Annual Report

KraneShares CICC China Leaders 100 Index ETF

KraneShares CSI China Internet ETF

KraneShares Bosera MSCI China A 50 Connect Index ETF

KraneShares Bloomberg China Bond Inclusion Index 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 Asia Pacific High Income Bond ETF

KraneShares Emerging Markets Healthcare Index ETF

KraneShares MSCI Emerging Markets ex China Index ETF

KraneShares MSCI China ESG Leaders Index ETF

KraneShares CICC China 5G & Semiconductor Index ETF

KraneShares CICC China Consumer Leaders Index ETF

KraneShares SSE STAR Market 50 Index ETF

KraneShares Hang Seng TECH Index ETF

KraneShares China Innovation ETF

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF

KraneShares China Internet and Covered Call Strategy ETF

March 31, 2023

   

 

 

 

 

Table of Contents

 

Shareholder Letter   1
Management Discussion of Fund Performance   5
Schedules of Investments    
KraneShares CICC China Leaders 100 Index ETF   67
KraneShares CSI China Internet ETF   72
KraneShares Bosera MSCI China A 50 Connect Index ETF   74
KraneShares Bloomberg China Bond Inclusion Index ETF   77
KraneShares MSCI All China Index ETF   79
KraneShares MSCI One Belt One Road Index ETF.   86
KraneShares Emerging Markets Consumer Technology Index ETF   94
KraneShares MSCI China Clean Technology Index ETF   99
KraneShares Electric Vehicles and Future Mobility Index ETF   102
KraneShares MSCI All China Health Care Index ETF   107
KraneShares Asia Pacific High Income Bond ETF   111
KraneShares Emerging Markets Healthcare Index ETF   117
KraneShares MSCI Emerging Markets ex China Index ETF   122
KraneShares MSCI China ESG Leaders Index ETF   139
KraneShares CICC China 5G & Semiconductor Index ETF   145
KraneShares CICC China Consumer Leaders Index ETF   147
KraneShares SSE STAR Market 50 Index ETF   149
KraneShares Hang Seng TECH Index ETF   151
KraneShares China Innovation ETF   153
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF   154
KraneShares China Internet and Covered Call Strategy ETF   160
Glossary   161
Statements of Assets and Liabilities   162
Statements of Operations   169
Statements of Changes in Net Assets   176
Financial Highlights   196
Notes to Financial Statements   204
Report of Independent Registered Public Accounting Firm   227
Trustees and Officers of the Trust   230
Approval of Advisory Agreement   233
Disclosure of Fund Expenses   236
Notice To Shareholders   239
Supplemental Information   241

 

 

 

 

 

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 their reports on Form N-PORT. The Funds’ Form N-PORT reports are available on the Commission’s website at http://www.sec.gov.

 

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 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.

 

 

 

 

Shareholder Letter (Unaudited)

 

Dear Shareholders:

 

We are pleased to send you the Annual Report for the KraneShares Trust exchange-traded funds (ETFs) for the 12-month period ended March 31, 2023 (the Period). For the Period, the ETFs delivered the following returns:

 

Fund   Fund
Return*
    Underlying
Index
Return**
    Morningstar
Peer Group
Median
Return
 
KraneShares CICC China Leaders 100 Index ETF (KFYP)     -13.15 %     -12.51 %(a)      -8.11 %(1) 
KraneShares CSI China Internet ETF (KWEB)     5.86 %     6.36 %(b)      -8.11 %(1) 
KraneShares Bosera MSCI China A 50 Connect ETF (KBA)     -12.63 %     -11.57 %(c)      -8.11 %(1) 
KraneShares Bloomberg China Bond Inclusion Index ETF (KBND)     -3.98 %     -4.82 %(d)      -1.42 %(2) 
KraneShares MSCI All China Index ETF (KALL)     -6.44 %     -6.44 %(e)      -8.11 %(1) 
KraneShares MSCI One Belt One Road Index ETF (OBOR)     -14.98 %     -14.69 %(f)      -6.71 %(3) 
KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ)     -15.30 %     -14.47 %(g)      -9.39 %(4) 
KraneShares MSCI China Clean Technology Index ETF (KGRN)     -20.71 %     -21.68 %(h)      -8.11 %(1) 
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS)     -21.78 %     -21.56 %(i)      -5.11 %(5) 
KraneShares MSCI All China Health Care Index ETF (KURE)     -12.65 %     -12.43 %(j)      -8.11 %(1) 
KraneShares Asia Pacific High Income Bond ETF (KHYB)     -0.44 %     N/A       -6.55 %(6) 
KraneShares Emerging Markets Healthcare Index ETF (KMED)     -14.97 %     -14.90 %(k)      -9.39 %(4) 
KraneShares MSCI Emerging Markets ex China Index ETF (KEMX)     -12.12 %     -13.32 %(l)      -9.39 %(4) 
KraneShares MSCI China ESG Leaders Index ETF (KESG)     -10.38 %     -9.62 %(m)      -8.11 %(1) 
KraneShares CICC China 5G & Semiconductor Index ETF (KFVG)     -9.62 %     -9.32 %(n)      -8.11 %(1) 
KraneShares CICC China Consumer Leaders Index ETF (KBUY)     1.64 %     2.32 %(o)      -8.11 %(1) 
KraneShares SSE STAR Market 50 Index ETF (KSTR)     -9.97 %     -8.05 %(p)      -8.11 %(1) 
KraneShares Hang Seng TECH Index ETF (KTEC)     -4.37 %     -5.15 %(q)      -8.11 %(1) 
KraneShares China Innovation ETF (KGRO)     -6.60 %     N/A       -8.11 %(1) 
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (KDIV)     6.08 %^      6.36 %^(r)      -5.14 %(7) 
KraneShares China Internet and Covered Call Strategy ETF (KLIP)     -3.56 %^     N/A     -8.11 %(1) 

 

* Return based on net asset value as of March 31, 2023.
** Return as of March 31, 2023.
^ Return period since Fund inception (less than one-year period).

 

1

 

 

Shareholder Letter (Unaudited) (continued)

 

(a) The CSI CICC Select 100 Index.
(b) The CSI Overseas China Internet Index.
(c) The MSCI China A 50 Connect Index.
(d) The Bloomberg China Inclusion Focused Bond Index.
(e) The MSCI China All Shares Index.
(f) The MSCI Global China Infrastructure Exposure Index.
(g) The Solactive Emerging Markets Consumer Technology Index.
(h) The MSCI China IMI Environment 10/40 Index.
(i) The Bloomberg Electric Vehicles Index.
(j) The MSCI All Shares Health Care 10/40 Index.
(k) The Solactive Emerging Markets Healthcare Index.
(l) The MSCI Emerging Markets ex China Index.
(m) The MSCI China ESG Leaders 10/40 Index.
(n) The CICC China 5G and Semiconductor Leaders Index.
(o) The CICC China Consumer Leaders Index.
(p) The Shanghai Stock Exchange Science and Technology Innovation Board 50 Index.
(q) The Hang Seng TECH Index.
(r) The S&P Pan Asia Dividend Aristocrats Index.

 

Morningstar Peer Group Information

 

  Morningstar Peer Group Median   Morningstar Peer Group Name   Morningstar Peer Group Description
(1)  -8.11%   U.S. ETF China Region   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 and/or Taiwan.
           
(2)  -1.42%   U.S. ETF Emerging Markets Local Currency Bond   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.
           
(3)   -6.71%   U.S. ETF Infrastructure   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.

 

2

 

 

Shareholder Letter (Unaudited) (continued)

 

  Morningstar Peer Group Median   Morningstar Peer Group Name   Morningstar Peer Group Description 
(4)   -9.39%   U.S. ETF Diversified Emerging Markets   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 than 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.
           
(5)   -5.11%   U.S. ETF Industrials   The Morningstar Fund Industrials Category portfolios seek capital appreciation by investing inequity securities of U.S. or non-U.S. 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.
           
(6)   -6.55%   U.S. ETF Emerging Markets Bond   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.
           
(7) -5.14%   U.S. ETF Diversified Pacific/Asia   The Morningstar Fund Diversified Pacific/Asia Category portfolios have a wider investment range than other Asia-oriented portfolios. These portfolios can invest throughout the Pacific Rim, including Australia and New Zealand. As a results, country weightings for these portfolios vary tremendously, though most retain some exposure to Japan and Hong Kong. These portfolios invest at least 70% of their total assets in equities and invest at least 75% of assets in Pacific countries, including at least 10% in Japan.

 

We are encouraged by recent developments in China’s capital markets. The challenging macroeconomic environment and resulting volatility in global equity markets that ensued over the past year led many U.S. and global investors to seek diversified sources of return, including China equities.

 

We believe that China’s capital markets will continue to grow and become an essential element of a well-designed investment portfolio.

 

We believe that investors should have low-cost, transparent tools to obtain exposure to China’s equity and fixed income markets.

 

China’s National Party Congress (NPC), held last year, resulted in positive policy changes including the removal of COVID restrictions and the provision of support for the real estate industry.

 

We believe the further development of China’s capital markets offers a long-term value proposition.

 

3

 

 

Shareholder Letter (Unaudited) (concluded)

 

We are dedicated to helping investors obtain more complete passive and active market exposures and more balanced investment portfolios that include exposure to China.

 

Thank you for investing with us.

 

Jonathan Krane, CEO

March 31, 2023

 

4

 

 

Management Discussion of Fund Performance (Unaudited)

 

KraneShares CICC China Leaders 100 Index ETF

 

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-beta approach to systematically investing in companies listed in Mainland China. This quantitative approach reflects CICC’s top down and bottom-up research process, seeking to deliver the 100 leading companies in Mainland China.

 

China A Share Leaders Review

 

During the 12-month period ended March 31, 2023 (the Period), the Fund’s holdings were somewhat skewed towards growth and consumer industries. As a result, they were negatively impacted by China’s pandemic lockdowns at the beginning of the Period. Furthermore, declines in the prices of equities of real estate developers in connection with the government’s campaign to deleverage real estate developers also negatively impacted the Fund’s performance for the Period.

 

Still, during the Period the Fund outperformed the broader China equity market, as represented by the MSCI China Index. Further, we remain confident in the smart-beta approach to investing in China’s onshore (A Share/Mainland) equity market and CICC’s research process as represented in the Underlying Index, including because the Underlying Index generated a return profile that was significantly less volatile than the MSCI China Index during the Period.

 

The best performing sector within the Fund was Communication Services. Meanwhile, companies in the Real Estate sector detracted the most of any single sector from the Fund’s performance.

 

For the Period, the NAV of the Fund decreased by -13.15% while the Underlying Index decreased by -12.51%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares CICC China Leaders 100 Index ETF     -13.15 %     -12.86 %‡     4.78 %‡     5.20 %‡     0.47 %‡     0.67 %‡     7.13 %‡     7.08 %‡
Hybrid KFYP Index (Net)**     N/A       -12.51 %‡     N/A       6.54 %‡     N/A       1.66 %‡     N/A       7.47 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.68 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.68%. 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 Internet Review

 

Although global markets saw declines due to rising global interest rates, U.S. and Hong Kong-listed stocks of Chinese internet issuers saw positive catalysts during the 12-month period ended March 31, 2023 (the Period) as many of the geopolitical and policy-related issues that had been weighing on the sector in prior periods were resolved. We believe that the two most important developments for the sector during the Period were the China government’s removal of pandemic restrictions and the achievement of full access to the audit books of U.S.-listed, China-based firms by the U.S. Public Company Accounting Oversight Board (PCAOB).

 

Following the National Party Congress, held in October of 2022, China’s government removed all domestic, pandemic-related restrictions. This development improved the outlook for China’s consumer market and led to a rebound in the stock price of certain China Internet Companies.

 

On December 15th, 2022, the PCAOB announced that the agency had secured complete access to inspect and investigate China-based firms and their auditors for the first time in history. This announcement was significant for China Internet Companies, many of which are listed publicly in the U.S., because the U.S. Congress in 2022, required U.S.-listed foreign companies to allow the PCAOB to inspect their audit books to remain listed publicly on U.S. exchanges. This development significantly reduced the risk of the American depositary receipts (ADRs) of China Internet Companies being delisted from U.S. exchanges.

 

We see three potential positive catalysts for China Internet Companies in the year to come:

 

We believe that The People’s Bank of China (PBOC) is likely to maintain a dovish monetary policy stance, to the benefit of growth equities.

 

China retail sales increased +10.6% year-over-year (YoY) in March, setting the stage for a potential rebound in consumer spending this year, which we would expect to benefit China Internet Companies.

 

Alibaba’s recent restructuring into six separate business groups, each individually able to raise capital, indicates the company’s focus on generating shareholder value; and a resulting IPO would likely result in at least one new issuer, which would be included in the Fund in the future.

 

China capital market overview (April 1, 2022 to March 31, 2023)

 

China’s equity market, as measured by the MSCI China All Shares Index, was down for the Period, returning -6.44%, while China’s currency, the Renminbi (RMB) depreciated -8.4% against the U.S. dollar.

 

The best-performing sectors across China’s equity markets included Energy (+23.08%), Communication Services (+8.93%), and Utilities (+0.18%).

 

8

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares CSI China Internet ETF (continued)

 

The worst-performing sectors across China’s equity markets included Real Estate (-29.55%), Materials (-18.28%), and Information Technology (-10.98%).

 

For the Period, the NAV of the Fund increased by 5.86%, while the Underlying Index increased by 6.36%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares CSI China Internet ETF     5.86 %     9.40 %‡     -9.30 %‡     -9.38 %‡     -10.61 %‡     -10.67 %‡     3.83 %‡     3.81 %‡
CSI Overseas China Internet     N/A       6.36 %‡     N/A       -8.78 %‡     N/A       -10.18 %‡     N/A       4.04 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.77 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

10

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares CSI China Internet ETF (concluded)

 

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 50 Connect Index ETF

 

The KraneShares Bosera MSCI China A 50 Connect Index ETF (the Fund) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the MSCI China A 50 Connect Index (the Underlying Index).

 

The Underlying Index is constructed from the MSCI China A Index (the Parent Index), a broad-based benchmark index, which captures large and mid-cap China A shares listed on the Shanghai and Shenzhen exchanges and accessible through the Northbound Stock Connect channel. The Underlying Index aims to reflect the performance of the 50 largest securities representing each Global Industry Classification Standard (GICS®) sector and reflecting the sector weight allocation of the Parent Index.

 

China A Share Review

 

Several macroeconomic headwinds impacted the Fund’s performance during the 12-month period ended March 31, 2023 (the Period), including a slump in consumer demand stemming from pandemic restrictions in China and the strengthening of the U.S. dollar due to the most aggressive interest rate hiking cycle in history from the U.S. Federal Reserve, which weighed on the value of assets denominated in currencies other than the U.S. Dollar, including China’s Renminbi. Although pandemic restrictions were removed during the period, benefiting consumer-oriented holdings, the Fund’s holdings in other sectors, such as Information Technology and Financials, nonetheless detracted from its overall performance for the period.

 

We see three potential positive catalysts for China’s A share equity market in the year to come:

 

We believe that there will be continued government support for key industries that are captured by the Fund’s holdings.

 

The potential relative attractiveness of China A shares due to the dovish monetary policy stance we expect from the People’s Bank of China (PBOC) as compared to other global central banks.

 

China’s retail sales increased +10.6% year-over-year in March, setting the stage for a rebound in consumer spending during the coming year, which should, in turn, lead to increased revenue for some of the companies held by the Fund, which would contribute to Fund performance.

 

China capital market overview (April 1, 2022 to March 31, 2023)

 

China’s equity market, as measured by the MSCI China All Shares Index, was down for the period returning -6.44%, while China’s currency, the renminbi (RMB) depreciated -8.4% against the U.S. dollar.

 

The best-performing sectors across China’s equity markets included Energy (+23.08%), Communication Services (+8.93%), and Utilities (+0.18%).

 

The worst-performing sectors across China’s equity markets included Real Estate (-29.55%), Materials (-18.28%), and Information Technology (-10.98%).

 

The Fund had exposure to Communication Services and Consumer Discretionary, which contributed positively to its performance, and to Real Estate and Information Technology, which detracted from its performance. The Fund’s performance was also negatively impacted by the decline in the value of China’s currency, the Renminbi, compared to the U.S. dollar.

 

For the Period, the NAV of the Fund decreased by -12.63% while the Underlying Index decreased by -11.57%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and currency translations. 

 

12

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Bosera MSCI China A 50 Connect Index ETF (continued)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Bosera MSCI China A 50 Connect Index ETF     -12.63 %     -12.10 %‡     6.45 %‡     6.33 %‡     1.71 %‡     1.34 %‡     6.03 %‡     6.00 %‡
Hybrid KBA Index (Net)**     N/A       -11.57 %‡     N/A       7.24 %‡     N/A       1.96 %‡     N/A       7.04 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.13 %‡

 

* 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 27, 2017 to May 29, 2019, the MSCI China A Index from May 29, 2019 to January 5, 2022, and the MSCI China A 50 Connect 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

13

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Bosera MSCI China A 50 Connect Index ETF (concluded)

 

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 0.79% and its net expense ratio is 0.56% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.23% of the Fund’s average daily net assets until August 1, 2023. 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.

 

14

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Bloomberg China Bond Inclusion Index ETF

 

The KraneShares Bloomberg China Bond Inclusion Index ETF (the Fund) seeks to provide investment results that, before expenses and fees, correspond generally to the price and yield performance of the Bloomberg China Inclusion Focused Bond Index (the Underlying Index).

 

The underlying index is designed to track the performance of China’s onshore, renminbi-denominated bond market.

 

China Investment Grade & Government Bond Market Review

 

China’s high-quality bonds moved lower during the 12-month period ended March 31, 2023 (the Period) primarily due to global central banks hiking interest rates while China kept rates steady, making China’s risk-free rate less attractive to investors. Nonetheless, as the People’s Bank of China’s target rates remain relatively unchanged since the end of 2021, high quality bonds were remarkably stable during the period, especially compared to high quality bonds in the U.S., realized losses on which resulted in the collapse or near-collapse of multiple banks.

 

We see three potential positive catalysts for China’s investment grade and government bond market going forward:

 

Increased demand for China’s currency, the Renminbi, stemming from the recent commitments from multiple countries, especially oil-exporters, to transact in the currency as opposed to the U.S. dollar.

 

The Renminbi may also appreciate as the U.S. dollar comes down from its recent highs and as the U.S. Federal Reserve could pivot on rate hikes in the event of a recession or other market signals.

 

China’s government is currently urging businesses to increase borrowing, which may lead to an increase in issuance in the high-quality corporate bond segment, which is the focus of the Fund.

 

For the Period, the NAV of the Fund decreased by -3.98% while the Underlying Index decreased by -4.82%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and the Fund sampling the Underlying Index rather than replicating it.

 

15

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Bloomberg China Bond Inclusion Index ETF (continued)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Bloomberg China Bond Inclusion Index ETF     -3.98 %     -4.04 %‡     3.44 %‡     3.44 %‡     0.97 %‡     0.90 %‡     1.50 %‡     1.42 %‡
Bloomberg China Inclusion Focused Bond Index     N/A       -4.82 %‡     N/A       4.37 %‡     N/A       1.60 %‡     N/A       2.29 %‡
S&P U.S. Treasury Bill 3-6 Month Index**     N/A       2.57 %‡     N/A       0.90 %‡     N/A       1.49 %‡     N/A       1.12 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       10.67 %‡
Bloomberg Global Aggregate Index     N/A       -8.07 %‡     N/A       -3.43 %‡     N/A       -1.34 %‡     N/A       0.05 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

16

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Bloomberg China Bond Inclusion Index ETF (concluded)

 

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 0.68% and its net expense ratio is 0.48% 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 0.20% of the Fund’s average daily net assets until August 1, 2023. 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.

 

17

 

 

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 generally to the price and yield performance of 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.

 

Broad China Equity Market Review

 

Offshore China equities outpaced onshore China (Mainland/A Shares) during the 12-month period ended March 31, 2023 (the Period) due to a strong rebound from 2022 lows. Meanwhile, onshore China (Mainland/A Shares) exhibited significantly less volatility, though underperformed. We believe the past 12 months’ performance disparity between onshore China (Mainland/A Shares) and offshore China demonstrates why a balanced allocation to both is important to achieve a well-rounded China allocation.

 

We see three potential positive catalysts for broad China equities in the year to come:

 

Ample liquidity in Mainland China, driven by what we expect to be dovish central bank policy in China, in contrast to the hawkish policy in the U.S. and Europe.

 

The recent resolution of multiple macroeconomic headwinds that had weighed on China’s offshore equity markets in past periods. These headwinds included China’s restrictive COVID policy and the achievement of full access to the audit books of U.S.-listed China-based firms by the Public Company Accounting Oversight Board, significantly lowering the risk that certain ADRs in the Fund’s portfolio may be delisted from U.S. exchanges.

 

China retail sales increased +10.6% year-over-year in March, setting the stage for a rebound in consumer spending this year, which may benefit both onshore China (Mainland/A Shares) and offshore China equities.

 

China capital market overview (April 1, 2022 to March 31, 2023)

 

China’s equity market, as measured by the MSCI China All Shares Index, was down for the period returning -6.44%, while China’s currency, the renminbi (RMB) depreciated -8.4% against the U.S. dollar.

 

The best performing sectors across China’s equity markets included Energy (+23.08%), Communication Services (+8.93%), and Utilities (+0.18%).

 

The worst performing sectors across China’s equity markets included Real Estate (-29.55%), Materials (-18.28%), and Information Technology (-10.98%).

 

Within the Fund, as a result, the best-performing sectors for the Period were Energy and Communication Services. Meanwhile, the worst-performing sectors were Real Estate and Materials.

 

For the Period, the NAV of the Fund decreased by -6.44% while the Underlying Index decreased by -6.44%.

 

18

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI All China Index ETF     -6.44 %     -5.01 %‡     1.55 %‡     1.72 %‡     -1.09 %‡     -1.33 %‡     1.44 %‡     1.48 %‡
Hybrid KALL Index (Net)**     N/A       -6.44 %‡     N/A       1.13 %‡     N/A       -1.21 %‡     N/A       1.75 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       10.74 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

19

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI All China Index ETF (concluded)

 

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 0.68% and its net expense ratio is 0.48% 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, 2023. 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.

 

20

 

 

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, correspond generally to 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 “Belt & Road” or “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.

 

Emerging Markets/Belt & Road Review

 

China launched the “Belt & Road Initiative” or “One Belt One Road” (OBOR) in 2013. The Belt & Road Initiative is an infrastructure development strategy that was designed by the government to allow China to export any excess infrastructure construction capacity to other regions of the world.

 

The emerging markets (EM) economies included in China’s Belt & Road Initiative were adversely impacted by a steady increase in the value of the U.S. dollar during the 12-month period ended March 31, 2023 (the Period). In this regard, their U.S. dollar-denominated debts became more of a burden across the board, although certain commodity-exporting EM countries in the Belt & Road Initiative contemporaneously benefitted from rising oil prices.

 

The challenges faced by Belt & Road Initiative countries and issuers during the Period have included economic crises in Pakistan and Sri Lanka. These crises have threatened ongoing projects in both countries. In response, China’s Export-Import Bank has extended the deadline for repayment of principal and interest on loans to Sri Lanka by two years, and the China Development Bank has extended another $700 million in loans to Pakistan to help the country whether further challenges. Compounding the challenges for Belt & Road Initiative countries, however, has been the unclear status of Italy as a signatory within the Initiative.

 

Nonetheless, OBOR-related projects are likely to continue as various EM economies emerge from economic crises, and Italy’s new center-right ruling coalition may clarify the status of the partnership. Moreover, OBOR-funded energy projects in the Middle East may continue to benefit from China’s reopening and heightened prices for oil and gas.

 

We see three potential positive catalysts for OBOR-related equities in the year to come:

 

The International Monetary Fund has predicted that the growth gap between developed and emerging markets will reverse in favor of EM for the first time in nearly a decade, forecasting growth of 4% for EM in 2023 compared to 1.2% for developed markets.

 

Recent events suggest to us that key state-backed lenders are ready and willing to extend additional credit and restructure debt agreements when necessary to ensure that projects are completed, which could benefit OBOR-related companies.

 

The significant rise in the value of the U.S. dollar over the past year makes borrowing in Renminbi more attractive to developing countries, which may lead to continued demand for China-originated financing for infrastructure projects across the developing world, a key component of the OBOR initiative.

 

Emerging Markets Overview (April 1, 2022 to March 31, 2023)

 

Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning -10.39%.

 

21

 

 

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 Energy (+4.22%), Consumer Staples (-0.08%), and Consumer Discretionary (-3.86%).

 

The worst performing sectors across the Emerging Market equity market included Health Care (-15.02%), Materials (-15.21%), and Real Estate (-16.16%).

 

Within the Fund, the best-performing sectors for the period were Energy and Industrials. Meanwhile, the worst-performing sectors were Consumer Staples and Materials. At the end of the Period, the top country weights within the Fund were China, Singapore, and Kuwait.

 

For the Period, the NAV of the Fund decreased by -14.98% while the Underlying Index decreased by -14.69%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

22

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI One Belt Road Index ETF     -14.98 %     -15.53 %‡     11.71 %‡     12.05 %‡     0.72 %‡     0.32 %‡     1.13 %‡     1.05 %‡
MSCI Global China Infrastructure Exposure Index (Net)     N/A       -14.69 %‡     N/A       12.25 %‡     N/A       1.81 %‡     N/A       2.18 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.58 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.78%. 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

 

23

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI One Belt One Road Index ETF (concluded)

 

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.

 

24

 

 

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, correspond generally to 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.

 

Emerging Markets Consumer Technology Review

 

Many emerging markets (EM) countries were adversely impacted by a steady increase in the value of the U.S. dollar during the 12-month period ended March 31, 2023 (the Period), which meant that their U.S. dollar-denominated debts became more of a burden. However, certain commodity-exporting EM countries benefitted from rising oil prices, and e-commerce companies held by the Fund, especially those which derive significant revenues from China, experienced a recovery during the Period when China removed pandemic restrictions.

 

The International Monetary Fund has predicted that the growth gap between developed and emerging markets will favor the latter for the first time in nearly a decade. Developed economies are anticipated to experience a slowdown in growth from 2.7% in 2022 to 1.2% and 1.4% in 2023 and 2024, respectively. On the other hand, EM economies are expected to experience growth, increasing from 3.9% in 2022 to 4.0% in 2023 and 4.3% in 2024.

 

We see three potential positive catalysts for EM consumer technology companies in the year to come:

 

The U.S. dollar may see declines in the year ahead given its current high level versus EM currencies, which may improve the economic outlook for many EM countries.

 

China retail sales increased +10.6% year-over-year (YoY) in March, setting the stage for a rebound in consumer spending this year, which we expect to benefit consumer technology companies, among others.

 

Alibaba’s recent restructuring into six separate business groups, each individually able to raise capital, indicates the company’s focus on generating shareholder value; and a resulting IPO would likely result in a new issuer, which would be included in the Underlying Index and Fund in the future.

 

Emerging Markets Overview (April 1, 2022 to March 31, 2023)

 

Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning -10.39%.

 

The best performing sectors across EM equity markets included Energy (+4.22%), Consumer Staples (-0.08%), and Consumer Discretionary (-3.86%).

 

The worst performing sectors across EM equity markets included Health Care (-15.02%), Materials (-15.21%), and Real Estate (-16.16%).

 

Within the Fund, exposure to the Consumer Discretionary and Consumer Staples sectors contributed positively to performance, while its exposure to the Communication Services and Financials sectors detracted from performance.

 

25

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Emerging Markets Consumer Technology Index ETF (continued)

 

For the Period, the NAV of the Fund decreased by -15.30% while the Underlying Index decreased by -14.47%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and currency translations.

 

26

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Emerging Markets Consumer Technology Index ETF     -15.30 %     -14.60 %‡     -7.08 %‡     -7.32 %‡     -9.63 %‡     -9.89 %‡     -7.88 %‡     -7.96 %‡
Solactive Emerging Markets Consumer Technology Index     N/A       -14.47 %‡     N/A       -6.00 %‡     N/A       -8.76 %‡     N/A       -6.73 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.02 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

27

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Emerging Markets Consumer Technology Index ETF (concluded)

 

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, 2023.

 

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.

 

28

 

 

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 generally to the price and yield performance of 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 Clean Technology Review:

 

Several macroeconomic headwinds impacted the Fund’s performance during the 12-month period ending March 31, 2023 (the Period), including the most aggressive interest rate hiking cycle in history from the U.S. Federal Reserve. On the other hand, the passage of the Inflation Reduction Act (IRA) in the U.S. favors U.S. suppliers of clean energy technologies, such as solar panels, and the clean technology companies generally held by the Fund.

 

The best-performing sector within the Fund was Information Technology, while the worst-performing sectors were Real Estate and Utilities. Information technology company Kingsoft Cloud was one of the best-performing companies in the Fund. Meanwhile, real estate developers YueXiu and Soho saw declines following a slump in China’s real estate sector.

 

We see three potential positive catalysts for China’s clean technology equities in the year to come:

 

Increasing domestic demand for solar panels as China ramps up its efforts to achieve peak carbon emissions by 2030 and net zero emissions by 2060. Solar currently makes up less than 5% of China’s total energy mix, but we believe that sales have the potential to increase.

 

A rebound in China’s real estate development industry, which may uplift sustainable developers as well.

 

China’s continued leadership in the transition to electric vehicles (EVs) as 6 million EVs were sold in the country in 2022 compared to only 2.6 million in Europe and 800,000 in the U.S.

 

For the Period, the NAV of the Fund decreased by -20.71% while the Underlying Index decreased by -21.68%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and currency translations.

 

29

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI China Clean Technology Index ETF     -20.71 %     -20.31 %‡     20.76 %‡     20.82 %‡     5.81 %‡     5.53 %‡     4.40 %‡     4.45 %‡
MSCI China IMI Environment 10/40 Index (Net)     N/A       -21.68 %‡     N/A       17.38 %‡     N/A       4.21 %‡     N/A       3.01 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       11.06 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.78%. 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

 

30

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI China Clean Technology Index ETF (concluded)

 

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 Electric Vehicles and Future Mobility Index ETF

 

The KraneShares Electric Vehicle and Future Mobility Index ETF (the Fund) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg Electric Vehicles Index (the Underlying Index).

 

The Underlying Index seeks to measure the performance of companies that are engaged in the production of electric vehicles, their components, or other initiatives that may change the future of mobility. This includes issuers engaged in electric vehicles, autonomous driving, lithium and/ or copper production, lithium-ion/lead acid battery production, hydrogen fuel cell manufacturing, and/or electric infrastructure businesses.

 

Global Electric Vehicle Market Review:

 

Global electric vehicles equities were mostly flat during the 12-month period ended March 31, 2023 (the Period) as higher U.S. interest rates made growth equities appear less attractive. Nonetheless, sales of electric vehicles (EVs) continued to rise. EV sales increased +60% to reach 10.3 million vehicles in 2022, up from 6.5 million vehicles in 2021. China continued to lead in sales as 6 million EVs were sold in China during 2022. Meanwhile, Europe and the U.S. tracked behind, logging sales of 2.6 million and 800,000 EVs, respectively.

 

We see three potential positive catalysts for EV equities in the year to come:

 

The passage of the Inflation Reduction Act (IRA) in the United States, which includes over $300 billion in investment in the transition from fossil fuels to renewable energy, including incentives for manufacturers and buyers of EVs.

 

At least six provinces in China have launched their own EV subsidy programs following the expiration at the end of 2022 of national subsidies for purchases of new EVs.

 

The potential for a pivot from the U.S. Federal Reserve on interest rate hikes and for new metals supply to come online, both of which would provide support to EV manufacturers on both a fundamental and sentimental level.

 

For the Period, the NAV of the Fund decreased by -21.78% while the Underlying Index decreased by -21.56%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

Companies involved in battery production were among the best performing of the Fund’s holdings during the Period. Meanwhile, companies involved in hydrogen and fuel cell technologies, charging technologies, and vehicle production detracted the most from the Fund’s performance for the period.

 

32

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Electric Vehicles and Future Mobility Index ETF     -21.78 %     -21.35 %‡     20.30 %‡     20.81 %‡     7.97 %‡     7.77 %‡     6.20 %‡     6.26 %‡
Hybrid KARS Index (Net)**     N/A       -21.56 %‡     N/A       21.70 %‡     N/A       8.68 %‡     N/A       6.80 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       9.59 %‡

 

* The Fund commenced operations on January 18, 2018.
** The Hybrid KARS Index consists of the Solactive Electric Vehicles and Future Mobility Index from the inception of the Fund through June 15, 2021 and the Bloomberg Electric Vehicles Total Return Index going forward.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

33

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Electric Vehicles and Future Mobility Index ETF (concluded)

 

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.

 

34

 

 

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 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 the United States. Issuers eligible for inclusion must be classified under the Global Industry Classification Standard (GICS®) as engaged in the healthcare sector. The issuers included in the Underlying Index may include small-cap, mid-cap, and large-cap companies.

 

China Health Care Review:

 

Several macroeconomic headwinds impacted the Fund’s performance during the 12-month period ended March 31, 2023 (the Period), including an aggressive rate hiking cycle pursued by global central banks, which made growth equities appear less attractive due to the resulting increase in the risk-free rates in many countries, the placement of some China-based pharmaceutical companies on the U.S. “unverified list,” indicating that the end-use of imported materials could not be verified by U.S. inspectors due to COVID restrictions, and regulatory changes to China’s central procurement program, especially the inclusion of medical devices in the program.

 

We see three potential positive catalysts for China’s healthcare equities in the year to come:

 

Wuxi Biologics has been removed from the U.S. “unverified list,” which is a list of companies that import sensitive materials from the U.S. and are unable to submit to inspections. Wuxi Biologics was removed from the unverified list following the end of China’s pandemic restrictions, which enabled U.S. inspectors to gain access to Wuxi’s facilities. We believe that this means that being added to the unverified list is no longer a material risk to China’s pharmaceutical companies as COVID restrictions were the only reason for the companies’ inclusion on the list.

 

On December 15th, 2022, the Public Company Accounting Oversight Board (PCAOB) announced that the agency had secured complete access to inspect and investigate China-based firms and their auditors for the first time in history. This announcement was significant for China healthcare companies, many of which are listed publicly in the U.S., because the U.S. Congress in 2022 required U.S.-listed foreign companies to allow the PCAOB to inspect their audit books to remain listed publicly on U.S. exchanges. Thus, the achievement of full access to the audit books of U.S.-listed China-based firms by the PCAOB significantly lowers the risk that certain ADRs in the Fund’s portfolio may be delisted from U.S. exchanges.

 

According to a paper published by Lancet Public Health this year, life expectancy in China is likely to increase to over 80 by 2035 and to potentially as high as 90 for women in certain areas. This could create long-term, steadily growing demand for healthcare in China for the foreseeable future.

 

The best-performing industries within the Fund were medical/nursing services and medical distributors. Meanwhile, pharmaceuticals and biotechnology were the worst-performing industries within the Fund.

 

35

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI All China Health Care Index ETF (continued)

 

For the Period, the NAV of the Fund decreased by -12.65% while the Underlying Index decreased by -12.43%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

36

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Five Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI All China Health Care Index ETF     -12.65 %     -11.85 %‡     0.02 %‡     -0.35 %‡     -2.11 %‡     -2.69 %‡     -0.82 %‡     -1.04 %‡
MSCI China All Shares Health Care 10/40 Index     N/A       -12.43 %‡     N/A       1.00 %‡     N/A       -1.54 %‡     N/A       -0.11 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.19 %‡     N/A       9.46 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

37

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI All China Health Care Index ETF (concluded)

 

net assets until August 1, 2023. 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.

 

38

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Asia Pacific High Income Bond ETF

 

The KraneShares Asia Pacific High Income Bond ETF (the Fund) seeks to provide a total return that, before fees and expenses, exceeds that of the JP Morgan Asia Credit Index (JACI) Non-Investment Grade Corporate Index (the Benchmark Index) over a complete market cycle.

 

The Benchmark Index is comprised of liquid U.S. dollar denominated debt instruments issued out of Asia ex-Japan. It is based on the composition and established methodology of the J.P. Morgan Asia Credit Index (JACI), which is market capitalization weighted. The Benchmark Index is limited to issuers classified as non-investment grade based on the middle rating among Moody’s, Fitch, and S&P.

 

Asia High Yield Bond Market Review:

 

Asia’s high yield bond market was relatively unchanged from the prior year during the 12-month period ended March 31, 2023 (the Period) as the slump in China’s real estate market, stemming from tightening government policies that were introduced in 2021 and included the “three red lines” policy limiting developer leverage, continued to weigh on the performance of Asia’s high yield bond market. However, positive signs of a recovery emerged in the first quarter of 2023, including the stabilization of home prices in January following 16 consecutive months of price declines.

 

Portfolio manager Wai Hoong Leong and his Singapore-based team reversed from their high cash position of 18% in the second quarter of 2022 to under 10% by the end of the Period due to improving credit conditions. The team also reversed its underweights versus the benchmark to the Real Estate and Consumer Discretionary sectors from the beginning of the Period, while keeping duration lower than the Benchmark Index.

 

We see three potential positive catalysts for the Asia high yield bond market going forward:

 

The potential for a recession in the U.S. or other market changes that cause the U.S. Federal Reserve to end its rate hike cycle, the most aggressive in history, making high yield securities more attractive. This may also cause emerging Asian economies to appear relatively more attractive sources of growth compared to the U.S. and developed economies. Both of these developments should benefit the Fund.

 

The potential for a sustained recovery in China’s real estate sector as the government has become more supportive of the sector in recent months.

 

Issuance may increase in Asia’s high yield bond market following a slump over the past 12 months as market participants gain confidence in the outlooks for their businesses, especially in the Consumer [Staples] [Discretionary] sector following China’s removal of pandemic restrictions, which dampened Chinese consumer activity.

 

For the Period, the NAV of the Fund decreased by -0.44% while the Benchmark Index decreased by -0.62%.

 

39

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Asia Pacific High Income Bond ETF (continued)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*, 

 

    One Year
Return
    Three Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Asia Pacific High Income Bond ETF     -0.44 %     -0.66 %‡     -3.54 %‡     -3.99 %‡     -1.88 %‡     -1.85 %‡
J.P. Morgan Asia Credit (JACI) Non-Investment Grade Corporates Index     N/A       -0.62 %‡     N/A       -4.26 %‡     N/A       -1.65 %‡
Lipper China Region Funds Classification     N/A       -8.18 %‡     N/A       3.39 %‡     N/A       N/A  
Bloomberg Global Aggregate Index     N/A       -8.06 %‡     N/A       -3.43 %‡     N/A       -0.79 %‡

 

* The Fund commenced operations on June 26, 2018.
Prior to August 1, 2021, the Fund previously sought to track the performance of the Solactive USD China Corporate High Yield Bond Index, before fees and expenses. Its performance prior to that date would have been different if the current goal and principal investment strategies had been in effect.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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.

 

40

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Asia Pacific High Income Bond ETF (concluded)

 

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.

 

41

 

 

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 generally 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.

 

Emerging Markets Healthcare Review:

 

During the 12-month period ended March 31, 2023 (the Period), emerging market (EM) healthcare companies continued to build on the progress made in response to the pandemic. They continued to rapidly expand their virtual health services for patients and establish partnerships with developed market companies to produce and/or acquire vaccines, treatments, and equipment. Within the Fund, the best-performing holdings were mainly involved in the healthcare technology and medical devices industries. Meanwhile, the worst-performing holdings were mainly those involved in healthcare facilities management and biotechnology industries.

 

The Fund was down for the Period as a strong U.S. dollar and rising U.S. interest rates continued to weigh on EM and growth equities. Meanwhile, waning demand for COVID vaccines and concerns over future funding both had a negative impact on the global biotechnology industry. Brazil’s private healthcare industry was particularly hard-hit as provider Hapvida has had to grapple with tightening credit conditions and newly elected President Lula da Silva’s plans to make public healthcare more competitive with private alternatives.

 

We see three potential positive catalysts for EM healthcare equities in the year to come:

 

The International Monetary Fund has predicted that the growth gap between developed and emerging markets will reverse in favor of EM for the first time in nearly a decade, forecasting growth of 4% for EM in 2023 compared to 1.2% for developed markets.

 

Wuxi Biologics has been removed from the U.S. “unverified list,” which is a list of companies that import sensitive materials from the U.S. and are unable to submit to inspections. Wuxi Biologics was removed from the unverified list following the end of China’s pandemic restrictions, which enabled U.S. inspectors to gain access to Wuxi’s facilities. We believe that this means that being added to the unverified list is no longer a material risk to China’s pharmaceutical companies as COVID restrictions were the only reason for the companies’ inclusion on the list.

 

The achievement of full access to the audit books of U.S.-listed China-based firms by the U.S. Public Company Accounting Oversight Board (PCAOB) significantly lowers the risk of the ADRs issued by companies in the Fund from being removed from U.S. exchanges.

 

Emerging Markets Overview (March 31, 2022 to March 31, 2023)

 

Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning -10.39%.

 

The best performing sectors across the Emerging Market equity market included Consumer Staples (+0.08%), Consumer Discretionary (-3.86%), and Energy (+4.22%).

 

42

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Emerging Markets Healthcare Index ETF (continued)

 

The worst performing sectors across the Emerging Market equity market included Health Care (-15.02%), Materials (-15.21%), and Real Estate (-16.16%).

 

For the Period, the NAV of the Fund decreased by -14.97% while the Underlying Index decreased by -14.90%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

43

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares Emerging Markets Healthcare Index ETF     -14.97 %     -14.19 %‡     0.37 %‡     0.42 %‡     -3.29 %‡     -3.26 %‡
Solactive Emerging Markets Healthcare Index     N/A       -14.90 %‡     N/A       0.88 %‡     N/A       -2.76 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       9.68 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

44

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Emerging Markets Healthcare Index ETF (concluded)

 

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.

 

45

 

 

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 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.

 

Emerging Markets ex China Review:

 

Emerging markets (EM) excluding China (EM ex China) were adversely impacted by a steady increase in the value of the U.S. Dollar during the 12-month period ended March 31, 2023 (the Period), which meant that their U.S. Dollar-denominated debts became more of a burden. However, many commodity-exporting EM countries benefitted from heightened oil prices; and consumer-oriented stocks recovered somewhat. Meanwhile, South Korea and Taiwan lagged due to slowing global demand for their semiconductor exports. Due to the latter’s higher weight in the Fund’s Underlying Index, these opposing forces negatively impacted the Fund’s performance.

 

We see three potential positive catalysts for EM ex China equities in the year to come:

 

The International Monetary Fund has predicted that the growth gap between developed and emerging markets will reverse to favor the latter for the first time in nearly a decade, forecasting growth of 4% for EM in 2023 compared to 1.2% for developed markets.

 

Although China’s equity valuations saw a significant increase compared to other EM equity valuations in the fourth quarter of 2022, we believe the latter may close this gap over the next 12 months as EM ex China economies rebound and benefit from the Chinese population’s increased spending on energy, travel, and raw materials.

 

The U.S. dollar may see declines in the year ahead given its current high level versus EM currencies, which may improve the economic outlook for many EM countries to the extent that it mitigates the drag of their U.S. dollar denominated debt burden.

 

Emerging Markets Overview (April 1, 2022 to March 31, 2023)

 

Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning -10.39%.

 

The best performing sectors across the EM equity market included Energy (+4.22%), Consumer Staples (-0.08%), and Consumer Discretionary (-3.86%).

 

The worst performing sectors across the EM equity market included Health Care (-15.02%), Materials (-15.21%), and Real Estate (-16.16%).

 

Within the Fund, exposure for the Period to the Consumer Discretionary and Consumer Staples sectors benefitted the Fund, while exposure to the Communication Services and Financials sectors detracted from Fund performance. The best-performing country exposure for the Fund was Turkey, and the worst-performing country exposure was Colombia.

 

For the Period, the NAV of the Fund decreased by -12.12% while the Underlying Index decreased by -13.32%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and the Fund’s usage of representative sampling to seek to track the Underlying Index’s performance.

 

46

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Three Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI Emerging Markets ex China Index ETF     -12.12 %     -11.40 %‡     14.80 %‡     14.88 %‡     3.47 %‡     3.72 %‡
MSCI Emerging Markets Ex China Index     N/A       -13.32 %‡     N/A       14.30 %‡     N/A       2.44 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       18.60 %‡     N/A       11.15 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.59% and its net expense ratio is 0.23% due to a Fee Waiver whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.35% of the Fund’s average daily net assets until August 1, 2022. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives.

 

47

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares MSCI Emerging Markets ex China Index ETF (concluded)

 

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.

 

48

 

 

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 the MSCI China ESG Leaders 10/40 Index (the Underlying Index).

 

The Underlying Index is designed to measure the performance of Chinese companies with high Environmental, Social and Governance (ESG) ratings relative to their sector peers. The Underlying Index consists of small-cap, mid-cap and large-cap companies in China. In order to ensure diversification, the Underlying Index limits individual constituent weights to 10% and the cumulative weight of all constituents with a weight of over 5% to 40% of its composition.

 

China ESG Review:

 

Chinese companies with the highest MSCI ESG rankings tend to be highly concentrated in growth sectors and, as such, were caught up in the global growth selloff during the 12-month period ended March 31, 2023 (the Period). Nonetheless, we continue to see strong client interest in strategies that consider ESG factors. Furthermore, we are encouraged by the Fund’s performance since inception, which has outpaced the broader China equity market, as represented by the MSCI China Index. These performance results reinforce our thesis that ESG considerations may lead to outperformance in China.

 

President Xi’s pledge last year to promote “common prosperity” in the government’s oversight of private businesses led to investor enthusiasm for Chinese companies with high ESG rankings. With Xi installed for a third term, we believe this emphasis may continue.

 

We see three potential positive catalysts for China ESG equities in the year to come:

 

We believe that The People’s Bank of China (PBOC) is likely to maintain a dovish monetary policy stance, to the benefit of growth equities.

 

China retail sales increased +3.5% year-over-year in the first two months of 2023, setting the stage for a rebound in consumer spending this year, which could benefit consumer-oriented ESG equities.

 

New regulations globally surrounding ESG disclosure and adherence to sustainability standards in investment processes may cause more investors to seek ESG characteristics in their China investments. Meanwhile, China’s government continues to support industries with a high concentration of companies with high ESG ratings, such as manufacturers of electric vehicles and solar panels.

 

Communication Services was the best-performing sector within the Fund. Meanwhile, Real Estate was the worst-performing sector.

 

For the Period, the NAV of the Fund decreased by -10.38% while the Underlying Index decreased by -9.62%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

49

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year
Return
    Annualized
Inception to Date
 
    Net
Asset
Value
    Market
Price^
    Net
Asset
Value
    Market
Price^
 
KraneShares MSCI China ESG Leaders Index ETF     -10.38 %     -8.64 %‡     -6.44 %‡     -6.53 %‡
MSCI China ESG Leaders 10/40 Index     N/A       -9.62 %‡     N/A       -5.77 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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.

 

50

 

 

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 expenses and fees, correspond generally to the price and yield performance of the CICC China 5G and Semiconductor Leaders Index (the Underlying Index).

 

The Underlying Index is designed to track the performance of companies engaged in 5G and semiconductor related businesses, including 5G equipment, semiconductors, electronic components, and data centers.

 

China 5G & Semiconductor Market Review:

 

China’s 5G and semiconductor-related equities were down for the 12-month period ending March 31, 2023 (the Period) due to a global risk-off environment and geopolitical concerns that led to negative sentiment towards the semiconductor industry.

 

Regarding the semiconductor component of the strategy, in late 2022, the U.S. government implemented a series of restrictions on the export of certain varieties of high-end semiconductors to Mainland China. China’s share of U.S. semiconductor exports declined from $7 billion in 2021 to $5 billion in 2022. These restrictions were initially viewed as negative for China’s industry, but they have likely accelerated the timeline in which China could become self-sufficient in producing semiconductors. A self-sufficient China semiconductor industry would lead to a significant increase in the revenues of China’s leading semiconductor manufacturers and catalyze the Fund’s performance.

 

Regarding the 5G component of the strategy, the Fund’s performance benefited from holding stocks of companies mainly involved in the production of telecommunications equipment. We believe that the relative outperformance of these names was tied partially to the Chinese government’s reiteration of its goal to increase the nation’s 5G penetration rate as part of the 14th Five Year Plan.

 

We see three potential positive catalysts for China’s 5G & semiconductor companies in the year to come.

 

China’s imports of U.S.-made and/or designed semiconductors are likely to continue to fall given new export restrictions, representing a significant opportunity for local semiconductor manufacturers to grow their business.

 

We expect ample liquidity in China’s equity markets driven by dovish central bank policy in China, in contrast to the hawkish policy in the U.S. and Europe. We believe that such dovish policies are likely to benefit growth-oriented technology stocks, such as those of 5G and semiconductor issuers, listed in Mainland China.

 

According to a report from UBS, China is projected to have over 400 million 5G users by 2025, accounting for 40% of total global use and driving China’s 5G industry forward.

 

For the Period, the NAV of the Fund decreased by -9.62% while the Underlying Index decreased by -9.32%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

51

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year     Annualized  
    Return     Inception to Date  
    Net           Net        
    Asset     Market     Asset     Market  
    Value     Price^     Value     Price^  
KraneShares CICC China 5G & Semiconductor Index ETF     -9.62 %     -8.72 %‡     -13.41 %‡     -13.51 %‡
CICC China 5G And Semiconductor Leaders Index     N/A       -9.32 %‡     N/A       -12.21 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       N/A  

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.64% 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, 2022. 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

 

52

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares CICC China 5G & Semiconductor Index ETF (concluded)

 

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.

 

53

 

 

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 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 Consumer Leaders Review:

 

The stocks of China’s local consumer brands moved higher during the 12-month period ended March 31, 2023 (the Period), mostly due to the lifting of pandemic restrictions following China’s National Party Congress in October 2022, which led to an increase in consumer spending compared to one year earlier. The first evidence of this increase in consumer spending was reported by China’s Tourism Ministry in data from the Chinese Lunar New Year holiday in late January 2023, which signaled a rebound in consumer activities following the lifting of the pandemic restrictions. The data indicated a +23% rise in domestic trips taken during the seven-day holiday in 2022 as compared to the same holiday in 2021.

 

We believe that with the lifting of pandemic restrictions, China can return to normal and that consumption-related companies will be direct beneficiaries of the country’s reopening. We also believe that a recovery in the service sector (e.g., travel as evidenced by the activity around the Chinese Lunar New Year) will likely lead to a resurgence of demand for consumer products. As China’s inflation remains low and its high target for GDP growth remains intact, there appears to be significant policy support for China’s consumer market. In time, we expect China to strive to rebalance its economy through consumption rather than investments and exports, which will create a long-term opportunity for the leading consumer brands in China.

 

We see three potential positive catalysts for China’s consumer brands in the year to come:

 

China retail sales increased +10.6% year-over-year in March, setting the stage for a rebound in consumer spending this year, which may benefit both onshore and offshore China equities.

 

According to sources on the ground in China, consumers are beginning to perceive many local brands on equal footing with foreign brands, which, in the past, had been perceived as higher quality and more fashionable.

 

Many global banks have upgraded their 2023 GDP growth estimates for China to above 6% year-over-year, mostly owing to the heightened level of consumption, which may benefit the leading local China brands.

 

Within the Fund, the best-performing sectors during the Period were Consumer Discretionary and Consumer Staples. Meanwhile, the worst-performing sectors were Materials and Information Technology.

 

For the Period, the NAV of the Fund increased by 1.64% while the Underlying Index increased by 2.32%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

54

 

 

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 ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year     Annualized  
    Return     Inception to Date  
    Net           Net        
    Asset     Market     Asset     Market  
    Value     Price^     Value     Price^  
KraneShares CICC China Consumer Leaders Index ETF     1.64 %     2.85 %‡     -8.78 %‡     -8.82 %‡
CICC China Consumer Leaders Index     N/A       2.32 %‡     N/A       -7.77 %‡
S&P 500 Index     N/A       -7.73 %‡     N/A       N/A  

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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.

 

55

 

 

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.

 

STAR Market Review:

 

China’s STAR Market was not spared the global selloff in growth equities during the 12-month period ended March 31, 2023 (the Period). Nonetheless, the STAR market continues to attract new listings, accounting for 41% of the total capital raised through new listings in Mainland China in 2022. Since its launch in 2019, the STAR market has allowed 486 companies, mostly in the technology industry, to raise a total of 102 billion USD in capital.

 

We see three potential positive catalysts for the STAR Market in the years to come:

 

Ample liquidity driven by what we expect to be a dovish central bank policy in China, in contrast to the hawkish policy in the U.S. and Europe, which is likely to create the conditions for a vibrant IPO market in China over the next few years and lead to new listings on the STAR market.

 

China’s increasing support for high technology companies, such as semiconductor manufacturing, which represent a majority of companies in the Underlying Index and Fund portfolio, after restrictions on the export of high-end chips to China implemented by the U.S. last year.

 

The potential revival of financial technology company Ant Group’s IPO on the STAR Market.

 

The best-performing holdings for the period were mainly in the software industry. Beijing Kingsoft Office Software was the top-performing holding in the Fund. Meanwhile, pharmaceuticals, including Shanghai Junshi Biosciences Co., were the primary detractors from the Fund’s performance.

 

For the Period, the NAV of the Fund decreased by -9.97% while the Underlying Index decreased by -8.05%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees and the Underlying Index’s inclusion of an issuer that cannot be held by the Fund due to restrictions imposed by the U.S. Department of Treasury.

 

56

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares SSE STAR Market 50 Index ETF (concluded)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year     Annualized  
    Return     Inception to Date  
    Net           Net        
    Asset     Market     Asset     Market  
    Value     Price^     Value     Price^  
KraneShares SSE Star Market 50 Index ETF     -9.97 %     -8.81 %‡     -16.50 %‡     -16.29 %‡
SSE Science & Technology Innovation Board 50 Index     N/A       -8.05 %‡     N/A       -15.42 %‡

 

* 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 it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.88%. 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.

 

57

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Hang Seng TECH Index ETF

 

The KraneShares Hang Seng TECH Index ETF (the Fund) seeks to provide investment results that, before expenses and fees, correspond generally to the price and yield performance of the Hang Seng TECH Index (the Underlying Index).

 

The Underlying Index is designed to track the performance of the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the Underlying Index’s screening criteria.

 

Hong Kong-listed Technology Market Review:

 

During the 12-month period ended March 31, 2023 (Period), global markets saw declines due to rising global interest rates; and Hong Kong-listed technology stocks were not spared the downdraft in growth equities. Following China’s National Party Congress, held in October 2022, China’s government removed all domestic pandemic-related restrictions. This development improved the outlook for China’s consumer market and led to a rebound in many of China’s Hong Kong-listed, consumer and internet-related equities. As a result, stocks of internet and consumer companies were the best performing among the Fund’s holdings, while electric vehicle companies and data center operators detracted from the Fund’s performance.

 

We see three potential positive catalysts for Hong Kong-listed technology equities in the year to come:

 

We believe that The People’s Bank of China (PBOC) is likely to maintain a dovish monetary policy stance, to the benefit of growth equities.

 

China retail sales increased +3.5% year-over-year in the first two months of 2023, setting the stage for a rebound in consumer spending this year.

 

Alibaba’s recent restructuring into six separate business groups, each individually able to raise capital, indicates the company’s focus on generating shareholder value; and a resulting IPO would likely result in a new issuer, which would be included in the Underlying Index and Fund portfolio in the future.

 

For the Period, the NAV of the Fund decreased by -4.37% while the Underlying Index decreased by -5.15%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

58

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares Hang Seng TECH Index ETF (concluded)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year     Annualized  
    Return     Inception to Date  
    Net           Net        
    Asset     Market     Asset     Market  
    Value     Price^     Value     Price^  
KraneShares Hang Seng TECH Index ETF     -4.37 %     -1.85 %‡     -29.36 %‡     -29.74 %‡
Hang Seng TECH Index     N/A       -5.15 %‡     N/A       -28.98 %‡

 

* The Fund commenced operations on June 8, 2021.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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.

 

59

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares China Innovation ETF

 

The KraneShares China Innovation ETF (KGRO) is an active ETF which provides investors with core exposure to the brightest high-growth areas within China’s economy by combining “New China” growth sectors. KGRO primarily invests in the following ETFs:

 

KraneShares CSI China Internet ETF (KWEB)

 

KraneShares MSCI All China Health Care Index ETF (KURE)

 

KraneShares MSCI China Clean Technology Index ETF (KGRN)

 

KraneShares CICC China 5G & Semiconductor Index ETF (KFVG)

 

KraneShares SSE STAR Market 50 Index ETF (KSTR)

 

In addition to investments in these ETFs, KGRO may invest up to 15% of its net assets in the securities of private companies that align with the themes represented by the ETFs or appear to be attractive opportunities, including those that may be preparing for an initial public offering.

 

China Innovation Review:

 

China’s growth equities were down for the 12-month period ended March 31, 2023 (Period) as global central banks engaged in the most aggressive interest rate hiking cycle in decades. This is reflected in the Fund’s performance for the Period. Nonetheless, internet and e-commerce outperformed during the Period as several of the macroeconomic and geopolitical headwinds that had weighed on such issuers in previous periods were resolved, including as a result of China removing pandemic restrictions following the National Party Congress. Technology companies also saw a significant rebound in the first quarter of 2023 on significant policy support for key industries, such as semiconductors, although the sector was still down for the overall Period.

 

The best performing ETF in the portfolio was the KraneShares CSI China Internet ETF, reflecting the rebound in internet and e-commerce stocks during the Period thanks to the removal of pandemic restrictions. Meanwhile, the worst-performing ETF was the KraneShares MSCI China Clean Technology Index ETF, reflecting the underperformance of the Information Technology sector for the Period.

 

We see three potential positive catalysts for China growth equities in the year to come:

 

We believe that The People’s Bank of China (PBOC) is likely to maintain a dovish monetary policy stance, to the benefit of growth equities.

 

China retail sales increased +3.5% year-over-year in the first two months of 2023, setting the stage for a rebound in consumer spending this year.

 

Alibaba’s recent restructuring into six separate business groups, each individually able to raise capital, indicates the company’s focus on generating shareholder value; and a resulting IPO would likely result in a new issuer, which would be included in the Underlying Index and Fund portfolio in the future.

 

For the Period, the NAV of the Fund decreased by -6.60% while the Underlying Index decreased by -6.44%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

60

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares China Innovation ETF (concluded)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    One Year     Annualized  
    Return     Inception to Date  
    Net           Net        
    Asset     Market     Asset     Market  
    Value     Price^     Value     Price^  
KraneShares China Innovation ETF     -6.60 %     -6.91 %‡     -20.74 %‡     -20.70 %‡
China All Shares Index     N/A       -6.44 %‡     N/A       -14.49 %‡

 

* The Fund commenced operations on October 5, 2021.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.64%, which includes fees and expenses incurred indirectly as a result of investments in underlying Funds. 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.

 

61

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF

 

The KraneShares S&P Pan Asia Dividend Aristocrats Index ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the S&P Pan Asia Dividend Aristocrats Index (the Underlying Index).

 

The Underlying Index is designed to measure the performance of constituents in the S&P Pan Asia BMI Index that have followed a policy of consistently increasing dividends every year for the last seven years (Asia dividend growers). The S&P Pan Asia BMI Index is a comprehensive benchmark index that includes securities of companies from the Asia-Pacific region, including developed and emerging market countries.

 

Asia Dividend Growers Review:

 

Asia dividend growers outpaced by a wide margin global equities, as measured by the MSCI All Country World Index (ACWI), from the Fund’s inception on September 15, 2022 to the Fund’s fiscal year end on March 31, 2023 (the Period). This significant outperformance was likely due to the relative attractiveness of the companies’ dividend payments amid rising U.S. interest rates and the global risk-off environment, which broadly favored value-oriented companies with strong cash flows and balance sheets.

 

We see three potential positive catalysts for Asia dividend growers in the year to come:

 

China’s reopening is likely to contribute to strong economic growth in the Asia Pacific region this year compared to other regions globally.

 

Dividend yields in Japan, which made up approximately 31% of the portfolio as of the end of the period, are expected to remain elevated over the next year compared to other developed markets, with Nikko forecasting a 2.6% dividend yield for 2023 compared to 2.1% for the MSCI World Index.

 

We believe that investors may continue to search for yield and diversification over the year to come, which may continue to benefit Asia dividend growers.

 

For the Period, the NAV of the Fund increased by 6.08% while the Underlying Index increased by 6.36%. The deviation between the Fund’s performance and that of the Underlying Index can be mainly attributed to management fees.

 

Within the Fund, the best-performing sectors during the Period were Healthcare and Consumer Staples. Meanwhile, the worst-performing sectors were Financials and Utilities.

 

62

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (concluded)

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    Cumulative  
    Inception to Date  
    Net
Asset
    Market  
    Value     Price^  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF   6.08 %     -6.33 %‡
S&P Pan Asia Dividend Aristocrats Index   N/A       6.36 %‡

 

* The Fund commenced operations on September 14, 2022.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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 0.68%, which includes fees and expenses incurred indirectly as a result of investments in underlying Funds. 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.

 

63

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares China Internet and Covered Call Strategy ETF

 

The KraneShares China Internet and Covered Call Strategy ETF (the Fund) seeks to provide current income by following a “covered call” or “buy-write” strategy. The Fund buys shares of the KraneShares CSI China Internet ETF and “writes” or “sells” corresponding call options on the KraneShares CSI China Internet ETF, which seeks to provide investment results that, before expenses and fees, 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 Internet Review

 

Although global markets saw declines due to rising global interest rates, U.S. and Hong Kong-listed stocks of Chinese internet issuers saw positive catalysts during the 12-month period ended March 31, 2023 (the Period) as many of the geopolitical and policy-related issues that had been weighing on the sector in prior periods were resolved. We believe that the two most important developments for the sector during the Period were the China government’s removal of pandemic restrictions and the achievement of full access to the audit books of U.S.-listed, China-based firms by the U.S. Public Company Accounting Oversight Board (PCAOB).

 

Following the National Party Congress, held in October of 2022, China’s government removed all domestic, pandemic-related restrictions. This development improved the outlook for China’s consumer market and led to a rebound in the stock price of certain China Internet Companies.

 

On December 15th, 2022, the PCAOB announced that the agency had secured complete access to inspect and investigate China-based firms and their auditors for the first time in history. This announcement was significant for China Internet Companies, many of which are listed publicly in the U.S., because the U.S. Congress in 2022, required U.S.-listed foreign companies to allow the PCAOB to inspect their audit books to remain listed publicly on U.S. exchanges. This development significantly reduced the risk of the American depositary receipts (ADRs) of China Internet Companies being delisted from U.S. exchanges.

 

Despite the rebound in the prices of China Internet Companies during the Period, U.S. and Hong Kong-listed shares of such companies continued to exhibit a high level of volatility. As a result, from the Fund’s inception on January 12, 2023, the Fund was able to generate a significant premium income, which tends to be directly correlated to the volatility of the reference asset, which in this case us the KraneShares CSI China Internet ETF (KWEB). In March, the Fund paid out a distribution of approximately $1.10 per share, reflecting the premium income received.

 

We see four potential positive catalysts for the Fund in the year to come:

 

We believe that The People’s Bank of China (PBOC) is likely to maintain a dovish monetary policy stance, to the benefit of growth equities.

 

China retail sales increased +10.6% year-over-year (YoY) in March, setting the stage for a potential rebound in consumer spending this year, which we would expect to benefit China Internet Companies.

 

Alibaba’s recent restructuring into six separate business groups, each individually able to raise capital, indicates the company’s focus on generating shareholder value; and a resulting IPO

 

64

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares China Internet and Covered Call Strategy ETF (continued)

 

would likely result in a new issuers, which would be included in the Underlying Index and Fund portfolio in the future.

 

The potential for a continuation of the heightened level of volatility of KWEB seen during the Period due to continued U.S.-China tensions, which may allow the Fund to continue to earn significant option premiums.

 

From the Fund’s inception on January 12, 2023 to the Fund’s fiscal year end on March 31, 2023, the NAV of the Fund decreased by 3.56%.

 

Growth of a $10,000 Investment‡

(at Net Asset Value)‡

 

 

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2023*

 

    Cumulative  
    Inception to Date  
    Net
Asset
    Market  
    Value     Price^  
KraneShares China Internet and Covered Call Strategy ETF   -3.56 %     -3.48 %‡
CSI Overseas China Internet Index   N/A       -9.48 %‡

 

* The Fund commenced operations on January 12, 2023.
Unaudited.
^ Beginning December 23, 2020, market price returns are based on the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current NAV per share, the midpoint between the national best bid and national best offer (“NBBO”) as of that time. 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, shares may be worth less than their 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

 

65

 

 

Management Discussion of Fund Performance (Unaudited) (continued)

 

KraneShares China Internet and Covered Call Strategy ETF (concluded)

 

in the Fund’s prospectus, the Fund’s operating expense ratio is 0.26%, which includes fees and expenses incurred indirectly as a result of investments in underlying Funds. 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.

 

66

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Leaders 100 Index ETF

 

 

   

Shares

   

Value

 
COMMON STOCK — 100.0%             
CHINA — 100.0%                
Communication Services — 0.8%                
China South Publishing & Media Group, Cl A     9,100‌     $ 15,425‌  
G-bits Network Technology Xiamen, Cl A     500‌       34,712‌  
              50,137‌  
Consumer Discretionary — 17.6%                
Changchun Faway Automobile Components, Cl A     7,500‌       9,534‌  
Chongqing Department Store, Cl A     2,600‌       10,268‌  
Chongqing Zongshen Power Machinery, Cl A     8,500‌       9,122‌  
FAWER Automotive Parts, Cl A     9,000‌       6,304‌  
Fuyao Glass Industry Group, Cl A     19,900‌       100,727‌  
Gree Electric Appliances of Zhuhai, Cl A     55,800‌       298,611‌  
Guangdong Vanward New Electric, Cl A     3,600‌       4,707‌  
Guangdong Xinbao Electrical Appliances Holdings, Cl A     4,200‌       10,421‌  
Guangzhou Automobile Group, Cl A     27,400‌       44,448‌  
Hisense Home Appliances Group, Cl A     5,600‌       17,084‌  
HLA Group, Cl A     21,600‌       19,627‌  
Huayu Automotive Systems, Cl A     19,600‌       47,778‌  
IKD, Cl A     4,500‌       15,845‌  
Jiangsu Changshu Automotive Trim Group, Cl A     3,200‌       9,063‌  
KingClean Electric, Cl A     1,500‌       6,391‌  
Loncin Motor, Cl A     12,700‌       9,543‌  
Midea Group, Cl A     43,000‌       336,934‌  
Ningbo Huaxiang Electronic, Cl A     6,200‌       13,371‌  
Wuchan Zhongda Group, Cl A     38,600‌       27,261‌  
Zhejiang Hangmin, Cl A     7,800‌       9,507‌  
Zhejiang Supor, Cl A     2,100‌       16,559‌  
Zhejiang Wanfeng Auto Wheel, Cl A*     19,400‌       17,571‌  
Zhejiang Weixing Industrial Development, Cl A     7,900‌       10,791‌  
              1,051,467‌  

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

 

67

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Leaders 100 Index ETF (continued)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Consumer Staples — 4.9%                
Heilongjiang Agriculture, Cl A     9,100     $ 17,783  
Henan Shuanghui Investment & Development, Cl A     13,000       49,105  
Jiangsu Yanghe Brewery JSC, Cl A     7,500       180,704  
Meihua Holdings Group, Cl A     26,500       37,740  
Shanghai Flyco Electrical Appliance, Cl A     600       7,224  
              292,556  
Energy — 4.6%                
China Shenhua Energy, Cl A     41,000       168,184  
Shanxi Lu’an Environmental Energy Development, Cl A     14,800       47,284  
Yankuang Energy Group, Cl A     11,400       59,047  
              274,515  
Financials — 33.6%                
Agricultural Bank of China, Cl A     396,600       179,609  
Bank of China, Cl A     261,900       128,904  
Bank of Communications, Cl A     340,400       253,294  
China Construction Bank, Cl A     83,300       72,052  
China Merchants Bank, Cl A     63,900       318,881  
Industrial & Commercial Bank of China, Cl A     436,800       283,682  
Industrial Bank, Cl A     119,100       292,924  
Jiangsu Financial Leasing, Cl A     14,800       12,694  
Ping An Bank, Cl A     119,500       218,038  
Postal Savings Bank of China, Cl A     134,800       91,276  
Shanghai Pudong Development Bank, Cl A     145,700       152,546  
              2,003,900  
Health Care — 4.0%                
Anhui Anke Biotechnology Group, Cl A     14,600       23,492  
China Animal Healthcare*(A)       4,000        
Hubei Jumpcan Pharmaceutical, Cl A     4,700       19,492  
Jointown Pharmaceutical Group, Cl A     11,700       25,454  
Shandong Buchang Pharmaceuticals, Cl A     7,000       20,223  
Sichuan Kelun Pharmaceutical, Cl A     14,300       59,180  
Sunflower Pharmaceutical Group, Cl A     3,700       11,859  
Wuhan Easydiagnosis Biomedicine, Cl A     1,200       9,675  
Yunnan Baiyao Group, Cl A     9,000       71,688  
              241,063  
Industrials — 18.4%                
Anhui Construction Engineering Group, Cl A     15,000       13,193  
Anhui Heli, Cl A     6,300       16,476  
China Railway Group, Cl A     129,100       129,339  
China State Construction Engineering, Cl A     260,900       220,352  
CNPC Capital, Cl A     31,900       32,424  
CRRC, Cl A     150,600       134,212  
Daqin Railway, Cl A     74,200       77,687  
Hangcha Group, Cl A     4,400       12,609  

 

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

 

68

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Leaders 100 Index ETF (continued)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Industrials (continued)                
Hefei Meiya Optoelectronic Technology, Cl A     4,400     $ 20,695  
Jiangsu Guotai International Group, Cl A     12,400       14,824  
Jingjin Equipment, Cl A     3,600       14,678  
Long Yuan Construction Group, Cl A     13,300       9,567  
Shanghai International Port Group, Cl A     37,500       30,252  
Shanghai Mechanical and Electrical Industry, Cl A     3,900       7,377  
Shanghai Pudong Construction, Cl A     8,500       8,677  
Shanghai Tunnel Engineering, Cl A     27,900       23,158  
Shenzhen Tagen Group, Cl A     16,300       12,722  
Sichuan Road & Bridge, Cl A     23,200       46,621  
Sinotrans, Cl A     19,600       11,873  
Sumec, Cl A     6,400       6,011  
Tian Di Science & Technology, Cl A     21,000       15,535  
XCMG Construction Machinery, Cl A     73,700       74,373  
Xiamen C & D, Cl A     18,600       32,691  
Xiamen ITG Group, Cl A     19,200       24,100  
Xiamen Xiangyu, Cl A     14,300       22,385  
Zhejiang Chint Electrics, Cl A     13,300       54,170  
Zhejiang Weixing New Building Materials, Cl A     8,100       28,674  
              1,094,675  
Information Technology — 7.1%                
Avary Holding Shenzhen, Cl A     8,600       38,847  
China Railway Signal & Communication, Cl A     32,114       25,346  
Foxconn Industrial Internet, Cl A     46,900       117,603  
Hanergy Thin Film Power Group*(A)      65,064        
Olympic Circuit Technology     2,700       7,222  
Tongwei, Cl A     33,400       189,244  
Universal Scientific Industrial Shanghai, Cl A     8,400       21,638  
Yangling Metron New Material, Cl A     2,400       15,699  
Zhejiang Jiecang Linear Motion Technology, Cl A     2,500       8,963  
              424,562  
Materials — 1.5%                
Anhui Jinhe Industrial, Cl A     4,200       18,397  
China Lumena New Materials*(A)      718        
Gansu Qilianshan Cement Group, Cl A*     7,900       12,183  
Huaibei Mining Holdings, Cl A     12,300       24,287  
Jiangsu Asia-Pacific Light Alloy Technology, Cl A     7,700       6,660  
Nantong Jiangshan Agrochemical & Chemical, Cl A     2,200       12,773  
Shanghai Zijiang Enterprise Group, Cl A     15,100       12,467  
Tianhe Chemicals Group*(A)      40,000        
              86,767  
Real Estate — 4.4%                
China Vanke, Cl A     84,300       187,079  
Gemdale, Cl A     39,100       47,827  

 

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

 

69

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Leaders 100 Index ETF (continued)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Real Estate (continued)                
Hangzhou Binjiang Real Estate Group, Cl A     15,800     $ 21,052  
Rongan Property, Cl A     11,800       4,914  
              260,872  
Utilities — 3.1%                
China National Nuclear Power, Cl A     117,000       108,868  
Fujian Funeng, Cl A     9,500       16,960  
SDIC Power Holdings, Cl A     37,200       58,558  
              184,386  
TOTAL CHINA             5,964,900  
                 
TOTAL COMMON STOCK
(Cost $5,950,237)
            5,964,900  
                 
TOTAL INVESTMENTS — 100.0%
(Cost $5,950,237)
            5,964,900  
OTHER ASSETS LESS LIABILITIES – 0.0%             (325 )
NET ASSETS - 100%           $ 5,964,575  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.

 

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

 

70

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Leaders 100 Index ETF (concluded)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China                                
Communication Services   $ 50,137     $     $     $ 50,137  
Consumer Discretionary     1,051,467                   1,051,467  
Consumer Staples     292,556                   292,556  
Energy     274,515                   274,515  
Financials     2,003,900                   2,003,900  
Health Care     241,063             ‡‡      241,063  
Industrials     1,094,675                   1,094,675  
Information Technology     424,562             ‡‡      424,562  
Materials     86,767             ‡‡      86,767  
Real Estate     260,872                   260,872  
Utilities     184,386                   184,386  
Total Common Stock     5,964,900                   5,964,900  
Total Investments in Securities   $ 5,964,900     $     $     $ 5,964,900  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

71

 

 

Schedule of Investments March 31, 2023

 

KraneShares CSI China Internet ETF

 

 

   

Shares

   

Value

 
COMMON STOCK — 100.0%             
CHINA — 100.0%                
Communication Services — 45.0%                
Autohome ADR     2,352,891     $ 78,751,262  
Baidu, Cl A*     15,677,034       296,966,854  
Bilibili, Cl Z*     8,943,144       216,003,937  
China Literature*     15,298,000       78,926,490  
iQIYI ADR*     12,407,979       90,330,087  
JOYY ADR     1,541,752       48,071,827  
Kanzhun ADR*     10,760,196       204,766,530  
Kingsoft     32,814,200       161,563,937  
Kuaishou Technology, Cl B*     29,490,300       227,095,540  
NetEase     16,600,805       291,837,667  
Tencent Holdings     14,748,675       724,850,326  
Tencent Music Entertainment Group ADR*     32,313,996       267,559,887  
Weibo ADR*     3,019,704       60,575,262  
              2,747,299,606  
Consumer Discretionary — 36.7%                
Alibaba Group Holding*     44,419,464       568,120,075  
JD.com, Cl A     13,290,990       291,218,456  
Meituan, Cl B*     23,025,848       420,921,040  
PDD Holdings ADR*     4,068,795       308,821,540  
TAL Education Group ADR*     15,923,703       102,070,936  
Tongcheng Travel Holdings*     42,280,600       91,994,554  
Trip.com Group*     6,913,400       258,747,753  
Vipshop Holdings ADR*     13,215,343       200,608,907  
              2,242,503,261  
Consumer Staples — 6.0%                
Alibaba Health Information Technology*     173,194,000       125,318,240  
Dada Nexus ADR*     3,153,018       26,706,062  
JD Health International*     23,151,850       172,239,064  

 

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

 

72

 

 

Schedule of Investments March 31, 2023

 

KraneShares CSI China Internet ETF (concluded)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Consumer Staples (continued)                
Ping An Healthcare and Technology*(A)      17,991,400     $ 45,517,386  
              369,780,752  
Financials — 3.3%                
360 DigiTech ADR     3,833,709       74,373,955  
Lufax Holding ADR     28,333,266       57,799,863  
ZhongAn Online P&C Insurance, Cl H*(A)      22,309,900       70,340,578  
              202,514,396  
Industrials — 3.5%                
Full Truck Alliance ADR*     28,012,923       213,178,344  
                 
Information Technology — 1.0%                
Chindata Group Holdings ADR*     5,666,237       39,606,996  
Ming Yuan Cloud Group Holdings(A)      35,823,000       22,954,247  
              62,561,243  
Real Estate — 4.5%                
KE Holdings ADR*     14,472,227       272,656,757  
TOTAL CHINA             6,110,494,359  
                 
TOTAL COMMON STOCK
(Cost $7,130,394,689)
            6,110,494,359  
                 
SHORT-TERM INVESTMENT — 0.5%                
Invesco Government & Agency Portfolio, Cl Institutional, 4.430%(B)(C)      31,393,462       31,393,462  
TOTAL SHORT-TERM INVESTMENT
(Cost $31,393,462)
            31,393,462  
                 
TOTAL INVESTMENTS — 100.5%
(Cost $7,161,788,151)
            6,141,887,821  
OTHER ASSETS LESS LIABILITIES – (0.5)%             (30,218,433 )
NET ASSETS - 100%           $ 6,111,669,388  

 

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, 2023. The total market value of securities on loan at March 31, 2023 was $29,815,441.
(B) The rate shown is the 7-day effective yield as of March 31, 2023.
(C) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2023 was $31,393,462.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

73

 

 

Schedule of Investments March 31, 2023

 

KraneShares Bosera MSCI China A 50 Connect Index ETF

 

 

   

Shares

   

Value

 
COMMON STOCK — 99.9%             
CHINA — 99.9%                
Communication Services — 1.4%                
China United Network Communications, Cl A     5,352,800     $ 4,224,684  
Focus Media Information Technology, Cl A     2,430,602       2,431,558  
              6,656,242  
Consumer Discretionary — 6.1%                
BYD, Cl A     436,989       16,291,399  
China Tourism Group Duty Free, Cl A     470,632       12,557,862  
              28,849,261  
Consumer Staples — 16.4%                
Foshan Haitian Flavouring & Food, Cl A     430,720       4,800,619  
Inner Mongolia Yili Industrial Group, Cl A     713,612       3,025,990  
Jiangsu Yanghe Brewery JSC, Cl A     168,122       4,050,713  
Kweichow Moutai, Cl A     140,189       37,153,464  
Luzhou Laojiao, Cl A     164,146       6,090,132  
Muyuan Foods, Cl A     593,545       4,235,100  
Shanxi Xinghuacun Fen Wine Factory, Cl A     136,016       5,395,244  
Wuliangye Yibin, Cl A     432,879       12,417,859  
              77,169,121  
Energy — 3.2%                
China Shenhua Energy, Cl A     1,783,047       7,314,146  
Shaanxi Coal Industry, Cl A     2,620,716       7,762,201  
              15,076,347  
Financials — 17.5%                
Agricultural Bank of China, Cl A     13,291,307       6,019,246  
Bank of Communications, Cl A     6,127,999       4,559,881  
Bank of Ningbo, Cl A     1,031,818       4,103,352  
China Merchants Bank, Cl A     3,220,758       16,072,602  
China Pacific Insurance Group, Cl A     1,068,714       4,033,764  
CITIC Securities, Cl A     1,911,922       5,701,828  

 

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

 

74

 

 

Schedule of Investments March 31, 2023

 

KraneShares Bosera MSCI China A 50 Connect Index ETF (continued)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Financials (continued)                
East Money Information, Cl A     2,062,994     $ 6,017,177  
Industrial & Commercial Bank of China, Cl A     9,821,826       6,378,831  
Industrial Bank, Cl A     3,243,522       7,977,383  
Ping An Bank, Cl A     3,029,771       5,528,087  
Ping An Insurance Group of China, Cl A     1,691,298       11,230,496  
Shanghai Pudong Development Bank, Cl A     4,582,646       4,797,989  
              82,420,636  
Health Care — 9.2%                
Aier Eye Hospital Group, Cl A     1,548,467       7,005,789  
Chongqing Zhifei Biological Products, Cl A     345,270       4,119,227  
Jiangsu Hengrui Pharmaceuticals, Cl A     1,376,239       8,581,328  
Shenzhen Mindray Bio-Medical Electronics, Cl A     261,694       11,878,415  
WuXi AppTec, Cl A     553,382       6,406,284  
Zhangzhou Pientzehuang Pharmaceutical, Cl A     130,150       5,389,609  
              43,380,652  
Industrials — 15.6%                
China State Construction Engineering, Cl A     9,130,858       7,711,761  
Contemporary Amperex Technology, Cl A     531,753       31,441,513  
COSCO SHIPPING Holdings, Cl A     2,773,960       4,455,431  
Eve Energy, Cl A     444,469       4,511,160  
NARI Technology, Cl A     1,457,576       5,754,064  
SF Holding, Cl A     1,065,959       8,596,219  
Shenzhen Inovance Technology, Cl A     578,778       5,924,904  
Sungrow Power Supply, Cl A     323,438       4,938,725  
              73,333,777  
Information Technology — 13.7%                
BOE Technology Group, Cl A     19,508,345       12,612,971  
LONGi Green Energy Technology, Cl A     3,798,591       22,352,465  
Luxshare Precision Industry, Cl A     3,692,550       16,297,699  
Tongwei, Cl A     2,341,605       13,267,492  
              64,530,627  
Materials — 12.1%                
Wanhua Chemical Group, Cl A     2,398,899       33,492,994  
Zijin Mining Group, Cl A     12,929,792       23,327,963  
              56,820,957  
Real Estate — 1.6%                
China Vanke, Cl A     1,567,600       3,478,838  
Poly Developments and Holdings Group, Cl A     1,929,677       3,970,459  
              7,449,297  
Utilities — 3.1%                
China Three Gorges Renewables Group, Cl A     4,448,000       3,549,436  

 

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

 

75

 

 

Schedule of Investments March 31, 2023

 

KraneShares Bosera MSCI China A 50 Connect Index ETF (concluded)

 

   

Shares

   

Value

 
COMMON STOCK (continued)            
Utilities (continued)                
China Yangtze Power, Cl A     3,534,394     $ 10,936,739  
              14,486,175  
TOTAL CHINA             470,173,092  
                 
TOTAL COMMON STOCK
(Cost $530,344,133)
            470,173,092  
                 
RIGHT — 0.0%                
CHINA — 0.0%                
Health Care — 0.0%                
Kangmei Pharma‡‡*(A)      66,139        
TOTAL CHINA              
                 
TOTAL RIGHT
(Cost $–)
             
                 
TOTAL INVESTMENTS — 99.9%
(Cost $530,344,133)
            470,173,092  
OTHER ASSETS LESS LIABILITIES – 0.1%             699,975  
NET ASSETS - 100%           $ 470,873,067  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.
‡‡ Expiration date not available.

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China   $ 470,173,092   $     $     $ 470,173,092  
Total Common Stock     470,173,092                   470,173,092  
Right                 ‡‡       
Total Investments in Securities   $ 470,173,092     $     $     $ 470,173,092  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

76

 

 

Schedule of Investments March 31, 2023

 

KraneShares Bloomberg China Bond Inclusion Index ETF

 

 

    Face Amount(A)      Value  
GLOBAL BONDS — 47.4%                
CHINA — 47.4%                
Agricultural Development Bank of China                
3.350%, 03/24/2026     930,000     $ 137,408  
3.060%, 08/05/2023     3,500,000       510,822  
China Development Bank                
4.040%, 04/10/2027     1,650,000       249,976  
4.040%, 07/06/2028     1,650,000       253,223  
3.430%, 01/14/2027     3,450,000       512,981  
3.300%, 03/03/2026     2,360,000       349,603  
3.090%, 06/18/2030     820,000       119,908  
China Government Bond                
4.080%, 10/22/2048     1,190,000       197,796  
3.530%, 10/18/2051     2,700,000       412,510  
3.290%, 05/23/2029     1,600,000       241,137  
3.020%, 10/22/2025     2,500,000       369,143  
2.690%, 08/15/2032     2,000,000       286,517  
2.680%, 05/21/2030     1,800,000       258,966  
2.260%, 02/24/2025     3,000,000       435,412  
2.180%, 08/25/2025     2,000,000       289,022  
Export-Import Bank of China                
3.860%, 05/20/2029     1,030,000       157,610  
3.230%, 03/23/2030     1,160,000       171,183  
3.180%, 03/11/2032     1,000,000       147,164  
2.930%, 03/02/2025     1,240,000       181,616  
              5,281,997  
TOTAL GLOBAL BONDS
(Cost $5,544,072)
            5,281,997  
                 
CORPORATE OBLIGATIONS — 19.8%                
CHINA — 15.9%                
Basic Materials — 5.2%                
China Baowu Steel Group, MTN                
2.370%, 05/22/2023     4,000,000       582,291  

 

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

 

77

 

 

Schedule of Investments March 31, 2023

 

KraneShares Bloomberg China Bond Inclusion Index ETF (concluded)

 

    Face Amount(A)      Value  
CORPORATE OBLIGATIONS (continued)                
Consumer, Cyclical — 5.2%                
Zhejiang Geely Holding Group, MTN                
3.300%, 03/28/2025     4,000,000     $ 574,259  
                 
Utilities — 5.5%                
State Grid Corp of China, MTN                
2.880%, 08/30/2027     4,300,000       618,824  
TOTAL CHINA             1,775,374  
                 
SUPRANATIONAL — 3.9%                
Government — 3.9%                
New Development Bank                
2.450%, 01/27/2025     3,000,000       433,766  
                 
TOTAL CORPORATE OBLIGATIONS
(Cost $2,237,746)
            2,209,140  
                 
TOTAL INVESTMENTS — 67.2%
(Cost $7,781,818)
            7,491,137  
OTHER ASSETS LESS LIABILITIES – 32.8%             3,654,011  
NET ASSETS - 100%           $ 11,145,148  

 

(A) In CNY unless otherwise indicated.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

78

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.8%                 
CHINA — 99.6%                
Communication Services — 13.5%                
Autohome ADR     520     $ 17,404  
Baidu, Cl A*     6,550       124,075  
Bilibili, Cl Z*     1,260       30,433  
Focus Media Information Technology, Cl A     28,500       28,511  
iQIYI ADR*     2,698       19,642  
Kingsoft     14,400       70,900  
Kuaishou Technology, Cl B*     5,600       43,124  
NetEase     3,900       68,561  
Tencent Holdings     15,358       754,797  
Tencent Music Entertainment Group ADR*     3,636       30,106  
              1,187,553  
Consumer Discretionary — 22.9%                
Alibaba Group Holding*     41,124       525,971  
ANTA Sports Products     4,600       66,803  
BYD, Cl A     2,300       85,746  
BYD, Cl H     3,500       102,459  
China Tourism Group Duty Free, Cl A     2,300       61,371  
Chongqing Changan Automobile, Cl A     27,838       48,320  
Fuyao Glass Industry Group, Cl A     8,100       41,000  
Geely Automobile Holdings     23,000       29,593  
Great Wall Motor, Cl H     16,500       20,368  
Guangzhou Automobile Group, Cl H     18,000       11,350  
H World Group ADR*     777       38,057  
Haier Smart Home, Cl A     8,500       28,072  
Haier Smart Home, Cl H     11,200       35,241  
Huayu Automotive Systems, Cl A     4,600       11,213  
JD.com, Cl A     5,522       120,988  
Li Auto, Cl A*     3,500       43,695  

 

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

 

79

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Consumer Discretionary (continued)                
Li Ning     7,500     $ 59,141  
Meituan, Cl B*     12,266       224,223  
New Oriental Education & Technology Group*     5,700       22,219  
NIO ADR*     4,568       48,010  
PDD Holdings ADR*     1,368       103,831  
SAIC Motor, Cl A     11,557       24,167  
Shenzhen Overseas Chinese Town, Cl A*     27,400       19,271  
Shenzhou International Group Holdings     3,800       39,888  
TAL Education Group ADR*     2,876       18,435  
TravelSky Technology, Cl H     7,000       13,073  
Trip.com Group ADR*     1,915       72,138  
Vipshop Holdings ADR*     1,837       27,886  
Yum China Holdings     1,204       76,322  
              2,018,851  
Consumer Staples — 11.2%                
Alibaba Health Information Technology*     18,000       13,024  
Anhui Gujing Distillery, Cl A     1,400       60,344  
China Mengniu Dairy     14,000       57,427  
China Resources Beer Holdings     4,000       32,102  
Foshan Haitian Flavouring & Food, Cl A     4,779       53,263  
Guangdong Haid Group, Cl A     4,900       41,620  
Henan Shuanghui Investment & Development, Cl A     5,200       19,642  
Inner Mongolia Yili Industrial Group, Cl A     7,700       32,651  
Jiangsu Yanghe Brewery JSC, Cl A     1,600       38,550  
Kweichow Moutai, Cl A     1,000       265,024  
Luzhou Laojiao, Cl A     2,300       85,334  
Muyuan Foods, Cl A     8,602       61,378  
New Hope Liuhe, Cl A*     13,500       26,008  
Shanxi Xinghuacun Fen Wine Factory, Cl A     1,660       65,846  
Tingyi Cayman Islands Holding     14,000       23,328  
Want Want China Holdings     23,000       14,796  
Wuliangye Yibin, Cl A     3,200       91,797  
              982,134  
Energy — 3.7%                
China Oilfield Services, Cl H     16,000       16,408  
China Petroleum & Chemical, Cl A     46,600       38,136  
China Petroleum & Chemical, Cl H     96,500       57,040  
China Shenhua Energy, Cl H     11,500       36,185  
PetroChina, Cl A     22,400       19,310  
PetroChina, Cl H     67,984       40,271  
Shaanxi Coal Industry, Cl A     11,900       35,246  
Shanxi Lu’an Environmental Energy Development, Cl A     7,600       24,281  

 

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

 

80

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Energy (continued)                
Yankuang Energy Group, Cl H     16,000     $ 57,274  
              324,151  
Financials — 20.1%                
Agricultural Bank of China, Cl A     87,500       39,626  
Agricultural Bank of China, Cl H     104,397       38,700  
Bank of Beijing, Cl A     28,100       18,004  
Bank of China, Cl A     34,700       17,079  
Bank of China, Cl H     240,396       92,178  
Bank of Communications, Cl A     43,600       32,443  
Bank of Communications, Cl H     32,000       20,138  
Bank of Hangzhou, Cl A     14,200       24,007  
Bank of Jiangsu, Cl A     22,200       22,694  
Bank of Nanjing, Cl A     14,000       18,266  
Bank of Ningbo, Cl A     7,200       28,633  
Bank of Shanghai, Cl A     18,604       16,227  
China CITIC Bank, Cl H     32,000       16,102  
China Construction Bank, Cl A     12,000       10,380  
China Construction Bank, Cl H     275,000       178,313  
China Everbright Bank, Cl A     54,900       24,063  
China Galaxy Securities, Cl H     38,000       19,121  
China Life Insurance, Cl H     23,483       38,590  
China Merchants Bank, Cl A     17,800       88,828  
China Merchants Bank, Cl H     13,000       66,408  
China Merchants Securities, Cl A     9,500       19,077  
China Minsheng Banking, Cl A     50,900       25,571  
China Minsheng Banking, Cl H     29,500       10,109  
China Pacific Insurance Group, Cl A     7,200       27,176  
China Pacific Insurance Group, Cl H     10,800       28,686  
CITIC Securities, Cl A     15,845       47,254  
CITIC Securities, Cl H     8,000       17,080  
East Money Information, Cl A     13,000       37,917  
Everbright Securities, Cl A     10,300       22,858  
GF Securities, Cl A     10,000       22,964  
Guosen Securities, Cl A     10,900       14,872  
Guotai Junan Securities, Cl A     8,300       17,356  
Haitong Securities, Cl A     12,600       16,164  
Huatai Securities, Cl A     11,900       22,128  
Huatai Securities, Cl H     9,200       10,513  
Huaxia Bank, Cl A     18,500       14,493  
Industrial & Commercial Bank of China, Cl A     66,900       43,449  
Industrial & Commercial Bank of China, Cl H     211,441       112,590  
Industrial Bank, Cl A     20,000       49,190  
Industrial Securities, Cl A     27,569       24,569  
New China Life Insurance, Cl A     4,000       17,765  

 

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

 

81

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Financials (continued)                
New China Life Insurance, Cl H     3,700     $ 8,795  
Orient Securities, Cl A     14,100       20,101  
People’s Insurance Group of China, Cl H     54,452       18,174  
PICC Property & Casualty, Cl H     29,510       30,112  
Ping An Bank, Cl A     19,891       36,293  
Ping An Insurance Group of China, Cl A     10,200       67,730  
Ping An Insurance Group of China, Cl H     19,000       123,682  
Shanghai Pudong Development Bank, Cl A     28,600       29,944  
Shenwan Hongyuan Group, Cl A     32,800       19,917  
              1,766,329  
Health Care — 5.3%                
Beijing Tongrentang, Cl A     2,144       17,215  
Changchun High & New Technology Industry Group, Cl A     1,400       33,291  
China Medical System Holdings     9,000       14,217  
CSPC Pharmaceutical Group     45,520       44,766  
Genscript Biotech*     14,000       29,962  
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A     2,300       11,079  
Huadong Medicine, Cl A     2,980       20,109  
Jiangsu Hengrui Pharmaceuticals, Cl A     5,616       35,018  
Shanghai Fosun Pharmaceutical Group, Cl A     3,900       18,395  
Shanghai Pharmaceuticals Holding, Cl A     7,600       22,543  
Shenzhen Mindray Bio-Medical Electronics, Cl A     1,100       49,929  
Sinopharm Group, Cl H     6,400       19,363  
Wuxi Biologics Cayman*     11,500       71,198  
Yunnan Baiyao Group, Cl A     2,140       17,046  
Zai Lab ADR*     374       12,439  
Zhangzhou Pientzehuang Pharmaceutical, Cl A     700       28,988  
Zhejiang NHU, Cl A     7,032       18,380  
              463,938  
Industrials — 6.9%                
AECC Aviation Power, Cl A     3,900       24,505  
China Conch Venture Holdings     8,000       13,962  
China Eastern Airlines, Cl A*     24,400       18,298  
China Energy Engineering, Cl A     79,637       27,948  
China Merchants Port Holdings     16,734       25,666  
China Railway Group, Cl H     23,000       14,035  
China Southern Airlines, Cl A*     23,000       26,358  
CITIC     23,780       27,809  
Contemporary Amperex Technology, Cl A     2,000       118,256  
COSCO SHIPPING Holdings, Cl A     24,420       39,223  
Daqin Railway, Cl A     15,500       16,228  
Fosun International     11,500       8,438  
Metallurgical Corp of China, Cl A     40,600       23,057  
Power Construction Corp of China, Cl A     18,600       19,312  

 

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

 

82

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Industrials (continued)                
Sany Heavy Industry, Cl A     13,500     $ 33,596  
SF Holding, Cl A     4,400       35,483  
Shanghai International Airport, Cl A*     1,600       12,985  
Shanghai International Port Group, Cl A     12,700       10,245  
Weichai Power, Cl A     17,188       31,561  
Zhejiang Chint Electrics, Cl A     3,800       15,477  
Zhuzhou CRRC Times Electric, Cl H     3,100       13,486  
Zoomlion Heavy Industry Science and Technology, Cl A     16,100       14,559  
ZTO Express Cayman ADR*     1,406       40,296  
              610,783  
Information Technology — 5.1%                
BOE Technology Group, Cl A     47,800       30,905  
GDS Holdings, Cl A*     9,500       22,994  
Hanergy Thin Film Power Group*(A)      4,364        
Iflytek, Cl A     3,200       29,673  
Kingboard Holdings     4,500       13,815  
Kingdee International Software Group*     16,000       25,926  
Lenovo Group     32,000       34,650  
LONGi Green Energy Technology, Cl A     9,629       56,660  
Luxshare Precision Industry, Cl A     11,774       51,966  
Sunny Optical Technology Group     3,000       36,287  
Unigroup Guoxin Microelectronics, Cl A*     2,320       37,543  
Xiaomi, Cl B*     42,600       65,664  
Yonyou Network Technology, Cl A     5,325       19,502  
ZTE, Cl H     7,600       22,268  
              447,853  
Materials — 4.1%                
Anhui Conch Cement, Cl A     3,800       15,632  
Anhui Conch Cement, Cl H     7,000       24,255  
Baoshan Iron & Steel, Cl A     28,400       25,806  
China National Building Material, Cl H     18,000       14,767  
China Northern Rare Earth Group High-Tech, Cl A     10,500       39,891  
CMOC Group, Cl H     54,000       32,675  
Ganfeng Lithium Group, Cl A     3,120       30,199  
Inner Mongolia BaoTou Steel Union, Cl A     63,900       17,586  
Rongsheng Petrochemical, Cl A     12,450       27,430  
Shandong Hualu Hengsheng Chemical, Cl A     5,440       27,924  
Tianqi Lithium, Cl A     1,540       16,936  
Wanhua Chemical Group, Cl A     2,900       40,489  
Zhejiang Huayou Cobalt, Cl A     1,704       13,647  
Zijin Mining Group, Cl A     17,900       32,295  
              359,532  

 

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

 

83

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Real Estate — 3.4%                
China Evergrande Group*(A)      13,000     $ 631  
China Merchants Shekou Industrial Zone Holdings, Cl A     9,100       18,048  
China Overseas Land & Investment     16,839       40,671  
China Resources Land     14,214       64,824  
China Vanke, Cl A     10,443       23,175  
China Vanke, Cl H     9,300       14,667  
Country Garden Holdings*     53,612       15,093  
Gemdale, Cl A     10,600       12,966  
KE Holdings ADR*     2,141       40,337  
Longfor Group Holdings     8,000       22,573  
Poly Developments and Holdings Group, Cl A     12,700       26,131  
Seazen Holdings, Cl A*     6,400       15,228  
Shimao Group Holdings*(A)      17,500       2,242  
Sunac China Holdings*(A)      13,000       1,726  
              298,312  
Utilities — 3.4%                
China Gas Holdings     11,000       15,498  
China Longyuan Power Group, Cl H     16,000       18,283  
China Resources Gas Group     7,600       28,028  
China Resources Power Holdings     14,000       29,819  
China Yangtze Power, Cl A     21,400       66,220  
ENN Energy Holdings     2,382       32,650  
Guangdong Investment     16,000       16,367  
Huadian Power International, Cl A     50,700       42,747  
Huaneng Power International, Cl H*     45,077       23,659  
Sichuan Chuantou Energy, Cl A     13,500       25,988  
              299,259  
TOTAL CHINA             8,758,695  
                 
HONG KONG — 0.2%                
Health Care — 0.2%                
Sino Biopharmaceutical     36,500       20,459  
TOTAL HONG KONG             20,459  
                 
TOTAL COMMON STOCK
(Cost $10,372,666)
            8,779,154  

 

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

 

84

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Index ETF (concluded)

 

    Shares     Value  
RIGHT — 0.0%                
CHINA — 0.0%                
Health Care — 0.0%                
Kangmei Pharma‡‡*(A)      480     $  
TOTAL CHINA            
                 
TOTAL RIGHT
(Cost $–)
             
                 
TOTAL INVESTMENTS — 99.8%
(Cost $10,372,666)
            8,779,154  
OTHER ASSETS LESS LIABILITIES – 0.2%             15,367  
NET ASSETS - 100%           $ 8,794,521  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
‡‡ Expiration date not available.
(A) Level 3 security in accordance with fair value hierarchy.

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China                                
Communication Services   $ 1,187,553     $     $     $ 1,187,553  
Consumer Discretionary     2,018,851                   2,018,851  
Consumer Staples     982,134                   982,134  
Energy     324,151                   324,151  
Financials     1,766,329                   1,766,329  
Health Care     463,938                   463,938  
Industrials     610,783                   610,783  
Information Technology     447,853             ‡‡      447,853  
Materials     359,532                   359,532  
Real Estate     293,713             4,599       298,312  
Utilities     299,259                   299,259  
Hong Kong     20,459                   20,459  
Total Common Stock     8,774,555             4,599       8,779,154  
Right                 ‡‡       
Total Investments in Securities   $ 8,774,555     $     $ 4,599     $ 8,779,154  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

85

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.2%                 
CHINA — 47.7%                
Energy — 0.4%                
Guanghui Energy, Cl A     14,700     $ 19,800  
                 
Financials — 4.5%                
Bank of Changsha, Cl A     9,200       10,597  
Bank of Chengdu, Cl A     8,400       16,586  
Bank of Guiyang, Cl A     8,427       6,761  
Bank of Hangzhou, Cl A     13,500       22,823  
Bank of Jiangsu, Cl A     33,655       34,404  
Bank of Nanjing, Cl A     23,591       30,780  
Bank of Ningbo, Cl A     14,846       59,040  
Bank of Suzhou, Cl A     8,400       8,513  
Chongqing Rural Commercial Bank, Cl A     20,500       10,956  
              200,460  
Industrials — 22.1%                
Beijing New Building Materials, Cl A     3,908       15,274  
Beijing-Shanghai High Speed Railway, Cl A     92,100       70,007  
China Conch Venture Holdings     12,500       21,815  
China Energy Engineering, Cl A     72,900       25,584  
China First Heavy Industries, Cl A*     15,500       7,200  
China Lesso Group Holdings     9,000       8,048  
China Railway Group, Cl H     31,500       19,221  
China State Construction Engineering, Cl A     94,700       79,982  
CRRC, Cl H     33,000       17,992  
Dajin Heavy Industry, Cl A     1,300       6,669  
Daqin Railway, Cl A     33,832       35,422  
Dongfang Electric, Cl A     6,500       17,946  
Fangda Carbon New Material, Cl A*     8,700       8,159  
Farasis Energy Gan Zhou, Cl A*     2,747       9,396  
Gotion High-tech, Cl A     3,900       16,929  

 

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

 

86

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Industrials (continued)                
Guangdong Kinlong Hardware Products, Cl A     800     $ 9,367  
Guangzhou Great Power Energy & Technology, Cl A     1,100       9,129  
Jiangsu Expressway, Cl H     10,000       9,325  
Jiangsu Hengli Hydraulic, Cl A     3,000       28,928  
Jiangxi Special Electric Motor, Cl A*     4,000       8,964  
Liaoning Port, Cl A     43,200       10,065  
Luoyang Xinqianglian Slewing Bearing, Cl A     850       5,632  
Metallurgical Corp of China, Cl A     39,700       22,546  
Ming Yang Smart Energy Group, Cl A     5,000       16,389  
NARI Technology, Cl A     14,960       59,057  
Ningbo Deye Technology, Cl A     400       15,025  
Ningbo Orient Wires & Cables, Cl A     1,600       11,489  
Ningbo Ronbay New Energy Technology, Cl A     1,116       11,116  
North Industries Group Red Arrow, Cl A     3,100       10,310  
Power Construction Corp of China, Cl A     39,100       40,596  
Riyue Heavy Industry, Cl A     2,200       7,125  
Shanghai Construction Group, Cl A     20,000       7,951  
Shanghai Electric Group, Cl A*     28,400       18,279  
Shanghai International Port Group, Cl A     21,210       17,111  
Shenzhen Inovance Technology, Cl A     6,150       62,957  
Shenzhen International Holdings     10,993       9,719  
Shuangliang Eco-Energy Systems, Cl A*     4,200       9,596  
Sichuan Road & Bridge, Cl A     11,700       23,511  
Sieyuan Electric, Cl A     1,800       11,984  
Suzhou Maxwell Technologies, Cl A     440       19,542  
TBEA, Cl A     8,675       27,425  
Titan Wind Energy Suzhou, Cl A     4,100       8,812  
Wuxi Shangji Automation, Cl A     900       13,382  
XCMG Construction Machinery, Cl A     27,248       27,497  
Xiangtan Electric Manufacturing, Cl A*     3,000       8,995  
Yangzijiang Shipbuilding Holdings     22,900       20,669  
Zhefu Holding Group, Cl A     12,200       7,230  
Zhejiang Expressway, Cl H     12,000       9,539  
Zhejiang Weixing New Building Materials, Cl A     3,700       13,098  
Zhuzhou CRRC Times Electric, Cl H     4,100       17,836  
Zhuzhou Kibing Group, Cl A     6,000       9,113  
Zoomlion Heavy Industry Science and Technology, Cl A     16,000       14,469  
              993,422  
Materials — 4.9%                
Anhui Conch Cement, Cl H     9,500       32,918  
Chengtun Mining Group, Cl A     7,200       5,997  
China National Building Material, Cl H     29,000       23,791  
China Northern Rare Earth Group High-Tech, Cl A     8,224       31,244  
China Rare Earth Resources And Technology, Cl A*     2,300       11,310  
China Resources Cement Holdings     20,000       9,809  

 

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

 

87

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Materials (continued)                
Henan Shenhuo Coal & Power, Cl A     5,100     $ 13,160  
Huaxin Cement, Cl A     3,100       7,020  
Jinduicheng Molybdenum, Cl A     6,100       10,357  
Shenghe Resources Holding, Cl A     4,000       8,242  
Tangshan Jidong Cement, Cl A     6,100       7,710  
Western Mining, Cl A     5,500       10,147  
Xiamen Tungsten, Cl A     3,300       9,793  
Yintai Gold, Cl A     6,600       12,658  
Youngy, Cl A     600       6,620  
Yunnan Chihong Zinc & Germanium, Cl A     11,600       8,750  
Yunnan Tin, Cl A     3,800       8,223  
              217,749  
Utilities — 15.8%                
Beijing Enterprises Holdings     4,000       14,395  
CECEP Solar Energy, Cl A     9,200       9,177  
CECEP Wind-Power, Cl A     14,800       8,340  
CGN Power, Cl H     81,000       19,399  
China Gas Holdings     22,200       31,278  
China Longyuan Power Group, Cl H     26,000       29,710  
China National Nuclear Power, Cl A     42,300       39,360  
China Power International Development     38,000       15,103  
China Resources Gas Group     7,000       25,816  
China Resources Power Holdings     14,635       31,172  
China Three Gorges Renewables Group, Cl A     65,100       51,949  
China Yangtze Power, Cl A     51,600       159,670  
ENN Energy Holdings     6,000       82,243  
ENN Natural Gas, Cl A     6,000       18,217  
GD Power Development, Cl A*     40,500       22,410  
Huadian Power International, Cl A     18,242       15,380  
Huaneng Power International, Cl H*     31,000       16,270  
Kunlun Energy     30,000       23,465  
SDIC Power Holdings, Cl A     16,906       26,612  
Shanghai Electric Power, Cl A     6,500       9,399  
Shenergy, Cl A     11,419       9,744  
Shenzhen Energy Group, Cl A     10,800       9,609  
Sichuan Chuantou Energy, Cl A     8,384       16,140  
Wintime Energy, Cl A*     50,800       11,392  
Zhejiang Zheneng Electric Power, Cl A*     25,300       13,189  
              709,439  
TOTAL CHINA             2,140,870  

 

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

 

88

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
HONG KONG — 0.2%                
Industrials — 0.2%                
Hutchison Port Holdings Trust, Cl U     45,900     $ 8,583  
TOTAL HONG KONG             8,583  
                 
INDIA — 2.5%                
Energy — 0.3%                
Great Eastern Shipping     1,669       13,090  
                 
Industrials — 0.6%                
AIA Engineering     785       27,730  
                 
Materials — 1.6%                
Fine Organic Industries     143       7,494  
PI Industries     1,397       51,510  
Vinati Organics     464       10,210  
              69,214  
TOTAL INDIA             110,034  
                 
INDONESIA — 4.3%                
Energy — 2.2%                
Adaro Energy Indonesia     256,400       49,589  
Bukit Asam     71,400       18,999  
Indo Tambangraya Megah     7,200       18,919  
Medco Energi Internasional     134,800       9,080  
              96,587  
Materials — 2.1%                
Indah Kiat Pulp & Paper     48,600       24,309  
Merdeka Copper Gold*     217,500       60,777  
Pabrik Kertas Tjiwi Kimia     25,000       11,213  
              96,299  
TOTAL INDONESIA             192,886  
                 
ISRAEL — 5.1%                
Industrials — 2.7%                
Elbit Systems     485       82,031  
ZIM Integrated Shipping Services     1,629       38,412  
              120,443  
Materials — 2.4%                
ICL Group     12,809       85,840  
Israel     73       23,881  
              109,721  
TOTAL ISRAEL             230,164  
                 
JORDAN — 0.3%                
Financials — 0.3%                
Arab Bank     1,854       12,382  
TOTAL JORDAN             12,382  

 

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

 

89

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
KAZAKHSTAN — 0.8%                
Energy — 0.8%                
NAC Kazatomprom JSC GDR     1,195     $ 35,252  
TOTAL KAZAKHSTAN             35,252  
                 
KUWAIT — 8.4%                
Financials — 8.4%                
Kuwait Finance House     133,528       359,439  
Kuwait Projects Holding*     37,515       15,038  
TOTAL KUWAIT             374,477  
                 
MALAYSIA — 2.7%                
Industrials — 1.2%                
Malaysia Airports Holdings     12,200       18,774  
Pentamaster     9,000       9,994  
Sime Darby     48,500       23,632  
              52,400  
Materials — 1.5%                
Petronas Chemicals Group     43,300       69,378  
TOTAL MALAYSIA             121,778  
                 
PHILIPPINES — 3.2%                
Industrials — 3.2%                
Aboitiz Equity Ventures     30,610       27,251  
International Container Terminal Services     18,330       71,951  
JG Summit     52,402       46,171  
TOTAL PHILIPPINES             145,373  
                 
POLAND — 1.6%                
Materials — 1.6%                
KGHM Polska Miedz     2,527       71,709  
TOTAL POLAND             71,709  
                 
RUSSIA — 0.0%                
Energy — 0.0%                
Rosneft Oil PJSC(A)      33,666        
Sovcomflot PJSC*(A)      9,110        
Surgutneftegas PJSC(A)      143,400        
               
Materials — 0.0%                
MMC Norilsk Nickel PJSC(A)      1,239        
Polymetal International*(A)      7,154        
Segezha Group PJSC(A)      78,500        
               
TOTAL RUSSIA              

 

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

 

90

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
SINGAPORE — 9.8%                
Financials — 6.1%                
Oversea-Chinese Banking     29,512     $ 274,577  
                 
Industrials — 3.7%                
Keppel     12,800       54,202  
Sembcorp Marine*     248,114       22,207  
Singapore Airlines     11,700       50,424  
Singapore Technologies Engineering     13,600       37,438  
              164,271  
TOTAL SINGAPORE             438,848  
                 
SOUTH AFRICA — 5.0%                
Materials — 5.0%                
Anglo American Platinum     962       51,726  
Impala Platinum Holdings     15,461       142,763  
Kumba Iron Ore     1,203       30,491  
TOTAL SOUTH AFRICA             224,980  
                 
THAILAND — 4.5%                
Energy — 3.8%                
PTT     184,100       169,591  
                 
Materials — 0.7%                
Indorama Ventures*     31,100       31,377  
TOTAL THAILAND             200,968  
                 
TURKEY — 2.5%                
Industrials — 1.6%                
Kontrolmatik Enerji Ve Muhendislik     1,334       9,868  
Turk Hava Yollari AO*     9,993       61,692  
              71,560  
Materials — 0.9%                
Sasa Polyester Sanayi*     8,029       41,996  
TOTAL TURKEY             113,556  
                 
UNITED ARAB EMIRATES — 0.6%                
Industrials — 0.6%                
Air Arabia PJSC     48,174       27,809  
TOTAL UNITED ARAB EMIRATES             27,809  
                 
TOTAL COMMON STOCK
(Cost $5,435,115)
            4,449,669  

 

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

 

91

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI One Belt One Road Index ETF (continued)

 

    Shares     Value  
PREFERRED STOCK — 0.0%                
RUSSIA— 0.0%                
Energy — 0.0%                
Surgutneftegas PJSC(A)(B)       136,600     $  
                 
TOTAL PREFERRED STOCK
(Cost $74,846)
             
                 
TOTAL INVESTMENTS — 99.2%
(Cost $5,509,961)
            4,449,669  
OTHER ASSETS LESS LIABILITIES – 0.8%             35,564  
NET ASSETS - 100%           $ 4,485,233  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.
(B) Currently, no stated interest rate.

 

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

 

92

 

 

Schedule of Investments March 31, 2023

 

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, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China   $ 2,140,870     $     $     $ 2,140,870  
Hong Kong     8,583                   8,583  
India     110,034                   110,034  
Indonesia     192,886                   192,886  
Israel     230,164                   230,164  
Jordan     12,382                   12,382  
Kazakhstan     35,252                   35,252  
Kuwait     374,477                   374,477  
Malaysia     121,778                   121,778  
Philippines     145,373                   145,373  
Poland     71,709                   71,709  
Russia                                
Energy                 ‡‡       
Materials                 ‡‡       
Singapore     438,848                   438,848  
South Africa     224,980                   224,980  
Thailand     200,968                   200,968  
Turkey     113,556                   113,556  
United Arab Emirates     27,809                   27,809  
Total Common Stock     4,449,669                   4,449,669  
Preferred Stock                                
Russia                                
Energy                 ‡‡       
Total Preferred Stock                        
Total Investments in Securities   $ 4,449,669     $     $     $ 4,449,669  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

93

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Consumer Technology Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.8%                 
BRAZIL — 10.9%                
Consumer Discretionary — 3.7%                
MercadoLibre*     850      $ 1,120,351‌  
                 
Financials — 4.6%                
Cielo     239,100‌       228,713‌  
Pagseguro Digital, Cl A*     26,049‌       223,240‌  
StoneCo, Cl A*     25,304‌       241,400‌  
XP, Cl A*     60,541‌       718,622‌  
              1,411,975‌  
Information Technology — 2.6%                
TOTVS     144,400‌       801,993‌  
TOTAL BRAZIL             3,334,319‌  
                 
CHINA — 40.8%                
Communication Services — 14.5%                
Baidu, Cl A*     58,514‌       1,108,419‌  
JOYY ADR     7,607‌       237,186‌  
Kuaishou Technology, Cl B*     107,800‌       830,134‌  
NetEase     62,400‌       1,096,975‌  
Tencent Holdings     23,675‌       1,163,551‌  
              4,436,265‌  
Consumer Discretionary — 18.9%                
Alibaba Group Holding*     95,200‌       1,217,598‌  
JD.com, Cl A     45,225‌       990,924‌  
Meituan, Cl B*     63,798‌       1,166,242‌  
PDD Holdings ADR*     11,472‌       870,725‌  
Trip.com Group*     19,200‌       718,598‌  

 

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

 

94

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Consumer Technology Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Consumer Discretionary (continued)                
Vipshop Holdings ADR*     52,825     $ 801,883  
              5,765,970  
Consumer Staples — 4.9%                
Alibaba Health Information Technology*     1,030,000       745,278  
JD Health International*     102,350       761,437  
              1,506,715  
Real Estate — 2.5%                
KE Holdings, Cl A*     121,500       748,352  
TOTAL CHINA             12,457,302  
                 
EGYPT — 0.7%                
Financials — 0.7%                
E-Finance for Digital & Financial Investments     404,595       226,468  
TOTAL EGYPT             226,468  
                 
INDIA — 8.5%                
Consumer Discretionary — 5.2%                
FSN E-Commerce Ventures*     421,118       636,680  
MakeMyTrip*     9,001       220,254  
Zomato*     1,167,735       724,661  
              1,581,595  
Financials — 3.3%                
One 97 Communications*     100,695       780,246  
PB Fintech*     31,754       246,861  
              1,027,107  
TOTAL INDIA             2,608,702  
                 
INDONESIA — 0.7%                
Consumer Discretionary — 0.7%                
Bukalapak.com*     13,594,500       224,845  
TOTAL INDONESIA             224,845  
                 
JAPAN — 2.6%                
Communication Services — 2.6%                
Nexon     33,900       803,625  
TOTAL JAPAN             803,625  
                 
MALAYSIA — 0.8%                
Industrials — 0.8%                
My EG Services     1,364,000       236,478  
TOTAL MALAYSIA             236,478  

 

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

 

95

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Consumer Technology Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
RUSSIA — 0.0%                
Communication Services — 0.0%                
VK GDR*(A)      49,503     $  
Yandex, Cl A*(A)      31,479        
               
Consumer Discretionary — 0.0%                
Ozon Holdings PLC ADR*(A)      58,005        
                 
Industrials — 0.0%                
HeadHunter Group PLC ADR*(A)      11,746        
TOTAL RUSSIA              
                 
SINGAPORE — 3.8%                
Communication Services — 3.8%                
Sea ADR*     13,423       1,161,761  
TOTAL SINGAPORE             1,161,761  
                 
SOUTH AFRICA — 3.7%                
Consumer Discretionary — 3.7%                
Naspers, Cl N     6,094       1,131,030  
TOTAL SOUTH AFRICA             1,131,030  
                 
SOUTH KOREA — 21.6%                
Communication Services — 18.1%                
Kakao     16,454       772,239  
Kakao Games*(B)      21,997       704,593  
Krafton*     5,980       842,901  
NAVER     4,796       744,165  
NCSoft     2,409       687,440  
Neowiz*     6,844       210,285  
Netmarble*     16,866       858,944  
Pearl Abyss*(B)      7,160       254,369  
Studio Dragon*     3,862       208,548  
Wemade(B)      6,090       234,834  
              5,518,318  
Consumer Discretionary — 2.9%                
Coupang, Cl A*     55,021       880,336  
                 
Information Technology — 0.6%                
Douzone Bizon     7,085       190,751  
TOTAL SOUTH KOREA             6,589,405  

 

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

 

96

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Consumer Technology Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
SWEDEN — 0.7%                
Information Technology — 0.7%                
Truecaller, Cl B*(B)      72,494     $ 213,017  
TOTAL SWEDEN             213,017  
                 
TAIWAN — 2.8%                
Consumer Discretionary — 2.8%                
momo.com     29,000       860,071  
TOTAL TAIWAN             860,071  
                 
THAILAND — 0.6%                
Information Technology — 0.6%                
Forth     209,800       196,333  
TOTAL THAILAND             196,333  
                 
UNITED ARAB EMIRATES — 0.7%                
Financials — 0.7%                
Network International Holdings PLC*     70,629       213,781  
TOTAL UNITED ARAB EMIRATES             213,781  
                 
URUGUAY — 0.9%                
Financials — 0.9%                
Dlocal, Cl A*     15,936       258,482  
TOTAL URUGUAY             258,482  
                 
TOTAL COMMON STOCK
(Cost $45,317,060)
            30,515,619  
                 
SHORT-TERM INVESTMENT — 2.3%                
Invesco Government & Agency Portfolio, Cl Institutional, 4.430%(C)(D)       696,591       696,591  
               
TOTAL SHORT-TERM INVESTMENT
(Cost $696,591)
            696,591  
                 
TOTAL INVESTMENTS — 102.1%
(Cost $46,013,651)
            31,212,210  
OTHER ASSETS LESS LIABILITIES – (2.1)%             (650,637 )
NET ASSETS - 100%           $ 30,561,573  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.
(B) This security or a partial position of this security is on loan at March 31, 2023. The total market value of securities on loan at March 31, 2023 was $632,846.
(C) The rate shown is the 7-day effective yield as of March 31, 2023.
(D) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2023 was $696,591.

 

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

 

97

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Consumer Technology Index ETF (concluded)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
Brazil   $ 3,334,319     $     $     $ 3,334,319  
China     12,457,302                   12,457,302  
Egypt     226,468                   226,468  
India     2,608,702                   2,608,702  
Indonesia     224,845                   224,845  
Japan     803,625                   803,625  
Malaysia     236,478                   236,478  
Russia                                
Communication Services                 ‡‡       
Consumer Discretionary                 ‡‡       
Industrials                 ‡‡       
Singapore     1,161,761                   1,161,761  
South Africa     1,131,030                   1,131,030  
South Korea     6,589,405                   6,589,405  
Sweden     213,017                   213,017  
Taiwan     860,071                   860,071  
Thailand     196,333                   196,333  
United Arab Emirates     213,781                   213,781  
Uruguay     258,482                   258,482  
Total Common Stock     30,515,619                   30,515,619  
Short-Term Investment     696,591                   696,591  
Total Investments in Securities   $ 31,212,210     $     $     $ 31,212,210  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

98

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China Clean Technology Index ETF

 

 

    Shares     Value  
COMMON STOCK — 100.0%                 
CHINA — 97.3%                
Consumer Discretionary — 39.8%                
BYD, Cl A     33,900   $ 1,263,827  
BYD, Cl H     259,000       7,581,985  
Li Auto, Cl A*     685,900       8,562,882  
NIO ADR*     863,565       9,076,068  
Tianneng Power International     1,159,885       1,372,663  
XPeng, Cl A*     927,000       5,166,434  
Yadea Group Holdings     1,964,694       5,068,192  
              38,092,051  
Industrials — 28.5%                
Beijing Easpring Material Technology, Cl A     50,700       424,660  
China Conch Venture Holdings     2,227,000       3,886,636  
China Everbright Environment Group     6,324,216       2,714,999  
Contemporary Amperex Technology, Cl A     137,750       8,144,888  
CT Environmental Group*(A)      329,000        
Dajin Heavy Industry, Cl A     66,600       341,665  
Dynagreen Environmental Protection Group, Cl H     648,000       219,579  
Emeren Group ADR*     53,968       240,158  
Ginlong Technologies, Cl A*     39,150       761,530  
GoodWe Technologies, Cl A     12,034       507,221  
Gotion High-tech, Cl A     179,100       777,448  
Ming Yang Smart Energy Group, Cl A     227,100       744,400  
Pylon Technologies, Cl A     17,380       621,320  
Riyue Heavy Industry, Cl A     104,000       336,808  
Sungrow Power Supply, Cl A     148,800       2,272,096  
Titan Wind Energy Suzhou, Cl A     179,109       384,962  
Xinjiang Goldwind Science & Technology, Cl A     346,135       556,453  
Zhejiang Weiming Environment Protection, Cl A     171,100       454,452  

 

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

 

99

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China Clean Technology Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Industrials (continued)                
Zhuzhou CRRC Times Electric, Cl H     888,500     $ 3,865,283  
              27,254,558  
Information Technology — 16.7%                
China Railway Signal & Communication, Cl A     717,532       566,310  
Chindata Group Holdings ADR*     220,394       1,540,554  
Hengdian Group DMEGC Magnetics, Cl A     157,500       471,539  
JA Solar Technology, Cl A     225,620       1,883,863  
Kingsoft Cloud Holdings ADR*     181,675       1,615,091  
LONGi Green Energy Technology, Cl A     686,946       4,042,272  
Shanghai Aiko Solar Energy, Cl A*     128,300       618,586  
Tuya ADR*     344,452       651,014  
Xinyi Solar Holdings     3,845,588       4,609,836  
              15,999,065  
Real Estate — 2.0%                
China Evergrande Group*(A)      7,881,000       382,458  
Guangzhou R&F Properties, Cl H*     2,859,600       615,637  
Shimao Group Holdings*(A)      2,540,500       325,484  
SOHO China*     3,470,000       579,074  
              1,902,653  
Utilities — 10.3%                
Beijing Enterprises Water Group     6,642,500       1,658,520  
CECEP Solar Energy, Cl A     390,700       389,716  
CECEP Wind-Power, Cl A     652,800       367,879  
China Datang Renewable Power, Cl H     3,769,000       1,349,167  
China Everbright Greentech     982,000       201,405  
China Longyuan Power Group, Cl H     3,133,800       3,580,938  
China Three Gorges Renewables Group, Cl A     2,857,800       2,280,480  
              9,828,105  
TOTAL CHINA             93,076,432  
                 
HONG KONG — 2.7%                
Industrials — 0.2%                
China High Speed Transmission Equipment Group*     640,000       238,881  
                 
Real Estate — 1.1%                
Yuexiu Real Estate Investment Trust      3,961,000       1,009,178  
                 
Utilities — 1.4%                
Canvest Environmental Protection Group     837,000       387,048  
Concord New Energy Group     10,460,000       932,745  
              1,319,793  
TOTAL HONG KONG             2,567,852  

 

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

 

100

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China Clean Technology Index ETF (concluded)

 

    Shares     Value  
COMMON STOCK (continued)                
Utilities (continued)                
TOTAL COMMON STOCK
(Cost $125,747,403)
          $ 95,644,284  
               
TOTAL INVESTMENTS — 100.0%
(Cost $125,747,403)
            95,644,284  
OTHER ASSETS LESS LIABILITIES – 0.0%             (33,743 )
NET ASSETS - 100%           $ 95,610,541  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
Real Estate Investment Trust
(A) Level 3 security in accordance with fair value hierarchy.

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China                                
Consumer Discretionary   $ 38,092,051     $     $     $ 38,092,051  
Industrials     27,254,558             ‡‡      27,254,558  
Information Technology     15,999,065                   15,999,065  
Real Estate     1,194,711             707,942       1,902,653  
Utilities     9,828,105                   9,828,105  
Hong Kong     2,567,852                   2,567,852  
Total Common Stock     94,936,342             707,942       95,644,284  
Total Investments in Securities   $ 94,936,342     $     $ 707,942     $ 95,644,284  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

101

 

 

Schedule of Investments March 31, 2023

 

KraneShares Electric Vehicles and Future Mobility Index ETF

 

 

    Shares     Value  
COMMON STOCK — 94.4%                 
AUSTRALIA — 8.3%                
Materials — 8.3%                
Allkem*     380,537     $ 3,027,801  
IGO     473,429       4,049,112  
Lynas Rare Earths*     580,137       2,463,394  
Mineral Resources     33,203       1,792,142  
Pilbara Minerals     1,495,031       3,945,122  
TOTAL AUSTRALIA             15,277,571  
                 
BELGIUM — 2.4%                
Materials — 2.4%                
Umicore     130,650       4,430,089  
TOTAL BELGIUM             4,430,089  
                 
CANADA — 3.7%                
Industrials — 2.9%                
Ballard Power Systems*(A)      150,931       840,891  
Magna International     86,954       4,651,125  
              5,492,016  
Materials — 0.8%                
Lithium Americas*(A)      65,729       1,427,888  
TOTAL CANADA             6,919,904  
                 
CHINA — 32.5%                
Consumer Discretionary — 15.7%                
BYD, Cl A     193,000       7,195,238  
Geely Automobile Holdings     3,222,000       4,145,530  
Guangzhou Automobile Group, Cl H     1,724,000       1,087,115  
Li Auto, Cl A*     400,700       5,002,401  
NIO ADR*     476,826       5,011,441  

 

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

 

102

 

 

Schedule of Investments March 31, 2023

 

KraneShares Electric Vehicles and Future Mobility Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Consumer Discretionary (continued)                
Shenzhen Kedali Industry, Cl A     40,736     $ 766,933  
XPeng, Cl A*     712,700       3,972,080  
Yadea Group Holdings     716,000       1,847,018  
              29,027,756  
Industrials — 8.0%                
Beijing Easpring Material Technology, Cl A     91,300       764,722  
China Baoan Group, Cl A     459,107       760,131  
Contemporary Amperex Technology, Cl A     120,289       7,112,453  
Eve Energy, Cl A     365,360       3,708,239  
Gotion High-tech, Cl A     319,189       1,385,555  
Guangzhou Great Power Energy & Technology, Cl A     81,200       673,859  
Qingdao TGOOD Electric, Cl A     187,600       482,160  
              14,887,119  
Materials — 8.8%                
Chengxin Lithium Group, Cl A     163,500       822,107  
CMOC Group, Cl A     3,144,500       2,742,789  
Ganfeng Lithium Group, Cl A     288,858       2,795,914  
GEM, Cl A     917,540       998,067  
Guangzhou Tinci Materials Technology, Cl A     344,294       2,103,676  
Ningbo Shanshan, Cl A     407,100       1,021,411  
Shanghai Putailai New Energy Technology, Cl A     247,862       1,801,406  
Tianqi Lithium, Cl H     64,200       432,228  
Xiamen Tungsten, Cl A     253,451       752,163  
Youngy, Cl A     46,600       514,159  
Zhejiang Huayou Cobalt, Cl A     287,263       2,300,682  
              16,284,602  
TOTAL CHINA             60,199,477  
                 
GERMANY — 3.2%                
Consumer Discretionary — 2.1%                
Mercedes-Benz Group     25,419       1,954,692  
Volkswagen     10,984       1,885,501  
              3,840,193  
Information Technology — 1.1%                
Infineon Technologies     51,306       2,100,334  
TOTAL GERMANY             5,940,527  
                 
INDONESIA — 0.7%                
Materials — 0.7%                
Aneka Tambang     5,316,900       741,093  
Vale Indonesia*     1,329,700       589,717  
TOTAL INDONESIA             1,330,810  

 

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

 

103

 

 

Schedule of Investments March 31, 2023

 

KraneShares Electric Vehicles and Future Mobility Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
JAPAN — 8.5%                
Consumer Discretionary — 4.2%                
Panasonic Holdings     869,600     $ 7,723,099  
                 
Industrials — 4.2%                
Nidec     150,200       7,724,991  
                 
Materials — 0.1%                
W-Scope*     31,100       293,030  
TOTAL JAPAN             15,741,120  
                 
NETHERLANDS — 0.6%                
Industrials — 0.6%                
Alfen Beheer BV*     13,946       1,107,886  
TOTAL NETHERLANDS             1,107,886  
                 
SOUTH KOREA — 12.3%                
Industrials — 5.7%                
Ecopro     31,596       5,448,632  
LG Energy Solution*     11,520       5,167,784  
              10,616,416  
Information Technology — 6.2%                
L&F     15,411       3,711,141  
Samsung SDI     13,631       7,695,806  
              11,406,947  
Materials — 0.4%                
SK IE Technology*(A)       11,552       631,795  
TOTAL SOUTH KOREA             22,655,158  
                 
SWEDEN — 0.7%                
Consumer Discretionary — 0.7%                
Volvo Car, Cl B*     313,222       1,365,157  
TOTAL SWEDEN             1,365,157  
                 
UNITED STATES — 21.5%                
Consumer Discretionary — 12.6%                
Aptiv*     63,684       7,144,708  
Ford Motor     150,893       1,901,252  
Lucid Group*(A)      351,119       2,822,997  
Rivian Automotive, Cl A*     237,745       3,680,293  
Tesla*     37,166       7,710,458  
              23,259,708  
Industrials — 3.2%                
Blink Charging*(A)      27,343       236,517  

 

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

 

104

 

 

Schedule of Investments March 31, 2023

 

KraneShares Electric Vehicles and Future Mobility Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Industrials (continued)                
ChargePoint Holdings*(A)      180,966     $ 1,894,714  
Nikola*(A)      242,001       292,821  
Plug Power*(A)      293,396       3,438,601  
              5,862,653  
Information Technology — 0.9%                
SolarEdge Technologies*     5,675       1,724,916  
                 
Materials — 4.8%                
Albemarle     29,199       6,454,147  
Livent*     113,829       2,472,366  
              8,926,513  
TOTAL UNITED STATES             39,773,790  
               
TOTAL COMMON STOCK
(Cost $216,111,084)
            174,741,489  
                 
PREFERRED STOCK — 5.0%                
CHILE— 2.3%                
Materials — 2.3%                
Sociedad Quimica y Minera de Chile(B)      53,737       4,336,425  
                 
GERMANY— 2.7%                
Consumer Discretionary — 2.7%                
Dr Ing hc F Porsche*(B)      39,415       5,053,040  
               
TOTAL PREFERRED STOCK
(Cost $8,818,572)
            9,389,465  
                 
SHORT-TERM INVESTMENT — 4.6%                
Invesco Government & Agency Portfolio, Cl Institutional, 4.430%(C)(D)      8,431,059       8,431,059  
                 
TOTAL SHORT-TERM INVESTMENT
(Cost $8,431,059)
            8,431,059  
               
TOTAL INVESTMENTS — 104.0%
(Cost $233,360,715)
            192,562,013  
OTHER ASSETS LESS LIABILITIES – (4.0)%             (7,456,273 )
NET ASSETS - 100%           $ 185,105,740  

 

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, 2023. The total market value of securities on loan at March 31, 2023 was $8,113,787.
(B) Currently, no stated interest rate.
(C) The rate shown is the 7-day effective yield as of March 31, 2023.
(D) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2023 was $8,431,059.

 

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

 

105

 

 

Schedule of Investments March 31, 2023

 

KraneShares Electric Vehicles and Future Mobility Index ETF (concluded)

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

106

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Health Care Index ETF

 

 

    Shares     Value  
COMMON STOCK — 100.0%                 
CHINA — 96.6%                
Health Care — 96.6%                
3SBio     568,000     $ 565,833  
Aier Eye Hospital Group, Cl A     811,137       3,669,860  
Akeso*     181,000       931,522  
Apeloa Pharmaceutical, Cl A     136,892       424,592  
Asymchem Laboratories Tianjin, Cl A     39,024       757,663  
Autobio Diagnostics, Cl A     62,530       554,887  
BeiGene*     237,018       3,907,048  
Beijing Tiantan Biological Products, Cl A     186,942       675,650  
Beijing Tongrentang, Cl A     153,890       1,235,638  
Beijing Wantai Biological Pharmacy Enterprise, Cl A     68,530       1,159,081  
Betta Pharmaceuticals, Cl A     47,063       402,694  
BGI Genomics, Cl A     47,127       473,514  
Bloomage Biotechnology, Cl A     55,945       923,822  
Changchun High & New Technology Industry Group, Cl A     45,608       1,084,529  
China Medical System Holdings     511,000       807,190  
China Meheco, Cl A     168,000       335,643  
China National Medicines, Cl A     84,455       458,106  
China Resources Pharmaceutical Group     604,000       478,586  
China Resources Sanjiu Medical & Pharmaceutical, Cl A     110,990       928,513  
China Traditional Chinese Medicine Holdings     1,068,000       559,173  
Chongqing Zhifei Biological Products, Cl A     181,749       2,168,348  
CSPC Pharmaceutical Group     3,428,889       3,372,126  
Daan Gene, Cl A     157,947       370,528  
Dong-E-E-Jiao, Cl A     74,640       575,943  
Genscript Biotech*     444,000       950,223  
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A     157,740       759,839  
Guangzhou Kingmed Diagnostics Group, Cl A     51,399       659,393  
Hangzhou Tigermed Consulting, Cl A     42,350       590,235  
Hangzhou Tigermed Consulting, Cl H     46,400       435,631  
Hansoh Pharmaceutical Group     450,000       781,916  
Huadong Medicine, Cl A     197,641       1,333,666  
Hualan Biological Engineering, Cl A     208,047       661,347  
Hubei Jumpcan Pharmaceutical, Cl A     106,300       440,846  
Humanwell Healthcare Group, Cl A     184,300       718,704  
Hygeia Healthcare Holdings*     127,600       907,022  
Imeik Technology Development, Cl A     24,200       1,969,005  

 

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

 

107

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Health Care Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Health Care (continued)                
Innovent Biologics*     409,500     $ 1,833,633  
iRay Technology, Cl A     8,164       430,152  
Jafron Biomedical, Cl A     91,390       403,898  
Jiangsu Hengrui Pharmaceuticals, Cl A     716,928       4,470,295  
Jiangsu Yuyue Medical Equipment & Supply, Cl A     114,910       532,776  
Joincare Pharmaceutical Group Industry, Cl A     210,545       403,780  
Joinn Laboratories China, Cl A     51,324       391,322  
Jointown Pharmaceutical Group, Cl A     210,606       458,180  
Lepu Medical Technology Beijing, Cl A     202,800       684,534  
Livzon Pharmaceutical Group, Cl A     70,059       381,344  
Meinian Onehealth Healthcare Holdings, Cl A*     434,683       475,998  
Microport Scientific*     242,300       569,794  
Nanjing King-Friend Biochemical Pharmaceutical, Cl A     186,484       442,631  
Ovctek China, Cl A     102,293       493,344  
Pharmaron Beijing, Cl A     112,050       799,017  
Pharmaron Beijing, Cl H     75,300       316,070  
Porton Pharma Solutions, Cl A     62,100       335,399  
Shandong Buchang Pharmaceuticals, Cl A     125,583       362,816  
Shandong Weigao Group Medical Polymer, Cl H     983,200       1,570,625  
Shanghai Fosun Pharmaceutical Group, Cl A     240,829       1,135,883  
Shanghai Fosun Pharmaceutical Group, Cl H     189,500       538,328  
Shanghai Junshi Biosciences, Cl A*     87,220       610,145  
Shanghai Medicilon, Cl A     10,150       230,626  
Shanghai Pharmaceuticals Holding, Cl A     311,794       924,853  
Shanghai Pharmaceuticals Holding, Cl H     295,500       551,102  
Shanghai RAAS Blood Products, Cl A     765,234       716,505  
Shenzhen Kangtai Biological Products, Cl A     127,577       587,790  
Shenzhen Mindray Bio-Medical Electronics, Cl A     137,255       6,230,069  
Shenzhen New Industries Biomedical Engineering, Cl A     88,200       785,635  
Shenzhen Salubris Pharmaceuticals, Cl A     125,365       645,510  
Shijiazhuang Yiling Pharmaceutical, Cl A     191,450       811,543  
Sichuan Kelun Pharmaceutical, Cl A     158,715       656,835  
Sinopharm Group, Cl H     515,200       1,558,736  
Tonghua Dongbao Pharmaceutical, Cl A     226,991       391,358  
Topchoice Medical, Cl A*     38,441       723,669  
Walvax Biotechnology, Cl A     183,000       919,090  
WuXi AppTec, Cl A     290,620       3,364,392  
WuXi AppTec, Cl H     134,784       1,411,378  
Wuxi Biologics Cayman*     1,337,135       8,278,366  
Yunnan Baiyao Group, Cl A     203,723       1,622,712  
Zai Lab ADR*     32,708       1,087,868  
Zhangzhou Pientzehuang Pharmaceutical, Cl A     67,934       2,813,197  
Zhejiang Huahai Pharmaceutical, Cl A     167,872       493,058  
Zhejiang Jiuzhou Pharmaceutical, Cl A     101,200       490,431  
Zhejiang NHU, Cl A     353,730       924,591  

 

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

 

108

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Health Care Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Health Care (continued)                
Zhejiang Wolwo Bio-Pharmaceutical, Cl A     59,136     $ 409,895  
TOTAL CHINA             91,297,489  
                 
HONG KONG — 2.3%                
Health Care — 2.3%                
Sino Biopharmaceutical     3,916,750       2,195,390  
TOTAL HONG KONG             2,195,390  
                 
UNITED STATES — 1.1%                
Health Care — 1.1%                
Legend Biotech ADR*     21,431       1,033,403  
TOTAL UNITED STATES             1,033,403  
               
TOTAL COMMON STOCK
(Cost $112,170,471)
            94,526,282  
                 
RIGHT — 0.0%                
CHINA — 0.0%                
Health Care — 0.0%                
Kangmei Pharma‡‡*(A)      118,157        
TOTAL CHINA              
               
TOTAL RIGHT
(Cost $–)
             
               
TOTAL INVESTMENTS — 100.0%
(Cost $112,170,471)
            94,526,282  
OTHER ASSETS LESS LIABILITIES – 0.0%             (34,242 )
NET ASSETS - 100%           $ 94,492,040  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.
‡‡ Expiration date not available.

 

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

 

109

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI All China Health Care Index ETF (concluded)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China   $ 91,297,489     $     $     $ 91,297,489  
Hong Kong     2,195,390                   2,195,390  
United States     1,033,403                   1,033,403  
Total Common Stock     94,526,282                   94,526,282  
Right                 ‡‡       
Total Investments in Securities   $ 94,526,282     $     $     $ 94,526,282  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

110

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF

 

 

    Face Amount     Value  
CORPORATE OBLIGATIONS — 94.1%                
AUSTRALIA — 0.9%                
Real Estate — 0.9%                
Scentre Group Trust 2                
4.750%, US Treas Yield Curve Rate T Note Const Mat 5 Yr + 4.379%, 09/24/2080(A)    $ 200,000     $ 180,055  
                 
CHINA — 33.1%                
Consumer Discretionary — 4.2%                
Fortune Star BVI                
6.750%, 07/02/2023     300,000       290,910  
Golden Eagle Retail Group                
4.625%, 05/21/2023     200,000       197,506  
Health & Happiness H&H International Holdings                
5.625%, 10/24/2024     400,000       351,700  
              840,116  
Financials — 2.5%                
Huarong Finance II, MTN                
5.000%, 11/19/2025     200,000       172,775  
ZhongAn Online P&C Insurance                
3.125%, 07/16/2025     400,000       337,646  
              510,421  
Materials — 3.2%                
China Hongqiao Group                
7.375%, 05/02/2023     400,000       399,440  
6.250%, 06/08/2024     250,000       240,445  
              639,885  

 

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

 

111

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF (continued)

 

    Face Amount     Value  
CORPORATE OBLIGATIONS (continued)                
Real Estate — 23.2%                
Country Garden Holdings                
8.000%, 01/27/2024   $ 250,000     $ 216,425  
6.150%, 09/17/2025     250,000       159,829  
5.625%, 12/15/2026     200,000       113,853  
5.125%, 01/17/2025     270,000       173,953  
Gemdale Ever Prosperity Investment, MTN                
4.950%, 08/12/2024     200,000       183,150  
Greentown China Holdings                
5.650%, 07/13/2025     200,000       184,100  
4.700%, 04/29/2025     200,000       182,350  
Hopson Development Holdings                
7.000%, 05/18/2024     300,000       259,284  
New Metro Global                
6.800%, 08/05/2023     200,000       186,100  
4.800%, 12/15/2024     200,000       143,800  
4.500%, 05/02/2026     200,000       125,838  
RKPF Overseas 2019 A                
6.700%, 09/30/2024     200,000       183,966  
6.000%, 09/04/2025     250,000       197,323  
RKPF Overseas 2019 E                
7.750%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 6.003%‡ (A)      200,000       122,187  
RKPF Overseas 2020 A                
5.200%, 01/12/2026     200,000       142,505  
Seazen Group                
6.150%, 04/15/2023     200,000       195,190  
6.000%, 08/12/2024     200,000       150,200  
4.450%, 07/13/2025     200,000       130,046  
Shui On Development Holding                
6.150%, 08/24/2024     200,000       179,900  
5.750%, 11/12/2023     500,000       488,600  
5.500%, 06/29/2026     200,000       152,090  
Wanda Properties Overseas                
6.875%, 07/23/2023     200,000       190,100  
Yanlord Land HK                
6.800%, 02/27/2024     431,000       417,398  
5.125%, 05/20/2026     200,000       166,002  
              4,644,189  
TOTAL CHINA             6,634,611  
                 
HONG KONG — 16.1%                
Communication Services — 1.7%                
HKT Capital No. 6                
3.000%, 01/18/2032     400,000       339,376  

 

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

 

112

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF (continued)

 

    Face Amount     Value  
CORPORATE OBLIGATIONS (continued)                
Consumer Discretionary — 6.8%                
Li & Fung, MTN                
5.000%, 08/18/2025   $ 250,000     $ 232,625  
LS Finance 2025                
4.500%, 06/26/2025     400,000       343,120  
Melco Resorts Finance                
5.625%, 07/17/2027     200,000       176,000  
5.250%, 04/26/2026     200,000       180,250  
4.875%, 06/06/2025     450,000       423,225  
              1,355,220  
Financials — 2.1%                
Bank of East Asia, MTN                
6.750%, US Treas Yield Curve Rate T Note Const Mat 1 Yr+ 2.100%, 03/15/2027     250,000       248,368  
FWD Group                
6.375%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 4.876%‡ (A)      200,000       183,600  
              431,968  
Health Care — 0.9%                
PCGI Intermediate, MTN                
4.750%, 10/28/2024     200,000       189,600  
                 
Industrials — 2.8%                
Celestial Dynasty                
4.250%, 06/27/2029     200,000       173,400  
Celestial Miles                
5.750%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 8.205%‡ (A)      400,000       391,480  
              564,880  
Real Estate — 1.8%                
NWD, MTN                
4.500%, 05/19/2030     200,000       167,169  
NWD Finance BVI                
6.150%, US Treas Yield Curve Rate T Note Const Mat 3 Yr+ 6.201%      200,000       185,000  
              352,169  
TOTAL HONG KONG             3,233,213  
                 
INDIA — 15.1%                
Energy — 6.2%                
Clean Renewable Power Mauritius Pte                
4.250%, 03/25/2027     186,000       160,905  
Continuum Energy Levanter Pte                
4.500%, 02/09/2027     186,000       163,785  
Greenko Solar Mauritius                
5.550%, 01/29/2025     400,000       383,000  

 

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

 

113

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF (continued)

 

    Face Amount     Value  
CORPORATE OBLIGATIONS (continued)                
Energy (continued)                
HPCL-Mittal Energy                
5.250%, 04/28/2027   $ 400,000     $ 375,000  
ReNew Wind Energy AP2                
4.500%, 07/14/2028     200,000       167,941  
              1,250,631  
Financials — 1.4%                
Shriram Finance, MTN                
4.150%, 07/18/2025     300,000       276,750  
                 
Industrials — 5.6%                
India Airport Infrastructure                
6.250%, 10/25/2025     250,000       236,109  
JSW Steel                
5.050%, 04/05/2032     200,000       163,682  
Magnum Holdings                
5.375%, 10/31/2026     400,000       350,282  
Periama Holdings                
5.950%, 04/19/2026     400,000       377,224  
              1,127,297  
Materials — 1.9%                
Vedanta Resources                
7.125%, 05/31/2023     200,000       185,831  
Vedanta Resources Finance II                
8.000%, 04/23/2023     200,000       190,500  
              376,331  
TOTAL INDIA             3,031,009  
                 
INDONESIA — 6.1%                
Energy — 3.7%                
Medco Bell Pte                
6.375%, 01/30/2027     600,000       540,400  
Saka Energi Indonesia                
4.450%, 05/05/2024     200,000       190,624  
              731,024  
Financials — 1.6%                
Bank Negara Indonesia Persero                
4.300%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 3.466%‡ (A)      400,000       324,200  
                 
Industrials — 0.8%                
Japfa Comfeed Indonesia                
5.375%, 03/23/2026     200,000       167,760  
TOTAL INDONESIA             1,222,984  

 

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

 

114

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF (continued)

 

    Face Amount     Value  
CORPORATE OBLIGATIONS (continued)                
JAPAN — 1.0%                
Communication Services — 1.0%                
SoftBank Group                
5.500%, 04/20/2023   $ 200,000     $ 199,020  
                 
MACAU — 11.8%                
Consumer Discretionary — 11.8%                
Champion Path Holdings                
4.500%, 01/27/2026     200,000       176,000  
MGM China Holdings                
5.875%, 05/15/2026     200,000       188,260  
5.375%, 05/15/2024     200,000       195,307  
5.250%, 06/18/2025     200,000       189,499  
4.750%, 02/01/2027     200,000       179,142  
Sands China                
5.625%, 08/08/2025     300,000       292,007  
4.875%, 06/18/2030     200,000       176,942  
Studio City                
7.000%, 02/15/2027     200,000       188,677  
Studio City Finance                
6.500%, 01/15/2028     200,000       168,302  
6.000%, 07/15/2025     250,000       229,075  
Wynn Macau                
5.500%, 10/01/2027     200,000       174,512  
5.125%, 12/15/2029     250,000       204,750  
              2,362,473  
TOTAL MACAU             2,362,473  
                 
MALAYSIA — 0.8%                
Energy — 0.8%                
Petronas Capital, MTN                
2.480%, 01/28/2032     200,000       170,007  
                 
PHILIPPINES — 2.8%                
Energy — 1.9%                
Petron                
4.600%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 4.769%‡ (A)      400,000       380,680  
                 
Financials — 0.9%                
Rizal Commercial Banking                
6.500%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 6.236%‡ (A)      200,000       175,942  
TOTAL PHILIPPINES             556,622  

 

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

 

115

 

 

Schedule of Investments March 31, 2023

 

KraneShares Asia Pacific High Income Bond ETF (concluded)

 

    Face Amount     Value  
CORPORATE OBLIGATIONS (continued)                
SOUTH KOREA — 0.9%                
Financials — 0.9%                
Kookmin Bank, MTN                
4.350%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 2.639%‡ (A)    $ 200,000     $ 189,305  
                 
THAILAND — 4.4%                
Financials — 4.4%                
Kasikornbank, MTN                
5.275%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 4.940%‡ (A)      200,000       182,624  
4.000%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 3.337%‡ (A)      400,000       331,200  
Krung Thai Bank                
4.400%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 3.530%‡ (A)      200,000       176,060  
TMBThanachart Bank, MTN                
4.900%, US Treas Yield Curve Rate T Note Const Mat 5 Yr+ 3.256%‡ (A)      200,000       183,048  
              872,932  
TOTAL THAILAND             872,932  
                 
VIETNAM — 1.1%                
Energy — 1.1%                
Mong Duong Finance Holdings BV                
5.125%, 05/07/2029     250,000       211,184  
               
TOTAL CORPORATE OBLIGATIONS
(Cost $19,252,157)
            18,863,415  
               
TOTAL INVESTMENTS — 94.1%
(Cost $19,252,157)
            18,863,415  
OTHER ASSETS LESS LIABILITIES – 5.9%             1,181,858  
NET ASSETS - 100%           $ 20,045,273  

 

Perpetual security with no stated maturity date.
(A) Variable or floating rate security. The rate shown is the effective interest rate as of period end. The rates for certain securities are not based on published reference rates and spreads and are either determined by the issuer or agent based on current market conditions; by using a formula based on the rates of underlying loans; or by adjusting periodically based on prevailing interest rates.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

116

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Healthcare Index ETF

 

 
    Shares     Value  
COMMON STOCK — 100.0%                 
BRAZIL — 5.4%                
Health Care — 5.4%                
Blau Farmaceutica     1,000   $ 4,753  
Fleury     2,200       6,300  
Hapvida Participacoes e Investimentos*     49,404       25,529  
Hypera     3,600       26,768  
Rede D’Or Sao Luiz     11,800       49,432  
TOTAL BRAZIL             112,782  
                 
CHINA — 44.6%                
Consumer Staples — 2.3%                
JD Health International*     6,400       47,613  
                 
Health Care — 42.3%                
3SBio     5,500       5,479  
Aier Eye Hospital Group, Cl A     17,096       77,348  
AK Medical Holdings     2,000       2,334  
Akeso*     2,000       10,293  
Angelalign Technology     400       5,946  
Beijing Tongrentang, Cl A     3,400       27,300  
CanSino Biologics, Cl H     200       1,070  
Changchun High & New Technology Industry Group, Cl A     1,000       23,779  
China Evergrande New Energy Vehicle Group*(A)      16,000       1,504  
China Medical System Holdings     6,000       9,478  
China Resources Sanjiu Medical & Pharmaceutical, Cl A     2,300       19,241  
Chongqing Zhifei Biological Products, Cl A     4,113       49,070  
CSPC Pharmaceutical Group     28,000       27,537  
Genscript Biotech*     4,000       8,561  
Hansoh Pharmaceutical Group     14,000       24,326  
Huadong Medicine, Cl A     4,340       29,286  
Hygeia Healthcare Holdings     1,200       8,530  
InnoCare Pharma*     4,000       4,265  
Innovent Biologics*     3,500       15,672  
Jiangsu Hengrui Pharmaceuticals, Cl A     16,259       101,381  
Jinxin Fertility Group     5,000       3,350  

 

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

 

117

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Healthcare Index ETF (continued)

 
    Shares     Value  
COMMON STOCK (continued)                
Health Care (continued)                
Lepu Medical Technology Beijing, Cl A     4,200   $ 14,177  
Lifetech Scientific*     10,000       3,554  
Luye Pharma Group*     8,000       3,710  
Microport Scientific*     4,000       9,406  
New Horizon Health*     1,000       3,465  
Remegen, Cl H*     500       2,666  
Shandong Weigao Group Medical Polymer, Cl H     10,800       17,253  
Shanghai Fosun Pharmaceutical Group, Cl H     1,500       4,261  
Shanghai Pharmaceuticals Holding, Cl H     2,200       4,103  
Shenzhen Mindray Bio-Medical Electronics, Cl A     2,200       99,859  
Shenzhen New Industries Biomedical Engineering, Cl A     2,100       18,706  
Shenzhen Salubris Pharmaceuticals, Cl A     2,700       13,902  
Shijiazhuang Yiling Pharmaceutical, Cl A     4,000       16,956  
Simcere Pharmaceutical Group     7,000       7,357  
Sinopharm Group, Cl H     3,200       9,682  
Topchoice Medical, Cl A*     700       13,178  
Walvax Biotechnology, Cl A     3,800       19,085  
WuXi AppTec, Cl H     858       8,984  
Wuxi Biologics Cayman*     9,281       57,460  
Yunnan Baiyao Group, Cl A     1,980       15,771  
Zai Lab*     2,000       6,637  
Zhangzhou Pientzehuang Pharmaceutical, Cl A     1,500       62,116  
Zhejiang NHU, Cl A     7,524       19,666  
              887,704  
TOTAL CHINA             935,317  
                 
HUNGARY — 1.0%                
Health Care — 1.0%                
Richter Gedeon Nyrt     1,042       21,802  
TOTAL HUNGARY             21,802  
                 
INDIA — 12.7%                
Health Care — 12.7%                
Apollo Hospitals Enterprise     739       38,764  
Divi’s Laboratories     1,431       49,161  
Dr Reddy’s Laboratories     927       52,144  
Max Healthcare Institute*     5,580       29,950  
Sun Pharmaceutical Industries     8,025       95,998  
TOTAL INDIA             266,017  
                 
INDONESIA — 3.1%                
Consumer Staples — 0.4%                
Industri Jamu Dan Farmasi Sido Muncul     154,300       8,953  

 

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

 

118

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Healthcare Index ETF (continued)

 
    Shares     Value  
COMMON STOCK (continued)                
Health Care — 2.7%                
Kalbe Farma     245,600     $ 34,397  
Metro Healthcare Indonesia TBK*     186,700       6,151  
Mitra Keluarga Karyasehat     80,400       15,710  
              56,258  
TOTAL INDONESIA             65,211  
                 
MALAYSIA — 3.3%                
Health Care — 3.3%                
IHH Healthcare     47,500       61,898  
Top Glove*     38,400       8,180  
TOTAL MALAYSIA             70,078  
                 
SOUTH AFRICA — 1.9%                
Health Care — 1.9%                
Aspen Pharmacare Holdings     2,343       24,190  
Life Healthcare Group Holdings     8,299       9,023  
Netcare     8,325       6,949  
TOTAL SOUTH AFRICA             40,162  
                 
SOUTH KOREA — 16.0%                
Health Care — 16.0%                
Alteogen*     245       7,462  
Celltrion     734       84,412  
Celltrion Healthcare     874       40,393  
Celltrion Pharm*     197       12,561  
Daewoong Pharmaceutical     59       4,768  
Green Cross     54       5,065  
Hanmi Pharm     64       12,492  
Hanmi Science     367       10,986  
Hugel*     66       6,484  
Samsung Biologics*     147       88,978  
Seegene     243       4,629  
SK Biopharmaceuticals*     345       16,775  
SK Bioscience*     348       19,273  
ST Pharm     96       5,457  
Yuhan     392       15,227  
TOTAL SOUTH KOREA             334,962  
                 
THAILAND — 6.2%                
Health Care — 6.2%                
Bangkok Chain Hospital     12,100       7,219  
Bangkok Dusit Medical Services, Cl F     80,600       69,534  
Bumrungrad Hospital     4,000       26,437  
Chularat Hospital, Cl F     54,100       5,727  
Mega Lifesciences     3,700       4,517  

 

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

 

119

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Healthcare Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Health Care (continued)                
Ramkhamhaeng Hospital     5,400     $ 8,409  
Thonburi Healthcare Group     3,600       7,159  
TOTAL THAILAND             129,002  
                 
UNITED ARAB EMIRATES — 4.8%                
Industrials — 4.8%                
International Holding PJSC*     922       99,418  
TOTAL UNITED ARAB EMIRATES             99,418  
                 
UNITED STATES — 1.0%                
Health Care — 1.0%                
Legend Biotech ADR*     425       20,493  
TOTAL UNITED STATES             20,493  
                 
TOTAL COMMON STOCK
(Cost $2,894,498)
             
2,095,244
 
                 
RIGHT — 0.0%                
CHINA — 0.0%                
Health Care — 0.0%                
Kangmei Pharma‡‡*(A)      5,516        
TOTAL CHINA              
                 
TOTAL RIGHT
(Cost $–)
             
 
                 
TOTAL INVESTMENTS — 100.0%
(Cost $2,894,498)
             
2,095,244
 
OTHER ASSETS LESS LIABILITIES – 0.0%             (174 )
NET ASSETS - 100%           $ 2,095,070  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.
‡‡ Expiration date not available.

 

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

 

120

 

 

Schedule of Investments March 31, 2023

 

KraneShares Emerging Markets Healthcare Index ETF (concluded)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
Brazil   $ 112,782     $     $     $ 112,782  
China                                
Consumer Staples     47,613                   47,613  
Health Care     886,200             1,504       887,704  
Hungary     21,802                   21,802  
India     266,017                   266,017  
Indonesia     65,211                   65,211  
Malaysia     70,078                   70,078  
South Africa     40,162                   40,162  
South Korea     334,962                   334,962  
Thailand     129,002                   129,002  
United Arab Emirates     99,418                   99,418  
United States     20,493                   20,493  
Total Common Stock     2,093,740             1,504       2,095,244  
Right                 ‡‡       
Total Investments in Securities   $ 2,093,740     $     $ 1,504     $ 2,095,244  

 

^ 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 end of the period in relation to net assets.
‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

121

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF

 

 

    Shares     Value  
COMMON STOCK — 95.8%                 
AUSTRALIA — 0.3%                
Materials — 0.3%                
AngloGold Ashanti     3,843     $ 93,441  
TOTAL AUSTRALIA             93,441  
                 
BRAZIL — 5.4%                
Communication Services — 0.1%                
Telefonica Brasil     4,700       35,837  
                 
Consumer Discretionary — 0.2%                
Lojas Renner     8,225       26,880  
Magazine Luiza*     37,000       24,154  
              51,034  
Consumer Staples — 0.6%                
Ambev     44,300       125,205  
Raia Drogasil     11,700       56,420  
              181,625  
Energy — 0.7%                
Petroleo Brasileiro     36,600       191,220  
Ultrapar Participacoes     10,700       29,461  
              220,681  
Financials — 0.8%                
B3 - Brasil Bolsa Balcao     49,000       100,025  
Banco Bradesco     12,288       28,718  
Banco do Brasil     8,200       63,252  
Banco Santander Brasil     3,600       19,029  
BB Seguridade Participacoes     5,900       37,830  
              248,854  

 

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

 

122

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 
    Shares     Value  
COMMON STOCK (continued)                
Industrials — 0.8%                
CCR     9,400     $ 23,731  
Localiza Rent a Car     6,920       72,881  
Rumo     9,400       34,947  
WEG     14,100       112,767  
              244,326  
Materials — 1.9%                
Klabin     5,900       21,050  
Suzano     6,900       56,613  
Vale     30,900       489,317  
              566,980  
Utilities — 0.3%                
Cia de Saneamento Basico do Estado de Sao Paulo     2,400       23,956  
Equatorial Energia     10,500       55,832  
              79,788  
TOTAL BRAZIL             1,629,125  
                 
CHILE — 0.6%                
Consumer Discretionary — 0.0%                
Falabella     6,017       13,912  
                 
Energy — 0.1%                
Empresas Copec     3,138       22,267  
                 
Financials — 0.3%                
Banco de Chile     532,555       52,002  
Banco de Credito e Inversiones     461       13,585  
Banco Santander Chile     531,412       23,694  
              89,281  
Materials — 0.1%                
Empresas CMPC     10,138       17,034  
                 
Utilities — 0.1%                
Enel Americas     227,921       30,183  
Enel Chile     225,362       12,360  
              42,543  
TOTAL CHILE             185,037  
                 
COLOMBIA — 0.0%                
Financials — 0.0%                
Bancolombia     1,787       13,420  
TOTAL COLOMBIA             13,420  

 

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

 

123

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 
    Shares     Value  
COMMON STOCK (continued)                
CZECH REPUBLIC — 0.3%                
Financials — 0.1%                
Komercni Banka     581     $ 19,291  
                 
Utilities — 0.2%                
CEZ     1,238       60,213  
TOTAL CZECH REPUBLIC             79,504  
                 
EGYPT — 0.1%                
Financials — 0.1%                
Commercial International Bank Egypt SAE     21,159       35,043  
TOTAL EGYPT             35,043  
                 
GREECE — 0.1%                
Communication Services — 0.1%                
Hellenic Telecommunications Organization     1,858       27,231  
TOTAL GREECE             27,231  
                 
HUNGARY — 0.3%                
Energy — 0.1%                
MOL Hungarian Oil & Gas     2,888       21,151  
                 
Financials — 0.1%                
OTP Bank Nyrt     1,773       50,554  
                 
Health Care — 0.1%                
Richter Gedeon Nyrt     1,430       29,921  
TOTAL HUNGARY             101,626  
                 
INDIA — 18.1%                
Communication Services — 0.6%                
Bharti Airtel     17,930       163,412  
                 
Consumer Discretionary — 1.4%                
Bajaj Auto     659       31,151  
Eicher Motors     1,053       37,783  
Mahindra & Mahindra     7,433       104,799  
Maruti Suzuki India     995       100,395  
Tata Motors*     14,563       74,567  
Titan     2,492       76,259  
              424,954  
Consumer Staples — 1.8%                
Dabur India     4,204       27,874  
Godrej Consumer Products*     2,889       34,034  
Hindustan Unilever     7,270       226,493  
ITC     34,945       163,069  

 

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

 

124

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Consumer Staples (continued)                
Nestle India     327     $ 78,403  
              529,873  
Energy — 2.4%                
Bharat Petroleum     6,073       25,443  
Indian Oil     48,606       46,073  
Oil & Natural Gas     20,662       37,976  
Reliance Industries     22,023       624,667  
              734,159  
Financials — 4.6%                
Axis Bank     22,139       231,270  
Bajaj Finance     2,026       138,467  
Bajaj Finserv     3,101       47,789  
Housing Development Finance     14,731       470,614  
ICICI Bank     37,325       398,422  
State Bank of India     17,464       111,298  
              1,397,860  
Health Care — 0.6%                
Aurobindo Pharma     2,098       13,226  
Dr Reddy’s Laboratories     913       51,356  
Sun Pharmaceutical Industries     8,726       104,384  
              168,966  
Industrials — 0.5%                
Larsen & Toubro     5,783       152,290  
                 
Information Technology — 4.2%                
HCL Technologies     10,489       138,511  
Infosys ADR     36,755       641,007  
Tata Consultancy Services     8,726       340,397  
Tech Mahindra     6,022       80,739  
Wipro     14,557       64,697  
              1,265,351  
Materials — 1.5%                
Asian Paints     3,279       110,187  
Grasim Industries     2,635       52,349  
Hindalco Industries     16,255       80,175  
JSW Steel     6,893       57,714  
UltraTech Cement     936       86,811  
UPL     4,339       37,890  
Vedanta     10,584       35,345  
              460,471  

 

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

 

125

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Utilities — 0.5%                
GAIL India     24,471     $ 31,310  
NTPC     28,281       60,256  
Power Grid Corp of India     24,855       68,260  
              159,826  
TOTAL INDIA             5,457,162  
                 
INDONESIA — 3.4%                
Communication Services — 0.5%                
Telkom Indonesia Persero     535,300       144,941  
                 
Consumer Discretionary — 0.3%                
Astra International     232,400       92,994  
                 
Consumer Staples — 0.2%                
Charoen Pokphand Indonesia     73,100       24,327  
Unilever Indonesia     75,500       21,903  
              46,230  
Energy — 0.2%                
Adaro Energy Indonesia     122,100       23,615  
United Tractors     17,100       33,186  
              56,801  
Financials — 2.2%                
Bank Central Asia     506,000       295,275  
Bank Mandiri Persero     209,300       144,121  
Bank Negara Indonesia Persero     77,800       48,513  
Bank Rakyat Indonesia Persero     581,400       183,402  
              671,311  
TOTAL INDONESIA             1,012,277  
                 
MALAYSIA — 2.4%                
Communication Services — 0.2%                
CelcomDigi Bhd     34,900       34,326  
Maxis     34,900       32,666  
              66,992  
Consumer Discretionary — 0.1%                
Genting     22,900       24,184  
                 
Consumer Staples — 0.1%                
Sime Darby Plantation     26,500       25,644  
                 
Financials — 1.3%                
CIMB Group Holdings     95,455       114,871  
Hong Leong Bank     5,900       27,037  
Malayan Banking     64,916       126,080  

 

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

 

126

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Financials (continued)                
Public Bank     150,900     $ 136,793  
              404,781  
Health Care — 0.1%                
IHH Healthcare     22,900       29,841  
                 
Materials — 0.2%                
Petronas Chemicals Group     34,900       55,919  
                 
Utilities — 0.4%                
Petronas Gas     5,900       22,036  
Tenaga Nasional     43,200       90,365  
              112,401  
TOTAL MALAYSIA             719,762  
                 
MEXICO — 5.0%                
Communication Services — 1.1%                
America Movil     289,000       302,989  
Grupo Televisa     22,900       24,186  
              327,175  
Consumer Staples — 1.5%                
Fomento Economico Mexicano     19,400       184,588  
Grupo Bimbo, Ser A     12,900       64,786  
Wal-Mart de Mexico     50,000       199,463  
              448,837  
Financials — 0.9%                
Grupo Financiero Banorte, Cl O     26,500       222,937  
Grupo Financiero Inbursa, Cl O*     17,600       37,771  
              260,708  
Industrials — 0.5%                
Grupo Aeroportuario del Pacifico, Cl B     4,800       93,206  
Grupo Aeroportuario del Sureste, Cl B     1,675       51,135  
              144,341  
Materials — 0.9%                
Cemex*     145,500       79,696  
Grupo Mexico     26,500       125,235  
Southern Copper     829       63,212  
              268,143  
Real Estate — 0.1%                
Fibra Uno Administracion      32,600       45,444  
TOTAL MEXICO             1,494,648  

 

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

 

127

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
PERU — 0.4%                
Financials — 0.2%                
Credicorp     609     $ 80,625  
                 
Materials — 0.2%                
Cia de Minas Buenaventura SAA ADR     6,611       54,078  
TOTAL PERU             134,703  
                 
PHILIPPINES — 1.2%                
Financials — 0.2%                
BDO Unibank     29,304       69,265  
                 
Industrials — 0.5%                
Ayala     3,490       41,727  
JG Summit     43,435       38,270  
SM Investments     3,490       57,070  
              137,067  
Real Estate — 0.5%                
Ayala Land     119,400       58,201  
SM Prime     162,900       98,282  
              156,483  
Utilities — 0.0%                
ACEN     9,960       1,121  
TOTAL PHILIPPINES             363,936  
                 
POLAND — 1.2%                
Communication Services — 0.1%                
CD Projekt     706       18,227  
                 
Consumer Discretionary — 0.2%                
LPP     33       73,384  
                 
Energy — 0.2%                
Polski Koncern Naftowy Orlen     3,261       44,085  
                 
Financials — 0.6%                
Bank Polska Kasa Opieki     1,927       38,226  
Powszechna Kasa Oszczednosci Bank Polski     9,612       63,633  
Powszechny Zaklad Ubezpieczen     6,982       56,854  
Santander Bank Polska     376       25,468  
              184,181  
Materials — 0.1%                
KGHM Polska Miedz     1,343       38,110  
TOTAL POLAND             357,987  

 

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

 

128

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
QATAR — 1.3%                
Financials — 1.0%                
Masraf Al Rayan     45,520     $ 36,954  
Qatar Islamic Bank     13,350       65,209  
Qatar National Bank     47,322       208,919  
              311,082  
Industrials — 0.3%                
Industries Qatar     21,227       75,811  
TOTAL QATAR             386,893  
                 
ROMANIA — 0.1%                
Real Estate — 0.1%                
NEPI Rockcastle     5,510       32,083  
TOTAL ROMANIA             32,083  
                 
RUSSIA — 0.0%                
Communication Services — 0.0%                
Mobile TeleSystems PJSC ADR*(A),(B)      3,839        
                 
Consumer Discretionary — 0.0%                
X5 Retail Group GDR*(A),(B)       915        
                 
Consumer Staples — 0.0%                
Magnit PJSC GDR*(A),(B)      2,616        
                 
Energy — 0.0%                
Gazprom PJSC(A),(B)      89,700        
LUKOIL PJSC(A),(B)      3,729        
Novatek PJSC GDR*(A),(B)      756        
Rosneft Oil PJSC(A),(B)      10,270        
Tatneft PJSC(A),(B)      16,537        
               
Financials — 0.0%                
Sberbank of Russia PJSC(A),(B)      99,330        
                 
Materials — 0.0%                
Alrosa PJSC*(A),(B)      18,910        
MMC Norilsk Nickel PJSC(A),(B)      670        
Novolipetsk Steel PJSC*(A),(B)      8,860        
Severstal PAO*(A),(B)      1,512        
               
TOTAL RUSSIA              

 

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

 

129

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
SOUTH AFRICA — 5.9%                
Communication Services — 0.6%                
MTN Group     16,311     $ 117,185  
MultiChoice Group     3,306       22,986  
Vodacom Group     4,946       34,021  
              174,192  
Consumer Discretionary — 1.7%                
Absa Group     6,988       71,596  
Mr Price Group     1,885       15,320  
Naspers, Cl N     2,232       414,253  
Woolworths Holdings     7,651       27,568  
              528,737  
Consumer Staples — 0.6%                
Bid     3,261       73,243  
Clicks Group     1,957       28,362  
Shoprite Holdings     6,225       77,980  
              179,585  
Energy — 0.1%                
Exxaro Resources     2,017       21,207  
                 
Financials — 1.9%                
Capitec Bank     1,012       96,263  
Discovery*     6,946       54,593  
FirstRand     43,525       148,121  
Nedbank Group     4,404       53,831  
Old Mutual     38,413       25,547  
Remgro     4,123       31,239  
Sanlam     14,156       44,975  
Standard Bank Group     12,815       124,817  
              579,386  
Industrials — 0.4%                
Bidvest Group     2,612       37,308  
Sasol     5,412       73,207  
              110,515  
Materials — 0.5%                
Anglo American Platinum     686       36,886  
Gold Fields     7,791       104,070  
              140,956  
Real Estate — 0.1%                
Growthpoint Properties      43,841       32,271  
TOTAL SOUTH AFRICA             1,766,849  

 

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

 

130

 

 

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KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
SOUTH KOREA — 18.4%                
Communication Services — 1.2%                
Kakao     2,493     $ 117,004  
NAVER*     1,224       189,921  
NCSoft     181       51,651  
              358,576  
Consumer Discretionary — 2.1%                
Coway     423       17,058  
Hyundai Mobis     671       111,331  
Hyundai Motor     1,461       207,055  
Kangwon Land     947       14,476  
Kia     2,911       181,120  
LG Electronics     1,112       98,486  
              629,526  
Consumer Staples — 0.8%                
Amorepacific     412       43,294  
E-MART     436       35,366  
KT&G     1,639       105,628  
LG H&H     99       45,627  
              229,915  
Energy — 0.4%                
HD Hyundai     352       15,710  
SK Innovation*     622       85,700  
S-Oil     364       22,396  
              123,806  
Financials — 1.9%                
DB Insurance     399       22,956  
Hana Financial Group     3,494       109,234  
Industrial Bank of Korea     2,033       15,772  
KB Financial Group     4,172       152,703  
Samsung Fire & Marine Insurance     532       84,182  
Samsung Life Insurance     552       26,628  
Shinhan Financial Group     4,460       121,105  
Woori Financial Group     3,806       33,357  
              565,937  
Health Care — 0.9%                
Celltrion     923       106,190  
Celltrion Healthcare     1,639       75,802  
Samsung Biologics*     173       104,716  
              286,708  
Industrials — 1.0%                
Hyundai Engineering & Construction     634       17,751  

 

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

 

131

 

 

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KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Industrials (continued)                
Korea Shipbuilding & Offshore Engineering*     305     $ 18,157  
LG     1,270       80,774  
Samsung C&T     1,136       94,416  
Samsung Heavy Industries*     10,958       43,517  
SK Holdings     458       60,687  
              315,302  
Information Technology — 8.1%                
LG Display     1,725       21,770  
Samsung Electro-Mechanics     781       91,607  
Samsung Electronics     33,990       1,670,976  
Samsung SDI     528       298,099  
Samsung SDS     275       24,504  
SK Hynix     4,304       292,917  
SK Square*     841       25,684  
              2,425,557  
Materials — 1.8%                
Hyundai Steel     634       16,899  
Korea Zinc     63       26,761  
LG Chemical     470       257,050  
Lotte Chemical     145       21,251  
POSCO Holdings     795       224,726  
              546,687  
Utilities — 0.2%                
Korea Electric Power*     4,943       68,382  
TOTAL SOUTH KOREA             5,550,396  
                 
TAIWAN — 27.0%                
Communication Services — 1.3%                
Chunghwa Telecom     47,000       184,465  
Far EasTone Telecommunications     34,000       83,974  
Taiwan Mobile     34,000       112,785  
              381,224  
Consumer Staples — 0.7%                
President Chain Store     12,000       106,215  
Uni-President Enterprises     47,000       110,988  
              217,203  
Energy — 0.1%                
Formosa Petrochemical     12,000       33,500  
                 
Financials — 5.9%                
Cathay Financial Holding     70,000       96,100  
Chailease Holding     23,152       169,947  

 

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

 

132

 

 

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KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Financials (continued)                
Chang Hwa Commercial Bank     179,660     $ 102,376  
China Development Financial Holding     216,000       89,032  
CTBC Financial Holding     141,000       101,186  
E.Sun Financial Holding     144,910       120,411  
First Financial Holding     146,220       127,022  
Fubon Financial Holding     81,740       151,681  
Hua Nan Financial Holdings     122,567       89,970  
Mega Financial Holding     98,625       106,893  
Shanghai Commercial & Savings Bank     75,000       115,650  
Shin Kong Financial Holding     356,000       98,449  
SinoPac Financial Holdings     82,560       45,012  
Taishin Financial Holding     253,648       138,289  
Taiwan Cooperative Financial Holding     129,634       111,124  
Yuanta Financial Holding     143,138       105,071  
              1,768,213  
Industrials — 0.3%                
Far Eastern New Century     105,000       107,940  
                 
Information Technology — 16.4%                
ASE Technology Holding     38,000       140,406  
Asustek Computer     12,000       107,398  
AUO     95,600       57,773  
Catcher Technology     12,000       74,883  
Delta Electronics     24,000       237,261  
Hon Hai Precision Industry     105,000       358,650  
Innolux     60,580       28,850  
Lite-On Technology     47,000       113,149  
MediaTek     12,000       310,173  
Novatek Microelectronics     12,000       170,063  
Pegatron     37,000       84,700  
Quanta Computer     36,000       105,348  
Taiwan Semiconductor Manufacturing     171,000       2,993,448  
United Microelectronics     94,000       163,317  
              4,945,419  
Materials — 2.3%                
Asia Cement     47,000       66,840  
China Steel     157,000       159,333  
Formosa Chemicals & Fibre     36,000       81,701  
Formosa Plastics     47,000       141,706  
Nan Ya Plastics     59,000       150,177  
Taiwan Cement     69,404       82,973  
              682,730  
TOTAL TAIWAN             8,136,229  

 

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

 

133

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
THAILAND — 2.3%                
Communication Services — 0.3%                
Advanced Info Service     11,800     $ 73,157  
              73,157  
Consumer Staples — 0.3%                
CP ALL     55,900       101,354  
              101,354  
Energy — 0.6%                
PTT     121,200       111,648  
PTT Exploration & Production     17,000       74,821  
              186,469  
Health Care — 0.2%                
Bangkok Dusit Medical Services, Cl F     65,600       56,593  
              56,593  
Industrials — 0.4%                
Airports of Thailand*     50,200       104,231  
              104,231  
Materials — 0.4%                
Indorama Ventures     36,300       36,624  
PTT Global Chemical     26,600       35,588  
Siam Cement     6,100       56,193  
              128,405  
Real Estate — 0.1%                
Central Pattana     16,300       32,772  
              32,772  
TOTAL THAILAND             682,981  
                 
TURKEY — 0.6%                
Consumer Staples — 0.2%                
BIM Birlesik Magazalar     8,142       63,075  
                 
Energy — 0.2%                
Turkiye Petrol Rafinerileri     2,328       64,291  
                 
Financials — 0.2%                
Akbank     58,231       51,390  
TOTAL TURKEY             178,756  
                 
UNITED ARAB EMIRATES — 1.3%                
Communication Services — 0.5%                
Emirates Telecommunications Group PJSC     25,472       153,005  

 

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

 

134

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Financials — 0.6%                
Abu Dhabi Commercial Bank PJSC     25,850     $ 58,423  
First Abu Dhabi Bank PJSC     38,100       133,621  
              192,044  
Real Estate — 0.2%                
Emaar Properties PJSC     28,538       43,516  
TOTAL UNITED ARAB EMIRATES             388,565  
                 
UNITED STATES — 0.1%                
Consumer Staples — 0.1%                
JBS     7,000       24,644  
TOTAL UNITED STATES             24,644  
                 
TOTAL COMMON STOCK
(Cost $32,166,056)
            28,852,298  
                 
PREFERRED STOCK — 3.5%                
BRAZIL — 2.1%                
Energy — 0.6%                
Petroleo Brasileiro(C)     39,600       183,151  
                 
Financials — 1.3%                
Banco Bradesco(C)      52,871       137,333  
Itau Unibanco Holding(C)      38,000       185,419  
Itausa(C)      47,882       77,627  
              400,379  
Materials — 0.1%                
Gerdau(C)      8,575       42,771  
                 
Utilities — 0.1%                
Cia Energetica de Minas Gerais(C)      9,923       22,389  
TOTAL BRAZIL             648,690  
                 
CHILE — 0.4%                
Materials — 0.4%                
Sociedad Quimica y Minera de Chile(C)      1,475       119,028  
                 
COLOMBIA — 0.1%                
Financials — 0.1%                
Bancolombia(C)      3,583       22,440  
                 
RUSSIA — 0.0%                
Energy — –%                
Surgutneftegas PJSC(A),(B)(C)      50,900        
                 
SOUTH KOREA — 0.9%                
Information Technology — 0.9%                
Samsung Electronics(C)      6,396       264,811  
                 
TOTAL PREFERRED STOCK
(Cost $1,169,619)
            1,054,969  
                 
TOTAL INVESTMENTS — 99.3%
(Cost $33,335,675)
            29,907,267  
OTHER ASSETS LESS LIABILITIES – 0.7%             204,368  
NET ASSETS - 100%           $ 30,111,635  

 

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

 

135

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
Real Estate Investment Trust
(A) Level 3 security in accordance with fair value hierarchy.
(B) Due to the financial uncertainty surrounding Russia and its markets, and the inability to liquidate the positions due to market closures and restrictions, the Russian securities have been determined to be worthless.
(C) Currently, no stated interest rate.

 

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

 

136

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (continued)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
Australia   $ 93,441     $     $     $ 93,441  
Brazil     1,629,125                   1,629,125  
Chile     185,037                   185,037  
Colombia     13,420                   13,420  
Czech Republic     79,504                   79,504  
Egypt     35,043                   35,043  
Greece     27,231                   27,231  
Hungary     101,626                   101,626  
India     5,457,162                   5,457,162  
Indonesia     1,012,277                   1,012,277  
Malaysia     719,762                   719,762  
Mexico     1,494,648                   1,494,648  
Peru     134,703                   134,703  
Philippines     363,936                   363,936  
Poland     357,987                   357,987  
Qatar     386,893                   386,893  
Romania     32,083                   32,083  
Russia                                
Communication Services                 ‡‡       
Consumer Discretionary                 ‡‡       
Consumer Staples                 ‡‡       
Energy                 ‡‡       
Financials                 ‡‡       
Materials                 ‡‡       
South Africa     1,766,849                   1,766,849  
South Korea     5,550,396                   5,550,396  
Taiwan     8,136,229                   8,136,229  
Thailand     682,981                   682,981  
Turkey     178,756                   178,756  
United Arab Emirates     388,565                   388,565  
United States     24,644                   24,644  
Total Common Stock     28,852,298                   28,852,298  
Preferred Stock                                
Brazil     648,690                   648,690  
Chile     119,028                   119,028  
Colombia     22,440                   22,440  
Russia                                
Energy                 ‡‡       
South Korea     264,811                   264,811  
Total Preferred Stock     1,054,969                   1,054,969  
Total Investments in Securities   $ 29,907,267     $     $     $ 29,907,267  

 

^ 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 end of the period in relation to net assets.

 

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

 

137

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI Emerging Markets ex China Index ETF (concluded)

 

‡‡ Security or securities with a market value of $0.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

138

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.9%                 
CHINA — 99.0%                
Communication Services — 18.4%                
37 Interactive Entertainment Network Technology Group, Cl A     900     $ 3,728  
Baidu, Cl A*     12,000       227,314  
China Ruyi Holdings*     40,000       10,446  
NetEase     13,000       228,536  
Tencent Holdings     9,100       447,236  
              917,260  
Consumer Discretionary — 30.5%                
Alibaba Group Holding*     34,936       446,828  
BYD, Cl A     801       29,862  
BYD, Cl H     6,000       175,644  
Li Auto, Cl A*     7,600       94,880  
Meituan, Cl B*     25,070       458,289  
Pop Mart International Group     3,800       10,359  
Tongcheng Travel Holdings*     8,400       18,277  
Vipshop Holdings ADR*     2,734       41,502  
XPeng, Cl A*     5,900       32,882  
Yadea Group Holdings     10,000       25,796  
Yum China Holdings     2,896       183,578  
              1,517,897  
Consumer Staples — 4.0%                
Alibaba Health Information Technology*     12,000       8,683  
Angel Yeast, Cl A     300       1,824  
Anjoy Foods Group, Cl A     200       4,765  
By-health, Cl A     700       2,176  
China Feihe     25,000       18,758  
China Mengniu Dairy     22,000       90,243  
Dali Foods Group     14,000       5,850  
Henan Shuanghui Investment & Development, Cl A     1,400       5,288  

 

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

 

139

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Consumer Staples (continued)                
Inner Mongolia Yili Industrial Group, Cl A     2,600     $ 11,025  
Jonjee Hi-Tech Industrial And Commercial Holding, Cl A     300       1,621  
Ping An Healthcare and Technology*     3,500       8,855  
Uni-President China Holdings     9,000       9,080  
Want Want China Holdings     33,000       21,229  
Yihai International Holding     3,000       8,809  
              198,206  
Financials — 14.0%                
China Construction Bank, Cl H     676,000       438,326  
China Merchants Bank, Cl A     8,600       42,917  
China Merchants Bank, Cl H     27,500       140,479  
Far East Horizon     11,000       9,893  
Huatai Securities, Cl A     3,000       5,579  
Huatai Securities, Cl H     11,000       12,569  
Orient Securities, Cl A     3,100       4,419  
Postal Savings Bank of China, Cl A     11,100       7,516  
Postal Savings Bank of China, Cl H     56,000       33,244  
              694,942  
Health Care — 9.4%                
3SBio     10,500       10,460  
China Medical System Holdings     9,000       14,216  
China Resources Sanjiu Medical & Pharmaceutical, Cl A     400       3,346  
CSPC Pharmaceutical Group     63,800       62,744  
Genscript Biotech*     8,000       17,121  
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A     600       2,890  
Guangzhou Kingmed Diagnostics Group, Cl A     200       2,566  
Hansoh Pharmaceutical Group     8,000       13,901  
Huadong Medicine, Cl A     700       4,724  
Jafron Biomedical, Cl A     300       1,326  
Joincare Pharmaceutical Group Industry, Cl A     800       1,534  
Livzon Pharmaceutical Group, Cl A     200       1,089  
Microport Scientific*     4,500       10,582  
Ovctek China, Cl A     380       1,833  
Pharmaron Beijing, Cl A     350       2,496  
Pharmaron Beijing, Cl H     1,350       5,667  
Shandong Weigao Group Medical Polymer, Cl H     18,000       28,754  
Shanghai Fosun Pharmaceutical Group, Cl A     900       4,245  
Shanghai Fosun Pharmaceutical Group, Cl H     3,500       9,943  
Shanghai Pharmaceuticals Holding, Cl A     1,200       3,559  
Shanghai Pharmaceuticals Holding, Cl H     5,500       10,257  
Shenzhen Mindray Bio-Medical Electronics, Cl A     500       22,695  
Sinopharm Group, Cl H     9,600       29,045  
Topchoice Medical, Cl A*     200       3,765  
WuXi AppTec, Cl A     1,120       12,966  

 

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

 

140

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Health Care (continued)                
WuXi AppTec, Cl H     2,500     $ 26,178  
Wuxi Biologics Cayman*     25,000       154,778  
Yunnan Baiyao Group, Cl A     720       5,735  
Zhejiang Jiuzhou Pharmaceutical, Cl A     300       1,454  
              469,869  
Industrials — 9.3%                
Air China, Cl A*     3,100       4,830  
Air China, Cl H*     14,000       12,520  
Beijing Capital International Airport, Cl H*     14,000       10,308  
Beijing Easpring Material Technology, Cl A     300       2,513  
BOC Aviation     1,500       11,589  
China Baoan Group, Cl A     1,100       1,821  
China Communications Services, Cl H     16,000       7,868  
China Conch Venture Holdings     11,500       20,070  
China Eastern Airlines, Cl A*     4,700       3,525  
China Everbright Environment Group     26,000       11,162  
China Lesso Group Holdings     8,000       7,154  
China Southern Airlines, Cl A*     4,600       5,272  
China Southern Airlines, Cl H*     14,000       9,987  
CITIC     41,000       47,947  
Contemporary Amperex Technology, Cl A     1,000       59,128  
COSCO SHIPPING Holdings, Cl A     5,300       8,513  
COSCO SHIPPING Holdings, Cl H     22,000       24,747  
Fosun International     17,000       12,474  
Jiangsu Expressway, Cl H     8,000       7,460  
Jiangsu Zhongtian Technology, Cl A     1,400       3,484  
Keda Industrial Group, Cl A     800       1,681  
Ming Yang Smart Energy Group, Cl A     900       2,950  
SF Holding, Cl A     2,000       16,129  
Shanghai Electric Group, Cl A*     5,300       3,411  
Shanghai M&G Stationery, Cl A     400       2,860  
Shenzhen Inovance Technology, Cl A     1,150       11,772  
Shenzhen International Holdings     9,913       8,764  
Sungrow Power Supply, Cl A     600       9,162  
Titan Wind Energy Suzhou, Cl A     800       1,719  
Weichai Power, Cl A     2,800       5,141  
Weichai Power, Cl H     14,000       22,472  
Xinjiang Goldwind Science & Technology, Cl A     1,400       2,251  
Zhejiang Chint Electrics, Cl A     900       3,666  
Zhejiang Expressway, Cl H     10,000       7,949  
Zhejiang Weixing New Building Materials, Cl A     700       2,478  
Zoomlion Heavy Industry Science and Technology, Cl A     2,900       2,622  
ZTO Express Cayman ADR     2,987       85,607  
              463,006  

 

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

 

141

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Information Technology — 2.9%                
AAC Technologies Holdings*     5,000     $ 12,331  
Kingdee International Software Group*     19,000       30,787  
Lenovo Group     50,000       54,141  
Unisplendour, Cl A     1,151       4,909  
Xinyi Solar Holdings     34,000       40,757  
              142,925  
Materials — 1.8%                
BBMG, Cl A     3,500       1,249  
Chengtun Mining Group, Cl A     1,300       1,083  
Chengxin Lithium Group, Cl A     300       1,508  
China Jushi, Cl A     1,686       3,587  
China Resources Cement Holdings     16,000       7,847  
CMOC Group, Cl A     7,500       6,542  
CMOC Group, Cl H     24,000       14,522  
Ganfeng Lithium Group, Cl A     640       6,195  
Ganfeng Lithium Group, Cl H     2,480       15,417  
GEM, Cl A     2,100       2,284  
Huaxin Cement, Cl A     600       1,359  
Jiangsu Eastern Shenghong, Cl A     1,700       3,372  
Shandong Nanshan Aluminum, Cl A     4,900       2,419  
Shanghai Putailai New Energy Technology, Cl A     600       4,361  
Sichuan Yahua Industrial Group, Cl A     400       1,233  
Sinopec Shanghai Petrochemical, Cl A     3,000       1,472  
Skshu Paint, Cl A*     240       4,068  
Yunnan Energy New Material, Cl A     400       6,630  
Zhejiang Huayou Cobalt, Cl A     680       5,446  
Zhejiang Yongtai Technology, Cl A     300       914  
              91,508  
Real Estate — 5.8%                
China Overseas Land & Investment     26,500       64,006  
China Resources Land     22,000       100,332  
China Resources Mixc Lifestyle Services     4,600       24,172  
China Vanke, Cl A     4,000       8,877  
China Vanke, Cl H     11,900       18,767  
Country Garden Services Holdings     15,000       25,949  
Greentown Service Group     10,000       6,319  
Longfor Group Holdings     13,000       36,682  
Shimao Group Holdings*(A)      12,500       1,601  
              286,705  
Utilities — 2.9%                
Beijing Enterprises Water Group     28,000       6,991  
CECEP Solar Energy, Cl A     1,600       1,596  
CECEP Wind-Power, Cl A     2,700       1,521  

 

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

 

142

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Utilities (continued)                
China Resources Gas Group     6,500     $ 23,972  
China Three Gorges Renewables Group, Cl A     11,900       9,496  
ENN Energy Holdings     5,600       76,760  
ENN Natural Gas, Cl A     1,100       3,340  
Kunlun Energy     26,000       20,336  
              144,012  
TOTAL CHINA             4,926,330  
                 
HONG KONG — 0.9%                
Consumer Staples — 0.1%                
Vinda International Holdings     3,000       7,254  
                 
Health Care — 0.8%                
Sino Biopharmaceutical     73,000       40,917  
TOTAL HONG KONG             48,171  
                 
TOTAL COMMON STOCK
(Cost $5,874,589)
            4,974,501  
                 
TOTAL INVESTMENTS — 99.9%
(Cost $5,874,589)
            4,974,501  
OTHER ASSETS LESS LIABILITIES – 0.1%             2,970  
NET ASSETS - 100%           $ 4,977,471  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Level 3 security in accordance with fair value hierarchy.

 

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

 

143

 

 

Schedule of Investments March 31, 2023

 

KraneShares MSCI China ESG Leaders Index ETF (concluded)

 

The following summarizes the market value of the Fund’s investments used as of March 31, 2023, based on the inputs used to value them:

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  
Common Stock                                
China                                
Communication Services   $ 917,260     $     $     $ 917,260  
Consumer Discretionary     1,517,897                   1,517,897  
Consumer Staples     198,206                   198,206  
Financials     694,942                   694,942  
Health Care     469,869                   469,869  
Industrials     463,006                   463,006  
Information Technology     142,925                   142,925  
Materials     91,508                   91,508  
Real Estate     285,104             1,601       286,705  
Utilities     144,012                   144,012  
Hong Kong     48,171                   48,171  
Total Common Stock     4,972,900             1,601       4,974,501  
Total Investments in Securities   $ 4,972,900     $     $ 1,601     $ 4,974,501  

 

^ 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 end of the period in relation to net assets.

 

Amounts designated as “ —” are $0 or have been rounded to $0.

 

See “Glossary” for abbreviations.

 

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

 

144

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China 5G & Semiconductor Index ETF

 

 

    Shares     Value  
COMMON STOCK — 100.0%                 
CHINA — 100.0%                
Industrials — 3.5%                
Ginlong Technologies, Cl A*     13,700     $ 266,487  
Suzhou Maxwell Technologies, Cl A     6,000       266,480  
              532,967  
Information Technology — 96.5%                
Advanced Micro-Fabrication Equipment China, Cl A*     19,332       415,253  
Avary Holding Shenzhen, Cl A     84,585       382,076  
BOE Technology Group, Cl A     1,299,230       840,007  
Chaozhou Three-Circle Group, Cl A     64,664       283,428  
China Resources Microelectronics, Cl A     45,269       398,550  
China Zhenhua Group Science & Technology, Cl A     18,000       236,058  
Foxconn Industrial Internet, Cl A     632,174       1,585,199  
GigaDevice Semiconductor, Cl A     23,000       408,603  
GoerTek, Cl A     121,722       379,312  
Hangzhou Silan Microelectronics, Cl A     48,700       262,459  
Hua Hong Semiconductor*     45,000       199,205  
Luxshare Precision Industry, Cl A     250,005       1,103,440  
Maxscend Microelectronics, Cl A     18,269       330,936  
Montage Technology, Cl A     39,568       400,560  
NAURA Technology Group, Cl A     17,118       662,680  
Sanan Optoelectronics, Cl A     167,200       514,214  
SG Micro, Cl A     12,400       280,238  
Shenzhen Transsion Holdings, Cl A     29,332       432,251  
StarPower Semiconductor, Cl A     5,929       237,037  
Sunny Optical Technology Group     37,900       458,424  
TCL Zhonghuan Renewable Energy Technology, Cl A     104,400       736,712  
Unigroup Guoxin Microelectronics, Cl A     30,900       500,038  
Will Semiconductor Shanghai, Cl A     41,906       555,913  
Wingtech Technology, Cl A     43,055       346,394  
Xiaomi, Cl B*     714,400       1,101,184  
Yealink Network Technology, Cl A     32,380       358,395  
Zhejiang Jingsheng Mechanical & Electrical, Cl A     43,220       410,909  
ZTE, Cl H     254,200       744,795  
              14,564,270  
TOTAL CHINA             15,097,237  

 

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

 

145

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China 5G & Semiconductor Index ETF (concluded)

 

    Shares     Value  
COMMON STOCK (continued)                
Information Technology (continued)                
                 
TOTAL COMMON STOCK
(Cost $17,470,076)
          $ 15,097,237  
                 
TOTAL INVESTMENTS — 100.0%
(Cost $17,470,076)
            15,097,237  
OTHER ASSETS LESS LIABILITIES – 0.0%             (825 )
NET ASSETS - 100%           $ 15,096,412  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

146

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Consumer Leaders Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.9%                 
CHINA — 99.9%                
Consumer Discretionary — 38.4%                
ANTA Sports Products     21,400     $ 310,779  
Bosideng International Holdings     84,000       46,869  
DR, Cl A     9,300       72,005  
Ecovacs Robotics, Cl A     4,000       48,112  
Gree Electric Appliances of Zhuhai, Cl A     59,400       317,876  
Haidilao International Holding*     37,000       100,160  
Haier Smart Home, Cl A     91,300       301,528  
Li Ning     40,000       315,416  
Midea Group, Cl A     71,365       559,194  
Oppein Home Group, Cl A     3,400       59,798  
Shenzhen Overseas Chinese Town, Cl A     85,400       60,065  
Yum China Holdings     7,750       487,315  
              2,679,117  
Consumer Staples — 60.7%                
China Mengniu Dairy     72,000       295,339  
China Resources Beer Holdings     36,000       288,919  
Chongqing Brewery, Cl A     4,136       75,284  
Eastroc Beverage Group, Cl A     1,800       50,433  
Foshan Haitian Flavouring & Food, Cl A     25,856       288,180  
Henan Shuanghui Investment & Development, Cl A     22,935       86,633  
Hengan International Group     14,500       67,051  
Inner Mongolia Yili Industrial Group, Cl A     74,700       316,757  
Jiangsu Yanghe Brewery JSC, Cl A     11,417       275,080  
Kweichow Moutai, Cl A     2,700       715,565  
Luzhou Laojiao, Cl A     11,300       419,252  
Proya Cosmetics, Cl A     2,800       74,145  
Shanghai Flyco Electrical Appliance, Cl A     9,717       116,989  
Shanxi Xinghuacun Fen Wine Factory, Cl A     7,800       309,397  
Tsingtao Brewery, Cl H     14,000       152,842  
Want Want China Holdings     106,000       68,192  
Wuliangye Yibin, Cl A     22,000       631,107  
              4,231,165  

 

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

 

147

 

 

Schedule of Investments March 31, 2023

 

KraneShares CICC China Consumer Leaders Index ETF (concluded)

 

    Shares     Value  
COMMON STOCK (continued)                
Real Estate — 0.8%                
Youngor Group, Cl A     57,600     $ 54,687  
TOTAL CHINA             6,964,969  
                 
TOTAL COMMON STOCK
(Cost $6,867,158)
            6,964,969  
                 
TOTAL INVESTMENTS — 99.9%
(Cost $6,867,158)
            6,964,969  
OTHER ASSETS LESS LIABILITIES – 0.1%             4,865  
NET ASSETS - 100%           $ 6,969,834  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

148

 

 

Schedule of Investments March 31, 2023

 

KraneShares SSE STAR Market 50 Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.7%                 
CHINA — 99.7%                
Consumer Discretionary — 4.5%                
Beijing Roborock Technology, Cl A     20,369     $ 1,082,610  
Ninebot GDR*     155,726       853,542  
Tianneng Battery Group, Cl A     49,318       247,477  
              2,183,629  
Health Care — 5.7%                
Bloomage Biotechnology, Cl A     35,069       579,096  
iRay Technology, Cl A     13,171       693,964  
Nanjing Vazyme Biotech, Cl A     13,047       77,135  
Shanghai Junshi Biosciences, Cl A*     138,980       972,231  
Shanghai United Imaging Healthcare, Cl A*     17,919       402,462  
              2,724,888  
Industrials — 10.1%                
GoodWe Technologies, Cl A     26,988       1,137,535  
Hoymiles Power Electronics, Cl A     6,168       597,947  
Ningbo Ronbay New Energy Technology, Cl A     98,480       980,885  
Pylon Technologies, Cl A     31,835       1,138,073  
Sany Heavy Energy, Cl A*     51,960       237,279  
Zhuhai CosMX Battery, Cl A     40,654       111,532  
Zhuzhou CRRC Times Electric, Cl A     94,891       659,662  
              4,862,913  
Information Technology — 71.4%                
3peak, Cl A     21,676       768,559  
ACM Research Shanghai, Cl A*     14,124       197,217  
Advanced Micro-Fabrication Equipment China, Cl A*     157,030       3,373,014  
Amlogic Shanghai, Cl A*     105,367       1,290,678  
ASR Microelectronics, Cl A*     13,642       151,591  
Beijing Kingsoft Office Software, Cl A     67,158       4,625,651  
Cambricon Technologies, Cl A*     72,953       1,975,392  
China Railway Signal & Communication, Cl A     941,480       743,061  
China Resources Microelectronics, Cl A     192,219       1,692,304  
Everdisplay Optronics Shanghai, Cl A*     1,510,023       565,107  
GalaxyCore, Cl A*     108,666       278,022  
Guobo Electronics, Cl A     11,649       148,596  
Hygon Information Technology, Cl A*     75,808       851,878  

 

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

 

149

 

 

Schedule of Investments March 31, 2023

 

KraneShares SSE STAR Market 50 Index ETF (concluded)

 

    Shares     Value  
COMMON STOCK (continued)                
Information Technology (continued)                
Jinko Solar, Cl A     546,038     $ 1,107,613  
Loongson Technology, Cl A*     11,678       249,314  
Montage Technology, Cl A     288,876       2,924,389  
National Silicon Industry Group, Cl A*     397,757       1,354,759  
Qi An Xin Technology Group, Cl A*     99,319       1,009,489  
Shanghai Friendess Electronic Technology, Cl A     15,864       423,448  
Shanghai Fudan Microelectronics Group, Cl A     96,498       919,832  
Shenzhen Transsion Holdings, Cl A     117,063       1,725,099  
SICC, Cl A*     14,015       149,246  
Suzhou Novosense Microelectronics, Cl A     11,009       466,135  
Trina Solar, Cl A     394,844       2,994,980  
Verisilicon Microelectronics Shanghai, Cl A*     90,597       1,278,355  
Xinjiang Daqo New Energy, Cl A     108,929       771,368  
Yuneng Technology*     8,737       422,480  
Zhejiang Supcon Technology, Cl A     126,599       1,914,480  
              34,372,057  
Materials — 8.0%                
Cathay Biotech, Cl A     63,410       569,803  
Hunan Changyuan Lico, Cl A     279,647       611,637  
Jiangsu Cnano Technology, Cl A     67,630       666,915  
Suzhou Nanomicro Technology, Cl A     58,441       425,247  
Western Superconducting Technologies, Cl A     118,247       1,403,853  
Zhongfu Shenying Carbon Fiber, Cl A*     26,093       146,892  
              3,824,347  
TOTAL CHINA             47,967,834  
                 
TOTAL COMMON STOCK
(Cost $52,333,165)
            47,967,834  
                 
TOTAL INVESTMENTS — 99.7%
(Cost $52,333,165)
            47,967,834  
OTHER ASSETS LESS LIABILITIES – 0.3%             161,676  
NET ASSETS - 100%           $ 48,129,510  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

150

 

 

Schedule of Investments March 31, 2023

 

KraneShares Hang Seng TECH Index ETF

 

 

    Shares     Value  
COMMON STOCK — 94.9%                 
CHINA — 94.9%                
Communication Services — 31.3%                
Baidu, Cl A*     17,150     $ 324,869  
Bilibili, Cl Z*     7,860       189,843  
China Literature*     14,000       72,230  
Kingsoft     29,000       142,784  
Kuaishou Technology, Cl B*     78,100       601,424  
NetEase     18,505       325,313  
Tencent Holdings     12,900       633,994  
Weibo, Cl A*     140       3,085  
              2,293,542  
Consumer Discretionary — 34.7%                
Alibaba Group Holding*     51,600       659,958  
Haier Smart Home, Cl H     74,026       232,924  
JD.com, Cl A     16,110       352,975  
Li Auto, Cl A*     26,200       327,085  
Meituan, Cl B*     34,580       632,135  
NIO, Cl A*     1,530       15,505  
Trip.com Group*     3,100       116,024  
XPeng, Cl A*     36,500       203,425  
              2,540,031  
Consumer Staples — 5.6%                
Alibaba Health Information Technology*     164,000       118,666  
JD Health International*     33,700       250,712  
Ping An Healthcare and Technology*     15,300       38,708  
              408,086  
Financials — 1.1%                
ZhongAn Online P&C Insurance, Cl H*     25,800       81,344  
                 
Information Technology — 22.2%                
AAC Technologies Holdings*     22,000       54,258  
BYD Electronic International     24,000       74,599  
GDS Holdings, Cl A*     11,600       28,077  
Hua Hong Semiconductor*     20,000       88,535  

 

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

 

151

 

 

Schedule of Investments March 31, 2023

 

KraneShares Hang Seng TECH Index ETF (concluded)

 

    Shares     Value  
COMMON STOCK (continued)                
Information Technology (continued)                
Kingdee International Software Group*     85,000     $ 137,733  
Lenovo Group     222,000       240,384  
SenseTime Group, Cl B*     508,000       172,139  
Sunny Optical Technology Group     21,640       261,749  
Xiaomi, Cl B*     365,600       563,540  
              1,621,014  
TOTAL CHINA             6,944,017  
                 
TOTAL COMMON STOCK
(Cost $6,130,779)
            6,944,017  
                 
TOTAL INVESTMENTS — 94.9%
(Cost $6,130,779)
            6,944,017  
OTHER ASSETS LESS LIABILITIES – 5.1%             370,788  
NET ASSETS - 100%           $ 7,314,805  

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

152

 

 

Schedule of Investments March 31, 2023

 

KraneShares China Innovation ETF

 

 

    Shares     Value  
EXCHANGE - TRADED FUNDS — 100.0%                
KraneShares CICC China 5G and Semiconductor Index ETF      14,816     $ 262,320  
KraneShares CSI China Internet ETF*      15,155       472,684  
KraneShares MSCI All China Health Care Index ETF      17,947       368,272  
KraneShares MSCI China Clean Technology Index ETF      11,210       320,491  
KraneShares SSE STAR Market 50 Index ETF*      10,161       172,534  
TOTAL EXCHANGE - TRADED FUNDS
(Cost $2,325,788)
            1,596,301  
                 
TOTAL INVESTMENTS — 100.0%
(Cost $2,325,788)
            1,596,301  
OTHER ASSETS LESS LIABILITIES – 0.0%             758  
NET ASSETS - 100%           $ 1,597,059  

 

* Non-income producing security.
Affiliated Investment.

 

As of March 31, 2023, 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.

 

Transactions with affiliated companies during the period ended March 31, 2023 are as follows:

 

Value as of 3/31/2022     Purchases at
Cost
    Proceeds
from Sale
    Change in
Unrealized
Appreciation
(Depreciation)
    Realized
Gain/(Loss)
    Value as of
3/31/2023
    Dividend
Income
    Capital
Gain
Distributions
 
KraneShares CICC China 5G and Semiconductor Index ETF                                    
$ 433,558     $ 16,145     $ (155,765 )   $ (22,438 )   $ (9,180 )   $ 262,320     $ 816     $  
KraneShares CSI China Internet ETF                                  
  759,535       9,011       (383,427 )     126,216       (38,651 )     472,684              
KraneShares MSCI All China Health Care Index ETF                                  
  696,488       9,033       (280,489 )     3,581       (60,341 )     368,272       217        
KraneShares MSCI China Clean Technology Index ETF                                  
  603,644       40,705       (282,187 )     (70,724 )     29,053       320,491       1,029       4,378  
KraneShares SSE STAR Market 50 Index ETF                                  
  296,468       9,020       (111,235 )     (13,550 )     (8,169 )     172,534              
$ 2,789,693     $ 83,914     $ (1,213,103 )   $ 23,085     $ (87,288 )   $ 1,596,301     $ 2,062     $ 4,378  

 

See “Glossary” for abbreviations.

 

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

 

153

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF

 

 

    Shares     Value  
COMMON STOCK — 99.2%                 
AUSTRALIA — 15.4%                
Communication Services — 1.1%                
carsales.com     1,983     $ 29,391  
                 
Consumer Discretionary — 3.1%                
JB Hi-Fi     2,910       82,773  
                 
Financials — 1.2%                
Steadfast Group     8,108       31,768  
                 
Health Care — 2.9%                
EBOS Group     1,024       29,791  
Sonic Healthcare     1,972       46,015  
              75,806  
Information Technology — 1.2%                
Altium     664       16,935  
Technology One     1,480       14,412  
              31,347  
Materials — 2.2%                
Brickworks     2,187       33,177  
Northern Star Resources     2,920       24,074  
              57,251  
Real Estate — 1.4%                
Charter Hall Group      4,871       35,886  
                 
Utilities — 2.3%                
APA Group     8,861       60,059  
TOTAL AUSTRALIA             404,281  

 

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

 

154

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
CHINA — 26.6%                
Consumer Discretionary — 2.3%                
Bosideng International Holdings     110,000     $ 61,376  
                 
Financials — 5.9%                
New China Life Insurance, Cl H     40,300       95,797  
Ping An Insurance Group of China, Cl H     9,000       58,586  
              154,383  
Health Care — 5.9%                
China Medical System Holdings     37,000       58,446  
CSPC Pharmaceutical Group     26,000       25,570  
Sinopharm Group, Cl H     23,200       70,191  
              154,207  
Real Estate — 5.2%                
China Resources Land     12,000       54,726  
Longfor Group Holdings     29,000       81,829  
              136,555  
Utilities — 7.3%                
China Gas Holdings     40,400       56,921  
China Resources Gas Group     13,000       47,943  
Guangdong Investment     86,000       87,972  
              192,836  
TOTAL CHINA             699,357  
                 
HONG KONG — 10.8%                
Financials — 0.8%                
AIA Group     2,000       21,058  
                 
Industrials — 0.8%                
Techtronic Industries     2,000       21,618  
                 
Real Estate — 4.2%                
Link REIT      8,300       53,395  
Swire Properties     22,000       56,612  
              110,007  
Utilities — 5.0%                
CK Infrastructure Holdings     14,000       76,153  
Hong Kong & China Gas     61,000       53,696  
              129,849  
TOTAL HONG KONG             282,532  

 

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

 

155

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
INDIA — 1.0%                
Information Technology — 1.0%                
Infosys ADR     1,454     $ 25,358  
TOTAL INDIA             25,358  
                 
INDONESIA — 0.9%                
Financials — 0.9%                
Bank Central Asia     42,600       24,859  
TOTAL INDONESIA             24,859  
                 
JAPAN — 31.0%                
Communication Services — 1.9%                
Hakuhodo DY Holdings     1,100       12,356  
KDDI     600       18,452  
Nippon Telegraph & Telephone     600       17,862  
              48,670  
Consumer Discretionary — 4.2%                
Fujitsu General     100       2,806  
Hikari Tsushin     100       13,953  
Open House Group     400       14,877  
Rinnai     300       7,292  
Sekisui Chemical     1,100       15,505  
Sekisui House     1,200       24,327  
Seria     500       9,851  
TS Tech     1,800       22,708  
              111,319  
Consumer Staples — 3.8%                
Asahi Group Holdings     400       14,799  
Kao     300       11,647  
Lion     700       7,526  
Morinaga     400       11,286  
Seven & i Holdings     300       13,468  
Sundrug     500       13,656  
Takara Holdings     2,000       15,358  
Welcia Holdings     200       4,259  
Yakult Honsha     100       7,236  
              99,235  
Financials — 3.2%                
Chiba Bank     1,900       12,206  
SBI Holdings     1,400       27,602  
Tokio Marine Holdings     900       17,224  
Tokyo Century     400       13,239  

 

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

 

156

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Financials (continued)                
Zenkoku Hosho     400     $ 15,013  
              85,284  
Health Care — 2.8%                
Alfresa Holdings     1,400       17,841  
Astellas Pharma     1,100       15,563  
Mani     600       8,142  
Medipal Holdings     1,000       13,555  
Shionogi     200       8,982  
Ship Healthcare Holdings     400       7,324  
Terumo     100       2,685  
              74,092  
Industrials — 3.7%                
Benefit One     600       8,457  
COMSYS Holdings     1,200       22,027  
EXEO Group     1,300       23,413  
Kurita Water Industries     200       9,077  
Sanwa Holdings     2,100       22,343  
SHO-BOND Holdings     300       12,353  
              97,670  
Information Technology — 3.7%                
Azbil     300       8,137  
Itochu Techno-Solutions     500       12,228  
Murata Manufacturing     200       12,082  
NEC Networks & System Integration     1,000       12,135  
Nomura Research Institute     200       4,606  
NTT Data     300       3,904  
Oracle Japan NIP     200       14,321  
Otsuka     400       14,081  
SCSK     800       11,631  
TIS     200       5,245  
              98,370  
Materials — 2.0%                
Nippon Sanso Holdings     600       10,739  
Nissan Chemical     300       13,502  
Nitto Denko     200       12,848  
Shin-Etsu Chemical     500       16,061  
              53,150  
Real Estate — 5.1%                
Aeon Mall     1,000       13,051  
Hulic     2,400       19,602  
Japan Metropolitan Fund Invest      29       21,071  
Japan Real Estate Investment      5       19,836  

 

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

 

157

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (continued)

 

    Shares     Value  
COMMON STOCK (continued)                
Real Estate (continued)                
Mori Hills REIT Investment      18     $ 19,962  
Nomura Real Estate Holdings     900       19,814  
Tokyo Tatemono     1,600       19,415  
              132,751  
Utilities — 0.6%                
Nippon Gas     1,000       14,456  
TOTAL JAPAN             814,997  
                 
NEW ZEALAND — 1.1%                
Health Care — 1.1%                
Fisher & Paykel Healthcare     1,729       28,829  
TOTAL NEW ZEALAND             28,829  
                 
PHILIPPINES — 1.6%                
Industrials — 1.6%                
International Container Terminal Services     10,690       41,962  
TOTAL PHILIPPINES             41,962  
                 
TAIWAN — 9.2%                
Financials — 1.1%                
Chailease Holding     4,000       29,362  
                 
Information Technology — 8.1%                
Advantech     3,000       36,555  
Sinbon Electronics     4,000       44,930  
Wistron     96,000       131,951  
              213,436  
TOTAL TAIWAN             242,798  
                 
THAILAND — 0.7%                
Financials — 0.7%                
Krungthai Card     12,300       19,514  
TOTAL THAILAND             19,514  
                 
UNITED STATES — 0.9%                
Information Technology — 0.9%                
Computershare     1,602       23,165  
TOTAL UNITED STATES             23,165  
                 
TOTAL COMMON STOCK
(Cost $2,497,865)
            2,607,652  
                 
TOTAL INVESTMENTS — 99.2%
(Cost $2,497,865)
            2,607,652  
OTHER ASSETS LESS LIABILITIES – 0.8%             21,278  
NET ASSETS - 100%           $ 2,628,930  

 

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

 

158

 

 

Schedule of Investments March 31, 2023

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF (concluded)

 

Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
Real Estate Investment Trust

 

As of March 31, 2023, 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.

 

See “Glossary” for abbreviations.

 

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

 

159

 

 

Schedule of Investments March 31, 2023

 

KraneShares China Internet and Covered Call Strategy ETF

 

 

    Shares     Value  
EXCHANGE - TRADED FUND — 106.2%                
KraneShares CSI China Internet ETF*      180,912     $ 5,642,645  
TOTAL EXCHANGE - TRADED FUND
(Cost $5,970,676)
            5,642,645  
                 
TOTAL INVESTMENTS — 106.2%
(Cost $5,970,676)
            5,642,645  
OTHER ASSETS LESS LIABILITIES – (6.2)%             (328,661 )
NET ASSETS - 100%           $ 5,313,984  
WRITTEN OPTIONS — (10.3)%
(Premiums Received $(347,588))
          $ (547,635 )

 

* Non-income producing security.
Affiliated Investment.

 

Description   Number of
Contracts
    Notional
Amount
    Exercise
Price
    Expiration Date   Market Value  
WRITTEN OPTIONS — (10.3)%                                    
Call Options                                    
KWEB US     (1,452 )     (4,528,788 )   $ 28.50     04/22/23   $ (454,955 )
KWEB US     (186 )     (580,134 )   $ 28.67     04/22/23     (55,744 )
KWEB US     (171 )     (533,349 )   $ 31.19     05/20/23     (36,936 )
Total Written Options (Premiums Received $347,588)           (547,635 )

 

As of March 31, 2023, 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.

 

Transactions with affiliated companies during the period ended March 31, 2023 are as follows:

 

Value as of
1/12/2023
    Purchases at
Cost
    Proceeds
from Sale
    Change in
Unrealized
Appreciation/
(Depreciation)
    Realized
Gain/(Loss)
    Value as of
3/31/2023
    Dividend
Income
    Capital
Gain
Distributions
 
KraneShares CSI China Internet ETF                              
$     $ 5,994,799     $ (24,299 )   $ (328,031 )   $ 176     $ 5,642,645     $     $  

 

See “Glossary” for abbreviations.

 

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

 

160

 

 

Schedule of Investments March 31, 2023

 

Glossary (abbreviations which may be used in preceding Schedule of Investments):

 

Fund Abbreviations

ADR — American Depositary Receipt

Cl — Class

ETF — Exchange-Traded Fund

GDR — Global Depositary Receipt

JSC — Joint-Stock Company

MTN — Medium Term Note

PJSC — Public Joint-Stock Company

 

161

 

 

Statements of Assets and Liabilities

March 31, 2023

 

    KraneShares CICC
China Leaders 100
Index ETF
    KraneShares CSI
China Internet ETF
    KraneShares
Bosera MSCI China
A 50 Connect Index
ETF
 
Assets:                        
Investments at Value   $ 5,964,900     $ 6,141,887,821 *   $ 470,173,092  
Cash and Cash Equivalents     3,143       3,202,209       231,436  
Foreign Currency at Value     5             7,199,092  
Receivable for Capital Shares Sold                 11,178  
Receivable for Investment Securities Sold                 4,989  
Dividend and Interest Receivable           1,455,205        
Total Assets     5,968,048       6,146,545,235       477,619,787  
                         
Liabilities:                        
Payable for Management Fees     3,430       3,428,609       220,664  
Payable for Trustees’ Fee     43       45,427       3,434  
Payable for Investment Securities Purchased                 780  
Obligation to Return Securities Lending Collateral           31,393,462        
Payable for Capital Shares Redeemed                 6,521,842  
Payable for Securities Lending Fees           8,349        
Total Liabilities     3,473       34,875,847       6,746,720  
Net Assets   $ 5,964,575     $ 6,111,669,388     $ 470,873,067  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 7,229,529     $ 11,449,252,623     $ 638,410,630  
Total Distributable Loss     (1,264,954 )     (5,337,583,235 )     (167,537,563 )
Net Assets   $ 5,964,575     $ 6,111,669,388     $ 470,873,067  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     250,000       195,600,000       18,050,000  
Net Asset Value, Offering and Redemption Price Per Share   $ 23.86     $ 31.25     $ 26.09  
Cost of Investments   $ 5,950,237     $ 7,161,788,151     $ 530,344,133  
Cost of Foreign Currency     5             7,186,781  
  *Includes Market Value of Securities on Loan           29,815,441        

 

* Includes Market Value of Securities on Loan.

 

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 Assets and Liabilities (continued)

March 31, 2023

 

    KraneShares
Bloomberg China
Bond Inclusion
Index ETF
    KraneShares MSCI
All China Index ETF
    KraneShares MSCI
One Belt One Road
Index ETF
 
Assets:                        
Investments at Value   $ 7,491,137     $ 8,779,154     $ 4,449,669  
Cash and Cash Equivalents     630,583       10,124       32,647  
Foreign Currency at Value     12,110       39       1,337  
Receivable for Investment Securities Sold     2,913,221              
Dividend and Interest Receivable     109,431       302       6,834  
Reclaim Receivable           79       92  
Receivable from Adviser           7,295        
Other Receivable           1,083        
Total Assets     11,156,482       8,798,076       4,490,579  
                         
Liabilities:                        
Unrealized Depreciation on Spot Contracts     6,731             1  
Payable for Management Fees     4,524       3,492       2,989  
Payable for Trustees’ Fee     79       63       33  
Payable for Foreign Capital Gains Tax                 2,323  
Total Liabilities     11,334       3,555       5,346  
Net Assets   $ 11,145,148     $ 8,794,521     $ 4,485,233  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 11,465,755     $ 15,893,905     $ 8,878,840  
Total Distributable Loss     (320,607 )     (7,099,384 )     (4,393,607 )
Net Assets   $ 11,145,148     $ 8,794,521     $ 4,485,233  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     350,000       400,000       200,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 31.84     $ 21.99     $ 22.43  
Cost of Investments   $ 7,781,818     $ 10,372,666     $ 5,509,961  
Cost of Foreign Currency     12,091       39       1,332  

 

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 Assets and Liabilities (continued)

March 31, 2023

 

    KraneShares
Emerging Markets
Consumer
Technology Index
ETF
    KraneShares
MSCI China Clean
Technology Index
ETF
    KraneShares
Electric Vehicles
and Future Mobility
Index ETF
 
Assets:                        
Investments at Value   $ 31,212,210 *   $ 95,644,284     $ 192,562,013 *
Cash and Cash Equivalents     33,114       27,874       498,971  
Foreign Currency at Value     56       59       73,766  
Dividend and Interest Receivable     20,780             189,351  
Reclaim Receivable     5,968             323,433  
Unrealized Appreciation on Spot Contracts                 45  
Total Assets     31,272,128       95,672,217       193,647,579  
                         
Liabilities:                        
Obligation to Return Securities Lending Collateral     696,591             8,431,059  
Payable for Management Fees     13,436       60,982       105,027  
Payable for Securities Lending Fees     309             4,364  
Payable for Trustees’ Fee     219       694       1,389  
Total Liabilities     710,555       61,676       8,541,839  
Net Assets   $ 30,561,573     $ 95,610,541     $ 185,105,740  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 85,729,026     $ 168,044,502     $ 282,812,711  
Total Distributable Loss     (55,167,453 )     (72,433,961 )     (97,706,971 )
Net Assets   $ 30,561,573     $ 95,610,541     $ 185,105,740  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     2,000,002       3,350,002       6,050,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 15.28     $ 28.54     $ 30.60  
Cost of Investments   $ 46,013,651     $ 125,747,403     $ 233,360,715  
Cost of Foreign Currency     55       57       60,217  
  *Includes Market Value of Securities on Loan     632,846             8,113,787  

 

* Includes Market Value of Securities on Loan.

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

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

 

164

 

 

Statements of Assets and Liabilities (continued)

March 31, 2023

 

    KraneShares MSCI
All China Health
Care Index ETF
    KraneShares Asia
Pacific High Income
Bond ETF
    KraneShares
Emerging Markets
Healthcare Index
ETF
 
Assets:                        
Investments at Value   $ 94,526,282     $ 18,863,415     $ 2,095,244  
Cash and Cash Equivalents     17,842       1,427,814       4,417  
Foreign Currency at Value     73       383        
Dividend and Interest Receivable     348       281,261       2,582  
Total Assets     94,544,545       20,572,873       2,102,243  
                         
Liabilities:                        
Payable for Management Fees     51,760       11,704       1,380  
Payable for Trustees’ Fee     710       146       15  
Payable for Securities Lending Fees     35             1  
Payable for Investment Securities Purchased           515,750        
Foreign Currency Payable at Value                 361  
Payable for Foreign Capital Gains Tax                 5,416  
Total Liabilities     52,505       527,600       7,173  
Net Assets   $ 94,492,040     $ 20,045,273     $ 2,095,070  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 171,477,863     $ 28,615,457     $ 3,759,926  
Total Distributable Loss     (76,985,823 )     (8,570,184 )     (1,664,856 )
Net Assets   $ 94,492,040     $ 20,045,273     $ 2,095,070  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     4,550,002       750,001       100,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 20.77     $ 26.73     $ 20.95  
Cost of Investments   $ 112,170,471     $ 19,252,157     $ 2,894,498  
Cost of Foreign Currency     73       371       (362 )

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

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

 

165

 

 

Statements of Assets and Liabilities (continued)

March 31, 2023

 

    KraneShares MSCI
Emerging Markets
ex China Index ETF
    KraneShares MSCI
China ESG Leaders
Index ETF
    KraneShares
CICC China 5G &
Semiconductor
Index ETF
 
Assets:                        
Investments at Value   $ 29,907,267     $ 4,974,501     $ 15,097,237  
Cash and Cash Equivalents     101,420       5,376        
Foreign Currency at Value     15,074              
Dividend and Interest Receivable     117,113              
Reclaim Receivable     462              
Receivable for Investment Securities Sold                 230,395  
Total Assets     30,141,336       4,979,877       15,327,632  
                         
Liabilities:                        
Payable for Foreign Capital Gains Tax     24,440              
Payable for Management Fees     5,080       2,370       7,738  
Payable for Trustees’ Fee     179       36       101  
Unrealized Depreciation on Spot Contracts     2             16  
Payable for Investment Securities Purchased                 140,703  
Payable to Custodian                 82,662  
Total Liabilities     29,701       2,406       231,220  
Net Assets   $ 30,111,635     $ 4,977,471     $ 15,096,412  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 35,254,875     $ 8,616,093     $ 29,808,217  
Total Distributable Loss     (5,143,240 )     (3,638,622 )     (14,711,805 )
Net Assets   $ 30,111,635     $ 4,977,471     $ 15,096,412  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     1,200,002       250,000       850,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 25.09     $ 19.91     $ 17.76  
Cost of Investments   $ 33,335,675     $ 5,874,589     $ 17,470,076  
Cost of Foreign Currency     14,734              

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

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

 

166

 

 

Statements of Assets and Liabilities (continued)

March 31, 2023

 

    KraneShares CICC
China Consumer
Leaders Index ETF
    KraneShares SSE
STAR Market 50
Index ETF
    KraneShares Hang
Seng TECH Index
ETF
 
Assets:                        
Investments at Value   $ 6,964,969     $ 47,967,834     $ 6,944,017  
Cash and Cash Equivalents     57,584       37,623       17,397  
Foreign Currency at Value     1       158,131        
Receivable for Investment Securities Sold     45,515             357,457  
Unrealized Appreciation on Spot Contracts     8              
Receivable for Capital Shares Sold                 25  
Total Assets     7,068,077       48,163,588       7,318,896  
                         
Liabilities:                        
Payable for Investment Securities Purchased     94,210              
Payable for Management Fees     3,982       33,746       3,978  
Payable for Trustees’ Fee     51       320       51  
Unrealized Depreciation on Spot Contracts           12       62  
Total Liabilities     98,243       34,078       4,091  
Net Assets   $ 6,969,834     $ 48,129,510     $ 7,314,805  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 27,891,815     $ 73,645,379     $ 11,206,977  
Total Distributable Loss     (20,921,981 )     (25,515,869 )     (3,892,172 )
Net Assets   $ 6,969,834     $ 48,129,510     $ 7,314,805  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     350,002       2,850,000       550,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 19.91     $ 16.89     $ 13.30  
Cost of Investments   $ 6,867,158     $ 52,333,165     $ 6,130,779  
Cost of Foreign Currency     1       158,352        

 

Amounts designated as “—” are $0 or have been rounded to $0.

 

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

 

167

 

 

Statements of Assets and Liabilities (concluded)

March 31, 2023

 

    KraneShares China
Innovation ETF
    KraneShares S&P
Pan Asia Dividend
Aristocrats Index
ETF
    KraneShares
China Internet
and Covered Call
Strategy ETF
 
Assets:                        
Investments at Value   $ 1,596,301     $ 2,607,652     $ 5,642,645  
Cash and Cash Equivalents     926       11,017       185,004  
Foreign Currency at Value           620        
Receivable for Capital Shares Sold                 531,924  
Receivable for Investment Securities Sold                 36,418  
Dividend and Interest Receivable           11,157        
Unrealized Appreciation on Spot Contracts           1        
Total Assets     1,597,227       2,630,447       6,395,991  
                         
Liabilities:                        
Written Options at Value                 547,635  
Payable for Management Fees     157       1,498       990  
Payable for Trustees’ Fee     11       19       33  
Payable for Investment Securities Purchased                 533,349  
Total Liabilities     168       1,517       1,082,007  
Net Assets   $ 1,597,059     $ 2,628,930     $ 5,313,984  
                         
Net Assets Consist of:                        
Paid-in Capital   $ 2,448,505     $ 2,500,050     $ 5,842,063  
Total Distributable Earnings/(Loss)     (851,446 )     128,880       (528,079 )
Net Assets   $ 1,597,059     $ 2,628,930     $ 5,313,984  
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value)     100,002       100,002       250,002  
Net Asset Value, Offering and Redemption Price Per Share   $ 15.97     $ 26.29     $ 21.26  
Cost of Investments   $ 2,325,788     $ 2,497,865     $ 5,970,676  
Cost of Foreign Currency           616        
Written Options, Premiums Received                 347,588  

 

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 Operations

For the Year Ended March 31, 2023

 

    KraneShares CICC
China Leaders 100
Index ETF
    KraneShares CSI
China Internet ETF
    KraneShares Bosera
MSCI China A 50
Connect Index ETF
 
Investment Income:                        
Dividend Income   $ 305,975     $ 78,933,611     $ 14,609,313  
Interest Income     406       270,697       7,467  
Security Lending Income           3,155,440        
Less: Foreign Taxes Withheld     (30,637 )           (1,461,599 )
Total Investment Income     275,744       82,359,748       13,155,181  
                         
Expenses:                        
Management Fees      44,615       43,182,019       4,319,739  
Trustees’ Fees     294       288,541       25,424  
Security Lending Fees            301,354        
Insurance Expense     117       81,751       7,584  
Total Expenses     45,026       43,853,665       4,352,747  
Management Fee Waiver                  (1,320,906 )
Net Expenses     45,026       43,853,665       3,031,841  
Net Investment Income     230,718       38,506,083       10,123,340  
                         
Net Realized Gain (Loss) on:                        
Investments     (1,259,104 )     (2,232,239,153 )     (100,887,697 )
Foreign Currency Translations     340       (142,082 )     (722,531 )
Net Realized Loss     (1,258,764 )     (2,232,381,235 )     (101,610,228 )
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     (273,162 )     2,302,137,112       (2,753,333 )
Foreign Currency Translations           1,108       (36,079 )
Net Change in Unrealized Appreciation (Depreciation)     (273,162 )     2,302,138,220       (2,789,412 )
Net Realized and Unrealized Gain (Loss)     (1,531,926 )     69,756,985       (104,399,640 )
Net Increase (Decrease) in Net Assets Resulting from Operations   $ (1,301,208 )   $ 108,263,068     $ (94,276,300 )

 

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.

 

169

 

 

Statements of Operations (continued)

For the Year Ended March 31, 2023

 

    KraneShares
Bloomberg China
Bond Inclusion Index
ETF
    KraneShares MSCI
All China Index ETF
    KraneShares MSCI
One Belt One Road
Index ETF
 
Investment Income:                        
Dividend Income   $     $ 225,567     $ 239,797  
Interest Income     359,992       682       687  
Less: Foreign Taxes Withheld           (16,504 )     (26,875 )
Total Investment Income     359,992       209,745       213,609  
                         
Expenses:                        
Management Fees      92,989       53,233       44,408  
Trustees’ Fees     629       329       254  
Insurance Expense     153       203       103  
Total Expenses     93,771       53,765       44,765  
Management Fee Waiver      (27,350 )     (15,657 )      
Net Expenses     66,421       38,108       44,765  
Net Investment Income     293,571       171,637       168,844  
                         
Net Realized Gain (Loss) on:                        
Investments     (17,798 )     (6,453,755 )     50,123  
Foreign Currency Translations     (454,914 )     2,550       (3,167 )
Net Realized Gain (Loss)     (472,712 )     (6,451,205 )     46,956  
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     (434,722 )     4,729,576       (1,350,068 )
Accrued Foreign Capital Gains Tax on Appreciated Securities                 1,054  
Foreign Currency Translations     (1,656 )     (28 )     213  
Net Change in Unrealized Appreciation (Depreciation)     (436,378 )     4,729,548       (1,348,801 )
Net Realized and Unrealized Loss     (909,090 )     (1,721,657 )     (1,301,845 )
Net Decrease in Net Assets Resulting from Operations   $ (615,519 )   $ (1,550,020 )   $ (1,133,001 )

 

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.

 

170

 

 

Statements of Operations (continued)

For the Year Ended March 31, 2023

 

   

KraneShares
Emerging Markets
Consumer
Technology Index ETF

    KraneShares
MSCI China Clean
Technology Index ETF
    KraneShares Electric
Vehicles and Future
Mobility Index ETF
 
Investment Income:                        
Dividend Income   $ 415,141     $ 1,427,531     $ 3,672,913  
Interest Income     1,560       7,420       7,080  
Security Lending Income     61,311             676,692  
Less: Foreign Taxes Withheld           (37,819 )     (474,377 )
Total Investment Income     478,012       1,397,132       3,882,308  
                         
Expenses:                        
Management Fees      296,203       931,302       1,545,275  
Trustees’ Fees     1,649       5,400       10,180  
Security Lending Fees      6,087             67,245  
Insurance Expense     805       1,856       3,530  
Total Expenses     304,744       938,558       1,626,230  
Management Fee Waiver      (75,950 )            
Net Expenses     228,794       938,558       1,626,230  
Net Investment Income     249,218       458,574       2,256,078  
                         
Net Realized Gain (Loss) on:                        
Investments     (21,039,753 )     (32,326,631 )     (41,582,319 )
Foreign Currency Translations     (36,077 )     (738 )     (49,822 )
Net Realized Loss     (21,075,830 )     (32,327,369 )     (41,632,141 )
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     12,502,057       533,750       (23,328,171 )
Foreign Currency Translations     (240 )     2       4,849  
Net Change in Unrealized Appreciation (Depreciation)     12,501,817       533,752       (23,323,322 )
Net Realized and Unrealized Loss     (8,574,013 )     (31,793,617 )     (64,955,463 )
Net Decrease in Net Assets Resulting from Operations   $ (8,324,795 )   $ (31,335,043 )   $ (62,699,385 )

 

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.

 

171

 

 

Statements of Operations (continued)

For the Year Ended March 31, 2023

 

    KraneShares MSCI
All China Health
Care Index ETF
    KraneShares Asia
Pacific High Income
Bond ETF
    KraneShares
Emerging Markets
Healthcare Index ETF
 
Investment Income:                        
Dividend Income   $ 1,126,320     $     $ 18,224  
Interest Income     9,540       1,966,337       37  
Security Lending Income     19,536             122  
Less: Foreign Taxes Withheld     (88,165 )     (650 )     (2,869 )
Total Investment Income     1,067,231       1,965,687       15,514  
                         
Expenses:                        
Management Fees      831,225       150,544       16,978  
Trustees’ Fees     4,939       985       100  
Security Lending Fees      1,908              
Insurance Expense     1,441       386       140  
Total Expenses     839,513       151,915       17,218  
Management Fee Waiver      (149,193 )            
Net Expenses     690,320       151,915       17,218  
Net Investment Income (Loss)     376,911       1,813,772       (1,704 )
                         
Net Realized Gain (Loss) on:                        
Investments     (41,109,231 )     (3,640,259 )     (360,559 )
Foreign Currency Translations     (31,628 )           (254 )
Net Realized Loss     (41,140,859 )     (3,640,259 )     (360,813 )
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     23,296,248       924,572       (12,631 )
Accrued Foreign Capital Gains Tax on Appreciated Securities                 6,195  
Foreign Currency Translations           12       (252 )
Net Change in Unrealized Appreciation (Depreciation)     23,296,248       924,584       (6,688 )
Net Realized and Unrealized Loss     (17,844,611 )     (2,715,675 )     (367,501 )
Net Decrease in Net Assets Resulting from Operations   $ (17,467,700 )   $ (901,903 )   $ (369,205 )

 

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.

 

172

 

 

Statements of Operations (continued)

For the Year Ended March 31, 2023

 

    KraneShares MSCI
Emerging Markets ex
China Index ETF
    KraneShares MSCI
China ESG Leaders
Index ETF
    KraneShares
CICC China 5G &
Semiconductor Index
ETF
 
Investment Income:                        
Dividend Income   $ 951,054     $ 147,892     $ 195,421  
Interest Income     2,191       11       909  
Less: Foreign Taxes Withheld     (158,460 )     (7,336 )     (18,680 )
Total Investment Income     794,785       140,567       177,650  
                         
Expenses:                        
Management Fees      121,761       31,861       124,591  
Trustees’ Fees     933       182       704  
Insurance Expense     377       101       288  
Total Expenses     123,071       32,144       125,583  
Management Fee Waiver      (73,476 )           (22,362 )
Net Expenses     49,595       32,144       103,221  
Net Investment Income     745,190       108,423       74,429  
                         
Net Realized Gain (Loss) on:                        
Investments     (1,515,588 )     (2,244,873 )     (2,834,021 )
Foreign Currency Translations     (63,432 )     (989 )     (8,140 )
Net Realized Loss     (1,579,020 )     (2,245,862 )     (2,842,161 )
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     (2,900,389 )     1,510,945       268,404  
Accrued Foreign Capital Gains Tax on Appreciated Securities     38,160              
Foreign Currency Translations     1,019             (39 )
Net Change in Unrealized Appreciation (Depreciation)     (2,861,210 )     1,510,945       268,365  
Net Realized and Unrealized Loss     (4,440,230 )     (734,917 )     (2,573,796 )
Net Decrease in Net Assets Resulting from Operations   $ (3,695,040 )   $ (626,494 )   $ (2,499,367 )

 

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.

 

173

 

 

Statements of Operations (continued)

For the Year or Period Ended March 31, 2023

 

    KraneShares CICC
China Consumer
Leaders Index ETF
    KraneShares SSE
STAR Market 50
Index ETF
    KraneShares Hang
Seng TECH Index ETF
 
Investment Income:                        
Dividend Income   $ 224,091     $ 239,472     $ 84,189  
Interest Income     2,013       5,175       (22 )
Less: Foreign Taxes Withheld     (20,827 )     (24,033 )     (546 )
Total Investment Income     205,277       220,614       83,621  
                         
Expenses:                        
Management Fees      69,342       439,952       51,290  
Trustees’ Fees     436       2,242       334  
Insurance Expense     604       877       65  
Total Expenses     70,382       443,071       51,689  
Net Investment Income (Loss)     134,895       (222,457 )     31,932  
                         
Net Realized Gain (Loss) on:                        
Investments     (11,379,761 )     (14,304,417 )     (4,107,247 )
Foreign Currency Translations     16,309       (9,946 )     (981 )
Net Realized Loss     (11,363,452 )     (14,314,363 )     (4,108,228 )
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments     10,213,831       7,893,383       2,353,980  
Foreign Currency Translations     175       (7,863 )     (34 )
Net Change in Unrealized Appreciation (Depreciation)     10,214,006       7,885,520       2,353,946  
Net Realized and Unrealized Loss     (1,149,446 )     (6,428,843 )     (1,754,282 )
Net Decrease in Net Assets Resulting from Operations   $ (1,014,551 )   $ (6,651,300 )   $ (1,722,350 )

 

See Note 3 in Notes to Financial Statements.

 

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

 

174

 

 

Statements of Operations (concluded)

For the Year or Period Ended March 31, 2023

 

    KraneShares China
Innovation ETF
    KraneShares S&P
Pan Asia Dividend
Aristocrats Index
ETF(1) 
    KraneShares China
Internet and Covered
Call Strategy ETF(2) 
 
Investment Income:                        
Dividend Income   $     $ 50,181     $  
Dividend from Affiliated Investment     2,062              
Interest Income     4       42       920  
Less: Foreign Taxes Withheld           (4,620 )      
Total Investment Income     2,066       45,603       920  
                         
Expenses:                        
Management Fees      4,781       9,216       1,983  
Trustees’ Fees     88       69       50  
Insurance Expense     24              
Total Expenses     4,893       9,285       2,033  
Management Fee Waiver      (2,193 )            
Net Expenses     2,700       9,285       2,033  
Net Investment Income (Loss)     (634 )     36,318       (1,113 )
                         
Net Realized Gain (Loss) on:                        
Investments           1,826        
Affiliated Investments     (91,666 )           176  
Capital Gain Distributions Received From Affiliated Fund     4,378              
Foreign Currency Translations           3,289        
Written Options                 395,776  
Net Realized Gain (Loss)     (87,288 )     5,115       395,952  
                         
Net Change in Unrealized Appreciation (Depreciation) on:                        
Investments           109,787        
Affiliated Investments     23,085             (328,031 )
Foreign Currency Translations           (11 )      
Written Options                 (200,047 )
Net Change in Unrealized Appreciation (Depreciation)     23,085       109,776       (528,078 )
Net Realized and Unrealized Gain (Loss)     (64,203 )     114,891       (132,126 )
Net Increase (Decrease) in Net Assets Resulting from Operations   $ (64,837 )   $ 151,209     $ (133,239 )

 

See Note 3 in Notes to Financial Statements.
(1) Commenced operations on September 15, 2022.
(2) Commenced operations on January 12, 2023.

 

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

 

    KraneShares CICC
China Leaders 100
Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 230,718     $ 250,564  
Net Realized Gain (Loss)     (1,258,764 )     548,689  
Net Change in Unrealized Appreciation (Depreciation)     (273,162 )     (442,945 )
Net Increase (Decrease) in Net Assets Resulting from Operations     (1,301,208 )     356,308  
Distributions     (267,141 )     (1,242,906 )
                 
Capital Share Transactions:(1)                 
Issued     29,678       3,147,630  
Redeemed     (2,571,456 )     (4,749,351 )
Decrease in Net Assets from Capital Share Transactions     (2,541,778 )     (1,601,721 )
Total Decrease in Net Assets     (4,110,127 )     (2,488,319 )
                 
Net Assets:                
Beginning of Year     10,074,702       12,563,021  
End of Year   $ 5,964,575     $ 10,074,702  
                 
Share Transactions:                
Issued           100,000  
Redeemed     (100,000 )     (150,000 )
Net Decrease in Shares Outstanding from Share Transactions     (100,000 )     (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.

 

176

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares CSI
China Internet ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income (Loss)   $ 38,506,083     $ (7,133,279 )
Net Realized Loss     (2,232,381,235 )     (1,972,722,327 )
Net Change in Unrealized Appreciation (Depreciation)     2,302,138,220       (3,543,610,616 )
Net Increase (Decrease) in Net Assets Resulting from Operations     108,263,068       (5,523,466,222 )
Distributions           (455,309,639 )
                 
Capital Share Transactions:(1)                 
Issued     3,037,376,264       10,834,164,254  
Redeemed     (3,273,504,223 )     (2,278,114,147 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (236,127,959 )     8,556,050,107  
Total Increase (Decrease) in Net Assets     (127,864,891 )     2,577,274,246  
                 
Net Assets:                
Beginning of Year     6,239,534,279       3,662,260,033  
End of Year   $ 6,111,669,388     $ 6,239,534,279  
                 
Share Transactions:                
Issued     100,950,000       224,400,000  
Redeemed     (116,750,000 )     (61,450,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (15,800,000 )     162,950,000  

 

(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.

 

177

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares Bosera
MSCI China A 50
Connect Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 10,123,340     $ 7,399,447  
Net Realized Gain (Loss)     (101,610,228 )     178,885,405  
Net Change in Unrealized Appreciation (Depreciation)     (2,789,412 )     (237,940,238 )
Net Decrease in Net Assets Resulting from Operations     (94,276,300 )     (51,655,386 )
Distributions     (111,275,241 )     (64,359,649 )
                 
Capital Share Transactions:(1)                 
Issued     254,963,186       91,859,183  
Redeemed     (137,931,980 )     (218,814,477 )
Increase (Decrease) in Net Assets from Capital Share Transactions     117,031,206       (126,955,294 )
Total Decrease in Net Assets     (88,520,335 )     (242,970,329 )
                 
Net Assets:                
Beginning of Year     559,393,402       802,363,731  
End of Year   $ 470,873,067     $ 559,393,402  
                 
Share Transactions:                
Issued     7,300,000       2,050,000  
Redeemed     (4,350,000 )     (5,200,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     2,950,000       (3,150,000 )

 

(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.

 

178

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares Bloomberg
China Bond
 
    Inclusion Index ETF  
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 293,571     $ 212,675  
Net Realized Gain (Loss)     (472,712 )     180,221  
Net Change in Unrealized Appreciation (Depreciation)     (436,378 )     242,411  
Net Increase (Decrease) in Net Assets Resulting from Operations     (615,519 )     635,307  
Distributions     (93,427 )     (936,375 )
Return of Capital     (233,872 )      
                 
Capital Share Transactions:(1)                 
Issued     1,710,911       1,752,884  
Redeemed     (3,208,976 )      
Increase (Decrease) in Net Assets from Capital Share Transactions     (1,498,065 )     1,752,884  
Total Increase (Decrease) in Net Assets     (2,440,883 )     1,451,816  
                 
Net Assets:                
Beginning of Year     13,586,031       12,134,215  
End of Year   $ 11,145,148     $ 13,586,031  
                 
Share Transactions:                
Issued     50,000       50,000  
Redeemed     (100,000 )      
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (50,000 )     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.

 

179

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares MSCI All
China Index ETF
 
   

Year Ended

March 31,
2023

    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 171,637     $ 320,231  
Net Realized Gain (Loss)     (6,451,205 )     651,122  
Net Change in Unrealized Appreciation (Depreciation)     4,729,548       (6,493,293 )
Net Decrease in Net Assets Resulting from Operations     (1,550,020 )     (5,521,940 )
Distributions     (311,974 )     (928,865 )
                 
Capital Share Transactions:(1)                 
Issued     3,417,132       3,218,338  
Redeemed     (8,941,286 )     (2,988,805 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (5,524,154 )     229,533  
Total Decrease in Net Assets     (7,386,148 )     (6,221,272 )
                 
Net Assets:                
Beginning of Year     16,180,669       22,401,941  
End of Year   $ 8,794,521     $ 16,180,669  
                 
Share Transactions:                
Issued     150,000       100,000  
Redeemed     (400,000 )     (100,000 )
Net Decrease in Shares Outstanding from Share Transactions     (250,000 )      

 

(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.

 

180

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares MSCI One
Belt One Road
 
    Index ETF  
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 168,844     $ 315,016  
Net Realized Gain     46,956       1,131,670  
Net Change in Unrealized Appreciation (Depreciation)     (1,348,801 )     (1,396,666 )
Net Increase (Decrease) in Net Assets Resulting from Operations     (1,133,001 )     50,020  
Distributions     (215,731 )     (297,852 )
                 
Capital Share Transactions:(1)                 
Issued     12,878       2,198  
Redeemed     (2,468,601 )     (1,563,737 )
Decrease in Net Assets from Capital Share Transactions     (2,455,723 )     (1,561,539 )
Total Decrease in Net Assets     (3,804,455 )     (1,809,371 )
                 
Net Assets:                
Beginning of Year     8,289,688       10,099,059  
End of Year   $ 4,485,233     $ 8,289,688  
                 
Share Transactions:                
Redeemed     (100,000 )     (50,000 )
Net Decrease in Shares Outstanding from Share Transactions     (100,000 )     (50,000 )

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

181

 

 

Statements of Changes in Net Assets (continued)

 


 
KraneShares Emerging
Markets Consumer
Technology Index ETF

 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income (Loss)   $ 249,218     $ (165,301 )
Net Realized Loss     (21,075,830 )     (19,277,596 )
Net Change in Unrealized Appreciation (Depreciation)     12,501,817       (31,537,956 )
Net Decrease in Net Assets Resulting from Operations     (8,324,795 )     (50,980,853 )
Distributions           (250,511 )
                 
Capital Share Transactions:(1)                 
Issued     2,557,125       37,293,138  
Redeemed     (19,605,280 )     (40,731,527 )
Decrease in Net Assets from Capital Share Transactions     (17,048,155 )     (3,438,389 )
Total Decrease in Net Assets     (25,372,950 )     (54,669,753 )
                 
Net Assets:                
Beginning of Year     55,934,523       110,604,276  
End of Year   $ 30,561,573     $ 55,934,523  
                 
Share Transactions:                
Issued     150,000       1,350,000  
Redeemed     (1,250,000 )     (1,700,000 )
Net Decrease in Shares Outstanding from Share Transactions     (1,100,000 )     (350,000 )

 

(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.

 

182

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares MSCI
China Clean

Technology Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 458,574     $ 831,350  
Net Realized Gain (Loss)     (32,327,369 )     4,228,847  
Net Change in Unrealized Appreciation (Depreciation)     533,752       (23,098,574 )
Net Decrease in Net Assets Resulting from Operations     (31,335,043 )     (18,038,377 )
Distributions     (1,776,032 )     (757,516 )
                 
Capital Share Transactions:(1)                 
Issued     5,598,103       56,347,141  
Redeemed     (23,735,159 )     (31,865,907 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (18,137,056 )     24,481,234  
Total Increase (Decrease) in Net Assets     (51,248,131 )     5,685,341  
                 
Net Assets:                
Beginning of Year     146,858,672       141,173,331  
End of Year   $ 95,610,541     $ 146,858,672  
                 
Share Transactions:                
Issued     150,000       1,250,000  
Redeemed     (800,000 )     (750,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (650,000 )     500,000  

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

183

 

 

Statements of Changes in Net Assets (continued)

 

  KraneShares Electric
Vehicles and

Future Mobility Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 2,256,078     $ 447,423  
Net Realized Gain (Loss)     (41,632,141 )     9,642,454  
Net Change in Unrealized Appreciation (Depreciation)     (23,323,322 )     (30,971,355 )
Net Decrease in Net Assets Resulting from Operations     (62,699,385 )     (20,881,478 )
Distributions     (2,090,551 )     (21,884,257 )
                 
Capital Share Transactions:(1)                 
Issued     5,211,336       161,175,495  
Redeemed     (52,076,878 )     (20,218,326 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (46,865,542 )     140,957,169  
Total Increase (Decrease) in Net Assets     (111,655,478 )     98,191,434  
                 
Net Assets:                
Beginning of Year     296,761,218       198,569,784  
End of Year   $ 185,105,740     $ 296,761,218  
                 
Share Transactions:                
Issued     150,000       3,300,000  
Redeemed     (1,600,000 )     (500,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (1,450,000 )     2,800,000  

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

184

 

 

Statements of Changes in Net Assets (continued)

 


  KraneShares MSCI All
China Health

Care Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income (Loss)   $ 376,911     $ (85,433 )
Net Realized Loss     (41,140,859 )     (1,397,169 )
Net Change in Unrealized Appreciation (Depreciation)     23,296,248       (57,562,032 )
Net Decrease in Net Assets Resulting from Operations     (17,467,700 )     (59,044,634 )
Distributions     (50,955 )     (21,078,396 )
                 
Capital Share Transactions:(1)                 
Issued     11,751,147       44,149,338  
Redeemed     (36,551,437 )     (41,679,374 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (24,800,290 )     2,469,964  
Total Decrease in Net Assets     (42,318,945 )     (77,653,066 )
                 
Net Assets:                
Beginning of Year     136,810,985       214,464,051  
End of Year   $ 94,492,040     $ 136,810,985  
                 
Share Transactions:                
Issued     550,000       1,300,000  
Redeemed     (1,750,000 )     (1,150,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (1,200,000 )     150,000  

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

185

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares Asia
Pacific High Income

Bond ETF
 
   

Year Ended

March 31,
2023

    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 1,813,772     $ 1,006,947  
Net Realized Loss     (3,640,259 )     (3,985,978 )
Net Change in Unrealized Appreciation (Depreciation)     924,584       (1,285,892 )
Net Decrease in Net Assets Resulting from Operations     (901,903 )     (4,264,923 )
Distributions     (2,002,618 )     (1,214,239 )
Return of Capital           (192,065 )
                 
Capital Share Transactions:(1)                 
Issued     4,213,744       29,733,209  
Redeemed     (7,799,091 )     (7,312,822 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (3,585,347 )     22,420,387  
Total Increase (Decrease) in Net Assets     (6,489,868 )     16,749,160  
                 
Net Assets:                
Beginning of Year     26,535,141       9,785,981  
End of Year   $ 20,045,273     $ 26,535,141  
                 
Share Transactions:                
Issued     150,000       900,000  
Redeemed     (300,000 )     (250,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (150,000 )     650,000  

 

(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.

 

186

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares Emerging
Markets Healthcare
Index ETF
 
   

Year Ended

March 31,
2023

    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income (Loss)   $ (1,704 )   $ 11,822  
Net Realized Loss     (360,813 )     (171,867 )
Net Change in Unrealized Appreciation (Depreciation)     (6,688 )     (878,739 )
Net Decrease in Net Assets Resulting from Operations     (369,205 )     (1,038,784 )
Distributions     (4,560 )     (10,783 )
                 
Capital Share Transactions:(1)                 
Issued           2,217  
Redeemed           (1,492,577 )
Decrease in Net Assets from Capital Share Transactions           (1,490,360 )
Total Decrease in Net Assets     (373,765 )     (2,539,927 )
                 
Net Assets:                
Beginning of Year     2,468,835       5,008,762  
End of Year   $ 2,095,070     $ 2,468,835  
                 
Share Transactions:                
Redeemed           (50,000 )
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.

 

187

 

 

Statements of Changes in Net Assets (continued)

 

KraneShares MSCI
Emerging Markets

ex China Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 745,190     $ 720,486  
Net Realized Gain (Loss)     (1,579,020 )     335,656  
Net Change in Unrealized Appreciation (Depreciation)     (2,861,210 )     (851,279 )
Net Increase (Decrease) in Net Assets Resulting from Operations     (3,695,040 )     204,863  
Distributions     (693,378 )     (1,341,512 )
                 
Capital Share Transactions:(1)                 
Issued     14,955,300       9,310,517  
Redeemed     (13,153,943 )     (6,466,320 )
Increase in Net Assets from Capital Share Transactions     1,801,357       2,844,197  
Total Increase (Decrease) in Net Assets     (2,587,061 )     1,707,548  
                 
Net Assets:                
Beginning of Year     32,698,696       30,991,148  
End of Year   $ 30,111,635     $ 32,698,696  
                 
Share Transactions:                
Issued     600,000       300,000  
Redeemed     (500,000 )     (200,000 )
Net Increase in Shares Outstanding from Share Transactions     100,000       100,000  

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

188

 

 

Statements of Changes in Net Assets (continued)

 

    189 KraneShares MSCI
China ESG
Leaders Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 108,423     $ 141,014  
Net Realized Loss     (2,245,862 )     (413,967 )
Net Change in Unrealized Appreciation (Depreciation)     1,510,945       (2,750,597 )
Net Decrease in Net Assets Resulting from Operations     (626,494 )     (3,023,550 )
Distributions     (100,843 )     (219,611 )
                 
Capital Share Transactions:(1)                 
Issued     12,606       2,806  
Redeemed     (2,245,452 )     (1,660,518 )
Decrease in Net Assets from Capital Share Transactions     (2,232,846 )     (1,657,712 )
Total Decrease in Net Assets     (2,960,183 )     (4,900,873 )
                 
Net Assets:                
Beginning of Year     7,937,654       12,838,527  
End of Year   $ 4,977,471     $ 7,937,654  
                 
Share Transactions:                
Redeemed     (100,000 )     (50,000 )
Net Decrease in Shares Outstanding from Share Transactions     (100,000 )     (50,000 )

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

189

 

 

Statements of Changes in Net Assets (continued)

 

  KraneShares CICC
China 5G & Semiconductor
Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 74,429     $ 140,986  
Net Realized Loss     (2,842,161 )     (1,232,367 )
Net Change in Unrealized Appreciation (Depreciation)     268,365       2,467,447  
Net Increase (Decrease) in Net Assets Resulting from Operations     (2,499,367 )     1,376,066  
Distributions     (45,914 )      
                 
Capital Share Transactions:(1)                 
Issued     3,203       7,848,791  
Redeemed     (4,057,370 )     (106,409,148 )
Decrease in Net Assets from Capital Share Transactions     (4,054,167 )     (98,560,357 )
Total Decrease in Net Assets     (6,599,448 )     (97,184,291 )
                 
Net Assets:                
Beginning of Year     21,695,860       118,880,151  
End of Year   $ 15,096,412     $ 21,695,860  
                 
Share Transactions:                
Issued           300,000  
Redeemed     (250,000 )     (4,350,000 )
Net Decrease in Shares Outstanding from Share Transactions     (250,000 )     (4,050,000 )

 

(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.

 

190

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares CICC
China Consumer
Leaders Index ETF
 
    Year Ended
March 31,
2023
    Year Ended
March 31,
2022
 
Operations:                
Net Investment Income   $ 134,895     $ 330,472  
Net Realized Loss     (11,363,452 )     (7,146,359 )
Net Change in Unrealized Appreciation (Depreciation)     10,214,006       (6,860,658 )
Net Decrease in Net Assets Resulting from Operations     (1,014,551 )     (13,676,545 )
Distributions     (68,755 )     (267,348 )
                 
Capital Share Transactions:(1)                 
Issued     293,649       19,432,252  
Redeemed     (36,769,983 )     (15,178,158 )
Increase (Decrease) in Net Assets from Capital Share Transactions     (36,476,334 )     4,254,094  
Total Decrease in Net Assets     (37,559,640 )     (9,689,799 )
                 
Net Assets:                
Beginning of Year     44,529,474       54,219,273  
End of Year   $ 6,969,834     $ 44,529,474  
                 
Share Transactions:                
Issued           800,000  
Redeemed     (1,900,000 )     (650,000 )
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (1,900,000 )     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.

 

191

 

 

Statements of Changes in Net Assets (continued)

 

KraneShares SSE
STAR Market 50

Index ETF
 
   

Year Ended

March 31,

2023

    Year Ended
March 31,
2022
 
Operations:                
Net Investment Loss   $ (222,457 )   $ (597,970 )
Net Realized Loss     (14,314,363 )     (5,609,501 )
Net Change in Unrealized Appreciation (Depreciation)     7,885,520       (2,007,586 )
Net Decrease in Net Assets Resulting from Operations     (6,651,300 )     (8,215,057 )
                 
Capital Share Transactions:(1)                 
Issued     2,467,586       25,541,153  
Redeemed     (13,360,925 )     (45,373,706 )
Decrease in Net Assets from Capital Share Transactions     (10,893,339 )     (19,832,553 )
Total Decrease in Net Assets     (17,544,639 )     (28,047,610 )
                 
Net Assets:                
Beginning of Year     65,674,149       93,721,759  
End of Year   $ 48,129,510     $ 65,674,149  
                 
Share Transactions:                
Issued     150,000       1,000,000  
Redeemed     (800,000 )     (1,950,000 )
Net Decrease in Shares Outstanding from Share Transactions     (650,000 )     (950,000 )

 

(1) Includes transaction costs related to creations and redemptions.

 

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

 

192

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares Hang
Seng TECH Index ETF
 
    Year Ended
March 31,
2023
    Period Ended
March 31,
2022(1) 
 
Operations:                
Net Investment Income   $ 31,932     $ 2,441  
Net Realized Loss     (4,108,228 )     (620,063 )
Net Change in Unrealized Appreciation (Depreciation)     2,353,946       (1,540,772 )
Net Decrease in Net Assets Resulting from Operations     (1,722,350 )     (2,158,394 )
Distributions     (11,428 )      
                 
Capital Share Transactions:(2)                 
Issued     7,531,750       7,728,841  
Redeemed     (4,053,614 )      
Increase in Net Assets from Capital Share Transactions     3,478,136       7,728,841  
Total Increase in Net Assets     1,744,358       5,570,447  
                 
Net Assets:                
Beginning of Year/Period     5,570,447        
End of Year/Period   $ 7,314,805     $ 5,570,447  
                 
Share Transactions:                
Issued     550,001       400,001  
Redeemed     (400,000 )      
Net Increase in Shares Outstanding from Share Transactions     150,001       400,001  

 

(1) Commenced operations on June 8, 2021.
(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.

 

193

 

 

Statements of Changes in Net Assets (continued)

 

    KraneShares China
Innovation ETF
 
    Year Ended
March 31,
2023
    Period Ended
March 31,
2022(1) 
 
Operations:                
Net Investment Loss   $ (634 )   $ (688 )
Net Realized Gain (Loss)     (87,288 )     115,589  
Net Change in Unrealized Appreciation (Depreciation)     23,085       (752,572 )
Net Decrease in Net Assets Resulting from Operations     (64,837 )     (637,671 )
Distributions     (110,615 )     (4,286 )
Return of Capital     (53,934 )      
                 
Capital Share Transactions:(2)                 
Issued           3,479,534  
Redeemed     (1,011,132 )      
Increase (Decrease) in Net Assets from Capital Share Transactions     (1,011,132 )     3,479,534  
Total Increase (Decrease) in Net Assets     (1,240,518 )     2,837,577  
                 
Net Assets:                
Beginning of Year/Period     2,837,577        
End of Year/Period   $ 1,597,059     $ 2,837,577  
                 
Share Transactions:                
Issued           150,002  
Redeemed     (50,000 )      
Net Increase (Decrease) in Shares Outstanding from Share Transactions     (50,000 )     150,002  

 

(1) Commenced operations on October 5, 2021.
(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.

 

194

 

 

Statements of Changes in Net Assets (concluded)

 

    ‍KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     KraneShares China Internet and Covered Call Strategy ETF  
    Period Ended
March 31,
2023(1) 
    Period Ended
March 31,
2023(2) 
 
Operations:                
Net Investment Income (Loss)   $ 36,318     $ (1,113 )
Net Realized Gain     5,115       395,952  
Net Change in Unrealized Appreciation (Depreciation)     109,776       (528,078 )
Net Increase (Decrease) in Net Assets Resulting from Operations     151,209       (133,239 )
Distributions     (22,329 )     (395,952 )
Return of Capital           (139,051 )
                 
Capital Share Transactions:(3)                 
Issued     2,500,050       5,982,226  
Increase in Net Assets from Capital Share Transactions     2,500,050       5,982,226  
Total Increase in Net Assets     2,628,930       5,313,984  
                 
Net Assets:                
Beginning of Period            
End of Period   $ 2,628,930     $ 5,313,984  
                 
Share Transactions:                
Issued     100,002       250,002  
Net Increase in Shares Outstanding from Share Transactions     100,002       250,002  

 

(1) Commenced operations on September 15, 2022.
(2) Commenced operations on January 12, 2023.
(3) 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.

 

195

 

 

Financial Highlights

 

Selected Per Share Data & Ratios

For the Years Ended March 31

For a Share Outstanding Throughout Each Period

 

    Net Asset
Value,
Beginning of
Period
($)
  Net Investment
Income (Loss)
($)*
  Net Realized and
Unrealized Gain
(Loss)
on Investments
($)
  Total
from
Operations
($)
  Distribution
from Net
Investment
Income
($)
  Distribution from
Capital Gains
($)
  Return of
Capital
($)
KraneShares CICC China Leaders 100 Index ETF
2023   28.78   0.87   (4.72)   (3.85)   (0.84)   (0.23)  
2022   31.41   0.62   0.30   0.92   (0.63)   (2.92)  
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)  
KraneShares CSI China Internet ETF
2023   29.52   0.18   1.55   1.73      
2022   75.59   (0.05)   (43.44)   (43.49)     (2.58)  
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)  
KraneShares Bosera MSCI China A 50 Connect Index ETF
2023   37.05   0.57   (5.28)   (4.71)   (0.54)   (5.71)  
2022   43.97   0.43   (3.41)   (2.98)   (0.49)   (3.45)  
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)  
KraneShares Bloomberg China Bond Inclusion Index ETF
2023   33.97   0.68   (2.05)   (1.37)   (0.22)     (0.54)
2022   34.67   0.55   1.12   1.67   (2.37)    
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)

 

* 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.
~ During the periods, certain fees were waived. (See Note 3 in the Notes to Financial Statements).
(1) During the year ended March 31, 2023, 2022, 2021, 2020, and 2019 the Fund participated in securities lending, generating $3,155,440, $3,419,311, $3,716,046, $5,794,534, and $9,746,130, respectively, in security lending income. The expense ratios include $301,354, $337,352, $376,498, $579,613, and $968,632, respectively, in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69%, 0.68%, 0.69%, 0,69%, and 0.69%, respectively.

 

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

 

196

 

 

 

 

 

 

 

 

Total from
Distributions
($)
  Net Asset
Value, End
of Period
($)
  Total Return
(%)**
  Net Assets
End of Period
($)(000)
   
Ratio of
Expenses to
Average Net
Assets
(%)~ 
  Ratio of Expenses
to Average Net
Assets (Excluding
Waivers, as
applicable)
(%)~ 
  Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
(%)
  Portfolio
Turnover
(%)
                             
(1.07)   23.86   (13.15)   5,965   0.69   0.69   3.52   90
(3.55)   28.78   2.77   10,075   0.68   0.68   2.00   167
(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
                             
  31.25   5.86   6,111,669   0.69(1)    0.69   0.61   60
(2.58)   29.52   (57.99)   6,239,534   0.69(1)    0.69   (0.12)   60
(0.22)   75.59   67.77   3,662,260   0.70(1)    0.70   (0.39)   89
(0.04)   45.19   (3.85)   2,313,638   0.73(1)    0.73   (0.05)   33
(1.27)   47.04   (20.44)   2,074,505   0.75(1)    0.76   0.20   70
                             
(6.25)   26.09   (12.63)   470,873   0.55   0.78   1.83   68
(3.94)   37.05   (7.96)   559,393   0.59   0.79   0.97   89
(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
                             
(0.76)   31.84   (3.98)   11,145   0.49   0.69   2.15   151
(2.37)   33.97   4.89   13,586   0.42   0.68   1.59   159
(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^  

 

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

 

197

 

 

Financial Highlights (continued)

 

Selected Per Share Data & Ratios

For the Years Ended March 31

For a Share Outstanding Throughout Each Period

 

    Net Asset
Value,
Beginning of
Period
($)
  Net Investment
Income (Loss)
($)*
  Net Realized and
Unrealized Gain
(Loss)
on Investments
($)
  Total
from
Operations
($)
  Distribution
from Net
Investment
Income
($)
  Distribution from
Capital Gains
($)
  Return of
Capital
($)
KraneShares MSCI All China Index ETF
2023   24.89   0.50   (2.15)   (1.65)   (0.77)   (0.48)  
2022   34.46   0.47   (8.71)   (8.24)   (0.40)   (0.93)  
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)    
KraneShares MSCI One Belt One Road Index ETF
2023   27.63   0.73   (4.85)   (4.12)   (1.08)    
2022   28.85   0.95   (1.18)   (0.23)   (0.99)    
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)    
KraneShares Emerging Markets Consumer Technology Index ETF
2023   18.04   0.10   (2.86)   (2.76)      
2022   32.06   (0.05)   (13.90)   (13.95)   (0.01)   (0.06)  
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)      
KraneShares MSCI China Clean Technology Index ETF
2023   36.71   0.12   (7.75)   (7.63)   (0.10)   (0.44)  
2022   40.34   0.21   (3.65)   (3.44)   (0.19)    
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)    
KraneShares Electric Vehicles and Future Mobility Index ETF
2023   39.57   0.33   (8.98)   (8.65)   (0.32)    
2022   42.25   0.08   0.39(3)    0.47   (0.52)   (2.63)  
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)    

 

* 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.
~ During the periods, certain fees were waived. (See Note 3 in the Notes to Financial Statements).
(1) The expense ratio includes $6,087 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.58%.
(2) The expense ratio includes $67,245 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69%.
(3) 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.

 

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

 

198

 

 

 

 

 

 

 

 

Total from
Distributions
($)
  Net Asset
Value, End
of Period
($)
  Total Return
(%)**
  Net Assets
End of Period
($)(000)
   
Ratio of
Expenses to
Average Net
Assets
(%)~ 
  Ratio of Expenses
to Average Net
Assets (Excluding
Waivers, as
applicable)
(%)~ 
  Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
(%)
  Portfolio
Turnover
(%)
                             
(1.25)   21.99   (6.44)   8,795   0.49   0.69   2.19   55
(1.33)   24.89   (24.35)   16,181   0.48   0.68   1.49   18
(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
                             
(1.08)   22.43   (14.98)   4,485   0.79   0.79   2.96   34
(0.99)   27.63   (1.11)   8,290   0.78   0.78   3.12   36
(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
                             
  15.28   (15.30)   30,562   0.60(1)    0.80   0.66   87
(0.07)   18.04   (43.57)   55,935   0.59   0.79   (0.17)   97
(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
                             
(0.54)   28.54   (20.71)   95,611   0.79   0.79   0.38   49
(0.19)   36.71   (8.61)   146,859   0.78   0.78   0.48   62
  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
                             
(0.32)   30.60   (21.78)   185,106   0.72(2)    0.72   0.99   69
(3.15)   39.57   0.04   296,761   0.70   0.70   0.17   114
(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

 

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

 

199

 

 

Financial Highlights (continued)

 

Selected Per Share Data & Ratios

For the Years/Periods Ended March 31

For a Share Outstanding Throughout Each Period

 

    Net Asset
Value,
Beginning of
Period
($)
  Net Investment
Income (Loss)
($)*
  Net Realized and
Unrealized Gain
(Loss)
on Investments
($)
  Total
from
Operations
($)
  Distribution
from Net
Investment
Income
($)
  Distribution from
Capital Gains
($)
  Return of
Capital
($)
KraneShares MSCI All China Health Care Index ETF
2023   23.79   0.07   (3.08)   (3.01)   (0.01)    
2022   38.30   (0.02)   (10.44)   (10.46)     (4.05)  
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)  
KraneShares Asia Pacific High Income Bond ETF
2023   29.48   2.23   (2.44)   (0.21)   (2.54)    
2022   39.14   1.78   (9.26)   (7.48)   (1.88)     (0.30)
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
2023   24.69   (0.02)   (3.67)   (3.69)   (0.05)    
2022   33.39   0.09   (8.68)   (8.59)   (0.11)    
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
2023   29.73   0.91   (4.56)   (3.65)   (0.99)    
2022   30.99   0.79   (0.56)   0.23   (0.73)   (0.76)  
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
2023   22.68   0.40   (2.77)   (2.37)   (0.40)    
2022   32.10   0.39   (9.18)   (8.79)   (0.33)   (0.30)  
2021(4)    25.00   (0.07)   7.32   7.25     (0.15)  
KraneShares CICC China 5G & Semiconductor Index ETF
2023   19.72   0.08   (1.99)   (1.91)   (0.05)    
2022   23.08   0.04   (3.40)   (3.36)      
2021(5)    25.00   (0.06)   (1.86)   (1.92)      
KraneShares CICC China Consumer Leaders Index ETF
2023   19.79   0.26   0.06   0.32   (0.20)    
2022   25.82   0.15   (6.06)   (5.91)   (0.12)    
2021(6)    25.00   (0.05)   0.87   0.82      

 

* 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.
# Amount represents less than $0.005 per share.
~ During the periods, certain fees were waived. (See Note 3 in the Notes to Financial Statements).
(1) The Fund commenced operations on June 26, 2018.
(2) The Fund commenced operations on August 29, 2018.

 

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

 

200

 

 

 

 

 

 

Total from
Distributions
($)
  Net Asset
Value, End
of Period
($)
  Total Return
(%)**
  Net Assets
End of Period
($)(000)
   
Ratio of
Expenses to
Average Net
Assets
(%)~ 
  Ratio of Expenses
to Average Net
Assets (Excluding
Waivers, as
applicable)
(%)~ 
  Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
(%)
  Portfolio
Turnover
(%)
                             
(0.01)   20.77   (12.65)   94,492   0.65(7)    0.79   0.35   32
(4.05)   23.79   (28.88)   136,811   0.65   0.79   (0.04)   44
  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
                             
(2.54)   26.73   (0.44)   20,045   0.69   0.69   8.19   119
(2.18)   29.48   (19.73)   26,535   0.68   0.68   5.33   150
(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†† 
                             
(0.05)   20.95   (14.97)   2,095   0.79   0.79   (0.08)   36
(0.11)   24.69   (25.77)   2,469   0.81   0.81   0.29   28
(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†† 
                             
(0.99)   25.09   (12.12)   30,112   0.24   0.59   3.55   50
(1.49)   29.73   0.57   32,699   0.23   0.58   2.52   23
(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†† 
                             
(0.40)   19.91   (10.38)   4,977   0.59   0.59   1.97   42
(0.63)   22.68   (27.63)   7,938   0.59   0.59   1.30   57
(0.15)   32.10   29.05   12,839   0.58    0.58    (0.35)    30†† 
                             
(0.05)   17.76   (9.62)   15,096   0.65   0.79   0.47   25
  19.72   (14.56)   21,696   0.65   0.79   0.17   58
  23.08   (7.68)   118,880   0.64    0.78    (0.64)    59†† 
                             
(0.20)   19.91   1.64   6,970   0.69   0.69   1.32   46
(0.12)   19.79   (22.98)   44,529   0.68   0.68   0.63   62
  25.82   3.28   54,219   0.68    0.68    (0.63)    50†† 

 

(3) The Fund commenced operations on April 12, 2019.
(4) The Fund commenced operations on July 28, 2020.
(5) The Fund commenced operations on November 23, 2020.
(6) The Fund commenced operations on December 8, 2020.
(7) The expense ratio includes $1,908 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.64%.

 

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

 

201

 

 

Financial Highlights (concluded)

 

Selected Per Share Data & Ratios

For the Years/Periods Ended March 31

For a Share Outstanding Throughout Each Period

 

    Net Asset
Value,
Beginning of
Period
($)
  Net Investment
Income (Loss)
($)*
  Net Realized and
Unrealized Gain
(Loss)
on Investments
($)
  Total
from
Operations
($)
  Distribution
from Net
Investment
Income
($)
  Distribution from
Capital Gains
($)
  Return of
Capital
($)
KraneShares SSE STAR Market 50 Index ETF
2023   18.76   (0.07)   (1.80)   (1.87)      
2022   21.06   (0.14)   (2.16)   (2.30)      
2021(1)    25.00   (0.03)   (3.91)   (3.94)      
KraneShares Hang Seng TECH Index ETF
2023   13.93   0.05   (0.66)   (0.61)   (0.02)    
2022(2)    25.00   0.01   (11.08)   (11.07)      
KraneShares China Innovation ETF
2023   18.92   (0.01)   (1.29)   (1.30)     (1.11)   (0.54)
2022(3)    25.00   (0.01)   (6.03)   (6.04)   (0.04)    
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF
2023(4)    25.00   0.37   1.14   1.51   (0.22)    
KraneShares China Internet and Covered Call Strategy ETF
2023(5)    25.00   (0.01)   (0.91)   (0.92)   (2.09)     (0.73)

 

* 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.
~ During the periods, certain fees were waived. (See Note 3 in the Notes to Financial Statements).
(1) The Fund commenced operations on January 26, 2021.
(2) The Fund commenced operations on June 8, 2021.
(3) The Fund commenced operations on October 5, 2021.
(4) The Fund commenced operations on September 15, 2022.
(5) The Fund commenced operations on January 12, 2023.

 

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

 

202

 

 

 

 

 

 

 

 

Total from
Distributions
($)
  Net Asset
Value, End
of Period
($)
  Total Return
(%)**
  Net Assets
End of Period
($)(000)
   
Ratio of
Expenses to
Average Net
Assets
(%)~ 
  Ratio of Expenses
to Average Net
Assets (Excluding
Waivers, as
applicable)
(%)~ 
  Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
(%)
  Portfolio
Turnover
(%)
                             
  16.89   (9.97)   48,130   0.89   0.89   (0.44)   43
  18.76   (10.92)   65,674   0.88   0.88   (0.57)   78
  21.06   (15.76)   93,722   0.88    0.88    (0.88)    12†† 
                             
(0.02)   13.30   (4.37)   7,315   0.69   0.69   0.42   126
  13.93   (44.28)   5,570   0.68    0.68    0.09    60†† 
                             
(1.65)   15.97   (6.60)   1,597   0.14   0.26   (0.03)   4
(0.04)   18.92   (24.19)   2,838   0.25    0.25    (0.06)    4†† 
                             
(0.22)   26.29   6.08   2,629   0.68    0.68    2.68    35†† 
                             
(2.82)   21.26   (3.56)   5,314   0.26    0.26    (0.14)    †† 

 

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

 

203

 

 

Notes to Financial Statements

 

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 (the “Investment Company Act”), as an open-end management investment company. As of March 31, 2023, the Trust had thirty-one operational series. The financial statements herein and the related notes pertain to the following 21 series: KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A 50 Connect Index ETF, KraneShares Bloomberg China Bond Inclusion Index 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 Asia Pacific High Income Bond ETF, KraneShares Emerging Markets Healthcare Index ETF, KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares MSCI China ESG Leaders Index ETF, KraneShares CICC China 5G & Semiconductor Index ETF, KraneShares CICC China Consumer Leaders Index ETF, KraneShares SSE STAR Market 50 Index ETF, KraneShares Hang Seng TECH Index ETF, KraneShares China Innovation ETF, KraneShares S&P Pan Asia Dividend Aristocrats Index ETF and KraneShares China Internet and Covered Call Strategy ETF (each, a “Fund” and collectively, the “Funds”). KraneShares Bosera MSCI China A 50 Connect Index ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI Emerging Markets ex China Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI One Belt One Road Index ETF and KraneShares Electric Vehicles and Future Mobility Index ETF are diversified Funds. All other Funds are non-diversified Funds, as defined under Section 5(b)(1) of the Investment Company Act. 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. As of March 31, 2023, Central Huijin Investment Limited, a mainland Chinese-domiciled entity, and HKSCC Nominees Limited, held approximately 40.1% and 39.4%, 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.

 

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 25,000, 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 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.

 

204

 

 

Notes to Financial Statements (continued)

 

The investment objective of each of the following Funds is to seek to provide a total return that (before fees and expenses) tracks the performance of 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 50 Connect Index ETF   MSCI China A 50 Connect Index
KraneShares Bloomberg China Bond Inclusion Index ETF   Bloomberg China Inclusion Focused Bond 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 Index ETF   MSCI China IMI Environment 10/40 Index
KraneShares Electric Vehicles and Future Mobility Index ETF   Bloomberg Electric Vehicles Index
KraneShares MSCI All China Health Care Index ETF   MSCI China All Shares Health Care 10/40 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
KraneShares Hang Seng TECH Index ETF   Hang Seng TECH Index
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF   S&P Pan Asia Dividend Aristocrats® 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.

 

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,

 

205

 

 

Notes to Financial Statements (continued)

 

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 (as defined below) and determined as of the regularly scheduled close of normal trading on each day that the Exchange is scheduled to be open for business (normally 4:00 p.m., Eastern Time). Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources.

 

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 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 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.

 

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 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. 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, except as discussed below for FLEX 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. Over-the-counter (“OTC”) options are valued based upon prices determined by the applicable independent, third party pricing agent. 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. As of and during the year ended March 31, 2023, the Funds did not hold swaps or foreign currency forward contracts.

 

206

 

 

Notes to Financial Statements (continued)

 

FLEX (short for flexible) options are normally valued using a model-based price provided by a third-party pricing vendor. On days when a trade in a FLEX options occurs, the trade price will be used to value such FLEX options in lieu of the model price.

 

On certain days, the settlement price for futures may not be available at the time the Fund calculates its NAV. On such days, the best available price (which is typically the last trade price) may be used to value futures.

 

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).

 

Securities issued by a wholly owned subsidiary of a Fund will be valued at the subsidiary’s net asset value, which will be determined using the same pricing policies and procedures applicable to the Fund.

 

Investments 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 third-party pricing agents pursuant to established methodologies, are fair valued in accordance with Krane’s valuation policies and procedures approved by the Board. 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 Adviser 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’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 based on that day’s opening price (“Collared Securities”). Fair value determinations for Collared Securities will generally be capped based on any applicable pre-determined “limit down” or “limit up” prices established by the relevant foreign securities exchange. As an example, China A-Shares can only be plus or minus ten percent in one day of trading in the relevant mainland China equity market. As a result, the fair value price determination on a given day will generally be capped plus or minus ten percent.

 

207

 

 

Notes to Financial Statements (continued)

 

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 its Underlying Index.

 

Trading in securities on many foreign exchanges is normally completed before the close of business on each Business Day (a “Business Day”, as used herein, is any day on which the Exchange is open for business). 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 a Fund’s 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 a Fund’s 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 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.

 

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).

 

208

 

 

Notes to Financial Statements (continued)

 

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 (the “Code”), 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.

 

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, 2023, 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.

 

OPTIONS — The KraneShares China Internet and Covered Call Strategy ETF writes (sells) at the money Flexible Exchange call options (“FLEX options”) on the KraneShares CSI China Internet ETF (“Underlying Fund”). The KraneShares China Internet and Covered Call Strategy ETF will cover such options by holding the Underlying Fund. FLEX options are exchange-traded options contracts with uniquely customizable terms like exercise price, style, and expiration date. Each FLEX option written will generally (i) have an expiration date greater than 30 days; (ii) have an exercise price generally at the prevailing market price of the Underlying Fund; and (iii) be traded on a national securities exchange. The KraneShares China Internet and Covered Call Strategy ETF will attempt to hold each FLEX option written until expiration. However, if there are redemptions in the

 

209

 

 

Notes to Financial Statements (continued)

 

KraneShares China Internet and Covered Call Strategy ETF, it may not be able to hold such options until expiration. In addition, each FLEX option written generally will only be subject to exercise on its expiration date.

 

As of March 31, 2023, the KraneShares China Internet and Covered Call Strategy ETF had open written option positions. Refer to the KraneShares China Internet and Covered Call Strategy ETF’s Schedule of Investments for details regarding open options as of March 31, 2023. All options held during the period were equity options.

 

For the period ended March 31, 2023, the average monthly cost for written options held during the period by the KraneShares China Internet and Covered Call Strategy ETF was $252,778.

 

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.

 

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS — Each Fund, except for the KraneShares Asia Pacific High Income Bond ETF, the KraneShares Bloomberg China Bond Inclusion Index ETF and the KraneShares China Internet and Covered Call Strategy ETF intends to pay out dividends, if any, at least annually; each of the KraneShares Asia Pacific High Income Bond ETF, the KraneShares Bloomberg China Bond Inclusion Index ETF and the KraneShares China Internet and Covered Call Strategy ETF intend to pay out dividends, if any, at least monthly. 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 BBH Base Rate 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 in an amount equal to at least 100% 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

 

210

 

 

Notes to Financial Statements (continued)

 

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, 2023:

 

KraneShares Funds   Market Value
Securities on Loan
    Cash Collateral for
Securities on Loan
 
KraneShares CSI China Internet ETF   $ 29,815,441     $ 31,393,462  
KraneShares Emerging Markets Consumer Technology Index ETF     632,846       696,591  
KraneShares Electric Vehicles and Future Mobility Index ETF     8,113,787       8,431,059  

 

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 25,000 Shares, 50,000 Shares, 100,000 Shares, or multiples thereof). In its discretion, the Trust reserves the right to increase or decrease the number of each Fund’s shares that constitute a Creation Unit.

 

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 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, 2023:

 

KraneShares Funds   Creation
Unit
Shares
    Standard
Transaction Fee -
Subscriptions
    Value at
March 31,
2023
    Standard
Transaction Fee -
Redemptions
    Maximum
Variable
Transaction
Fee* 
 
KraneShares CICC China Leaders 100 Index ETF     50,000     $ 1,700     $ 1,193,000     $ 1,700       2.00 %
KraneShares CSI China Internet ETF     50,000       500       1,562,500       500       2.00 %
KraneShares Bosera MSCI China A 50 Connect Index ETF     50,000       850       1,304,500       850       2.00 %
KraneShares Bloomberg China Bond Inclusion Index ETF     50,000       500       1,592,000       500       2.00 %
KraneShares MSCI All China Index ETF     50,000       4,250       1,099,500       4,250       2.00 %
KraneShares MSCI One Belt One Road Index ETF     50,000       3,600       1,121,500       3,600       2.00 %
KraneShares Emerging Markets Consumer Technology Index ETF     50,000       1,500       764,000       1,500       2.00 %
KraneShares MSCI China Clean Technology Index ETF     50,000       800       1,427,000       800       2.00 %
KraneShares Electric Vehicles and Future Mobility Index ETF     50,000       800       1,530,000       800       2.00 %

 

211

 

 

Notes to Financial Statements (continued)

 

KraneShares Funds   Creation
Unit
Shares
    Standard
Transaction Fee -
Subscriptions
    Value at
March 31,
2023
    Standard
Transaction Fee -
Redemptions
    Maximum
Variable
Transaction
Fee* 
 
KraneShares MSCI All China Health Care Index ETF     50,000     $ 1,200     $ 1,038,500     $ 1,200       2.00 %
KraneShares Asia Pacific High Income Bond ETF     50,000       600       1,336,500       600       2.00 %
KraneShares Emerging Markets Healthcare Index ETF     50,000       2,100       1,047,500       2,100       2.00 %
KraneShares MSCI Emerging Markets ex China Index ETF     100,000       15,000       2,509,000       15,000       2.00 %
KraneShares MSCI China ESG Leaders Index ETF     50,000       2,100       995,500       2,100       2.00 %
KraneShares CICC China 5G & Semiconductor Index ETF     50,000       500       888,000       500       2.00 %
KraneShares CICC China Consumer Leaders Index ETF     50,000       500       995,500       500       2.00 %
KraneShares SSE STAR Market 50 Index ETF     50,000       2,250       844,500       2,250       2.00 %
KraneShares Hang Seng TECH Index ETF     50,000       550       665,000       550       2.00 %
KraneShares China Innovation ETF     50,000       50       798,500       50       2.00 %
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     50,000       1,800       1,314,500       1,800       2.00 %
KraneShares China Internet and Covered Call Strategy ETF     25,000       10       531,500       10       2.00 %

 

* As a percentage of the Creation Unit(s) purchased/redeemed.

 

The Adviser may adjust the transaction fees from time to time based on actual experience.

 

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. 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) determine which securities are available for loan and notify the securities lending agent for a Fund (the “Agent”), (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 appropriate. The Board of Trustees of the Trust supervises Krane and establishes policies that Krane must follow in its management activities.

 

212

 

 

Notes to Financial Statements (continued)

 

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 Investment Company 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, 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 it 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
Fee
KraneShares CICC China Leaders 100 Index ETF   0.68%
KraneShares CSI China Internet ETF   0.68%
KraneShares Bosera MSCI China A 50 Connect Index ETF   0.78%
KraneShares Bloomberg China Bond Inclusion Index 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 Asia Pacific High Income Bond ETF   0.68%
KraneShares Emerging Markets Healthcare Index ETF   0.78%
KraneShares MSCI Emerging Markets ex China Index ETF   0.58%
KraneShares MSCI China ESG Leaders Index ETF   0.58%
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%
KraneShares Hang Seng TECH Index ETF   0.68%

 

213

 

 

Notes to Financial Statements (continued)

 

KraneShares Funds   Management
Fee
KraneShares China Innovation ETF   0.25%
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF   0.68%
KraneShares China Internet and Covered Call Strategy ETF   0.94%*

 

* The Fund’s management fee of 0.94% of the Fund’s average daily net assets is reduced by the amount of any acquired fund fees and expenses incurred by the Fund that are attributable to the Fund’s investment in affiliated acquired funds such as KraneShares CSI China Internet ETF. This fee reduction is currently expected to be 0.69% of the Fund’s average daily net assets reducing the Fund’s management fee to 0.25% of the Fund’s average daily net assets.

 

The Adviser bears all of its own costs associated with providing these advisory services.

 

Pursuant to the terms of Fee Waiver Agreements, Krane has contractually agreed to waive its management fee for the below listed Funds by the following amounts of the Fund’s average daily net assets until August 1, 2023. The Fee Waiver Agreements may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreements will terminate if the Investment Advisory Agreement for a Fund is terminated.

 

KraneShares Funds   Fee Waiver
Fee
KraneShares Bosera MSCI China A 50 Connect Index ETF   0.23%
KraneShares Bloomberg China Bond Inclusion Index ETF   0.20%
KraneShares MSCI All China Index ETF   0.20%
KraneShares Emerging Markets Consumer Technology Index ETF   0.20%
KraneShares MSCI All China Health Care Index ETF   0.14%
KraneShares MSCI Emerging Markets ex China Index ETF   0.35%
KraneShares CICC China 5G & Semiconductor Index ETF   0.14%

 

Effective June 1, 2022, Krane has contractually agreed to waive its management fee by 0.15% of the average daily net assets of KraneShares China Innovation ETF. This contractual fee waiver will continue until the date of the Fund’s first investment in an initial public offering (“IPO”) and or a pre-IPO, and may only be terminated prior thereto by the Board. In addition, the fee waiver will terminate if the Investment Advisory Agreement for the Fund is terminated.

 

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 50 Connect Index 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 50 Connect Index ETF, the Adviser pays Bosera a fee equal to 50% of the net revenue the Adviser receives from the Fund. For the services Bosera provides to KraneShares SSE STAR Market 50 Index ETF, the Adviser pays Bosera a twelve basis points (0.12%) sub-advisory fee based upon the monthly average assets under management of KraneShares SSE STAR Market 50 Index ETF.

 

Nikko Asset Management Americas Inc. (“Nikko”) serves as the investment sub-adviser to KraneShares Asia Pacific High Income Bond ETF. Nikko is responsible for the day-to-day investment management of the Fund, subject to the supervision of Krane and the Board. Nikko delegates to its affiliate Nikko Asset Management Asia, Ltd. (“Nikko Asia”), a registered investment adviser with the SEC, certain of its responsibilities for the management of the Fund. Krane has entered into a Sub-Advisory Agreement with Nikko pursuant to which Krane has agreed to pay Nikko 36.77% of

 

214

 

 

Notes to Financial Statements (continued)

 

the sum of: (i) the total gross advisory fee due to the Adviser 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 the Adviser.

 

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 Investment Company 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, 2023, 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.

 

4. INVESTMENT TRANSACTIONS

 

For the year ended March 31, 2023, 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
Maturities
 
KraneShares CICC China Leaders 100 Index ETF   $ 6,013,494     $ 8,589,803  
KraneShares CSI China Internet ETF     3,786,756,821       3,924,487,694  
KraneShares Bosera MSCI China A 50 Connect Index ETF     384,329,147       369,305,890  
KraneShares Bloomberg China Bond Inclusion Index ETF     16,585,250       16,831,868  
KraneShares MSCI All China Index ETF     4,353,928       9,495,910  
KraneShares MSCI One Belt One Road Index ETF     1,907,490       3,390,062  
KraneShares Emerging Markets Consumer Technology Index ETF     33,466,396       44,286,883  
KraneShares MSCI China Clean Technology Index ETF     57,966,830       73,673,849  
KraneShares Electric Vehicles and Future Mobility Index ETF     156,090,055       174,283,682  
KraneShares MSCI All China Health Care Index ETF     33,766,109       56,881,499  
KraneShares Asia Pacific High Income Bond ETF     16,404,357       19,455,516  
KraneShares Emerging Markets Healthcare Index ETF     790,813       793,977  
KraneShares MSCI Emerging Markets ex China Index ETF     12,043,581       10,928,438  
KraneShares MSCI China ESG Leaders Index ETF     2,376,286       4,442,967  
KraneShares CICC China 5G & Semiconductor Index ETF     3,986,473       8,038,183  
KraneShares CICC China Consumer Leaders Index ETF     4,629,652       41,075,676  
KraneShares SSE STAR Market 50 Index ETF     21,859,409       32,975,520  
KraneShares Hang Seng TECH Index ETF     12,673,076       9,173,346  
KraneShares China Innovation ETF     83,913       1,208,724  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     2,080,210       866,470  
KraneShares China Internet and Covered Call Strategy ETF           24,299  

 

For the year ended March 31, 2023, there were no purchases or sales of long-term U.S. government securities for the Funds.

 

215

 

 

Notes to Financial Statements (continued)

 

For the year ended March 31, 2023, in-kind transactions associated with creations and redemptions were:

 

KraneShares Funds   Purchases     Sales     Realized Gain/
(Loss)
 
KraneShares CSI China Internet ETF   $ 953,090,271     $ 1,032,175,755     $ 68,892,595  
KraneShares MSCI All China Index ETF     210,510       726,625       (1,002,628 )
KraneShares MSCI One Belt One Road Index ETF           995,838       145,257  
KraneShares Emerging Markets Consumer Technology Index ETF     969,753       6,936,558       (1,180,826 )
KraneShares MSCI China Clean Technology Index ETF     1,684,354       5,549,896       (1,661,098 )
KraneShares Electric Vehicles and Future Mobility Index ETF     2,903,991       31,945,588       1,038,046  
KraneShares MSCI All China Health Care Index ETF     257,293       1,551,179       (266,110 )
KraneShares MSCI Emerging Markets ex China Index ETF     3,388,632       2,720,716       148,083  
KraneShares MSCI China ESG Leaders Index ETF           156,198       (10,126 )
KraneShares China Innovation ETF           961,844       34,251  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     1,282,299              
KraneShares China Internet and Covered Call Strategy ETF     5,994,799              

 

5. 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, investments in passive foreign investment companies (“PFICs”), net operating loss, perpetual bond adjustments and distribution reclassification. The permanent differences that are credited or charged to Paid-in Capital and Distributable Earnings for the fiscal year ended March 31, 2023 are primarily related to redemptions in-kind, net operating loss, distributions in excess and utilization of earnings and profits on shareholder redemptions.

 

KraneShares Funds   Distributable
Earnings/(Loss)
    Paid-in Capital  
KraneShares CSI China Internet ETF   $ 175,506,387     $ (175,506,387 )
KraneShares Bloomberg China Bond Inclusion Index ETF     161,343       (161,343 )
KraneShares MSCI All China Index ETF     1,002,628       (1,002,628 )
KraneShares MSCI One Belt One Road Index ETF     (119,057 )     119,057  
KraneShares Emerging Markets Consumer Technology Index ETF     1,334,071       (1,334,071 )
KraneShares MSCI China Clean Technology Index ETF     1,773,873       (1,773,873 )

 

216

 

 

Notes to Financial Statements (continued)

 

KraneShares Funds   Distributable
Earnings/(Loss)
    Paid-in Capital  
KraneShares Electric Vehicles and Future Mobility Index ETF   $ 32,276     $ (32,276 )
KraneShares MSCI All China Health Care Index ETF     280,758       (280,758 )
KraneShares Emerging Markets Healthcare Index ETF     1,219       (1,219 )
KraneShares MSCI Emerging Markets ex China Index ETF     (49,643 )     49,643  
KraneShares MSCI China ESG Leaders Index ETF     22,493       (22,493 )
KraneShares SSE STAR Market 50 Index ETF     138,931       (138,931 )
KraneShares China Innovation ETF     (34,037 )     34,037  
KraneShares China Internet and Covered Call Strategy ETF     1,112       (1,112 )

 

The tax character of dividends and distributions paid during the years or periods ended March 31, 2023 and March 31, 2022 were as follows:

 

KraneShares Funds     Ordinary
Income
    Long-Term
Capital Gain
    Return of
Capital
    Totals  
KraneShares CICC China Leaders 100 Index ETF                                  
2023     $ 209,433     $ 57,708     $     $ 267,141  
2022       576,817       666,089             1,242,906  
KraneShares CSI China Internet ETF                                  
2023     $     $     $     $  
2022             455,309,639             455,309,639  
KraneShares Bosera MSCI China A 50 Connect Index ETF                                  
2023     $ 9,640,424     $ 101,634,817     $     $ 111,275,241  
2022       8,007,641       56,352,008             64,359,649  
KraneShares Bloomberg China Bond Inclusion Index ETF                                  
2023     $ 93,427     $     $ 233,872     $ 327,299  
2022       936,375                   936,375  
KraneShares MSCI All China Index ETF                                  
2023     $ 192,809     $ 119,165     $     $ 311,974  
2022       280,169       648,696             928,865  
KraneShares MSCI One Belt One Road Index ETF                                  
2023     $ 215,731     $     $     $ 215,731  
2022       297,852                   297,852  
KraneShares Emerging Markets Consumer Technology Index ETF                                  
2023     $     $     $     $  
2022       250,511                   250,511  
KraneShares MSCI China Clean Technology Index ETF                                  
2023     $ 337,960     $ 1,438,072     $     $ 1,776,032  
2022       750,577       6,939             757,516  
KraneShares Electric Vehicles and Future Mobility Index ETF                                  
2023     $ 2,090,551     $     $     $ 2,090,551  
2022       16,115,832       5,768,425             21,884,257  

 

217

 

 

Notes to Financial Statements (continued)

 

KraneShares Funds     Ordinary
Income
    Long-Term
Capital Gain
    Return of
Capital
    Totals  
KraneShares MSCI All China Health Care Index ETF                                  
2023     $ 50,955     $     $     $ 50,955  
2022             21,078,396             21,078,396  
KraneShares Asia Pacific High Income Bond ETF                                  
2023     $ 2,002,618     $     $     $ 2,002,618  
2022       1,214,239             192,065       1,406,304  
KraneShares Emerging Markets Healthcare Index ETF                                  
2023     $ 4,560     $     $     $ 4,560  
2022       10,783                   10,783  
KraneShares MSCI Emerging Markets ex China Index ETF                                  
2023     $ 693,378     $     $     $ 693,378  
2022       681,402       660,110             1,341,512  
KraneShares MSCI China ESG Leaders Index ETF                                  
2023     $ 100,843     $     $     $ 100,843  
2022       219,611                   219,611  
KraneShares CICC China 5G & Semiconductor Index ETF                                  
2023     $ 45,914     $     $     $ 45,914  
2022                          
KraneShares CICC China Consumer Leaders Index ETF                                  
2023     $ 68,755     $     $     $ 68,755  
2022       267,348                   267,348  
KraneShares SSE STAR Market 50 Index ETF                                  
2023     $     $     $     $  
2022                          
KraneShares Hang Seng TECH Index ETF                                  
2023     $ 11,428     $     $     $ 11,428  
2022                          
KraneShares China Innovation ETF                                  
2023     $     $ 110,615     $ 53,934     $ 164,549  
2022       3,228       1,058             4,286  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF                                  
2023     $ 22,329     $     $     $ 22,329  
KraneShares China Internet and Covered Call Strategy ETF                                  
2023     $ 395,952     $     $ 139,051     $ 535,003  

 

218

 

 

Notes to Financial Statements (continued)

 

As of March 31, 2023, the components of tax basis distributable earnings (distributable losses) were as follows:

 

    KraneShares
CICC China
Leaders 100
Index ETF
    KraneShares
CSI China
Internet ETF
    KraneShares
Bosera MSCI
China A 50
Connect Index
ETF
    KraneShares
Bloomberg
China Bond
Inclusion Index
ETF
 
Undistributed Ordinary Income   $ 32,495     $ 42,166,340     $     $  
Capital Loss Carryforwards     (1,226,300 )     (1,191,143,119 )     (71,581,132 )     (28,413 )
Post October Losses           (887,681,082 )            
Qualified Late-Year Loss Deferrals                 (602,309 )      
Unrealized Depreciation on Investments and Foreign Currency     (71,149 )     (3,300,925,375 )     (95,050,139 )     (292,191 )
Other Temporary Differences           1       (303,983 )     (3 )
Total Distributable Losses   $ (1,264,954 )   $ (5,337,583,235 )   $ (167,537,563 )   $ (320,607 )

 

    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
 
Undistributed Ordinary Income   $ 23,929     $ 17,410     $ 27,451     $  
Capital Loss Carryforwards     (5,474,769 )     (3,191,194 )     (36,647,128 )     (30,716,725 )
Post October Losses                       (191,872 )
Unrealized Depreciation on Investments and Foreign Currency     (1,648,547 )     (1,219,823 )     (18,547,775 )     (41,525,364 )
Other Temporary Differences     3             (1 )      
Total Distributable Losses   $ (7,099,384 )   $ (4,393,607 )   $ (55,167,453 )   $ (72,433,961 )

 

    KraneShares
Electric
Vehicles and
Future Mobility
Index ETF
    KraneShares
MSCI All China
Health Care
Index ETF
    KraneShares
Asia Pacific
High Income
Bond ETF
    KraneShares
Emerging
Markets
Healthcare
Index ETF
 
Undistributed Ordinary Income   $ 90,533     $ 87,921     $ 547,248     $  
Capital Loss Carryforwards     (47,045,059 )     (40,418,259 )     (8,222,667 )     (841,415 )
Post October Losses                       (1,992 )
Unrealized Depreciation on Investments and Foreign Currency     (50,752,445 )     (36,655,486 )     (926,347 )     (821,449 )
Other Temporary Differences           1       31,582        
Total Distributable Losses   $ (97,706,971 )   $ (76,985,823 )   $ (8,570,184 )   $ (1,664,856 )

 

219

 

 

Notes to Financial Statements (continued)

 

    KraneShares
MSCI Emerging
Markets ex
China Index ETF
    KraneShares
MSCI China
ESG Leaders
Index ETF
    KraneShares
CICC China
5G&
Semiconductor
Index ETF
    KraneShares
CICC China
Consumer
Leaders Index
ETF
 
Undistributed Ordinary Income   $ 153,114     $ 33,045     $     $  
Capital Loss Carryforwards     (1,531,324 )     (2,261,521 )     (10,998,460 )     (19,363,165 )
Qualified Late-Year Loss Deferrals                 (22,431 )     (1,098 )
Unrealized Depreciation on Investments and Foreign Currency     (3,765,032 )     (1,410,143 )     (3,690,912 )     (1,557,715 )
Other Temporary Differences     2       (3 )     (2 )     (3 )
Total Distributable Losses   $ (5,143,240 )   $ (3,638,622 )   $ (14,711,805 )   $ (20,921,981 )

 

    KraneShares
SSE STAR
Market 50
Index ETF
    KraneShares
Hang Seng
TECH Index ETF
    KraneShares
China
Innovation ETF
    KraneShares
S&P Pan
Asia Dividend
Aristocrats
Index ETF
 
Undistributed Ordinary Income   $     $ 21,861     $     $ 31,646  
Capital Loss Carryforwards     (19,056,687 )     (2,908,579 )     (121,539 )     (1,654 )
Qualified Late-Year Loss Deferrals     (94,680 )           (422 )      
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency     (6,364,498 )     (1,005,455 )     (729,487 )     98,888  
Other Temporary Differences     (4 )     1       2        
Total Distributable Earnings/(Loss)   $ (25,515,869 )   $ (3,892,172 )   $ (851,446 )   $ 128,880  

 

    KraneShares
China Internet
and Covered
Call Strategy
ETF
 
Unrealized Depreciation on Investments and Foreign Currency     (528,078 )
Other Temporary Differences     (1 )
Total Distributable Losses   $ (528,079 )

 

Qualified late year ordinary and Post-October capital losses (including currency and specified gain/loss items) represent losses realized from January 1, 2023 through March 31, 2023 and November 1, 2022 through March 31, 2023, 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, PFICs mark to market, perpetual bond adjustments, and book adjustments not recognized for tax.

 

220

 

 

Notes to Financial Statements (continued)

 

The Funds have capital loss carryforwards as follows:

 

KraneShares Funds   Short-Term Loss     Long-Term Loss     Total  
KraneShares CICC China Leaders 100 Index ETF   $ 1,221,254     $ 5,046     $ 1,226,300  
KraneShares CSI China Internet ETF     613,197,112       577,946,007       1,191,143,119  
KraneShares Bosera MSCI China A 50 Connect Index ETF     62,330,691       9,250,441       71,581,132  
KraneShares Bloomberg China Bond Inclusion Index ETF     22,024       6,389       28,413  
KraneShares MSCI All China Index ETF     196,232       5,278,537       5,474,769  
KraneShares MSCI One Belt One Road Index ETF     2,378,781       812,413       3,191,194  
KraneShares Emerging Markets Consumer Technology Index ETF     21,320,388       15,326,740       36,647,128  
KraneShares MSCI China Clean Technology Index ETF     5,134,830       25,581,895       30,716,725  
KraneShares Electric Vehicles and Future Mobility Index ETF     29,718,100       17,326,959       47,045,059  
KraneShares MSCI All China Health Care Index ETF     3,901,437       36,516,822       40,418,259  
KraneShares Asia Pacific High Income Bond ETF     6,743,141       1,479,526       8,222,667  
KraneShares Emerging Markets Healthcare Index ETF     533,970       307,445       841,415  
KraneShares MSCI Emerging Markets ex China Index ETF     10,980       1,520,344       1,531,324  
KraneShares MSCI China ESG Leaders Index ETF     307,053       1,954,468       2,261,521  
KraneShares CICC China 5G & Semiconductor Index ETF     8,222,486       2,775,974       10,998,460  
KraneShares CICC China Consumer Leaders Index ETF     6,819,078       12,544,087       19,363,165  
KraneShares SSE STAR Market 50 Index ETF     7,176,205       11,880,482       19,056,687  
KraneShares Hang Seng TECH Index ETF     2,115,907       792,672       2,908,579  
KraneShares China Innovation ETF     15,404       106,135       121,539  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     1,654             1,654  

 

During the year ended March 31, 2023, the following Funds utilized capital loss carryforwards, to offset capital gains:

 

KraneShares Funds   Amount
Utilized
 
KraneShares MSCI One Belt One Road Index ETF   $ 60,113  

 

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 PFICs. The federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Funds at March 31, 2023 were as follows:

 

KraneShares Funds  
Federal Tax
Cost
    Aggregated
Gross
Unrealized
Appreciation
    Aggregated
Gross
Unrealized
Depreciation
   
Net Unrealized
Appreciation
(Depreciation)
 
KraneShares CICC China Leaders 100 Index ETF   $ 6,036,049     $ 500,548     $ (571,697 )   $ (71,149 )
KraneShares CSI China Internet ETF     9,442,813,196       224,250,872       (3,525,176,247 )     (3,300,925,375 )
KraneShares Bosera MSCI China A 50 Connect Index ETF     565,235,541       8,213,209       (103,263,348 )     (95,050,139 )
KraneShares Bloomberg China Bond Inclusion Index ETF     7,782,145       64,818       (357,009 )     (292,191 )
KraneShares MSCI All China Index ETF     10,427,690       363,909       (2,012,456 )     (1,648,547 )

 

221

 

 

Notes to Financial Statements (continued)

 

KraneShares Funds  
Federal Tax
Cost
    Aggregated
Gross
Unrealized
Appreciation
    Aggregated
Gross
Unrealized
Depreciation
   
Net Unrealized
Appreciation
(Depreciation)
 
KraneShares MSCI One Belt One Road Index ETF   $ 5,667,259     $ 399,653     $ (1,617,152 )   $ (1,217,499 )
KraneShares Emerging Markets Consumer Technology Index ETF     49,758,857       732,900       (19,280,675 )     (18,547,775 )
KraneShares MSCI China Clean Technology Index ETF     137,169,650       8,410,176       (49,935,542 )     (41,525,366 )
KraneShares Electric Vehicles and Future Mobility Index ETF     243,311,872       12,321,634       (63,074,079 )     (50,752,445 )
KraneShares MSCI All China Health Care Index ETF     131,181,768       3,727,729       (40,383,215 )     (36,655,486 )
KraneShares Asia Pacific High Income Bond ETF     19,789,774       320,337       (1,246,684 )     (926,347 )
KraneShares Emerging Markets Healthcare Index ETF     2,911,288       183,554       (999,587 )     (816,033 )
KraneShares MSCI Emerging Markets ex China Index ETF     33,647,851       730,264       (4,470,856 )     (3,740,592 )
KraneShares MSCI China ESG Leaders Index ETF     6,384,644       247,571       (1,657,714 )     (1,410,143 )
KraneShares CICC China 5G & Semiconductor Index ETF     18,788,134       851,493       (4,542,405 )     (3,690,912 )
KraneShares CICC China Consumer Leaders Index ETF     8,522,693       412,904       (1,970,619 )     (1,557,715 )
KraneShares SSE STAR Market 50 Index ETF     54,327,040       3,766,812       (10,131,312 )     (6,364,500 )
KraneShares Hang Seng TECH Index ETF     7,949,408       969,563       (1,975,018 )     (1,005,455 )
KraneShares China Innovation ETF     2,325,788             (729,487 )     (729,487 )
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     2,508,753       195,613       (96,725 )     98,888  
KraneShares China Internet and Covered Call Strategy ETF     5,970,676             (528,078 )     (528,078 )

 

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

 

222

 

 

Notes to Financial Statements (continued)

 

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 were extended to December 31, 2025.

 

6. 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”.

 

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. China may be subject to considerable degrees of economic, political and social instability. In addition, the Chinese economy is export-driven and highly reliant on trade with key partners. 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. Recent developments in relations between the United States and China have heightened concerns of increased tariffs and restrictions on trade between the two

 

223

 

 

Notes to Financial Statements (continued)

 

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.

 

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.

 

CONCENTRATION RISK — Because the assets of certain Funds 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.

 

CURRENCY RISK — The Funds’ 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.

 

224

 

 

Notes to Financial Statements (continued)

 

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. Derivatives may at times be highly illiquid, and the Fund may not be able to close out or sell a derivative at a particular time or at an anticipated price. Derivatives can be difficult to value and valuation may be more difficult in times of market turmoil. There may be imperfect correlation between the derivative and that of the reference asset, resulting 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 make required payments or otherwise comply with the terms of derivative. 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. That risk is generally thought to be greater with over-the-counter (OTC) derivatives than with derivatives that are exchange traded or centrally cleared. 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. 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 — A Funds’ 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.

 

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 and 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 a position, which may cause the Funds to suffer significant losses and difficulties in meeting redemptions. Liquidity risk may be the result of, among other things, market turmoil, the reduced number and capacity of traditional market participants, or the lack of an active trading market. Markets for securities or financial instruments could be disrupted by a number of events, including, but not limited to, an economic crisis, natural disasters, new legislation or regulatory changes inside or outside the U.S. Liquid investments may become less liquid after being purchased by the Fund, particularly during periods of market stress. In addition, if a number of securities held by the Fund stop trading, it may have a cascading effect and cause the Fund to halt trading. Volatility in market prices will increase the risk of the Fund being subject to a trading halt. Certain countries in which the Fund may invest may be subject to extended settlement delays and/or foreign holidays, during which the Fund will unlikely be able to convert holdings to cash.

 

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

 

225

 

 

Notes to Financial Statements (concluded)

 

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.

 

NON-DIVERSIFIED FUND RISK — Because a 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.

 

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 by a pricing service at an evaluated price. These valuations involve subjectivity and different market participants may assign different prices to the same investment. As a result, there is a risk that a Fund may not be able to sell an investment at the price assigned to the investment 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.

 

7. OTHER

 

At March 31, 2023, 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 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.

 

8. 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.

 

9. 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.

 

Based on this evaluation, no additional disclosures or adjustments were required to the financial statements as of the date the financial statements were issued.

 

226

 

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Trustees

KraneShares Trust:

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of assets and liabilities of the funds listed in the Appendix, twenty-one of the funds comprising KraneShares Trust (collectively, the Funds), including the schedules of investments, as of March 31, 2023, the related statements of operations for the year or period listed in the Appendix, the statements of changes in net assets for each of the years or periods in the two-year period listed in the Appendix, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period 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, 2023, the results of its operations for the year or period listed in the Appendix, the changes in its net assets for each of the years or periods in the two-year period listed in the Appendix, and the financial highlights for each of the years or periods in the five-year period 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 Funds 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 audit 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 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, 2023, 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 29, 2023

 

227

 

 

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 50 Connect Index ETF

KraneShares Bloomberg China Bond Inclusion Index 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

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights each of the years in the five-year period ended March 31, 2023

 

Funds with commencement of operations during the year ended March 31, 2019:

 

KraneShares Asia Pacific High Income Bond ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the four-year period ended March 31, 2023 and the period from June 26, 2018 (commencement of operations) through March 31, 2019

KraneShares Emerging Markets Healthcare Index ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the four-year period ended March 31, 2023 and the period from August 29, 2018 (commencement of operations) through March 31, 2019

 

Funds 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, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the three-year period ended March 31, 2023 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

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the two-year period ended March 31, 2023 and the period from July 28, 2020 (commencement of operations) through March 31, 2021

KraneShares CICC China 5G & Semiconductor Index ETF

 

228

 

 

Report of Independent Registered Public Accounting Firm (concluded)

 

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the two-year period ended March 31, 2023 and the period from November 23, 2020 (commencement of operations) through March 31, 2021

KraneShares CICC China Consumer Leaders Index ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the two-year period ended March 31, 2023 and the period from December 8, 2020 (commencement of operations) through March 31, 2021

KraneShares SSE STAR Market 50 Index ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for each of the years in the two-year period ended March 31, 2023

Financial highlights for each of the years in the two-year period ended March 31, 2023 and the period from January 26, 2021 (commencement of operations) through March 31, 2021

 

Funds with commencement of operations during the year ended March 31, 2022:

 

KraneShares Heng Seng TECH Index ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for the year ended March 31, 2023 and the period from June 8, 2021 (commencement of operations) through March 31, 2022

Financial highlights for the year ended March 31, 2023 and the period from June 8, 2021 (commencement of operations) through March 31, 2022

KraneShares China Innovation ETF

Statement of operations for the year ended March 31, 2023

Statements of changes in net assets for the year ended March 31, 2023 and the period from October 5, 2021 (commencement of operations) through March 31, 2022

Financial highlights for the year ended March 31, 2023 and the period from October 5, 2021 (commencement of operations) through March 31, 2022

 

Funds with commencement of operations during the year ended March 31, 2023:

 

KraneShares S&P Pan Asia Dividend Aristocrats Index ETF

Statements of operations and changes in net assets and financial highlights for the period from September 15, 2022 (commencement of operations) through March 31, 2023

KraneShares China Internet & Covered Call Strategy ETF

Statements of operations and changes in net assets and the financial highlights for the period from January 12, 2023 (commencement of operations) through March 31, 2023

 

229

 

 

Trustees and Officers of the Trust (Unaudited)

March 31, 2023

 

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, 2023.

 

            Number of   Other
    Position(s)       Funds in Trust   Directorships
Name, Address   Held   Principal Occupation(s)   Overseen by   Held by
(Year of Birth)   with Trust   During the Past 5 Years   Trustee   Trustees
Interested Trustee1                 
                 

Jonathan Krane2 

(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 Officer of Krane Portfolio Advisors, LLC from 2018 to present. Principal of Krane Capital LLC from 2009 to 2011.   38   None
                 
Independent Trustees1                 
                 

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.   38   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, LLC from 2005 to 2011.   38   None

 

230

 

 

Trustees and Officers of the Trust (Unaudited) (continued)

March 31, 2023

 

            Number of   Other
    Position(s)       Funds in Trust   Directorships
Name, Address   Held   Principal Occupation(s)   Overseen by   Held by
(Year of Birth)   with Trust   During the Past 5 Years   Trustee   Trustees
Independent Trustees1                 
                 

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.   38   None

 

            Number of   Other
    Position(s)       Funds in Trust   Directorships
Name, Address   Held   Principal Occupation(s)   Overseen by   Held by
(Year of Birth)   with Trust   During the Past 5 Years   Trustee   Trustees
Officers1                 
                 

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 Officer of Krane Portfolio Advisors, LLC from 2018 to present. Principal of Krane Capital LLC from 2009 to 2011.   38   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.   38   None

 

231

 

 

Trustees and Officers of the Trust (Unaudited) (concluded)

March 31, 2023

 

            Number of   Other
    Position(s)       Funds in Trust   Directorships
Name, Address   Held   Principal Occupation(s)   Overseen by   Held by
(Year of Birth)   with Trust   During the Past 5 Years   Trustee   Trustees
Officers1                 
                 

Michael Quain

(1957)

280 Park Avenue

32nd Floor

New York,

New York, 10017

  Chief Compliance Officer and AntiMoney Laundering Officer, No Set Term; served since 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.   38   None
                 

Eric Olsen

(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).

 

  38   None
                 

David Adelman

(1964)

280 Park Avenue

32nd Floor

New York,

New York, 10017

  Assistant Secretary, No set term; served since 2021   Managing Director and the General Counsel, Krane Fund Advisors, LLC from 2021. Partner, Reed Smith LLP from 2015 to 2021.   38   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.   38   None

 

1 Each Trustee serves until his or her successor is duly elected or appointed and qualified.
2 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.

 

232

 

 

Approval of Advisory Agreement (Unaudited)

 

Approval of Advisory Agreement for KraneShares China Internet and Covered Call Strategy ETF

 

At a meeting held on December 1-2, 2022, the Board of Trustees (the “Board”) of KraneShares Trust (the “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 (the “Advisory Agreement”) between Krane Funds Advisors, LLC (“Krane”) and the Trust, on behalf of a proposed new series of the Trust, KraneShares China Internet and Covered Call Strategy ETF (the “New Fund”).

 

In advance of the meeting, and at a separate meeting of the Independent Trustees in executive session held on December 1, 2022, the Board received and considered information provided by Krane in response to the Independent Trustees’ written request for information regarding the New Fund and the Advisory Agreement. The Board noted that it considers information at each of its regularly scheduled meetings related to, among other matters, the services provided by Krane to each series of the Trust, and that such information will include information related to the New Fund after it is operational. The Board considered that the Independent Trustees also receive additional information outside of regularly scheduled Board meetings and at executive sessions held by the Independent Trustees. As a result, the Board considered that its evaluation process with respect to Krane and each series of the Trust is an ongoing one.

 

In evaluating the Advisory Agreement with respect to the New Fund, the Board considered, among other matters: (1) the nature, extent, and quality of the services to be provided to the New Fund by Krane; (2) the proposed compensation to be paid by the New Fund under the Advisory Agreement and related fee waivers; (3) the estimated costs of the services to be provided by Krane and the profitability expectations of Krane with respect to its relationship with the New Fund; (4) the extent to which economies of scale could be realized as the New Fund grows and whether the unitary fee charged under the Advisory Agreement will enable investors in the New Fund to share in any such economies of scale; and (5) other benefits Krane anticipates it may receive from its relationship with the New Fund.

 

Nature, Extent and Quality of Services

 

Based on written and oral reports received by the Board prior to and at the December 1, 2022 executive session of the Independent Trustees and December 1-2, 2022 meeting of the Board, the Board considered the nature, quality, and extent of the overall services to be provided by Krane to the New Fund under the Advisory Agreement. The Board took note of the qualifications, background and responsibilities of Krane personnel who will provide services to the New Fund.

 

The Board considered Krane’s representation that the New Fund represented a unique investment opportunity for retail investors. They noted that the portfolio would consist of investments in component securities of the CSI Overseas China Internet Index (“Index”) and at the money covered call options written by Krane on the Index. The Board noted that the Index is also the underlying index for KraneShares CSI China Internet ETF (“KWEB”) and considered that Krane intends to manage the New Fund’s portfolio by purchasing KWEB and writing covered call options on KWEB. The Board considered the hypothetical results of the proposed portfolio construction and considered the relative volatility of the New Fund compared to historical volatility of KWEB. The Board noted the portfolio management expertise necessary to write covered call options on the New Fund’s portfolio and considered the expertise and experience of Krane’s portfolio staff in this regard.

 

233

 

 

Approval of Advisory Agreement (Unaudited) (continued)

 

The Board recognized that Krane invests significant time and effort in structuring new series of the Trust, including the New Fund. They considered Krane’s evaluation of the market appeal for the New Fund, and considered that Krane worked with the Trust’s service providers to manage the administrative and other requirements for the New Fund. The Board also noted that Krane continually evaluates its existing compliance and operational staff, as well as its investment professionals, and that Krane has consistently sought to retain qualified and experienced staff in these areas as its business has grown. The Board considered Krane’s current ownership structure, financial strength and long-term strategic plans, and noted that Krane is part of a family of investment management firms with significant resources, including administrative resources utilized by Krane.

 

Investment Performance

 

The Board noted that, because the New Fund has not yet commenced investment operations, it has no investment performance. The Board considered, however, Krane’s representations with respect to hypothetical results of a model proposed portfolio and considered the resulting relative volatility of the New Fund compared to historical volatility of KWEB. The Board noted that once the New Fund commences operations, the Board will receive regular reports regarding its performance relative its respective broad Morningstar peer group, as well as a select group of competitors identified by Krane. The Board also considered that at its regular meetings it will receive information regarding the New Fund against the performance of an identified index. The Board considered that there are limited peers available for the New Fund.

 

Compensation

 

The Board considered that, pursuant to the Advisory Agreement, Krane will enter into a unitary advisory fee arrangement for the New Funds. The Board considered the proposed fee for the New Fund compared to its Morningstar universe and against a custom peer group. The Board considered that Krane will waive any acquired fund fees and expenses due to the New Fund’s investment in KWEB and considered the results of such waiver on the New Fund’s advisory fee. The Board considered that the proposed fee rate for the New Fund is above the median of its peer group, and took note of the unique nature of the strategy followed by the New Fund. The Board also considered that under the unitary fee arrangement, Krane will be responsible for paying most of the expenses incurred by the New Fund, including those of its principal service providers. The Board noted that, under the unitary fee structure, Krane takes the risk that the New Fund may not be successful in raising sufficient assets to enable Krane to cover the cost of such expenses.

 

Costs and Profitability

 

The Board considered the estimated cost of Krane’s services with respect to the New Fund. The Board noted that, because the New Fund has not yet launched, it was difficult to estimate how profitable it will be to Krane, although the Board recognized that the New Fund will leverage procedures and systems put in place in connection with management of other series of the Trust. The Independent Trustees received information from Krane regarding its overall profitability, particularly in light of recent market performance, and discussed with Krane’s management how launching the New Fund could impact such profitability. The Board considered information previously provided by Krane regarding the cost of its services and its profitability with respect to the existing operational series of the Trust. The Board noted Krane’s continuing commitment to operating the Trust and its continued use of a unitary fee structure under which it will bear many of the expenses of the New Funds.

 

234

 

 

Approval of Advisory Agreement (Unaudited) (concluded)

 

Other Benefits

 

The Board considered the extent to which Krane could derive ancillary benefits from the operations of the New Fund including, in particular, the effect the New Fund could have on KWEB’s assets and the fees earned by Krane on KWEB. They noted that it was unlikely that the New Fund would participate in the Trust’s securities lending program, and considered whether Krane would benefit as a result of its ability to use the New Fund’s assets to engage in soft dollar transactions.

 

Economies of Scale

 

The Board considered whether Krane would realize economies of scale with respect to its services as the New Fund grows, including the extent to which this is reflected in the level of fees to be paid by the New Fund. The Board noted that the proposed advisory fee for the New Fund does not includes breakpoints, and considered that it is not possible—before the commencement of investment operations—to accurately evaluate potential economies of scale. The Board also noted that Krane continues to reinvest a portion of its profits in its business, including through the evolution of its compliance and investment infrastructure, and that any economies of scale could be shared with the New Fund in this manner. Based on these and other considerations, including that the New Fund is newly organized, the Board considered economies of scale not to be a material factor in its consideration of the Advisory Agreement.

 

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 in their review of the Advisory Agreement. The Board reviewed a memorandum from Independent Trustee counsel discussing the legal standards and judicial precedent applicable to its consideration of the Advisory Agreement. The Board noted that, consistent with its approach to other series of the Trust, it will continue to monitor the New Fund 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 Advisory Agreement, were reasonable in light of the factors considered by the Board.

 

235

 

 

Disclosure of Fund Expenses (Unaudited)

 

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, 2022 to March 31, 2023).

 

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.

 

236

 

 

Disclosure of Fund Expenses (Unaudited) (continued)

 

   
Beginning
Account Value
10/1/2022
    Ending
Account
Value
3/31/2023
   
Annualized
Expense
Ratios
   
Expenses
Paid During
Period(1) 
 
KraneShares CICC China Leaders 100 Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,085.80       0.69 %   $ 3.59  
Hypothetical 5% Return     1,000.00       1,021.49       0.69       3.48  
                                 
KraneShares CSI China Internet ETF                                
Actual Fund Return   $ 1,000.00     $ 1,268.30       0.69 %   $ 3.90  
Hypothetical 5% Return     1,000.00       1,021.49       0.69       3.48  
                                 
KraneShares Bosera MSCI China A 50 Connect Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,058.20       0.56 %   $ 2.87  
Hypothetical 5% Return     1,000.00       1,022.14       0.56       2.82  
                                 
KraneShares Bloomberg China Bond Inclusion Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,047.00       0.49 %   $ 2.50  
Hypothetical 5% Return     1,000.00       1,022.49       0.49       2.47  
                                 
KraneShares MSCI All China Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,147.20       0.49 %   $ 2.62  
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     $ 1,045.40       0.79 %   $ 4.03  
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     $ 1,151.50       0.60 %   $ 3.22  
Hypothetical 5% Return     1,000.00       1,021.94       0.60       3.02  
                                 
KraneShares MSCI China Clean Technology Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,027.80       0.79 %   $ 3.99  
Hypothetical 5% Return     1,000.00       1,020.99       0.79       3.98  
                                 
KraneShares Electric Vehicles and Future Mobility Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,010.20       0.72 %   $ 3.61  
Hypothetical 5% Return     1,000.00       1,021.34       0.72       3.63  
                                 
KraneShares MSCI All China Health Care Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,166.10       0.65 %   $ 3.51  
Hypothetical 5% Return     1,000.00       1,021.69       0.65       3.28  
                                 
KraneShares Asia Pacific High Income Bond ETF                                
Actual Fund Return   $ 1,000.00     $ 1,101.90       0.69 %   $ 3.62  
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     $ 1,068.40       0.80 %   $ 4.13  
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     $ 1,148.40       0.24 %   $ 1.29  
Hypothetical 5% Return     1,000.00       1,023.74       0.24       1.21  

 

237

 

 

Disclosure of Fund Expenses (Unaudited) (concluded)

 

   
Beginning
Account Value
10/1/2022
    Ending
Account
Value
3/31/2023
   
Annualized
Expense
Ratios
   
Expenses
Paid During
Period(1) 
 
KraneShares MSCI China ESG Leaders Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,164.20       0.59 %   $ 3.18  
Hypothetical 5% Return     1,000.00       1,021.99       0.59       2.97  
                                 
KraneShares CICC China 5G & Semiconductor Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,214.00       0.65 %   $ 3.59  
Hypothetical 5% Return     1,000.00       1,021.69       0.65       3.28  
                                 
KraneShares CICC China Consumer Leaders Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,095.00       0.68 %   $ 3.55  
Hypothetical 5% Return     1,000.00       1,021.54       0.68       3.43  
                                 
KraneShares SSE STAR Market 50 Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,168.90       0.89 %   $ 4.81  
Hypothetical 5% Return     1,000.00       1,020.49       0.89       4.48  
                                 
KraneShares Hang Seng TECH Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,267.40       0.69 %   $ 3.90  
Hypothetical 5% Return     1,000.00       1,021.49       0.69       3.48  
                                 
KraneShares China Innovation ETF                                
Actual Fund Return   $ 1,000.00     $ 1,179.60       0.11 %   $ 0.60  
Hypothetical 5% Return     1,000.00       1,024.38       0.11       0.56  
                                 
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF                                
Actual Fund Return   $ 1,000.00     $ 1,169.80       0.68 %   $ 3.68  
Hypothetical 5% Return     1,000.00       1,021.54       0.68       3.43  
                                 
KraneShares China Internet and Covered Call Strategy ETF                                
Actual Fund Return(2)    $ 1,000.00     $ 964.40       0.27 %   $ 0.57  
Hypothetical 5% Return     1,000.00       1,023.59       0.27       1.36  

 

(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 the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 79/365 (to reflect the period from 1/12/23- 3/31/23).

 

238

 

 

Notice To Shareholders (Unaudited)

 

For shareholders that do not have a March 31, 2023 tax year end, this notice is for informational purposes only. For shareholders with a March 31, 2023 tax year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended March 31, 2023, the Funds are designating the following items with regard to distributions paid during the year.

 

Return of
Capital(1) 
    Long-Term
Capital
Gain
Distributions
    Ordinary
Income
Distributions
    Total
Distributions
    Qualifying
for
Corporate
Dividends
Received
Deduction(2) 
    Qualifying
Dividend
Income(3) 
    U.S.
Government
Interest(4) 
    Interest
Related
Dividends(5) 
    Short Term
Capital
Gain
Dividends(6) 
    Foreign
Tax
Credit
 
KraneShares CICC China Leaders 100 Index ETF(7) 
  0.00 %     19.41 %     80.59 %     100.00 %     0.00 %     100.00 %     0.00 %     0.13 %     0.00 %     10.16 %
KraneShares CSI China Internet ETF
  0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares Bosera MSCI China A 50 Connect Index ETF(7) 
  0.00 %     90.15 %     9.85 %     100.00 %     0.00 %     100.00 %     0.00 %     0.05 %     0.00 %     1.30 %
KraneShares Bloomberg China Bond Inclusion Index ETF
  71.46 %     0.00 %     28.54 %     100.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares MSCI All China Index ETF (7) 
  0.00 %     36.28 %     63.72 %     100.00 %     0.25 %     81.86 %     0.00 %     0.24 %     0.00 %     5.02 %
KraneShares MSCI One Belt One Road Index ETF(7) 
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     81.15 %     0.00 %     0.21 %     0.00 %     11.07 %
KraneShares Emerging Markets Consumer Technology Index ETF
  0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares MSCI China Clean Technology Index ETF(7) 
  0.00 %     80.97 %     19.03 %     100.00 %     0.00 %     100.00 %     0.00 %     0.57 %     0.00 %     0.00 %
KraneShares Electric Vehicles and Future Mobility Index ETF(7) 
  0.00 %     0.00 %     100.00 %     100.00 %     14.10 %     100.00 %     0.00 %     0.16 %     0.00 %     18.47 %
KraneShares MSCI All China Health Care Index ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     100.00 %     0.00 %     1.04 %     0.00 %     63.26 %
KraneShares Asia Pacific High Income Bond ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     0.00 %     0.00 %     0.07 %     0.00 %     0.00 %
KraneShares Emerging Markets Healthcare Index ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     100.00 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares MSCI Emerging Markets ex China Index ETF(7) 
  0.00 %     0.00 %     100.00 %     100.00 %     0.34 %     39.67 %     0.00 %     0.19 %     0.00 %     18.60 %
KraneShares MSCI China ESG Leaders Index ETF(7) 
  0.00 %     0.00 %     100.00 %     100.00 %     1.33 %     62.28 %     0.00 %     0.01 %     0.00 %     6.78 %
KraneShares CICC China 5G & Semiconductor Index ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     100.00 %     0.00 %     0.54 %     0.00 %     0.00 %
KraneShares CICC China Consumer Leaders Index ETF(7) 
  0.00 %     0.00 %     100.00 %     100.00 %     2.01 %     100.00 %     0.00 %     1.26 %     0.00 %     23.25 %
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 %
KraneShares Hang Seng TECH Index ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     14.02 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares China Innovation ETF
  32.78 %     67.22 %     0.00 %     100.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %     0.00 %
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF
  0.00 %     0.00 %     100.00 %     100.00 %     0.00 %     53.40 %     0.00 %     0.06 %     0.00 %     17.04 %

 

239

 

 

Notice To Shareholders (Unaudited) (concluded)

 

Return of
Capital(1) 
   
Long-Term
Capital
Gain
Distributions
   
Ordinary
Income
Distributions
   
Total
Distributions
    Qualifying
for
Corporate
Dividends
Received
Deduction(2) 
   
Qualifying
Dividend
Income(3) 
   
U.S.
Government
Interest(4) 
   
Interest
Related
Dividends(5) 
   
Short Term
Capital
Gain
Dividends(6) 
   
Foreign
Tax
Credit
 
KraneShares China Internet and Covered Call Strategy ETF
  35.12 %     0.00 %     64.88 %     100.00 %     0.00 %     0.00 %     0.00 %     0.23 %     100.00 %     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.
(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, 2023, the total amount of foreign source income and amount of foreign tax to be paid is as follows:

 


KraneShares Funds
  Foreign
Source
Income
    Foreign Tax
Credit Pass
Through
 
KraneShares CICC China Leaders 100 Index ETF   $ 262,176     $ 30,201  
KraneShares Bosera MSCI China A 50 Connect Index ETF     11,475,483       1,461,599  
KraneShares MSCI All China Index ETF     189,569       16,504  
KraneShares MSCI One Belt One Road Index ETF     196,688       26,857  
KraneShares Electric Vehicles and Future Mobility Index ETF     2,277,359       473,744  
KraneShares MSCI All China Health Care Index ETF     278,213       87,722  
KraneShares MSCI Emerging Markets ex China Index ETF     895,915       158,460  
KraneShares MSCI China ESG Leaders Index ETF     115,785       7,333  
KraneShares CICC China Consumer Leaders Index ETF     125,495       20,827  
KraneShares S&P Pan Asia Dividend Aristocrats Index ETF     43,293       4,587  

 

The allocable share of foreign tax credit will be reported on Form 1099-DIV.

 

240

 

 

Supplemental Information (Unaudited)

 

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 closing price on the stock exchange on which the Shares of the Funds are listed for trading. 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.

 

241

 

 

 

KraneShares Trust:

280 Park Avenue 32nd Floor

New York, NY 10017

1-855-857-2638

http://kraneshares.com/

 

Distributor:

SEI Investments Distribution Co.

One Freedom Valley Drive

Oaks, PA 19456

     

Investment Adviser:

Krane Funds Advisors, LLC

280 Park Avenue 32nd Floor

New York, NY 10017

 

Administrator:

SEI Investments Global Funds Services

One Freedom Valley Drive

Oaks, PA 19456

     

Sub-Adviser:

Bosera Asset Management

(International) Co., Ltd.

Suite 4109

Jardine House

One Connaught Place

Central, Hong Kong

 

Independent Registered Public Accounting Firm:

KPMG LLP

1601 Market Street

Philadelphia, PA 19103

     

Sub-Adviser:

Nikko Asset Management Americas, Inc.

605 Third Avenue 38th Floor

New York, NY 10158

   

 

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-001-1000