
|
151,287 | ||
Celltrion Pharm* |
312 |
|
41,368 | ||
Chong Kun Dang Pharmaceutical |
90 |
|
10,974 | ||
Daewoong |
333 |
|
9,622 |
The accompanying notes are an integral part of the financial statements.
125
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Healthcare Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Health Care (continued) |
|
||||
Genexine* |
190 |
$ |
16,033 | ||
Green Cross |
92 |
|
29,305 | ||
Green Cross Holdings |
341 |
|
10,500 | ||
Hanall Biopharma* |
417 |
|
8,438 | ||
Hanmi Pharm |
98 |
|
27,406 | ||
Hanmi Science ltd |
562 |
|
28,801 | ||
Hugel* |
114 |
|
17,980 | ||
Ilyang Pharmaceutical |
173 |
|
5,052 | ||
Jeil Pharmaceutical |
147 |
|
5,183 | ||
LegoChem Biosciences* |
200 |
|
9,914 | ||
MedPacto* |
193 |
|
15,160 | ||
Medytox |
42 |
|
7,065 | ||
Mezzion Pharma* |
71 |
|
9,498 | ||
Oscotec* |
242 |
|
8,542 | ||
Pharmicell* |
424 |
|
5,638 | ||
Sam Chun Dang Pharm* |
188 |
|
8,472 | ||
Samsung Biologics* |
291 |
|
192,329 | ||
Seegene |
241 |
|
27,704 | ||
Shin Poong Pharmaceutical |
431 |
|
32,408 | ||
SillaJen*(A)(B)(C) |
261 |
|
2,791 | ||
SK Biopharmaceuticals* |
651 |
|
59,247 | ||
ST Pharm* |
159 |
|
11,984 | ||
Yuhan |
583 |
|
32,453 | ||
Yungjin Pharmaceutical* |
1,613 |
|
8,751 | ||
|
1,081,370 | ||||
TOTAL SOUTH KOREA |
|
1,093,325 | |||
|
|||||
THAILAND — 2.5% |
|
||||
Health Care — 2.5% |
|
||||
Bangkok Chain Hospital |
20,500 |
|
9,643 | ||
Bangkok Dusit Medical Services, Cl F |
124,700 |
|
86,193 | ||
Bumrungrad Hospital |
7,000 |
|
30,464 | ||
TOTAL THAILAND |
|
126,300 | |||
TOTAL
COMMON STOCK |
|
4,949,264 | |||
TOTAL
INVESTMENTS — 98.8% |
|
4,949,264 | |||
OTHER ASSETS LESS LIABILITIES — 1.2% |
|
59,498 | |||
NET ASSETS — 100% |
$ |
5,008,762 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2021 was $2,791 and represents 0.1% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2021 was $2,791 and represents 0.1% of Net Assets. (Unaudited)
The accompanying notes are an integral part of the financial statements.
126
Schedule of Investments March 31, 2021
KraneShares Emerging Markets Healthcare Index ETF (concluded)
ADR — American Depositary Receipt
Cl — Class
The following summarizes the market value of the Fund’s investments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3^ |
Total | ||||||||
Common Stock |
|
|
|
|
||||||||
Brazil |
$ |
183,024 |
$ |
— |
$ |
— |
$ |
183,024 | ||||
China |
|
2,440,878 |
|
— |
|
— |
|
2,440,878 | ||||
Hungary |
|
46,734 |
|
— |
|
— |
|
46,734 | ||||
India |
|
657,583 |
|
— |
|
— |
|
657,583 | ||||
Indonesia |
|
61,569 |
|
— |
|
— |
|
61,569 | ||||
Malaysia |
|
265,601 |
|
— |
|
— |
|
265,601 | ||||
Poland |
|
8,530 |
|
— |
|
— |
|
8,530 | ||||
South Africa |
|
65,720 |
|
— |
|
— |
|
65,720 | ||||
South Korea |
|
|
|
|
||||||||
Consumer Staples |
|
11,955 |
|
— |
|
— |
|
11,955 | ||||
Health Care |
|
1,078,579 |
|
— |
|
2,791 |
|
1,081,370 | ||||
Thailand |
|
126,300 |
|
— |
|
— |
|
126,300 | ||||
Total Common Stock |
|
4,946,473 |
|
— |
|
2,791 |
|
4,949,264 | ||||
Total Investments in Securities |
$ |
4,946,473 |
$ |
— |
$ |
2,791 |
$ |
4,949,264 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March 31, 2021, the transfers in and out of Level 3 occurred due to a halt in trading of these securities.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
127
Shares |
Value | ||||
COMMON STOCK — 95.6%‡ |
|
||||
BRAZIL — 4.7% |
|
||||
Communication Services — 0.1% |
|
||||
Telefonica Brasil |
4,000 |
$ |
31,473 | ||
Consumer Discretionary — 0.5% |
|
||||
Lojas Renner |
5,950 |
|
44,823 | ||
Magazine Luiza |
32,000 |
|
113,868 | ||
|
158,691 | ||||
Consumer Staples — 0.6% |
|
||||
Ambev |
38,000 |
|
103,165 | ||
BRF* |
3,000 |
|
13,392 | ||
JBS |
6,000 |
|
32,004 | ||
Raia Drogasil |
10,000 |
|
44,586 | ||
|
193,147 | ||||
Energy — 0.5% |
|
||||
Petroleo Brasileiro |
31,000 |
|
131,680 | ||
Ultrapar Participacoes |
6,000 |
|
22,594 | ||
|
154,274 | ||||
Financials — 0.8% |
|
||||
B3 - Brasil Bolsa Balcao |
14,000 |
|
135,633 | ||
Banco Bradesco |
8,980 |
|
37,317 | ||
Banco do Brasil |
7,000 |
|
37,872 | ||
Banco Santander Brasil |
3,000 |
|
21,122 | ||
BB Seguridade Participacoes |
5,000 |
|
21,487 | ||
|
253,431 | ||||
Industrials — 0.5% |
|
||||
CCR |
8,000 |
|
18,260 | ||
Localiza Rent a Car |
4,020 |
|
42,701 | ||
Rumo* |
8,000 |
|
28,566 | ||
WEG |
6,000 |
|
79,628 | ||
|
169,155 |
The accompanying notes are an integral part of the financial statements.
128
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Materials — 1.6% |
|
||||
Klabin* |
5,000 |
$ |
24,384 | ||
Suzano |
4,000 |
|
48,776 | ||
Vale |
24,000 |
|
414,800 | ||
|
487,960 | ||||
Utilities — 0.1% |
|
||||
Cia de Saneamento Basico do Estado de Sao Paulo |
2,000 |
|
14,521 | ||
Equatorial Energia |
5,000 |
|
21,912 | ||
|
36,433 | ||||
TOTAL BRAZIL |
|
1,484,564 | |||
|
|||||
CHILE — 0.7% |
|
||||
Consumer Discretionary — 0.1% |
|
||||
Falabella |
5,140 |
|
23,411 | ||
Energy — 0.1% |
|
||||
Empresas COPEC |
2,680 |
|
33,194 | ||
Financials — 0.2% |
|
||||
Banco de Chile |
172,818 |
|
20,431 | ||
Banco de Credito e Inversiones |
350 |
|
18,562 | ||
Banco Santander Chile |
456,804 |
|
28,614 | ||
|
67,607 | ||||
Materials — 0.1% |
|
||||
Empresas CMPC |
8,679 |
|
27,943 | ||
Utilities — 0.2% |
|
||||
Enel Americas |
196,033 |
|
32,772 | ||
Enel Chile |
193,507 |
|
15,106 | ||
|
47,878 | ||||
TOTAL CHILE |
|
200,033 | |||
|
|||||
COLOMBIA — 0.1% |
|
||||
Energy — 0.1% |
|
||||
Ecopetrol |
33,398 |
|
21,502 | ||
Financials — 0.0% |
|
||||
Bancolombia |
1,540 |
|
12,048 | ||
TOTAL COLOMBIA |
|
33,550 | |||
|
|||||
CZECH REPUBLIC — 0.1% |
|
||||
Financials — 0.0% |
|
||||
Komercni banka as |
510 |
|
15,765 | ||
Utilities — 0.1% |
|
||||
CEZ |
1,090 |
|
26,975 | ||
TOTAL CZECH REPUBLIC |
|
42,740 | |||
|
|||||
EGYPT — 0.1% |
|
||||
Financials — 0.1% |
|
||||
Commercial International Bank Egypt SAE |
9,060 |
|
33,306 | ||
TOTAL EGYPT |
|
33,306 |
The accompanying notes are an integral part of the financial statements.
129
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
GREECE — 0.1% |
|
||||
Communication Services — 0.1% |
|
||||
Hellenic Telecommunications Organization |
1,660 |
$ |
26,690 | ||
TOTAL GREECE |
|
26,690 | |||
|
|||||
HUNGARY — 0.3% |
|
||||
Energy — 0.1% |
|
||||
MOL Hungarian Oil & Gas |
2,480 |
|
17,992 | ||
Financials — 0.2% |
|
||||
OTP Bank Nyrt |
1,520 |
|
65,097 | ||
TOTAL HUNGARY |
|
83,089 | |||
|
|||||
INDIA — 13.7% |
|
||||
Communication Services — 0.3% |
|
||||
Bharti Airtel |
15,409 |
|
109,023 | ||
Consumer Discretionary — 0.9% |
|
||||
Bajaj Auto* |
560 |
|
28,114 | ||
Eicher Motors* |
900 |
|
32,054 | ||
Mahindra & Mahindra |
5,030 |
|
54,711 | ||
Maruti Suzuki India |
850 |
|
79,743 | ||
Tata Motors* |
12,509 |
|
51,635 | ||
Titan |
2,140 |
|
45,603 | ||
|
291,860 | ||||
Consumer Staples — 1.2% |
|
||||
Dabur India |
3,610 |
|
26,687 | ||
Godrej Consumer Products |
2,480 |
|
24,750 | ||
Hindustan Unilever |
6,250 |
|
207,852 | ||
ITC |
30,027 |
|
89,736 | ||
Nestle India |
160 |
|
37,564 | ||
|
386,589 | ||||
Energy — 2.2% |
|
||||
Bharat Petroleum |
5,220 |
|
30,554 | ||
Indian Oil |
15,018 |
|
18,866 | ||
Oil & Natural Gas |
9,610 |
|
13,426 | ||
Reliance Industries |
23,098 |
|
632,817 | ||
|
695,663 | ||||
Financials — 3.4% |
|
||||
Axis Bank |
19,018 |
|
181,417 | ||
Bajaj Finance* |
1,600 |
|
112,698 | ||
Bajaj Finserv* |
260 |
|
34,382 | ||
Housing Development Finance |
13,699 |
|
468,058 | ||
ICICI Bank |
20,018 |
|
159,375 | ||
Piramal Enterprises |
550 |
|
13,188 | ||
State Bank of India |
15,009 |
|
74,785 | ||
|
1,043,903 | ||||
Health Care — 0.4% |
|
||||
Aurobindo Pharma |
1,800 |
|
21,697 | ||
Dr Reddy’s Laboratories |
780 |
|
48,178 | ||
Sun Pharmaceutical Industries |
7,500 |
|
61,322 | ||
|
131,197 |
The accompanying notes are an integral part of the financial statements.
130
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Industrials — 0.2% |
|
||||
Larsen & Toubro |
4,000 |
$ |
77,627 | ||
Information Technology — 3.7% |
|
||||
HCL Technologies |
9,009 |
|
121,081 | ||
Infosys ADR |
31,645 |
|
592,395 | ||
Tata Consultancy Services |
7,500 |
|
325,983 | ||
Tech Mahindra |
3,180 |
|
43,122 | ||
Wipro |
12,509 |
|
70,857 | ||
|
1,153,438 | ||||
Materials — 1.1% |
|
||||
Asian Paints |
2,120 |
|
73,574 | ||
Grasim Industries |
2,260 |
|
44,837 | ||
Hindalco Industries |
8,160 |
|
36,479 | ||
JSW Steel |
5,920 |
|
37,930 | ||
UltraTech Cement |
800 |
|
73,726 | ||
UPL |
3,730 |
|
32,745 | ||
Vedanta |
9,090 |
|
28,440 | ||
|
327,731 | ||||
Utilities — 0.3% |
|
||||
GAIL India |
14,018 |
|
25,979 | ||
NTPC |
18,027 |
|
26,271 | ||
Power Grid Corp of India |
16,018 |
|
47,246 | ||
|
99,496 | ||||
TOTAL INDIA |
|
4,316,527 | |||
|
|||||
INDONESIA — 2.2% |
|
||||
Communication Services — 0.3% |
|
||||
Telkom Indonesia Persero |
460,000 |
|
108,310 | ||
Consumer Discretionary — 0.2% |
|
||||
Astra International |
200,000 |
|
72,633 | ||
Consumer Staples — 0.2% |
|
||||
Charoen Pokphand Indonesia |
63,000 |
|
30,362 | ||
Unilever Indonesia |
65,000 |
|
29,423 | ||
|
59,785 | ||||
Energy — 0.1% |
|
||||
United Tractors |
15,000 |
|
22,849 | ||
Financials — 1.4% |
|
||||
Bank Central Asia |
87,000 |
|
186,129 | ||
Bank Mandiri Persero |
180,000 |
|
76,213 | ||
Bank Negara Indonesia Persero |
67,000 |
|
26,408 | ||
Bank Rakyat Indonesia Persero |
500,000 |
|
151,463 | ||
|
440,213 | ||||
TOTAL INDONESIA |
|
703,790 | |||
|
|||||
MALAYSIA — 2.2% |
|
||||
Communication Services — 0.2% |
|
||||
DiGi.Com |
30,000 |
|
26,336 | ||
Maxis |
30,000 |
|
32,702 | ||
|
59,038 |
The accompanying notes are an integral part of the financial statements.
131
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Discretionary — 0.1% |
|
||||
Genting |
20,000 |
$ |
24,262 | ||
Consumer Staples — 0.1% |
|
||||
Sime Darby Plantation |
23,000 |
|
25,737 | ||
Financials — 1.1% |
|
||||
CIMB Group Holdings |
80,000 |
|
83,733 | ||
Hong Leong Bank |
5,000 |
|
22,549 | ||
Malayan Banking |
56,016 |
|
111,451 | ||
Public Bank |
130,000 |
|
131,678 | ||
|
349,411 | ||||
Health Care — 0.1% |
|
||||
IHH Healthcare |
20,000 |
|
25,660 | ||
Materials — 0.2% |
|
||||
Petronas Chemicals Group |
30,000 |
|
57,880 | ||
Utilities — 0.4% |
|
||||
Petronas Gas |
5,000 |
|
19,293 | ||
Tenaga Nasional |
37,000 |
|
90,303 | ||
|
109,596 | ||||
TOTAL MALAYSIA |
|
651,584 | |||
|
|||||
MEXICO — 3.0% |
|
||||
Communication Services — 0.7% |
|
||||
America Movil |
280,900 |
|
191,244 | ||
Grupo Televisa |
20,000 |
|
35,512 | ||
|
226,756 | ||||
Consumer Staples — 0.9% |
|
||||
Fomento Economico Mexicano |
17,000 |
|
127,954 | ||
Grupo Bimbo, Ser A |
11,000 |
|
23,064 | ||
Wal-Mart de Mexico |
43,000 |
|
135,659 | ||
|
286,677 | ||||
Financials — 0.4% |
|
||||
Grupo Financiero Banorte, Cl O |
22,000 |
|
123,921 | ||
Grupo Financiero Inbursa, Cl O* |
15,000 |
|
13,570 | ||
|
137,491 | ||||
Industrials — 0.1% |
|
||||
Grupo Aeroportuario del Pacifico, Cl B |
2,000 |
|
20,856 | ||
Grupo Aeroportuario del Sureste, Cl B |
1,450 |
|
25,725 | ||
|
46,581 | ||||
Materials — 0.8% |
|
||||
Cemex |
125,000 |
|
87,791 | ||
Grupo Mexico |
29,000 |
|
152,707 | ||
|
240,498 | ||||
Real Estate — 0.1% |
|
||||
Fibra Uno Administracion† |
28,000 |
|
32,748 | ||
TOTAL MEXICO |
|
970,751 | |||
|
|||||
PERU — 0.9% |
|
||||
Financials — 0.3% |
|
||||
Credicorp |
711 |
|
97,101 |
The accompanying notes are an integral part of the financial statements.
132
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Materials — 0.6% |
|
||||
Cia de Minas Buenaventura SAA ADR* |
5,719 |
$ |
57,362 | ||
Southern Copper |
1,681 |
|
114,089 | ||
|
171,451 | ||||
TOTAL PERU |
|
268,552 | |||
|
|||||
PHILIPPINES — 1.2% |
|
||||
Financials — 0.1% |
|
||||
BDO Unibank |
21,000 |
|
44,131 | ||
Industrials — 0.5% |
|
||||
Ayala |
3,000 |
|
45,738 | ||
JG Summit Holdings |
36,795 |
|
45,295 | ||
SM Investments |
3,000 |
|
59,335 | ||
|
150,368 | ||||
Real Estate — 0.6% |
|
||||
Ayala Land |
105,000 |
|
74,309 | ||
SM Prime Holdings |
140,000 |
|
100,953 | ||
|
175,262 | ||||
TOTAL PHILIPPINES |
|
369,761 | |||
|
|||||
POLAND — 1.0% |
|
||||
Communication Services — 0.1% |
|
||||
CD Projekt* |
600 |
|
28,966 | ||
Consumer Discretionary — 0.1% |
|
||||
LPP |
10 |
|
20,590 | ||
Energy — 0.1% |
|
||||
Polski Koncern Naftowy ORLEN |
2,800 |
|
45,030 | ||
Financials — 0.5% |
|
||||
Bank Polska Kasa Opieki |
1,650 |
|
29,529 | ||
Powszechna Kasa Oszczednosci Bank Polski |
8,250 |
|
68,430 | ||
Powszechny Zaklad Ubezpieczen |
6,000 |
|
51,850 | ||
Santander Bank Polska |
320 |
|
17,727 | ||
|
167,536 | ||||
Materials — 0.2% |
|
||||
KGHM Polska Miedz |
1,150 |
|
55,431 | ||
TOTAL POLAND |
|
317,553 | |||
|
|||||
QATAR — 1.1% |
|
||||
Financials — 0.9% |
|
||||
Masraf Al Rayan QSC |
37,545 |
|
44,237 | ||
Qatar Islamic Bank SAQ |
11,009 |
|
49,769 | ||
Qatar National Bank QPSC |
39,036 |
|
192,875 | ||
|
286,881 | ||||
Industrials — 0.2% |
|
||||
Industries Qatar QSC |
17,509 |
|
57,466 | ||
TOTAL QATAR |
|
344,347 | |||
|
|||||
RUSSIA — 5.1% |
|
||||
Communication Services — 0.1% |
|
||||
Mobile TeleSystems PJSC ADR |
3,480 |
|
29,023 |
The accompanying notes are an integral part of the financial statements.
133
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Discretionary — 0.1% |
|
||||
X5 Retail Group GDR |
830 |
$ |
26,850 | ||
Consumer Staples — 0.1% |
|
||||
Magnit PJSC GDR |
2,420 |
|
36,276 | ||
Energy — 2.8% |
|
||||
Gazprom PJSC |
83,000 |
|
250,862 | ||
LUKOIL PJSC |
3,450 |
|
279,563 | ||
Novatek PJSC GDR |
700 |
|
138,315 | ||
Rosneft |
9,500 |
|
71,817 | ||
Tatneft PJSC |
15,300 |
|
121,134 | ||
|
861,691 | ||||
Financials — 1.1% |
|
||||
Sberbank of Russia PJSC |
91,900 |
|
353,222 | ||
Materials — 0.9% |
|
||||
Alrosa PJSC |
17,500 |
|
24,506 | ||
MMC Norilsk Nickel PJSC |
620 |
|
195,313 | ||
Novolipetsk Steel PJSC |
8,200 |
|
26,203 | ||
Severstal PAO |
1,400 |
|
28,531 | ||
|
274,553 | ||||
TOTAL RUSSIA |
|
1,581,615 | |||
|
|||||
SOUTH AFRICA — 6.3% |
|
||||
Communication Services — 0.5% |
|
||||
MTN Group |
14,018 |
|
82,449 | ||
MultiChoice Group |
2,840 |
|
24,801 | ||
Vodacom Group |
4,250 |
|
36,340 | ||
|
143,590 | ||||
Consumer Discretionary — 3.0% |
|
||||
Absa Group |
6,000 |
|
51,234 | ||
Mr Price Group |
1,620 |
|
21,241 | ||
Naspers, Cl N |
3,450 |
|
825,152 | ||
Woolworths Holdings |
6,580 |
|
22,036 | ||
|
919,663 | ||||
Consumer Staples — 0.4% |
|
||||
Bid |
2,800 |
|
54,233 | ||
Clicks Group |
1,680 |
|
27,351 | ||
Shoprite Holdings |
2,810 |
|
29,900 | ||
Tiger Brands |
1,090 |
|
15,557 | ||
|
127,041 | ||||
Energy — 0.1% |
|
||||
Exxaro Resources |
1,740 |
|
20,487 | ||
Financials — 1.3% |
|
||||
Capitec Bank Holdings |
260 |
|
25,000 | ||
Discovery |
2,440 |
|
21,908 | ||
FirstRand |
37,416 |
|
130,799 | ||
Nedbank Group |
3,350 |
|
31,762 | ||
Old Mutual |
33,018 |
|
28,241 | ||
Remgro |
3,550 |
|
25,003 |
The accompanying notes are an integral part of the financial statements.
134
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Financials (continued) |
|
||||
Sanlam |
12,169 |
$ |
49,059 | ||
Standard Bank Group |
11,009 |
|
93,515 | ||
|
405,287 | ||||
Industrials — 0.3% |
|
||||
Bidvest Group |
2,240 |
|
25,847 | ||
Sasol |
4,650 |
|
66,666 | ||
|
92,513 | ||||
Materials — 0.6% |
|
||||
Anglo American Platinum |
350 |
|
51,012 | ||
AngloGold Ashanti |
3,300 |
|
71,926 | ||
Gold Fields |
5,410 |
|
50,380 | ||
|
173,318 | ||||
Real Estate — 0.1% |
|
||||
Growthpoint Properties† |
20,016 |
|
17,893 | ||
NEPI Rockcastle |
2,690 |
|
16,982 | ||
|
34,875 | ||||
TOTAL SOUTH AFRICA |
|
1,916,774 | |||
|
|||||
SOUTH KOREA — 23.5% |
|
||||
Communication Services — 2.3% |
|
||||
Kakao |
340 |
|
149,609 | ||
NAVER |
1,250 |
|
416,391 | ||
NCSoft |
150 |
|
115,706 | ||
SK Telecom |
130 |
|
31,588 | ||
|
713,294 | ||||
Consumer Discretionary — 2.4% |
|
||||
Coway |
360 |
|
20,835 | ||
Fila Holdings |
320 |
|
12,201 | ||
Hyundai Mobis |
570 |
|
147,064 | ||
Hyundai Motor |
1,250 |
|
240,777 | ||
Kangwon Land |
810 |
|
18,107 | ||
Kia Motors |
2,500 |
|
183,124 | ||
LG Electronics |
950 |
|
125,911 | ||
|
748,019 | ||||
Consumer Staples — 1.0% |
|
||||
Amorepacific |
354 |
|
80,856 | ||
E-MART |
130 |
|
19,642 | ||
KT&G |
1,405 |
|
101,053 | ||
LG Household & Health Care |
80 |
|
110,979 | ||
|
312,530 | ||||
Energy — 0.4% |
|
||||
SK Innovation |
530 |
|
102,558 | ||
S-Oil |
310 |
|
22,242 | ||
|
124,800 | ||||
Financials — 1.9% |
|
||||
DB Insurance |
340 |
|
14,210 | ||
Hana Financial Group |
3,000 |
|
113,453 | ||
Industrial Bank of Korea |
1,740 |
|
14,083 |
The accompanying notes are an integral part of the financial statements.
135
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Financials (continued) |
|
||||
KB Financial Group |
3,580 |
$ |
177,774 | ||
Samsung Fire & Marine Insurance |
459 |
|
77,057 | ||
Samsung Life Insurance |
470 |
|
32,434 | ||
Shinhan Financial Group |
3,830 |
|
126,736 | ||
Woori Financial Group |
3,270 |
|
29,182 | ||
|
584,929 | ||||
Health Care — 1.1% |
|
||||
Celltrion* |
740 |
|
212,307 | ||
Celltrion Healthcare* |
340 |
|
40,857 | ||
Samsung Biologics* |
147 |
|
97,156 | ||
|
350,320 | ||||
Industrials — 1.3% |
|
||||
Hyundai Engineering & Construction |
540 |
|
21,018 | ||
Hyundai Heavy Industries Holdings |
60 |
|
15,454 | ||
Korea Shipbuilding & Offshore Engineering* |
260 |
|
30,669 | ||
LG |
1,213 |
|
96,890 | ||
Samsung C&T |
971 |
|
106,817 | ||
Samsung Heavy Industries* |
2,990 |
|
20,528 | ||
SK Holdings |
393 |
|
97,924 | ||
|
389,300 | ||||
Information Technology — 11.0% |
|
||||
LG Display |
1,480 |
|
29,751 | ||
Samsung Electro-Mechanics |
673 |
|
111,498 | ||
Samsung Electronics |
33,516 |
|
2,410,605 | ||
Samsung SDI |
450 |
|
262,425 | ||
Samsung SDS |
230 |
|
39,324 | ||
SK Hynix |
4,690 |
|
549,083 | ||
|
3,402,686 | ||||
Materials — 1.8% |
|
||||
Hyundai Steel |
540 |
|
22,927 | ||
Korea Zinc |
50 |
|
18,047 | ||
LG Chemical |
400 |
|
284,515 | ||
Lotte Chemical |
120 |
|
31,915 | ||
POSCO |
680 |
|
192,269 | ||
|
549,673 | ||||
Utilities — 0.3% |
|
||||
Korea Electric Power |
4,244 |
|
86,811 | ||
TOTAL SOUTH KOREA |
|
7,262,362 | |||
|
|||||
TAIWAN — 25.7% |
|
||||
Communication Services — 1.0% |
|
||||
Chunghwa Telecom |
40,000 |
|
156,310 | ||
Far EasTone Telecommunications |
27,000 |
|
60,656 | ||
Taiwan Mobile |
27,000 |
|
92,924 | ||
|
309,890 | ||||
Consumer Staples — 0.6% |
|
||||
President Chain Store |
10,000 |
|
95,328 | ||
Uni-President Enterprises |
40,000 |
|
102,338 | ||
|
197,666 |
The accompanying notes are an integral part of the financial statements.
136
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Energy — 0.1% |
|
||||
Formosa Petrochemical |
10,000 |
$ |
33,926 | ||
Financials — 4.6% |
|
||||
Cathay Financial Holding |
60,000 |
|
100,831 | ||
Chailease Holding |
14,071 |
|
97,150 | ||
Chang Hwa Commercial Bank |
150,243 |
|
92,411 | ||
China Development Financial Holding |
182,000 |
|
66,975 | ||
CTBC Financial Holding |
120,000 |
|
92,945 | ||
E.Sun Financial Holding |
111,094 |
|
101,621 | ||
First Financial Holding |
121,282 |
|
94,363 | ||
Fubon Financial Holding |
60,000 |
|
119,441 | ||
Hua Nan Financial Holdings |
103,567 |
|
67,694 | ||
Mega Financial Holding |
80,000 |
|
89,440 | ||
Shanghai Commercial & Savings Bank* |
64,000 |
|
94,095 | ||
Shin Kong Financial Holding |
308,000 |
|
98,770 | ||
SinoPac Financial Holdings |
70,000 |
|
31,525 | ||
Taishin Financial Holding |
196,310 |
|
92,193 | ||
Taiwan Cooperative Financial Holding |
106,365 |
|
78,843 | ||
Yuanta Financial Holding |
119,280 |
|
94,060 | ||
|
1,412,357 | ||||
Industrials — 0.3% |
|
||||
Far Eastern New Century |
88,000 |
|
93,141 | ||
Information Technology — 17.0% |
|
||||
ASE Technology Holding |
32,000 |
|
120,562 | ||
Asustek Computer |
10,000 |
|
130,550 | ||
AU Optronics |
102,000 |
|
75,250 | ||
Catcher Technology |
10,000 |
|
74,125 | ||
Delta Electronics |
20,000 |
|
201,871 | ||
Hon Hai Precision Industry |
110,000 |
|
478,043 | ||
Innolux |
60,000 |
|
44,370 | ||
Lite-On Technology |
43,000 |
|
94,641 | ||
MediaTek |
10,000 |
|
339,607 | ||
Novatek Microelectronics |
10,000 |
|
201,521 | ||
Pegatron |
34,000 |
|
88,298 | ||
Quanta Computer |
30,000 |
|
103,039 | ||
Taiwan Semiconductor Manufacturing |
154,000 |
|
3,168,191 | ||
United Microelectronics |
80,000 |
|
140,749 | ||
|
5,260,817 | ||||
Materials — 2.1% |
|
||||
Asia Cement |
40,000 |
|
67,010 | ||
China Steel |
137,000 |
|
124,358 | ||
Formosa Chemicals & Fibre |
29,000 |
|
89,034 | ||
Formosa Plastics |
40,000 |
|
141,590 | ||
Nan Ya Plastics |
50,000 |
|
139,838 | ||
Taiwan Cement |
50,370 |
|
82,617 | ||
|
644,447 | ||||
TOTAL TAIWAN |
|
7,952,244 | |||
|
|||||
THAILAND — 2.5% |
|
||||
Communication Services — 0.2% |
|
||||
Advanced Info Service |
10,000 |
|
55,520 |
The accompanying notes are an integral part of the financial statements.
137
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Staples — 0.4% |
|
||||
CP ALL |
50,000 |
$ |
110,800 | ||
Energy — 0.6% |
|
||||
PTT |
105,000 |
|
137,760 | ||
PTT Exploration & Production |
14,000 |
|
51,072 | ||
|
188,832 | ||||
Financials — 0.5% |
|
||||
Kasikornbank |
18,000 |
|
83,520 | ||
Siam Commercial Bank |
18,000 |
|
64,224 | ||
|
147,744 | ||||
Health Care — 0.1% |
|
||||
Bangkok Dusit Medical Services, Cl F |
35,000 |
|
24,192 | ||
Industrials — 0.3% |
|
||||
Airports of Thailand |
43,000 |
|
94,944 | ||
Materials — 0.3% |
|
||||
PTT Global Chemical |
23,000 |
|
46,184 | ||
Siam Cement |
4,000 |
|
51,072 | ||
|
97,256 | ||||
Real Estate — 0.1% |
|
||||
Central Pattana |
13,000 |
|
24,232 | ||
TOTAL THAILAND |
|
743,520 | |||
|
|||||
TURKEY — 0.5% |
|
||||
Consumer Staples — 0.2% |
|
||||
BIM Birlesik Magazalar |
7,000 |
|
59,713 | ||
Energy — 0.1% |
|
||||
Turkiye Petrol Rafinerileri |
2,000 |
|
21,749 | ||
Financials — 0.2% |
|
||||
Akbank T.A.S. |
50,036 |
|
28,354 | ||
Turkiye Garanti Bankasi |
40,036 |
|
32,363 | ||
|
60,717 | ||||
TOTAL TURKEY |
|
142,179 | |||
|
|||||
UNITED ARAB EMIRATES — 0.6% |
|
||||
Communication Services — 0.2% |
|
||||
Emirates Telecommunications Group PJSC |
11,659 |
|
68,688 | ||
Financials — 0.3% |
|
||||
Abu Dhabi Commercial Bank PJSC |
13,929 |
|
23,473 | ||
First Abu Dhabi Bank PJSC |
19,019 |
|
75,596 | ||
|
99,069 | ||||
Real Estate — 0.1% |
|
||||
Emaar Properties PJSC |
23,538 |
|
22,685 | ||
TOTAL UNITED ARAB EMIRATES |
|
190,442 | |||
TOTAL
COMMON STOCK |
|
29,635,973 | |||
|
|||||
PREFERRED STOCK(A) — 3.9% |
|
||||
BRAZIL — 2.1% |
|
||||
Consumer Discretionary — 0.1% |
|
||||
Lojas Americanas |
5,000 |
|
19,741 |
The accompanying notes are an integral part of the financial statements.
138
Schedule of Investments March 31, 2021
KraneShares MSCI Emerging Markets ex China Index ETF (concluded)
Shares |
Value | ||||
PREFERRED STOCK(A) (continued) |
|
||||
Energy — 0.5% |
|
||||
Petroleo Brasileiro |
34,000 |
$ |
145,749 | ||
Financials — 1.4% |
|
||||
Banco Bradesco |
37,940 |
|
179,111 | ||
Itau Unibanco Holding |
39,000 |
|
193,169 | ||
Itausa |
36,000 |
|
65,454 | ||
|
437,734 | ||||
Materials — 0.1% |
|
||||
Gerdau |
7,000 |
|
37,338 | ||
Utilities — 0.0% |
|
||||
Cia Energetica de Minas Gerais |
6,024 |
|
13,899 | ||
TOTAL BRAZIL |
|
654,461 | |||
|
|||||
CHILE — 0.1% |
|
||||
Materials — 0.1% |
|
||||
Sociedad Quimica y Minera de Chile |
830 |
|
44,493 | ||
|
|||||
COLOMBIA — 0.1% |
|
||||
Financials — 0.1% |
|
||||
Bancolombia |
3,070 |
|
24,376 | ||
|
|||||
RUSSIA — 0.1% |
|
||||
Energy — 0.1% |
|
||||
Surgutneftegas PJSC |
47,000 |
|
26,139 | ||
|
|||||
SOUTH KOREA — 1.5% |
|
||||
Information Technology — 1.5% |
|
||||
Samsung Electronics |
7,000 |
|
451,513 | ||
TOTAL
PREFERRED STOCK |
|
1,200,982 | |||
TOTAL
INVESTMENTS — 99.5% |
|
30,836,955 | |||
OTHER ASSETS LESS LIABILITIES — 0.5% |
|
154,193 | |||
NET ASSETS — 100% |
$ |
30,991,148 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
† Real Estate Investment Trust
(A) Currently, no stated interest rate.
ADR — American Depositary Receipt
Cl — Class
GDR — Global Depositary Receipt
PJSC — Public Joint-Stock Company
Ser — Series
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March 31, 2021, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
139
Shares |
Value | ||||
COMMON STOCK — 99.9%‡ |
|
||||
CHINA — 97.5% |
|
||||
Communication Services — 8.2% |
|
||||
China Literature* |
600 |
$ |
5,939 | ||
Tencent Holdings |
13,200 |
|
1,035,700 | ||
Wuhu Sanqi Interactive Entertainment Network Technology Group, Cl A |
2,300 |
|
7,698 | ||
|
1,049,337 | ||||
Consumer Discretionary — 26.6% |
|
||||
Alibaba Group Holding ADR* |
4,867 |
|
1,103,495 | ||
BYD, Cl A |
2,101 |
|
52,679 | ||
BYD, Cl H |
15,000 |
|
318,157 | ||
Geely Automobile Holdings |
112,000 |
|
284,954 | ||
Hangzhou Robam Appliances, Cl A |
1,000 |
|
5,566 | ||
Meituan, Cl B* |
23,800 |
|
912,883 | ||
NIO ADR* |
11,597 |
|
452,051 | ||
Suning.com, Cl A |
10,500 |
|
11,010 | ||
TCL Technology Group, Cl A |
16,100 |
|
22,919 | ||
Vipshop Holdings ADR* |
8,506 |
|
253,989 | ||
Weifu High-Technology Group, Cl A |
900 |
|
3,248 | ||
|
3,420,951 | ||||
Consumer Staples — 4.4% |
|
||||
Angel Yeast, Cl A |
900 |
|
7,577 | ||
By-health, Cl A |
1,700 |
|
7,416 | ||
Chacha Food, Cl A |
600 |
|
4,482 | ||
China Feihe |
22,000 |
|
62,255 | ||
China Mengniu Dairy |
52,000 |
|
297,642 | ||
Dali Foods Group |
39,000 |
|
22,173 | ||
Fu Jian Anjoy Foods, Cl A |
200 |
|
6,357 | ||
Inner Mongolia Yili Industrial Group, Cl A |
7,000 |
|
42,707 | ||
Laobaixing Pharmacy Chain JSC, Cl A |
500 |
|
5,220 |
The accompanying notes are an integral part of the financial statements.
140
Schedule of Investments March 31, 2021
KraneShares MSCI China ESG Leaders Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Consumer Staples (continued) |
|
||||
Sun Art Retail Group* |
5,000 |
$ |
4,090 | ||
Uni-President China Holdings |
24,000 |
|
29,203 | ||
Want Want China Holdings |
92,000 |
|
68,990 | ||
Yifeng Pharmacy Chain, Cl A |
600 |
|
8,111 | ||
|
566,223 | ||||
Energy — 0.0% |
|
||||
Offshore Oil Engineering, Cl A |
5,000 |
|
3,452 | ||
Financials — 16.1% |
|
||||
Bank of Shanghai, Cl A |
16,400 |
|
21,971 | ||
China CITIC Bank, Cl H |
169,000 |
|
85,864 | ||
China Construction Bank, Cl A |
8,700 |
|
9,746 | ||
China Construction Bank, Cl H |
1,405,000 |
|
1,181,910 | ||
China Everbright Bank, Cl H |
59,000 |
|
25,726 | ||
China Merchants Bank, Cl H |
74,500 |
|
568,732 | ||
China Minsheng Banking, Cl H |
111,500 |
|
64,682 | ||
Huaxia Bank, Cl A |
14,600 |
|
14,330 | ||
Industrial Bank, Cl A |
24,400 |
|
89,587 | ||
Oceanwide Holdings, Cl A |
4,900 |
|
2,054 | ||
|
2,064,602 | ||||
Health Care — 13.9% |
|
||||
3SBio* |
24,500 |
|
21,650 | ||
Alibaba Health Information Technology* |
12,000 |
|
33,957 | ||
CanSino Biologics, Cl H* |
1,400 |
|
52,943 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A |
800 |
|
3,568 | ||
China Medical System Holdings |
26,000 |
|
51,435 | ||
China National Accord Medicines, Cl A |
500 |
|
3,208 | ||
China National Medicines, Cl A |
800 |
|
4,127 | ||
China Resources Pharmaceutical Group |
30,500 |
|
19,027 | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A |
1,000 |
|
3,728 | ||
CSPC Pharmaceutical Group |
173,800 |
|
210,140 | ||
Genscript Biotech* |
20,000 |
|
35,192 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A |
1,600 |
|
6,791 | ||
Guangzhou Kingmed Diagnostics Group, Cl A |
600 |
|
11,618 | ||
Hansoh Pharmaceutical Group |
22,000 |
|
105,409 | ||
Huadong Medicine, Cl A |
2,100 |
|
11,804 | ||
Microport Scientific |
14,000 |
|
78,784 | ||
Ovctek China, Cl A |
700 |
|
9,618 | ||
Ping An Healthcare and Technology* |
10,100 |
|
126,665 | ||
Shandong Weigao Group Medical Polymer, Cl H |
44,000 |
|
86,818 | ||
Shanghai Pharmaceuticals Holding, Cl A |
2,200 |
|
6,575 | ||
Shanghai Pharmaceuticals Holding, Cl H |
15,000 |
|
29,442 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A |
1,100 |
|
66,912 | ||
Sinopharm Group, Cl H |
25,600 |
|
61,971 | ||
Topchoice Medical, Cl A* |
300 |
|
11,454 | ||
Winning Health Technology Group, Cl A |
2,500 |
|
6,253 | ||
WuXi AppTec, Cl A |
2,500 |
|
53,420 | ||
WuXi AppTec, Cl H |
5,400 |
|
106,202 |
The accompanying notes are an integral part of the financial statements.
141
Schedule of Investments March 31, 2021
KraneShares MSCI China ESG Leaders Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Health Care (continued) |
|
||||
Wuxi Biologics Cayman* |
43,000 |
$ |
538,437 | ||
Yunnan Baiyao Group, Cl A |
1,500 |
|
27,551 | ||
|
1,784,699 | ||||
Industrials — 9.7% |
|
||||
51job ADR* |
516 |
|
32,302 | ||
A-Living Smart City Services, Cl H |
9,000 |
|
39,938 | ||
China Conch Venture Holdings |
31,000 |
|
145,740 | ||
China Eastern Airlines, Cl A* |
10,800 |
|
8,987 | ||
China Everbright Environment Group |
71,000 |
|
48,037 | ||
China Lesso Group Holdings |
22,000 |
|
47,314 | ||
CITIC |
112,000 |
|
106,029 | ||
Contemporary Amperex Technology, Cl A |
2,600 |
|
127,666 | ||
Country Garden Services Holdings |
31,000 |
|
314,209 | ||
Eve Energy, Cl A |
2,100 |
|
24,053 | ||
Fosun International |
49,000 |
|
68,573 | ||
Gotion High-tech, Cl A* |
1,500 |
|
8,237 | ||
Greentown Service Group |
28,000 |
|
42,570 | ||
NARI Technology, Cl A |
5,300 |
|
25,154 | ||
Shanghai M&G Stationery, Cl A |
1,000 |
|
13,017 | ||
Shenzhen Inovance Technology, Cl A |
1,800 |
|
23,459 | ||
Siasun Robot & Automation, Cl A* |
1,700 |
|
2,936 | ||
Sinotrans, Cl A |
5,000 |
|
3,277 | ||
Sinotruk Hong Kong |
13,500 |
|
40,459 | ||
Xinjiang Goldwind Science & Technology, Cl A |
4,000 |
|
8,639 | ||
Xinjiang Goldwind Science & Technology, Cl H |
14,200 |
|
26,667 | ||
Zhejiang Expressway, Cl H |
28,000 |
|
24,815 | ||
Zhejiang Weixing New Building Materials, Cl A |
1,700 |
|
6,545 | ||
Zhengzhou Yutong Bus, Cl A |
2,400 |
|
5,249 | ||
Zoomlion Heavy Industry Science and Technology |
26,000 |
|
37,122 | ||
Zoomlion Heavy Industry Science and Technology, Cl A |
8,500 |
|
16,466 | ||
|
1,247,460 | ||||
Information Technology — 4.7% |
|
||||
360 Security Technology, Cl A |
5,500 |
|
11,669 | ||
AAC Technologies Holdings |
13,500 |
|
67,982 | ||
Beijing Shiji Information Technology, Cl A |
900 |
|
4,051 | ||
BYD Electronic International |
12,500 |
|
72,996 | ||
China National Software & Service, Cl A |
600 |
|
4,897 | ||
China TransInfo Technology, Cl A |
1,700 |
|
4,086 | ||
GoerTek, Cl A |
3,700 |
|
15,310 | ||
Kingdee International Software Group* |
46,000 |
|
142,595 | ||
Lenovo Group |
140,000 |
|
199,165 | ||
Sangfor Technologies, Cl A |
500 |
|
18,823 | ||
TravelSky Technology, Cl H |
18,000 |
|
42,092 | ||
Unisplendour, Cl A |
3,251 |
|
9,830 | ||
Wangsu Science & Technology, Cl A |
2,700 |
|
2,646 | ||
Wuxi Lead Intelligent Equipment, Cl A |
1,000 |
|
12,039 | ||
|
608,181 |
The accompanying notes are an integral part of the financial statements.
142
Schedule of Investments March 31, 2021
KraneShares MSCI China ESG Leaders Index ETF (continued)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Materials — 1.4% |
|
||||
Baoshan Iron & Steel, Cl A |
27,500 |
$ |
33,866 | ||
BBMG, Cl A |
9,600 |
|
4,316 | ||
Beijing Oriental Yuhong Waterproof Technology, Cl A |
2,700 |
|
21,053 | ||
China Jushi, Cl A |
4,100 |
|
11,998 | ||
China Molybdenum, Cl A |
21,500 |
|
17,302 | ||
China Molybdenum, Cl H |
69,000 |
|
41,802 | ||
GEM, Cl A |
5,600 |
|
7,306 | ||
Lee & Man Paper Manufacturing |
24,000 |
|
22,072 | ||
Transfar Zhilian, Cl A |
3,800 |
|
4,199 | ||
Zhejiang Huayou Cobalt, Cl A |
1,500 |
|
15,715 | ||
|
179,629 | ||||
Real Estate — 7.9% |
|
||||
China Merchants Property Operation & Service, Cl A |
1,300 |
|
3,913 | ||
China Merchants Shekou Industrial Zone Holdings, Cl A |
7,700 |
|
14,400 | ||
China Overseas Land & Investment |
74,000 |
|
192,271 | ||
China Overseas Property Holdings |
30,000 |
|
28,015 | ||
China Vanke, Cl A |
11,500 |
|
52,582 | ||
China Vanke, Cl H |
33,800 |
|
132,384 | ||
CIFI Holdings Group |
64,000 |
|
62,070 | ||
Greenland Holdings, Cl A |
9,400 |
|
8,008 | ||
Guangzhou R&F Properties |
32,000 |
|
42,230 | ||
Jinke Properties Group, Cl A |
6,300 |
|
6,328 | ||
KWG Group Holdings |
25,000 |
|
42,768 | ||
Logan Group |
27,000 |
|
45,495 | ||
Longfor Group Holdings |
35,500 |
|
235,161 | ||
Poly Developments and Holdings Group, Cl A |
14,100 |
|
30,580 | ||
Poly Property Services |
2,000 |
|
13,892 | ||
Shenzhen Investment |
60,000 |
|
20,838 | ||
Wharf Holdings |
29,000 |
|
76,841 | ||
|
1,007,776 | ||||
Utilities — 4.6% |
|
||||
Beijing Enterprises Water Group |
94,000 |
|
35,668 | ||
China Gas Holdings |
49,600 |
|
203,199 | ||
China Resources Gas Group |
18,000 |
|
99,789 | ||
ENN Energy Holdings |
14,800 |
|
237,388 | ||
Sichuan Chuantou Energy, Cl A |
5,100 |
|
9,747 | ||
|
585,791 | ||||
TOTAL CHINA |
|
12,518,101 | |||
|
|||||
HONG KONG — 2.1% |
|
||||
Consumer Staples — 0.2% |
|
||||
Vinda International Holdings |
7,000 |
|
23,635 | ||
Health Care — 1.9% |
|
||||
Hutchison China MediTech ADR* |
1,377 |
|
38,901 | ||
Sino Biopharmaceutical |
202,000 |
|
202,144 | ||
|
241,045 | ||||
TOTAL HONG KONG |
|
264,680 |
The accompanying notes are an integral part of the financial statements.
143
Schedule of Investments March 31, 2021
KraneShares MSCI China ESG Leaders Index ETF (concluded)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
SINGAPORE — 0.3% |
|
||||
Industrials — 0.3% |
|
||||
BOC Aviation |
4,000 |
$ |
38,742 | ||
TOTAL SINGAPORE |
|
38,742 | |||
TOTAL
COMMON STOCK |
|
12,821,523 | |||
TOTAL
INVESTMENTS — 99.9% |
|
12,821,523 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
|
17,004 | |||
NET ASSETS — 100% |
$ |
12,838,527 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
ADR — American Depositary Receipt
Cl — Class
JSC — Joint-Stock Company
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
144
Shares |
Value | ||||
EXCHANGE - TRADED FUND — 6.0% |
|
||||
Schwab Short-Term U.S. Treasury ETF‡ |
109,950 |
$ |
5,641,535 | ||
TOTAL
EXCHANGE - TRADED FUND |
|
5,641,535 | |||
TOTAL
INVESTMENTS — 6.0% |
|
5,641,535 | |||
OTHER ASSETS LESS LIABILITIES — 94.0% |
|
88,059,375 | |||
NET ASSETS — 100% |
$ |
93,700,910 |
A list of the open futures contracts held by the Fund at March 31, 2021, is as follows:
Type of Contract |
Number of
|
Expiration
|
Notional
|
Value |
Unrealized
| |||||||||
RGGI VINTAGE 2021^ |
1,055 |
Dec-2021 |
$ |
8,466,532 |
$ |
8,418,900 |
$ |
(47,632 |
) | |||||
CA Carbon Allowance 2021^ |
804 |
Dec-2021 |
|
14,847,469 |
|
14,882,040 |
|
34,571 |
| |||||
CA Carbon Allowance 2022^ |
194 |
Dec-2022 |
|
3,748,411 |
|
3,755,840 |
|
7,429 |
| |||||
Euro FX 2021^ |
55 |
Jun-2021 |
|
8,228,226 |
|
8,072,625 |
|
(155,601 |
) | |||||
ICE ECX Emission 2021^ |
1,239 |
Dec-2021 |
|
55,534,948 |
|
61,960,921 |
|
7,376,472 |
| |||||
ICE ECX Emission 2022^ |
103 |
Dec-2022 |
|
4,656,686 |
|
5,192,067 |
|
616,086 |
| |||||
$ |
95,482,272 |
$ |
102,282,393 |
$ |
7,831,325 |
|
^ Security is held by the KFA Global Carbon Subsidiary, Ltd. as of March 31, 2021.
‡ For financial information on the Schwab Short-Term U.S. Treasury ETF, please go to the Securities Exchange Commission’s website at http://www.sec.gov.
CA — California
ECX — European Climate Exchange
ETF — Exchange-Traded Fund
EUR — European
ICE — Intercontinental Exchange
RGGI — Regional Greenhouse Gas Initiative
The following summarizes the market value of the Fund’s investments and other financial instruments used as of March 31, 2021, based on the inputs used to value them:
Investments in Securities |
Level 1 |
Level 2 |
Level 3 |
Total | ||||||||
Exchange - Traded Fund |
$ |
5,641,535 |
$ |
— |
$ |
— |
$ |
5,641,535 | ||||
Total Investments in Securities |
$ |
5,641,535 |
$ |
— |
$ |
— |
$ |
5,641,535 |
The accompanying notes are an integral part of the financial statements.
145
Consolidated Schedule of Investments March 31, 2021
KraneShares Global Carbon ETF (concluded)
Other Financial Instruments |
Level 1 |
Level 2 |
Level 3 |
Total | ||||||||||
Futures Contracts* |
|
|
|
|
|
| ||||||||
Unrealized Appreciation |
$ |
8,034,558 |
|
$ |
— |
$ |
— |
$ |
8,034,558 |
| ||||
Unrealized Depreciation |
|
(203,233 |
) |
|
— |
|
— |
|
(203,233 |
) | ||||
Total Other Financial Instruments |
$ |
7,831,325 |
|
$ |
— |
$ |
— |
$ |
7,831,325 |
|
* Futures are valued at the unrealized appreciation (depreciation) on the instrument.
For the period ended March 31, 2021, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
146
Shares |
Value | ||||
COMMON STOCK — 99.9%‡ |
|
||||
CHINA — 88.3% |
|
||||
Information Technology — 88.3% |
|
||||
Avary Holding Shenzhen, Cl A |
588,485 |
$ |
3,201,993 | ||
AVIC Jonhon Optronic Technology, Cl A |
239,069 |
|
2,463,126 | ||
BOE Technology Group, Cl A |
7,229,730 |
|
6,908,859 | ||
BYD Electronic International |
479,000 |
|
2,797,188 | ||
Chaozhou Three-Circle Group, Cl A |
343,524 |
|
2,192,706 | ||
Foxconn Industrial Internet, Cl A |
4,419,354 |
|
9,679,040 | ||
GDS Holdings ADR* |
42,458 |
|
3,442,919 | ||
Gigadevice Semiconductor Beijing, Cl A |
115,500 |
|
3,008,084 | ||
GoerTek, Cl A |
834,222 |
|
3,451,979 | ||
Guangzhou Shiyuan Electronic Technology, Cl A |
147,023 |
|
2,920,203 | ||
JCET Group, Cl A* |
410,521 |
|
2,139,199 | ||
Lingyi iTech Guangdong, Cl A |
1,940,277 |
|
2,418,988 | ||
Luxshare Precision Industry, Cl A |
2,115,005 |
|
10,905,112 | ||
Maxscend Microelectronics, Cl A |
41,441 |
|
3,846,487 | ||
Montage Technology, Cl A |
284,896 |
|
2,657,385 | ||
NAURA Technology Group, Cl A |
137,118 |
|
2,999,744 | ||
Sanan Optoelectronics, Cl A |
1,246,509 |
|
4,422,778 | ||
Shennan Circuits, Cl A |
129,925 |
|
1,743,172 | ||
Shenzhen Goodix Technology, Cl A |
129,389 |
|
2,209,860 | ||
Sunny Optical Technology Group |
267,800 |
|
6,103,861 | ||
Unigroup Guoxin Microelectronics, Cl A |
137,200 |
|
2,237,248 | ||
Will Semiconductor Shanghai, Cl A |
204,371 |
|
7,996,422 | ||
Wingtech Technology, Cl A |
280,355 |
|
4,187,464 | ||
Wuhan Guide Infrared, Cl A |
380,083 |
|
2,074,433 | ||
Yealink Network Technology, Cl A |
222,780 |
|
2,314,655 | ||
Zhejiang Dahua Technology, Cl A |
571,500 |
|
2,148,830 | ||
ZTE, Cl H |
1,759,000 |
|
4,466,253 | ||
TOTAL CHINA |
|
104,937,988 | |||
|
|||||
HONG KONG — 11.6% |
|
||||
Information Technology — 11.6% |
|
||||
Hua Hong Semiconductor* |
317,000 |
|
1,726,804 | ||
Xiaomi, Cl B* |
3,656,000 |
|
12,109,152 | ||
TOTAL HONG KONG |
|
13,835,956 | |||
TOTAL
COMMON STOCK |
|
118,773,944 | |||
TOTAL
INVESTMENTS — 99.9% |
|
118,773,944 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
|
106,207 | |||
NET ASSETS — 100% |
$ |
118,880,151 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
The accompanying notes are an integral part of the financial statements.
147
Schedule of Investments March 31, 2021
KraneShares CICC China 5G & Semiconductor Index ETF (concluded)
* Non-income producing security.
ADR — American Depositary Receipt
Cl — Class
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
148
Shares |
Value | |||||
COMMON STOCK — 100.0%‡ |
|
| ||||
CHINA — 100.0% |
|
| ||||
Consumer Discretionary — 39.2% |
|
| ||||
ANTA Sports Products |
138,000 |
$ |
2,250,757 |
| ||
China Tourism Group Duty Free, Cl A |
52,900 |
|
2,467,785 |
| ||
Gree Electric Appliances of Zhuhai, Cl A |
307,200 |
|
2,935,658 |
| ||
Haidilao International Holding |
120,000 |
|
820,380 |
| ||
Haier Smart Home, Cl A |
409,100 |
|
1,944,117 |
| ||
Hangzhou Robam Appliances, Cl A |
52,100 |
|
289,991 |
| ||
Huazhu Group ADR* |
32,134 |
|
1,764,157 |
| ||
Li Ning |
239,000 |
|
1,552,457 |
| ||
Midea Group, Cl A |
269,765 |
|
3,380,902 |
| ||
Oppein Home Group, Cl A |
28,400 |
|
682,211 |
| ||
Shanghai Jinjiang International Hotels, Cl A |
33,300 |
|
281,679 |
| ||
Yum China Holdings |
41,831 |
|
2,476,813 |
| ||
Zhejiang Supor, Cl A |
40,400 |
|
440,563 |
| ||
|
21,287,470 |
| ||||
Consumer Staples — 60.8% |
|
| ||||
Anhui Gujing Distillery, Cl A |
11,800 |
|
377,981 |
| ||
Anhui Kouzi Distillery, Cl A |
48,800 |
|
461,135 |
| ||
China Mengniu Dairy |
309,000 |
|
1,768,678 |
| ||
Dali Foods Group |
299,000 |
|
169,990 |
| ||
Foshan Haitian Flavouring & Food, Cl A |
123,700 |
|
3,012,751 |
| ||
Henan Shuanghui Investment & Development, Cl A |
323,735 |
|
2,022,974 |
| ||
Hengan International Group |
78,000 |
|
512,680 |
| ||
Inner Mongolia Yili Industrial Group, Cl A |
407,000 |
|
2,483,114 |
| ||
Jiangsu Yanghe Brewery Joint-Stock, Cl A |
98,600 |
|
2,475,069 |
| ||
Kweichow Moutai, Cl A |
21,100 |
|
6,460,693 |
| ||
Luzhou Laojiao, Cl A |
80,800 |
|
2,771,081 |
| ||
Muyuan Foods, Cl A |
157,852 |
|
2,406,562 |
| ||
Shanxi Xinghuacun Fen Wine Factory, Cl A |
28,300 |
|
1,435,445 |
| ||
Want Want China Holdings |
731,000 |
|
548,171 |
| ||
Wens Foodstuffs Group |
708,731 |
|
1,827,673 |
| ||
Wuliangye Yibin, Cl A |
103,400 |
|
4,223,180 |
| ||
|
32,957,177 |
| ||||
TOTAL CHINA |
|
54,244,647 |
| |||
TOTAL
COMMON STOCK |
|
54,244,647 |
| |||
TOTAL
INVESTMENTS — 100.0% |
|
54,244,647 |
| |||
OTHER ASSETS LESS LIABILITIES — 0.0% |
|
(25,374 |
) | |||
NET ASSETS — 100% |
$ |
54,219,273 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
The accompanying notes are an integral part of the financial statements.
149
Schedule of Investments March 31, 2021
KraneShares CICC China Consumer Leaders Index ETF (concluded)
* Non-income producing security.
ADR — American Depositary Receipt
Cl — Class
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
150
Shares |
Value | ||||
COMMON STOCK — 99.3%‡ |
|
||||
CHINA — 99.3% |
|
||||
Consumer Discretionary — 6.9% |
|
||||
Autel Intelligent Technology, Cl A* |
78,825 |
$ |
802,522 | ||
Beijing Roborock Technology, Cl A |
31,765 |
|
5,649,844 | ||
|
6,452,366 | ||||
Health Care — 14.6% |
|
||||
Bloomage Biotechnology, Cl A* |
84,066 |
|
1,975,702 | ||
BrightGene Bio-Medical Technology, Cl A* |
65,118 |
|
400,363 | ||
Micro-Tech Nanjing, Cl A |
63,738 |
|
1,797,161 | ||
Qingdao Haier Biomedical, Cl A* |
151,437 |
|
1,993,940 | ||
Shanghai Haohai Biological Technology, Cl A* |
26,262 |
|
445,091 | ||
Shanghai Junshi Biosciences, Cl A* |
109,810 |
|
1,434,131 | ||
Shanghai MicroPort Endovascular MedTech, Cl A* |
45,933 |
|
2,032,794 | ||
Shanghai Shen Lian Biomedical, Cl A |
78,082 |
|
151,851 | ||
Shenzhen Chipscreen Biosciences, Cl A* |
326,365 |
|
1,902,619 | ||
Shenzhen Lifotronic Technology, Cl A* |
60,349 |
|
214,954 | ||
Suzhou Zelgen Biopharmaceutical* |
114,626 |
|
1,052,060 | ||
Xiamen Amoytop Biotech, Cl A* |
64,609 |
|
321,706 | ||
|
13,722,372 | ||||
Industrials — 8.8% |
|
||||
Farasis Energy Gan Zhou, Cl A* |
238,634 |
|
937,995 | ||
Guangdong Jia Yuan Technology Shares, Cl A* |
183,780 |
|
2,083,113 | ||
Ningbo Ronbay New Energy Technology, Cl A |
352,862 |
|
3,072,457 | ||
Suntar Environmental Technology, Cl A |
159,081 |
|
379,445 | ||
Zhejiang HangKe Technology, Cl A |
191,521 |
|
1,798,100 | ||
|
8,271,110 | ||||
Information Technology — 64.2% |
|
||||
Amlogic Shanghai, Cl A |
327,256 |
|
4,100,426 | ||
Anji Microelectronics Technology Shanghai, Cl A* |
33,739 |
|
961,488 | ||
Appotronics, Cl A |
288,321 |
|
949,176 | ||
Arcsoft, Cl A |
323,180 |
|
2,456,901 | ||
Beijing Kingsoft Office Software, Cl A* |
146,784 |
|
7,248,372 | ||
Cambricon Technologies* |
51,044 |
|
1,096,078 | ||
China Railway Signal & Communication, Cl A* |
4,117,462 |
|
3,558,192 | ||
China Resources Microelectronics, Cl A |
580,734 |
|
4,939,762 |
The accompanying notes are an integral part of the financial statements.
151
Schedule of Investments March 31, 2021
KraneShares SSE STAR Market 50 Index ETF (concluded)
Shares |
Value | ||||
COMMON STOCK (continued) |
|
||||
Information Technology (continued) |
|
||||
DBAPP Security, Cl A |
35,295 |
$ |
1,421,924 | ||
Espressif Systems Shanghai, Cl A* |
63,759 |
|
986,043 | ||
Guangzhou Fangbang Electronics, Cl A |
51,029 |
|
552,195 | ||
Hillstone Networks, Cl A |
143,117 |
|
701,930 | ||
Montage Technology, Cl A |
719,476 |
|
6,710,957 | ||
National Silicon Industry Group, Cl A* |
789,726 |
|
2,830,939 | ||
Piesat Information Technology, Cl A |
131,809 |
|
705,130 | ||
Qi An Xin Technology Group, Cl A* |
119,015 |
|
1,606,771 | ||
Raytron Technology, Cl A |
354,225 |
|
4,788,721 | ||
Shanghai Bright Power Semiconductor, Cl A |
29,351 |
|
883,500 | ||
Shanghai Friendess Electronic Technology, Cl A* |
47,854 |
|
2,137,282 | ||
Shenzhen Qingyi Photomask, Cl A |
127,120 |
|
335,954 | ||
Shenzhen Transsion Holdings, Cl A |
254,724 |
|
8,128,713 | ||
Suzhou HYC Technology, Cl A |
61,333 |
|
315,302 | ||
Traffic Control Technology, Cl A |
127,058 |
|
747,685 | ||
Trina Solar, Cl A* |
460,929 |
|
1,303,151 | ||
UCloud Technology, Cl A |
80,529 |
|
457,557 | ||
Willfar Information Technology, Cl A |
71,470 |
|
230,928 | ||
|
60,155,077 | ||||
Materials — 4.8% |
|
||||
Jiangsu Cnano Technology, Cl A* |
221,473 |
|
1,731,292 | ||
Ningbo Solartron Technology, Cl A |
134,635 |
|
556,089 | ||
Western Superconducting Technologies, Cl A* |
281,005 |
|
2,165,398 | ||
|
4,452,779 | ||||
TOTAL CHINA |
|
93,053,704 | |||
TOTAL
COMMON STOCK |
|
93,053,704 | |||
TOTAL
INVESTMENTS — 99.3% |
|
93,053,704 | |||
OTHER ASSETS LESS LIABILITIES — 0.7% |
|
668,055 | |||
NET ASSETS — 100% |
$ |
93,721,759 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
Cl — Class
As of March 31, 2021, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended March 31, 2021, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
152
KraneShares |
KraneShares |
KraneShares | ||||||||
Assets: |
|
|
|
|
||||||
Investments at Value |
$ |
12,563,015 |
$ |
3,842,215,253 |
* |
$ |
801,662,042 | |||
Cash and Cash Equivalents |
|
7,431 |
|
66,221,740 |
|
|
5,032,671 | |||
Foreign Currency at Value |
|
5 |
|
— |
|
|
1,374,605 | |||
Receivable for Capital Shares Sold |
|
— |
|
15,149,996 |
|
|
4,400,095 | |||
Dividend and Interest Receivable |
|
— |
|
362,298 |
|
|
— | |||
Unrealized Appreciation on Spot Contracts |
|
— |
|
— |
|
|
3,739 | |||
Total Assets |
|
12,570,451 |
|
3,923,949,287 |
|
|
812,473,152 | |||
Liabilities: |
|
|
|
|
||||||
Payable for Investment Securities Purchased |
|
— |
|
46,055,725 |
|
|
— | |||
Obligation to Return Securities Lending Collateral |
|
— |
|
199,656,233 |
|
|
— | |||
Payable for Capital Shares Redeemed |
|
— |
|
13,671,132 |
|
|
— | |||
Payable for Management Fees |
|
7,420 |
|
2,265,121 |
|
|
409,963 | |||
Payable for Trustees’ Fee |
|
10 |
|
2,698 |
|
|
665 | |||
Authorized Participant Subscription Received in Advanced |
|
— |
|
— |
|
|
9,698,793 | |||
Payable for Securities Lending Fees |
|
— |
|
36,230 |
|
|
— | |||
Unrealized Depreciation on Spot Contracts |
|
— |
|
2,115 |
|
|
— | |||
Total Liabilities |
|
7,430 |
|
261,689,254 |
|
|
10,109,421 | |||
Net Assets |
$ |
12,563,021 |
$ |
3,662,260,033 |
|
$ |
802,363,731 | |||
Net Assets Consist of: |
|
|
|
|
||||||
Paid-in Capital |
$ |
11,373,028 |
$ |
3,322,558,637 |
|
$ |
633,517,247 | |||
Total Distributable Earnings |
|
1,189,993 |
|
339,701,396 |
|
|
168,846,484 | |||
Net Assets |
$ |
12,563,021 |
$ |
3,662,260,033 |
|
$ |
802,363,731 | |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
400,000 |
|
48,450,000 |
|
|
18,250,000 | |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
31.41 |
$ |
75.59 |
|
$ |
43.97 | |||
Cost of Investments |
$ |
11,832,245 |
$ |
3,620,642,247 |
|
$ |
621,087,177 | |||
Cost of Foreign Currency |
|
5 |
|
— |
|
|
1,382,289 | |||
*Includes Market Value of Securities on Loan |
|
— |
|
192,461,874 |
|
|
— |
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
153
Statements of Assets and Liabilities (continued)
March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||
Assets: |
|
|
|
| ||||||
Investments at Value |
$ |
— |
$ |
22,357,848 |
$ |
10,039,366 |
| |||
Foreign Currency at Value |
|
12,161,487 |
|
1,545 |
|
97 |
| |||
Cash and Cash Equivalents |
|
— |
|
51,935 |
|
60,748 |
| |||
Dividend and Interest Receivable |
|
— |
|
— |
|
6,076 |
| |||
Reclaim Receivable |
|
— |
|
81 |
|
— |
| |||
Total Assets |
|
12,161,487 |
|
22,411,409 |
|
10,106,287 |
| |||
Liabilities: |
|
|
|
| ||||||
Payable to Custodian |
|
21,447 |
|
— |
|
— |
| |||
Payable for Management Fees |
|
5,817 |
|
9,431 |
|
5,953 |
| |||
Payable for Trustees’ Fee |
|
8 |
|
37 |
|
11 |
| |||
Payable for Foreign Capital Gains Tax |
|
— |
|
— |
|
1,264 |
| |||
Total Liabilities |
|
27,272 |
|
9,468 |
|
7,228 |
| |||
Net Assets |
$ |
12,134,215 |
$ |
22,401,941 |
$ |
10,099,059 |
| |||
Net Assets Consist of: |
|
|
|
| ||||||
Paid-in Capital |
$ |
11,606,151 |
$ |
22,114,405 |
$ |
12,644,783 |
| |||
Total Distributable Earnings/(Loss) |
|
528,064 |
|
287,536 |
|
(2,545,724 |
) | |||
Net Assets |
$ |
12,134,215 |
$ |
22,401,941 |
$ |
10,099,059 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
350,000 |
|
650,000 |
|
350,002 |
| |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
34.67 |
$ |
34.46 |
$ |
28.85 |
| |||
Cost of Investments |
$ |
— |
$ |
22,187,618 |
$ |
8,355,023 |
| |||
Cost of Foreign Currency |
|
12,259,311 |
|
1,545 |
|
97 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
154
Statements of Assets and Liabilities (continued)
March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value |
$ |
111,267,863 |
* |
$ |
140,819,400 |
|
$ |
209,055,985 |
* | |||
Cash and Cash Equivalents |
|
101,244 |
|
|
466,395 |
|
|
474,053 |
| |||
Foreign Currency at Value |
|
1,826 |
|
|
23 |
|
|
287,808 |
| |||
Dividend and Interest Receivable |
|
47,927 |
|
|
— |
|
|
66,980 |
| |||
Reclaim Receivable |
|
6,044 |
|
|
— |
|
|
56,513 |
| |||
Total Assets |
|
111,424,904 |
|
|
141,285,818 |
|
|
209,941,339 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Payable for Investment Securities Purchased |
|
— |
|
|
— |
|
|
266,060 |
| |||
Obligation to Return Securities Lending Collateral |
|
770,626 |
|
|
— |
|
|
10,993,789 |
| |||
Payable for Management Fees |
|
49,949 |
|
|
112,201 |
|
|
109,936 |
| |||
Payable for Trustees’ Fee |
|
32 |
|
|
286 |
|
|
327 |
| |||
Payable for Securities Lending Fees |
|
21 |
|
|
— |
|
|
1,443 |
| |||
Total Liabilities |
|
820,628 |
|
|
112,487 |
|
|
11,371,555 |
| |||
Net Assets |
$ |
110,604,276 |
|
$ |
141,173,331 |
|
$ |
198,569,784 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital |
$ |
108,577,896 |
|
$ |
162,497,792 |
|
$ |
183,674,780 |
| |||
Total Distributable Earnings/(Loss) |
|
2,026,380 |
|
|
(21,324,461 |
) |
|
14,895,004 |
| |||
Net Assets |
$ |
110,604,276 |
|
$ |
141,173,331 |
|
$ |
198,569,784 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
3,450,002 |
|
|
3,500,002 |
|
|
4,700,002 |
| |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
32.06 |
|
$ |
40.34 |
|
$ |
42.25 |
| |||
Cost of Investments |
$ |
107,032,703 |
|
$ |
148,357,695 |
|
$ |
195,563,519 |
| |||
Cost of Foreign Currency |
|
1,770 |
|
|
23 |
|
|
214,589 |
| |||
*Includes Market Value of Securities on Loan |
|
732,703 |
|
|
— |
|
|
10,578,384 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
155
Statements of Assets and Liabilities (continued)
March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value |
$ |
214,600,083 |
* |
$ |
6,944,335 |
|
$ |
4,949,264 |
| |||
Cash and Cash Equivalents |
|
240,006 |
|
|
2,742,669 |
|
|
59,831 |
| |||
Foreign Currency at Value |
|
64 |
|
|
— |
|
|
1 |
| |||
Receivable due from Administrator |
|
44,500 |
|
|
— |
|
|
— |
| |||
Dividend and Interest Receivable |
|
292 |
|
|
104,613 |
|
|
9,917 |
| |||
Total Assets |
|
214,884,945 |
|
|
9,791,617 |
|
|
5,019,013 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Obligation to Return Securities Lending Collateral |
|
292,977 |
|
|
— |
|
|
— |
| |||
Payable for Management Fees |
|
127,579 |
|
|
5,628 |
|
|
3,682 |
| |||
Payable for Trustees’ Fee |
|
309 |
|
|
8 |
|
|
6 |
| |||
Payable for Securities Lending Fees |
|
29 |
|
|
— |
|
|
22 |
| |||
Payable for Foreign Capital Gains Tax |
|
— |
|
|
— |
|
|
6,541 |
| |||
Total Liabilities |
|
420,894 |
|
|
5,636 |
|
|
10,251 |
| |||
Net Assets |
$ |
214,464,051 |
|
$ |
9,785,981 |
|
$ |
5,008,762 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital |
$ |
193,930,221 |
|
$ |
9,972,482 |
|
$ |
5,231,478 |
| |||
Total Distributable Earnings/(Loss) |
|
20,533,830 |
|
|
(186,501 |
) |
|
(222,716 |
) | |||
Net Assets |
$ |
214,464,051 |
|
$ |
9,785,981 |
|
$ |
5,008,762 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
5,600,002 |
|
|
250,001 |
|
|
150,002 |
| |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
38.30 |
|
$ |
39.14 |
|
$ |
33.39 |
| |||
Cost of Investments |
$ |
197,978,488 |
|
$ |
6,971,757 |
|
$ |
4,861,824 |
| |||
Cost of Foreign Currency |
|
64 |
|
|
— |
|
|
1 |
| |||
*Includes
Market Value of Securities |
|
292,977 |
|
|
— |
|
|
— |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
156
Statements of Assets and Liabilities/Consolidated Statement of Assets and Liabilities (continued)
March 31, 2021
KraneShares |
KraneShares |
KraneShares | |||||||
Assets: |
|
|
|
||||||
Investments at Value |
$ |
30,836,955 |
$ |
12,821,523 |
$ |
5,641,535 | |||
Cash and Cash Equivalents |
|
120,015 |
|
21,840 |
|
63,582,382 | |||
Foreign Currency at Value |
|
2,537 |
|
327 |
|
13,024,261 | |||
Cash Collateral on Futures Contracts |
|
— |
|
— |
|
10,002,766 | |||
Dividend and Interest Receivable |
|
56,693 |
|
746 |
|
— | |||
Reclaim Receivable |
|
139 |
|
— |
|
— | |||
Receivable for Capital Shares Sold |
|
— |
|
— |
|
1,407,969 | |||
Variation Margin Receivable on Future Contracts |
|
— |
|
— |
|
776,840 | |||
Total Assets |
|
31,016,339 |
|
12,844,436 |
|
94,435,753 | |||
Liabilities: |
|
|
|
||||||
Payable for Foreign Capital Gains Tax |
|
19,073 |
|
— |
|
— | |||
Payable for Management Fees |
|
6,051 |
|
5,866 |
|
37,173 | |||
Payable for Trustees’ Fee |
|
61 |
|
43 |
|
190 | |||
Unrealized Depreciation on Spot Contracts |
|
6 |
|
— |
|
— | |||
Authorized Participant Subscription Received in Advanced |
|
— |
|
— |
|
697,480 | |||
Total Liabilities |
|
25,191 |
|
5,909 |
|
734,843 | |||
Net Assets |
$ |
30,991,148 |
$ |
12,838,527 |
$ |
93,700,910 | |||
Net Assets Consist of: |
|
|
|
||||||
Paid-in Capital |
$ |
30,389,614 |
$ |
12,469,264 |
$ |
85,857,210 | |||
Total Distributable Earnings |
|
601,534 |
|
369,263 |
|
7,843,700 | |||
Net Assets |
$ |
30,991,148 |
$ |
12,838,527 |
$ |
93,700,910 | |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
1,000,002 |
|
400,000 |
|
3,300,000 | |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
30.99 |
$ |
32.10 |
$ |
28.39 | |||
Cost of Investments |
$ |
30,557,716 |
$ |
12,481,959 |
$ |
5,654,285 | |||
Cost of Foreign Currency |
|
2,518 |
|
327 |
|
13,092,096 |
(1) KraneShares Global Carbon ETF includes the account of the Fund’s Subsidiary, KFA Global Carbon, Subsidiary, Ltd.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
157
Statements of Assets and Liabilities (concluded)
March 31, 2021
KraneShares CICC |
KraneShares CICC |
KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value |
$ |
118,773,944 |
|
$ |
54,244,647 |
|
$ |
93,053,704 |
| |||
Cash and Cash Equivalents |
|
7,271,663 |
|
|
— |
|
|
371,462 |
| |||
Foreign Currency at Value |
|
1 |
|
|
— |
|
|
365,051 |
| |||
Receivable for Investment Securities Sold |
|
5,104,477 |
|
|
3,390,913 |
|
|
— |
| |||
Unrealized Appreciation on Spot Contracts |
|
— |
|
|
353 |
|
|
— |
| |||
Total Assets |
|
131,150,085 |
|
|
57,635,913 |
|
|
93,790,217 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Payable for Investment Securities Purchased |
|
12,188,110 |
|
|
505,267 |
|
|
— |
| |||
Payable for Capital Shares Redeemed |
|
— |
|
|
2,602,706 |
|
|
— |
| |||
Payable for Management Fees |
|
80,688 |
|
|
31,703 |
|
|
68,264 |
| |||
Unrealized Depreciation on Spot Contracts |
|
848 |
|
|
— |
|
|
— |
| |||
Payable for Trustees’ Fee |
|
288 |
|
|
117 |
|
|
194 |
| |||
Payable to Custodian |
|
— |
|
|
276,847 |
|
|
— |
| |||
Total Liabilities |
|
12,269,934 |
|
|
3,416,640 |
|
|
68,458 |
| |||
Net Assets |
$ |
118,880,151 |
|
$ |
54,219,273 |
|
$ |
93,721,759 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital |
$ |
132,744,349 |
|
$ |
60,114,055 |
|
$ |
105,090,557 |
| |||
Total Distributable Loss |
|
(13,864,198 |
) |
|
(5,894,782 |
) |
|
(11,368,798 |
) | |||
Net Assets |
$ |
118,880,151 |
|
$ |
54,219,273 |
|
$ |
93,721,759 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
|
5,150,002 |
|
|
2,100,002 |
|
|
4,450,000 |
| |||
Net Asset Value, Offering and Redemption Price Per Share |
$ |
23.08 |
|
$ |
25.82 |
|
$ |
21.06 |
| |||
Cost of Investments |
$ |
123,881,986 |
|
$ |
57,500,435 |
|
$ |
103,299,435 |
| |||
Cost of Foreign Currency |
|
1 |
|
|
— |
|
|
367,877 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
158
KraneShares |
KraneShares |
KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
474,482 |
|
$ |
5,864,511 |
|
$ |
10,291,478 |
| |||
Interest Income |
|
206 |
|
|
3,604 |
|
|
6,672 |
| |||
Security Lending Income |
|
— |
|
|
3,716,046 |
|
|
— |
| |||
Less: Foreign Taxes Withheld |
|
(47,448 |
) |
|
— |
|
|
(1,030,366 |
) | |||
Total Investment Income |
|
427,240 |
|
|
9,584,161 |
|
|
9,267,784 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
85,899 |
|
|
21,040,968 |
|
|
5,436,182 |
| |||
Trustees’ Fees |
|
1,116 |
|
|
223,648 |
|
|
51,591 |
| |||
Security Lending Fees† |
|
— |
|
|
376,498 |
|
|
— |
| |||
Insurance Expense |
|
626 |
|
|
85,485 |
|
|
20,101 |
| |||
Total Expenses |
|
87,641 |
|
|
21,726,599 |
|
|
5,507,874 |
| |||
Management Fee Waiver† |
|
— |
|
|
— |
|
|
(1,393,898 |
) | |||
Net Expenses |
|
87,641 |
|
|
21,726,599 |
|
|
4,113,976 |
| |||
Net Investment Income (Loss) |
|
339,599 |
|
|
(12,142,438 |
) |
|
5,153,808 |
| |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
1,039,043 |
|
|
759,722,139 |
|
|
30,577,538 |
| |||
Foreign Currency Translations |
|
296 |
|
|
(48,941 |
) |
|
117,456 |
| |||
Net Realized Gain on Investments and Foreign Currency Translations |
|
1,039,339 |
|
|
759,673,198 |
|
|
30,694,994 |
| |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
1,788,574 |
|
|
393,639,917 |
|
|
205,315,078 |
| |||
Foreign Currency Translations |
|
— |
|
|
(826 |
) |
|
(5,570 |
) | |||
Net Change in Unrealized Appreciation on Investments and Foreign Currency Translations |
|
1,788,574 |
|
|
393,639,091 |
|
|
205,309,508 |
| |||
Net Realized and Unrealized Gain on Investments and Foreign Currency Translations |
|
2,827,913 |
|
|
1,153,312,289 |
|
|
236,004,502 |
| |||
Net Increase in Net Assets Resulting from Operations |
$ |
3,167,512 |
|
$ |
1,141,169,851 |
|
$ |
241,158,310 |
|
† See Note 3 in Notes to Financial Statements.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
159
Statements of Operations (continued)
For the Year Ended March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
— |
|
$ |
112,243 |
|
$ |
265,578 |
| |||
Interest Income |
|
310,617 |
|
|
10 |
|
|
34 |
| |||
Less: Foreign Taxes Withheld |
|
(1,567 |
) |
|
(9,373 |
) |
|
(29,072 |
) | |||
Total Investment Income |
|
309,050 |
|
|
102,880 |
|
|
236,540 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
88,514 |
|
|
60,182 |
|
|
64,348 |
| |||
Trustees’ Fees |
|
1,074 |
|
|
553 |
|
|
678 |
| |||
Insurance Expense |
|
522 |
|
|
263 |
|
|
293 |
| |||
Total Expenses |
|
90,110 |
|
|
60,998 |
|
|
65,319 |
| |||
Management Fee Waiver† |
|
(15,620 |
) |
|
(17,700 |
) |
|
— |
| |||
Reimbursement for Trustees’ Fees† |
|
— |
|
|
(70 |
) |
|
— |
| |||
Net Expenses |
|
74,490 |
|
|
43,228 |
|
|
65,319 |
| |||
Net Investment Income |
|
234,560 |
|
|
59,652 |
|
|
171,221 |
| |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
14,506 |
|
|
606,737 |
|
|
(153,290 |
) | |||
Foreign Currency Translations |
|
1,020,904 |
|
|
7,475 |
|
|
(2,148 |
) | |||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
1,035,410 |
|
|
614,212 |
|
|
(155,438 |
) | |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
115,617 |
|
|
98,616 |
|
|
3,962,183 |
| |||
Affiliated Investments |
|
77 |
|
|
— |
|
|
— |
| |||
Accrued Foreign Capital Gains Tax on Appreciated Securities |
|
— |
|
|
— |
|
|
(1,264 |
) | |||
Foreign Currency Translations |
|
(98,672 |
) |
|
66 |
|
|
456 |
| |||
Net Change in Unrealized Appreciation on Investments, Affiliated Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
17,022 |
|
|
98,682 |
|
|
3,961,375 |
| |||
Net Realized and Unrealized Gain on Investments, Affiliated Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
1,052,432 |
|
|
712,894 |
|
|
3,805,937 |
| |||
Net Increase in Net Assets Resulting from Operations |
$ |
1,286,992 |
|
$ |
772,546 |
|
$ |
3,977,158 |
|
† See Note 3 in Notes to Financial Statements.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
160
Statements of Operations (continued)
For the Year Ended March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
988,394 |
|
$ |
67,036 |
|
$ |
507,502 |
| |||
Interest Income |
|
143 |
|
|
64 |
|
|
68 |
| |||
Security Lending Income |
|
11,093 |
|
|
— |
|
|
122,971 |
| |||
Less: Foreign Taxes Withheld |
|
(119,146 |
) |
|
(1,205 |
) |
|
(44,837 |
) | |||
Total Investment Income |
|
880,484 |
|
|
65,895 |
|
|
585,704 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
717,814 |
|
|
380,689 |
|
|
434,111 |
| |||
Trustees’ Fees |
|
6,705 |
|
|
2,015 |
|
|
3,290 |
| |||
Security Lending Fees† |
|
1,107 |
|
|
— |
|
|
12,383 |
| |||
Insurance Expense |
|
723 |
|
|
64 |
|
|
660 |
| |||
Total Expenses |
|
726,349 |
|
|
382,768 |
|
|
450,444 |
| |||
Management Fee Waiver† |
|
(179,584 |
) |
|
— |
|
|
— |
| |||
Net Expenses |
|
546,765 |
|
|
382,768 |
|
|
450,444 |
| |||
Net Investment Income (Loss) |
|
333,719 |
|
|
(316,873 |
) |
|
135,260 |
| |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
21,229,409 |
|
|
(11,401,068 |
) |
|
5,225,082 |
| |||
Foreign Currency Translations |
|
(135,411 |
) |
|
(75,257 |
) |
|
(45,676 |
) | |||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
21,093,998 |
|
|
(11,476,325 |
) |
|
5,179,406 |
| |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
8,849,312 |
|
|
(7,419,202 |
) |
|
17,029,121 |
| |||
Foreign Currency Translations |
|
(67 |
) |
|
(12 |
) |
|
2,762 |
| |||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
8,849,245 |
|
|
(7,419,214 |
) |
|
17,031,883 |
| |||
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Translations |
|
29,943,243 |
|
|
(18,895,539 |
) |
|
22,211,289 |
| |||
Net Increase (Decrease) in Net Assets Resulting from Operations |
$ |
30,276,962 |
|
$ |
(19,212,412 |
) |
$ |
22,346,549 |
|
† See Note 3 in Notes to Financial Statements.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
161
Statements of Operations (continued)
For the Year Ended March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
540,202 |
|
$ |
— |
|
$ |
22,553 |
| |||
Interest Income |
|
77 |
|
|
611,335 |
|
|
4 |
| |||
Security Lending Income |
|
19,942 |
|
|
— |
|
|
4,068 |
| |||
Less: Foreign Taxes Withheld |
|
(42,978 |
) |
|
— |
|
|
(1,625 |
) | |||
Total Investment Income |
|
517,243 |
|
|
611,335 |
|
|
25,000 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
1,016,580 |
|
|
69,069 |
|
|
26,083 |
| |||
Trustees’ Fees |
|
7,941 |
|
|
852 |
|
|
203 |
| |||
Security Lending Fees† |
|
2,021 |
|
|
— |
|
|
402 |
| |||
Insurance Expense |
|
1,137 |
|
|
426 |
|
|
38 |
| |||
Total Expenses |
|
1,027,679 |
|
|
70,347 |
|
|
26,726 |
| |||
Management Fee Waiver† |
|
(182,461 |
) |
|
— |
|
|
— |
| |||
Net Expenses |
|
845,218 |
|
|
70,347 |
|
|
26,726 |
| |||
Net Investment Income (Loss) |
|
(327,975 |
) |
|
540,988 |
|
|
(1,726 |
) | |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
14,325,160 |
|
|
(205,922 |
) |
|
277,878 |
| |||
Foreign Currency Translations |
|
(113,694 |
) |
|
— |
|
|
(3,928 |
) | |||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
14,211,466 |
|
|
(205,922 |
) |
|
273,950 |
| |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
14,169,467 |
|
|
905,654 |
|
|
90,478 |
| |||
Accrued Foreign Capital Gains Tax on Appreciated Securities |
|
— |
|
|
— |
|
|
(6,541 |
) | |||
Foreign Currency Translations |
|
— |
|
|
— |
|
|
(22 |
) | |||
Net Change in Unrealized Appreciation on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
14,169,467 |
|
|
905,654 |
|
|
83,915 |
| |||
Net Realized and Unrealized Gain on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
28,380,933 |
|
|
699,732 |
|
|
357,865 |
| |||
Net Increase in Net Assets Resulting from Operations |
$ |
28,052,958 |
|
$ |
1,240,720 |
|
$ |
356,139 |
|
† See Note 3 in Notes to Financial Statements.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
162
Statements of Operations/Consolidated Statement of Operations (continued)
For the Year or Period Ended March 31, 2021
KraneShares |
KraneShares |
KraneShares
| ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
168,684 |
|
$ |
9,357 |
|
$ |
7,466 |
| |||
Interest Income |
|
8 |
|
|
— |
|
|
6 |
| |||
Less: Foreign Taxes Withheld |
|
(21,812 |
) |
|
(122 |
) |
|
— |
| |||
Total Investment Income |
|
146,880 |
|
|
9,235 |
|
|
7,472 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
38,639 |
|
|
22,584 |
|
|
97,539 |
| |||
Trustees’ Fees |
|
250 |
|
|
180 |
|
|
582 |
| |||
Insurance Expense |
|
72 |
|
|
— |
|
|
— |
| |||
Total Expenses |
|
38,961 |
|
|
22,764 |
|
|
98,121 |
| |||
Management Fee Waiver† |
|
(18,746 |
) |
|
— |
|
|
— |
| |||
Net Expenses |
|
20,215 |
|
|
22,764 |
|
|
98,121 |
| |||
Net Investment Income (Loss) |
|
126,665 |
|
|
(13,529 |
) |
|
(90,649 |
) | |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
328,121 |
|
|
72,993 |
|
|
— |
| |||
Futures Contracts |
|
— |
|
|
— |
|
|
1,082,983 |
| |||
Foreign Currency Translations |
|
(26,909 |
) |
|
458 |
|
|
(899,401 |
) | |||
Net Realized Gain on Investments, Futures Contracts and Foreign Currency Translations |
|
301,212 |
|
|
73,451 |
|
|
183,582 |
| |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
901,852 |
|
|
339,564 |
|
|
(12,750 |
) | |||
Accrued Foreign Capital Gains Tax on Appreciated Securities |
|
(19,073 |
) |
|
— |
|
|
— |
| |||
Futures Contracts |
|
— |
|
|
— |
|
|
7,831,325 |
| |||
Foreign Currency Translations |
|
26 |
|
|
— |
|
|
(67,808 |
) | |||
Net Change in Unrealized Appreciation on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities, Futures Contracts and Foreign Currency Translations |
|
882,805 |
|
|
339,564 |
|
|
7,750,767 |
| |||
Net Realized and Unrealized Gain on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities, Futures Contracts and Foreign Currency Translations |
|
1,184,017 |
|
|
413,015 |
|
|
7,934,349 |
| |||
Net Increase in Net Assets Resulting from Operations |
$ |
1,310,682 |
|
$ |
399,486 |
|
$ |
7,843,700 |
|
† See Note 3 in Notes to Financial Statements.
(1) Commenced operations on July 28, 2020.
(2) Commenced operations on July 29, 2020.
(3) KraneShares Global Carbon ETF includes the account of the Fund’s Subsidiary, KFA Global Carbon, Subsidiary, Ltd.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
163
Statements of Operations (concluded)
For the Period Ended March 31, 2021
KraneShares |
KraneShares |
KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income |
$ |
— |
|
$ |
5,244 |
|
$ |
— |
| |||
Interest Income |
|
11 |
|
|
14 |
|
|
— |
| |||
Total Investment Income |
|
11 |
|
|
5,258 |
|
|
— |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
|
352,397 |
|
|
68,262 |
|
|
84,101 |
| |||
Trustees’ Fees |
|
1,746 |
|
|
117 |
|
|
198 |
| |||
Total Expenses |
|
354,143 |
|
|
68,379 |
|
|
84,299 |
| |||
Management Fee Waiver† |
|
(63,250 |
) |
|
— |
|
|
— |
| |||
Net Expenses |
|
290,893 |
|
|
68,379 |
|
|
84,299 |
| |||
Net Investment Loss |
|
(290,882 |
) |
|
(63,121 |
) |
|
(84,299 |
) | |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
|
(8,293,903 |
) |
|
(2,501,973 |
) |
|
(1,120,241 |
) | |||
Foreign Currency Translations |
|
(238,672 |
) |
|
(75,563 |
) |
|
(49,232 |
) | |||
Net Realized (Loss) on Investments and Foreign Currency Translations |
|
(8,532,575 |
) |
|
(2,577,536 |
) |
|
(1,169,473 |
) | |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
|
(5,108,042 |
) |
|
(3,255,788 |
) |
|
(10,245,731 |
) | |||
Foreign Currency Translations |
|
(625 |
) |
|
260 |
|
|
(2,826 |
) | |||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Translations |
|
(5,108,667 |
) |
|
(3,255,528 |
) |
|
(10,248,557 |
) | |||
Net Realized and Unrealized Loss on Investments and Foreign Currency Translations |
|
(13,641,242 |
) |
|
(5,833,064 |
) |
|
(11,418,030 |
) | |||
Net Decrease in Net Assets Resulting from Operations |
$ |
(13,932,124 |
) |
$ |
(5,896,185 |
) |
$ |
(11,502,329 |
) |
† See Note 3 in Notes to Financial Statements.
(1) Commenced operations on November 23, 2020.
(2) Commenced operations on December 8, 2020.
(3) Commenced operations on January 26, 2021.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
164
KraneShares CICC China Leaders
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
339,599 |
|
$ |
25,038 |
| ||
Net Realized Gain on Investments and Foreign Currency Translations |
|
1,039,339 |
|
|
55,274 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
1,788,574 |
|
|
(1,543,284 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
3,167,512 |
|
|
(1,462,972 |
) | ||
Distributions: |
|
(333,476 |
) |
|
(39,838 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
1,577,028 |
|
|
20,344,770 |
| ||
Redeemed |
|
(8,120,748 |
) |
|
(5,369,307 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
(6,543,720 |
) |
|
14,975,463 |
| ||
Total Increase (Decrease) in Net Assets |
|
(3,709,684 |
) |
|
13,472,653 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
16,272,705 |
|
|
2,800,052 |
| ||
End of Year |
$ |
12,563,021 |
|
$ |
16,272,705 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
50,000 |
|
|
750,000 |
| ||
Redeemed |
|
(300,000 |
) |
|
(200,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
(250,000 |
) |
|
550,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
165
Statements of Changes in Net Assets (continued)
KraneShares CSI China | ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Loss |
$ |
(12,142,438 |
) |
$ |
(865,457 |
) | ||
Net Realized Gain on Investments and Foreign Currency Translations |
|
759,673,198 |
|
|
35,638,760 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
393,639,091 |
|
|
(225,886,506 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
1,141,169,851 |
|
|
(191,113,203 |
) | ||
Distributions: |
|
(10,272,264 |
) |
|
(1,580,181 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
2,135,821,640 |
|
|
1,377,877,818 |
| ||
Redeemed |
|
(1,918,097,016 |
) |
|
(946,051,196 |
) | ||
Increase in Net Assets from Capital Share Transactions |
|
217,724,624 |
|
|
431,826,622 |
| ||
Total Increase in Net Assets |
|
1,348,622,211 |
|
|
239,133,238 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
2,313,637,822 |
|
|
2,074,504,584 |
| ||
End of Year |
$ |
3,662,260,033 |
|
$ |
2,313,637,822 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
28,550,000 |
|
|
28,300,000 |
| ||
Redeemed |
|
(31,300,000 |
) |
|
(21,200,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
(2,750,000 |
) |
|
7,100,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
166
Statements of Changes in Net Assets (continued)
KraneShares Bosera MSCI China A
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
5,153,808 |
|
$ |
9,311,869 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
30,694,994 |
|
|
(6,057,172 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
205,309,508 |
|
|
(39,732,518 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
241,158,310 |
|
|
(36,477,821 |
) | ||
Distributions: |
|
(5,683,472 |
) |
|
(9,500,578 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
161,140,212 |
|
|
237,310,081 |
| ||
Redeemed |
|
(101,758,942 |
) |
|
(287,859,292 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
59,381,270 |
|
|
(50,549,211 |
) | ||
Total Increase (Decrease) in Net Assets |
|
294,856,108 |
|
|
(96,527,610 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
507,507,623 |
|
|
604,035,233 |
| ||
End of Year |
$ |
802,363,731 |
|
$ |
507,507,623 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
3,850,000 |
|
|
7,550,000 |
| ||
Redeemed |
|
(2,800,000 |
) |
|
(9,300,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
1,050,000 |
|
|
(1,750,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
167
Statements of Changes in Net Assets (continued)
KraneShares E Fund China
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
234,560 |
|
$ |
432,951 |
| ||
Net Realized Gain (Loss) on Investments, Affiliated Investments and Foreign Currency Translations |
|
1,035,410 |
|
|
(701,280 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Affiliated Investments and Foreign Currency Translations |
|
17,022 |
|
|
(288,779 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
1,286,992 |
|
|
(557,108 |
) | ||
Distributions: |
|
(312,960 |
) |
|
— |
| ||
Return of Capital: |
|
— |
|
|
(521,147 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
1,637,962 |
|
|
1,658,813 |
| ||
Redeemed |
|
(3,401,610 |
) |
|
(6,478,959 |
) | ||
Decrease in Net Assets from Capital Share Transactions |
|
(1,763,648 |
) |
|
(4,820,146 |
) | ||
Total Decrease in Net Assets |
|
(789,616 |
) |
|
(5,898,401 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
12,923,831 |
|
|
18,822,232 |
| ||
End of Year |
$ |
12,134,215 |
|
$ |
12,923,831 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
50,000 |
|
|
50,000 |
| ||
Redeemed |
|
(100,000 |
) |
|
(200,000 |
) | ||
Net Decrease in Shares Outstanding from Share Transactions |
|
(50,000 |
) |
|
(150,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
168
Statements of Changes in Net Assets (continued)
KraneShares MSCI All China | ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
59,652 |
|
$ |
108,597 |
| ||
Net Realized Gain on Investments and Foreign Currency Translations |
|
614,212 |
|
|
577 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
98,682 |
|
|
(621,245 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
772,546 |
|
|
(512,071 |
) | ||
Distributions: |
|
(69,738 |
) |
|
(115,192 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
18,880,596 |
|
|
1,316,745 |
| ||
Redeemed |
|
(4,240,586) |
|
|
— |
| ||
Increase in Net Assets from Capital Share Transactions |
|
14,640,010 |
|
|
1,316,745 |
| ||
Total Increase in Net Assets |
|
15,342,818 |
|
|
689,482 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
7,059,123 |
|
|
6,369,641 |
| ||
End of Year |
$ |
22,401,941 |
|
$ |
7,059,123 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
500,000 |
|
|
50,000 |
| ||
Redeemed |
|
(150,000 |
) |
|
— |
| ||
Net Increase in Shares Outstanding from Share Transactions |
|
350,000 |
|
|
50,000 |
|
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
169
Statements of Changes in Net Assets (continued)
KraneShares MSCI One Belt One Road
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
171,221 |
|
$ |
511,254 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
|
(155,438 |
) |
|
(1,409,296 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
3,961,375 |
|
|
(1,259,147 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
3,977,158 |
|
|
(2,157,189 |
) | ||
Distributions: |
|
(164,798 |
) |
|
(523,629 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
1,450,298 |
|
|
— |
| ||
Redeemed |
|
(2,268,750 |
) |
|
(11,535,830 |
) | ||
Decrease in Net Assets from Capital Share Transactions |
|
(818,452 |
) |
|
(11,535,830 |
) | ||
Total Increase (Decrease) in Net Assets |
|
2,993,908 |
|
|
(14,216,648 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
7,105,151 |
|
|
21,321,799 |
| ||
End of Year |
$ |
10,099,059 |
|
$ |
7,105,151 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
50,000 |
|
|
— |
| ||
Redeemed |
|
(100,000 |
) |
|
(500,000 |
) | ||
Net Decrease in Shares Outstanding from Share Transactions |
|
(50,000 |
) |
|
(500,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
170
Statements of Changes in Net Assets (continued)
KraneShares Emerging Markets Consumer
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
333,719 |
|
$ |
107,579 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
21,093,998 |
|
|
(458,535 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
8,849,245 |
|
|
(2,902,678 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
30,276,962 |
|
|
(3,253,634 |
) | ||
Distributions: |
|
(1,338,886 |
) |
|
(337,518 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
173,316,041 |
|
|
11,065,406 |
| ||
Redeemed |
|
(114,134,410 |
) |
|
(13,669,916 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
59,181,631 |
|
|
(2,604,510 |
) | ||
Total Increase (Decrease) in Net Assets |
|
88,119,707 |
|
|
(6,195,662 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
22,484,569 |
|
|
28,680,231 |
| ||
End of Year |
$ |
110,604,276 |
|
$ |
22,484,569 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
6,050,000 |
|
|
500,000 |
| ||
Redeemed |
|
(3,750,000 |
) |
|
(600,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
2,300,000 |
|
|
(100,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
171
Statements of Changes in Net Assets (continued)
KraneShares MSCI China Clean
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) |
$ |
(316,873 |
) |
$ |
116,324 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
|
(11,476,325 |
) |
|
(233,523 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
(7,419,214 |
) |
|
(401,841 |
) | ||
Net Decrease in Net Assets Resulting from Operations |
|
(19,212,412 |
) |
|
(519,040 |
) | ||
Distributions: |
|
(3,785 |
) |
|
(108,818 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
193,801,449 |
|
|
— |
| ||
Redeemed |
|
(35,072,442 |
) |
|
(1,768,056 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
158,729,007 |
|
|
(1,768,056 |
) | ||
Total Increase (Decrease) in Net Assets |
|
139,512,810 |
|
|
(2,395,914 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
1,660,521 |
|
|
4,056,435 |
| ||
End of Year |
$ |
141,173,331 |
|
$ |
1,660,521 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
4,250,000 |
|
|
— |
| ||
Redeemed |
|
(850,000 |
) |
|
(100,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
3,400,000 |
|
|
(100,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
172
Statements of Changes in Net Assets (continued)
KraneShares Electric Vehicles and
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
135,260 |
|
$ |
422,584 |
| ||
Net Realized Gain on Investments and Foreign Currency Translations |
|
5,179,406 |
|
|
729,774 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
17,031,883 |
|
|
(1,325,142 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
22,346,549 |
|
|
(172,784 |
) | ||
Distributions: |
|
(132,013 |
) |
|
(391,574 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
161,319,449 |
|
|
1,039,945 |
| ||
Redeemed |
|
(2,079,774 |
) |
|
(16,385,856 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
159,239,675 |
|
|
(15,345,911 |
) | ||
Total Increase (Decrease) in Net Assets |
|
181,454,211 |
|
|
(15,910,269 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
17,115,573 |
|
|
33,025,842 |
| ||
End of Year |
$ |
198,569,784 |
|
$ |
17,115,573 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
3,900,000 |
|
|
50,000 |
| ||
Redeemed |
|
(100,000 |
) |
|
(750,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
3,800,000 |
|
|
(700,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
173
Statements of Changes in Net Assets (continued)
KraneShares MSCI All China | ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) |
$ |
(327,975 |
) |
$ |
78,117 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
14,211,466 |
|
|
(3,814,600 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
14,169,467 |
|
|
2,531,292 |
| ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
28,052,958 |
|
|
(1,205,191 |
) | ||
Distributions: |
|
(469 |
) |
|
(54,459 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
180,686,733 |
|
|
14,879,626 |
| ||
Redeemed |
|
(26,384,777 |
) |
|
(20,514,237 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
154,301,956 |
|
|
(5,634,611 |
) | ||
Total Increase (Decrease) in Net Assets |
|
182,354,445 |
|
|
(6,894,261 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
32,109,606 |
|
|
39,003,867 |
| ||
End of Year |
$ |
214,464,051 |
|
$ |
32,109,606 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
4,950,000 |
|
|
600,000 |
| ||
Redeemed |
|
(700,000 |
) |
|
(1,000,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
4,250,000 |
|
|
(400,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
174
Statements of Changes in Net Assets (continued)
KraneShares CCBS China Corporate High
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
540,988 |
|
$ |
623,025 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
(205,922 |
) |
|
127,239 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
905,654 |
|
|
(1,171,693 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
1,240,720 |
|
|
(421,429 |
) | ||
Distributions: |
|
(688,389 |
) |
|
(601,337 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
1,959,913 |
|
|
— |
| ||
Redeemed |
|
(3,923,289 |
) |
|
— |
| ||
Decrease in Net Assets from Capital Share Transactions |
|
(1,963,376 |
) |
|
— |
| ||
Total Decrease in Net Assets |
|
(1,411,045 |
) |
|
(1,022,766 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
11,197,026 |
|
|
12,219,792 |
| ||
End of Year |
$ |
9,785,981 |
|
$ |
11,197,026 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
50,000 |
|
|
— |
| ||
Redeemed |
|
(100,000 |
) |
|
— |
| ||
Net Decrease in Shares Outstanding from Share Transactions |
|
(50,000 |
) |
|
— |
|
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
175
Statements of Changes in Net Assets (continued)
KraneShares Emerging Markets
| ||||||||
Year Ended |
Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) |
$ |
(1,726 |
) |
$ |
615 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
273,950 |
|
|
(214,719 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
83,915 |
|
|
(108,988 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
356,139 |
|
|
(323,092 |
) | ||
Distributions |
|
(820 |
) |
|
(18,337 |
) | ||
Return of Capital |
|
— |
|
|
(611 |
) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
|
5,219,345 |
|
|
— |
| ||
Redeemed |
|
(1,608,536 |
) |
|
(3,091,737 |
) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
|
3,610,809 |
|
|
(3,091,737 |
) | ||
Total Increase (Decrease) in Net Assets |
|
3,966,128 |
|
|
(3,433,777 |
) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
1,042,634 |
|
|
4,476,411 |
| ||
End of Year |
$ |
5,008,762 |
|
$ |
1,042,634 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
150,000 |
|
|
— |
| ||
Redeemed |
|
(50,000 |
) |
|
(150,000 |
) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
|
100,000 |
|
|
(150,000 |
) |
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
176
Statements of Changes in Net Assets (continued)
KraneShares MSCI Emerging Markets ex
| ||||||||
Year Ended |
Period Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income |
$ |
126,665 |
|
$ |
60,170 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
|
301,212 |
|
|
(22,714 |
) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Accrued Foreign Capital Gains Tax on Appreciated Securities and Foreign Currency Translations |
|
882,805 |
|
|
(623,173 |
) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
1,310,682 |
|
|
(585,717 |
) | ||
Distributions: |
|
(49,799 |
) |
|
(73,632 |
) | ||
Capital Share Transactions:(2) |
|
|
|
| ||||
Issued |
|
27,889,564 |
|
|
2,500,050 |
| ||
Increase in Net Assets from Capital Share Transactions |
|
27,889,564 |
|
|
2,500,050 |
| ||
Total Increase in Net Assets |
|
29,150,447 |
|
|
1,840,701 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year/Period |
|
1,840,701 |
|
|
— |
| ||
End of Year/Period |
$ |
30,991,148 |
|
$ |
1,840,701 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
900,000 |
|
|
100,002 |
| ||
Net Increase in Shares Outstanding from Share Transactions |
|
900,000 |
|
|
100,002 |
|
(1) Commenced operations on April 12, 2019.
(2) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
177
Statements of Changes in Net Assets/Consolidated Statement of Changes in Net Assets (continued)
KraneShares |
KraneShares | |||||||
Period Ended |
Period Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Loss |
$ |
(13,529 |
) |
$ |
(90,649 |
) | ||
Net Realized Gain on Investments, Futures Contracts and Foreign Currency Translations |
|
73,451 |
|
|
183,582 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Futures Contracts and Foreign Currency Translations |
|
339,564 |
|
|
7,750,767 |
| ||
Net Increase in Net Assets Resulting from Operations |
|
399,486 |
|
|
7,843,700 |
| ||
Distributions: |
|
(30,223 |
) |
|
— |
| ||
Capital Share Transactions:(4) |
|
|
|
| ||||
Issued |
|
12,469,264 |
|
|
85,857,210 |
| ||
Increase in Net Assets from Capital Share Transactions |
|
12,469,264 |
|
|
85,857,210 |
| ||
Total Increase in Net Assets |
|
12,838,527 |
|
|
93,700,910 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
|
— |
|
|
— |
| ||
End of Year |
$ |
12,838,527 |
|
$ |
93,700,910 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
|
400,000 |
|
|
3,300,000 |
| ||
Net Increase in Shares Outstanding from Share Transactions |
|
400,000 |
|
|
3,300,000 |
|
(1) Commenced operations on July 28, 2020.
(2) Commenced operations on July 29, 2020.
(3) KraneShares Global Carbon ETF includes the account of the Fund’s Subsidiary, KFA Global Carbon, Subsidiary, Ltd.
(4) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
178
Statements of Changes in Net Assets (concluded)
KraneShares CICC |
KraneShares |
KraneShares | ||||||||||
Period Ended |
Period Ended |
Period Ended | ||||||||||
Operations: |
|
|
|
|
|
| ||||||
Net Investment Loss |
$ |
(290,882 |
) |
$ |
(63,121 |
) |
$ |
(84,299 |
) | |||
Net Realized Loss on Investments and Foreign Currency Translations |
|
(8,532,575 |
) |
|
(2,577,536 |
) |
|
(1,169,473 |
) | |||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
|
(5,108,667 |
) |
|
(3,255,528 |
) |
|
(10,248,557 |
) | |||
Net Decrease in Net Assets Resulting from Operations |
|
(13,932,124 |
) |
|
(5,896,185 |
) |
|
(11,502,329 |
) | |||
Capital Share Transactions:(4) |
|
|
|
|
|
| ||||||
Issued |
|
165,052,118 |
|
|
68,243,083 |
|
|
105,224,088 |
| |||
Redeemed |
|
(32,239,843 |
) |
|
(8,127,625 |
) |
|
— |
| |||
Increase in Net Assets from Capital Share Transactions |
|
132,812,275 |
|
|
60,115,458 |
|
|
105,224,088 |
| |||
Total Increase in Net Assets |
|
118,880,151 |
|
|
54,219,273 |
|
|
93,721,759 |
| |||
Net Assets: |
|
|
|
|
|
| ||||||
Beginning of Year |
|
— |
|
|
— |
|
|
— |
| |||
End of Year |
$ |
118,880,151 |
|
$ |
54,219,273 |
|
$ |
93,721,759 |
| |||
Share Transactions: |
|
|
|
|
|
| ||||||
Issued |
|
6,550,002 |
|
|
2,400,002 |
|
|
4,450,000 |
| |||
Redeemed |
|
(1,400,000 |
) |
|
(300,000 |
) |
|
— |
| |||
Net Increase in Shares Outstanding from Share Transactions |
|
5,150,002 |
|
|
2,100,002 |
|
|
4,450,000 |
|
(1) Commenced operations on November 23, 2020.
(2) Commenced operations on December 8, 2020.
(3) Commenced operations on January 26, 2021.
(4) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
179
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset |
Net |
Net Realized |
Total from |
Distribution |
Distribution |
Return of | ||||||||
KraneShares CICC China Leaders 100 Index ETF(1) | ||||||||||||||
2021 |
25.03 |
0.80 |
6.41 |
7.21 |
(0.83) |
— |
— | |||||||
2020 |
28.00 |
0.06 |
(2.98) |
(2.92) |
(0.05) |
— |
— | |||||||
2019 |
33.88 |
0.66 |
(2.09) |
(1.43) |
(0.68) |
(3.77) |
— | |||||||
2018(2) |
34.06 |
0.24 |
7.22 |
7.46 |
(0.30) |
(7.34) |
— | |||||||
2017 |
28.02 |
0.21 |
6.54 |
6.75 |
(0.33) |
— |
(0.38) | |||||||
KraneShares CSI China Internet ETF | ||||||||||||||
2021 |
45.19 |
(0.28) |
30.90 |
30.62 |
(0.22) |
— |
— | |||||||
2020 |
47.04 |
(0.02) |
(1.79) |
(1.81) |
(0.04) |
— |
— | |||||||
2019 |
61.11 |
0.10 |
(12.90) |
(12.80) |
(0.01) |
(1.26) |
— | |||||||
2018(2) |
42.21 |
(0.19) |
19.43 |
19.24 |
(0.34) |
— |
— | |||||||
2017 |
35.76 |
(0.27) |
7.13 |
6.86 |
(0.30) |
— |
(0.11) | |||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||
2021 |
29.51 |
0.30 |
14.46 |
14.76 |
(0.30) |
— |
— | |||||||
2020 |
31.88 |
0.47 |
(2.34) |
(1.87) |
(0.50) |
— |
— | |||||||
2019 |
34.47 |
0.60 |
(2.27) |
(1.67) |
(0.52) |
(0.40) |
— | |||||||
2018(2) |
28.38 |
0.21 |
6.22 |
6.43 |
(0.18) |
(0.16) |
— | |||||||
2017 |
30.37 |
(0.01) |
(0.67) |
(0.68) |
— |
(0.85) |
(0.46) | |||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||
2021 |
32.31 |
0.60 |
2.57 |
3.17 |
(0.81) |
— |
— | |||||||
2020 |
34.22 |
0.81 |
(1.75) |
(0.94) |
— |
— |
(0.97) | |||||||
2019 |
37.23 |
1.31 |
(2.29) |
(0.98) |
(1.95) |
— |
(0.08) | |||||||
2018(2) |
32.82 |
1.07 |
3.34 |
4.41 |
— |
— |
— | |||||||
2017 |
34.18 |
0.61 |
(1.96) |
(1.35) |
— |
— |
(0.01) | |||||||
KraneShares MSCI All China Index ETF | ||||||||||||||
2021 |
23.53 |
0.22 |
11.06 |
11.28 |
(0.35) |
— |
— | |||||||
2020 |
25.48 |
0.36 |
(1.93) |
(1.57) |
(0.38) |
— |
— | |||||||
2019 |
26.96 |
0.18 |
(1.23) |
(1.05) |
(0.43) |
— |
— | |||||||
2018(2) |
22.56 |
0.45 |
4.28 |
4.73 |
(0.33) |
— |
— | |||||||
2017 |
21.66 |
0.37 |
1.88 |
2.25 |
(0.70) |
(0.47) |
(0.18) |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of standard creation and redemption transaction fees associated with creation units. |
^ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses of the money market funds. |
^^ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses from investments in other investment companies. |
(1) | Effective November 1, 2018, the KraneShares Zacks New China ETF was renamed the KraneShares CICC China Leaders 100 Index ETF. |
(2) | March 29, 2018 represents the last business day of the Fund’s reporting period in 2018. |
(3) | As of July 28, 2017, pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to reduce its management fee and/or reimburse the Fund in an amount equal to the fees paid by the Fund to counsel to the Independent Trustees of the Trust until July 31, 2018. |
The accompanying notes are an integral part of the financial statements.
180
Total from |
Net |
Total |
Net Assets |
Ratio of |
Ratio of |
Ratio of Net |
Portfolio | |||||||
(0.83) |
31.41 |
28.90 |
12,563 |
0.69 |
0.69 |
2.68 |
143 | |||||||
(0.05) |
25.03 |
(10.45) |
16,273 |
0.69 |
0.69 |
0.23 |
126 | |||||||
(4.45) |
28.00 |
(0.62) |
2,800 |
0.70 |
0.70 |
2.21 |
181 | |||||||
(7.64) |
33.88 |
22.57 |
5,082 |
0.71(3) |
0.71(3) |
0.64 |
105 | |||||||
(0.71) |
34.06 |
24.54 |
3,406 |
0.84 |
0.84 |
0.55 |
86 | |||||||
(0.22) |
75.59 |
67.77 |
3,662,260 |
0.70(4) |
0.70(4) |
(0.39) |
89 | |||||||
(0.04) |
45.19 |
(3.85) |
2,313,638 |
0.73(5) |
0.73(5) |
(0.05) |
33 | |||||||
(1.27) |
47.04 |
(20.44) |
2,074,505 |
0.75(6) |
0.76(6) |
0.20 |
70 | |||||||
(0.34) |
61.11 |
45.62 |
1,628,622 |
0.70(3) |
0.70(3) |
(0.33) |
29 | |||||||
(0.41) |
42.21 |
19.44 |
291,257 |
0.81 |
0.81 |
(0.72) |
35 | |||||||
(0.30) |
43.97 |
50.00 |
802,364 |
0.59 |
0.79 |
0.74 |
35 | |||||||
(0.50) |
29.51 |
(5.98) |
507,508 |
0.59 |
0.80 |
1.52 |
91 | |||||||
(0.92) |
31.88 |
(4.01) |
604,035 |
0.60 |
0.80 |
2.05 |
106 | |||||||
(0.34) |
34.47 |
22.68 |
353,324 |
0.60 |
0.80 |
0.61 |
52 | |||||||
(1.31) |
28.38 |
(2.04) |
52,494 |
0.72(7) |
0.84(7) |
(0.04) |
95 | |||||||
(0.81) |
34.67 |
9.91 |
12,134 |
0.57^ |
0.69^ |
1.80^ |
— | |||||||
(0.97) |
32.31 |
(2.75) |
12,924 |
0.57^ |
0.70^ |
2.46^ |
— | |||||||
(2.03) |
34.22 |
(2.52) |
18,822 |
0.58^ |
0.70^ |
3.76^ |
— | |||||||
— |
37.23 |
13.44 |
13,030 |
0.77^(3)(8) |
0.89^(3)(8) |
3.10^ |
— | |||||||
(0.01) |
32.82 |
(3.95)(9) |
9,845 |
0.95^ |
1.07^ |
1.84^ |
— | |||||||
(0.35) |
34.46 |
47.97 |
22,402 |
0.49 |
0.69 |
0.67 |
45 | |||||||
(0.38) |
23.53 |
(6.30) |
7,059 |
0.49 |
0.69 |
1.47 |
7 | |||||||
(0.43) |
25.48 |
(3.52) |
6,370 |
0.67 |
0.69 |
0.74 |
62 | |||||||
(0.33) |
26.96 |
20.99 |
2,696 |
0.63^^(3) |
0.72^^(3) |
1.75^^ |
3 | |||||||
(1.35) |
22.56 |
11.24 |
2,256 |
0.37^^ |
0.73^^ |
1.70^^ |
25 |
(4) | During the year ended March 31, 2021, the Fund participated in securities lending, generating $3,716,046 in security lending income. The expense ratios include $376,498 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69% and 0.69%, respectively. |
(5) | During the year ended March 31, 2020, the Fund participated in securities lending, generating $5,794,534 in security lending income. The expense ratios include $579,613 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69% and 0.69%, respectively. |
(6) | During the year ended March 31, 2019, the Fund participated in securities lending, generating $9,746,130 in security lending income. The expense ratios include $968,632 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69% and 0.70%, respectively. |
(7) | As of February 17, 2017, pursuant to the terms of a Fee Waiver Agreement, the Adviser had contractually agreed to waive its management fee by 0.20% of the Fund’s average daily net assets. |
(8) | The expenses during the year include a one-time, non-recurring expense. Had this expense not been included, the net and gross expense ratios for the period would have been 0.59% and 0.71%, respectively. |
(9) | Fund received reimbursement from third-party for dilution to shareholders for an accounting error. Absent the reimbursement, total return would have been (4.44)%. |
The accompanying notes are an integral part of the financial statements.
181
Financial Highlights (continued)
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset |
Net |
Net Realized |
Total from |
Distribution |
Distribution |
Return of | ||||||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||||
2021 |
17.76 |
0.48 |
11.16 |
11.64 |
(0.55) |
— |
— | |||||||
2020 |
23.69 |
0.70 |
(5.58) |
(4.88) |
(1.05) |
— |
— | |||||||
2019 |
25.64 |
0.48 |
(1.82) |
(1.34) |
(0.61) |
— |
— | |||||||
2018(1)(3) |
25.00 |
0.08 |
0.59(4) |
0.67 |
(0.03) |
— |
— | |||||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||||
2021 |
19.55 |
0.11 |
13.14 |
13.25 |
(0.74) |
— |
— | |||||||
2020 |
22.94 |
0.10 |
(3.07) |
(2.97) |
(0.42) |
— |
— | |||||||
2019 |
26.48 |
— |
(3.54) |
(3.54) |
— |
— |
— | |||||||
2018(1)(6) |
25.00 |
(0.03) |
1.51(4) |
1.48 |
— |
— |
— | |||||||
KraneShares MSCI China Clean Technology Index ETF(8) | ||||||||||||||
2021 |
16.60 |
(0.28) |
24.02 |
23.74 |
—# |
— |
— | |||||||
2020 |
20.28 |
0.70 |
(3.29) |
(2.59) |
(1.09) |
— |
— | |||||||
2019 |
23.86 |
0.39 |
(3.61) |
(3.22) |
(0.36) |
— |
— | |||||||
2018(1)(9) |
25.00 |
(0.09) |
(1.05) |
(1.14) |
— |
— |
— | |||||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||||
2021 |
19.02 |
0.08 |
23.21 |
23.29 |
(0.06) |
— |
— | |||||||
2020 |
20.64 |
0.33 |
(1.51) |
(1.18) |
(0.44) |
— |
— | |||||||
2019 |
23.30 |
0.21 |
(2.62) |
(2.41) |
(0.25) |
— |
— | |||||||
2018(1)(11) |
25.00 |
0.02 |
(1.72) |
(1.70) |
— |
— |
— | |||||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||||
2021 |
23.78 |
(0.09) |
14.61 |
14.52 |
—# |
— |
— | |||||||
2020 |
22.29 |
0.07 |
1.48 |
1.55 |
(0.06) |
— |
— | |||||||
2019 |
26.65 |
0.02 |
(4.30) |
(4.28) |
(0.04) |
(0.04) |
— | |||||||
2018(1)(13) |
25.00 |
(0.03) |
1.68 |
1.65 |
— |
— |
— |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of standard creation and redemption transaction fees associated with creation units. |
† | Annualized. |
†† | Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of in-kind transfers. |
^ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses from investments in other investment companies. |
# | Amount represents less than $0.005 per share. |
(1) | March 29, 2018 represents the last business day of the Fund’s reporting period in 2018. |
(2) | As of July 28, 2017, pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to reduce its management fee and/or reimburse the Fund in an amount equal to the fees paid by the Fund to counsel to the Independent Trustees of the Trust until July 31, 2018. |
(3) | The Fund commenced operations on September 7, 2017. |
The accompanying notes are an integral part of the financial statements.
182
Total from |
Net |
Total |
Net Assets |
Ratio of |
Ratio of |
Ratio of Net |
Portfolio | |||||||
(0.55) |
28.85 |
65.82 |
10,099 |
0.79 |
0.79 |
2.07 |
39 | |||||||
(1.05) |
17.76 |
(21.78) |
7,105 |
0.80 |
0.80 |
3.03 |
30 | |||||||
(0.61) |
23.69 |
(4.94) |
21,322 |
0.79 |
0.79 |
2.05 |
72 | |||||||
(0.03) |
25.64 |
2.67 |
32,048 |
0.79^†(2)(5) |
0.80^†(2)(5) |
0.52^†(5) |
1†† | |||||||
(0.74) |
32.06 |
67.85 |
110,604 |
0.59 |
0.79 |
0.36 |
112 | |||||||
(0.42) |
19.55 |
(13.29) |
22,485 |
0.81 |
0.81 |
0.46 |
56 | |||||||
— |
22.94 |
(13.37) |
28,680 |
0.80 |
0.80 |
(0.02) |
119 | |||||||
— |
26.48 |
5.92 |
23,828 |
0.79†(2)(7) |
0.79†(2)(7) |
(0.23)†(7) |
—†† | |||||||
— |
40.34 |
143.03 |
141,173 |
0.78 |
0.78 |
(0.65) |
164 | |||||||
(1.09) |
16.60 |
(13.17) |
1,661 |
0.79 |
0.79 |
3.81 |
53 | |||||||
(0.36) |
20.28 |
(13.28) |
4,056 |
0.79 |
0.80 |
1.92 |
147 | |||||||
— |
23.86 |
(4.56) |
7,158 |
0.78†(2)(10) |
0.79†(2)(10) |
(0.78)†(10) |
36†† | |||||||
(0.06) |
42.25 |
122.46 |
198,570 |
0.70 |
0.70 |
0.21 |
81 | |||||||
(0.44) |
19.02 |
(6.15) |
17,116 |
0.72 |
0.72 |
1.57 |
53 | |||||||
(0.25) |
20.64 |
(10.19) |
33,026 |
0.70 |
0.70 |
0.98 |
74 | |||||||
— |
23.30 |
(6.80) |
26,798 |
0.70†(12) |
0.70†(12) |
0.43†(12) |
18†† | |||||||
— |
38.30 |
61.06 |
214,464 |
0.65 |
0.79 |
(0.25) |
45 | |||||||
(0.06) |
23.78 |
6.95 |
32,110 |
0.69 |
0.79 |
0.32 |
101 | |||||||
(0.08) |
22.29 |
(15.99) |
39,004 |
0.79 |
0.79 |
0.08 |
71 | |||||||
— |
26.65 |
6.60 |
3,998 |
0.82†(14) |
0.82†(14) |
(0.82)†(14) |
—†† |
(4) | Realized and unrealized gains and losses per share are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period. |
(5) | The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.79% and 0.53%, respectively. |
(6) | The Fund commenced operations on October 11, 2017. |
(7) | The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.78% and (0.22)%, respectively. |
(8) | Effective March 19, 2021, the KraneShares MSCI China Environment Index ETF was renamed the KraneShares MSCI China Clean Technology Index ETF. |
(9) | The Fund commenced operations on October 12, 2017. |
(10) | The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.79% and (0.78)%, respectively. |
(11) | The Fund commenced operations on January 18, 2018. |
(12) | The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.69%, 0.69% and 0.44%, respectively. |
(13) | The Fund commenced operations on January 31, 2018. |
(14) | The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.79%, 0.79% and (0.79)%, respectively. |
The accompanying notes are an integral part of the financial statements.
183
Financial Highlights (concluded)
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset |
Net |
Net Realized |
Total from |
Distribution |
Distribution |
Return of | ||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||||
2021 |
37.32 |
2.10 |
2.44 |
4.54 |
(2.58) |
(0.14) |
— | |||||||
2020 |
40.73 |
2.08 |
(3.49) |
(1.41) |
(1.81) |
(0.19) |
— | |||||||
2019(1) |
40.00 |
1.55 |
0.67 |
2.22 |
(1.31) |
—# |
(0.18) | |||||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||||
2021 |
20.85 |
(0.02) |
12.57 |
12.55 |
(0.01) |
— |
— | |||||||
2020 |
22.38 |
0.01 |
(1.16) |
(1.15) |
(0.37) |
— |
(0.01) | |||||||
2019(2) |
25.00 |
(0.04) |
(2.58) |
(2.62) |
—# |
— |
— | |||||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||||
2021 |
18.41 |
0.55 |
12.53 |
13.08 |
(0.50) |
— |
— | |||||||
2020(3) |
25.00 |
0.60 |
(6.45) |
(5.85) |
(0.74) |
— |
— | |||||||
KraneShares MSCI China ESG Leaders Index ETF | ||||||||||||||
2021(4) |
25.00 |
(0.07) |
7.32 |
7.25 |
— |
(0.15) |
— | |||||||
KraneShares Global Carbon ETF | ||||||||||||||
2021(5)(6) |
20.00 |
(0.12) |
8.51 |
8.39 |
— |
— |
— | |||||||
KraneShares CICC China 5G & Semiconductor Index ETF | ||||||||||||||
2021(7) |
25.00 |
(0.06) |
(1.86) |
(1.92) |
— |
— |
— | |||||||
KraneShares CICC China Consumer Leaders Index ETF | ||||||||||||||
2021(8) |
25.00 |
(0.05) |
0.87 |
0.82 |
— |
— |
— | |||||||
KraneShares SSE STAR Market 50 Index ETF | ||||||||||||||
2021(9) |
25.00 |
(0.03) |
(3.91) |
(3.94) |
— |
— |
— |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of standard creation and redemption transaction fees associated with creation units. |
# | Amount represents less than $0.005 per share. |
† | Annualized. |
†† | Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of in-kind transfers. |
(1) | The Fund commenced operations on June 26, 2018. |
(2) | The Fund commenced operations on August 29, 2018. |
(3) | The Fund commenced operations on April 12, 2019. |
(4) | The Fund commenced operations on July 28, 2020. |
(5) | The Fund commenced operations on July 29, 2020. Effective March 19, 2021, the KFA Global Carbon ETF was renamed the KraneShares Global Carbon ETF. |
(6) | KraneShares Global Carbon ETF includes the account of the Fund’s Subsidiary, KFA Global Carbon, Subsidiary, Ltd. |
(7) | The Fund commenced operations on November 23, 2020. |
(8) | The Fund commenced operations on December 8, 2020. |
(9) | The Fund commenced operations on January 26, 2021. |
The accompanying notes are an integral part of the financial statements.
184
Total from |
Net |
Total |
Net Assets |
Ratio of |
Ratio of |
Ratio of Net |
Portfolio | |||||||
(2.72) |
39.14 |
12.32 |
9,786 |
0.69 |
0.69 |
5.32 |
53 | |||||||
(2.00) |
37.32 |
(3.72) |
11,197 |
0.70 |
0.70 |
5.12 |
70 | |||||||
(1.49) |
40.73 |
5.72 |
12,220 |
0.69† |
0.69† |
5.13† |
38†† | |||||||
(0.01) |
33.39 |
60.18 |
5,009 |
0.80 |
0.80 |
(0.05) |
73 | |||||||
(0.38) |
20.85 |
(5.25) |
1,043 |
0.80 |
0.80 |
0.04 |
61 | |||||||
— |
22.38 |
(10.47) |
4,476 |
0.79† |
0.79† |
(0.34)† |
57†† | |||||||
(0.50) |
30.99 |
71.19 |
30,991 |
0.30 |
0.58 |
1.90 |
19 | |||||||
(0.74) |
18.41 |
(24.31) |
1,841 |
0.50† |
0.60† |
2.54† |
5†† | |||||||
(0.15) |
32.10 |
29.05 |
12,839 |
0.58† |
0.58† |
(0.35)† |
30†† | |||||||
— |
28.39 |
41.95 |
93,701 |
0.78† |
0.78† |
(0.72)† |
0†† | |||||||
— |
23.08 |
(7.68) |
118,880 |
0.64† |
0.78† |
(0.64)† |
59†† | |||||||
— |
25.82 |
3.28 |
54,219 |
0.68† |
0.68† |
(0.63)† |
50†† | |||||||
— |
21.06 |
(15.76) |
93,722 |
0.88† |
0.88† |
(0.88)† |
12†† |
The accompanying notes are an integral part of the financial statements.
185
1. ORGANIZATION
KraneShares Trust (the “Trust”) is a Delaware Statutory Trust formed on February 3, 2012. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. As of March 31, 2021, the Trust had 24 operational series. The financial statements herein and the related notes pertain to the following 18 series: KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF (formerly, KraneShares MSCI China Environment Index ETF), KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF, KraneShares Emerging Markets Healthcare Index ETF, KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares MSCI China ESG Leaders Index ETF, KraneShares Global Carbon ETF (formerly KFA Global Carbon ETF), KraneShares CICC China 5G & Semiconductor ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF (each, a “Fund” and collectively, the “Funds”). Each Fund, other than KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF is a non-diversified Fund. KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF are diversified Funds, as defined under Section 5(b)(1) of the Investment Company Act of 1940. Krane Funds Advisors, LLC (“Krane” or the ‘‘Adviser’’), a Delaware limited liability company, serves as the investment adviser for the Funds and is subject to the supervision of the Board of Trustees (the ‘‘Board’’). The Adviser is responsible for managing the investment activities of the Funds, the Funds’ business affairs and other administrative matters. The Adviser may use sub-advisers (each, a “Sub-Adviser” or collectively, the “Sub-Advisers”) to perform the day-to-day management of the Funds.
China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited owns a majority stake in Krane. Central Huijin Investment Limited, a mainland Chinese-domiciled entity, and HKSCC Nominees Limited, currently holds approximately 40.2% and 30.7%, respectively, of the shares of China International Capital Corporation Limited. Central Huijin Investment Limited is a wholly-owned subsidiary of China Investment Corporation, which is a mainland Chinese sovereign wealth fund. KFA One Holdings, LLC, located at 280 Park Avenue 32nd Floor, New York, New York, 10017, holds the remaining equity interests in Krane and Jonathan Krane, through his equity interests in KFA One Holdings, LLC, beneficially owns more than 10% of the equity interests in Krane.
The KFA Global Carbon, Subsidiary, Ltd. is a wholly-owned subsidiary of the KraneShares Global Carbon ETF (“Subsidiary”). The Subsidiary is organized under the laws of the Cayman Islands as an exempt limited company. Information regarding the KraneShares Global Carbon ETF and its subsidiary has been consolidated in the Consolidated Schedule of Investments, Consolidated Statement of Assets and Liabilities, Consolidated Statement of Operations, Consolidated Statement of Changes in Net Assets and Consolidated Financial Highlights.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. (“NYSE Arca”), (the “Exchange”). Market prices for Fund shares (“Shares”) may be different from their net asset value (“NAV”). The Funds issue and redeem Shares on a continuous basis at NAV only in large blocks of Shares, typically 50,000 or 100,000 Shares or multiples thereof, called “Creation Units”. This does not mean, however, that individual investors will be able to redeem and purchase Shares directly with the
186
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
series of the Trust. Only Authorized Participants can redeem and purchase Creation Units of Shares directly. Each Fund will issue and redeem Shares for a basket of securities and/or a balancing cash amount. Individual shares trade in the secondary market at market prices that change throughout the day.
The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to its respective index listed below (each, an “Underlying Index”):
KraneShares Funds | Index | |
KraneShares CICC China Leaders 100 Index ETF | CSI CICC Select 100 Index | |
KraneShares CSI China Internet ETF | CSI Overseas China Internet Index | |
KraneShares Bosera MSCI China A Share ETF | MSCI China A Index | |
KraneShares E Fund China Commercial Paper ETF | CSI Diversified High Grade Commercial Paper Index | |
KraneShares MSCI All China Index ETF | MSCI China All Shares Index | |
KraneShares MSCI One Belt One Road Index ETF | MSCI Global China Infrastructure Exposure Index | |
KraneShares Emerging Markets Consumer Technology Index ETF | Solactive Emerging Markets Consumer Technology Index | |
KraneShares MSCI China Clean Technology ETF | MSCI China IMI Environment 10/40 Index | |
KraneShares Electric Vehicles and Future Mobility Index ETF | Solactive Electric Vehicles and Future Mobility Index | |
KraneShares MSCI All China Health Care Index ETF | MSCI China All Shares Health Care 10/40 Index | |
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | Solactive USD China Corporate High Yield Bond Index | |
KraneShares Emerging Markets Healthcare Index ETF | Solactive Emerging Markets Healthcare Index | |
KraneShares MSCI Emerging Markets ex China Index ETF | MSCI Emerging Markets ex China Index | |
KraneShares MSCI China ESG Leaders Index ETF | MSCI China ESG Leaders 10/40 Index | |
KraneShares CICC China 5G & Semiconductor Index ETF | CICC China 5G and Semiconductor Leaders Index | |
KraneShares CICC China Consumer Leaders Index ETF | CICC China Consumer Leaders Index | |
KraneShares SSE STAR Market 50 Index ETF | SSE Science and Technology Innovation Board 50 Index |
The investment objective of the KraneShares Global Carbon ETF is to seek to provide a total return that, before fees and expenses, exceeds that of the IHS Markit Global Carbon Index over a complete market cycle. The KraneShares Global Carbon ETF is actively managed and does not track an index.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by the Funds. The Funds are investment companies that apply the accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board (“FASB”).
USE OF ESTIMATES — The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates, and could have a material impact to the Funds.
187
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
SECURITY VALUATION — The NAV per share of each Fund is computed by dividing the value of the net assets of a Fund (i.e., the value of its total assets less total liabilities and withholdings) by the total number of shares of a Fund outstanding, rounded to the nearest cent. Expenses and fees, including without limitation, the management, administration and distribution fees, are accrued daily and taken into account for purposes of determining NAV. The NAV per share for each Fund normally is calculated by the Administrator and determined as of the regularly scheduled close of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern Time) on each day that the Exchange is open.
Prices for most securities held by the Funds are provided daily by independent pricing agents. In calculating the values of each Fund’s portfolio securities, securities listed on a securities exchange (i.e., exchange-traded equity securities), market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued by the Funds’ independent pricing agents at the last reported sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at the time as of which the Fund’s NAV is calculated if a security’s exchange is normally open at that time). If there is no such reported sale, such securities are valued at the most recently reported bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used.
If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value.
The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. The value of a swap contract is equal to the obligation (or rights) under the swap contract, which will generally be equal to the net amounts to be paid or received under the contract based upon the relative values of the positions held by each party to the contract as determined by the applicable independent, third party pricing agent. Exchange-traded options are valued at the last reported sales price on the exchange on which they are listed. If there is no such reported sale on the valuation date, long positions are valued at the most recent bid price, and short positions are valued at the most recent ask price. Futures are valued at the settlement price established by the board of trade on which they are traded. Foreign currency forward contracts are valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s spot rate and the 30-, 60-, 90- and 180-day forward rates provided by an independent pricing agent. The exchange rates used for valuation are captured as of the close of the London Stock Exchange each day normally at 4:00 p.m. Greenwich Mean Time. If a security price cannot be obtained from an independent, third-party pricing agent, the Fund seeks to obtain bid and ask prices from two broker-dealers who make a market in the portfolio instrument and determines the average of the two. As of and during the year ended March 31, 2021, the Funds did not hold options, swaps or foreign currency forward contracts.
Investments in open-end investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end investment companies that trade on an exchange are valued in the same manner as other exchange-traded equity securities (described above).
188
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
Securities for which market prices are not ‘‘readily available,’’ or are not deemed to reflect current market values, or are debt securities where no evaluated price is available from the Trust’s third-party pricing agents pursuant to established methodologies, are fair valued in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using ‘‘fair value’’ pricing may include, but are not limited to: the security’s trading has been halted or suspended; the security’s primary trading market is temporarily closed; or the security has not been traded for an extended period of time.
In addition, a Fund may fair value its securities if an event that may materially affect the value of a Fund’s securities that trade outside of the United States (a ‘‘Significant Event’’) has occurred between the time of the security’s last close and the time that a Fund calculates its NAV. A Significant Event may relate to a single issuer or to an entire market sector, country or region. Events that may be Significant Events may include: government actions, natural disasters, armed conflict, acts of terrorism and significant market fluctuations. If Krane becomes aware of a Significant Event that has occurred with respect to a portfolio instrument or group of portfolio instruments after the closing of the exchange or market on which the portfolio instrument or portfolio instruments principally trade, but before the time at which a Fund calculates its NAV, it will notify the Administrator and may request that an ad hoc meeting of the Fair Valuation Committee be called.
With respect to trade-halted securities, the Trust typically will fair value a trade-halted security by adjusting the security’s last market close price by the security’s sector performance, as measured by a predetermined index, unless Krane recommends and the Trust’s Fair Valuation Committee determines to make additional adjustments. Certain foreign securities exchanges have mechanisms in place that confine one day’s price movement in an individual security to a pre-determined price range (the “Exchange Range”) based on that day’s opening price (‘‘Collared Securities’’). Fair value determinations for such Collared Securities will generally be capped based on the Exchange Range relevant to that security. As an example, China A-Shares can only be plus or minus ten percent in one day of trading on the relevant mainland China equity exchange. As a result, the fair value price determination for China A-Shares on a given day will generally be capped plus or minus ten percent.
Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different than the value that could actually be realized upon the sale of the security or that another fund that uses market quotations or its own fair value procedures to price the same securities. In addition, fair value pricing could result in a difference between the prices used to calculate a Fund’s NAV and the prices used by the Underlying Index. This may adversely affect a Fund’s ability to track the Underlying Index.
Trading in securities on many foreign exchanges is normally completed before the close of business on each Business Day. In addition, securities trading in a particular country or countries may not take place on each Business Day or may take place on days that are not Business Days. Changes in valuations on certain securities may occur at times or on days on which the Funds’ NAV is not calculated and on which Fund shares do not trade and sales and redemptions of shares do not occur. As a result, the value of the Funds’ portfolio securities and the net asset value of its shares may change on days when share purchases or sales cannot occur. Fund shares are purchased or sold on a national securities exchange at market prices, which may be higher or lower than NAV. Transactions in Fund shares will be priced at NAV only if shares are purchased or redeemed directly from a Fund in Creation Units. No secondary sales will be made to brokers or dealers at a concession by the Distributor or by a Fund. Purchases and sales of shares in the secondary market, which will not involve a Fund, will be subject to customary brokerage commissions and charges.
189
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
As of March 31, 2021, the total market value of securities valued in accordance with Fair Value Procedures is as follows:
KraneShares Funds |
Fair
Valued |
%
of | |||
KraneShares CICC China Leaders 100 Index ETF |
$ |
— |
0.0% | ||
KraneShares Bosera MSCI China A Share ETF |
|
2,735,698 |
0.3% | ||
KraneShares MSCI All China Index ETF |
|
26,291 |
0.1% | ||
KraneShares MSCI One Belt One Road Index ETF |
|
11,745 |
0.1% | ||
KraneShares MSCI China Clean Technology Index ETF |
|
1,058 |
0.0% | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
2,037,572 |
1.0% | ||
KraneShares Emerging Markets Healthcare Index ETF |
|
2,791 |
0.1% |
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date.
Level 2 — Other significant observable inputs (including quoted prices in non-active markets, quoted prices for similar investments, fair value of investments for which the Funds have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term, and short-term investments valued at amortized cost).
Level 3 — Significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments, broker quotes, fair value of investments for which the Funds do not have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term).
Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement. For details of the investment classification, refer to each Fund’s Schedule of Investments.
FEDERAL INCOME TAXES — It is each Fund’s intention to qualify or continue to qualify as a regulated investment company for federal income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute annually all or substantially all of its taxable income and gains to shareholders. Accordingly, no provisions for federal income taxes have been made in the financial statements.
190
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether it is “more-likely-than-not” (i.e., greater than 50 percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provisions in the current period. However, management’s conclusions regarding tax positions may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last three tax year ends, as applicable), on-going analysis of and changes to tax laws, regulations and interpretations thereof.
As of March 31, 2021, management of the Funds has reviewed all open tax years since inception and concluded that there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months.
SECURITY TRANSACTIONS AND INVESTMENT INCOME — Security transactions are accounted for on the trade date for financial reporting purposes. Costs used in determining realized gains and losses on the sale of investment securities are based on specific identification. Dividend income is recorded, net of any applicable withholding tax, on the ex-dividend date, or for certain foreign securities, when the information becomes available to the Funds. Interest income is recognized on the accrual basis from the settlement date and includes the amortization of premiums and the accretion of discount calculated using the effective interest method.
Dividend income received from affiliated funds is recognized on the ex-dividend date and is recorded as income distributions in the Statement of Operations. Capital gain distributions received from affiliated funds are recognized on ex-dividend date and are recorded on the Statement of Operations as such. Costs used in determining realized gains and losses on the sales of affiliated funds are on the basis of specific identification. See details on the Statements of Operations.
FOREIGN CURRENCY — The books and records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars at the relevant rates of exchange prevailing on the respective dates of such transactions. The Funds do not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. The Funds report certain foreign-currency-related transactions as components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income for Federal income tax purposes.
FUTURES — The KraneShares Global Carbon ETF will utilize the Subsidiary for purposes of investing in carbon credit futures that are the same as or similar to those included in the Index. Initial margin deposits of cash or securities are made upon entering into futures contracts. The contracts are marked-to-market daily and the resulting changes in value are accounted for as unrealized gains and losses. Variation margin payments are paid or received, depending upon whether unrealized gains or losses are incurred. When contracts are closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the amount invested in the contract.
191
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
As of March 31, 2021, the KraneShares Global Carbon ETF had open futures contracts. Refer to the Fund’s Consolidated Schedule of Investments for details regarding open futures contracts as of March 31, 2021.
For the period ended March 31, 2021, the average monthly notional amount of futures contracts was $26,318,676.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS — The Funds distribute their net investment income at least annually. Any net realized capital gains are distributed annually. All distributions are recorded on the ex-dividend date.
CASH OVERDRAFT CHARGES — Per the terms of an agreement with Brown Brothers Harriman & Co. (“BBH”),the Funds’ Custodian, if a Fund has a cash overdraft on a given day, it will be assessed an overdraft charge of the London Inter-bank Offered Rate (“LIBOR”) plus 2.00%. Cash overdraft charges are included in “Interest Expense” on the Statements of Operations.
SECURITIES LENDING — The Funds may lend securities from their portfolios to brokers, dealers and other financial institutions. In connection with such loans, a Fund remains the beneficial owner of the loaned securities and continues to receive payments in amounts approximately equal to the interest, dividends or other distributions payable on the loaned securities. A Fund also has the right to terminate a loan at any time. A Fund does not have the right to vote on securities while they are on loan. Loans of portfolio securities will not exceed 33 1/3% of the value of a Fund’s total assets (including the value of all assets received as collateral for the loan). A Fund will receive collateral consisting of cash in the form of U.S. dollars, foreign currency, or securities issued or fully guaranteed by the U.S. Government which will be maintained at all times in an amount equal to at least 102% on domestic securities and 105% on international securities of the current market value of the loaned securities. If the collateral consists of cash, a Fund will reinvest the cash and pay the borrower a pre-negotiated fee or “rebate” from any return earned on the investment. Should the borrower of the securities fail financially, a Fund may experience delays in recovering the loaned securities or exercising its rights in the collateral. In a loan transaction, a Fund will also bear the risk of any decline in value of securities acquired with cash collateral. Krane and a sub-adviser are subject to potential conflicts of interest because the compensation paid to them increases in connection with any net income received by a Fund from a securities lending program. Each Fund pays Krane 10% of any net monthly income received from the investment of cash collateral and loan fees received from borrowers in respect of each securities loan (net of any amounts paid to the custodian and/or securities lending agent or rebated to borrowers) (see Note 3).
The following table discloses the securities on loan as of March 31, 2021:
KraneShares Funds |
Market
Value |
Cash
Collateral for | ||||
KraneShares CSI China Internet ETF |
$ |
192,461,874 |
$ |
199,656,233 | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
732,703 |
|
770,626 | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
10,578,384 |
|
10,993,789 |
CREATION UNITS — The Funds issue and redeem Shares at NAV and only in large blocks of Shares (each block of Shares for a Fund is a Creation Unit of 50,000 Shares, 100,000 Shares, or multiples thereof).
Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the
192
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company (‘‘DTC’’) participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized Participants or have the resources to buy and sell whole Creation Units. Therefore, they will be unable to purchase or redeem the Shares directly from a Fund. Rather, most retail investors will purchase Shares in the secondary market with the assistance of a broker and will be subject to customary brokerage commissions or fees when buying or selling Shares. If a Creation Unit is purchased or redeemed for cash, a higher transaction fee may be charged.
The following table discloses Creation Unit breakdown for the year ended March 31, 2021:
KraneShares Funds |
Creation |
Standard |
Value at |
Standard |
Maximum | ||||||||
KraneShares CICC China Leaders 100 Index ETF |
50,000 |
$ |
1,700 |
$ |
1,570,500 |
$ |
1,700 |
2.00% | |||||
KraneShares CSI China Internet ETF |
50,000 |
|
500 |
|
3,779,500 |
|
500 |
2.00% | |||||
KraneShares Bosera MSCI China A Share ETF |
50,000 |
|
7,500 |
|
2,198,500 |
|
7,500 |
2.00% | |||||
KraneShares E Fund China Commercial Paper ETF |
50,000 |
|
1,000 |
|
1,733,500 |
|
1,000 |
2.00% | |||||
KraneShares MSCI All China Index ETF |
50,000 |
|
4,900 |
|
1,723,000 |
|
4,900 |
2.00% | |||||
KraneShares MSCI One Belt One Road Index ETF |
50,000 |
|
3,600 |
|
1,442,500 |
|
3,600 |
2.00% | |||||
KraneShares Emerging Markets Consumer Technology Index ETF |
50,000 |
|
1,500 |
|
1,603,000 |
|
1,500 |
2.00% | |||||
KraneShares MSCI China Clean Technology Index ETF |
50,000 |
|
800 |
|
2,017,000 |
|
800 |
2.00% | |||||
KraneShares Electric Vehicles and Future Mobility Index ETF |
50,000 |
|
800 |
|
2,112,500 |
|
800 |
2.00% | |||||
KraneShares MSCI All China Health Care Index ETF |
50,000 |
|
1,200 |
|
1,915,000 |
|
1,200 |
2.00% | |||||
KraneShares CCBS China Corporate High Yield Bond USD Index Fund |
50,000 |
|
1,000 |
|
1,957,000 |
|
1,000 |
2.00% | |||||
KraneShares Emerging Markets Healthcare Index ETF |
50,000 |
|
2,100 |
|
1,669,500 |
|
2,100 |
2.00% | |||||
KraneShares MSCI Emerging Markets ex China Index ETF |
100,000 |
|
17,500 |
|
3,099,000 |
|
17,500 |
2.00% | |||||
KraneShares MSCI China ESG Leaders Index ETF |
50,000 |
|
2,100 |
|
1,605,000 |
|
2,100 |
2.00% | |||||
KraneShares Global Carbon ETF |
50,000 |
|
500 |
|
1,419,500 |
|
500 |
2.00% | |||||
KraneShares CICC China 5G & Semiconductor Index |
50,000 |
|
500 |
|
1,154,000 |
|
500 |
2.00% | |||||
KraneShares CICC China Consumer Leaders Index ETF |
50,000 |
|
900 |
|
1,291,000 |
|
900 |
2.00% | |||||
KraneShares SSE STAR Market 50 Index ETF |
50,000 |
|
2,250 |
|
1,053,000 |
|
2,250 |
2.00% |
* As a percentage of the Creation Unit(s) purchased/redeemed.
193
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
CASH AND CASH EQUIVALENTS — Idle cash and currency balances may be swept into various overnight sweep accounts and are classified as cash equivalents on the Statement of Assets and Liabilities. These amounts, at times, may exceed United States federally insured limits. Amounts swept are available on the next business day.
3. DERIVATIVES TRANSACTIONS
The following tables are KraneShares Global Carbon ETF exposure by type of risk on derivatives held throughout the period.
The fair value of derivative instruments as of March 31, 2021, was as follows:
Consolidated Statement of Assets and Liabilities Location |
Asset |
Liability | |||||||
Commodities
Risk |
Unrealized
appreciation/(depreciation) |
$ |
8,034,558 |
$ |
(47,632 |
) | |||
Foreign
Exchange |
Unrealized
appreciation/(depreciation) |
|
— |
|
(155,601 |
) | |||
$ |
8,034,558 |
$ |
(203,233 |
) |
* Unrealized appreciation (depreciation) on Futures Contracts is included in distributable earnings (loss).
The effect of derivative instruments on the Consolidated Statement of Operations for the period ended March 31, 2021, was as follows:
The amount of realized gain (loss) on derivatives recognized in income:
Net |
Change
in |
Total | ||||||||||
Commodities
Risk |
$ |
1,122,955 |
|
$ |
7,986,926 |
|
$ |
9,109,881 |
| |||
Foreign
Exchange Risk |
|
(39,972 |
) |
|
(155,601 |
) |
|
(195,573 |
) | |||
$ |
1,082,983 |
|
$ |
7,831,325 |
|
$ |
8,914,308 |
|
* Futures contracts are included in net realized gain on Futures Contracts.
** Futures contracts are included in change in unrealized depreciation on Futures Contracts.
4. RELATED PARTY TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT — The Adviser serves as investment adviser to each Fund pursuant to an Investment Advisory Agreement between the Trust on behalf of each Fund and the Adviser (the “Agreement”). Under the Agreement, Krane is responsible for reviewing, supervising and administering each Fund’s investment program and the general management and administration of the Trust. In addition to these services, to the extent a Fund engages in securities lending, Krane will: (i) assist the securities lending agent of the Fund (the “Agent”) to determine which securities are available for loan, (ii) monitor the Agent’s activities to ensure that securities loans are effected in accordance with Krane’s instructions and in accordance with applicable procedures and guidelines adopted by the Board, (iii) make recommendations to the Board regarding the Fund’s participation in securities lending; (iv) prepare appropriate periodic reports for, and seek appropriate periodic approvals from, the Board with respect to securities lending activities, (v) respond to Agent inquiries concerning the Agent’s activities, and (vi) such other related duties as Krane deems necessary or
194
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
appropriate (this provision became effective with respect to the Funds on the later of October 5, 2017, or the date the Fund commenced operations). The Board of Trustees of the Trust supervises Krane and establishes policies that Krane must follow in its management activities.
The Agreement requires the Adviser to pay all operating expenses of the Funds, except: (a) interest and taxes (including, but not limited to, income, excise, transaction, transfer and withholding taxes); (b) expenses of the Funds incurred with respect to the acquisition and disposition of portfolio securities and the execution of portfolio transactions, including brokerage commissions and short sale dividend or interest expense; (c) expenses incurred in connection with any distribution plan adopted by the Trust in compliance with Rule 12b-1 under the Investment Company Act, including distribution fees; (d) “Acquired Fund Fees and Expenses” (as defined by Form N-1A under the 1940 Act); (e) litigation expenses; (f) the compensation payable to the Adviser under the Agreement; (g) compensation and expenses of the Independent Trustees (including any fees of independent legal counsel to the Independent Trustees); and (h) any expenses determined to be extraordinary expenses by the Board. In addition, effective on the later of October 5, 2017, or the date the Fund commenced operations, under the Agreement, while the fees and expenses related to the Funds’ securities lending-related activities reduce the gross revenues and income of the Funds from such activities, they are not fees and expenses for which Krane is responsible.
Each Agreement provides that each Fund pays a unitary (or unified) fee to the Adviser for advisory and management services provided to the Fund, subject to the exceptions noted herein. In this context, there exists a risk that a Trust service provider will seek recourse against the Trust if is not timely paid by Krane for the fees and expenses for which it is responsible, which could materially adversely affect the Funds. Pursuant to the Agreement between the Trust and the Adviser, the Funds below pay the Adviser a fee, which is calculated daily and paid monthly, at the following annual rates, based on a percentage of the average daily net assets of each Fund. In addition, as compensation for the services provided by the Adviser in connection with any securities lending-related activities, each Fund pays the Adviser 10% of the monthly investment income received from the investment of cash collateral and loan fees received from borrowers in respect to securities loans (net of any amounts paid to the custodian and/or securities lending agent or rebated to borrowers), included on the Statements of Operations as “Security Lending Fees”.
KraneShares Funds |
Management | |
KraneShares CICC China Leaders 100 Index ETF |
0.68% | |
KraneShares CSI China Internet ETF |
0.68% | |
KraneShares Bosera MSCI China A Share ETF |
0.78% | |
KraneShares E Fund China Commercial Paper ETF |
0.68% | |
KraneShares MSCI All China Index ETF |
0.68% | |
KraneShares MSCI One Belt One Road Index ETF |
0.78% | |
KraneShares Emerging Markets Consumer Technology Index ETF |
0.78% | |
KraneShares MSCI China Clean Technology Index ETF |
0.78% | |
KraneShares Electric Vehicles and Future Mobility Index ETF |
0.68% | |
KraneShares MSCI All China Health Care Index ETF |
0.78% | |
KraneShares CCBS China Corporate High Yield Bond USD Index Fund |
0.68% | |
KraneShares Emerging Markets Healthcare Index ETF |
0.78% | |
KraneShares MSCI Emerging Markets ex China Index ETF |
0.58% |
195
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
KraneShares Funds |
Management | |
KraneShares MSCI China ESG Leaders Index ETF |
0.58% | |
KraneShares Global Carbon ETF |
0.78% | |
KraneShares CICC China 5G & Semiconductor Index |
0.78% | |
KraneShares CICC China Consumer Leaders Index ETF |
0.68% | |
KraneShares SSE STAR Market 50 Index ETF |
0.88% |
Pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to waive its management fee for the KraneShares Bosera MSCI China A Share ETF by 0.20% of the Fund’s average daily net assets. The Fee Waiver Agreement will continue until August 1, 2021, and may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to reduce its management fee for the KraneShares E Fund China Commercial Paper ETF by 0.12% of the Fund’s average daily net assets until August 1, 2021. The Fee Waiver Agreement may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waive its advisory fee for the KraneShares MSCI All China Index ETF by 0.20% of the Fund’s average daily net assets and reduce its management fee in an amount equal to any Acquired Fund Fees and Expenses incurred by the Fund from its investments in the KraneShares Bosera MSCI China A Share ETF. The Fee Waiver Agreement will continue until August 1, 2021. The Fee Waiver Agreement may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waive its management fee for the KraneShares MSCI All China Health Care Index ETF by 0.14% of the Fund’s average daily net assets. The Fee Waiver Agreement will continue until August 1, 2021. The Fee Waiver Agreement may only be terminated prior thereto by the Board.
Effective January 8, 2021, pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waive its management fee for the KraneShares MSCI Emerging Markets ex China Index ETF by 0.35% of the Fund’s average daily net assets until August 1, 2021. The Fee Waiver Agreement may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated. Prior to January 8, 2021, Krane had contractually agreed to waive its management fee by 0.10% of the Fund’s average daily net assets.
Effective June 18, 2020, pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waived its management fee for the KraneShares Emerging Markets Consumer Technology Index ETF by 0.20% of the Fund’s average daily assets. The Fee Waiver Agreement will continue until August 1, 2021, and may only be terminated prior thereto by the Board. Prior to June 18, 2020, Krane had contractually agreed to waived its management fee for the KraneShares Emerging Markets Consumer Technology Index ETF by 0.10% of the Fund’s average daily assets.
Pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waive its management fee by 0.14% of the average daily net assets of KraneShares CICC China
196
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
5G & Semiconductor Index ETF. The Fee Waiver Agreement will continue until August 1, 2021, and may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
The Adviser and each Sub-Adviser bear all of their own costs associated with providing these advisory services.
SUB-ADVISORY AGREEMENT — Bosera Asset Management (International) Co., Ltd. (“Bosera”), operating out of Hong Kong, serves as the Sub-Adviser to the KraneShares Bosera MSCI China A Share ETF and KraneShares SSE STAR Market 50 Index ETF and is responsible for the day-to-day management of the Funds, subject to the supervision by the Adviser and the Board. For the services Bosera provides to KraneShares Bosera MSCI China A Share ETF and KraneShares SSE STAR Market 50 Index ETF, the Adviser pays Bosera a fee equal to 50% of the net revenue the Adviser receives from the Funds.
CCB Securities Ltd. (“CCBS”), located at 18/F CCB Centre, 18 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong, serves as the sub-adviser of KraneShares CCBS China Corporate High Yield Bond USD Index ETF. CCBS is responsible for the day-to-day investment management of the Fund, subject to the supervision of Krane and the Board. The Adviser has entered into a Sub-Advisory Agreement with CCBS pursuant to which the Adviser has agreed to pay CCBS a fee equal to 50% of net revenue earned by the Adviser from the Fund. For these purposes, net revenue is defined as gross revenue less gross fund-related expenses (including any waiver by the Adviser of its compensation under the investment advisory agreement and any payments or reimbursements by Krane of the Fund’s expenses).
Climate Finance Partners (“CFP”) serves as the Sub-Adviser of the KraneShares Global Carbon ETF. CFP provides non-discretionary sub-advisory services to the Fund, which will includes research and portfolio modeling services related to the Fund’s investments and the monitoring of such investments. For the services CFP provides to KraneShares Global Carbon ETF, the Adviser pays CFP a fee equal to 32% of the sum of: (i) the total gross advisory fee due to Krane from the Fund under the terms of the Advisory Agreement minus (ii) any applicable fee waivers from time to time entered into between the Fund and Krane.
E Fund Management (Hong Kong) Co., Limited (‘‘E Fund”), operating out of Hong Kong, serves as the Sub-Adviser to the KraneShares E Fund China Commercial Paper ETF and is responsible for the day-to-day management of the Fund, subject to the supervision by the Adviser and the Board. For the services E Fund provides to KraneShares E Fund China Commercial Paper ETF, the Adviser pays E Fund a fee equal to 50% of the net revenue the Adviser receives from the Fund.
DISTRIBUTION AGREEMENT — SEI Investments Distribution Co. (the “Distributor”), a wholly-owned subsidiary of SEI Investments Company, and an affiliate of the administrator, serves as the Funds’ distributor of Creation Units pursuant to a Distribution Agreement. The Distributor does not maintain any secondary market in Fund shares.
The Trust has adopted a Distribution and Service Plan (“Plan”) pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Plan, each Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year for certain distribution-related activities. For the year ended March 31, 2021, no fees were charged under the Plan. Fees would only be charged under the Plan upon approval by the Board.
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT — SEI Investments Global Funds Services (the “Administrator”) serves as the Funds’ Administrator pursuant to an Administration Agreement. BBH serves as the Funds’ Custodian and Transfer Agent pursuant to a Custodian and Transfer Agent Agreement.
197
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
4. BASIS FOR CONSOLIDATION FOR THE KRANESHARES GLOBAL CARBON ETF
The Consolidated Schedule of Investments, Consolidated Statement of Assets and Liabilities, Consolidated Statement of Operations, Consolidated Statement of Changes in Net Assets and the Consolidated Financial Highlights of the KraneShares Global Carbon ETF include the accounts of the Fund’s Subsidiary. All intercompany accounts and transactions have been eliminated in consolidation for the Fund. The Subsidiary has a fiscal year end of March 31 for financial statement consolidation purposes.
The Subsidiary is classified as a controlled foreign corporation under the Internal Revenue Code of 1986 (“IRC”). The Subsidiary’s taxable income is included in the calculation of the Fund’s taxable income. Net losses of the Subsidiary are not deductible by the Fund either in the current period or carried forward to future periods.
The KraneShares Global Carbon ETF’s investment in the Subsidiary may not exceed 25% of the value of its total assets.
A summary of the investments in the Subsidiary is as follows:
KraneShares Funds |
Inception |
Subsidiary |
% of Total | |||||
KFA Global Carbon, Subsidiary, Ltd. |
July 29, 2020 |
$ |
19,293,965 |
20.59 |
% |
5. INVESTMENT TRANSACTIONS
For the year ended March 31, 2021, the purchases and sales of investments in securities excluding in-kind transactions, long-term U.S. Government and short-term securities were:
KraneShares Funds |
Purchases |
Sales
and | ||||
KraneShares CICC China Leaders 100 Index ETF |
$ |
17,966,088 |
$ |
24,484,925 | ||
KraneShares CSI China Internet ETF |
|
2,770,214,860 |
|
2,706,525,170 | ||
KraneShares Bosera MSCI China A Share ETF |
|
302,143,811 |
|
243,716,450 | ||
KraneShares E Fund China Commercial Paper ETF |
|
— |
|
— | ||
KraneShares MSCI All China Index ETF |
|
14,603,614 |
|
3,914,935 | ||
KraneShares MSCI One Belt One Road Index ETF |
|
3,169,465 |
|
3,685,335 | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
131,794,728 |
|
99,083,103 | ||
KraneShares MSCI China Clean Technology Index ETF |
|
239,523,673 |
|
81,464,538 | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
84,293,574 |
|
54,206,940 | ||
KraneShares MSCI All China Health Care Index ETF |
|
211,295,040 |
|
57,598,703 | ||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
|
5,079,144 |
|
10,140,995 | ||
KraneShares Emerging Markets Healthcare Index ETF |
|
5,707,436 |
|
2,405,846 | ||
KraneShares MSCI Emerging Markets ex China Index ETF |
|
22,191,933 |
|
1,305,994 | ||
KraneShares MSCI China ESG Leaders Index ETF |
|
12,275,587 |
|
1,771,510 | ||
KraneShares Global Carbon ETF |
|
5,654,285 |
|
— | ||
KraneShares CICC China 5G & Semiconductor Index ETF |
|
206,876,170 |
|
74,700,254 | ||
KraneShares CICC China Consumer Leaders Index ETF |
|
77,583,920 |
|
17,581,511 | ||
KraneShares SSE STAR Market 50 Index ETF |
|
111,597,768 |
|
7,178,092 |
198
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
During the year ended March 31, 2021, there were no purchases or sales of long-term U.S. government securities for the Funds.
For the year ended March 31, 2021, in-kind transactions associated with creations and redemptions were:
KraneShares Funds |
Purchases |
Sales and |
Realized | ||||||||
KraneShares CSI China Internet ETF |
$ |
1,461,435,248 |
$ |
(1,349,234,549 |
) |
$ |
350,934,846 |
| |||
KraneShares MSCI All China Index ETF |
|
4,882,634 |
|
(971,929 |
) |
|
345,773 |
| |||
KraneShares MSCI One Belt One Road Index ETF |
|
779,806 |
|
(1,093,690 |
) |
|
(43,666 |
) | |||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
96,900,519 |
|
(71,528,449 |
) |
|
14,928,913 |
| |||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
130,376,453 |
|
(1,653,622 |
) |
|
269,006 |
| |||
KraneShares Emerging Markets Healthcare Index ETF |
|
355,815 |
|
(117,414 |
) |
|
14,547 |
| |||
KraneShares MSCI Emerging Markets ex China Index ETF |
|
6,903,891 |
|
— |
|
|
— |
| |||
KraneShares MSCI China ESG Leaders Index ETF |
|
1,904,862 |
|
— |
|
|
— |
|
6. TAX INFORMATION
The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with Federal income tax regulations, which may differ from U.S. GAAP. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. These book/tax differences may be temporary or permanent. To the extent these differences are permanent in nature, they are charged or credited to distributable earnings (loss) or paid-in capital, as appropriate, in the period that the differences arise.
The permanent differences primarily consist of foreign currency translations, reclassification of long term capital gain distribution on REITs, investments in PFICs, net operating loss, perpetual bond adjustments and distribution reclassification. The permanent difference that is credited or charged to Paid-in Capital and Distributable Earnings for the fiscal year ended March 31, 2021 are primarily related to redemptions in-kind, net operating loss and utilization of earnings and profits on shareholder redemptions.
KraneShares Funds |
Distributable |
Paid-in | ||||||
KraneShares CSI China Internet ETF |
$ |
(342,219,730 |
) |
$ |
342,219,730 |
| ||
KraneShares MSCI All China Index ETF |
|
(340,647 |
) |
|
340,647 |
| ||
KraneShares MSCI One Belt One Road Index ETF |
|
44,365 |
|
|
(44,365 |
) | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
(16,760,035 |
) |
|
16,760,035 |
| ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
(229,956 |
) |
|
229,956 |
| ||
KraneShares MSCI All China Health Care Index ETF |
|
74,396 |
|
|
(74,396 |
) | ||
KraneShares Emerging Markets Healthcare Index ETF |
|
(8,684 |
) |
|
8,684 |
| ||
KraneShares CICC China 5G & Semiconductor Index ETF |
|
67,926 |
|
|
(67,926 |
) | ||
KraneShares CICC China Consumer Leaders Index ETF |
|
1,403 |
|
|
(1,403 |
) | ||
KraneShares SSE STAR Market 50 Index ETF |
|
133,531 |
|
|
(133,531 |
) |
199
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
The tax character of dividends and distributions paid during the years or periods ended March 31, 2021 and March 31, 2020 were as follows:
KraneShares Funds |
Ordinary |
Long-Term |
Return
of |
Totals | ||||||||
KraneShares CICC China Leaders 100 Index ETF |
|
|
||||||||||
2021 |
$ |
333,476 |
$ |
— |
$ |
— |
$ |
333,476 | ||||
2020 |
|
39,838 |
|
— |
|
— |
|
39,838 | ||||
KraneShares CSI China Internet ETF |
|
|||||||||||
2021 |
$ |
4,346,283 |
$ |
5,925,981 |
$ |
— |
$ |
10,272,264 | ||||
2020 |
|
1,580,181 |
|
— |
|
— |
|
1,580,181 | ||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||
2021 |
$ |
5,683,472 |
$ |
— |
$ |
— |
$ |
5,683,472 | ||||
2020 |
|
9,500,578 |
|
— |
|
— |
|
9,500,578 | ||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||
2021 |
$ |
312,960 |
$ |
— |
$ |
— |
$ |
312,960 | ||||
2020 |
|
— |
|
— |
|
521,147 |
|
521,147 | ||||
KraneShares MSCI All China Index ETF | ||||||||||||
2021 |
$ |
69,738 |
$ |
— |
$ |
— |
$ |
69,738 | ||||
2020 |
|
115,192 |
|
— |
|
— |
|
115,192 | ||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||
2021 |
$ |
164,798 |
$ |
— |
$ |
— |
$ |
164,798 | ||||
2020 |
|
523,629 |
|
— |
|
— |
|
523,629 | ||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||
2021 |
$ |
1,338,886 |
$ |
— |
$ |
— |
$ |
1,338,886 | ||||
2020 |
|
337,518 |
|
— |
|
— |
|
337,518 | ||||
KraneShares MSCI China Clean Technology Index ETF | ||||||||||||
2021 |
$ |
3,785 |
$ |
— |
$ |
— |
$ |
3,785 | ||||
2020 |
|
108,818 |
|
— |
|
— |
|
108,818 | ||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||
2021 |
$ |
132,013 |
$ |
— |
$ |
— |
$ |
132,013 | ||||
2020 |
|
391,574 |
|
— |
|
— |
|
391,574 | ||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||
2021 |
$ |
— |
$ |
469 |
$ |
— |
$ |
469 | ||||
2020 |
|
54,459 |
|
— |
|
— |
|
54,459 | ||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||
2021 |
$ |
688,389 |
$ |
— |
$ |
— |
$ |
688,389 | ||||
2020 |
|
570,699 |
|
30,638 |
|
— |
|
601,337 | ||||
|
200
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
KraneShares Funds |
Ordinary |
Long-Term |
Return
of |
Totals | ||||||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||
2021 |
$ |
820 |
$ |
— |
$ |
— |
$ |
820 | ||||
2020 |
|
18,337 |
|
— |
|
611 |
|
18,948 | ||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||
2021 |
$ |
49,799 |
$ |
— |
$ |
— |
$ |
49,799 | ||||
2020 |
|
73,632 |
|
— |
|
— |
|
73,632 | ||||
KraneShares MSCI China ESG Leaders Index ETF | ||||||||||||
2021 |
$ |
30,223 |
$ |
— |
$ |
— |
$ |
30,223 | ||||
KraneShares Global Carbon ETF |
|
|
|
|
||||||||
2021 |
$ |
— |
$ |
— |
$ |
— |
$ |
— | ||||
KraneShares CICC China 5G & Semiconductor Index ETF | ||||||||||||
2021 |
$ |
— |
$ |
— |
$ |
— |
$ |
— | ||||
KraneShares CICC China Consumer Leaders Index ETF | ||||||||||||
2021 |
$ |
— |
$ |
— |
$ |
— |
$ |
— | ||||
KraneShares SSE STAR Market 50 Index ETF | ||||||||||||
2021 |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
As of March 31, 2021, the components of tax basis distributable earnings (accumulated losses) were as follows:
KraneShares |
KraneShares |
KraneShares |
KraneShares E |
KraneShares | ||||||||||||||||
Undistributed Ordinary Income |
$ |
355,056 |
|
$ |
— |
|
$ |
— |
|
$ |
633,985 |
|
$ |
— |
| |||||
Undistributed Long-Term Capital Gain |
|
157,940 |
|
|
253,353,244 |
|
|
6,517,453 |
|
|
— |
|
|
230,067 |
| |||||
Capital Loss Carryforwards |
|
— |
|
|
— |
|
|
— |
|
|
(8,025 |
) |
|
— |
| |||||
Post October Losses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(31,119 |
) | |||||
Qualified Late-Year Loss Deferrals |
|
(23,808 |
) |
|
(6,086,844 |
) |
|
(916,524 |
) |
|
— |
|
|
(2,588 |
) | |||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency |
|
700,806 |
|
|
92,434,993 |
|
|
163,245,555 |
|
|
(97,896 |
) |
|
91,176 |
| |||||
Other Temporary Differences |
|
(1 |
) |
|
3 |
|
|
— |
|
|
— |
|
|
— |
| |||||
Total Distributable Earnings |
$ |
1,189,993 |
|
$ |
339,701,396 |
|
$ |
168,846,484 |
|
$ |
528,064 |
|
$ |
287,536 |
|
201
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
KraneShares |
KraneShares |
KraneShares |
KraneShares |
KraneShares | |||||||||||||||
Undistributed Ordinary Income |
$ |
42,050 |
|
$ |
250,504 |
$ |
— |
|
$ |
— |
|
$ |
— |
| |||||
Undistributed Long-Term Capital Gain |
|
— |
|
|
— |
|
— |
|
|
2,797,170 |
|
|
8,974,227 |
| |||||
Capital Loss Carryforwards |
|
(4,145,635 |
) |
|
— |
|
(1,021,417 |
) |
|
— |
|
|
— |
| |||||
Post October Losses |
|
— |
|
|
— |
|
(3,589,789 |
) |
|
— |
|
|
— |
| |||||
Qualified Late-Year Loss Deferrals |
|
— |
|
|
— |
|
(281,323 |
) |
|
— |
|
|
(388,582 |
) | |||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency |
|
1,557,862 |
|
|
1,775,876 |
|
(16,431,930 |
) |
|
12,111,870 |
|
|
11,948,187 |
| |||||
Other Temporary Differences |
|
(1 |
) |
|
— |
|
(2 |
) |
|
(14,036 |
) |
|
(2 |
) | |||||
Total Distributable Earnings/(Loss) |
$ |
(2,545,724 |
) |
$ |
2,026,380 |
$ |
(21,324,461 |
) |
$ |
14,895,004 |
|
$ |
20,533,830 |
|
KraneShares |
KraneShares |
KraneShares |
KraneShares |
KraneShares | ||||||||||||||
Undistributed Ordinary Income |
$ |
40,525 |
|
$ |
— |
|
$ |
83,928 |
$ |
104,372 |
$ |
7,929,892 |
| |||||
Undistributed Long-Term Capital Gain |
|
— |
|
|
— |
|
|
370,444 |
|
— |
|
— |
| |||||
Capital Loss Carryforwards |
|
(180,673 |
) |
|
(284,697 |
) |
|
— |
|
— |
|
— |
| |||||
Post October Losses |
|
(36,247 |
) |
|
— |
|
|
— |
|
— |
|
— |
| |||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency |
|
(56,161 |
) |
|
62,142 |
|
|
147,162 |
|
264,890 |
|
(86,193 |
) | |||||
Other Temporary Differences |
|
46,055 |
|
|
(161 |
) |
|
— |
|
1 |
|
1 |
| |||||
Total Distributable Earnings/(Loss) |
$ |
(186,501 |
) |
$ |
(222,716 |
) |
$ |
601,534 |
$ |
369,263 |
$ |
7,843,700 |
|
202
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
KraneShares |
KraneShares |
KraneShares | ||||||||||
Capital Loss Carryforwards |
$ |
— |
|
$ |
— |
|
$ |
(1,471 |
) | |||
Post October Losses |
|
(2,163,819 |
) |
|
(1,087,696 |
) |
|
— |
| |||
Qualified Late-Year Loss Deferrals |
|
(461,628 |
) |
|
(137,280 |
) |
|
— |
| |||
Unrealized Depreciation on Investments and Foreign Currency |
|
(11,238,750 |
) |
|
(4,669,806 |
) |
|
(11,367,327 |
) | |||
Other Temporary Differences |
|
(1 |
) |
|
— |
|
|
— |
| |||
Total Distributable Losses |
$ |
(13,864,198 |
) |
$ |
(5,894,782 |
) |
$ |
(11,368,798 |
) |
Qualified late year ordinary and Post-October capital losses (including currency and specified gain/loss items) represent losses realized from January 1, 2021 through March 31, 2021 and November 1, 2020 through March 31, 2021, respectively, that in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
Other temporary differences primarily consist of late year and specified loss deferrals, PFIC mark to market, perpetual bond adjustments, and book adjustments not recognized for tax.
The Funds have capital losses carried forward as follows:
KraneShares Funds |
Short-Term |
Long-Term |
Total | ||||||
KraneShares E Fund China Commercial Paper ETF |
$ |
8,025 |
$ |
— |
$ |
8,025 | |||
KraneShares MSCI One Belt One Road Index ETF |
|
2,381,247 |
|
1,764,388 |
|
4,145,635 | |||
KraneShares MSCI China Clean Technology Index ETF |
|
792,699 |
|
228,718 |
|
1,021,417 | |||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
|
31,707 |
|
148,966 |
|
180,673 | |||
KraneShares Emerging Markets Healthcare Index ETF |
|
284,697 |
|
— |
|
284,697 | |||
KraneShares SSE STAR Market 50 Index ETF |
|
1,471 |
|
— |
|
1,471 |
During the year ended March 31, 2021, the following Funds utilized capital loss carryforwards, to offset capital gains:
KraneShares Funds |
Amount | ||
KraneShares CICC China Leaders 100 Index ETF |
$ |
486,901 | |
KraneShares CSI China Internet ETF |
|
126,978,517 | |
KraneShares Bosera MSCI China A Share ETF |
|
20,470,797 | |
KraneShares E Fund China Commercial Paper ETF |
|
14,474 | |
KraneShares MSCI All China Index ETF |
|
128,223 | |
KraneShares MSCI One Belt One Road Index ETF |
|
36,941 | |
KraneShares Emerging Markets Consumer Technology Index ETF |
|
3,721,922 | |
KraneShares MSCI China Clean Technology Index ETF |
|
808,707 | |
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
3,212,141 | |
KraneShares MSCI All China Health Care Index ETF |
|
7,682,624 | |
KraneShares Emerging Markets Healthcare Index ETF |
|
224,621 | |
KraneShares MSCI Emerging Markets ex China Index ETF |
|
5,648 |
203
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
The differences between book and tax-basis unrealized appreciation and depreciation are attributable primarily to the tax deferral of losses on wash sales and investments in passive foreign investment companies. The federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Funds at March 31, 2021 were as follows:
KraneShares Funds |
Federal Tax |
Aggregated Gross |
Aggregated Gross |
Net Unrealized
| ||||||||||
KraneShares CICC China Leaders 100 Index ETF |
$ |
11,862,209 |
$ |
1,389,599 |
$ |
(688,793 |
) |
$ |
700,806 |
| ||||
KraneShares CSI China Internet ETF |
|
3,749,779,320 |
|
541,520,124 |
|
(449,085,131 |
) |
|
92,434,993 |
| ||||
KraneShares Bosera MSCI China A Share ETF |
|
638,412,542 |
|
207,679,380 |
|
(44,433,825 |
) |
|
163,245,555 |
| ||||
KraneShares E Fund China Commercial Paper ETF |
|
— |
|
— |
|
(97,896 |
) |
|
(97,896 |
) | ||||
KraneShares MSCI All China Index ETF |
|
22,266,664 |
|
1,027,331 |
|
(936,155 |
) |
|
91,176 |
| ||||
KraneShares MSCI One Belt One Road Index ETF |
|
8,480,105 |
|
2,238,762 |
|
(679,636 |
) |
|
1,559,126 |
| ||||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
109,490,395 |
|
9,455,917 |
|
(7,680,039 |
) |
|
1,775,878 |
| ||||
KraneShares MSCI China Clean Technology Index ETF |
|
157,251,330 |
|
7,251,407 |
|
(23,683,337 |
) |
|
(16,431,930 |
) | ||||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
196,945,039 |
|
20,431,761 |
|
(8,319,891 |
) |
|
12,111,870 |
| ||||
KraneShares MSCI All China Health Care Index ETF |
|
202,358,919 |
|
22,496,163 |
|
(10,547,976 |
) |
|
11,948,187 |
| ||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
|
7,000,496 |
|
201,167 |
|
(257,328 |
) |
|
(56,161 |
) | ||||
KraneShares Emerging Markets Healthcare Index ETF |
|
4,880,450 |
|
431,231 |
|
(362,547 |
) |
|
68,684 |
| ||||
KraneShares MSCI Emerging Markets ex China Index ETF |
|
30,670,186 |
|
1,273,538 |
|
(1,107,302 |
) |
|
166,236 |
| ||||
KraneShares MSCI China ESG Leaders Index ETF |
|
12,556,633 |
|
758,791 |
|
(493,901 |
) |
|
264,890 |
| ||||
KraneShares Global Carbon ETF |
|
5,654,285 |
|
— |
|
(86,215 |
) |
|
(86,215 |
) | ||||
KraneShares CICC China 5G & Semiconductor Index ETF |
|
130,012,069 |
|
6,228,116 |
|
(17,466,866 |
) |
|
(11,238,750 |
) | ||||
KraneShares CICC China Consumer Leaders Index ETF |
|
58,914,713 |
|
766,792 |
|
(5,436,598 |
) |
|
(4,669,806 |
) | ||||
KraneShares SSE STAR Market 50 Index ETF |
|
104,418,205 |
|
1,500,302 |
|
(12,867,629 |
) |
|
(11,367,327 |
) |
204
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
Uncertainties in the Chinese tax rules governing the taxation of income distributions and capital gains from investments in A Shares could result in unexpected tax liabilities for the Funds. China generally imposes withholding tax at a rate of 10% on dividends and interest derived by non-Chinese resident investors (including, for example, Qualified Foreign Institutional Investors (“QFII”)) from Chinese companies and those companies which are not Chinese tax residents, but which are deemed to be Chinese tax residents (e.g., under Notice 7). China also imposes withholding tax at a rate of 10% on capital gains derived by non-residents from investment in actual and constructive Chinese resident companies. The Chinese withholding taxes applied to dividends, interest and capital gains may, in principle, be subject to a reduced rate under an applicable Chinese tax treaty, but the application of such treaties in the case of a non-resident (e.g., in the case of a QFII acting on behalf of non-resident investors, such as the Funds) is also uncertain. The imposition of such taxes could have a material adverse effect on the Funds’ returns. The People’s Republic of China (the “PRC”) rules regarding the taxation of non-resident investors are quickly evolving and certain of the tax regulations to be issued by the PRC State Administration of Taxation and/or the PRC Ministry of Finance to clarify matters may apply retrospectively. Such retroactively applied rules may be adverse to the Funds and their shareholders. It is also unclear how China’s value added tax (“VAT”) may be affected by tax treaty provisions. If such a tax is collected, the expenses will be passed on and borne by the Funds. The imposition of such taxes, as well as future changes in applicable PRC tax law, may adversely affect the Funds. If the Funds expect VAT to be imposed, they reserve the right to establish a reserve for such tax. If the Funds establish such a reserve but are not ultimately subject to the tax, shareholders who redeemed or sold their shares while the reserve was in place will effectively bear the tax and may not benefit from the later release, if any, of the reserve. Conversely, if the Funds do not establish such a reserve but ultimately are subject to the tax, shareholders who redeemed or sold their shares prior to the tax being withheld, reserved or paid will have effectively avoided the tax, even if they benefited from investments in a Fund. Effective November 17, 2014, QFIIs, RQFIIs (i.e., QFIIs investing in Yuan, rather than foreign currency) and non-Chinese resident investors investing through the Hong Kong-Shanghai Stock Connect are exempted temporarily from the 10% capital gains tax that normally applies to sales of A Shares on a public Chinese exchange (such as the Shanghai Stock Exchange). However, such investors are still required to pay capital gains tax for gains realized on trades executed before November 17, 2014.
On November 7, 2018, China’s Ministry of Finance and the State Administration of Taxation jointly issued Circular 108. This circular announced a three year exemption from corporate income tax withholding (“WHT”) and Value Added Tax (“VAT”) for China-sourced bond interest derived by overseas institutional investors. The WHT and VAT exemptions apply from November 7, 2018 to November 6, 2021.
7. CONCENTRATION OF RISKS
As with all ETFs, shareholders of the Funds are subject to the risk that their investment could lose money. Each Fund is subject to certain of the principal risks noted below, any of which may adversely affect a Fund’s NAV, trading price, yield, total return and ability to meet its investment objective. A more complete description of principal risks is included in each Fund’s prospectus under the heading “Principal Risks”. The following risks pertain to all Funds, unless otherwise noted.
CASH AND CASH EQUIVALENTS RISK — The Fund may hold cash or cash equivalents. Generally, such positions offer less potential for gain than other investments. Holding cash or cash equivalents, even
205
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
strategically, may lead to missed investment opportunities. This is particularly true when the market for other investments in which the Fund may invest is rapidly rising. If the Fund holds cash uninvested it will be subject to the credit risk of the depositing institution holding the cash.
CAP AND TRADE RISK (KraneShares Global Carbon ETF) — There is no assurance that cap and trade programs will continue to exist. Cap and trade may not prove to be an effective method of reduction in GHG emissions. As a result or due to other factors, cap and trade programs may be terminated or may not be renewed upon their expiration. New technologies may arise that may diminish or eliminate the need for cap and trade markets. Ultimately, the cost of emissions credits is determined by the cost of actually reducing emissions levels. If the price of credits becomes too high, it will be more economical for companies to develop or invest in green technologies, thereby suppressing the demand for credits and adversely affecting the price of the Fund.
Cap and trade programs set emission limits (i.e., the right to emit a certain quantity of GHG emissions), which can be allocated or auctioned to the parties regulated under the program up to the total emissions cap. This allocation may be larger or smaller than is needed for a stable price of credits and can lead to large price volatility, which could affect the value of the Fund. Depending upon the industries covered under each cap and trade mechanism represented in the Index, unpredictable demand for their products and services can affect the value of GHG emissions credits. For example, very mild winters or very cool summers can decrease demand for electric utilities and therefore require fewer carbon credits to offset reduced production and GHG emissions.
CHINA RISK — The Chinese economy is generally considered an emerging market and can be significantly affected by economic and political conditions in China and surrounding Asian countries. In addition, the Chinese economy is export-driven and highly reliant on trade. A downturn in the economies of China’s primary trading partners could slow or eliminate the growth of the Chinese economy and adversely impact the Fund’s investments. The Chinese government strictly regulates the payment of foreign currency denominated obligations and sets monetary policy. The Chinese government may introduce new laws and regulations that could have an adverse effect on the Fund. Although China has begun the process of privatizing certain sectors of its economy, privatized entities may lose money and/or be re-nationalized.
In the Chinese securities markets, a small number of issuers may represent a large portion of the entire market. The Chinese securities markets are subject to more frequent trading halts, low trading volume and price volatility. Further, the Chinese economy is heavily dependent upon trading with key partners. Recent developments in relations between the United States and China have heightened concerns of increased tariffs and restrictions on trade between the two countries. An increase in tariffs or trade restrictions or even the threat of such developments, could lead to significant reduction in international trade, which could have a negative impact on China’s export industry and a commensurately negative impact on the Fund.
The RMB Bond market is volatile with a risk of trading suspensions in particular securities and government interventions. Trading in RMB Bonds may be suspended without warning and for lengthy periods. Information on such trading suspensions, including as to their expected length, may be unavailable. Securities affected by trading suspensions may be or become illiquid. In recent years, Chinese entities have incurred significant levels of debt and Chinese financial institutions currently hold relatively large amounts of non-performing debt. Thus, there exists a possibility that widespread defaults could occur, which could trigger a financial crisis, freeze Chinese debt and finance markets and make certain Chinese securities illiquid.
206
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
In
addition, trade relations between the U.S. and China have recently been
strained. Worsening trade relations between the two countries could adversely
impact the Fund, particularly to the extent that the Chinese government
restricts foreign investments in on-shore Chinese
companies or the U.S. government restricts investments by U.S. investors in
China including by limiting the ability of Chinese issuers to list on the U.S.
exchanges. Worsening trade relations may also result in market volatility and
volatility in the price of Fund shares. In addition, the U.S government has
imposed restrictions on the ability of U.S. investors to hold and/or acquire
securities of certain Chinese companies, which may
adversely impact the
Fund, may mean that the Fund’s Underlying Index may need to adjust its
methodology or could increase tracking error for the Fund.
CHINESE CREDIT RATINGS RISK (KraneShares E Fund China Commercial Paper ETF and KraneShares CCBS China Corporate High Yield Bond USD Index ETF) — The debt securities included in Underlying Index securities, and therefore the securities held by the KraneShares E Fund China Commercial Paper ETF Fund, will generally be rated by Chinese ratings agencies (and not by U.S. nationally recognized statistical ratings organizations (“NRSROs”)). The rating criteria and methodology used by Chinese rating agencies may be different from those adopted by NRSROs and international credit rating agencies. Therefore, such rating systems may not provide an equivalent standard for comparison with securities rated by NRSROs or other international credit rating agencies.
COMMODITY-LINKED DERIVATIVES RISK (KraneShares Global Carbon ETF) — The value of a commodity-linked derivative investment typically is based upon the price movements of a physical commodity and may be affected by changes in overall market movements, volatility of the Index, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatory developments. Investments in commodity-linked derivatives may be subject to greater volatility than non-derivative based investments. Commodity-linked derivatives also may be subject to credit and interest rate risks that in general affect the values of debt securities.
COMMODITY POOL REGISTRATION RISK (KraneShares Global Carbon ETF) — Under amended regulations promulgated by the CFTC, the Fund and the Subsidiary will be considered commodity pools upon commencement of operations, and therefore each will be subject to regulation under the Commodity Exchange Act and CFTC rules. Krane will register as a commodity pool operator and will manage the Fund and the Subsidiary in accordance with CFTC rules, as well as the rules that apply to registered investment companies. Commodity pools are subject to additional laws, regulations and enforcement policies, all of which may potentially increase compliance costs and may affect the operations and financial performance of the Fund and the Subsidiary. Additionally, positions in futures and other contracts may have to be liquidated at disadvantageous times or prices to prevent the Fund from exceeding any applicable position limits established by the CFTC. Such actions may subject the Fund to substantial losses.
CONCENTRATION RISK — Because the Fund’s assets are expected to be concentrated in an industry or group of industries to the extent that the Underlying Index concentrates in a particular industry or group of industries, the Fund is subject to loss due to adverse occurrences that may affect that industry or group of industries or sector. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single industry or a group of related industries, and the securities of companies in that industry or group of industries could react similarly to these or other developments. Depending on the composition of each Fund’s Underlying Index, the Fund may be subject to principal risks, as outlined in each Fund’s prospectus. Each Fund may have significant exposure to other industries or sectors over time.
207
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
CURRENCY RISK — The Fund’s assets will be invested in instruments denominated in foreign currencies and the income received by the Fund may be in foreign currencies. The Fund will compute and expects to distribute its income in U.S. dollars, and the computation of income will be made on the date that the income is earned by the Fund at the foreign exchange rate in effect on that date. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market at the time the Fund wishes to enter into the transaction, or through forward, futures or options contracts to purchase or sell foreign currencies.
The Fund’s NAV is determined on the basis of the U.S. dollar. The Fund may therefore lose value if the local currency of a foreign investment depreciates against the U.S. dollar, even if the local currency value of the Fund’s holdings goes up. Currency exchange rates can be very volatile and can change quickly and unpredictably, which may adversely affect the Fund. The Fund may also be subject to delays in converting or transferring U.S. dollars to foreign currencies and vice versa. This may adversely affect the Fund’s performance over time.
CUSTODY RISKS (KraneShares E Fund China Commercial Paper ETF and KraneShares SSE STAR Market 50 Index ETF) — In accordance with Chinese regulations, A-Shares acquired through a QFII or RQFII license will be held in the joint names of the Fund and Bosera. While Bosera may not use such an account for any purpose other than for maintaining the Fund’s assets, the Fund’s assets may not be as well protected as they would be if it were possible for them to be registered and held solely in the name of the Fund. There is a risk that creditors of Bosera may assert that the securities are owned by Bosera and that regulatory actions taken against Bosera may affect the Fund. The risk is particularly acute in the case of cash deposited with a People’s Republic of China (“PRC”) sub-custodian (“PRC Custodian”) because it may not be segregated, and it may be treated as a debt owing from the PRC Custodian to the Fund as a depositor. Thus, in the event of a PRC Custodian bankruptcy, liquidation, or similar event, the Fund may face difficulties and/or encounter delays in recovering its cash.
DEPOSITARY RECEIPTS RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF) — The Fund may hold the securities of Chinese and other non-U.S. companies in the form of depositary receipts, including American Depositary Receipts and Global Depositary Receipts. Investing in depositary receipts entails the risks associated with foreign investments. The underlying securities of the depositary receipts in the Fund’s portfolio are subject to fluctuations in foreign currency exchange rates that may affect the value of the Fund’s portfolio. In addition, the value of the securities underlying the depositary receipts may change materially when the U.S. markets are not open for trading, which will affect the value of the depositary receipts. Like direct investments in foreign securities, investments in depositary receipts involve political and economic risks distinct from those associated with investing in the securities of U.S. issuers.
DERIVATIVES RISK — The use of derivatives (including swaps, futures, forwards, structured notes and options) may involve leverage, which includes risks that are different from, and greater than, the risks associated with investing directly in a reference asset, because a small investment in a derivative can result in a large impact on the Fund and may cause the Fund to be more volatile. In addition, derivatives can be illiquid and imperfectly correlate with the reference asset, resulting
208
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
in unexpected returns that could materially adversely affect the Fund. Certain derivatives (such as swaps and options) are bi-lateral agreements that expose the Fund to counterparty risk, which is the risk of loss in the event that the counterparty to an agreement fails to perform under it. In that case, the Fund may suffer losses potentially equal to, or greater than, the full value of the derivative if the counterparty fails to perform its obligations. Counterparty risks are compounded by the fact that there are only a limited number of ways available to invest in certain reference assets and, therefore, there may be few counterparties to swaps or options based on those reference assets. Investments in derivatives may expose the Fund to leverage, which may cause the Fund to be more volatile than if it had not been leveraged. Many derivatives are subject to segregation requirements that require the Fund to segregate the market or notional value of the derivatives, which could impede the portfolio management of the Fund.
EMERGING MARKETS RISK — The Fund’s investments in emerging markets are subject to greater risk of loss than investments in developed markets. This is due to, among other things, greater market volatility, greater risk of asset seizures and capital controls, lower trading volume, political and economic instability, greater risk of market shutdown and more governmental limitations on foreign investments than typically found in developed markets. The economies of emerging markets, and China in particular, may be heavily reliant upon international trade and may suffer disproportionately if international trading declines or is disrupted.
ESG RISK (KraneShares MSCI China ESG Leaders Index ETF) — Issuers with businesses with high ESG ratings may be difficult to identify and investments in them maybe volatile. Even companies with high ESG ratings may not necessarily compare favorably with respect to the ESG practices of other issuers. The ESG investment strategy limits the types and number of investment opportunities available and, as a result, the strategy may underperform other strategies that do not have an ESG focus. The ESG investment strategy may result in the Fund’s investing in securities or industry sectors that underperform the market as a whole or underperform other funds screened for ESG standards. Investing based on ESG criteria is qualitative and subjective by nature and there is no guarantee that the criteria used by the Fund will reflect the beliefs or values of any particular investor.
ETF RISK. As an ETF, the Fund is subject to the following risks:
Authorized Participants Concentration Risk. The Fund has a limited number of financial institutions that may act as Authorized Participants. To the extent they cannot or are otherwise unwilling to engage in creation and redemption transactions with the Fund and no other Authorized Participant steps in, shares of the Fund may trade like closed-end fund shares at a significant discount to net asset value (“NAV”) and may face delisting from the Exchange.
Cash Transactions Risk. Like other ETFs, the Fund sells and redeems its shares only in large blocks called Creation Units and only to “Authorized Participants.” Unlike many other ETFs, however, the Fund expects to effect its creations and redemptions at least partially or fully for cash, rather than in-kind securities. Thus, an investment in the Fund may be less tax-efficient than an investment in other ETFs as the Fund may recognize a capital gain that it could have avoided by making redemptions in-kind. As a result, the Fund may pay out higher capital gains distributions than ETFs that redeem in-kind. Further, paying redemption proceeds in cash rather than through in-kind delivery of portfolio securities may require the Fund to dispose of or sell portfolio investments to obtain the cash needed to distribute redemption proceeds at an inopportune time.
209
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
International Closed Market Trading Risk. Because certain of the Fund’s investments trade in markets that are closed when the Fund and Exchange are open, there are likely to be deviations between current pricing of an underlying security and stale pricing, resulting in the Fund trading at a discount or premium to NAV greater than those incurred by other ETFs.
New Fund Risk (KraneShares MSCI China ESG Leaders Index ETF, KraneShares Global Carbon ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF). The Fund is new. If the Fund does not grow large in size once it commences trading, it will be at greater risk than larger funds of wider bid-ask spreads for its shares, trading at a greater premium or discount to NAV, liquidation and/or a stop to trading.
Premium/Discount Risk. There may be times when the market price of the Fund’s shares is more than the NAV intra-day (at a premium) or less than the NAV intra-day (at a discount). As a result, shareholders of the Fund may pay more than NAV when purchasing shares and receive less than NAV when selling Fund shares. This risk is heightened in times of market volatility or periods of steep market declines. In such market conditions, market or stop loss orders to sell Fund shares may be executed at prices well below NAV.
Secondary Market Trading Risk. Investors buying or selling shares in the secondary market will normally pay brokerage commissions, which are often a fixed amount and may be a significant proportional cost for investors buying or selling relatively small amounts of shares. Secondary market trading is subject to bid-ask spreads and trading in Fund shares may be halted by the Exchange because of market conditions or other reasons. If a trading halt occurs, a shareholder may temporarily be unable to purchase or sell shares of the Fund. In addition, although the Fund’s shares are listed on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained or that the Fund’s shares will continue to be listed.
EQUITY SECURITIES RISK — The values of equity securities are subject to factors such as market fluctuations, changes in interest rates and perceived trends in stock prices. Equity securities are subject to volatile changes in value and their values may be more volatile than other asset classes. In the event of liquidation, equity securities are generally subordinate in rank to debt and other securities of the same issuer.
FIXED INCOME SECURITIES RISK (KraneShares E Fund China Commercial Paper ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF and KraneShares Global Carbon ETF) — Fixed income securities are subject to credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will not make timely interest payments or repay the principal of the debt issued (i.e., it defaults on its obligations). Interest rate risk refers to fluctuations in the value of a debt resulting from changes in the level of interest rates. When interest rates go up, the prices of most debt instruments go down; and when interest rates go down, the prices of most debt instruments go up. Debt instruments with longer durations tend to be more sensitive to interest rate changes, typically making them more volatile. The current low-interest-rate environment heightens the risks associated with rising interest rates. Maturity risk refers to the value of the Fund’s fixed income investments is also dependent on their maturity. Generally, the longer the maturity of a fixed income security, the greater its sensitivity to changes in interest rates.
210
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
FOREIGN SECURITIES RISK — Investments in securities of non-U.S. issuers may be less liquid than investments in U.S. issuers as foreign trading markets are not typically as active as U.S. markets and may have less governmental regulation and oversight. For example, non-U.S. issuers may be subject to different accounting, auditing, financial reporting and investor protection standards than U.S. issuers. As a result, there may be less information publicly available about non-U.S. issuers. Investments in non-U.S. securities also involve risk of loss due to foreign currency fluctuations and political or economic instability. Foreign markets also may have clearance and settlement procedures that make it difficult for the Funds to buy and sell securities. These factors could result in a loss to the Funds by causing the Funds to be unable to dispose of an investment or to miss an attractive investment opportunity, or by causing the Funds’ assets to be uninvested for some period of time.
FOREIGN INVESTMENTS RISK (KraneShares Global Carbon ETF) — Investments in non-U.S. instruments may involve risk of loss due to foreign currency fluctuations and political or economic instability. Foreign markets also may have clearance and settlement procedures that make it difficult for the Fund to buy and sell securities. These factors could result in a loss to the Fund by causing the Fund to be unable to dispose of an investment or to miss an attractive investment opportunity, or by causing the Fund’s assets to be uninvested for some period of time.
FRONTIER MARKETS RISK (KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF and KraneShares Emerging Markets Healthcare Index ETF) — Frontier market countries generally have smaller economies and less developed capital markets or legal, regulatory and political systems than traditional emerging market countries. As a result, the risks of investing in emerging market countries are magnified in frontier market countries.
FUTURES STRATEGY RISK (KraneShares Global Carbon ETF) — The use of futures contracts is subject to special risk considerations. The primary risks associated with the use of futures contracts include: (a) an imperfect correlation between the change in market value of the reference asset and the price of the futures contract; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) the inability to predict correctly the direction of market prices, interest rates, currency exchange rates and other economic factors; and (e) if the Fund has insufficient cash, it may have to sell securities or financial instruments from its portfolio to meet daily variation margin requirements, which may lead to the Fund selling securities or financial instruments at a loss.
As a futures contract the Fund owns approaches its settlement date, the Fund may sell that futures contract and reinvest the proceeds in a similar contract with a more distant settlement date. This process is referred to as “rolling” a futures contract. The successful use of such a strategy depends upon the Adviser’s skill and experience. Although the Fund will attempt to roll from an expiring futures contract to another contract that the Adviser believes will generate the greatest yield for the Fund, the Fund nevertheless may incur a cost to “roll” the contract. In a commodity futures market where current month expiring contracts trade at a lower price than next month’s contract, a situation referred to as “contango,” then, absent the impact of the overall movement in commodity prices, the Fund may experience an adverse impact because it would be selling less expensive contracts and buying more expense contracts. In the event of a prolonged period of contango, and absent the impact of rising or falling commodity prices, there could be a significant negative impact on the Fund when it “rolls” its futures contract positions.
211
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
GEOGRAPHIC FOCUS RISK — The Funds’ investments will be focused in a particular country, countries, or region and therefore a Fund may be susceptible to adverse market, political, regulatory, and geographic events affecting that country, countries or region. Such geographic focus also may subject the Fund to a higher degree of volatility than a more geographically diversified fund.
HIGH PORTFOLIO TURNOVER RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF and KraneShares MSCI All China Health Care Index ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF) — The Fund may incur high turnover rates, which may increase the Fund’s brokerage commission costs and negatively impact the Fund’s performance. Such portfolio turnover also may generate net short-term capital gains.
HONG KONG RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI All China Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF, KraneShares Emerging Markets Healthcare Index ETF, KraneShares MSCI China ESG Leaders Index ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF) — The economy of Hong Kong has few natural resources and any fluctuation or shortage in the commodity markets could have a significant adverse effect on the Hong Kong economy. Hong Kong is also heavily dependent on international trade and finance. Additionally, the continuation and success of the current political, economic, legal and social policies of Hong Kong is dependent on and subject to the control of the Chinese government. China may change its policies regarding Hong Kong at any time. Any such change may adversely affect market conditions and the performance of Chinese and Hong Kong issuers and, thus, the value of securities in the Fund’s portfolio.
INVESTMENT IN INVESTMENT COMPANIES RISK — The Fund may invest in other investment companies, including those advised, sponsored or otherwise serviced by the Adviser, the Sub-Adviser and/or their affiliates. The Fund will indirectly be exposed to the risks of investments by such funds. Moreover, the Fund will incur its pro rata share of the underlying fund’s expenses. The Adviser and the Sub-Adviser are subject to conflicts of interest in allocating Fund assets to investment companies that are advised, sponsored or otherwise serviced by the Adviser and the Sub-Adviser and/or their affiliates. To the extent that the Fund invests in investment companies or other pooled investment vehicles that are not registered pursuant to the 1940 Act, including foreign investment companies, it will not enjoy the protections of the U.S. law.
IPO RISK (KraneShares CICC China 5G & Semiconductor Index ETF and KraneShares SSE STAR Market 50 Index ETF) — Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. In addition, the prices of securities sold in IPOs may be highly volatile. At any particular time or from time to time, the Fund may not be able to invest in securities issued in IPOs, or invest to the extent desired, because, for example, only a small portion (if any) of the securities being offered in an IPO may be available to the Fund. In addition, as the Fund increases in size, the impact of IPOs on the Fund’s performance will generally decrease.
212
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
LARGE CAPITALIZATION COMPANY RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF, KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF) — Investments in large capitalization companies may go in and out of favor based on market and economic conditions and may underperform other market segments. Some large capitalization companies may be unable to respond quickly to new competitive challenges and attain the high growth rate of successful smaller companies, especially during extended periods of economic expansion. As such, returns on investments in stocks of large capitalization companies could trail the returns on investments in stocks of small and mid-capitalization companies.
LIQUIDITY RISK — Certain of the Funds’ investments are subject to liquidity risk, which exists when an investment is or becomes difficult to purchase or sell at a reasonable time or price. If a transaction is particularly large or if the relevant market is or becomes illiquid, it may not be possible to initiate a transaction or liquidate, which may cause the Funds to suffer significant losses and difficulties in meeting redemptions. If a number of securities held by the Funds halt trading, it may have a cascading effect and cause the Funds to halt trading. Volatility in market prices will increase the risk of the Funds being subject to a trading halt.
MANAGEMENT RISK — Because the Fund may not fully replicate the Underlying Index and may hold less than the total number of securities in the Underlying Index, the Fund is subject to management risk. This is the risk that Krane or its subadviser’s E Fund’s security selection process, which is subject to a number of constraints, may not produce the intended results.
MARKET RISK — The values of the Fund’s holdings could decline generally or could underperform other investments. In addition, there is a risk that policy changes by the U.S. Government, Federal Reserve, and/or other government actors could cause volatility in global financial markets, negative sentiment and higher levels of Fund redemptions, which could have a negative impact on the Fund and could result in losses. Geopolitical and other risks, including environmental and public health risks may add to instability in world economies and markets generally. Changes in value may be temporary or may last for extended periods. Further, the Fund is susceptible to the risk that certain investments may be difficult or impossible to sell at a favorable time or price. Market developments may also cause the Fund’s investments to become less liquid and subject to erratic price movements. Such market developments may also cause the Fund to encounter difficulties in timely honoring redemptions, especially if market events cause an increased incidence of shareholder redemptions.
MID-CAPITALIZATION COMPANY RISK (KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Emerging Markets Healthcare Index ETF, KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares MSCI All China Health Care Index ETF and KraneShares CICC China 5G & Semiconductor Index ETF) — Investing in the securities of medium capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization companies. Since medium-sized companies may have limited
213
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
operating histories, product lines and financial resources, the securities of these companies may be less liquid and more volatile. They may also be sensitive to (expected) changes in interest rates and earnings.
NON-DIVERSIFIED FUND RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF, KraneShares Emerging Markets Healthcare Index ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF, KraneShares MSCI China ESG Leaders Index ETF, KraneShares Global Carbon ETF and KraneShares SSE STAR Market 50 Index ETF) — Because the Fund is non-diversified and may invest a greater portion of its assets in fewer issuers than a diversified fund, changes in the market value of a single portfolio holding could cause greater fluctuations in the Fund’s share price than would occur in a diversified fund. This may increase the Fund’s volatility and cause the performance of a single portfolio holding or a relatively small number of portfolio holdings to have a greater impact on the Fund’s performance.
PASSIVE INVESTMENT RISK — The Fund is not actively managed, does not seek to “beat” the Underlying Index and does not take temporary defensive positions when markets decline. Therefore, the Fund may not sell a security due to current or projected underperformance of a security, industry or sector. There is no guarantee that the Underlying Index will create the desired exposure. The Underlying Index may not contain an appropriate mix of securities, but the Fund’s investment objective and principal investment strategies impose limits on the Fund’s ability to invest in securities not included in the Underlying Index.
REGULATORY RISK (KraneShares Global Carbon) — The Fund is subject to the risk that a change in U.S. law and related regulations will impact the way the Fund operates, increase the particular costs of the Fund’s operations and/or change the competitive landscape. Additional legislative or regulatory changes could occur that may materially and adversely affect the Fund.
Regulatory risk related to changes in regulation and enforcement of cap and trade programs could also adversely affect market behavior. If fines or other penalties for non-compliance are not enforced, incentives to purchase GHG credits will deteriorate, which could result in a decline in the price of emissions credits and a drop in the value of the Fund. In addition, as cap and trade markets develop, new regulation with respect to these markets may arise, which could have a negative effect on the value and liquidity of the cap and trade markets and the Fund.
RQFII AND QFII LICENSE RISK (KraneShares E Fund China Commercial Paper ETF) — Krane may choose to use a RQFII or QFII license and quota in the future to invest directly in RMB Bonds. The RQFII rules were adopted relatively recently and are novel. Chinese regulators may revise or discontinue the RQFII program at any time. The Fund’s investments may be limited to the quota obtained by Krane in its capacity as a RQFII or QFII on behalf of the Fund. There is no guarantee that the China Securities Regulatory Commission (“CSRC”) will ultimately grant a RQFII or QFII license or quota for the Fund, and the application process may take a significant amount of time. In addition, a reduction or elimination of the quota may have a material adverse effect on the ability of the Fund to achieve its investment objectives. The Fund may need to rely exclusively on investments through Bond Connect, the CIBM Program or the Exchange-Traded Bond Market to purchase RMB Bonds.
214
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
SECURITIES LENDING RISK — To the extent a Fund lends its securities, it may be subject to the following risks: (1) borrowers of the Funds’ securities typically provide collateral in the form of cash that is reinvested in securities; (2) the securities in which the collateral is invested may not perform sufficiently to cover the return collateral payments owed to borrowers; (3) delays may occur in the recovery of securities from borrowers, which could interfere with the Funds’ ability to vote proxies or to settle transactions; and (4) there is the risk of possible loss of rights in the collateral should the borrower fail financially.
Small and Mid-Capitalization Company Risk (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Clean Technology Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares CICC China Consumer Leaders Index ETF and KraneShares SSE STAR Market 50 Index ETF) — Investing in the securities of small and medium capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization companies and more established companies. Since small and medium-sized companies may have limited operating histories, product lines and financial resources, the securities of these companies may lack sufficient market liquidity and can be sensitive to expected changes in interest rates, borrowing costs and earnings.
SOUTH KOREA RISK (KraneShares Electric Vehicles and Future Mobility Index ETF) — The Fund may be susceptible to adverse market, political, regulatory and geographic events affecting South Korea. The South Korean economy is dependent on the economies of other Asian countries, especially China and Southeast Asia, and the United States as key trading partners. Furthermore, South Korea’s economy may be significantly affected by currency fluctuations and increasing competition from Asia’s other low-cost emerging economies. Also, tensions with North Korea could escalate and lead to further uncertainty in the political and economic climate of South Korea.
SOVERIGN AND QUASI-SOVEREIGN DEBT RISK (KraneShares E Fund China Commercial Paper ETF) — The governmental authority that controls the repayment of sovereign and quasi-sovereign debt may be unwilling or unable to repay the principal and/or interest when due including due to the extent of its foreign reserves, the availability of sufficient foreign exchange ,the relative size of the debt service burden to the economy as a whole the debtor’s policy towards the International Monetary Fund, and the political constraints to which the debtor is subject. If an issuer of government or quasi-government debt defaults on payments of principal and/or interest, the Fund may have limited legal recourse against the issuer and/or guarantor. During periods of economic uncertainty, the market prices of sovereign and quasi-sovereign bonds may be more volatile and result in losses. In the past, certain governments of emerging market countries have declared themselves unable to meet their financial obligations on a timely basis, which has resulted in losses for investors.
SUBSIDIARY INVESTMENT RISK (KraneShares Global Carbon ETF) — By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. Since the Subsidiary is organized under the law of the Cayman Islands and is not registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund will not receive all of the protections offered to shareholders of registered investment companies. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as intended, which may negatively affect the Fund and its shareholders.
215
Notes to Financial Statements/Consolidated Notes to Financial Statements (continued)
Tax Risk — In order to qualify for the favorable tax treatment generally available to regulated investment companies, the Fund must satisfy certain income, asset diversification and distribution requirements each year. If the Fund were to fail to qualify as a regulated investment company, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income, which would adversely affect the Fund’s performance.
Tracking Error Risk — The Fund’s return may not match or achieve a high degree of correlation with the return of the Underlying Index. This may be due to, among other factors, the Fund holding cash under certain circumstances in lieu of Underlying Index securities, such as when the Fund is subject to delays converting U.S. dollars into a foreign currency to purchase foreign securities. The Fund may not be able to invest in certain components of the Underlying Index due to legal restrictions imposed by foreign governments or other regulatory reasons. In addition, securities included in the Underlying Index may be suspended from trading. To the extent that the Fund employs a representative sampling strategy or calculates its NAV based on fair value prices and the value of the Underlying Index is based on securities’ closing prices on local foreign markets, the Fund’s ability to track the Underlying Index may be adversely affected. Changes in currency exchange rates or delays in converting currencies may also cause tracking error.
U.S. GOVERNMENT OBLIGATIONS RISK (KraneShares Global Carbon ETF) — Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so. Additionally, market prices and yields of securities supported by the full faith and credit of the U.S. government or other countries may decline or be negative for short or long periods of time.
VALUATION RISK — Independent market quotations for the non-U.S. securities held by the Funds may not be readily available and such securities may be fair valued. Fair valuation is subjective and different market participants may assign different prices to the same security. As a result, there is a risk that the Funds may not be able to sell a security at the price assigned to the security by the Fund. In addition, the securities in which the Funds invest may trade on days that the Funds do not price their shares; as a result, the value of Fund shares may change on days when investors cannot purchase or sell their holdings.
8. OTHER
At March 31, 2021, all shares issued by the Funds were in Creation Unit aggregations to Authorized Participants through primary market transactions (e.g., transactions directly with the Funds). However, the individual shares that make up those Creation Units are traded on the NYSE Arca Exchange (e.g., secondary market transactions). Some of those individual shares have been bought and sold by persons that are not Authorized Participants. Each Authorized Participant has entered into an agreement with the Funds’ Distributor.
9. INDEMNIFICATIONS
In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds’ maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claims is considered remote.
216
Notes to Financial Statements/Consolidated Notes to Financial Statements (concluded)
10. SUBSEQUENT EVENTS
The Funds have evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued.
Effective on or about June 4, 2021 the name of the KraneShares E Fund China Commercial Paper ETF (KCNY) will change to the KraneShares Bloomberg Barclays China Bond Inclusion Index ETF. The ticker of the Fund will change from KCNY to KBND and the Underlying Index for the Fund will change from the CSI Diversified High Grade Commercial Paper Index to the Bloomberg Barclays China Inclusion Focused Bond Index. Krane has also agreed to a contractual waiver of its management fee by 0.20% of the average daily net assets of the KraneShares Bloomberg Barclays China Bond Inclusion Index ETF until August 1, 2022.
Since April 8, 2021, Krane has also voluntarily agreed to waive its management fee by an additional 0.48% of the Fund’s average daily net assets. This voluntary waiver has been in addition to the current contractual management fee waiver of 0.20% of the Fund’s average daily net assets. As a result of the voluntary waiver and the contractual waiver, the Fund’s entire management fee of 0.68% of average daily net assets has been, and will continue to be, waived until on or about June 4, 2021.
Based on this evaluation, other than the above, no additional disclosures or adjustments were required to the financial statements as of the date the financial statements were issued.
217
To the Shareholders and Board of Trustees
KraneShares Trust:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities and the consolidated statement of assets and liabilities of the funds listed in the Appendix, eighteen of the funds comprising KraneShares Trust (collectively, the Funds), including the schedules of investments (except for KraneShares E Fund China Commercial Paper ETF) and the consolidated schedule of investments, as of March 31, 2021, the related statements of operations and consolidated statement of operations for the year or period then ended listed in the Appendix, the statements of changes in net assets and the consolidated statement of changes in net assets for each of the years or periods in the two year period then ended listed in the Appendix, and the related notes and consolidated notes (collectively, the financial statements) and the financial highlights and consolidated financial highlights (collectively, the financial highlights) for each of the years or periods in the five year period then ended listed in the Appendix. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2021, the results of its operations for the year or period then ended listed in the Appendix, the changes in its net assets for each of the years or periods in the two year period then ended listed in the Appendix, and the financial highlights for each of the years or periods in the five year period then ended listed in the Appendix, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures when replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more KraneShares investment companies since 2017.
Philadelphia, Pennsylvania
May 28, 2021
218
Report of Independent Registered Public Accounting Firm (continued)
Appendix
Funds with commencement of operations prior to March 31, 2019:
KraneShares CICC China Leaders 100 Index ETF
KraneShares CSI China Internet ETF
KraneShares Bosera MSCI China A Share ETF
KraneShares E Fund China Commercial Paper ETF
KraneShares MSCI All China Index ETF
Statement of operations for the year ended March 31, 2021
Statements of changes in net assets for each of the years in the two-year period ended March 31, 2021
Financial highlights or each of the years in the five-year period ended March 31, 2021
KraneShares MSCI One Belt One Road Index ETF
KraneShares Emerging Markets Consumer Technology Index ETF
KraneShares MSCI China Clean Technology Index ETF (Formerly, KraneShares MSCI China Environment Index ETF)
KraneShares Electric Vehicles and Future Mobility Index ETF
KraneShares MSCI All China Health Care Index ETF
Statement of operations for the year ended March 31, 2021
Statements of changes in net assets for each of the years in the two-year period ended March 31, 2021
Financial highlights or each of the years or periods in the four-year period ended March 31, 2021
KraneShares CCBS China Corporate High Yield Bond USD Index ETF
KraneShares Emerging Markets Healthcare Index ETF
Statement of operations for the year ended March 31, 2021
Statements of changes in net assets for each of the years in the two-year period ended March 31, 2021
Financial highlights or each of the years or periods in the three-year period ended March 31, 2021
Fund with commencement of operations during the year ended March 31, 2020:
KraneShares MSCI Emerging Markets ex China Index ETF
Statement of operations for the year ended March 31, 2021
Statements of changes in net assets and the financial highlights for the year ended March 31, 2021 and the period from April 12, 2019 (commencement of operations) through March 31, 2020
Funds with commencement of operations during the year ended March 31, 2021:
KraneShares MSCI China ESG Leaders Index ETF
Statements of operations and changes in net assets and the financial highlights for the period from July 28, 2020 (commencement of operations) through March 31, 2021
219
Report of Independent Registered Public Accounting Firm (concluded)
KraneShares Global Carbon ETF (Formerly, KFA Global Carbon ETF)
Consolidated statement of assets and liabilities and the consolidated schedule of investments, as of March 31, 2021
Consolidated statements of operations and changes in net assets and the consolidated financial highlights for the period from July 29, 2020 (commencement of operations) through March 31, 2021
KraneShares CICC China 5G & Semiconductor Index ETF
Statements of operations and changes in net assets and the financial highlights for the period from November 23, 2020 (commencement of operations) through March 31, 2021
KraneShares CICC China Consumer Leaders Index ETF
Statements of operations and changes in net assets and the financial highlights for the period from December 8, 2020 (commencement of operations) through March 31, 2021
KraneShares SSE STAR Market 50 Index ETF
Statements of operations and changes in net assets and the financial highlights for the period from January 26, 2021 (commencement of operations) through March 31, 2021
220
Set forth below are the names, addresses, years of birth, positions with the Trust, terms of office and lengths of time served; the principal occupations for the last five years; number of Funds in fund complex overseen; and other directorships outside the fund complex of each of the persons currently serving as Trustees and Officers of the Trust. The Trust’s Statement of Additional Information (“SAI”) includes additional information about the Trustees and Officers. The SAI may be obtained without charge, upon request, by calling 1-855-857-2638. The following chart lists Trustees and Officers as of March 31, 2021.
Name,
Address |
Position(s)
|
Principal |
Number
of |
Other
| ||||
Interested Trustee2 |
||||||||
Jonathan Krane1 (1968) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Trustee and Chairman of the Board, No set term; served since 2012 |
Chief Executive Officer of Krane Funds Advisors, LLC from 2011 to present. Chief Executive of Krane Portfolio Advisors, LLC from 2018 to present. Principal of Krane Capital LLC from 2009 to 2011. Chief Executive Officer of Emma Entertainment from 2004 to 2009. |
28 |
None | ||||
Independent Trustees2 |
||||||||
Patrick P. Campo (1970) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Trustee, No set term; served since 2017 |
From 2019 to present, Director of Research, and from 2013 to 2019, Director of Long Short Equity, Titan Advisors. |
28 |
None | ||||
John Ferguson (1966) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Trustee, No set term; served since 2012 |
Chief Operating Officer of Shrewsbury River Capital from 2017 to 2020. Chief Operating Officer of Kang Global Investors LP (hedge fund adviser) from 2014 to 2016. President of Alden Global Capital, LLC (hedge fund adviser) from 2012 to 2014 (formerly, Chief Operating Officer from 2011 to 2012). Senior Managing Director and Chief Operating Officer of K2 Advisors, L.L.C. from 2005 to 2011. |
28 |
None |
221
Trustees and Officers of the Trust (Unaudited) (continued)
March 31, 2021
Name,
Address |
Position(s)
|
Principal |
Number
of |
Other
| ||||
Independent Trustees2 |
||||||||
Matthew Stroyman (1968) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Trustee, No set term; served since 2012 |
Founder and President of BlackRidge Ventures from 2018 to present (principal investment activities and strategic advisory services in a variety of industries to clients and partners that include institutional investment firms, family offices and high net-worth individuals). Co-Founder, President and Chief Operating Officer of Arcturus (real estate asset and investment management services firm) from 2007 to 2017. |
28 |
None |
Name,
Address |
Position(s)
|
Principal |
Number
of |
Other
| ||||
Officers2 |
||||||||
Jonathan Krane (1968) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Principal Executive Officer and Principal Financial Officer, No set term; served since 2012 |
Chief Executive Officer of Krane Funds Advisors, LLC from 2011 to present. Chief Executive of Krane Portfolio Advisors, LLC from 2018 to present |
28 |
None | ||||
Jennifer Tarleton (formerly Krane) (1966) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Vice President and Secretary, No set term; served since 2012 |
Vice President of Krane Funds Advisors, LLC from 2011 to present. |
28 |
None |
222
Trustees and Officers of the Trust (Unaudited) (concluded)
March 31, 2021
Name,
Address |
Position(s)
|
Principal |
Number
of |
Other
| ||||
Officers2 |
||||||||
Michael Quain (1957) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Chief Compliance Officer and Anti-Money Laundering Officer, No set term; served since June 2015 |
Principal/President of Quain Compliance Consulting, LLC from 2014 to present. First Vice President of Aberdeen Asset Management Inc. from May 2013 to September 2013. |
28 |
None | ||||
Eric Olsen3 (1970) SEI Investments Company One Freedom Valley Drive Oaks, PA 19456 |
Assistant Treasurer, No set term; served since 2021 |
Director of Accounting, SEI Investments Global Fund Services (March 2021 to present); Deputy Head of Fund Operations, Traditional Assets, Aberdeen Standard Investments (August 2013 to February 2021) |
28 |
None | ||||
David Adelman (1964) 280 Park Avenue 32nd Floor New
York, |
Assistant Secretary, No set term; served since 2001 |
Managing Director and the General Counsel, Krane Fund Advisors, LLC from 2021. Partner, Reed Smith LLP from 2015 to 2021. |
28 |
None | ||||
Jonathan Shelon (1974) 280 Park Avenue 32nd Floor New York, New York, 10017 |
Assistant Secretary, No set term; served since 2019 |
Chief Operating Officer, Krane Funds Advisors, LLC from 2015 to present. Chief Operating Officer, CICC Wealth Management (USA) LLC from 2018 to present. Chief Investment Officer of Specialized Strategies, J.P. Morgan from 2011 to 2015. |
28 |
None |
1 | Mr. Krane is an “interested” person of the Trust, as that term is defined in the 1940 Act, by virtue of his ownership and controlling interest in the Adviser. |
2 | Each Trustee serves until his or her successor is duly elected or appointed and qualified. |
3 | These officers of the Trust also serve as officers of one or more funds for which SEI Investments Company or an affiliate acts as investment manager, administrator or distributor. |
223
Consistent with Rule 22e-4 under the Investment Company Act of 1940, as amended, the Trust, on behalf of its separate series (“Funds”), has established a liquidity risk management program (the “Program”). The Program is designed to assess and manage each Fund’s liquidity risk. Liquidity risk is defined as the risk that a Fund could not meet requests to redeem its shares without significant dilution of remaining shareholders. The Board has designated a cross-functional committee, which is composed of Krane Funds Advisors, LLC (“Krane”) compliance and capital markets personnel and the Trust’s Chief Compliance Officer, to administer the Program (the “Program Administrator”). The Program Administrator is responsible for implementing and monitoring the Program to assess and review, on an ongoing basis, the Funds’ liquidity risk.
The Program includes a number of elements that support the management and assessment of liquidity risk, including an annual assessment of the Funds’ liquidity risk factors and the periodic classification (or re-classification, as necessary,) of the Funds’ investments into buckets (highly liquid, moderately liquid, less liquid and illiquid) based on the number of days that it is reasonably expected to convert them into cash, in current market conditions, without significantly changing their value. In conducting its assessment, the Program Administrator utilizes information about each Fund’s investment strategy, its flows, the efficacy of its arbitrage mechanism (as indicated by the premiums and/or discounts and bid-ask spreads of its shares), the characteristics of the Fund’s shareholders and the Fund’s ability to honor redemptions in kind.
At a meeting of the Board in May 2020, the Program Administrator provided the Board with a written report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation from June 1, 2019 through December 31, 2019 (the “Annual Report”). In the Annual Report, the Program Administrator confirmed that the Program is reasonably designed to assess and manage each Fund’s liquidity risk and that the Program has been implemented and operated effectively. In addition, at subsequent quarterly meetings of the Board, the Program Administrator provided the Board with a summary of each Fund’s liquidity profile during the preceding quarter and the operation of the Program with respect thereto.
224
Approval of New Fund Advisory Agreements
At a meeting on May 28, 2020, the Board of Trustees (“Board”) of KraneShares Trust (“Trust”), including a majority of the Trustees who are not “interested persons” of the Trust, as that term is defined in the Investment Company Act of 1940, as amended (the “Independent Trustees”), approved the existing investment advisory agreement (“Advisory Agreement”) between Krane Funds Advisors, LLC (“Krane”) and the Trust with respect to each of KraneShares CICC China 5G and Technology Leaders Index ETF (“KFVG”), KraneShares CICC China Consumer Leaders Index ETF (“KBUY”), and KraneShares SSE STAR Market 50 Index ETF (“KSTR”) (collectively, the “New Funds”).
In advance of the meeting, and at a separate meeting of the Independent Trustees in executive session held May 26, 2020, the Board received and considered information provided by Krane in response to the Independent Trustees’ written request relating to the Board’s consideration of the Advisory Agreement with respect to the New Funds. The Board also considered that its evaluation process with respect to Krane is an ongoing one and, as a result, the Board considers information at each of its regularly scheduled meeting related to, among other matters, the services provided by Krane to each operational series of the Trust. The Board also receives additional information from Krane outside of the regularly scheduled Board meetings and at executive sessions held by the Independent Trustees.
In evaluating the Advisory Agreement with respect to each of the New Funds, the Board considered, among other matters: (1) the nature, extent, and quality of the services to be provided by Krane; (2) the proposed compensation to be paid by each New Fund under the Advisory Agreement; (3) the estimated costs of the services to be provided by Krane and Krane’s profitability expectations with respect to its services to the New Funds; (4) the extent to which economies of scale could be realized by Krane as the New Funds grow and whether investors will share in the benefits of economies of scale; and (5) other benefits Krane anticipates it may receive from its relationship with the New Funds.
Nature, Extent, and Quality of Services
Based on the written and oral reports received prior to and at the May 26, 2020 executive session of the Independent Trustees and the May 28, 2020 meeting of the Board, the Board considered the nature, quality, and extent of the overall services to be provided by Krane to each of the New Funds under the Advisory Agreement. Among other things, the Board considered the personnel, experience and resources of Krane, and Krane’s ability to provide or obtain the services necessary to manage the New Funds. The Board took note of the qualifications and experience of Krane’s senior personnel that will provide services to the New Funds, including the significant experience in the exchange traded fund industry of Krane’s recently appointed Head of Capital Markets. The Board recognized that Krane invested significant time and effort in structuring the New Funds, assessing the market appeal of the investment strategy of each of the New Funds, and arranging service providers for the Trust. The Board also considered the financial condition of Krane and its current ownership structures. In this regard, the Board noted that Krane is part of a larger family of investment management firms with significant resources.
The Board considered that Krane will be responsible for establishing and monitoring the New Funds’ investment programs and for the day-to-day investment activities of the New Funds, subject to the Board’s oversight. The Board also considered that the New Funds may participate in the securities lending program established by Krane. The Board considered that Krane’s portfolio managers
225
Approval of Advisory Agreements (Unaudited) (continued)
currently successfully manage a number of other funds. The Board considered that Krane recently hired additional compliance personnel and noted its undertaking to continue to evaluate its existing compliance and operational staff and to seek and retain qualified staff in these areas as its business continues to grow.
The Board noted Krane’s representation that KSTR will provide U.S. investors with exposure to companies traded on the Shanghai Stock Exchange STAR Market, and noted that a QFII license is required to trade on such exchange. The Board also considered Krane’s representations that KFVG will provide U.S. investors with access to a unique investment strategy focused on companies engaged in 5G and semiconductor related businesses in China. The Board considered the effort expended by Krane to structure and bring such unique products to market.
Investment Performance
The Board noted that, because the New Funds have not yet commenced investment operations, they have no investment performance. The Board considered that, once the New Funds commence operations, it would receive regular reports regarding the performance of the New Funds relative to their peer funds, including tracking error compared to their peer funds. The Board also considered its experience with Krane’s management of existing operational series of the Trust that pursue different investment strategies and Krane’s significant experience in managing portfolios with various investment objectives.
Compensation
The Board reviewed and considered the proposed compensation to be paid by each New Fund to Krane in light of the nature, quality, and extent of the services to be provided to each New Fund. The Board received written presentations from Krane prior to and at its May 28, 2020 meeting and had the opportunity to ask questions of senior representatives of Krane at that meeting and the May 26, 2020 executive session of the Independent Trustees. The Board considered that Krane proposes to enter into a unitary fee arrangement with each New Fund, under which Krane, and not the New Funds, is responsible for paying many of the New Funds’ expenses, including those of the New Funds’ principal service providers. The Board noted information provided by Krane regarding the amounts it will pay to the New Funds’ service providers under the unitary fee arrangement.
The Board noted that the proposed advisory fee rates for KFVG and KSTR were above the median for fees paid by funds in their respective peer group funds and the proposed advisory fee rates for KBUY was in line with the fees paid by funds in the peer group identified by Krane. In its evaluation of the proposed fees compared to other market participants, the Board considered Krane’s representations regarding the competitive marketplace for the New Funds.
The Board recognized that Krane invested significant time and effort in structuring KVFG and KSTR, including assessing the market appeal of the investment strategies, and arranging service providers for the Trust. They noted the unique investment strategies proposed for KFVG and KSTR and considered that managing KSTR will require a QFII license. The Board also recognized the time, effort and expense incurred by Krane to be first to market with a fund that invests in securities traded on the STAR market.
226
Approval of Advisory Agreements (Unaudited) (continued)
The Board also considered the compensation paid to Krane by other advisory clients, including existing operational series of the Trust, as compared to the New Funds. The Board recognized that Krane may receive additional compensation resulting from any securities lending-related services it provides to the New Funds. The Board took note that it was not possible to estimate what such compensation might amount to and that such compensation will be monitored to ensure it is appropriate in light of the services to be provided by Krane.
Costs and Profitability
The Board considered the estimated cost of services and profitability of Krane with respect to the New Funds. The Board noted that, because the New Funds had not yet launched, it was difficult to estimate how profitable services to the New Funds under the Advisory Agreement would be to Krane. The Independent Trustees received information from Krane regarding its financial stability and its profitability and had an opportunity to pose questions to Krane’s chief executive officer (“CEO”) and other senior members of management related to these matters, Krane’s broader business strategy and how launching the New Funds could impact Krane’s profitability. The Board considered information from Krane regarding the range of assets the New Funds are expected to gather. The Board also considered information previously provided by Krane regarding the cost of its services and profitability with respect to existing operational series of the Trust and the similarities and differences between those series and the New Funds. The Board noted Krane’s commitment to the New Funds, including its proposal of a unitary fee structure under which Krane will bear many of the New Funds’ expenses as well as the risk of failing to raise assets adequate to cover such costs.
Other Benefits
The Board considered the extent to which Krane could derive ancillary benefits from the New Funds’ operations, including potential benefits to Krane as a result of its ability to use the assets of the New Funds to engage in soft-dollar transactions and that Krane affiliates could potentially benefit from any trades that the New Funds conduct through a broker-dealer affiliated with the majority owner of Krane. The Board did not observe any other potential benefits to be realized by Krane from its relationship with the New Funds.
Economies of Scale
The Board considered whether Krane would realize economies of scale with respect to its services to the New Funds as they grow larger, including the extent to which this would be reflected in the level of fees to be paid by the New Funds to Krane. The Board noted that the proposed advisory fees for the New Funds do not include breakpoints, and that it was difficult — before the commencement of investment operations — to accurately evaluate potential economies of scale. The Board took note, however, that Krane consistently reinvests a portion of its profits in its business, including through the addition of compliance and operations personnel, as appropriate, and that such reinvestment benefits the Trust. Based on these and other considerations, including that the New Funds were newly organized, the Board considered economies of scale not to be a material factor in its consideration of the Advisory Agreement.
227
Approval of Advisory Agreements (Unaudited) (continued)
Conclusion
The Board did not identify any single factor as being of paramount importance, and different Trustees may have given different weight to different factors. The Board reviewed a memorandum from Independent Trustee counsel discussing the legal standards applicable to its consideration of the Advisory Agreement and the Independent Trustees met in executive session with Krane’s CEO and Independent Trustee counsel to address such standards and recent developments in this area of the law, to consider Krane’s financial stability and strategic initiatives, and to consider how the New Funds and other strategic initiatives would impact Krane’s business and staffing. The Board noted that, once the New Funds become operational, it will monitor the New Funds at its regular meetings, during executive sessions of the Independent Trustees, and outside of the Board meetings. Based on its review, including consideration of each of the factors referenced above, the Board determined, in the exercise of its reasonable business judgment, that the advisory arrangements, as outlined in the Agreements, were reasonable.
Approval of Subadvisory Agreement for KraneShares SSE Star Market 50 Index ETF and Consideration of Reduction in Advisory Fee
At a meeting on August 11, 2020, the Board of Trustees (“Board”) of KraneShares Trust (“Trust”), including a majority of the Trustees who are not “interested persons” of the Trust, as that term is defined in the Investment Company Act of 1940, as amended (the “Independent Trustees”), approved the existing sub-advisory agreement (the “Subadvisory Agreement”) between Krane Funds Advisors, LLC (“Krane”) and Bosera Asset Management (International) Co., Ltd. (“Bosera”) on behalf of KraneShares SSE Star Market 50 Index (“KSTR”). The Board, including a majority of the Independent Trustees, also approved a proposed reduction in the fee payable by KSTR to Krane under the existing advisory agreement (the “Advisory Agreement”) between Krane and the Trust, on behalf of KSTR.
In advance of the meeting, the Board received and considered (i) information provided by Bosera in response to the Independent Trustees’ written request relating to the Board’s consideration of the Subadvisory Agreement. The Board also considered that its evaluation process is an ongoing one and, as a result, the Board considers information at each of its regularly scheduled meeting related to, among other matters, the services provided by subadvisers to certain operational series of the Trust.
In evaluating the Subadvisory Agreement, the Board considered, among other matters: (1) the nature, extent, and quality of the services to be provided by Bosera; (2) the proposed compensation to be paid by KSTR under the Advisory Agreement; (3) the estimated costs of the services to be provided by Krane and Krane’s profitability expectations with respect to its services to KSTR, including in light of Krane’s obligation to pay Bosera’s subadvisory fees; (4) the extent to which economies of scale could be realized by Krane as KSTR grows and whether the Advisory Agreement would enable investors to share in the benefits of economies of scale; and (5) other benefits Krane and Bosera anticipate that they may receive from their relationship with the Trust and KSTR.
Nature, Extent, and Quality of Services
Based on the written and oral reports received prior to and at the meeting of the Board held on August 11, 2020, the Board considered the nature, quality, and extent of the overall services to be provided by Bosera to KSTR under the Subadvisory Agreement. Among other things, the Board considered Krane’s substantial experience in working with Bosera as the subadviser to KraneShares
228
Approval of Advisory Agreements (Unaudited) (continued)
Bosera MSCI China A Shares ETF (“KBA”), the increasing sophistication of Bosera’s compliance infrastructure, and Bosera’s ability to provide such services as may be necessary to manage KSTR including, in particular, the fact that Bosera has the licensure necessary to transact in securities listed on the Shanghai Stock Exchange STAR Market, an exchange recently established by the Shanghai Stock Exchange to list science and technology companies.
Investment Performance
The Board noted that, because KSTR has not yet commenced investment operations, it has no investment performance. The Board considered that, once KSTR commences operations, the Board will receive regular reports regarding the performance of KSTR relative to its peer funds, including tracking error against its underlying index relative to its peer funds. The Board also considered its experience with Krane’s management of existing operational series of the Trust that pursue different investment strategies and Krane’s prior experience in overseeing a portfolio managed by Bosera.
Compensation
The Board considered that Krane proposed to reduce the unitary fee payable by KSTR under the Advisory Agreement and that Krane would pay Bosera its subadvisory fee out of such unitary fee. The Board noted that, in part, the fee reduction was proposed because Krane will not have to separately obtain a QFII license since KSTR will rely on Bosera’s QFII license to transact in STAR Market securities.
Although the Board received information regarding the fees payable by Krane to Bosera under the Subadvisory Agreement, the Board noted the arm’s-length nature of the relationship between Krane and Bosera with respect to the negotiation of subadvisory fee rates. The Board also considered that Krane (and not KSTR) will pay Bosera’s subadvisory fees.
Costs and Profitability
The Board noted that it previously considered the estimated cost of services and profitability of Krane with respect to KSTR. The Board noted that, because KSTR has not yet launched, it is difficult to estimate how profitable the services to KSTR under the Advisory Agreement will be to Krane. The Board considered information previously provided by Krane regarding the cost of its services and profitability with respect to the existing operational series of the Trust and the similarities and differences between those series and KSTR. The Board noted that KSTR will pay a unitary fee and that, under the terms of the Advisory Agreement, Krane will bear many of KSTR’s expenses, including Bosera’s subadvisory fees, as well as the risk that KSTR fails to raise assets adequate to cover certain such costs.
The Board did not specifically consider information regarding the costs of third-party services or any profit that Bosera projects it will realize from its relationship with KSTR. The Board noted the arm’s-length nature of the relationship between Krane and Bosera with respect to the negotiation of the subadvisory fee rate on behalf of KSTR, and considered that Krane, and not KSTR, is responsible for paying Bosera’s fees under the Subadvisory Agreement.
Other Benefits
The Board considered the extent to which Bosera could potentially benefit from KSRT, including any trades that KSTR conducts through a broker-dealer affiliated with Bosera. The Board did not observe any other potential benefits to be realized by Bosera from its relationship with KSTR.
229
Approval of Advisory Agreements (Unaudited) (concluded)
Economies of Scale
The Board noted that it previously considered if Krane would realize economies of scale with respect to its services to KSTR as KSTR’s assets grow. Although the Board received information from Bosera related to possible economies of scale, the Board did not specifically consider such information in light of the arm’s-length nature of the relationship between Krane and Bosera with respect to the negotiation of the subadvisory fee rate on behalf of KSTR.
Conclusion
The Board did not identify any single factor as being of paramount importance to its review of the Subadvisory Agreement and the proposed new fee structure for KSTR. Different Trustees may have given different weight to different factors. The Board reviewed a memorandum from Independent Trustee counsel discussing the legal standards applicable to its consideration of the Subadvisory Agreement and had the opportunity to question Krane’s executive management with respect to its decision to propose a subadviser for KSTR and to reduce the proposed fee structure for KSTR. The Board noted that, once KSTR becomes operational, it will monitor KSTR at its regular meetings, during executive sessions of the Independent Trustees, and outside of the Board meetings. Based on its review, including consideration of each factor referenced above, the Board determined, in the exercise of its reasonable business judgment, that the advisory arrangements, as outlined in the Subadvisory Agreement and the existing Advisory Agreement, were reasonable.
230
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage expenses; and (2) ongoing costs. All Exchange Traded Funds (“ETFs”) have operating expenses. As a shareholder of an ETF, your investment is affected by these ongoing costs, which include (among others) costs for ETF management, administrative services, commissions, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns. In addition, a shareholder is responsible for brokerage fees as a result of their investment in the Fund. Operating expenses such as these are deducted from an ETF’s gross income and directly reduce its final investment return. These expenses are expressed as a percentage of the ETF’s average net assets; this percentage is known as the ETF’s expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (October 1, 2020 to March 31, 2021).
The table on the next page illustrates your Fund’s costs in two ways:
Actual Fund Return. This section helps you to estimate the actual expenses that your Fund incurred over the period. The “Expenses Paid During Period” column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the “Ending Account Value” number is derived from deducting that expense cost from the Fund’s gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under “Expenses Paid During Period.”
Hypothetical 5% Return. This section helps you compare your Fund’s costs with those of other funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all funds to make this 5% calculation. You can assess your Fund’s comparative cost by comparing the hypothetical result for your Fund in the “Expenses Paid During Period” column with those that appear in the same charts in the shareholder reports for other funds.
NOTE: Because the return is set at 5% for comparison purposes — NOT your Fund’s actual return — the account values shown may not apply to your specific investment.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, including brokerage commissions on the purchases and sale of Fund shares. Therefore, the expense examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs had been included, your costs would have been higher.
231
Disclosure of Fund Expenses (Unaudited) (continued)
Beginning |
Ending Account |
Annualized
|
Expenses | |||||||||
KraneShares CICC China Leaders 100 Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,092.90 |
0.69 |
% |
$ |
3.60 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.49 |
0.69 |
|
|
3.48 | ||||
KraneShares CSI China Internet ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,120.00 |
0.70 |
% |
$ |
3.70 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.44 |
0.70 |
|
|
3.53 | ||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,127.50 |
0.59 |
% |
$ |
3.13 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.99 |
0.59 |
|
|
2.97 | ||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,045.30 |
0.57 |
% |
$ |
2.91 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,022.09 |
0.57 |
|
|
2.87 | ||||
KraneShares MSCI All China Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,139.70 |
0.49 |
% |
$ |
2.61 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,022.49 |
0.49 |
|
|
2.47 | ||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,360.30 |
0.79 |
% |
$ |
4.65 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,020.99 |
0.79 |
|
|
3.98 | ||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,173.70 |
0.59 |
% |
$ |
3.20 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.99 |
0.59 |
|
|
2.97 | ||||
KraneShares MSCI China Clean Technology Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,306.40 |
0.78 |
% |
$ |
4.49 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.04 |
0.78 |
|
|
3.93 | ||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,451.50 |
0.70 |
% |
$ |
4.28 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.44 |
0.70 |
|
|
3.53 | ||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,143.30 |
0.65 |
% |
$ |
3.47 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.69 |
0.65 |
|
|
3.28 | ||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,025.30 |
0.69 |
% |
$ |
3.48 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.49 |
0.69 |
|
|
3.48 | ||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,098.60 |
0.80 |
% |
$ |
4.19 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,020.94 |
0.80 |
|
|
4.03 | ||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,332.60 |
0.27 |
% |
$ |
1.57 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,023.59 |
0.27 |
|
|
1.36 |
232
Disclosure of Fund Expenses (Unaudited) (concluded)
Beginning |
Ending Account |
Annualized
|
Expenses | |||||||||
KraneShares MSCI China ESG Leaders Index ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,254.90 |
0.58 |
% |
$ |
3.26 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,022.04 |
0.58 |
|
|
2.92 | ||||
KraneShares Global Carbon ETF | ||||||||||||
Actual Fund Return |
$ |
1,000.00 |
$ |
1,399.20 |
0.90 |
% |
$ |
5.38 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,020.44 |
0.90 |
|
|
4.53 | ||||
KraneShares CICC China 5G & Semiconductor Index ETF | ||||||||||||
Actual Fund Return(2) |
$ |
1,000.00 |
$ |
923.20 |
0.64 |
% |
$ |
2.16 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.74 |
0.64 |
|
|
3.23 | ||||
KraneShares CICC China Consumer Leaders Index ETF | ||||||||||||
Actual Fund Return(3) |
$ |
1,000.00 |
$ |
1,032.80 |
0.68 |
% |
$ |
2.16 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,021.54 |
0.68 |
|
|
3.43 | ||||
KraneShares SSE STAR Market 50 Index ETF | ||||||||||||
Actual Fund Return(4) |
$ |
1,000.00 |
$ |
842.40 |
0.88 |
% |
$ |
1.42 | ||||
Hypothetical 5% Return |
|
1,000.00 |
|
1,020.54 |
0.88 |
|
|
4.43 |
(1) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period) unless otherwise indicated.
(2) Expenses are equal to Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 128/365 (to reflect the period from 11/23/20 - 3/31/21).
(3) Expenses are equal to Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 114/365 (to reflect the period from 12/8/20- 3/31/21).
(4) Expenses are equal to Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 64/365 (to reflect the period from 1/26/21- 3/31/21).
233
For shareholders that do not have a March 31, 2021 tax year end, this notice is for informational purposes only. For shareholders with a March 31, 2021 tax year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended March 31, 2021, the Funds are designating the following items with regard to distributions paid during the year.
Return of |
Long-Term |
Ordinary |
Total |
Qualifying for |
Qualifying |
U.S. |
Interest |
Short Term |
Foreign Tax | |||||||||||||||||||
KraneShares CICC China Leaders 100 Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
62.37 |
% |
0.00 |
% |
0.03 |
% |
100.00 |
% |
12.46 |
% | |||||||||
KraneShares CSI China Internet ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
92.73 |
% |
7.27 |
% |
100.00 |
% |
0.00 |
% |
24.62 |
% |
0.00 |
% |
0.01 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares Bosera MSCI China A Share ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
100.00 |
% |
0.00 |
% |
0.06 |
% |
100.00 |
% |
15.35 |
% | |||||||||
KraneShares E Fund China Commercial Paper ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares MSCI All China Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.41 |
% |
100.00 |
% |
0.00 |
% |
0.01 |
% |
0.00 |
% |
11.85 |
% | |||||||||
KraneShares MSCI One Belt One Road Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
93.32 |
% |
0.00 |
% |
0.05 |
% |
0.00 |
% |
15.00 |
% | |||||||||
KraneShares Emerging Markets Consumer Technology Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.03 |
% |
13.53 |
% |
0.00 |
% |
0.00 |
% |
100.00 |
% |
3.21 |
% | |||||||||
KraneShares MSCI China Clean Technology Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
0.05 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares Electric Vehicles and Future Mobility Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
89.32 |
% |
100.00 |
% |
0.00 |
% |
0.01 |
% |
0.00 |
% |
23.01 |
% | |||||||||
KraneShares MSCI All China Health Care Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
100.00 |
% |
0.00 |
% |
100.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
1.29 |
% |
100.00 |
% |
0.00 |
% | |||||||||
KraneShares Emerging Markets Healthcare Index ETF(7) |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares MSCI Emerging Markets ex China Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.72 |
% |
49.23 |
% |
0.00 |
% |
0.03 |
% |
0.00 |
% |
30.46 |
% | |||||||||
KraneShares MSCI China ESG Leaders Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
100.00 |
% |
100.00 |
% |
0.00 |
% |
0.82 |
% |
0.00 |
% |
0.00 |
% |
100.00 |
% |
0.00 |
% | |||||||||
KraneShares Global Carbon ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares CICC China 5G & Semiconductor Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares CICC China Consumer Leaders Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% | |||||||||
KraneShares SSE Star Market 50 Index ETF |
| |||||||||||||||||||||||||||
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
0.00 |
% |
(1) Return of capital is a payment received from the fund that is not considered to be taxable income. The return of capital distribution is considered to be a return of the investor’s original investment and reduces the investor’s cost basis in the fund.
234
Notice To Shareholders (Unaudited) (concluded)
(2) | Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and are reflected as a percentage of ordinary income distributions (the total of short term capital gain and net investment income distributions). |
(3) | The percentage in this column represents the amount of “Qualifying Dividend Income” as created by the Jobs and Growth Relief Reconciliation Act of 2003 and is reflected as a percentage of ordinary income distributions (the total of short term capital gain and net investment income distributions). It is the intention of each of the aforementioned funds to designate the maximum amount permitted by law. |
(4) | “U.S. Government Interest” represents the amount of interest that was derived from U.S. Government obligations and distributed during the fiscal year. Generally, interest from direct U.S. Government obligations is exempt from state income tax. However, for shareholders who are residents of California, Connecticut and New York, the statutory threshold requirements were not satisfied to permit exemption of these amounts from state income. |
(5) | The percentage in this column represents the amount of “Interest Related Dividends” and is reflected as a percentage of ordinary income distributions that is exempt from U.S. withholding tax when paid for foreign investors. |
(6) | The percentage in this column represents the amount of “Short Term Capital Gain Dividends” and is reflected as a percentage of short term capital gain distributions that is exempt from U.S. withholding tax when paid for foreign investors. |
(7) | The following Funds intend to pass through a foreign tax credit to their shareholders. For the fiscal year ended March 31, 2021, the total amount of foreign source income and amount of foreign tax to be paid is as follows: |
KraneShares Funds |
Foreign |
Foreign Tax | ||||
KraneShares CICC China Leaders 100 Index ETF |
$ |
422,464 |
$ |
47,448 | ||
KraneShares Bosera MSCI China A Share ETF |
|
6,019,694 |
|
1,030,366 | ||
KraneShares MSCI All China Index ETF |
|
72,581 |
|
9,373 | ||
KraneShares MSCI One Belt One Road Index ETF |
|
201,705 |
|
29,072 | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
|
867,268 |
|
119,125 | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
|
73,302 |
|
39,448 | ||
KraneShares MSCI Emerging Markets ex China Index ETF |
|
147,550 |
|
21,812 |
The allocable share of foreign tax credit will be reported on Form 1099-DIV.
235
Net asset value, or “NAV”, is the price per Share at which the Funds issue and redeem Shares to Authorized Participants. It is calculated in accordance with the policies described in Note 2 in Notes to Financial Statements. The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated. The Funds’ Market Price may be at, above or below their NAV. The NAV of the Funds will fluctuate with changes in the market value of their holdings. The Market Price of the Funds will fluctuate in accordance with changes in their NAV, as well as market supply and demand of Fund Shares.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Funds on a given day, generally at the time NAV is calculated. A premium is the amount that the Funds are trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Funds are trading below the reported NAV, expressed as a percentage of the NAV. Shareholders may pay more than NAV when they buy Fund Shares and receive less than NAV when they sell those Shares, because Shares are bought and sold at Market Price.
Further information regarding premiums and discounts is available on the Funds’ website at http://kraneshares.com. The premium and discount information contained on the website represents past performance and cannot be used to predict future results.
236
Privacy Notice
Adopted December 18, 2020
PRIVACY NOTICE
KRANE SHARES TRUST
FACTS |
WHAT DOES KRANE SHARES TRUST DO WITH YOUR PERSONAL INFORMATION? |
Why? |
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some, but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? |
The types of personal information we collect and share depends on the product or service that you have with us. This information can include: • Social Security number and wire transfer instructions • account transactions and transaction history • investment experience and purchase history When you are no longer our customer, we may continue to share your information as described in this notice. |
How? |
All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Krane Shares Trust chooses to share; and whether you can limit this sharing. |
Reasons we can
share |
Does Krane Shares
Trust
|
Can you limit this sharing? |
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus. |
YES |
NO |
For our marketing purposes — to offer our products and services to you. |
NO |
We don’t share |
For joint marketing with other financial companies. |
NO |
We don’t share |
237
Privacy Notice (concluded)
Reasons we can
share |
Does Krane Shares
Trust |
Can you limit this sharing? |
For our affiliates’ everyday business purposes — information about your transactions and records. |
NO |
We don’t share |
For our affiliates’ everyday business purposes — information about your credit worthiness. |
NO |
We don’t share |
For nonaffiliates to market to you |
NO |
We don’t share |
QUESTIONS? |
Call 1-212-933-0393 |
What we do: |
|
How does Krane Shares Trust protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information. |
How does Krane Shares Trust collect my personal information? |
We collect your personal information, for example, when you open an account We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
Why can’t I limit all sharing? |
Federal law gives you the right to limit only: • sharing for affiliates’ everyday business purposes — information about your creditworthiness. • affiliates from using your information to market to you. • sharing for nonaffiliates to market to you. State laws and individual companies may give you additional rights to limit sharing. |
Definitions |
|
Affiliates |
Companies related by common ownership or control. They can be financial and nonfinancial companies. |
Nonaffiliates |
Companies not related by common ownership or control. They can be financial and nonfinancial companies. • Krane Shares Trust does not share with nonaffiliates so they can market to you. |
Joint marketing |
A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • Krane Shares Trust does not jointly market. |
238
KraneShares Trust:
280 Park Avenue 32nd Floor
New York, NY 10017
1-855-857-2638
http://kraneshares.com/
Investment Adviser:
Krane Funds Advisors, LLC
280 Park Avenue 32nd Floor
New York, NY 10017
Distributor:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
Administrator:
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
This information must be preceded or accompanied by a current prospectus for the Funds described.
KraneShares Trust:
280 Park Avenue, 32nd Floor
New York, NY 10017
KRS-AR-001-0800