UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File number 811-22698
KraneShares Trust
(Exact name of registrant as specified in charter)
280 Park Avenue
32nd Floor
New York, New York 10017
(Address of principal executive offices) (Zip code)
Jonathan Krane
KraneShares Trust
280 Park Avenue
32nd Floor
New York, New York 10017
(Name and address of agent for service)
Copy to:
Stacy L. Fuller
K&L Gates LLP
1601 K Street NW
Washington, DC 20006-1600
Registrant’s telephone number, including area code: (855) 857-2638
Date of fiscal year end: March 31, 2020
Date of reporting period: March 31, 2020
Item 1. | Reports to Stockholders. |
A copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act, as amended [17 CFR § 270.30e-1], are attached hereto.
Annual Report KraneShares CICC China Leaders 100 Index ETF KraneShares CSI China Internet ETF KraneShares Bosera MSCI China A Share ETF KraneShares E Fund China Commercial Paper ETF KraneShares MSCI All China Index ETF KraneShares MSCI One Belt One Road Index ETF KraneShares Emerging Markets Consumer Technology Index ETF KraneShares MSCI China Environment Index ETF KraneShares Electric Vehicles and Future Mobility Index ETF KraneShares MSCI All China Health Care Index ETF KraneShares CCBS China Corporate High Yield Bond USD Index ETF KraneShares Emerging Markets Healthcare Index ETF KraneShares MSCI Emerging Markets ex China Index ETF Beginning on January1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund (if you hold your Fund shares directly with the Fund) or from your financial intermediary, such as a broker-dealer or bank (if you hold your Fund shares through a financial intermediary). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you hold your Fund shares directly with the Fund, you may elect to receive shareholder reports and other communications electronically from the Fund by contacting the Fund at 855-857-2638 or, if you hold your Fund shares through a financial intermediary, contacting your financial intermediary. You may elect to receive all future reports in paper free of charge. If you hold your Fund shares directly with the Fund, you can inform the Fund that you wish to continue receiving paper copies of your shareholder reports at 855-857-2638 or, if you hold your Fund shares through a financial intermediary, contacting your financial intermediary. Your election to receive reports in paper will apply to all of the KraneShares Funds you hold directly with series of the Trust or through your financial intermediary, as applicable. March31, 2020 |
Table of Contents
1 | ||
Schedules of Investments | ||
34 | ||
39 | ||
42 | ||
55 | ||
58 | ||
68 | ||
75 | ||
79 | ||
82 | ||
87 | ||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | 90 | |
94 | ||
97 | ||
111 | ||
115 | ||
119 | ||
132 | ||
138 | ||
162 | ||
164 | ||
167 | ||
169 | ||
171 |
The Funds file their complete schedules of Fund holdings with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT within sixty days after the end of the period. The Funds’ Form N-PORT reports are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that KraneShares Trust uses to determine how to vote proxies relating to Fund securities, as well as information relating to how the Funds voted proxies relating to Fund securities during the most recent 12-month year ended June30, are available (i) without charge, upon request, by calling 855-857-2638; and (ii) on the Commission’s website at http://www.sec.gov.
Fund shares may only be purchased or redeemed from a Fund in large Creation Unit aggregations. Investors who cannot transact in Creation Units of a Fund’s shares must buy or sell Fund shares in the secondary market at their market price, which may be at a premium or discount to a Fund’s net asset value, with the assistance of a broker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying Fund shares and receive less than net asset value when selling Fund shares.
Dear Shareholders:
We are pleased to send you the Annual Report for KraneShares Exchange-traded funds (“ETFs”) for the fiscal period ended March31, 2020.
For the period, the ETFs delivered the following returns:
KraneShares Funds | Return* | Underlying | Morningstar | ||||||
KraneShares Bosera MSCI China A Share ETF (KBA) | -5.98 | %Ÿ | -5.18 | %(a) | -6.82 | %(1) | |||
KraneShares CICC China Leaders 100 Index ETF (KFYP) | -10.45 | %Ÿ | -9.43 | %(b) | -6.82 | %(1) | |||
KraneShares CSI China Internet ETF (KWEB) | -3.85 | %Ÿ | -3.84 | %(c) | -6.82 | %(1) | |||
KraneShares MSCI All China Index ETF (KALL) | -6.30 | %Ÿ | -5.95 | %(d) | -6.82 | %(1) | |||
KraneShares MSCI China Environment Index ETF (KGRN) | -13.17 | %Ÿ | -13.13 | %(e) | -6.82 | %(1) | |||
KraneShares MSCI All China Health Care Index ETF (KURE) | 6.95 | %Ÿ | 7.80 | %(f) | -6.82 | %(1) | |||
KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ) | -13.29 | %Ÿ | -12.69 | %(g) | -20.88 | %(2) | |||
KraneShares Emerging Markets Healthcare Index ETF (KMED) | -5.25 | %Ÿ | -4.02 | %(h) | -20.88 | %(2) | |||
KraneShares MSCI One Belt One Road Index ETF (OBOR) | -21.78 | %Ÿ | -19.66 | %(i) | -20.32 | %(3) | |||
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) | -6.15 | %Ÿ | -5.96 | %(j) | -18.80 | %(4) | |||
KraneShares E Fund China Commercial Paper ETF (KCNY) | -2.75 | %Ÿ | -2.30 | %(k) | -5.51 | %(5) | |||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF (KCCB) | -3.72 | %Ÿ | -3.28 | %(l) | -5.35 | %(6) | |||
KraneShares MSCI Emerging Markets ex China Index ETF (KEMX) | -24.31 | %^ | -26.29 | %(m) | N/A |
|
* Return based on net asset value as of March 31, 2020
** Return as of March 31, 2020
Ÿ Return for one-year period
^ Return period since Fund inception (less than one-year period)
Morningstar Peer Group Median | Morningstar Peer Group Name | ||
(1) | -6.82% | U.S. ETF China Region | |
(2) | -20.88% | U.S. ETF Diversified Emerging Markets | |
(3) | -20.32% | U.S. ETF Infrastructure | |
(4) | -18.80% | U.S. ETF Industrials | |
(5) | -5.51% | U.S. ETF Emerging Markets Local Currency Bond | |
(6) | -5.35% | U.S. ETF Emerging Markets Bond |
(a) The underlying index for KraneShares Bosera MSCI China A Share ETF.
(b) The underlying index for KraneShares CICC China Leaders 100 Index ETF.
(c) The underlying index for KraneShares CSI China Internet ETF.
(d) The underlying index for KraneShares MSCI All ChinaIndexETF.
(e) The underlying index for KraneShares MSCI China Environment Index ETF.
(f) The underlying index for KraneShares MSCI All China Health Care Index ETF.
(g) The underlying index for KraneShares Emerging Markets Consumer Technology Index ETF.
(h) The underlying index for KraneShares EmergingMarkets Healthcare Index ETF.
(i) The underlying index for KraneShares MSCI One Belt One Road Index ETF.
(j) The underlying index for KraneShares Electric Vehicles and Future Mobility Index ETF.
(k) The underlying index for KraneShares E Fund China Commercial Paper ETF.
1
Management Discussion of Fund Performance (Unaudited)(continued)
(l) The underlying index for KraneShares CCBS China Corporate High Yield Bond USD Index ETF.
(m) The underlying index for KraneSharesMSCI Emerging Markets ex China Index ETF.
U.S. ETF China Region: China-region stock portfolios invest almost exclusively in stocks from China, Taiwan, and Hong Kong. These portfolios invest at least 70% of total assets in equities and invest at least 75% of stock assets in one specific region or a combination of China, Taiwan, and/orHongKong.
U.S. ETF Diversified Emerging Markets: Diversified emerging-markets 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 on 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 investments from emerging markets
U.S. ETF Infrastructure: Infrastructure equity funds 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.
U.S. ETF Industrials: Industrial portfolios seek capital appreciation by investing in equity 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.
U.S. ETF Emerging Markets Local Currency Bond: Emerging-markets local-currency bond 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.
U.S. ETF Emerging Markets Bond: 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.
We are encouraged by the steady progress being made by China to increase access to local and Mainland Chinese markets for international investors, as well as by the heightened demand and awareness of these markets by the global investor community.
• We believe that China will continue to grow and be an essential element of a well-designed investment portfolio.
• We believe that investors should have low-cost, transparent tools to obtain exposure to Chinese equity and fixed income markets.
2
Management Discussion of Fund Performance (Unaudited)(continued)
• China’s capital markets have shown resilience to recent market volatility arising out of the COVID-19 pandemic. We believe this further demonstrates the asset class’ ability to provide diversification.
• We are dedicated to helping investors obtain more complete passive market exposures and more balanced investment portfolios.
Thank you for investing with us.
Jonathan Krane, CEO
March31, 2020
3
Management Discussion of Fund Performance (Unaudited)(continued)
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. The strategy is based on China International Capital Corporation (“CICC”)’s latest research on China’s capital markets. This quantitative approach reflects CICC’s top down and bottom up research process, seeking to deliver the 100 leading companies in Mainland China.
China review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-10.45%, while the Underlying Index decreased-9.43%.
The Fund held 41.0% of the portfolio in the Financials sector and 15.7% in the Industrials sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
4
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CICC China Leaders 100 Index ETF(continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Three Year | Five Year | Annualized | |||||||||||||
Net Asset | Market | Net Asset | Market | Net Asset | Market | Net Asset | Market | |||||||||
KraneShares CICC China Leaders 100 Index ETF | -10.45% | -9.40%‡ | 2.94%‡ | 2.58%‡ | 4.17%‡ | 4.14%‡ | 8.20%‡ | 7.94%‡ | ||||||||
Hybrid KFYP Index (Net)** | N/A | -9.43%‡ | N/A | 1.18%‡ | N/A | 3.74%‡ | N/A | 7.89%‡ | ||||||||
S&P 500 Index | N/A | -6.98%‡ | N/A | 5.10%‡ | N/A | 6.73%‡ | N/A | 8.71%‡ |
* 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 throughNovember 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.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included
5
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CICC China Leaders 100 Index ETF(concluded)
in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.70%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated 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.
6
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CSI China Internet ETF
The KraneShares CSI China Internet ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the CSI Overseas China Internet Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to measure the performance of the investable universe of publicly traded China-based companies whose primary business or businesses are in the Internet and Internet-related sectors (‘‘China Internet Companies’’), as defined by the index sponsor, China Securities Index Co., Ltd. (‘‘CSI’’).
China review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-3.85%, while the Underlying Index decreased-3.84%.
The Fund held 45.4% of the portfolio in the Consumer Discretionary sector and 44.6% in the Communication Services sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
7
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CSI China Internet ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Three Year | Five Year | Annualized | |||||||||||||
Net Asset | Market | Net Asset | Market | Net Asset | Market | Net Asset | Market | |||||||||
KraneShares CSI China Internet ETF | -3.85% | -3.83%‡ | 3.66%‡ | 3.58%‡ | 6.87%‡ | 6.86%‡ | 10.35%‡ | 10.35%‡ | ||||||||
CSI Overseas China Internet Index | N/A | -3.84%‡ | N/A | 3.95%‡ | N/A | 7.17%‡ | N/A | 10.38%‡ | ||||||||
S&P 500 Index | N/A | -6.98%‡ | N/A | 5.10%‡ | N/A | 6.73%‡ | N/A | 8.83%‡ |
* The Fund commenced operations on July 31, 2013.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.76%. 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.
8
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Bosera MSCI China A Share ETF
The KraneShares Bosera MSCI China A Share ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the MSCI China A Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to track the progressive partial inclusion of A shares in the MSCI Emerging Markets Index over time. The index is designed for global investors accessing the A shares market using the Stock Connect framework and is calculated using China A Stock Connect listings based on the offshore renminbi (“RMB”) exchange rate (CNH).
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-5.98%, while the Underlying Index decreased-5.18%.
The Fund held 24.4% of the portfolio in the Financials sector and 15.5% in the Consumer Staples sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
9
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Bosera MSCI China A Share ETF(continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Three Year | Five Year | Annualized | |||||||||||||
Net Asset | Market | Net Asset | Market | Net Asset | Market | Net Asset | Market | |||||||||
KraneShares Bosera MSCI China A Share ETF | -5.98% | -6.12%‡ | 3.45%‡ | 2.95%‡ | -4.61%‡ | -4.53%‡ | 5.84%‡ | 5.84%‡ | ||||||||
Hybrid KBA Index** | N/A | -5.18%‡ | N/A | 1.78%‡ | N/A | -4.29%‡ | N/A | 6.95%‡ | ||||||||
S&P 500 Index | N/A | -6.98%‡ | N/A | 5.10%‡ | N/A | 6.73%‡ | N/A | 7.61%‡ |
* 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 throughOctober 23,2014, the MSCI China A International Index from October 23, 2014 through December 26, 2017, the MSCI China A Inclusion Index from December 26, 2017 to May 29, 2019, and the MSCI China A Index going forward. From October 23, 2014 through December 26, 2017, the Fund sought investment results that, before fees and expenses, corresponded to the price and yield performance of the MSCI China A International Index. Prior to October 23, 2014, the Fund sought investment results that, before fees and expenses, corresponded to the price and yield performance of the MSCI China A Index.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were
10
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Bosera MSCI China A Share ETF(concluded)
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 0.80% and its net expense ratio is 0.60% due toa 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 August1, 2020. 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.
11
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares E Fund China Commercial Paper ETF
The KraneShares E Fund China Commercial Paper ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the CSI Diversified High Grade Commercial Paper Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to deliver a diversified basket of investment-grade (according to a Chinese ratings organization) on-shore renminbi (“RMB”)-denominated commercial paper issued by sovereign, quasi-sovereign and corporate issuers in the People’s Republic of China and traded in the inter-bank bond market. A commercial paper issue must have at least RMB ¥600million outstanding and a remaining term to final maturity of no more than one year (365 days) and no less than one month (31 days).
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-2.75%, while the Underlying Index decreased-2.30%.
The Fund held 33.6% of the portfolio in the Materials sector and 26.7% in the Industrials sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
12
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares E Fund China Commercial Paper ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Three Year | Five Year | Annualized | |||||||||||||
Net Asset | Market | Net Asset | Market | Net Asset | Market | Net Asset | Market | |||||||||
KraneShares E Fund China Commercial Paper ETF | -2.75% | -3.24%‡ | 2.45%‡ | 2.42%‡ | 0.43% | 0.42%‡ | 0.43%‡ | 0.30%‡ | ||||||||
CSI Diversified High Grade Commercial Paper Index | N/A | -2.30%‡ | N/A | 2.93%‡ | N/A | 1.09%‡ | N/A | 1.13%‡ | ||||||||
S&P U.S. Treasury Bill 3-6 Month Index** | N/A | 2.55%‡ | N/A | 1.95%‡ | N/A | 1.31%‡ | N/A | 1.24%‡ | ||||||||
S&P 500 Index | N/A | -6.98%‡ | N/A | 5.10%‡ | N/A | 6.73%‡ | N/A | 6.44%‡ |
* The Fund commenced operations on December 2, 2014.
** Index added to provide a fixed income benchmark for fixed income funds.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.71% and its net expense ratio is 0.59% due toa Fee WaiverAgreement whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.12% of the Fund’s average daily net assets until August1, 2020. 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.
13
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI All China Index ETF
The KraneShares MSCI All China Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the MSCI China All Shares Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to track the equity market performance of companies based in China and listed in Mainland China, Hong Kong, and the United States. Companies available for inclusion must be headquartered in China and meet the market capitalization minimums required by the MSCI Global Investable Market Indexes Methodology.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-6.30%, while the Underlying Index decreased-5.95%.
The Fund held 22.1% of the portfolio in the Financials sector and 21.6% in the Consumer Discretionary sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
14
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI All China Index ETF(continued)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Three Year | Five Year | Annualized | |||||||||||||
Net Asset | Market | Net Asset | Market | Net Asset | Market | Net Asset | Market | |||||||||
KraneShares MSCI All China Index ETF | -6.30% | -7.58%‡ | 3.04%‡ | 2.75%‡ | 0.91% | 0.68%‡ | 1.37%‡ | 1.33%‡ | ||||||||
FTSE Emerging incl. China Overseas non-R/QFII GDP Weighted Index/MSCI China All Shares Index** | N/A | -5.95%‡ | N/A | 2.82%‡ | N/A | 1.39%‡ | N/A | 2.11%‡ | ||||||||
S&P 500 Index | N/A | -6.98%‡ | N/A | 5.10%‡ | N/A | 6.73%‡ | N/A | 6.39%‡ |
* The Fund commenced operations on February 12, 2015.
** The FTSE Emerging incl. China Overseas non-R/QFII GDP Weighted Index/MSCI China All Shares Index 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.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, as
15
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI All China Index ETF(concluded)
supplemented,the Fund’s gross operating expense ratio is 0.86% and its net expense ratio is 0.49% 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 and reduce its management fee in an amount equal to any Acquired Fund Fees and Expenses incurred by the Fund from its investments in the KraneShares Bosera MSCI China A Share ETF until August1, 2020. 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.
16
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 to the price and yield performance of the MSCI Global China Infrastructure Exposure Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to represent the performance of listed companies within Developed, Emerging and Frontier markets whose revenues are likely to benefit from China infrastructure development from within a specified set of industries relevant to what has become known as the ‘One Belt, One Road’ (“OBOR”) investment program and development strategy promoted by China.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on Emerging Market (“EM”) equities. The subsequent rise in the value of the US dollar and other safe haven assets has also had a negative impact on Emerging Markets. However, many Emerging Market countries may have been ill-equipped to handle the pandemic leading to a fall in equity markets. Growth sectors and companies geared to the EM consumer, especially online platforms, have outperformed value and commodity dependent sectors.
We see three potential catalysts for Emerging Market equities in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of health care systems in many Emerging Market countries as well as the increased penetration of E-Commerce and other internet platforms.
• China and South Korea were the first countries to experience the coronavirus pandemic and have thus far been the first to recover.
• Emerging Market countries that are net energy importers such as South Korea and China may see some benefits from low energy prices, at the expense of net exporters.
Emerging Markets Overview (March31, 2019 to March31, 2020)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning-17.27%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+3.92%), Consumer Discretionary (-7.83%), and Communication Services (-7.99%).
• The worst performing sectors across the Emerging Market equity market included Energy (-35.37%), Materials (-30.99%), and Financials (-26.74%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-21.78%, while the Underlying Index decreased-19.66%.
The Fund held 34.6% of the portfolio in the Industrials sector and 28.7% in the Materials sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
17
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI One Belt One Road Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||||
Net Asset | Market | Net Asset | Market | |||||||
KraneShares MSCI One Belt One Road Index ETF | -21.78% | -22.78 | %‡ | -9.99%‡ | -10.45 | %‡ | ||||
MSCI Global China Infrastructure Exposure Index | N/A | -19.66 | %‡ | N/A | -8.46 | %‡ | ||||
S&P 500 Index | N/A | -6.98 | %‡ | N/A | 3.89 | %‡ |
* The Fund commenced operations on September 7, 2017.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, as supplemented, the Fund’s operating expense ratio is 0.79%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
18
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 to the price and yield performance of the Solactive Emerging Market Consumer Technology Index (the ‘‘Underlying Index’’).
The Underlying Index selects companies from 26 eligible countries in emerging markets whose primary business or businesses are internet retail, internet software/services, purchase, payment processing, or software for internet and E-Commerce transactions.
China review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on Emerging Market (“EM”) equities. The subsequent rise in the value of the US dollar and other safe haven assets has also had a negative impact on Emerging Markets. However, many Emerging Market countries may have been ill-equipped to handle the pandemic leading to a fall in equity markets. Growth sectors and companies geared to the EM consumer, especially online platforms, have outperformed value and commodity dependent sectors.
We see three potential catalysts for Emerging Market equities in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of health care systems in many Emerging Market countries as well as the increased penetration of E-Commerce and other internet platforms.
• China and South Korea were the first countries to experience the coronavirus pandemic and have thus far been the first to recover.
• Emerging Market countries that are net energy importers such as South Korea and China may see some benefits from low energy prices, at the expense of net exporters.
Emerging Markets Overview (March31, 2019 to March31, 2020)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning-17.27%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+3.92%), Consumer Discretionary (-7.83%), and Communication Services (-7.99%).
• The worst performing sectors across the Emerging Market equity market included Energy (-35.37%), Materials (-30.99%), and Financials (-26.74%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-13.29%, while the Underlying Index decreased-12.69%.
The Fund held 55.9% of the portfolio in the Communication Services sector and 29.1% in the Consumer Discretionary sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
19
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Emerging Markets Consumer Technology Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||||
Net Asset | Market | Net Asset | Market | |||||||
KraneShares Emerging Markets Consumer Technology Index ETF | -13.29% | -13.25 | %‡ | -8.84%‡ | -8.72 | %‡ | ||||
Solactive Emerging Market Consumer Technology Index | N/A | -12.69 | %‡ | N/A | -7.60 | %‡ | ||||
S&P 500 Index | N/A | -6.98 | %‡ | N/A | 2.47 | %‡ |
* The Fund commenced operations on October 11, 2017.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower.As stated in the Fund’s prospectus, as supplemented, the Fund’s gross operating expense ratio is0.80% and its net expense ratio is0.70% due to an Fee Waiver Agreement whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.10% of the Fund’s average daily net assets until August1, 2021. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
20
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI China Environment Index ETF
The KraneShares MSCI China Environment Index (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond 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 Index is based on five key Clean Technology environmental themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention and Energy Efficiency. The Index aims to serve as a benchmark for investors seeking exposure to Chinese companies that focus on contributing to a more environmentally sustainable economy by making efficient use of scarce natural resources or by mitigating the impact of environmental degradation. Constituent selection is based on data from MSCI Environment, Social, and Governance (“ESG”).
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
21
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI China Environment Index ETF(continued)
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-13.17%, while the Underlying Index decreased-13.13%.
The Fund held 25.6% of the portfolio in the Industrials sector and 23.5% in the Information Technology sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
22
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI China Environment Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | ||||||||||
Net Asset | Market | Net Asset | Market | ||||||||
KraneShares MSCI China Environment Index | -13.17 | % | -12.94 | %‡ | -12.53%‡ | -12.49 | %‡ | ||||
MSCI China IMI Environment 10/40 Index | N/A |
| -13.13 | %‡ | N/A | -12.10 | %‡ | ||||
S&P 500 Index | N/A |
| -6.98 | %‡ | N/A | 2.54 | %‡ |
* The Fund commenced operations on October 12, 2017.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.80%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
23
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Electric Vehicles and Future Mobility Index ETF
The KraneShares Electric Vehicles and Future Mobility Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the Solactive Electric Vehicles and Future Mobility Index (the ‘‘Underlying Index’’).
The Underlying Index is designed to track the performance of companies engaged in the production of electric vehicles and/or their components, or engaged in other initiatives that may change the future of mobility. The Index includes issuers engaged in the electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing and/or electric infrastructure businesses.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on Emerging Market (“EM”) equities. The subsequent rise in the value of the US dollar and other safe haven assets has also had a negative impact on Emerging Markets. However, many Emerging Market countries may have been ill-equipped to handle the pandemic leading to a fall in equity markets. Growth sectors and companies geared to the EM consumer, especially online platforms, have outperformed value and commodity dependent sectors.
We see three potential catalysts for Emerging Market equities in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of health care systems in many Emerging Market countries as well as the increased penetration of E-Commerce and other internet platforms.
• China and South Korea were the first countries to experience the coronavirus pandemic and have thus far been the first to recover.
• Emerging Market countries that are net energy importers such as South Korea and China may see some benefits from low energy prices, at the expense of net exporters.
Emerging Markets Overview (March31, 2019 to March31, 2020)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning-17.27%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+3.92%), Consumer Discretionary (-7.83%), and Communication Services (-7.99%).
• The worst performing sectors across the Emerging Market equity market included Energy (-35.37%), Materials (-30.99%), and Financials (-26.74%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-6.15%, while the Underlying Index decreased-5.96%.
The Fund held 34.7% of the portfolio in the Information Technology sector and 32.0% in the Consumer Discretionary sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
24
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Electric Vehicles and Future Mobility Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||||
Net Asset | Market | Net Asset | Market | |||||||
KraneShares Electric Vehicles and Future Mobility Index ETF | -6.15% | -7.58 | %‡ | -10.38%‡ | -10.79 | %‡ | ||||
Solactive Electric Vehicles and Future Mobility Index | N/A | -5.96 | %‡ | N/A | -10.62 | %‡ | ||||
S&P 500 Index | N/A | -6.98 | %‡ | N/A | -1.60 | %‡ |
* The Fund commenced operations on January 18, 2018.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.70%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated 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.
25
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, correspond to 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 United States. Issuers eligible for inclusion must be classified under the Global Industry Classification Standard as engaged in the healthcare sector. The issuers included in the Underlying Index may include small-cap, mid-cap and large-cap companies.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund increased by 6.95%, while the Underlying Index increased 7.80%.
The Fund held 100% of the portfolio in the Health Care sector.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
26
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI All China Health Care Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||||
Net Asset | Market | Net Asset | Market | |||||||
KraneShares MSCI All China Health Care Index ETF | 6.95% | 7.58 | %‡ | -1.97%‡ | -1.99 | %‡ | ||||
MSCI China All Shares Health Care 10/40 Index | N/A | 7.80 | %‡ | N/A | -1.64 | %‡ | ||||
S&P 500 Index | N/A | -6.98 | %‡ | N/A | -2.05 | %‡ |
* The Fund commenced operations on January 31, 2018.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is0.79% and its net expense ratio is0.65% due toa Fee WaiverAgreement 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 August1, 2020. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
27
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF
The KraneShares CCBS China Corporate High Yield Bond USD Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the Solactive USD China Corporate High Yield Bond Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to track the performance of outstanding high yield debt securities denominated in U.S. dollars issued by Chinese companies. For purposes of the Underlying Index, Chinese companies include companies that conduct the majority of their business activities in, are headquartered in or have the majority of their business assets, profits, or revenues in China or Hong Kong as determined by the index provider, Solactive, AG (“Index Provider”).
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on China’s equity markets. However, the market reaction in China was muted in comparison to that in the US and Europe. In response to the pandemic, the US Federal Reserve softened its already dovish stance and lowered the Federal funds rate to near zero. Central banks in Europe also lowered rates, many of which were already negative. Meanwhile, China focused more on fiscal stimulus in response to the pandemic and lowered key rates only slightly. Equity markets in the US, Europe, and China have rebounded since the onset of the outbreak in each region, but remain below pre-pandemic levels.
We see three potential catalysts for China’s equity and bond markets in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of China’s health care system, increased demand for work from home platforms operated by China’s internet giants, and the increased penetration of E-Commerce.
• China was the first country to experience the coronavirus pandemic and has thus far been the first to recover.
• In November 2020, Bloomberg Barclays will complete its inclusion of RMB-denominated bonds issued by the Chinese government and policy banks to their Global Aggregate Index, which is tracked by $2.5 trillion in assets.
ChinaCapital Market Overview (March31, 2019 to March31, 2020)
• China’s equity market, as measured by the MSCI China All Shares Index, was down for the period, returning-5.95%, while China’s currency, the renminbi (RMB) depreciated-5.2% against the US dollar.
• The best performing sectors across China’s equity markets included Consumer Staples (+14.72%), Health Care (+9.24%), and Information Technology (+6.49%).
• The worst performing sectors across China’s equity markets were Energy (-31.26%), Industrials (-15.72%), and Real Estate (-14.05%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-3.72%, while the Underlying Index decreased-3.28%.
The Fund held 50.1% of the portfolio in the Financials sector and 31.0% in the Real Estate sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
28
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares CCBS China Corporate High Yield Bond USD Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||||
Net Asset | Market | Net Asset | Market | |||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | -3.72% | -2.46 | %‡ | 1.01%‡ | 1.91 | %‡ | ||||
Solactive USD China Corporate High Yield Bond Index | N/A | -3.28 | %‡ | N/A | 2.95 | %‡ | ||||
Lipper China Region Funds Classification | N/A | -5.54 | %‡ | N/A | -4.11 | %‡ |
* The Fund commenced operations on June 26, 2018.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.69%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
29
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Emerging Markets Healthcare Index ETF
The KraneShares Emerging Markets Healthcare Index ETF (the ‘‘Fund’’) seeks to provide investment results that, before fees and expenses, correspond to the price and yield performance of the Solactive Emerging Markets Healthcare Index (the ‘‘Underlying Index’’).
The Underlying Index seeks to track the equity market performance of companies engaged in the health care sector in various emerging markets. The issuers include small-cap, mid-cap, and large-cap companies involved in hospital management, healthcare management, pharmaceutical manufacturing, and biotechnology, among other sub-industries.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on Emerging Market (“EM”) equities. The subsequent rise in the value of the US dollar and other safe haven assets has also had a negative impact on Emerging Markets. However, many Emerging Market countries may have been ill-equipped to handle the pandemic leading to a fall in equity markets. Growth sectors and companies geared to the EM consumer, especially online platforms, have outperformed value and commodity dependent sectors.
We see three potential catalysts for Emerging Market equities in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of health care systems in many Emerging Market countries as well as the increased penetration of E-Commerce and other internet platforms.
• China and South Korea were the first countries to experience the coronavirus pandemic and have thus far been the first to recover.
• Emerging Market countries that are net energy importers such as South Korea and China may see some benefits from low energy prices, at the expense of net exporters.
Emerging MarketsOverview (March31, 2019 to March31, 2020)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning-17.27%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+3.92%), Consumer Discretionary (-7.83%), and Communication Services(-7.99%).
• The worst performing sectors across the Emerging Market equity market included Energy(-35.37%), Materials (-30.99%), and Financials (-26.74%).
By the Fund’s fiscal year end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-5.25%, while the Underlying Index decreased-4.02%.
The Fund held 98.8% of the portfolio in the Health Care sector and 1.2% in the Consumer Discretionary sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
30
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares Emerging Markets Healthcare Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
One Year | Annualized | |||||||
Net Asset | Market | Net Asset | Market | |||||
KraneShares Emerging Markets Healthcare Index ETF | -5.25% | -5.08%‡ | -9.84%‡ | -9.84%‡ | ||||
Solactive Emerging Markets Healthcare Index | N/A | -4.02%‡ | N/A | -9.28%‡ | ||||
S&P 500 Index | N/A | -6.98%‡ | N/A | -5.39%‡ |
* The Fund commenced operations on August 29, 2018.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s operating expense ratio is 0.79%. Please note that one cannot invest directly in an unmanaged index. There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities. For further information on the Fund’s objectives, risks, and strategies, see the Fund’s prospectus. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
31
Management Discussion of Fund Performance (Unaudited)(continued)
KraneShares MSCI Emerging Markets ex China Index ETF
The KraneShares MSCI Emerging Markets ex China Index ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of a specific equity securities index. The Fund’s current index is the MSCI Emerging Markets ex China Index (the “Underlying Index”).
The Underlying Index is a free float-adjusted market capitalization weighted index designed to track the equity market performance of mid- and large-cap companies of emerging market countries, excluding China. The Underlying Index is based on the MSCI Emerging Markets Index (“universe”), but excludes the securities of Chinese issuers.
China Review
Global equity markets experienced an upward trend through the end of 2019. The easing of trade tension between the US and China, which continued to be a source of volatility in the second half of 2019, provided a year-end catalyst for equities. In January 2020, the two countries signed a phase one trade deal, which brought some stability to trade policy. Since the beginning of 2020, the coronavirus pandemic has had a negative effect on Emerging Market (“EM”) equities. The subsequent rise in the value of the US dollar and other safe haven assets has also had a negative impact on Emerging Markets. However, many Emerging Market countries may have been ill-equipped to handle the pandemic leading to a fall in equity markets. Growth sectors and companies geared to the EM consumer, especially online platforms, have outperformed value and commodity dependent sectors.
We see three potential catalysts for Emerging Market equities in the year to come:
• The lasting after-effects of the coronavirus pandemic including the revamp of health care systems in many Emerging Market countries as well as the increased penetration of E-Commerce and other internet platforms.
• China and South Korea were the first countries to experience the coronavirus pandemic and have thus far been the first to recover.
• Emerging Market countries that are net energy importers such as South Korea and China may see some benefits from low energy prices, at the expense of net exporters.
Emerging MarketsOverview (March31, 2019 to March31, 2020)
• Emerging Market equities, as measured by the MSCI Emerging Markets Index, were down for the period, returning-17.27%.
• The best performing sectors across the Emerging Market equity market included Information Technology (+3.92%), Consumer Discretionary (-7.83%), and Communication Services(-7.99%).
• The worst performing sectors across the Emerging Market equity market included Energy(-35.37%), Materials (-30.99%), and Financials (-26.74%).
By the Fund’s fiscal period end on March31, 2020 (the “reporting period”), the NAV of the Fund decreased by-24.31%, while the Underlying Index decreased-26.29%.
The Fund held 28.2% of the portfolio in the Information Technology sector and 21.2% in the Financials sector, which represent the Fund’s top two sector weightings.
There are risks involved with investing, including possible loss of principal. There is no guarantee the fund will achieve its stated objective. This letter represents the manager’s opinion and should not be regarded as investment advice or recommendation of specific securities.
32
Management Discussion of Fund Performance (Unaudited)(concluded)
KraneShares MSCI Emerging Markets ex China Index ETF(concluded)
Growth of a $10,000 Investment‡
(at Net Asset Value)‡
AVERAGE TOTAL RETURN FOR THE PERIOD ENDED MARCH31, 2020*
Cumulative Inception to Date | |||||
Net Asset | Market | ||||
KraneShares MSCI Emerging Markets ex China Index ETF | -24.31 | % | -23.75%‡ | ||
MSCI Emerging Markets Ex China Index | N/A |
| -26.29%‡ | ||
S&P 500 Index | N/A |
| -8.78%‡ |
* The Fund commenced operations on April 12, 2019.
‡ Unaudited.
^ The “Market Price” of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. For performance data current to the most recent month end, please call 855-857-2638 or visit www.kraneshares.com. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. As stated in the Fund’s prospectus, the Fund’s gross operating expense ratio is 0.59% and its net expense ratio is 0.49% due toa Fee Waiver Agreement whereby the Fund’s investment manager, Krane Funds Advisors, LLC, has contractually agreed to reduce its management fee by 0.10% of the Fund’s average daily net assets until August1, 2020. 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.
33
Shares | Value | ||||
COMMON STOCK — 99.9%‡ |
| ||||
CHINA — 99.9% |
| ||||
Communication Services — 0.8% |
| ||||
China South Publishing & Media Group, Cl A | 29,100 | $ | 43,641 | ||
G-bits Network Technology Xiamen, Cl A | 1,400 |
| 81,057 | ||
| 124,698 | ||||
Consumer Discretionary — 9.2% |
| ||||
Chongqing Department Store, Cl A | 10,100 |
| 39,555 | ||
Dashang, Cl A* | 6,100 |
| 20,327 | ||
Great Wall Motor, Cl A | 49,500 |
| 62,083 | ||
Guangdong Xinbao Electrical Appliances Holdings, Cl A | 13,200 |
| 34,600 | ||
Haier Smart Home, Cl A | 143,700 |
| 291,933 | ||
Hisense Home Appliances Group, Cl A | 17,300 |
| 23,138 | ||
Jason Furniture Hangzhou, Cl A | 7,000 |
| 34,683 | ||
Joyoung, Cl A | 12,100 |
| 48,054 | ||
KingClean Electric, Cl A* | 3,100 |
| 8,922 | ||
Lao Feng Xiang, Cl A | 5,200 |
| 29,389 | ||
Loncin Motor, Cl A* | 42,100 |
| 19,778 | ||
Markor International Home Furnishings, Cl A | 52,000 |
| 30,225 | ||
Midea Group, Cl A | 104,476 |
| 713,683 | ||
Shandong Linglong Tyre, Cl A | 19,400 |
| 54,109 | ||
Wuchan Zhongda Group, Cl A | 71,500 |
| 48,418 | ||
Zhejiang Hangmin, Cl A | 22,196 |
| 17,598 | ||
Zhejiang Meida Industrial, Cl A | 10,400 |
| 16,888 | ||
| 1,493,383 |
The accompanying notes are an integral part of the financial statements.
34
Schedule of InvestmentsMarch 31, 2020
KraneShares CICC China Leaders 100 Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Staples — 14.1% |
| ||||
Chacha Food, Cl A | 10,400 | $ | 66,187 | ||
Heilongjiang Agriculture, Cl A | 29,400 |
| 71,548 | ||
Henan Shuanghui Investment & Development, Cl A | 38,900 |
| 215,678 | ||
Inner Mongolia Yili Industrial Group, Cl A | 209,800 |
| 883,811 | ||
New Hope Liuhe, Cl A | 87,200 |
| 386,656 | ||
Wens Foodstuffs Group | 148,300 |
| 675,784 | ||
| 2,299,664 | ||||
Energy — 2.1% |
| ||||
China Shenhua Energy, Cl A | 136,101 |
| 311,825 | ||
Huolinhe Opencut Coal Industry of Inner Mongolia, Cl A | 23,200 |
| 23,959 | ||
| 335,784 | ||||
Financials — 41.0% |
| ||||
Agricultural Bank of China, Cl A | 1,497,600 |
| 712,016 | ||
Bank of China, Cl A | 857,000 |
| 420,750 | ||
Bank of Communications, Cl A | 1,073,700 |
| 781,623 | ||
China Construction Bank, Cl A | 271,000 |
| 242,394 | ||
China Life Insurance, Cl A | 66,867 |
| 248,480 | ||
China Merchants Bank, Cl A | 167,600 |
| 763,258 | ||
CITIC Securities, Cl A | 279,332 |
| 873,282 | ||
GF Securities, Cl A | 120,500 |
| 232,561 | ||
Huatai Securities, Cl A | 164,598 |
| 400,105 | ||
Industrial & Commercial Bank of China, Cl A | 842,000 |
| 611,763 | ||
Industrial Bank, Cl A | 313,800 |
| 704,348 | ||
Ping An Insurance Group of China, Cl A | 69,959 |
| 682,693 | ||
| 6,673,273 | ||||
Health Care — 1.2% |
| ||||
China Animal Healthcare*(A)(B)(C) | 4,000 |
| — | ||
Guangxi Liuzhou Pharmaceutical, Cl A | 7,400 |
| 32,823 | ||
Shandong Buchang Pharmaceuticals, Cl A | 23,810 |
| 67,619 | ||
Yifan Pharmaceutical, Cl A | 29,200 |
| 67,148 | ||
Zhejiang Jingxin Pharmaceutical, Cl A | 23,800 |
| 34,651 | ||
| 202,241 | ||||
Industrials — 15.7% |
| ||||
China Gezhouba Group, Cl A | 110,200 |
| 108,518 | ||
China National Chemical Engineering, Cl A | 79,200 |
| 66,706 | ||
China Railway Construction, Cl A | 185,300 |
| 256,976 | ||
China Railway Group, Cl A | 334,600 |
| 253,964 | ||
China Southern Airlines, Cl A | 146,900 |
| 106,732 | ||
China State Construction Engineering, Cl A | 834,500 |
| 620,442 | ||
Daqin Railway, Cl A | 244,779 |
| 234,826 | ||
Fujian Longma Environmental Sanitation Equipment, Cl A | 12,100 |
| 23,540 | ||
Hangxiao Steel Structure, Cl A | 54,800 |
| 30,847 |
The accompanying notes are an integral part of the financial statements.
35
Schedule of InvestmentsMarch 31, 2020
KraneShares CICC China Leaders 100 Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials (continued) |
| ||||
Hefei Meiya Optoelectronic Technology, Cl A | 10,900 | $ | 58,005 | ||
Henan Zhongyuan Expressway, Cl A | 36,200 |
| 19,254 | ||
Jiangsu Expressway, Cl A | 20,300 |
| 28,124 | ||
Shanghai Construction Group, Cl A | 182,000 |
| 82,422 | ||
Shanghai International Port Group, Cl A | 157,184 |
| 99,346 | ||
Shanghai Pudong Road & Bridge Construction, Cl A | 32,500 |
| 29,711 | ||
Shanghai Tongji Science & Technology Industrial, Cl A | 21,100 |
| 24,529 | ||
Shanghai Tunnel Engineering, Cl A | 77,200 |
| 60,229 | ||
Sieyuan Electric, Cl A | 21,600 |
| 54,882 | ||
TangShan Port Group, Cl A | 121,300 |
| 38,675 | ||
TBEA, Cl A | 152,600 |
| 157,160 | ||
Titan Wind Energy Suzhou, Cl A | 36,300 |
| 25,913 | ||
Zhejiang Yankon Group, Cl A | 34,300 |
| 17,130 | ||
Zhengzhou Yutong Bus, Cl A | 55,600 |
| 107,385 | ||
Zhuzhou Kibing Group, Cl A | 65,900 |
| 44,905 | ||
| 2,550,221 | ||||
Information Technology — 1.6% |
| ||||
Hanergy Thin Film Power Group*(A)(B)(C) | 65,064 |
| — | ||
Hangzhou First Applied Material, Cl A | 4,300 |
| 24,702 | ||
MLS, Cl A | 15,600 |
| 24,958 | ||
Shengyi Technology, Cl A | 48,500 |
| 181,117 | ||
Skyworth Digital, Cl A | 16,200 |
| 26,535 | ||
| 257,312 | ||||
Materials — 2.8% |
| ||||
China Lumena New Materials*(A)(B)(C) | 718 |
| — | ||
CSG Holding | 49,747 |
| 30,810 | ||
Jiangsu Yangnong Chemical, Cl A | 7,500 |
| 71,326 | ||
Shenzhen Jinjia Group, Cl A | 34,630 |
| 44,996 | ||
Tianhe Chemicals Group*(A)(B)(C) | 40,000 |
| — | ||
Zhejiang Yongtai Technology, Cl A | 25,500 |
| 41,696 | ||
Zijin Mining Group, Cl A | 497,700 |
| 259,094 | ||
| 447,922 | ||||
Real Estate — 10.2% |
| ||||
China Fortune Land Development, Cl A | 46,500 |
| 137,043 | ||
China Vanke, Cl A | 218,800 |
| 791,769 | ||
Financial Street Holdings, Cl A | 49,032 |
| 45,240 | ||
Hangzhou Binjiang Real Estate Group, Cl A | 64,600 |
| 37,913 | ||
Huafa Industrial Zhuhai, Cl A | 69,200 |
| 62,774 | ||
Oceanwide Holdings, Cl A | 63,700 |
| 35,498 | ||
RiseSun Real Estate Development, Cl A | 72,047 |
| 78,774 | ||
Seazen Holdings, Cl A | 37,000 |
| 163,228 |
The accompanying notes are an integral part of the financial statements.
36
Schedule of InvestmentsMarch 31, 2020
KraneShares CICC China Leaders 100 Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Real Estate (continued) |
| ||||
Shanghai Lujiazui Finance & Trade Zone Development, Cl A | 36,500 | $ | 57,107 | ||
Youngor Group, Cl A | 131,400 |
| 118,086 | ||
Zhejiang China Commodities City Group, Cl A | 137,377 |
| 64,151 | ||
Zhongtian Financial Group, Cl A | 174,350 |
| 76,497 | ||
| 1,668,080 | ||||
Utilities — 1.2% |
| ||||
Guangxi Guiguan Electric Power, Cl A | 97,200 |
| 62,668 | ||
Hubei Energy Group, Cl A | 79,100 |
| 39,504 | ||
Shenergy, Cl A | 100,100 |
| 74,565 | ||
Shenzhen Gas, Cl A | 24,000 |
| 24,920 | ||
| 201,657 | ||||
TOTAL COMMON STOCK |
| 16,254,235 | |||
| |||||
TOTAL INVESTMENTS — 99.9% |
| 16,254,235 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
| 18,470 | |||
NET ASSETS — 100% | $ | 16,272,705 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2020 was $0 and represents 0.0% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2020 was $0 and represents 0.0% of Net Assets.
Cl — Class
The accompanying notes are an integral part of the financial statements.
37
Schedule of InvestmentsMarch 31, 2020
KraneShares CICC China Leaders 100 Index ETF(concluded)
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3^ | Total | ||||||||
Common Stock |
|
|
|
| ||||||||
China |
|
|
|
| ||||||||
Communication Services | $ | 124,698 | $ | — | $ | — | $ | 124,698 | ||||
Consumer Discretionary |
| 1,493,383 |
| — |
| — |
| 1,493,383 | ||||
Consumer Staples |
| 2,299,664 |
| — |
| — |
| 2,299,664 | ||||
Energy |
| 335,784 |
| — |
| — |
| 335,784 | ||||
Financials |
| 6,673,273 |
| — |
| — |
| 6,673,273 | ||||
Health Care |
| 202,241 |
| — |
| — |
| 202,241 | ||||
Industrials |
| 2,550,221 |
| — |
| — |
| 2,550,221 | ||||
Information Technology |
| 257,312 |
| — |
| — |
| 257,312 | ||||
Materials |
| 447,922 |
| — |
| — |
| 447,922 | ||||
Real Estate |
| 1,668,080 |
| — |
| — |
| 1,668,080 | ||||
Utilities |
| 201,657 |
| — |
| — |
| 201,657 | ||||
Total Common Stock |
| 16,254,235 |
| — |
| — |
| 16,254,235 | ||||
Total Investments in Securities | $ | 16,254,235 | $ | — | $ | — | $ | 16,254,235 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets
For the year ended March31, 2020, the transfers in and out of Level 3 occurred due to a halt in trading of these securities. Transfers between levels are recognized at period end.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
38
Shares | Value | ||||
COMMON STOCK — 100.0%‡ |
| ||||
CHINA — 86.9% |
| ||||
Communication Services — 44.0% |
| ||||
58.com ADR* | 1,422,313 | $ | 69,295,089 | ||
Autohome ADR* | 798,081 |
| 56,679,713 | ||
Baidu* | 1,429,656 |
| 144,095,028 | ||
Bilibili ADR*(A) | 3,107,256 |
| 72,771,936 | ||
Bitauto Holdings ADR* | 510,562 |
| 5,304,739 | ||
DouYu International Holdings ADR* | 2,044,101 |
| 13,102,688 | ||
HUYA ADR*(A) | 1,009,749 |
| 17,115,246 | ||
iQIYI ADR* | 4,143,765 |
| 73,759,017 | ||
JOYY ADR* | 925,882 |
| 49,312,475 | ||
Momo ADR | 2,402,182 |
| 52,103,328 | ||
NetEase ADR | 318,400 |
| 102,193,664 | ||
Qutoutiao ADR*(A) | 2,068,744 |
| 4,944,298 | ||
SINA* | 973,421 |
| 30,993,725 | ||
Sogou ADR*(A) | 1,665,790 |
| 5,597,054 | ||
So-Young International ADR*(A) | 872,759 |
| 8,937,052 | ||
Tencent Holdings | 4,731,875 |
| 232,109,674 | ||
Tencent Music Entertainment Group ADR* | 4,633,381 |
| 46,611,813 | ||
Weibo ADR*(A) | 973,059 |
| 32,217,983 | ||
| 1,017,144,522 | ||||
Consumer Discretionary — 37.4% |
| ||||
Alibaba Group Holding ADR* | 1,184,633 |
| 230,387,426 | ||
Baozun ADR*(A) | 609,325 |
| 17,024,540 | ||
GSX Techedu ADR*(A) | 1,339,422 |
| 56,737,916 | ||
JD.com ADR* | 4,298,069 |
| 174,071,795 | ||
Pinduoduo ADR* | 2,530,871 |
| 91,187,282 | ||
TAL Education Group ADR* | 2,112,866 |
| 112,531,243 | ||
Trip.com Group ADR* | 2,881,434 |
| 67,569,627 | ||
Uxin ADR*(A) | 3,766,919 |
| 5,801,055 | ||
Vipshop Holdings ADR* | 6,725,536 |
| 104,783,851 | ||
Yunji ADR*(A) | 1,455,301 |
| 5,326,402 | ||
| 865,421,137 |
The accompanying notes are an integral part of the financial statements.
39
Schedule of InvestmentsMarch 31, 2020
KraneShares CSI China Internet ETF(continued)
Shares | Value | |||||
COMMON STOCK(continued) |
|
| ||||
Financials — 2.9% |
|
| ||||
360 Finance ADR* | 966,013 | $ | 7,728,104 |
| ||
Fanhua ADR(A) | 776,589 |
| 15,624,971 |
| ||
FinVolution Group ADR | 2,669,054 |
| 4,750,916 |
| ||
LexinFintech Holdings ADR*(A) | 1,657,378 |
| 14,700,943 |
| ||
Qudian ADR*(A) | 3,719,152 |
| 6,694,474 |
| ||
ZhongAn Online P&C Insurance, Cl H*(A) | 5,281,600 |
| 17,444,291 |
| ||
| 66,943,699 |
| ||||
Industrials — 1.2% |
|
| ||||
51job ADR* | 435,167 |
| 26,714,902 |
| ||
Information Technology — 1.5% |
|
| ||||
Kingsoft* | 10,594,000 |
| 34,580,268 |
| ||
TOTAL CHINA |
| 2,010,804,528 |
| |||
HONG KONG — 13.1% |
|
| ||||
Communication Services — 2.4% |
|
| ||||
Alibaba Pictures Group* | 187,294,000 |
| 24,164,161 |
| ||
China Literature*(A) | 5,520,400 |
| 21,936,591 |
| ||
NetDragon Websoft Holdings | 3,688,815 |
| 8,899,720 |
| ||
| 55,000,472 |
| ||||
Consumer Discretionary — 9.8% |
|
| ||||
Koolearn Technology Holding*(A) | 5,123,000 |
| 19,266,853 |
| ||
Maoyan Entertainment* | 8,602,200 |
| 10,931,849 |
| ||
Meituan Dianping, Cl B* | 14,834,500 |
| 179,237,369 |
| ||
Tongcheng-Elong Holdings* | 12,713,200 |
| 17,878,425 |
| ||
| 227,314,496 |
| ||||
Financials — 0.2% |
|
| ||||
Yixin Group* | 35,313,000 |
| 5,786,104 |
| ||
Information Technology — 0.6% |
|
| ||||
Weimob*(A) | 21,375,000 |
| 13,540,524 |
| ||
TOTAL HONG KONG |
| 301,641,596 |
| |||
TOTAL COMMON STOCK |
| 2,312,446,124 |
| |||
SHORT-TERM INVESTMENT(B)(C) — 4.0% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.430% | 92,943,944 |
| 92,943,944 |
| ||
TOTAL SHORT-TERM INVESTMENT |
| 92,943,944 |
| |||
TOTAL INVESTMENTS — 104.0% |
| 2,405,390,068 |
| |||
OTHER ASSETS LESS LIABILITIES — (4.0)% |
| (91,752,246 | ) | |||
NET ASSETS — 100% | $ | 2,313,637,822 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
40
Schedule of InvestmentsMarch 31, 2020
KraneShares CSI China Internet ETF(concluded)
(A) This security or a partial position of this security is on loan at March 31, 2020. The total market value of securities on loan at March 31, 2020 was $88,942,649.
(B) The rate shown is the 7-day effective yield as of March 31, 2020.
(C) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2020 was $92,943,944.
ADR — American Depositary Receipt
Cl — Class
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
41
Shares | Value | ||||
COMMON STOCK — 100.0%‡ |
| ||||
CHINA — 100.0% |
| ||||
Communication Services — 2.5% |
| ||||
Beijing Enlight Media, Cl A | 390,660 | $ | 491,067 | ||
China Film, Cl A | 207,221 |
| 344,969 | ||
China South Publishing & Media Group, Cl A | 239,211 |
| 358,739 | ||
China United Network Communications, Cl A | 4,133,020 |
| 3,043,701 | ||
Chinese Universe Publishing and Media Group, Cl A | 180,436 |
| 306,488 | ||
CITIC Guoan Information Industry, Cl A* | 522,071 |
| 229,799 | ||
Focus Media Information Technology, Cl A | 1,954,829 |
| 1,218,976 | ||
G-bits Network Technology Xiamen, Cl A | 9,608 |
| 556,280 | ||
Giant Network Group, Cl A | 179,780 |
| 421,284 | ||
Mango Excellent Media, Cl A* | 237,134 |
| 1,458,293 | ||
NanJi E-Commerce, Cl A* | 326,920 |
| 535,012 | ||
Oriental Pearl Group, Cl A | 456,906 |
| 564,026 | ||
Perfect World, Cl A | 172,134 |
| 1,154,732 | ||
Wanda Film Holding, Cl A* | 276,850 |
| 615,162 | ||
Wuhu Sanqi Interactive Entertainment Network Technology Group, Cl A | 281,304 |
| 1,296,153 | ||
Youzu Interactive, Cl A* | 118,327 |
| 313,671 | ||
| 12,908,352 | ||||
Consumer Discretionary — 5.6% |
| ||||
BAIC BluePark New Energy Technology, Cl A* | 465,300 |
| 393,209 | ||
BTG Hotels Group, Cl A | 131,575 |
| 249,666 | ||
BYD, Cl A | 241,504 |
| 2,043,254 | ||
Changzhou Xingyu Automotive Lighting Systems, Cl A | 36,801 |
| 434,871 | ||
China Grand Automotive Services Group, Cl A | 1,086,711 |
| 623,983 | ||
China International Travel Service, Cl A | 260,007 |
| 2,465,008 | ||
Chongqing Changan Automobile, Cl A | 519,520 |
| 775,447 |
The accompanying notes are an integral part of the financial statements.
42
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Discretionary (continued) |
| ||||
Fuyao Glass Industry Group, Cl A | 266,789 | $ | 721,906 | ||
Gree Electric Appliances of Zhuhai, Cl A | 400,577 |
| 2,949,990 | ||
Guangzhou Automobile Group, Cl A | 316,896 |
| 471,665 | ||
Haier Smart Home, Cl A | 812,068 |
| 1,649,753 | ||
Hangzhou Robam Appliances, Cl A | 126,426 |
| 507,259 | ||
HLA, Cl A | 392,433 |
| 350,456 | ||
Huayu Automotive Systems, Cl A | 419,879 |
| 1,275,951 | ||
Liaoning Cheng Da, Cl A* | 203,709 |
| 521,616 | ||
NavInfo, Cl A | 261,379 |
| 518,834 | ||
Ningbo Joyson Electronic, Cl A* | 173,175 |
| 459,067 | ||
Oppein Home Group, Cl A | 37,291 |
| 497,532 | ||
SAIC Motor, Cl A | 1,037,327 |
| 3,000,085 | ||
Shandong Linglong Tyre, Cl A | 159,795 |
| 445,691 | ||
Shanghai Jinjiang International Hotels, Cl A | 89,000 |
| 302,225 | ||
Shanghai Yuyuan Tourist Mart Group, Cl A | 430,669 |
| 444,145 | ||
Shenzhen Overseas Chinese Town, Cl A | 1,092,375 |
| 984,774 | ||
Songcheng Performance Development, Cl A | 193,436 |
| 681,701 | ||
Suning.com, Cl A | 1,239,933 |
| 1,579,610 | ||
Suofeiya Home Collection, Cl A | 121,484 |
| 308,158 | ||
TCL Technology Group, Cl A | 1,801,700 |
| 1,052,318 | ||
Visual China Group, Cl A | 93,300 |
| 204,285 | ||
Wanxiang Qianchao, Cl A | 366,673 |
| 263,823 | ||
Weifu High-Technology Group, Cl A | 111,374 |
| 298,539 | ||
Wuchan Zhongda Group, Cl A | 674,130 |
| 456,509 | ||
Zhejiang Semir Garment, Cl A | 239,600 |
| 240,675 | ||
Zhejiang Supor, Cl A | 72,894 |
| 710,923 | ||
Zhejiang Wanfeng Auto Wheel, Cl A | 291,266 |
| 271,205 | ||
| 28,154,133 | ||||
Consumer Staples — 15.5% |
| ||||
Angel Yeast, Cl A | 109,710 |
| 544,820 | ||
Anhui Gujing Distillery, Cl A | 51,050 |
| 822,697 | ||
Anhui Kouzi Distillery, Cl A | 79,900 |
| 466,221 | ||
Beijing Dabeinong Technology Group, Cl A | 565,100 |
| 689,613 | ||
Beijing Shunxin Agriculture, Cl A | 98,826 |
| 855,919 | ||
Beijing Yanjing Brewery, Cl A | 375,324 |
| 319,821 | ||
By-health, Cl A | 210,719 |
| 499,135 | ||
Chongqing Brewery, Cl A | 64,481 |
| 414,002 | ||
Chongqing Fuling Zhacai Group, Cl A | 105,100 |
| 467,658 | ||
Foshan Haitian Flavouring & Food, Cl A | 299,658 |
| 5,291,638 | ||
Fujian Sunner Development, Cl A* | 137,589 |
| 459,070 | ||
Guangdong Haid Group, Cl A | 210,492 |
| 1,193,784 | ||
Heilongjiang Agriculture, Cl A | 236,700 |
| 576,038 |
The accompanying notes are an integral part of the financial statements.
43
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Staples (continued) |
| ||||
Henan Shuanghui Investment & Development, Cl A | 368,409 | $ | 2,042,616 | ||
Inner Mongolia Yili Industrial Group, Cl A | 812,015 |
| 3,420,723 | ||
Jiangsu King’s Luck Brewery JSC, Cl A | 167,107 |
| 663,647 | ||
Jiangsu Yanghe Brewery Joint-Stock, Cl A | 200,709 |
| 2,374,857 | ||
Jiangxi Zhengbang Technology, Cl A | 324,261 |
| 871,930 | ||
Jonjee Hi-Tech Industrial And Commercial Holding, Cl A | 106,114 |
| 715,591 | ||
Juewei Food, Cl A | 81,100 |
| 592,100 | ||
Kweichow Moutai, Cl A | 167,348 |
| 26,230,020 | ||
Laobaixing Pharmacy Chain JSC, Cl A | 38,229 |
| 420,140 | ||
Luzhou Laojiao, Cl A | 195,075 |
| 2,026,928 | ||
Muyuan Foodstuff, Cl A | 287,908 |
| 4,963,917 | ||
New Hope Liuhe, Cl A | 561,492 |
| 2,489,729 | ||
Shanghai Jahwa United, Cl A | 89,400 |
| 316,196 | ||
Shanxi Xinghuacun Fen Wine Factory, Cl A | 116,026 |
| 1,476,147 | ||
Sichuan Swellfun, Cl A | 65,063 |
| 395,159 | ||
Tech-Bank Food, Cl A* | 154,424 |
| 254,026 | ||
Toly Bread, Cl A | 73,140 |
| 510,562 | ||
Tongwei, Cl A | 517,080 |
| 846,943 | ||
Tsingtao Brewery, Cl A | 92,724 |
| 597,954 | ||
Wens Foodstuffs Group | 707,429 |
| 3,223,661 | ||
Wuliangye Yibin, Cl A | 516,922 |
| 8,401,204 | ||
Yifeng Pharmacy Chain, Cl A | 50,500 |
| 663,293 | ||
Yonghui Superstores, Cl A | 1,274,551 |
| 1,841,286 | ||
Yuan Longping High-tech Agriculture, Cl A | 175,388 |
| 448,355 | ||
| 78,387,400 | ||||
Energy — 2.0% |
| ||||
China Merchants Energy Shipping, Cl A | 897,600 |
| 809,185 | ||
China Petroleum & Chemical, Cl A | 3,393,684 |
| 2,120,993 | ||
China Shenhua Energy, Cl A | 585,678 |
| 1,341,865 | ||
COSCO SHIPPING Energy Transportation, Cl A | 364,404 |
| 385,575 | ||
Guanghui Energy, Cl A | 904,805 |
| 329,336 | ||
Offshore Oil Engineering, Cl A | 588,787 |
| 406,192 | ||
PetroChina, Cl A | 2,156,495 |
| 1,405,576 | ||
Shaanxi Coal Industry, Cl A | 1,109,869 |
| 1,171,217 | ||
Shandong Xinchao Energy, Cl A* | 905,700 |
| 224,885 | ||
Shanxi Lu’an Environmental Energy Development, Cl A | 398,362 |
| 327,650 | ||
Shanxi Meijin Energy, Cl A* | 545,920 |
| 506,779 | ||
Shanxi Xishan Coal & Electricity Power, Cl A | 419,646 |
| 287,137 | ||
Yantai Jereh Oilfield Services Group, Cl A | 127,606 |
| 398,037 | ||
Yanzhou Coal Mining, Cl A | 328,500 |
| 400,418 | ||
| 10,114,845 |
The accompanying notes are an integral part of the financial statements.
44
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Financials — 24.4% |
| ||||
Agricultural Bank of China, Cl A | 9,920,507 | $ | 4,716,587 | ||
Anxin Trust, Cl A*(A)(B)(C) | 739,031 |
| 260,655 | ||
Avic Capital, Cl A | 1,195,452 |
| 662,809 | ||
Bank of Beijing, Cl A | 2,815,752 |
| 1,918,693 | ||
Bank of Chengdu, Cl A | 481,100 |
| 511,086 | ||
Bank of China, Cl A | 4,678,200 |
| 2,296,794 | ||
Bank of Communications, Cl A | 5,227,414 |
| 3,805,403 | ||
Bank of Guiyang, Cl A | 428,527 |
| 463,096 | ||
Bank of Hangzhou, Cl A | 683,279 |
| 742,255 | ||
Bank of Jiangsu, Cl A | 1,537,464 |
| 1,303,597 | ||
Bank of Nanjing, Cl A | 1,129,609 |
| 1,155,394 | ||
Bank of Ningbo, Cl A | 749,616 |
| 2,438,721 | ||
Bank of Shanghai, Cl A | 1,891,986 |
| 2,199,425 | ||
Caitong Securities, Cl A | 478,009 |
| 681,791 | ||
Changjiang Securities, Cl A | 736,405 |
| 663,868 | ||
China CITIC Bank, Cl A | 755,806 |
| 552,337 | ||
China Construction Bank, Cl A | 1,277,626 |
| 1,142,765 | ||
China Everbright Bank, Cl A | 5,301,884 |
| 2,700,234 | ||
China Life Insurance, Cl A | 369,739 |
| 1,373,963 | ||
China Merchants Bank, Cl A | 2,747,327 |
| 12,511,458 | ||
China Merchants Securities, Cl A* | 761,629 |
| 1,839,549 | ||
China Minsheng Banking, Cl A | 4,722,810 |
| 3,804,527 | ||
China Pacific Insurance Group, Cl A | 837,238 |
| 3,333,266 | ||
CITIC Securities, Cl A | 1,310,243 |
| 4,096,242 | ||
CSC Financial, Cl A | 368,500 |
| 1,613,182 | ||
Dongxing Securities, Cl A | 367,280 |
| 565,309 | ||
East Money Information, Cl A | 894,420 |
| 2,025,259 | ||
Everbright Securities, Cl A | 520,333 |
| 808,226 | ||
First Capital Securities, Cl A | 466,408 |
| 454,024 | ||
Founder Securities, Cl A | 1,096,361 |
| 1,110,560 | ||
GF Securities, Cl A | 788,328 |
| 1,521,448 | ||
Guosen Securities, Cl A | 546,016 |
| 855,052 | ||
Guotai Junan Securities, Cl A | 1,000,981 |
| 2,299,028 | ||
Guoyuan Securities, Cl A | 448,223 |
| 526,748 | ||
Haitong Securities, Cl A* | 1,077,687 |
| 1,952,188 | ||
Hithink RoyalFlush Information Network, Cl A | 71,600 |
| 1,097,001 | ||
Huaan Securities, Cl A | 482,254 |
| 525,239 | ||
Huatai Securities, Cl A | 979,895 |
| 2,381,929 | ||
Huaxi Securities, Cl A | 349,631 |
| 518,907 | ||
Huaxia Bank, Cl A | 1,707,687 |
| 1,558,750 | ||
Hubei Biocause Pharmaceutical, Cl A | 657,941 |
| 549,506 |
The accompanying notes are an integral part of the financial statements.
45
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Financials (continued) |
| ||||
Industrial & Commercial Bank of China, Cl A | 7,181,326 | $ | 5,217,662 | ||
Industrial Bank, Cl A | 2,766,658 |
| 6,209,973 | ||
Industrial Securities, Cl A | 891,853 |
| 786,389 | ||
Jiangsu Changshu Rural Commercial Bank, Cl A | 365,049 |
| 352,267 | ||
Nanjing Securities, Cl A | 439,340 |
| 963,818 | ||
New China Life Insurance, Cl A | 277,766 |
| 1,559,647 | ||
Northeast Securities, Cl A | 311,700 |
| 364,549 | ||
Orient Securities, Cl A | 794,635 |
| 1,022,414 | ||
Pacific Securities, Cl A* | 907,800 |
| 425,199 | ||
People’s Insurance Group of China, Cl A | 787,894 |
| 700,281 | ||
Ping An Bank, Cl A | 2,584,494 |
| 4,667,126 | ||
Ping An Insurance Group of China, Cl A | 1,442,630 |
| 14,077,864 | ||
SDIC Capital, Cl A | 469,152 |
| 810,800 | ||
Sealand Securities, Cl A | 729,877 |
| 451,012 | ||
Shanghai AJ Group, Cl A | 216,000 |
| 242,262 | ||
Shanghai Pudong Development Bank, Cl A | 3,909,097 |
| 5,597,660 | ||
Shanxi Securities, Cl A | 376,745 |
| 373,120 | ||
Shenwan Hongyuan Group, Cl A | 3,001,281 |
| 1,867,279 | ||
Sinolink Securities, Cl A | 402,800 |
| 519,966 | ||
SooChow Securities, Cl A | 523,593 |
| 585,037 | ||
Southwest Securities, Cl A | 751,800 |
| 479,407 | ||
Western Securities, Cl A | 466,325 |
| 544,074 | ||
Zheshang Securities, Cl A | 369,900 |
| 522,375 | ||
| 123,877,052 | ||||
Health Care — 10.7% |
| ||||
Aier Eye Hospital Group, Cl A | 412,534 |
| 2,291,920 | ||
Asymchem Laboratories Tianjin, Cl A | 30,800 |
| 746,036 | ||
Autobio Diagnostics, Cl A | 37,300 |
| 613,001 | ||
Beijing SL Pharmaceutical, Cl A | 136,850 |
| 230,715 | ||
Beijing Tiantan Biological Products, Cl A | 139,228 |
| 714,584 | ||
Beijing Tongrentang, Cl A | 182,681 |
| 653,334 | ||
Betta Pharmaceuticals, Cl A | 53,400 |
| 528,862 | ||
BGI Genomics, Cl A | 53,320 |
| 637,144 | ||
Changchun High & New Technology Industry Group, Cl A | 22,681 |
| 1,753,504 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A | 97,139 |
| 539,676 | ||
China National Accord Medicines, Cl A | 49,730 |
| 280,284 | ||
China National Medicines, Cl A | 100,500 |
| 400,968 | ||
China Resources Double Crane Pharmaceutical, Cl A | 138,966 |
| 248,399 | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A | 130,347 |
| 512,142 | ||
Chongqing Zhifei Biological Products, Cl A | 177,572 |
| 1,688,239 | ||
Dong-E-E-Jiao, Cl E | 87,088 |
| 316,250 |
The accompanying notes are an integral part of the financial statements.
46
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Health Care (continued) |
| ||||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A | 187,239 | $ | 831,563 | ||
Guangzhou Kingmed Diagnostics Group, Cl A | 60,937 |
| 483,923 | ||
Guizhou Bailing Group Pharmaceutical, Cl A | 187,989 |
| 221,189 | ||
Hangzhou Tigermed Consulting, Cl A | 99,850 |
| 902,259 | ||
Huadong Medicine, Cl A | 233,042 |
| 573,712 | ||
Hualan Biological Engineering, Cl A | 186,890 |
| 1,263,476 | ||
Hubei Jumpcan Pharmaceutical, Cl A* | 108,480 |
| 335,470 | ||
Jafron Biomedical, Cl A | 55,752 |
| 744,624 | ||
Jiangsu Hengrui Medicine, Cl A* | 589,035 |
| 7,647,766 | ||
Jiangsu Yuyue Medical Equipment & Supply, Cl A | 133,536 |
| 683,486 | ||
Jilin Aodong Pharmaceutical Group, Cl A | 154,855 |
| 344,525 | ||
Jinyu Bio-Technology, Cl A | 149,955 |
| 451,037 | ||
Joincare Pharmaceutical Group Industry, Cl A | 258,134 |
| 417,344 | ||
Jointown Pharmaceutical Group, Cl A | 250,077 |
| 599,773 | ||
Lepu Medical Technology Beijing, Cl A | 237,311 |
| 1,212,636 | ||
Livzon Pharmaceutical Group, Cl A | 81,911 |
| 453,918 | ||
Meinian Onehealth Healthcare Holdings, Cl A | 522,008 |
| 869,743 | ||
Nanjing King-Friend Biochemical Pharmaceutical, Cl A | 79,700 |
| 567,599 | ||
Ovctek China, Cl A | 53,800 |
| 419,276 | ||
Shandong Buchang Pharmaceuticals, Cl A | 152,060 |
| 431,840 | ||
Shanghai Fosun Pharmaceutical Group, Cl A | 267,824 |
| 1,241,598 | ||
Shanghai Pharmaceuticals Holding, Cl A | 256,059 |
| 704,793 | ||
Shanghai RAAS Blood Products, Cl A* | 662,545 |
| 727,209 | ||
Shenzhen Hepalink Pharmaceutical Group, Cl A | 138,400 |
| 402,223 | ||
Shenzhen Kangtai Biological Products, Cl A | 85,908 |
| 1,388,936 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A | 134,889 |
| 4,980,171 | ||
Shenzhen Salubris Pharmaceuticals, Cl A | 116,065 |
| 290,482 | ||
Shijiazhuang Yiling Pharmaceutical, Cl A | 160,269 |
| 507,610 | ||
Sichuan Kelun Pharmaceutical, Cl A | 191,769 |
| 559,761 | ||
Tasly Pharmaceutical Group, Cl A | 201,441 |
| 392,753 | ||
Tonghua Dongbao Pharmaceutical, Cl A | 270,871 |
| 405,455 | ||
Topchoice Medical, Cl A* | 42,706 |
| 649,368 | ||
Walvax Biotechnology, Cl A | 204,753 |
| 914,545 | ||
Winning Health Technology Group, Cl A | 218,600 |
| 646,715 | ||
WuXi AppTec, Cl A | 195,479 |
| 2,495,541 | ||
Yifan Pharmaceutical, Cl A | 163,921 |
| 376,952 | ||
Yunnan Baiyao Group, Cl A | 170,158 |
| 2,053,697 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A | 80,350 |
| 1,409,033 | ||
Zhejiang Conba Pharmaceutical, Cl A | 355,200 |
| 258,074 | ||
Zhejiang Huahai Pharmaceutical, Cl A* | 176,111 |
| 638,533 | ||
Zhejiang NHU, Cl A | 286,122 |
| 1,101,991 | ||
Zhejiang Wolwo Bio-Pharmaceutical, Cl A | 69,726 |
| 438,628 | ||
| 54,194,285 |
The accompanying notes are an integral part of the financial statements.
47
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials — 12.5% |
| ||||
AECC Aero-Engine Control, Cl A | 152,600 | $ | 256,838 | ||
AECC Aviation Power, Cl A | 299,605 |
| 896,084 | ||
Air China, Cl A | 530,736 |
| 487,442 | ||
AVIC Aircraft, Cl A | 368,734 |
| 825,050 | ||
AVIC Electromechanical Systems, Cl A | 480,590 |
| 488,848 | ||
AVIC Shenyang Aircraft, Cl A* | 124,338 |
| 502,215 | ||
AVICOPTER, Cl A | 78,500 |
| 460,599 | ||
Beijing New Building Materials, Cl A | 224,981 |
| 749,069 | ||
Beijing Originwater Technology, Cl A | 421,439 |
| 548,188 | ||
Bohai Leasing, Cl A* | 823,600 |
| 336,960 | ||
Centre Testing International Group, Cl A | 110,400 |
| 239,079 | ||
China Aerospace Times Electronics, Cl A | 362,102 |
| 325,413 | ||
China Avionics Systems, Cl A | 195,325 |
| 356,028 | ||
China Communications Construction, Cl A | 365,084 |
| 425,439 | ||
China Eastern Airlines, Cl A* | 1,243,300 |
| 724,419 | ||
China Gezhouba Group, Cl A | 613,271 |
| 603,910 | ||
China International Marine Containers Group, Cl A | 202,895 |
| 220,694 | ||
China Meheco, Cl A | 142,300 |
| 301,937 | ||
China National Chemical Engineering, Cl A | 656,939 |
| 553,304 | ||
China Railway Construction, Cl A | 1,531,942 |
| 2,124,515 | ||
China Railway Group, Cl A | 2,712,000 |
| 2,058,430 | ||
China Railway Hi-tech Industry, Cl A | 295,885 |
| 397,396 | ||
China Shipbuilding Industry, Cl A | 3,047,099 |
| 1,809,809 | ||
China Southern Airlines, Cl A* | 1,145,402 |
| 832,203 | ||
China Spacesat, Cl A | 157,472 |
| 649,154 | ||
China State Construction Engineering, Cl A | 5,590,206 |
| 4,156,258 | ||
Contemporary Amperex Technology, Cl A | 294,099 |
| 4,995,144 | ||
COSCO SHIPPING Development, Cl A | 1,056,378 |
| 302,538 | ||
COSCO SHIPPING Holdings, Cl A* | 859,364 |
| 498,291 | ||
CRRC, Cl A | 3,239,928 |
| 2,998,494 | ||
Dalian Port PDA, Cl A | 1,030,200 |
| 251,439 | ||
Daqin Railway, Cl A | 1,979,910 |
| 1,899,409 | ||
Dongfang Electric, Cl A | 366,340 |
| 436,205 | ||
Eve Energy, Cl A* | 129,100 |
| 1,058,379 | ||
Fangda Carbon New Material, Cl A* | 362,318 |
| 459,530 | ||
Guangshen Railway, Cl A | 752,806 |
| 251,707 | ||
Guangzhou Baiyun International Airport, Cl A | 275,609 |
| 487,979 | ||
Guoxuan High-Tech, Cl A | 151,390 |
| 373,338 | ||
Hefei Meiya Optoelectronic Technology, Cl A | 90,000 |
| 478,937 | ||
Hongfa Technology, Cl A | 99,200 |
| 386,404 | ||
Inner Mongolia First Machinery Group, Cl A | 225,072 |
| 289,270 | ||
Jiangsu Hengli Hydraulic, Cl A | 117,437 |
| 1,018,929 | ||
Jiangsu Zhongtian Technology, Cl A | 408,296 |
| 553,557 | ||
Juneyao Airlines, Cl A* | 218,220 |
| 307,864 | ||
Metallurgical Corp of China, Cl A | 2,377,621 |
| 878,836 |
The accompanying notes are an integral part of the financial statements.
48
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials (continued) |
| ||||
NARI Technology, Cl A | 615,533 | $ | 1,715,072 | ||
Ningbo Zhoushan Port, Cl A | 1,169,541 |
| 585,744 | ||
Power Construction Corp of China, Cl A | 1,697,946 |
| 943,809 | ||
Sany Heavy Industry, Cl A | 1,121,753 |
| 2,737,836 | ||
SF Holding, Cl A | 215,587 |
| 1,436,801 | ||
Shanghai Construction Group, Cl A | 1,185,911 |
| 537,058 | ||
Shanghai Electric Group, Cl A | 1,081,360 |
| 701,766 | ||
Shanghai International Airport, Cl A | 128,289 |
| 1,100,597 | ||
Shanghai International Port Group, Cl A | 1,131,608 |
| 715,218 | ||
Shanghai M&G Stationery, Cl A | 122,506 |
| 800,207 | ||
Shanghai Mechanical and Electrical Industry, Cl A | 107,437 |
| 205,834 | ||
Shanghai Tunnel Engineering, Cl A | 418,753 |
| 326,698 | ||
Shanghai Waigaoqiao Free Trade Zone Group, Cl A | 103,732 |
| 214,249 | ||
Shenzhen Airport, Cl A | 273,126 |
| 294,388 | ||
Shenzhen Inovance Technology, Cl A | 221,315 |
| 807,115 | ||
Siasun Robot & Automation, Cl A* | 207,783 |
| 400,428 | ||
Sinochem International, Cl A | 360,686 |
| 260,533 | ||
Sinotrans, Cl A | 583,322 |
| 288,032 | ||
Spring Airlines, Cl A | 122,139 |
| 556,227 | ||
Sunwoda Electronic, Cl A | 206,100 |
| 410,851 | ||
Suzhou Gold Mantis Construction Decoration, Cl A | 356,441 |
| 412,852 | ||
TangShan Port Group, Cl A | 789,240 |
| 251,641 | ||
TBEA, Cl A | 494,699 |
| 509,481 | ||
Tian Di Science & Technology, Cl A | 551,200 |
| 233,289 | ||
Tus Environmental Science And Technology Development, Cl A | 190,552 |
| 217,215 | ||
Weichai Power, Cl A | 797,869 |
| 1,346,253 | ||
XCMG Construction Machinery, Cl A | 1,043,287 |
| 743,292 | ||
Xiamen C & D, Cl A | 377,618 |
| 407,548 | ||
Xinjiang Goldwind Science & Technology, Cl A | 459,700 |
| 616,116 | ||
Yunda Holding, Cl A | 197,708 |
| 859,369 | ||
Zhejiang Chint Electrics, Cl A* | 286,458 |
| 955,776 | ||
Zhejiang Dingli Machinery, Cl A | 46,200 |
| 374,126 | ||
Zhejiang Sanhua Intelligent Controls, Cl A | 368,285 |
| 834,957 | ||
Zhejiang Weixing New Building Materials, Cl A | 209,515 |
| 326,915 | ||
Zhengzhou Yutong Bus, Cl A | 294,836 |
| 569,440 | ||
Zoomlion Heavy Industry Science and Technology, Cl A* | 863,041 |
| 692,800 | ||
| 63,645,064 | ||||
Information Technology — 12.6% |
| ||||
360 Security Technology, Cl A | 180,199 |
| 481,246 | ||
Accelink Technologies, Cl A | 90,200 |
| 399,704 | ||
Aisino, Cl A | 248,088 |
| 668,153 | ||
AVIC Jonhon Optronic Technology, Cl A | 139,600 |
| 673,559 | ||
Beijing Shiji Information Technology, Cl A | 118,485 |
| 484,090 | ||
Beijing Sinnet Technology, Cl A | 205,400 |
| 693,437 | ||
BOE Technology Group, Cl A | 4,509,780 |
| 2,360,442 |
The accompanying notes are an integral part of the financial statements.
49
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Information Technology (continued) |
| ||||
Chaozhou Three-Circle Group, Cl A | 232,103 | $ | 597,268 | ||
China Greatwall Technology Group, Cl A | 390,000 |
| 656,951 | ||
China National Software & Service, Cl A | 65,842 |
| 670,291 | ||
China TransInfo Technology, Cl A | 198,000 |
| 569,849 | ||
Dawning Information Industry, Cl A | 119,937 |
| 738,925 | ||
DHC Software, Cl A | 414,930 |
| 756,313 | ||
Fiberhome Telecommunication Technologies, Cl A | 155,979 |
| 727,060 | ||
Foxconn Industrial Internet, Cl A | 528,812 |
| 985,526 | ||
GCL System Integration Technology, Cl A* | 685,100 |
| 292,860 | ||
Gigadevice Semiconductor Beijing, Cl A | 42,767 |
| 1,460,179 | ||
Glodon, Cl A | 150,189 |
| 904,117 | ||
GoerTek, Cl A | 432,214 |
| 1,000,625 | ||
GRG Banking Equipment, Cl A | 320,854 |
| 390,645 | ||
Guangzhou Haige Communications Group, Cl A | 307,065 |
| 488,656 | ||
Hangzhou Hikvision Digital Technology, Cl A | 1,244,557 |
| 4,898,725 | ||
Hangzhou Silan Microelectronics, Cl A | 174,700 |
| 356,143 | ||
Hengtong Optic-electric, Cl A | 253,515 |
| 578,690 | ||
Holitech Technology, Cl A | 415,010 |
| 325,535 | ||
Hubei Kaile Science & Technology, Cl A | 133,260 |
| 249,667 | ||
Hundsun Technologies, Cl A | 106,984 |
| 1,326,697 | ||
Hytera Communications, Cl A | 244,989 |
| 201,502 | ||
Iflytek, Cl A | 292,770 |
| 1,423,331 | ||
Inspur Electronic Information Industry, Cl A | 199,136 |
| 1,089,486 | ||
Lens Technology, Cl A | 368,918 |
| 757,801 | ||
Leyard Optoelectronic, Cl A | 338,664 |
| 300,527 | ||
Lingyi iTech Guangdong, Cl A* | 759,900 |
| 881,236 | ||
LONGi Green Energy Technology, Cl A | 502,357 |
| 1,760,468 | ||
Luxshare Precision Industry, Cl A | 712,385 |
| 3,835,192 | ||
NAURA Technology Group, Cl A | 65,317 |
| 1,071,692 | ||
Newland Digital Technology, Cl A | 139,047 |
| 310,140 | ||
Ninestar, Cl A | 141,600 |
| 535,979 | ||
OFILM Group, Cl A* | 361,305 |
| 695,268 | ||
Sanan Optoelectronics, Cl A | 543,131 |
| 1,467,363 | ||
Sangfor Technologies, Cl A | 45,410 |
| 1,012,599 | ||
Shanghai 2345 Network Holding Group, Cl A | 768,484 |
| 301,400 | ||
Shanghai Baosight Software, Cl A | 112,318 |
| 629,869 | ||
Shengyi Technology, Cl A | 303,116 |
| 1,131,949 | ||
Shennan Circuits, Cl A | 45,145 |
| 1,257,375 | ||
Shenzhen Goodix Technology, Cl A | 50,600 |
| 1,861,611 | ||
Shenzhen Kingdom Sci-Tech, Cl A* | 114,600 |
| 271,456 | ||
Shenzhen Sunway Communication, Cl A* | 129,045 |
| 624,817 | ||
Suzhou Dongshan Precision Manufacturing, Cl A | 213,992 |
| 622,214 | ||
Tianjin Zhonghuan Semiconductor, Cl A | 370,900 |
| 747,744 | ||
Tianma Microelectronics, Cl A | 272,778 |
| 512,984 | ||
Tunghsu Optoelectronic Technology, Cl A | 729,845 |
| 308,899 |
The accompanying notes are an integral part of the financial statements.
50
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Information Technology (continued) |
| ||||
Unigroup Guoxin Microelectronics, Cl A | 80,859 | $ | 569,237 | ||
Unisplendour, Cl A | 226,722 |
| 1,129,740 | ||
Universal Scientific Industrial Shanghai, Cl A | 193,200 |
| 432,834 | ||
Venustech Group, Cl A | 119,408 |
| 623,303 | ||
Visionox Technology, Cl A* | 182,160 |
| 289,885 | ||
Wangsu Science & Technology, Cl A | 323,999 |
| 356,535 | ||
Westone Information Industry, Cl A | 111,600 |
| 353,936 | ||
Will Semiconductor, Cl A | 76,716 |
| 1,687,315 | ||
Wingtech Technology, Cl A* | 129,200 |
| 1,850,089 | ||
Wuhan Guide Infrared, Cl A | 124,663 |
| 593,575 | ||
WUS Printed Circuit Kunshan, Cl A | 229,650 |
| 767,206 | ||
Wuxi Lead Intelligent Equipment, Cl A | 117,405 |
| 620,467 | ||
Yealink Network Technology, Cl A | 66,500 |
| 765,273 | ||
Yonyou Network Technology, Cl A | 333,461 |
| 1,903,422 | ||
Zhejiang Dahua Technology, Cl A | 399,163 |
| 910,593 | ||
Zhongji Innolight, Cl A | 79,200 |
| 600,576 | ||
ZTE, Cl A* | 513,195 |
| 3,098,776 | ||
| 63,901,017 | ||||
Materials — 7.5% |
| ||||
Aluminum Corp of China, Cl A* | 1,741,800 |
| 707,709 | ||
Angang Steel, Cl A | 709,711 |
| 269,338 | ||
Anhui Conch Cement, Cl A | 532,673 |
| 4,140,724 | ||
Baoshan Iron & Steel, Cl A | 2,472,080 |
| 1,698,461 | ||
BBMG, Cl A | 1,110,612 |
| 513,926 | ||
Beijing Oriental Yuhong Waterproof Technology, Cl A | 197,591 |
| 948,622 | ||
Beijing Sanju Environmental Protection and New Material, Cl A | 312,890 |
| 199,965 | ||
China Jushi, Cl A | 466,396 |
| 519,812 | ||
China Molybdenum, Cl A | 2,352,691 |
| 1,151,750 | ||
China Northern Rare Earth Group High-Tech, Cl A | 483,821 |
| 613,633 | ||
Ganfeng Lithium, Cl A | 145,465 |
| 826,016 | ||
GEM, Cl A | 552,600 |
| 362,517 | ||
Guangdong HEC Technology Holding, Cl A | 401,400 |
| 395,839 | ||
Hengli Petrochemical, Cl A | 781,202 |
| 1,375,441 | ||
Hengyi Petrochemical, Cl A | 378,431 |
| 667,361 | ||
Hesteel, Cl A | 1,414,159 |
| 424,954 | ||
Huaxin Cement, Cl A | 181,360 |
| 595,390 | ||
Hunan Valin Steel, Cl A | 562,282 |
| 311,753 | ||
Inner Mongolia BaoTou Steel Union, Cl A | 6,071,000 |
| 984,968 | ||
Inner Mongolia Junzheng Energy & Chemical Industry Group, Cl A* | 1,123,745 |
| 390,002 | ||
Jiangsu Yangnong Chemical, Cl A | 41,300 |
| 392,770 | ||
Jiangxi Copper, Cl A | 276,371 |
| 492,447 | ||
Jinduicheng Molybdenum, Cl A | 358,079 |
| 305,632 | ||
Lomon Billions Group, Cl A* | 270,582 |
| 569,932 | ||
Luxi Chemical Group, Cl A | 195,109 |
| 224,611 | ||
Maanshan Iron & Steel, Cl A* | 794,800 |
| 282,568 |
The accompanying notes are an integral part of the financial statements.
51
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Materials (continued) |
| ||||
Nanjing Iron & Steel, Cl A | 589,800 | $ | 261,275 | ||
Pangang Group Vanadium Titanium & Resources, Cl A* | 1,143,931 |
| 358,275 | ||
Rongsheng Petro Chemical, Cl A | 698,177 |
| 1,078,558 | ||
Sansteel Minguang Fujian, Cl A | 326,495 |
| 367,112 | ||
Shandong Gold Mining, Cl A* | 346,231 |
| 1,677,375 | ||
Shandong Hualu Hengsheng Chemical, Cl A | 216,657 |
| 479,884 | ||
Shandong Nanshan Aluminum, Cl A | 1,591,500 |
| 462,528 | ||
Shandong Sinocera Functional Material, Cl A | 128,300 |
| 378,663 | ||
Shandong Sun Paper Industry JSC, Cl A | 345,138 |
| 427,515 | ||
Shanxi Taigang Stainless Steel, Cl A | 758,600 |
| 346,754 | ||
Shanying International Holding, Cl A* | 610,600 |
| 263,598 | ||
Shenghe Resources Holding, Cl A | 233,795 |
| 227,917 | ||
Shenzhen Zhongjin Lingnan Nonfemet, Cl A | 475,393 |
| 238,763 | ||
Sichuan Hebang Biotechnology* | 1,176,100 |
| 240,589 | ||
Sinopec Shanghai Petrochemical, Cl A | 813,340 |
| 446,361 | ||
Tangshan Jidong Cement, Cl A | 179,419 |
| 496,375 | ||
Tianqi Lithium, Cl A | 197,709 |
| 514,620 | ||
Tongkun Group, Cl A | 246,119 |
| 407,293 | ||
Tongling Nonferrous Metals Group, Cl A | 1,401,900 |
| 393,581 | ||
Transfar Zhilian, Cl A | 433,879 |
| 377,063 | ||
Wanhua Chemical Group, Cl A | 418,108 |
| 2,433,193 | ||
Weihai Guangwei Composites, Cl A | 69,020 |
| 482,678 | ||
Xiamen Tungsten, Cl A | 187,280 |
| 299,354 | ||
Xinjiang Zhongtai Chemical, Cl A | 285,900 |
| 197,640 | ||
Xinxing Ductile Iron Pipes, Cl A | 531,500 |
| 257,944 | ||
Xinyu Iron & Steel, Cl A | 424,700 |
| 243,860 | ||
Yintai Gold, Cl A | 264,147 |
| 537,745 | ||
Yunnan Energy New Material | 89,337 |
| 535,654 | ||
Yunnan Tin, Cl A* | 222,270 |
| 259,015 | ||
Zhejiang Huayou Cobalt, Cl A | 143,659 |
| 596,063 | ||
Zhejiang Jiahua Energy Chemical Industry, Cl A | 190,773 |
| 237,383 | ||
Zhejiang Juhua, Cl A | 365,600 |
| 349,703 | ||
Zhejiang Longsheng Group, Cl A | 433,271 |
| 728,007 | ||
Zhongjin Gold, Cl A | 459,640 |
| 523,306 | ||
Zijin Mining Group, Cl A | 2,615,642 |
| 1,361,660 | ||
| 37,853,445 | ||||
Real Estate — 4.0% |
| ||||
Beijing Capital Development, Cl A | 343,526 |
| 320,350 | ||
China Enterprise | 541,278 |
| 325,308 | ||
China Fortune Land Development, Cl A | 401,368 |
| 1,182,892 | ||
China Merchants Shekou Industrial Zone Holdings, Cl A | 1,053,998 |
| 2,450,536 | ||
China Vanke, Cl A | 1,295,072 |
| 4,686,464 | ||
Financial Street Holdings, Cl A | 398,081 |
| 367,294 | ||
Gemdale, Cl A | 601,207 |
| 1,195,086 | ||
Grandjoy Holdings Group, Cl A | 380,583 |
| 288,866 |
The accompanying notes are an integral part of the financial statements.
52
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Real Estate (continued) |
| ||||
Greenland Holdings, Cl A | 1,080,408 | $ | 824,611 | ||
Jiangsu Zhongnan Construction Group, Cl A | 494,050 |
| 540,178 | ||
Jinke Properties Group, Cl A | 711,120 |
| 798,583 | ||
Oceanwide Holdings, Cl A | 461,363 |
| 257,101 | ||
Poly Developments and Holdings Group, Cl A | 1,589,014 |
| 3,333,517 | ||
RiseSun Real Estate Development, Cl A | 579,078 |
| 633,144 | ||
Seazen Holdings, Cl A | 300,560 |
| 1,325,938 | ||
Shanghai Zhangjiang High-Tech Park Development, Cl A | 206,216 |
| 352,896 | ||
Sichuan Languang Development, Cl A | 400,888 |
| 341,039 | ||
Tahoe Group, Cl A | 331,480 |
| 241,775 | ||
Xinhu Zhongbao, Cl A | 1,145,268 |
| 487,953 | ||
Yango Group, Cl A | 539,354 |
| 531,882 | ||
| 20,485,413 | ||||
Utilities — 2.7% |
| ||||
Chengdu Xingrong Environment, Cl A | 397,733 |
| 256,432 | ||
China National Nuclear Power, Cl A | 1,727,466 |
| 1,072,325 | ||
China Yangtze Power, Cl A | 2,929,967 |
| 7,146,967 | ||
GD Power Development, Cl A | 2,617,000 |
| 749,486 | ||
Huadian Power International, Cl A | 903,985 |
| 439,992 | ||
Huaneng Power International, Cl A | 976,410 |
| 646,054 | ||
Hubei Energy Group, Cl A | 577,728 |
| 288,530 | ||
Inner Mongolia MengDian HuaNeng Thermal Power, Cl A | 773,600 |
| 281,579 | ||
SDIC Power Holdings, Cl A | 903,769 |
| 1,012,376 | ||
Shanghai Electric Power, Cl A | 348,592 |
| 345,238 | ||
Shenergy, Cl A | 654,132 |
| 487,263 | ||
Shenzhen Energy Group, Cl A | 439,947 |
| 333,923 | ||
Sichuan Chuantou Energy, Cl A | 586,236 |
| 760,894 | ||
| 13,821,059 | ||||
TOTAL COMMON STOCK |
| 507,342,065 | |||
TOTAL INVESTMENTS — 100.0% |
| 507,342,065 | |||
OTHER ASSETS LESS LIABILITIES — 0.0% |
| 165,558 | |||
NET ASSETS — 100% | $ | 507,507,623 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2020 was $260,655 and represents 0.1% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2020 was $260,655 and represents 0.1% of Net Assets.
Cl — Class
JSC — Joint-Stock Company
The accompanying notes are an integral part of the financial statements.
53
Schedule of InvestmentsMarch 31, 2020
KraneShares Bosera MSCI China A Share ETF(concluded)
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3^ | Total | ||||||||
Common Stock |
|
|
|
| ||||||||
China |
|
|
|
| ||||||||
Communication Services | $ | 12,908,352 | $ | — | $ | — | $ | 12,908,352 | ||||
Consumer Discretionary |
| 28,154,133 |
| — |
| — |
| 28,154,133 | ||||
Consumer Staples |
| 78,387,400 |
| — |
| — |
| 78,387,400 | ||||
Energy |
| 10,114,845 |
| — |
| — |
| 10,114,845 | ||||
Financials |
| 123,616,397 |
| — |
| 260,655 |
| 123,877,052 | ||||
Health Care |
| 54,194,285 |
| — |
| — |
| 54,194,285 | ||||
Industrials |
| 63,645,064 |
| — |
| — |
| 63,645,064 | ||||
Information Technology |
| 63,901,017 |
| — |
| — |
| 63,901,017 | ||||
Materials |
| 37,853,445 |
| — |
| — |
| 37,853,445 | ||||
Real Estate |
| 20,485,413 |
| — |
| — |
| 20,485,413 | ||||
Utilities |
| 13,821,059 |
| — |
| — |
| 13,821,059 | ||||
Total Common Stock |
| 507,081,410 |
| — |
| 260,655 |
| 507,342,065 | ||||
Total Investments in Securities | $ | 507,081,410 | $ | — | $ | 260,655 | $ | 507,342,065 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March31, 2020, the transfers in and out of Level 3 occurred due to a halt in trading of these securities. Transfers between levels are recognized at period end.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
54
Face | Value | ||||
COMMERCIAL PAPER — 83.1%‡ | |||||
CHINA — 83.1% |
| ||||
Consumer Discretionary — 5.5% |
| ||||
BYD Co. Ltd. | 5,000,000 | $ | 706,112 | ||
Energy — 3.3% |
| ||||
GD Power Development | 3,000,000 |
| 424,062 | ||
Financials — 10.9% |
| ||||
SD Luxin Investment | 10,000,000 |
| 1,412,608 | ||
Industrials — 14.2% |
| ||||
Cahngchun Urban Development | 5,000,000 |
| 707,328 | ||
Jiangxi Expressway Investment | 5,000,000 |
| 705,278 | ||
Wuxi Industry Development | 3,000,000 |
| 425,263 | ||
| 1,837,869 | ||||
Materials — 31.7% |
| ||||
Aluminum Corporation of China | 4,000,000 |
| 564,566 | ||
2.200%, 04/15/2020 | 5,000,000 |
| 705,396 | ||
Shanghair Electric Power | 6,000,000 |
| 846,565 | ||
Shougang Group | 6,000,000 |
| 847,755 | ||
Sinochem Fertilizer | 6,000,000 |
| 846,627 | ||
Wuchan Zhongda | 2,000,000 |
| 282,881 | ||
| 4,093,790 |
The accompanying notes are an integral part of the financial statements.
55
Schedule of InvestmentsMarch 31, 2020
KraneShares E Fund China Commercial Paper ETF(continued)
Face | Value | ||||
COMMERCIAL PAPER(continued) |
| ||||
Transportation — 12.0% |
| ||||
Xiamen Iport Group | 6,000,000 | $ | 847,892 | ||
Zhejiang Airport Group | 5,000,000 |
| 705,813 | ||
| 1,553,705 | ||||
Utilities — 5.5% |
| ||||
China Yangtze Power | 5,000,000 |
| 706,509 | ||
TOTAL COMMERCIAL PAPER |
| 10,734,655 | |||
| |||||
CORPORATE OBLIGATIONS — 10.9% |
| ||||
CHINA — 10.9% |
| ||||
Industrials — 10.9% |
| ||||
China Eastern Airlines | 4,000,000 |
| 564,194 | ||
Qingdao City Construction Investment Group | 6,000,000 |
| 846,576 | ||
TOTAL CORPORATE OBLIGATIONS |
| 1,410,770 | |||
| |||||
SHORT-TERM INVESTMENTS(B) — 0.3% |
| ||||
China Universal Express Income Money Market Fund, 1.657% | 393 |
| 55 | ||
E Fund Money Market Fund, 1.888%** | 125,011 |
| 17,639 | ||
Fortune SGAM Xianjin Tianyi Money Market Fund, 1.722% | 165,335 |
| 23,327 | ||
Xianjinbao Real-Time Redemption Money Market Fund, 1.458% | 3,571 |
| 504 | ||
TOTAL SHORT-TERM INVESTMENTS |
| 41,525 | |||
| |||||
TOTAL INVESTMENTS — 94.3% |
| 12,186,950 | |||
OTHER ASSETS LESS LIABILITIES — 5.7% |
| 736,881 | |||
NET ASSETS — 100% | $ | 12,923,831 |
** Affiliated investment is a Chinese investment company which is managed by E Fund Management (Hong Kong) Co., Limited (the “Sub-Adviser”) or an affiliate of the Sub- Adviser or which is distributed by an affiliate of the Fund’s distributor. Transactions with affiliated companies during the year ended March 31, 2020 are as follows:
The accompanying notes are an integral part of the financial statements.
56
Schedule of InvestmentsMarch 31, 2020
KraneShares E Fund China Commercial Paper ETF(concluded)
Value of | Purchases | Proceeds | Change in | Realized | Value of | Number of Shares | Dividend | Capital Gains Distributions | |||||||||||||||||
E Fund Money Market Fund | |||||||||||||||||||||||||
$ | 384,215 | $ | 1,142,698 | $ | (1,500,186 | ) | $ | 6,916 | $ | (16,004) | $ | 17,639 | 125,011 | $ | 6,239 | $ | — |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
(A) In CNY unless otherwise indicated.
(B) The rate shown is the 7-day effective yield as of March 31, 2020.
CNY — Chinese Yuan
Ltd. — Limited
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||
Commercial Paper | $ | — | $ | 10,734,655 | $ | — | $ | 10,734,655 | ||||
Corporate Obligations |
| — |
| 1,410,770 |
| — |
| 1,410,770 | ||||
Short-Term Investments |
| 41,525 |
| — |
| — |
| 41,525 | ||||
Total Investments in Securities | $ | 41,525 | $ | 12,145,425 | $ | — | $ | 12,186,950 |
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
57
Shares | Value | ||||
COMMON STOCK — 99.9%‡ |
| ||||
CHINA — 89.9% |
| ||||
Communication Services — 15.9% |
| ||||
58.com ADR* | 296 | $ | 14,421 | ||
Autohome ADR* | 178 |
| 12,641 | ||
Baidu* | 720 |
| 72,569 | ||
China Mobile | 15,972 |
| 118,797 | ||
China Telecom, Cl H | 36,000 |
| 10,915 | ||
China Unicom Hong Kong | 14,000 |
| 8,074 | ||
Focus Media Information Technology, Cl A | 11,500 |
| 7,171 | ||
iQIYI ADR* | 1,000 |
| 17,800 | ||
JOYY ADR* | 171 |
| 9,108 | ||
Momo ADR* | 380 |
| 8,242 | ||
NetEase ADR | 259 |
| 83,129 | ||
Oriental Pearl Group, Cl A | 6,740 |
| 8,320 | ||
SINA* | 240 |
| 7,642 | ||
Tencent Holdings | 14,858 |
| 728,820 | ||
Tencent Music Entertainment Group ADR* | 1,000 |
| 10,060 | ||
Weibo ADR* | 176 |
| 5,827 | ||
| 1,123,536 | ||||
Consumer Discretionary — 20.8% |
| ||||
Alibaba Group Holding ADR* | 3,858 |
| 750,304 | ||
ANTA Sports Products | 3,000 |
| 22,043 | ||
BAIC Motor, Cl H | 9,500 |
| 3,775 | ||
BYD, Cl A | 1,900 |
| 16,075 | ||
BYD, Cl H | 3,000 |
| 15,676 |
The accompanying notes are an integral part of the financial statements.
58
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Discretionary (continued) |
| ||||
China Grand Automotive Services Group, Cl A | 10,200 | $ | 5,857 | ||
China International Travel Service, Cl A | 1,800 |
| 17,065 | ||
Chongqing Changan Automobile, Cl A | 12,700 |
| 18,956 | ||
Dongfeng Motor Group, Cl H | 12,000 |
| 7,911 | ||
Fuyao Glass Industry Group, Cl A | 6,600 |
| 17,859 | ||
Geely Automobile Holdings | 13,000 |
| 19,187 | ||
Great Wall Motor, Cl H | 18,500 |
| 11,862 | ||
Gree Electric Appliances of Zhuhai, Cl A* | 3,000 |
| 22,093 | ||
Guangzhou Automobile Group, Cl H | 14,000 |
| 14,071 | ||
Haier Smart Home, Cl A | 6,700 |
| 13,611 | ||
Huayu Automotive Systems, Cl A | 3,700 |
| 11,244 | ||
Huazhu Group ADR | 411 |
| 11,808 | ||
JD.com ADR* | 3,517 |
| 142,439 | ||
NavInfo, Cl A | 5,400 |
| 10,719 | ||
New Oriental Education & Technology Group ADR* | 539 |
| 58,341 | ||
NIO ADR* | 8,200 |
| 22,796 | ||
Pinduoduo ADR* | 500 |
| 18,015 | ||
SAIC Motor, Cl A | 5,557 |
| 16,072 | ||
Shenzhen Overseas Chinese Town, Cl A | 14,400 |
| 12,982 | ||
Shenzhou International Group Holdings | 3,000 |
| 31,893 | ||
Suning.com, Cl A | 10,300 |
| 13,121 | ||
Suofeiya Home Collection, Cl A | 2,500 |
| 6,342 | ||
TAL Education Group ADR* | 1,052 |
| 56,030 | ||
Trip.com Group ADR* | 1,565 |
| 36,699 | ||
Vipshop Holdings ADR* | 1,543 |
| 24,040 | ||
Yum China Holdings | 889 |
| 37,898 | ||
| 1,466,784 | ||||
Consumer Staples — 7.3% |
| ||||
Anhui Gujing Distillery, Cl A | 700 |
| 11,281 | ||
China Mengniu Dairy | 7,000 |
| 24,339 | ||
China Resources Beer Holdings | 8,000 |
| 36,537 | ||
Foshan Haitian Flavouring & Food, Cl A | 1,900 |
| 33,552 | ||
Guangdong Haid Group, Cl A | 3,700 |
| 20,984 | ||
Henan Shuanghui Investment & Development, Cl A | 3,700 |
| 20,514 | ||
Inner Mongolia Yili Industrial Group, Cl A | 6,000 |
| 25,276 | ||
Jiangsu Yanghe Brewery Joint-Stock, Cl A | 1,200 |
| 14,199 | ||
Kweichow Moutai, Cl A | 1,000 |
| 156,739 | ||
Luzhou Laojiao, Cl A | 1,800 |
| 18,703 | ||
Muyuan Foodstuff, Cl A | 2,900 |
| 50,000 | ||
New Hope Liuhe, Cl A | 10,800 |
| 47,889 |
The accompanying notes are an integral part of the financial statements.
59
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Staples (continued) |
| ||||
Shanxi Xinghuacun Fen Wine Factory, Cl A | 700 | $ | 8,906 | ||
Tingyi Cayman Islands Holding | 10,000 |
| 16,360 | ||
Want Want China Holdings | 18,000 |
| 13,051 | ||
Yonghui Superstores, Cl A | 12,600 |
| 18,203 | ||
| 516,533 | ||||
Energy — 2.4% |
| ||||
China Oilfield Services, Cl H | 12,000 |
| 9,274 | ||
China Petroleum & Chemical, Cl A | 22,200 |
| 13,875 | ||
China Petroleum & Chemical, Cl H | 74,500 |
| 36,717 | ||
China Shenhua Energy, Cl H | 9,000 |
| 17,139 | ||
CNOOC | 37,826 |
| 39,676 | ||
Offshore Oil Engineering, Cl A | 15,100 |
| 10,417 | ||
PetroChina, Cl A | 11,500 |
| 7,495 | ||
PetroChina, Cl H | 51,984 |
| 19,047 | ||
Shaanxi Coal Industry, Cl A | 9,600 |
| 10,131 | ||
Shanxi Lu’an Environmental Energy Development, Cl A | 6,000 |
| 4,935 | ||
| 168,706 | ||||
Financials — 18.0% |
| ||||
Agricultural Bank of China, Cl A | 21,000 |
| 9,984 | ||
Agricultural Bank of China, Cl H | 84,397 |
| 33,864 | ||
Anxin Trust, Cl A*(A)(B)(C) | 9,567 |
| 3,374 | ||
Avic Capital, Cl A | 18,100 |
| 10,035 | ||
Bank of Beijing, Cl A | 23,400 |
| 15,945 | ||
Bank of China, Cl A | 24,700 |
| 12,127 | ||
Bank of China, Cl H | 175,396 |
| 67,208 | ||
Bank of Communications, Cl A | 36,000 |
| 26,207 | ||
Bank of Communications, Cl H | 5,000 |
| 3,064 | ||
Bank of Hangzhou, Cl A | 11,500 |
| 12,493 | ||
Bank of Jiangsu, Cl A | 18,700 |
| 15,856 | ||
Bank of Nanjing, Cl A | 12,100 |
| 12,376 | ||
Bank of Ningbo, Cl A | 5,500 |
| 17,893 | ||
Bank of Shanghai, Cl A | 15,704 |
| 18,256 | ||
Changjiang Securities, Cl A | 17,500 |
| 15,776 | ||
China CITIC Bank, Cl H | 25,000 |
| 12,353 | ||
China Construction Bank, Cl A | 10,300 |
| 9,213 | ||
China Construction Bank, Cl H | 257,000 |
| 210,218 | ||
China Everbright Bank, Cl A | 45,000 |
| 22,918 | ||
China Life Insurance, Cl H | 18,483 |
| 36,199 | ||
China Merchants Bank, Cl A | 12,000 |
| 54,649 | ||
China Merchants Securities, Cl A* | 7,800 |
| 18,839 | ||
China Minsheng Banking, Cl A | 22,800 |
| 18,367 |
The accompanying notes are an integral part of the financial statements.
60
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Financials (continued) |
| ||||
China Pacific Insurance Group, Cl A | 4,300 | $ | 17,119 | ||
CITIC Securities, Cl A | 9,000 |
| 28,137 | ||
Everbright Securities, Cl A | 8,400 |
| 13,048 | ||
Founder Securities, Cl A | 14,400 |
| 14,586 | ||
GF Securities, Cl A | 4,300 |
| 8,299 | ||
Guosen Securities, Cl A | 9,600 |
| 15,033 | ||
Guotai Junan Securities, Cl A | 6,600 |
| 15,159 | ||
Haitong Securities, Cl A* | 10,200 |
| 18,477 | ||
Huatai Securities, Cl A | 4,900 |
| 11,911 | ||
Huaxia Bank, Cl A | 15,700 |
| 14,331 | ||
Hubei Biocause Pharmaceutical, Cl A | 10,300 |
| 8,603 | ||
Industrial & Commercial Bank of China, Cl A | 42,000 |
| 30,515 | ||
Industrial Bank, Cl A | 16,300 |
| 36,587 | ||
Industrial Securities, Cl A | 22,169 |
| 19,547 | ||
New China Life Insurance, Cl A | 1,800 |
| 10,107 | ||
New China Life Insurance, Cl H | 3,700 |
| 11,528 | ||
Noah Holdings ADR* | 371 |
| 9,594 | ||
Orient Securities, Cl A | 11,400 |
| 14,668 | ||
PICC Property & Casualty, Cl H | 15,510 |
| 15,008 | ||
Ping An Bank, Cl A | 16,891 |
| 30,502 | ||
Ping An Insurance Group of China, Cl A | 7,200 |
| 70,261 | ||
Ping An Insurance Group of China, Cl H | 15,000 |
| 147,370 | ||
Shanghai Pudong Development Bank, Cl A | 24,000 |
| 34,367 | ||
Shenwan Hongyuan Group, Cl A | 27,100 |
| 16,861 | ||
| 1,268,832 | ||||
Health Care — 6.0% |
| ||||
3SBio* | 6,000 |
| 6,247 | ||
Alibaba Health Information Technology* | 14,000 |
| 23,409 | ||
Beijing Tongrentang, Cl A | 3,044 |
| 10,887 | ||
Changchun High & New Technology Industry Group, Cl A | 500 |
| 38,656 | ||
China Medical System Holdings | 7,000 |
| 7,577 | ||
China Traditional Chinese Medicine Holdings | 14,000 |
| 6,376 | ||
CSPC Pharmaceutical Group | 12,000 |
| 24,028 | ||
Dong-E-E-Jiao, Cl E | 2,400 |
| 8,715 | ||
Genscript Biotech* | 10,000 |
| 16,204 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A | 1,900 |
| 8,438 | ||
Huadong Medicine, Cl A | 2,280 |
| 5,613 | ||
Hualan Biological Engineering, Cl A | 3,600 |
| 24,338 | ||
Hutchison China MediTech ADR* | 821 |
| 14,655 | ||
Jiangsu Hengrui Medicine, Cl A* | 3,600 |
| 46,741 |
The accompanying notes are an integral part of the financial statements.
61
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Health Care (continued) |
| ||||
Meinian Onehealth Healthcare Holdings, Cl A | 5,760 | $ | 9,597 | ||
Shanghai Fosun Pharmaceutical Group, Cl A | 3,100 |
| 14,371 | ||
Shanghai Fosun Pharmaceutical Group, Cl H | 2,500 |
| 8,225 | ||
Shanghai Pharmaceuticals Holding, Cl A | 6,000 |
| 16,515 | ||
Sichuan Kelun Pharmaceutical, Cl A | 1,900 |
| 5,546 | ||
Sino Biopharmaceutical | 18,000 |
| 23,734 | ||
Sinopharm Group, Cl H | 4,800 |
| 10,800 | ||
Tasly Pharmaceutical Group, Cl A | 3,000 |
| 5,849 | ||
Tonghua Dongbao Pharmaceutical, Cl A | 4,200 |
| 6,287 | ||
Wuxi Biologics Cayman* | 2,500 |
| 32,416 | ||
Yunnan Baiyao Group, Cl A | 1,200 |
| 14,483 | ||
Zai Lab ADR* | 135 |
| 6,950 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A | 600 |
| 10,522 | ||
Zhejiang NHU, Cl A | 3,600 |
| 13,865 | ||
| 421,044 | ||||
Industrials — 7.0% |
| ||||
51job ADR* | 113 |
| 6,937 | ||
AECC Aviation Power, Cl A | 3,100 |
| 9,272 | ||
AVIC Aircraft, Cl A | 4,300 |
| 9,621 | ||
AVIC Electromechanical Systems, Cl A | 6,000 |
| 6,103 | ||
AVIC Shenyang Aircraft, Cl A* | 1,900 |
| 7,674 | ||
Beijing Capital International Airport, Cl H | 10,000 |
| 6,374 | ||
China Communications Construction, Cl H | 24,000 |
| 16,721 | ||
China Conch Venture Holdings | 6,000 |
| 26,784 | ||
China Eastern Airlines, Cl A* | 20,500 |
| 11,944 | ||
China Gezhouba Group, Cl A | 8,500 |
| 8,370 | ||
China Merchants Port Holdings | 10,741 |
| 12,278 | ||
China Railway Construction, Cl A | 8,500 |
| 11,788 | ||
China Railway Construction, Cl H | 9,500 |
| 10,639 | ||
China Railway Group, Cl H | 18,000 |
| 9,591 | ||
China Southern Airlines, Cl A* | 7,900 |
| 5,740 | ||
China State Construction Engineering, Cl A | 33,000 |
| 24,535 | ||
China State Construction International Holdings | 12,000 |
| 8,887 | ||
CITIC | 12,780 |
| 13,372 | ||
COSCO SHIPPING Development, Cl A | 49,200 |
| 14,091 | ||
COSCO SHIPPING Holdings, Cl A* | 22,800 |
| 13,220 | ||
CRRC, Cl A | 16,800 |
| 15,548 | ||
CRRC, Cl H | 13,000 |
| 6,608 | ||
Daqin Railway, Cl A | 13,900 |
| 13,335 | ||
Fosun International | 9,000 |
| 10,404 |
The accompanying notes are an integral part of the financial statements.
62
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials (continued) |
| ||||
Guangzhou Baiyun International Airport, Cl A | 6,000 | $ | 10,623 | ||
Jiangsu Expressway, Cl H | 12,000 |
| 13,392 | ||
Metallurgical Corp of China, Cl A | 34,200 |
| 12,641 | ||
Ningbo Zhoushan Port, Cl A | 6,500 |
| 3,255 | ||
Power Construction Corp of China, Cl A | 15,700 |
| 8,727 | ||
Sany Heavy Industry, Cl A | 10,800 |
| 26,359 | ||
Shanghai Electric Group, Cl H | 38,000 |
| 10,050 | ||
Shanghai International Airport, Cl A | 1,200 |
| 10,295 | ||
Shanghai International Port Group, Cl A | 10,800 |
| 6,826 | ||
Suzhou Gold Mantis Construction Decoration, Cl A | 6,700 |
| 7,760 | ||
Weichai Power, Cl A | 13,488 |
| 22,759 | ||
Xinjiang Goldwind Science & Technology, Cl A | 8,449 |
| 11,324 | ||
Zhejiang Chint Electrics, Cl A* | 3,000 |
| 10,010 | ||
Zhejiang Sanhua Intelligent Controls, Cl A | 6,240 |
| 14,147 | ||
Zhengzhou Yutong Bus, Cl A | 5,444 |
| 10,514 | ||
Zhuzhou CRRC Times Electric, Cl H | 2,400 |
| 7,106 | ||
Zoomlion Heavy Industry Science and Technology, Cl A* | 13,700 |
| 10,998 | ||
ZTO Express Cayman ADR* | 780 |
| 20,654 | ||
| 497,276 | ||||
Information Technology — 5.0% |
| ||||
AAC Technologies Holdings | 3,000 |
| 15,559 | ||
Aisino, Cl A | 3,100 |
| 8,349 | ||
BOE Technology Group, Cl A | 39,100 |
| 20,465 | ||
DHC Software, Cl A | 7,900 |
| 14,400 | ||
GDS Holdings ADR* | 233 |
| 13,507 | ||
Hanergy Thin Film Power Group*(A)(B)(C) | 4,364 |
| — | ||
Hangzhou Hikvision Digital Technology, Cl A | 8,309 |
| 32,705 | ||
Hengtong Optic-electric, Cl A | 3,100 |
| 7,076 | ||
Iflytek, Cl A | 2,500 |
| 12,154 | ||
Kingdee International Software Group | 12,000 |
| 16,008 | ||
Kingsoft | 6,000 |
| 19,585 | ||
Lenovo Group | 14,000 |
| 7,514 | ||
LONGi Green Energy Technology, Cl A | 4,680 |
| 16,401 | ||
Luxshare Precision Industry, Cl A | 7,150 |
| 38,493 | ||
OFILM Group, Cl A* | 5,382 |
| 10,357 | ||
Sanan Optoelectronics, Cl A | 6,600 |
| 17,831 | ||
Sunny Optical Technology Group | 1,900 |
| 25,592 | ||
Tianma Microelectronics, Cl A | 6,000 |
| 11,284 | ||
TravelSky Technology, Cl H | 5,000 |
| 8,825 | ||
Unigroup Guoxin Microelectronics, Cl A | 1,300 |
| 9,152 |
The accompanying notes are an integral part of the financial statements.
63
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Information Technology (continued) |
| ||||
Yonyou Network Technology, Cl A | 3,250 | $ | 18,551 | ||
Zhejiang Dahua Technology, Cl A | 4,200 |
| 9,581 | ||
ZTE, Cl H | 6,000 |
| 18,617 | ||
| 352,006 | ||||
Materials — 2.8% |
| ||||
Angang Steel, Cl A | 19,470 |
| 7,389 | ||
Anhui Conch Cement, Cl A | 3,000 |
| 23,320 | ||
Anhui Conch Cement, Cl H | 3,000 |
| 20,843 | ||
Baoshan Iron & Steel, Cl A | 15,100 |
| 10,374 | ||
BBMG, Cl A | 23,400 |
| 10,828 | ||
China Molybdenum, Cl H | 39,000 |
| 10,919 | ||
China National Building Material, Cl H | 14,000 |
| 15,299 | ||
China Northern Rare Earth Group High-Tech, Cl A | 8,500 |
| 10,781 | ||
Ganfeng Lithium, Cl A | 1,800 |
| 10,221 | ||
Hesteel, Cl A | 26,400 |
| 7,933 | ||
Inner Mongolia BaoTou Steel Union, Cl A | 52,900 |
| 8,583 | ||
Rongsheng Petro Chemical, Cl A | 6,100 |
| 9,423 | ||
Shandong Hualu Hengsheng Chemical, Cl A | 3,600 |
| 7,974 | ||
Sinopec Shanghai Petrochemical, Cl A | 27,100 |
| 14,873 | ||
Tianqi Lithium, Cl A | 2,340 |
| 6,091 | ||
Zhejiang Huayou Cobalt, Cl A | 780 |
| 3,236 | ||
Zhejiang Longsheng Group, Cl A | 9,000 |
| 15,122 | ||
Zijin Mining Group, Cl A | 15,100 |
| 7,861 | ||
| 201,070 | ||||
Real Estate — 3.1% |
| ||||
China Fortune Land Development, Cl A | 3,600 |
| 10,610 | ||
China Merchants Shekou Industrial Zone Holdings, Cl A | 7,200 |
| 16,740 | ||
China Overseas Land & Investment | 12,839 |
| 39,838 | ||
China Resources Land | 10,214 |
| 42,169 | ||
China Vanke, Cl A | 7,143 |
| 25,848 | ||
China Vanke, Cl H | 3,700 |
| 12,197 | ||
Gemdale, Cl A | 8,400 |
| 16,697 | ||
Greenland Holdings, Cl A | 14,400 |
| 10,991 | ||
Poly Developments and Holdings Group, Cl A | 10,300 |
| 21,608 | ||
Seazen Holdings, Cl A | 2,400 |
| 10,588 | ||
Xinhu Zhongbao, Cl A | 25,300 |
| 10,779 | ||
| 218,065 | ||||
Utilities — 1.6% |
| ||||
China National Nuclear Power, Cl A | 19,300 |
| 11,980 | ||
China Yangtze Power, Cl A | 9,600 |
| 23,417 | ||
ENN Energy Holdings | 482 |
| 4,667 |
The accompanying notes are an integral part of the financial statements.
64
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Utilities (continued) |
| ||||
Guangdong Investment | 12,000 | $ | 23,130 | ||
Huadian Power International, Cl A | 20,400 |
| 9,929 | ||
Huaneng Power International, Cl H | 13,077 |
| 4,910 | ||
Hubei Energy Group, Cl A | 21,100 |
| 10,538 | ||
SDIC Power Holdings, Cl A | 10,800 |
| 12,098 | ||
Sichuan Chuantou Energy, Cl A | 10,900 |
| 14,147 | ||
| 114,816 | ||||
TOTAL CHINA |
| 6,348,668 | |||
HONG KONG — 10.0% |
| ||||
Communication Services — 0.2% |
| ||||
Alibaba Pictures Group* | 120,000 |
| 15,482 | ||
Consumer Discretionary — 0.8% |
| ||||
Brilliance China Automotive Holdings | 14,000 |
| 11,524 | ||
Haier Electronics Group | 6,000 |
| 15,985 | ||
Meituan Dianping, Cl B* | 2,500 |
| 30,206 | ||
| 57,715 | ||||
Consumer Staples — 0.2% |
| ||||
Sun Art Retail Group | 9,000 |
| 13,353 | ||
Energy — 0.1% |
| ||||
Yanzhou Coal Mining, Cl H | 12,000 |
| 9,413 | ||
| |||||
Financials — 4.1% |
| ||||
China Cinda Asset Management, Cl H | 4,504 |
| 854 | ||
China Galaxy Securities, Cl H | 30,500 |
| 14,796 | ||
China Huarong Asset Management, Cl H | 49,000 |
| 6,195 | ||
China International Capital, Cl H* | 5,200 |
| 8,413 | ||
China Merchants Bank, Cl H | 9,500 |
| 42,898 | ||
China Minsheng Banking, Cl H | 27,500 |
| 20,437 | ||
China Pacific Insurance Group, Cl H | 8,600 |
| 26,019 | ||
China Taiping Insurance Holdings | 5,000 |
| 8,192 | ||
CITIC Securities, Cl H | 6,000 |
| 10,992 | ||
Far East Horizon | 7,000 |
| 5,645 | ||
GF Securities, Cl H | 12,000 |
| 12,866 | ||
Huatai Securities, Cl H | 7,400 |
| 10,999 | ||
Industrial & Commercial Bank of China, Cl H | 171,441 |
| 117,451 | ||
People’s Insurance Group of China, Cl H | 19,452 |
| 6,425 | ||
| 292,182 | ||||
Industrials — 0.3% |
| ||||
China Everbright International | 12,323 |
| 7,075 | ||
Shenzhen International Holdings | 7,016 |
| 12,854 | ||
| 19,929 |
The accompanying notes are an integral part of the financial statements.
65
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Information Technology — 0.8% |
| ||||
Kingboard Holdings | 3,500 | $ | 8,200 | ||
Semiconductor Manufacturing International* | 15,000 |
| 23,610 | ||
Xiaomi, Cl B* | 18,000 |
| 24,245 | ||
| 56,055 | ||||
Materials — 0.4% |
| ||||
China Resources Cement Holdings | 12,000 |
| 14,321 | ||
Nine Dragons Paper Holdings | 12,000 |
| 10,946 | ||
| 25,267 | ||||
Real Estate — 2.3% |
| ||||
China Evergrande Group | 6,000 |
| 9,955 | ||
China Jinmao Holdings Group | 24,000 |
| 15,544 | ||
CIFI Holdings Group | 25,195 |
| 18,203 | ||
Country Garden Holdings | 25,612 |
| 30,995 | ||
Guangzhou R&F Properties | 5,200 |
| 6,790 | ||
KWG Group Holdings | 6,773 |
| 9,630 | ||
Longfor Group Holdings | 6,000 |
| 29,222 | ||
Shimao Property Holdings | 3,500 |
| 12,328 | ||
Sunac China Holdings | 6,000 |
| 27,790 | ||
| 160,457 | ||||
Utilities — 0.8% |
| ||||
Beijing Enterprises Water Group | 24,000 |
| 9,382 | ||
China Gas Holdings | 5,000 |
| 17,417 | ||
China Longyuan Power Group, Cl H | 12,000 |
| 6,595 | ||
China Resources Gas Group | 2,000 |
| 10,064 | ||
China Resources Power Holdings | 10,000 |
| 11,018 | ||
| 54,476 | ||||
TOTAL HONG KONG |
| 704,329 | |||
TOTAL COMMON STOCK |
| 7,052,997 | |||
TOTAL INVESTMENTS — 99.9% |
| 7,052,997 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
| 6,126 | |||
NET ASSETS — 100% | $ | 7,059,123 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2020 was $3,374 and represents 0.0% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2020 was $3,374 and represents 0.0% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
66
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Index ETF(concluded)
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3^ | Total | ||||||||
Common Stock |
|
|
|
| ||||||||
China |
|
|
|
| ||||||||
Communication Services | $ | 1,123,536 | $ | — | $ | — | $ | 1,123,536 | ||||
Consumer Discretionary |
| 1,466,784 |
| — |
| — |
| 1,466,784 | ||||
Consumer Staples |
| 516,533 |
| — |
| — |
| 516,533 | ||||
Energy |
| 168,706 |
| — |
| — |
| 168,706 | ||||
Financials |
| 1,265,458 |
| — |
| 3,374 |
| 1,268,832 | ||||
Health Care |
| 421,044 |
| — |
| — |
| 421,044 | ||||
Industrials |
| 497,276 |
| — |
| — |
| 497,276 | ||||
Information Technology |
| 352,006 |
| — |
| — |
| 352,006 | ||||
Materials |
| 201,070 |
| — |
| — |
| 201,070 | ||||
Real Estate |
| 218,065 |
| — |
| — |
| 218,065 | ||||
Utilities |
| 114,816 |
| — |
| — |
| 114,816 | ||||
Hong Kong |
| 704,329 |
| — |
| — |
| 704,329 | ||||
Total Common Stock |
| 7,049,623 |
| — |
| 3,374 |
| 7,052,997 | ||||
Total Investments in Securities | $ | 7,049,623 | $ | — | $ | 3,374 | $ | 7,052,997 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets.
For the year ended March31, 2020, the transfers in and out of Level 3 occurred due to a halt in trading of these securities. Transfers between levels are recognized at period end.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
67
Shares | Value | ||||
COMMON STOCK — 97.6%‡ |
| ||||
CHINA — 45.4% |
| ||||
Energy — 0.2% |
| ||||
Guanghui Energy, Cl A | 42,300 | $ | 15,397 | ||
Financials — 4.8% |
| ||||
Bank of Chengdu, Cl A | 22,500 |
| 23,902 | ||
Bank of Guiyang, Cl A | 20,027 |
| 21,642 | ||
Bank of Hangzhou, Cl A | 31,800 |
| 34,545 | ||
Bank of Jiangsu, Cl A | 71,455 |
| 60,586 | ||
Bank of Nanjing, Cl A | 52,291 |
| 53,484 | ||
Bank of Ningbo, Cl A | 34,646 |
| 112,714 | ||
Chongqing Rural Commercial Bank, Cl H | 49,425 |
| 20,278 | ||
Jiangsu Changshu Rural Commercial Bank, Cl A | 17,000 |
| 16,405 | ||
| 343,556 | ||||
Industrials — 22.6% |
| ||||
Beijing New Building Materials, Cl A | 10,208 |
| 33,988 | ||
China Communications Construction, Cl H | 88,000 |
| 61,309 | ||
China Conch Venture Holdings | 33,000 |
| 147,312 | ||
China Gezhouba Group, Cl A | 28,350 |
| 27,917 | ||
China Lesso Group Holdings | 22,000 |
| 29,008 | ||
China Railway Construction, Cl H | 39,000 |
| 43,675 | ||
China Railway Group, Cl H | 77,500 |
| 41,295 | ||
China Railway Hi-tech Industry, Cl A | 13,876 |
| 18,637 | ||
China State Construction Engineering, Cl A | 263,479 |
| 195,894 | ||
Contemporary Amperex Technology, Cl A | 13,900 |
| 236,086 | ||
CRRC, Cl H | 88,850 |
| 45,165 | ||
Daqin Railway, Cl A | 92,932 |
| 89,153 | ||
Dongfang Electric, Cl A | 17,300 |
| 20,599 | ||
Eve Energy, Cl A* | 6,100 |
| 50,009 | ||
Hefei Meiya Optoelectronic Technology, Cl A | 4,200 |
| 22,350 | ||
Jiangsu Expressway, Cl H | 24,000 |
| 26,784 | ||
Metallurgical Corp of China, Cl A | 110,500 |
| 40,844 |
The accompanying notes are an integral part of the financial statements.
68
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials (continued) |
| ||||
NARI Technology, Cl A | 26,900 | $ | 74,952 | ||
Ningbo Zhoushan Port, Cl A | 53,901 |
| 26,995 | ||
Shanghai Construction Group, Cl A | 55,300 |
| 25,043 | ||
Shanghai Electric Group, Cl H | 58,000 |
| 15,340 | ||
Shanghai International Port Group, Cl A | 52,810 |
| 33,378 | ||
Shenzhen Inovance Technology, Cl A | 10,600 |
| 38,657 | ||
Siasun Robot & Automation, Cl A* | 9,600 |
| 18,501 | ||
Suzhou Gold Mantis Construction Decoration, Cl A | 16,100 |
| 18,648 | ||
TBEA, Cl A | 22,375 |
| 23,043 | ||
XCMG Construction Machinery, Cl A | 47,148 |
| 33,591 | ||
Xinjiang Goldwind Science & Technology, Cl A | 21,344 |
| 28,606 | ||
Yangzijiang Shipbuilding Holdings | 46,300 |
| 26,990 | ||
Zhejiang Expressway, Cl H | 30,000 |
| 20,901 | ||
Zhejiang Weixing New Building Materials, Cl A | 9,200 |
| 14,355 | ||
Zhengzhou Yutong Bus, Cl A | 13,597 |
| 26,261 | ||
Zhuzhou CRRC Times Electric, Cl H | 11,300 |
| 33,459 | ||
Zoomlion Heavy Industry Science and Technology* | 27,200 |
| 19,792 | ||
| 1,608,537 | ||||
Materials — 5.7% |
| ||||
Anhui Conch Cement, Cl H | 24,500 |
| 170,216 | ||
BBMG, Cl A | 52,500 |
| 24,294 | ||
Beijing Oriental Yuhong Waterproof Technology, Cl A | 8,824 |
| 42,363 | ||
China National Building Material, Cl H | 77,000 |
| 84,144 | ||
China Northern Rare Earth Group High-Tech, Cl A | 22,624 |
| 28,694 | ||
Huaxin Cement, Cl A | 8,200 |
| 26,920 | ||
Yintai Gold, Cl A | 12,100 |
| 24,633 | ||
| 401,264 | ||||
Utilities — 12.1% |
| ||||
Beijing Enterprises Holdings | 10,000 |
| 36,705 | ||
CGN Power, Cl H | 216,875 |
| 49,805 | ||
China National Nuclear Power, Cl A | 81,042 |
| 50,307 | ||
China Yangtze Power, Cl A | 134,843 |
| 328,918 | ||
ENN Energy Holdings | 16,300 |
| 157,829 | ||
GD Power Development, Cl A | 121,900 |
| 34,911 | ||
Huadian Power International, Cl A | 42,142 |
| 20,512 | ||
Huaneng Power International, Cl H | 79,000 |
| 29,660 | ||
Kunlun Energy | 74,000 |
| 43,249 | ||
SDIC Power Holdings, Cl A | 42,306 |
| 47,390 | ||
Shenergy, Cl A | 30,419 |
| 22,659 | ||
Sichuan Chuantou Energy, Cl A | 26,884 |
| 34,893 | ||
| 856,838 | ||||
TOTAL CHINA |
| 3,225,592 |
The accompanying notes are an integral part of the financial statements.
69
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
HONG KONG — 6.9% |
| ||||
Industrials — 1.4% |
| ||||
China Communications Services, Cl H | 52,000 | $ | 37,838 | ||
Shenzhen International Holdings | 19,810 |
| 36,293 | ||
Sinotruk Hong Kong | 14,000 |
| 23,301 | ||
| 97,432 | ||||
Materials — 0.9% |
| ||||
China Resources Cement Holdings | 50,000 |
| 59,670 | ||
Utilities — 4.6% |
| ||||
China Gas Holdings | 37,800 |
| 131,675 | ||
China Longyuan Power Group, Cl H | 68,000 |
| 37,374 | ||
China Power International Development | 90,000 |
| 16,720 | ||
China Resources Gas Group | 19,500 |
| 98,118 | ||
China Resources Power Holdings | 40,635 |
| 44,772 | ||
| 328,659 | ||||
TOTAL HONG KONG |
| 485,761 | |||
INDIA — 1.7% |
| ||||
Industrials — 0.5% |
| ||||
AIA Engineering | 1,995 |
| 36,741 | ||
Materials — 1.2% |
| ||||
Hindalco Industries | 65,592 |
| 82,975 | ||
TOTAL INDIA |
| 119,716 | |||
INDONESIA — 2.9% |
| ||||
Energy — 1.1% |
| ||||
Adaro Energy | 873,200 |
| 53,003 | ||
Bukit Asam | 201,400 |
| 26,919 | ||
| 79,922 | ||||
Materials — 1.8% |
| ||||
Barito Pacific* | 1,594,700 |
| 70,886 | ||
Indah Kiat Pulp & Paper | 157,900 |
| 38,822 | ||
Pabrik Kertas Tjiwi Kimia | 83,800 |
| 20,500 | ||
| 130,208 | ||||
TOTAL INDONESIA |
| 210,130 | |||
ISRAEL — 1.8% |
| ||||
Materials — 1.8% |
| ||||
Israel Chemicals | 40,104 |
| 127,881 | ||
TOTAL ISRAEL |
| 127,881 | |||
JORDAN — 0.4% |
| ||||
Financials — 0.4% |
| ||||
Arab Bank(A)(B)(C) | 4,626 |
| 30,731 | ||
TOTAL JORDAN |
| 30,731 |
The accompanying notes are an integral part of the financial statements.
70
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
KUWAIT — 1.4% |
| ||||
Industrials — 1.4% |
| ||||
Agility Public Warehousing KSC | 53,815 | $ | 97,830 | ||
TOTAL KUWAIT |
| 97,830 | |||
MALAYSIA — 3.9% |
| ||||
Energy — 0.1% |
| ||||
Sapura Energy* | 418,000 |
| 7,741 | ||
Industrials — 0.8% |
| ||||
Sime Darby | 148,500 |
| 58,094 | ||
Materials — 3.0% |
| ||||
Petronas Chemicals Group | 134,200 |
| 156,877 | ||
Press Metal Aluminium Holdings | 77,500 |
| 59,022 | ||
| 215,899 | ||||
TOTAL MALAYSIA |
| 281,734 | |||
PHILIPPINES — 3.4% |
| ||||
Industrials — 3.4% |
| ||||
International Container Terminal Services | 53,380 |
| 78,401 | ||
JG Summit Holdings | 156,820 |
| 161,260 | ||
TOTAL PHILIPPINES |
| 239,661 | |||
POLAND — 1.7% |
| ||||
Materials — 1.7% |
| ||||
KGHM Polska Miedz* | 8,268 |
| 119,078 | ||
TOTAL POLAND |
| 119,078 | |||
RUSSIA — 10.5% |
| ||||
Energy — 4.9% |
| ||||
Rosneft | 65,840 |
| 264,889 | ||
Surgutneftegas | 193,700 |
| 84,041 | ||
| 348,930 | ||||
Materials — 5.6% |
| ||||
MMC Norilsk Nickel PJSC | 1,591 |
| 397,436 | ||
TOTAL RUSSIA |
| 746,366 | |||
SINGAPORE — 8.7% |
| ||||
Financials — 5.5% |
| ||||
Oversea-Chinese Banking | 64,112 |
| 389,035 | ||
Industrials — 3.2% |
| ||||
Hutchison Port Holdings Trust, Cl U | 101,800 |
| 10,486 | ||
Keppel | 28,600 |
| 106,257 | ||
Singapore Airlines | 10,700 |
| 43,135 | ||
Singapore Technologies Engineering | 30,700 |
| 67,271 | ||
| 227,149 | ||||
TOTAL SINGAPORE |
| 616,184 |
The accompanying notes are an integral part of the financial statements.
71
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
SOUTH AFRICA — 5.5% |
| ||||
Materials — 5.5% |
| ||||
Anglo American Platinum | 3,200 | $ | 135,129 | ||
Impala Platinum Holdings | 46,226 |
| 196,034 | ||
Kumba Iron Ore | 3,913 |
| 61,359 | ||
TOTAL SOUTH AFRICA |
| 392,522 | |||
THAILAND — 1.8% |
| ||||
Energy — 0.4% |
| ||||
IRPC | 460,500 |
| 30,029 | ||
Materials — 1.4% |
| ||||
PTT Global Chemical | 108,700 |
| 101,024 | ||
TOTAL THAILAND |
| 131,053 | |||
TURKEY — 0.7% |
| ||||
Industrials — 0.7% |
| ||||
Turk Hava Yollari AO* | 33,699 |
| 46,379 | ||
TOTAL TURKEY |
| 46,379 | |||
UNITED ARAB EMIRATES — 0.5% |
| ||||
Industrials — 0.5% |
| ||||
Air Arabia PJSC | 127,053 |
| 32,895 | ||
TOTAL UNITED ARAB EMIRATES |
| 32,895 | |||
UNITED KINGDOM — 0.4% |
| ||||
Energy — 0.4% |
| ||||
NAC Kazatomprom JSC GDR | 2,181 |
| 27,263 | ||
TOTAL UNITED KINGDOM |
| 27,263 | |||
TOTAL COMMON STOCK |
| 6,930,776 | |||
PREFERRED STOCK — 1.8% |
| ||||
RUSSIA — 1.8% |
| ||||
Energy — 1.8% |
| ||||
Surgutneftegas PJSC(D) | 174,300 |
| 83,877 | ||
Transneft(D) | 24 |
| 45,384 | ||
TOTAL PREFERRED STOCK |
| 129,261 | |||
TOTAL INVESTMENTS — 99.4% |
| 7,060,037 | |||
OTHER ASSETS LESS LIABILITIES — 0.6% |
| 45,114 | |||
NET ASSETS — 100% | $ | 7,105,151 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2020 was $30,731 and represents 0.4% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
The accompanying notes are an integral part of the financial statements.
72
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(continued)
(C) Security considered illiquid. The total value of such securities as of March 31, 2020 was $30,731 and represents 0.4% of Net Assets.
(D) Currently, no stated interest rate.
CL— Class
GDR— Global Depositary Receipt
JSC— Joint-Stock Company
PJSC— Public Joint-Stock Company
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stock |
|
|
|
| ||||||||
China | $ | 3,225,592 | $ | — | $ | — | $ | 3,225,592 | ||||
Hong Kong |
| 485,761 |
| — |
| — |
| 485,761 | ||||
India |
| 119,716 |
| — |
| — |
| 119,716 | ||||
Indonesia |
| 210,130 |
| — |
| — |
| 210,130 | ||||
Israel |
| 127,881 |
| — |
| — |
| 127,881 | ||||
Jordan |
|
|
|
| ||||||||
Financials |
| — |
| — |
| 30,731 |
| 30,731 | ||||
Kuwait |
| 97,830 |
| — |
| — |
| 97,830 | ||||
Malaysia |
| 281,734 |
| — |
| — |
| 281,734 | ||||
Philippines |
| 239,661 |
| — |
| — |
| 239,661 | ||||
Poland |
| 119,078 |
| — |
| — |
| 119,078 | ||||
Russia |
| 746,366 |
| — |
| — |
| 746,366 | ||||
Singapore |
| 616,184 |
| — |
| — |
| 616,184 | ||||
South Africa |
| 392,522 |
| — |
| — |
| 392,522 | ||||
Thailand |
| 131,053 |
| — |
| — |
| 131,053 | ||||
Turkey |
| 46,379 |
| — |
| — |
| 46,379 | ||||
United Arab Emirates |
| 32,895 |
| — |
| — |
| 32,895 | ||||
United Kingdom |
| 27,263 |
| — |
| — |
| 27,263 | ||||
Total Common Stock |
| 6,900,045 |
| — |
| 30,731 |
| 6,930,776 | ||||
Preferred Stock |
|
|
|
| ||||||||
Russia |
| 129,261 |
| — |
| — |
| 129,261 | ||||
Total Preferred Stock |
| 129,261 |
| — |
| — |
| 129,261 | ||||
Total Investments in Securities | $ | 7,029,306 | $ | — | $ | 30,731 | $ | 7,060,037 |
The accompanying notes are an integral part of the financial statements.
73
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI One Belt One Road Index ETF(concluded)
The following is a reconciliation of the investments in which significant unobservable inputs (Level 3) were used in determining value:
Common Stock | ||||
Beginning balance as of March 31, 2019 | $ | 293,832 |
| |
Accrued discounts/premiums |
| — |
| |
Realized gain/(loss)(1) |
| (236,812 | ) | |
Change in unrealized appreciation/(depreciation)(2) |
| 36,175 |
| |
Purchases |
| — |
| |
Sales |
| (93,195 | ) | |
Transfer into Level 3 |
| 30,731 |
| |
Transfer out of Level 3 |
| — |
| |
Ending balance as of March 31, 2020 | $ | 30,731 |
|
(1) Realized gain/(loss) from the sale of Level 3 securities is included on the Statement of Operations in Net Realized Gain (Loss) on Investments
(2) Change in unrealized appreciation/(depreciation) is included on the Statement of Operations in Net Change in Unrealized Appreciation (Depreciation) on Investments
For the year ended March31, 2020, the transfer in Level 3 occurred due to a halt in trading of these securities. Transfer between levels was recognized at period end.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
74
Shares | Value | ||||
COMMON STOCK — 98.7%‡ |
| ||||
ARGENTINA — 3.2% |
| ||||
Consumer Discretionary — 3.2% |
| ||||
MercadoLibre* | 1,473 | $ | 719,678 | ||
TOTAL ARGENTINA |
| 719,678 | |||
BRAZIL — 6.6% |
| ||||
Communication Services — 0.3% |
| ||||
Smiles Fidelidade | 29,300 |
| 69,993 | ||
Consumer Discretionary — 2.6% |
| ||||
B2W Cia Digital* | 53,170 |
| 490,531 | ||
CVC Brasil Operadora e Agencia de Viagens | 40,426 |
| 87,920 | ||
| 578,451 | ||||
Information Technology — 3.7% |
| ||||
Cielo | 461,780 |
| 399,759 | ||
Pagseguro Digital, Cl A* | 23,036 |
| 445,286 | ||
| 845,045 | ||||
TOTAL BRAZIL |
| 1,493,489 | |||
CHINA — 40.4% |
| ||||
Communication Services — 23.5% |
| ||||
58.com ADR* | 11,263 |
| 548,733 | ||
Autohome ADR* | 8,558 |
| 607,789 | ||
Baidu* | 7,887 |
| 794,931 | ||
China Telecom, Cl H | 1,758,000 |
| 533,009 | ||
iQIYI ADR* | 30,241 |
| 538,290 | ||
NetEase ADR | 2,715 |
| 871,407 | ||
Tencent Holdings | 17,975 |
| 881,716 | ||
Weibo ADR* | 15,075 |
| 499,133 | ||
| 5,275,008 |
The accompanying notes are an integral part of the financial statements.
75
Schedule of InvestmentsMarch 31, 2020
KraneShares Emerging Markets Consumer Technology Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Discretionary — 16.9% |
| ||||
Alibaba Group Holding ADR* | 4,277 | $ | 831,791 | ||
JD.com ADR* | 21,116 |
| 855,198 | ||
New Oriental Education & Technology Group ADR* | 6,878 |
| 744,475 | ||
TAL Education Group ADR* | 16,272 |
| 866,647 | ||
Trip.com Group ADR* | 21,721 |
| 509,357 | ||
| 3,807,468 | ||||
TOTAL CHINA |
| 9,082,476 | |||
GREECE — 4.8% |
| ||||
Communication Services — 2.6% |
| ||||
Hellenic Telecommunications Organization | 49,013 |
| 590,499 | ||
Consumer Discretionary — 2.2% |
| ||||
OPAP | 63,964 |
| 486,378 | ||
TOTAL GREECE |
| 1,076,877 | |||
INDIA — 0.5% |
| ||||
Consumer Discretionary — 0.5% |
| ||||
MakeMyTrip* | 10,039 |
| 120,016 | ||
TOTAL INDIA |
| 120,016 | |||
MALAYSIA — 3.7% |
| ||||
Communication Services — 3.0% |
| ||||
Telekom Malaysia | 775,800 |
| 673,438 | ||
Information Technology — 0.7% |
| ||||
My EG Services | 743,600 |
| 165,244 | ||
TOTAL MALAYSIA |
| 838,682 | |||
MEXICO — 2.1% |
| ||||
Communication Services — 2.1% |
| ||||
Grupo Televisa | 406,000 |
| 477,835 | ||
TOTAL MEXICO |
| 477,835 | |||
POLAND — 3.4% |
| ||||
Communication Services — 3.4% |
| ||||
Cyfrowy Polsat | 103,253 |
| 592,148 | ||
Orange Polska* | 118,716 |
| 169,635 | ||
TOTAL POLAND |
| 761,783 | |||
PUERTO RICO — 0.7% |
| ||||
Information Technology — 0.7% |
| ||||
EVERTEC | 6,993 |
| 158,951 | ||
TOTAL PUERTO RICO |
| 158,951 | |||
RUSSIA — 3.4% |
| ||||
Communication Services — 2.8% |
| ||||
Mail.Ru Group GDR* | 38,328 |
| 622,447 | ||
Information Technology — 0.6% |
| ||||
QIWI ADR | 11,791 |
| 126,281 | ||
TOTAL RUSSIA |
| 748,728 |
The accompanying notes are an integral part of the financial statements.
76
Schedule of InvestmentsMarch 31, 2020
KraneShares Emerging Markets Consumer Technology Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
SOUTH AFRICA — 3.6% |
| ||||
Consumer Discretionary — 3.6% |
| ||||
Naspers, Cl N | 5,705 | $ | 815,729 | ||
TOTAL SOUTH AFRICA |
| 815,729 | |||
SOUTH KOREA — 21.6% |
| ||||
Communication Services — 17.1% |
| ||||
Com2uSCorp(A) | 2,343 |
| 162,442 | ||
Kakao | 4,321 |
| 551,949 | ||
KT ADR | 65,137 |
| 506,766 | ||
NAVER | 6,085 |
| 849,756 | ||
NCSoft | 1,106 |
| 592,362 | ||
Netmarble*(A) | 8,223 |
| 629,551 | ||
NHN* | 3,014 |
| 169,597 | ||
Pearl Abyss* | 1,272 |
| 187,036 | ||
Studio Dragon* | 2,939 |
| 188,071 | ||
| 3,837,530 | ||||
Consumer Discretionary — 0.8% |
| ||||
DoubleUGames(A) | 4,983 |
| 177,650 | ||
Consumer Staples — 0.7% |
| ||||
Orion Holdings | 15,571 |
| 154,130 | ||
Financials — 0.7% |
| ||||
Daou Technology | 13,507 |
| 164,212 | ||
Health Care — 1.5% |
| ||||
Celltrion Pharm* | 5,006 |
| 328,549 | ||
Information Technology — 0.8% |
| ||||
Douzone Bizon | 2,567 |
| 170,803 | ||
TOTAL SOUTH KOREA |
| 4,832,874 | |||
TAIWAN — 2.1% |
| ||||
Information Technology — 2.1% |
| ||||
Wistron NeWeb | 84,000 |
| 145,271 | ||
WPG Holdings | 146,880 |
| 172,420 | ||
WT Microelectronics | 146,000 |
| 164,628 | ||
TOTAL TAIWAN |
| 482,319 | |||
THAILAND — 2.6% |
| ||||
Communication Services — 2.6% |
| ||||
Intouch Holdings, Cl F | 383,337 |
| 584,044 | ||
TOTAL THAILAND |
| 584,044 | |||
TOTAL COMMON STOCK |
| 22,193,481 |
The accompanying notes are an integral part of the financial statements.
77
Schedule of InvestmentsMarch 31, 2020
KraneShares Emerging Markets Consumer Technology Index ETF(concluded)
Shares | Value | |||||
PREFERRED STOCK — 0.6% |
|
| ||||
BRAZIL— 0.6% |
|
| ||||
Communication Services — 0.6% |
|
| ||||
Oi*(B) | 719,800 | $ | 129,066 |
| ||
TOTAL PREFERRED STOCK |
| 129,066 |
| |||
SHORT-TERM INVESTMENT(C)(D) — 3.2% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.430% | 735,292 |
| 735,292 |
| ||
TOTAL SHORT-TERM INVESTMENT |
| 735,292 |
| |||
TOTAL INVESTMENTS — 102.5% |
| 23,057,839 |
| |||
OTHER ASSETS LESS LIABILITIES — (2.5)% |
| (573,270 | ) | |||
NET ASSETS — 100% | $ | 22,484,569 |
|
‡ 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, 2020. The total market value of securities on loan at March 31, 2020 was $700,238.
(B) Currently, no stated interest rate.
(C) The rate shown is the 7-day effective yield as of March 31, 2020.
(D) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2020 was $735,292.
ADR — American Depositary Receipt
Cl — Class
GDR — Global Depositary Receipt
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
78
Shares | Value | ||||
COMMON STOCK — 95.2%‡ |
| ||||
CHINA — 41.8% |
| ||||
Consumer Discretionary — 12.8% |
| ||||
BAIC BluePark New Energy Technology, Cl A* | 14,500 | $ | 12,254 | ||
BYD, Cl A | 3,600 |
| 30,458 | ||
BYD, Cl H | 21,000 |
| 109,729 | ||
NIO ADR* | 21,291 |
| 59,189 | ||
| 211,630 | ||||
Industrials — 18.6% |
| ||||
China Conch Venture Holdings | 35,500 |
| 158,472 | ||
Contemporary Amperex Technology, Cl A | 4,000 |
| 67,938 | ||
Guoxuan High-Tech, Cl A | 4,600 |
| 11,344 | ||
Tus Environmental Science And Technology Development, Cl A | 5,500 |
| 6,270 | ||
Xinjiang Goldwind Science & Technology, Cl A | 14,135 |
| 18,944 | ||
Xinjiang Goldwind Science & Technology, Cl H | 53,204 |
| 46,334 | ||
| 309,302 | ||||
Information Technology — 9.9% |
| ||||
GCL System Integration Technology, Cl A* | 20,300 |
| 8,678 | ||
JinkoSolar Holding ADR* | 2,416 |
| 35,877 | ||
LONGi Green Energy Technology, Cl A | 15,130 |
| 53,022 | ||
Sanan Optoelectronics, Cl A | 17,900 |
| 48,360 | ||
Wuxi Lead Intelligent Equipment, Cl A | 3,400 |
| 17,968 | ||
| 163,905 | ||||
Utilities — 0.5% |
| ||||
Chengdu Xingrong Environment, Cl A | 12,000 |
| 7,737 | ||
TOTAL CHINA |
| 692,574 | |||
HONG KONG — 53.2% |
| ||||
Consumer Discretionary — 3.3% |
| ||||
Tianneng Power International | 45,885 |
| 34,158 | ||
Yadea Group Holdings | 72,694 |
| 20,446 | ||
| 54,604 |
The accompanying notes are an integral part of the financial statements.
79
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI China Environment Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Industrials — 5.8% |
| ||||
China Everbright International | 103,216 | $ | 59,259 | ||
China High Speed Transmission Equipment Group | 28,000 |
| 16,256 | ||
CT Environmental Group*(A)(B)(C) | 329,000 |
| 1,061 | ||
Dynagreen Environmental Protection Group, Cl H | 24,000 |
| 9,290 | ||
Fullshare Holdings* | 617,500 |
| 9,560 | ||
| 95,426 | ||||
Information Technology — 12.5% |
| ||||
China Railway Signal & Communication, Cl H | 100,000 |
| 50,446 | ||
GCL-Poly Energy Holdings* | 967,000 |
| 31,065 | ||
Wasion Holdings | 35,000 |
| 12,011 | ||
Xinyi Solar Holdings | 201,588 |
| 114,177 | ||
| 207,699 | ||||
Real Estate — 18.6% |
| ||||
China Merchants Land | 86,000 |
| 13,426 | ||
Shimao Property Holdings | 48,000 |
| 169,064 | ||
SOHO China | 142,500 |
| 73,540 | ||
Yuexiu Real Estate Investment Trust† | 108,000 |
| 53,227 | ||
| 309,257 | ||||
Utilities — 13.0% |
| ||||
Beijing Enterprises Water Group | 176,500 |
| 68,998 | ||
Canvest Environmental Protection Group | 42,000 |
| 19,616 | ||
China Datang Renewable Power, Cl H | 171,000 |
| 12,355 | ||
China Everbright Greentech | 16,000 |
| 6,750 | ||
China Longyuan Power Group, Cl H | 147,800 |
| 81,233 | ||
Concord New Energy Group | 410,000 |
| 15,604 | ||
GCL New Energy Holdings* | 398,000 |
| 5,546 | ||
Panda Green Energy Group* | 320,000 |
| 6,440 | ||
| 216,542 | ||||
TOTAL HONG KONG |
| 883,528 | |||
SINGAPORE — 0.2% |
| ||||
Utilities — 0.2% |
| ||||
China Everbright Water | 24,357 |
| 3,934 | ||
TOTAL SINGAPORE |
| 3,934 | |||
TOTAL COMMON STOCK |
| 1,580,036 | |||
TOTAL INVESTMENTS — 95.2% |
| 1,580,036 | |||
OTHER ASSETS LESS LIABILITIES — 4.8% |
| 80,485 | |||
NET ASSETS — 100% | $ | 1,660,521 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
80
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI China Environment Index ETF(concluded)
† Real Estate Investment Trust
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of March 31, 2020 was $1,061 and represents 0.1% of Net Assets.
(B) Level 3 security in accordance with fair value hierarchy.
(C) Security considered illiquid. The total value of such securities as of March 31, 2020 was $1,061 and represents 0.1% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
The following summarizes the market value of the Fund’s investments used as of March31, 2020, based on the inputs used to value them:
Investments in Securities | Level 1 | Level 2 | Level 3^ | Total | ||||||||
Common Stock |
|
|
|
| ||||||||
China | $ | 692,574 | $ | — | $ | — | $ | 692,574 | ||||
Hong Kong |
|
|
|
| ||||||||
Consumer Discretionary |
| 54,604 |
| — |
| — |
| 54,604 | ||||
Industrials |
| 94,365 |
| — |
| 1,061 |
| 95,426 | ||||
Information Technology |
| 207,699 |
| — |
| — |
| 207,699 | ||||
Real Estate |
| 309,257 |
| — |
| — |
| 309,257 | ||||
Utilities |
| 216,542 |
| — |
| — |
| 216,542 | ||||
Singapore |
| 3,934 |
| — |
| — |
| 3,934 | ||||
Total Common Stock |
| 1,578,975 |
| — |
| 1,061 |
| 1,580,036 | ||||
Total Investments in Securities | $ | 1,578,975 | $ | — | $ | 1,061 | $ | 1,580,036 |
^ A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets
For the year ended March31, 2020, the transfer in Level 3 occurred due to a halt in trading of these securities. Transfer between levels was recognized at period end.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
81
Shares | Value | ||||
COMMON STOCK — 95.9%‡ |
| ||||
AUSTRIA — 1.0% |
| ||||
Information Technology — 1.0% | |||||
ams*(A) | 16,669 | $ | 164,356 | ||
TOTAL AUSTRIA |
| 164,356 | |||
BELGIUM — 1.0% |
| ||||
Information Technology — 1.0% |
| ||||
Melexis | 3,152 |
| 166,701 | ||
TOTAL BELGIUM |
| 166,701 | |||
CANADA — 2.4% |
| ||||
Industrials — 0.9% |
| ||||
Ballard Power Systems* | 21,429 |
| 160,640 | ||
Materials — 1.5% |
| ||||
First Quantum Minerals | 51,183 |
| 258,549 | ||
TOTAL CANADA |
| 419,189 | |||
CHILE — 2.9% |
| ||||
Materials — 2.9% |
| ||||
Antofagasta | 30,908 |
| 296,249 | ||
Sociedad Quimica y Minera de Chile ADR | 8,785 |
| 198,102 | ||
TOTAL CHILE |
| 494,351 | |||
CHINA — 17.6% |
| ||||
Communication Services — 2.0% |
| ||||
Baidu* | 3,494 |
| 352,160 | ||
Consumer Discretionary — 11.0% |
| ||||
Aerospace Hi-Tech Holdings Grp, Cl A | 113,850 |
| 155,479 | ||
Changzhou Xingyu Automotive Lighting Systems, Cl A | 17,804 |
| 210,387 | ||
FAW CAR, Cl A | 131,600 |
| 161,896 | ||
Guangdong Dongfang Precision Science & Technology, Cl A* | 248,300 |
| 155,884 | ||
Ningbo Joyson Electronic, Cl A* | 75,600 |
| 200,407 | ||
NIO ADR*(A) | 57,101 |
| 158,741 | ||
SAIC Motor, Cl A | 183,800 |
| 531,573 |
The accompanying notes are an integral part of the financial statements.
82
Schedule of InvestmentsMarch 31, 2020
KraneShares Electric Vehicles and Future Mobility Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Consumer Discretionary (continued) |
| ||||
Shanghai Shenda, Cl A | 183,100 | $ | 130,450 | ||
Zotye Automobile, Cl A* | 487,226 |
| 173,219 | ||
| 1,878,036 | ||||
Industrials — 3.7% |
| ||||
Camel Group, Cl A | 130,605 |
| 155,144 | ||
Guoxuan High-Tech, Cl A | 65,389 |
| 161,254 | ||
Shenzhen Center Power Tech, Cl A* | 56,900 |
| 161,833 | ||
Zhejiang Narada Power Source, Cl A* | 100,700 |
| 150,449 | ||
| 628,680 | ||||
Information Technology — 0.9% |
| ||||
Shanghai Belling, Cl A | 65,200 |
| 150,486 | ||
TOTAL CHINA |
| 3,009,362 | |||
FRANCE — 2.5% |
| ||||
Consumer Discretionary — 1.7% |
| ||||
Valeo | 17,379 |
| 290,803 | ||
Information Technology — 0.8% |
| ||||
STMicroelectronics | 6,168 |
| 134,511 | ||
TOTAL FRANCE |
| 425,314 | |||
GERMANY — 10.4% |
| ||||
Consumer Discretionary — 8.5% |
| ||||
Bayerische Motoren Werke | 12,249 |
| 633,235 | ||
Daimler | 21,425 |
| 646,955 | ||
Hella GmbH & KGaA | 6,106 |
| 177,947 | ||
| 1,458,137 | ||||
Information Technology — 1.9% |
| ||||
Infineon Technologies | 22,264 |
| 328,084 | ||
TOTAL GERMANY |
| 1,786,221 | |||
HONG KONG — 1.6% |
| ||||
Consumer Discretionary — 1.6% |
| ||||
Brilliance China Automotive Holdings | 326,000 |
| 268,340 | ||
TOTAL HONG KONG |
| 268,340 | |||
JAPAN — 3.9% |
| ||||
Consumer Discretionary — 1.5% |
| ||||
Mitsubishi Motors | 88,600 |
| 251,138 | ||
Industrials — 1.0% |
| ||||
GS Yuasa | 13,400 |
| 180,479 | ||
Materials — 1.4% |
| ||||
Hitachi Chemical | 5,700 |
| 242,351 | ||
TOTAL JAPAN |
| 673,968 |
The accompanying notes are an integral part of the financial statements.
83
Schedule of InvestmentsMarch 31, 2020
KraneShares Electric Vehicles and Future Mobility Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
NETHERLANDS — 1.9% |
| ||||
Information Technology — 1.9% |
| ||||
NXP Semiconductors | 3,901 | $ | 323,510 | ||
TOTAL NETHERLANDS |
| 323,510 | |||
PERU — 1.9% |
| ||||
Materials — 1.9% |
| ||||
Southern Copper | 11,341 |
| 319,363 | ||
TOTAL PERU |
| 319,363 | |||
SOUTH KOREA — 3.1% |
| ||||
Consumer Discretionary — 1.3% |
| ||||
Kia Motors | 10,693 |
| 228,380 | ||
Information Technology — 1.8% |
| ||||
Samsung SDI | 1,528 |
| 301,872 | ||
TOTAL SOUTH KOREA |
| 530,252 | |||
SWEDEN — 1.3% |
| ||||
Industrials — 1.3% |
| ||||
PowerCell Sweden* | 10,553 |
| 216,222 | ||
TOTAL SWEDEN |
| 216,222 | |||
SWITZERLAND — 1.4% |
| ||||
Information Technology — 1.4% |
| ||||
STMicroelectronics | 10,895 |
| 237,596 | ||
TOTAL SWITZERLAND |
| 237,596 | |||
TAIWAN — 1.1% |
| ||||
Information Technology — 1.1% |
| ||||
Parade Technologies | 9,000 |
| 191,955 | ||
TOTAL TAIWAN |
| 191,955 | |||
UNITED KINGDOM — 1.0% |
| ||||
Information Technology — 1.0% |
| ||||
Dialog Semiconductor* | 6,468 |
| 174,870 | ||
TOTAL UNITED KINGDOM |
| 174,870 | |||
UNITED STATES — 40.9% |
| ||||
Communication Services — 3.5% |
| ||||
Alphabet, Cl A* | 512 |
| 594,918 | ||
Consumer Discretionary — 7.5% |
| ||||
Aptiv | 6,130 |
| 301,841 | ||
Gentherm* | 5,235 |
| 164,379 | ||
Tesla* | 1,233 |
| 646,092 | ||
Visteon* | 3,604 |
| 172,920 | ||
| 1,285,232 |
The accompanying notes are an integral part of the financial statements.
84
Schedule of InvestmentsMarch 31, 2020
KraneShares Electric Vehicles and Future Mobility Index ETF(continued)
Shares | Value | |||||
COMMON STOCK(continued) |
|
| ||||
Industrials — 3.4% |
|
| ||||
Bloom Energy, Cl A*(A) | 31,615 | $ | 165,346 |
| ||
EnerSys | 4,150 |
| 205,508 |
| ||
Plug Power*(A) | 60,825 |
| 215,321 |
| ||
| 586,175 |
| ||||
Information Technology — 23.1% |
|
| ||||
Advanced Micro Devices* | 14,167 |
| 644,315 |
| ||
Ambarella* | 4,481 |
| 217,597 |
| ||
Analog Devices | 6,590 |
| 590,794 |
| ||
Cirrus Logic* | 3,274 |
| 214,873 |
| ||
Maxim Integrated Products | 7,373 |
| 358,402 |
| ||
MaxLinear, Cl A* | 16,507 |
| 192,637 |
| ||
NVIDIA | 2,793 |
| 736,234 |
| ||
Skyworks Solutions | 4,615 |
| 412,489 |
| ||
Texas Instruments | 5,866 |
| 586,189 |
| ||
| 3,953,530 |
| ||||
Materials — 3.4% |
|
| ||||
Albemarle | 3,987 |
| 224,747 |
| ||
FMC | 4,413 |
| 360,498 |
| ||
| 585,245 |
| ||||
TOTAL UNITED STATES |
| 7,005,100 |
| |||
TOTAL COMMON STOCK |
| 16,406,670 |
| |||
PREFERRED STOCK — 3.5% |
|
| ||||
GERMANY — 3.5% |
|
| ||||
Consumer Discretionary — 3.5% |
|
| ||||
Volkswagen(B) | 5,042 |
| 591,074 |
| ||
TOTAL PREFERRED STOCK |
| 591,074 |
| |||
SHORT-TERM INVESTMENT(C)(D) — 3.7% |
|
| ||||
Invesco Government & Agency Portfolio, Cl Institutional, 0.430% | 640,629 |
| 640,629 |
| ||
TOTAL SHORT-TERM INVESTMENT |
| 640,629 |
| |||
TOTAL INVESTMENTS — 103.1% |
| 17,638,373 |
| |||
OTHER ASSETS LESS LIABILITIES — (3.1)% |
| (522,800 | ) | |||
NET ASSETS – 100% | $ | 17,115,573 |
|
‡ 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, 2020. The total market value of securities on loan at March 31, 2020 was $616,897.
(B) Currently, no stated interest rate.
(C) The rate shown is the 7-day effective yield as of March 31, 2020.
The accompanying notes are an integral part of the financial statements.
85
Schedule of InvestmentsMarch 31, 2020
KraneShares Electric Vehicles and Future Mobility Index ETF(concluded)
(D) This security was purchased with cash collateral held from securities on loan. The total value of such security as of March 31, 2020 was $640,629.
ADR — American Depositary Receipt
Cl — Class
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
86
Shares | Value | ||||
COMMON STOCK — 100.0%‡ |
| ||||
CHINA — 95.4% |
| ||||
Health Care — 95.4% |
| ||||
3SBio* | 256,500 | $ | 267,060 | ||
Aier Eye Hospital Group, Cl A | 157,105 |
| 872,830 | ||
Alibaba Health Information Technology* | 574,000 |
| 959,765 | ||
Asymchem Laboratories Tianjin, Cl A | 12,000 |
| 290,663 | ||
Autobio Diagnostics, Cl A | 14,100 |
| 231,724 | ||
Beijing SL Pharmaceutical, Cl A | 53,627 |
| 90,410 | ||
Beijing Tiantan Biological Products, Cl A | 53,923 |
| 276,758 | ||
Beijing Tongrentang, Cl A | 71,468 |
| 255,595 | ||
Betta Pharmaceuticals, Cl A | 19,500 |
| 193,124 | ||
BGI Genomics, Cl A | 21,200 |
| 253,328 | ||
Changchun High & New Technology Industry Group, Cl A | 8,600 |
| 664,879 | ||
Chengdu Kanghong Pharmaceutical Group, Cl A | 37,380 |
| 207,673 | ||
China Medical System Holdings | 239,000 |
| 258,707 | ||
China National Accord Medicines, Cl A | 19,232 |
| 108,394 | ||
China National Medicines, Cl A | 38,855 |
| 155,021 | ||
China Reform Health Management and Services Group, Cl A* | 35,500 |
| 62,905 | ||
China Resources Double Crane Pharmaceutical, Cl A | 54,307 |
| 97,073 | ||
China Resources Pharmaceutical Group | 273,500 |
| 164,081 | ||
China Resources Sanjiu Medical & Pharmaceutical, Cl A | 50,578 |
| 198,724 | ||
China Traditional Chinese Medicine Holdings | 390,000 |
| 177,618 | ||
Chongqing Zhifei Biological Products, Cl A | 67,800 |
| 644,599 | ||
CSPC Pharmaceutical Group | 808,000 |
| 1,617,896 | ||
Dong-E-E-Jiao, Cl A | 3,600 |
| 13,073 | ||
Dong-E-E-Jiao, Cl E | 30,114 |
| 109,356 | ||
Genscript Biotech* | 160,000 |
| 259,273 | ||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A | 73,246 |
| 325,299 | ||
Guangzhou Kingmed Diagnostics Group, Cl A | 23,700 |
| 188,210 | ||
Guizhou Bailing Group Pharmaceutical, Cl A | 73,600 |
| 86,598 | ||
Hangzhou Tigermed Consulting, Cl A | 38,550 |
| 348,343 | ||
Huadong Medicine, Cl A | 90,922 |
| 223,835 | ||
Hualan Biological Engineering, Cl A | 71,964 |
| 486,515 | ||
Hubei Jumpcan Pharmaceutical, Cl A* | 42,375 |
| 131,043 | ||
Hutchison China MediTech ADR* | 10,619 |
| 189,549 | ||
Jafron Biomedical, Cl A | 21,200 |
| 283,147 |
The accompanying notes are an integral part of the financial statements.
87
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Health Care Index ETF(continued)
Shares | Value | ||||
COMMON STOCK(continued) |
| ||||
Health Care (continued) |
| ||||
Jiangsu Hengrui Medicine, Cl A* | 227,709 | $ | 2,956,470 | ||
Jiangsu Yuyue Medical Equipment & Supply, Cl A | 50,810 |
| 260,064 | ||
Jilin Aodong Pharmaceutical Group, Cl A | 59,331 |
| 132,001 | ||
Jinyu Bio-Technology, Cl A | 58,068 |
| 174,658 | ||
Joincare Pharmaceutical Group Industry, Cl A | 95,648 |
| 154,641 | ||
Jointown Pharmaceutical Group, Cl A | 93,150 |
| 223,407 | ||
Lepu Medical Technology Beijing, Cl A | 90,600 |
| 462,957 | ||
Livzon Pharmaceutical Group, Cl A | 31,440 |
| 174,228 | ||
Luye Pharma Group | 194,500 |
| 94,855 | ||
Meinian Onehealth Healthcare Holdings, Cl A | 203,417 |
| 338,923 | ||
Nanjing King-Friend Biochemical Pharmaceutical, Cl A | 29,500 |
| 210,090 | ||
Ovctek China, Cl A | 19,800 |
| 154,306 | ||
Shandong Buchang Pharmaceuticals, Cl A | 59,069 |
| 167,752 | ||
Shandong Weigao Group Medical Polymer, Cl H | 352,000 |
| 445,058 | ||
Shanghai Fosun Pharmaceutical Group, Cl A | 104,059 |
| 482,405 | ||
Shanghai Fosun Pharmaceutical Group, Cl H | 93,000 |
| 305,964 | ||
Shanghai Pharmaceuticals Holding, Cl A | 99,994 |
| 275,230 | ||
Shanghai Pharmaceuticals Holding, Cl H | 143,200 |
| 243,504 | ||
Shanghai RAAS Blood Products, Cl A* | 255,600 |
| 280,546 | ||
Shenzhen Hepalink Pharmaceutical Group, Cl A | 51,328 |
| 149,171 | ||
Shenzhen Kangtai Biological Products, Cl A | 34,900 |
| 564,254 | ||
Shenzhen Mindray Bio-Medical Electronics, Cl A | 53,153 |
| 1,962,437 | ||
Shenzhen Salubris Pharmaceuticals, Cl A | 45,257 |
| 113,267 | ||
Shijiazhuang Yiling Pharmaceutical, Cl A | 62,172 |
| 196,913 | ||
Sichuan Kelun Pharmaceutical, Cl A | 76,200 |
| 222,423 | ||
Sino Biopharmaceutical | 1,158,500 |
| 1,527,548 | ||
Sinopharm Group, Cl H | 230,400 |
| 518,414 | ||
SSY Group | 256,000 |
| 200,152 | ||
Tasly Pharmaceutical Group, Cl A | 78,992 |
| 154,013 | ||
Tonghua Dongbao Pharmaceutical, Cl A | 106,191 |
| 158,952 | ||
Topchoice Medical, Cl A* | 16,400 |
| 249,371 | ||
Walvax Biotechnology, Cl A | 79,400 |
| 354,646 | ||
Winning Health Technology Group, Cl A | 77,400 |
| 228,983 | ||
WuXi AppTec, Cl A | 76,348 |
| 974,681 | ||
WuXi AppTec, Cl H | 26,800 |
| 329,861 | ||
Wuxi Biologics Cayman* | 135,000 |
| 1,750,442 | ||
Yifan Pharmaceutical, Cl A | 59,739 |
| 137,376 | ||
Yunnan Baiyao Group, Cl A | 66,665 |
| 804,604 | ||
Zai Lab ADR* | 6,655 |
| 342,599 | ||
Zhangzhou Pientzehuang Pharmaceutical, Cl A | 30,681 |
| 538,028 | ||
Zhejiang Conba Pharmaceutical, Cl A | 137,013 |
| 99,548 | ||
Zhejiang Huahai Pharmaceutical, Cl A* | 66,916 |
| 242,620 |
The accompanying notes are an integral part of the financial statements.
88
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI All China Health Care Index ETF(concluded)
Shares | Value | |||||
COMMON STOCK(continued) |
|
| ||||
Health Care (continued) |
|
| ||||
Zhejiang NHU, Cl A | 110,433 | $ | 425,330 |
| ||
Zhejiang Wolwo Bio-Pharmaceutical, Cl A | 26,700 |
| 167,963 |
| ||
TOTAL CHINA |
| 30,643,723 |
| |||
HONG KONG — 4.6% |
|
| ||||
Health Care — 4.6% |
|
| ||||
Hansoh Pharmaceutical Group* | 90,000 |
| 305,384 |
| ||
Innovent Biologics* | 158,000 |
| 666,581 |
| ||
Ping An Healthcare and Technology* | 53,500 |
| 499,045 |
| ||
TOTAL HONG KONG |
| 1,471,010 |
| |||
TOTAL COMMON STOCK |
| 32,114,733 |
| |||
TOTAL INVESTMENTS — 100.0% |
| 32,114,733 |
| |||
OTHER ASSETS LESS LIABILITIES — (0.0)% |
| (5,127 | ) | |||
NET ASSETS — 100% | $ | 32,109,606 |
|
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
ADR — American Depositary Receipt
Cl — Class
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
89
Face | Value | |||||
CORPORATE OBLIGATIONS — 97.3% | ||||||
CHINA— 65.7% | ||||||
Consumer Discretionary — 2.6% | ||||||
CAR | ||||||
8.875%, 05/10/2022 | $ | 200,000 | $ | 119,996 | ||
Golden Eagle Retail Group | ||||||
4.625%, 05/21/2023 | 200,000 | 176,000 | ||||
295,996 | ||||||
Financials — 33.0% | ||||||
CFLD Cayman Investment | ||||||
8.600%, 04/08/2024 | 200,000 | 161,000 | ||||
China Mengniu Dairy | ||||||
3.000%, 07/18/2024 | 200,000 | 209,376 | ||||
China Reinsurance Finance | ||||||
3.375%, 03/09/2022 | 400,000 | 399,528 | ||||
Chouzhou International Investment | ||||||
4.500%, 05/30/2022 | 200,000 | 200,992 | ||||
Country Garden Holdings | ||||||
6.500%, 04/08/2024 | 200,000 | 196,024 | ||||
Fortune Star BVI | ||||||
5.950%, 01/29/2023 | 200,000 | 177,009 | ||||
GLP China Holdings | ||||||
4.974%, 02/26/2024 | 200,000 | 200,431 | ||||
Greenland Global Investment | ||||||
5.875%, 07/03/2024 | 200,000 | 163,952 | ||||
Guotai Junan Holdings | ||||||
3.875%, 03/11/2022 | 200,000 | 208,323 | ||||
Kaisa Group Holdings | ||||||
9.375%, 06/30/2024 | 400,000 | 305,995 | ||||
Kunming Traffic Investment | ||||||
6.200%, 06/27/2022 | 300,000 | 299,987 |
The accompanying notes are an integral part of the financial statements.
90
Schedule of InvestmentsMarch 31, 2020
KraneShares CCBS China Corporate High Yield Bond USD Index ETF(continued)
Face | Value | |||||
CORPORATE OBLIGATIONS (continued) |
|
| ||||
Financials (continued) |
|
| ||||
KWG Group Holdings |
|
| ||||
5.875%, 11/10/2024 | $ | 200,000 | $ | 160,637 | ||
Poly Real Estate Finance |
|
| ||||
4.750%, 09/17/2023 |
| 200,000 |
| 215,943 | ||
Ronshine China Holdings |
|
| ||||
8.750%, 10/25/2022 |
| 200,000 |
| 186,491 | ||
Sino-Ocean Land Treasure IV |
|
| ||||
5.250%, 04/30/2022 |
| 200,000 |
| 201,356 | ||
Westwood Group Holdings |
|
| ||||
5.375%, 10/19/2023 |
| 200,000 |
| 212,826 | ||
Yankuang Group Cayman |
|
| ||||
6.000%, 01/30/2022 |
| 200,000 |
| 193,875 | ||
|
| 3,693,745 | ||||
Industrials — 1.7% |
|
| ||||
Lee & Man Paper Manufacturing |
|
| ||||
5.500%, VAR US Treas Yield Curve Rate T Note Const Mat 5 |
| 200,000 |
| 195,996 | ||
Materials — 2.2% |
|
| ||||
Chinalco Capital Holdings |
|
| ||||
4.250%, 04/21/2022 |
| 250,000 |
| 242,543 | ||
Real Estate — 23.0% |
|
| ||||
Agile Group Holdings |
|
| ||||
8.375%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+11.254%‡ |
| 200,000 |
| 171,020 | ||
Chengdu Economic & Technological Development Zone |
|
| ||||
7.500%, 02/12/2022 |
| 200,000 |
| 188,015 | ||
China Aoyuan Group |
|
| ||||
7.950%, 09/07/2021 |
| 200,000 |
| 195,000 | ||
China Evergrande Group |
|
| ||||
7.500%, 06/28/2023 |
| 400,000 |
| 282,000 | ||
Easy Tactic |
|
| ||||
8.625%, 02/27/2024 |
| 200,000 |
| 168,015 | ||
Franshion Brilliant |
|
| ||||
5.750%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.859%‡ |
| 200,000 |
| 174,100 | ||
Logan Property Holdings |
|
| ||||
5.250%, 02/23/2023 |
| 200,000 |
| 183,988 | ||
Shimao Property Holdings |
|
| ||||
6.125%, 02/21/2024 |
| 300,000 |
| 295,489 |
The accompanying notes are an integral part of the financial statements.
91
Schedule of InvestmentsMarch 31, 2020
KraneShares CCBS China Corporate High Yield Bond USD Index ETF(continued)
Face | Value | |||||
CORPORATE OBLIGATIONS (continued) |
|
| ||||
Real Estate (continued) |
|
| ||||
Shui On Development Holding |
|
| ||||
6.400%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+7.627%‡ | $ | 200,000 | $ | 167,300 | ||
Sunac China Holdings |
|
| ||||
8.350%, 04/19/2023 |
| 200,000 |
| 187,000 | ||
Times China Holdings |
|
| ||||
6.600%, 03/02/2023 |
| 200,000 |
| 181,988 | ||
Well Hope Development |
|
| ||||
3.875%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+6.927%‡ |
| 200,000 |
| 193,097 | ||
Yuzhou Properties |
|
| ||||
8.500%, 02/04/2023 |
| 200,000 |
| 184,000 | ||
|
| 2,571,012 | ||||
Utilities — 3.2% |
|
| ||||
Lenovo Group |
|
| ||||
4.750%, 03/29/2023 |
| 200,000 |
| 206,831 | ||
Nuoxi Capital |
|
| ||||
5.350%, 01/24/2023 |
| 200,000 |
| 40,400 | ||
Tsinghua Unic |
|
| ||||
5.375%, 01/31/2023 |
| 200,000 |
| 108,600 | ||
|
| 355,831 | ||||
TOTAL CHINA |
|
| 7,355,123 | |||
HONG KONG — 31.6% |
|
| ||||
Consumer Discretionary — 1.0% |
|
| ||||
Li & Fung |
|
| ||||
5.250%‡ |
| 200,000 |
| 118,100 | ||
Financials — 15.8% |
|
| ||||
AIA Group |
|
| ||||
3.125%, 03/13/2023 |
| 200,000 |
| 206,922 | ||
Bank of East Asia |
|
| ||||
5.875%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.257%‡ |
| 250,000 |
| 247,499 | ||
China CITIC Bank International |
|
| ||||
7.100%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.151%‡ |
| 200,000 |
| 213,989 | ||
CMB Wing Lung Bank |
|
| ||||
6.500%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.948%‡ |
| 250,000 |
| 247,490 | ||
FWD Group |
|
| ||||
0.000%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+4.865%‡ |
| 300,000 |
| 228,147 |
The accompanying notes are an integral part of the financial statements.
92
Schedule of InvestmentsMarch 31, 2020
KraneShares CCBS China Corporate High Yield Bond USD Index ETF(concluded)
Face | Value | |||||
CORPORATE OBLIGATIONS (continued) |
|
| ||||
Financials (continued) |
|
| ||||
Industrial & Commercial Bank of China Asia |
|
| ||||
4.250%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.135%‡ | $ | 300,000 | $ | 297,752 | ||
Nanyang Commercial Bank |
|
| ||||
5.000%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+3.205%‡ |
| 350,000 |
| 322,329 | ||
|
| 1,764,128 | ||||
Industrials — 3.3% |
|
| ||||
Celestial Miles |
|
| ||||
5.750%, VAR US Treas Yield Curve Rate T Note Const Mat 5 Yr+8.205%‡ |
| 200,000 |
| 190,021 | ||
China Water Affairs Group |
|
| ||||
5.250%, 02/07/2022 |
| 200,000 |
| 180,350 | ||
|
| 370,371 | ||||
Real Estate — 7.2% |
|
| ||||
HLP Finance |
|
| ||||
4.750%, 06/25/2022 |
| 200,000 |
| 214,031 | ||
Metropolitan Light |
|
| ||||
5.500%, 11/21/2022 |
| 161,000 |
| 150,412 | ||
Nan Fung Treasury |
|
| ||||
4.500%, 09/20/2022 |
| 200,000 |
| 210,354 | ||
NWD Finance BVI |
|
| ||||
5.750%‡ |
| 250,000 |
| 227,625 | ||
|
| 802,422 | ||||
Utilities — 4.3% |
|
| ||||
OVPH |
|
| ||||
5.875%‡ |
| 500,000 |
| 485,940 | ||
TOTAL HONG KONG |
|
| 3,540,961 | |||
TOTAL CORPORATE OBLIGATIONS |
|
| 10,896,084 | |||
TOTAL INVESTMENTS — 97.3% |
|
| 10,896,084 | |||
OTHER ASSETS LESS LIABILITIES — 2.7% |
|
| 300,942 | |||
NET ASSETS — 100% |
| $ | 11,197,026 |
‡ Perpetual security with no stated maturity date.
VAR — Variable Rate
As of March31, 2020, all of the Fund’s investments were considered Level 2 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year endedMarch31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
93
Shares | Value | ||||
COMMON STOCK — 99.9%‡ | |||||
BRAZIL — 5.8% | |||||
Health Care — 5.8% | |||||
Fleury | 1,300 | $ | 5,008 | ||
Hapvida Participacoes e Investimentos | 3,100 | 25,384 | |||
Notre Dame Intermedica Participacoes | 2,200 | 18,943 | |||
Odontoprev | 2,200 | 6,066 | |||
Qualicorp Consultoria e Corretora de Seguros | 1,100 | 5,073 | |||
TOTAL BRAZIL | 60,474 | ||||
CHINA — 38.6% | |||||
Health Care — 38.6% | |||||
3SBio* | 4,500 | 4,685 | |||
Aier Eye Hospital Group, Cl A | 4,916 | 27,312 | |||
Autobio Diagnostics, Cl A | 600 | 9,861 | |||
Beijing Tongrentang, Cl A | 2,200 | 7,868 | |||
Changchun High & New Technology Industry Group, Cl A | 300 | 23,194 | |||
China Biologic Products Holdings* | 62 | 6,692 | |||
China Medical System Holdings | 4,000 | 4,330 | |||
Chongqing Zhifei Biological Products, Cl A | 2,613 | 24,843 | |||
Genscript Biotech* | 2,000 | 3,241 | |||
Hangzhou Tigermed Consulting, Cl A | 1,200 | 10,843 | |||
Huadong Medicine, Cl A | 2,840 | 6,991 | |||
Hualan Biological Engineering, Cl A | 2,300 | 15,549 | |||
Jiangsu Hengrui Medicine, Cl A* | 3,690 | 47,904 | |||
Lepu Medical Technology Beijing, Cl A | 2,622 | 13,398 | |||
Luye Pharma Group | 5,500 | 2,682 | |||
Shandong Weigao Group Medical Polymer, Cl H | 8,000 | 10,115 | |||
Shanghai RAAS Blood Products, Cl A* | 8,600 | 9,439 | |||
Shenzhen Kangtai Biological Products, Cl A | 900 | 14,551 | |||
Shenzhen Mindray Bio-Medical Electronics, Cl A | 1,800 | 66,457 | |||
Topchoice Medical, Cl A* | 500 | 7,603 | |||
Walvax Biotechnology, Cl A | 2,400 | 10,720 | |||
WuXi AppTec, Cl H | 280 | 3,446 | |||
Wuxi Biologics Cayman* | 2,000 | 25,933 | |||
Yunnan Baiyao Group, Cl A | 1,800 | 21,725 | |||
Zai Lab ADR* | 100 | 5,148 | |||
Zhangzhou Pientzehuang Pharmaceutical, Cl A | 1,000 | 17,536 | |||
TOTAL CHINA | 402,066 |
The accompanying notes are an integral part of the financial statements.
94
Schedule of InvestmentsMarch 31, 2020
KraneShares Emerging Markets Healthcare Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
HONG KONG — 5.7% |
| ||||
Health Care — 5.7% |
| ||||
Hansoh Pharmaceutical Group* | 8,000 | $ | 27,145 | ||
Innovent Biologics* | 2,000 |
| 8,438 | ||
Jinxin Fertility Group | 2,000 |
| 2,219 | ||
Microport Scientific | 3,000 |
| 6,789 | ||
Ping An Healthcare and Technology* | 1,600 |
| 14,925 | ||
TOTAL HONG KONG |
| 59,516 | |||
HUNGARY — 1.3% |
| ||||
Health Care — 1.3% |
| ||||
Richter Gedeon Nyrt | 731 |
| 13,731 | ||
TOTAL HUNGARY |
| 13,731 | |||
INDIA — 8.7% |
| ||||
Health Care — 8.7% |
| ||||
Apollo Hospitals Enterprise | 553 |
| 8,326 | ||
Aurobindo Pharma | 2,267 |
| 12,381 | ||
Biocon | 4,679 |
| 16,733 | ||
Fortis Healthcare* | 3,315 |
| 5,528 | ||
Piramal Enterprises | 825 |
| 10,246 | ||
Sun Pharmaceutical Industries | 8,034 |
| 37,413 | ||
TOTAL INDIA |
| 90,627 | |||
INDONESIA — 2.0% |
| ||||
Health Care — 2.0% |
| ||||
Kalbe Farma | 190,300 |
| 14,001 | ||
Mitra Keluarga Karyasehat | 55,500 |
| 7,316 | ||
TOTAL INDONESIA |
| 21,317 | |||
MALAYSIA — 7.5% |
| ||||
Health Care — 7.5% |
| ||||
Hartalega Holdings | 13,500 |
| 21,500 | ||
IHH Healthcare | 35,200 |
| 42,044 | ||
Top Glove | 10,100 |
| 15,080 | ||
TOTAL MALAYSIA |
| 78,624 | |||
MEXICO — 0.3% |
| ||||
Health Care — 0.3% |
| ||||
Genomma Lab Internacional, Cl B* | 4,200 |
| 3,402 | ||
TOTAL MEXICO |
| 3,402 | |||
SOUTH AFRICA — 1.9% |
| ||||
Health Care — 1.9% |
| ||||
Aspen Pharmacare Holdings* | 1,789 |
| 9,260 | ||
Life Healthcare Group Holdings | 5,659 |
| 5,849 | ||
Netcare | 5,165 |
| 4,338 | ||
TOTAL SOUTH AFRICA |
| 19,447 |
The accompanying notes are an integral part of the financial statements.
95
Schedule of InvestmentsMarch 31, 2020
KraneShares Emerging Markets Healthcare Index ETF(concluded)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
SOUTH KOREA — 23.2% |
| ||||
Consumer Discretionary — 1.2% |
| ||||
HLB* | 164 | $ | 12,125 | ||
Health Care — 22.1% |
| ||||
Celltrion* | 333 |
| 62,613 | ||
Celltrion Healthcare* | 608 |
| 44,796 | ||
Daewoong Pharmaceutical | 45 |
| 3,131 | ||
Genexine* | 96 |
| 4,763 | ||
Green Cross | 44 |
| 4,988 | ||
Hanall Biopharma* | 203 |
| 3,952 | ||
Hanmi Pharm | 45 |
| 9,667 | ||
Hanmi Science Ltd. | 269 |
| 5,955 | ||
Helixmith* | 81 |
| 4,571 | ||
Hugel* | 20 |
| 5,537 | ||
Medy-Tox | 23 |
| 3,728 | ||
Mezzion Pharma* | 40 |
| 4,275 | ||
Samsung Biologics* | 149 |
| 58,995 | ||
SillaJen* | 261 |
| 2,841 | ||
Yuhan | 54 |
| 10,158 | ||
| 229,970 | ||||
TOTAL SOUTH KOREA |
| 242,095 | |||
THAILAND — 4.8% |
| ||||
Health Care — 4.8% |
| ||||
Bangkok Chain Hospital | 9,900 |
| 3,439 | ||
Bangkok Dusit Medical Services, Cl F | 63,700 |
| 36,686 | ||
Bumrungrad Hospital | 2,800 |
| 9,726 | ||
TOTAL THAILAND |
| 49,851 | |||
TOTAL COMMON STOCK |
| ||||
(Cost $1,044,188) |
| 1,041,150 | |||
TOTAL INVESTMENTS — 99.9% |
| ||||
(Cost $1,044,188) |
| 1,041,150 | |||
OTHER ASSETS LESS LIABILITIES — 0.1% |
| 1,484 | |||
NET ASSETS — 100% | $ | 1,042,634 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
ADR — American Depositary Receipt
Cl — Class
Ltd. — Limited
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the year ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
96
Shares | Value | ||||
COMMON STOCK — 94.1%‡ | |||||
BRAZIL — 5.2% | |||||
Consumer Discretionary — 0.6% | |||||
Cogna Educacao | 1,000 | $ | 791 | ||
Lojas Renner | 550 | 3,564 | |||
Magazine Luiza | 800 | 6,074 | |||
10,429 | |||||
Consumer Staples — 0.9% | |||||
Ambev | 3,800 | 8,704 | |||
BRF* | 300 | 873 | |||
JBS | 600 | 2,353 | |||
Raia Drogasil | 200 | 3,906 | |||
15,836 | |||||
Energy — 0.5% | |||||
Petroleo Brasileiro | 3,100 | 8,481 | |||
Ultrapar Participacoes | 600 | 1,459 | |||
9,940 | |||||
Financials — 1.1% | |||||
B3 - Brasil Bolsa Balcao | 1,400 | 9,617 | |||
Banco Bradesco* | 800 | 2,914 | |||
Banco do Brasil* | 700 | 3,745 | |||
Banco Santander Brasil | 300 | 1,562 | |||
BB Seguridade Participacoes | 500 | 2,420 | |||
IRB Brasil Resseguros S | 300 | 561 | |||
20,819 | |||||
Industrials — 0.6% | |||||
CCR | 800 | 1,836 | |||
Embraer* | 500 | 920 |
The accompanying notes are an integral part of the financial statements.
97
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Industrials (continued) |
| ||||
Localiza Rent a Car | 420 | $ | 2,127 | ||
Rumo* | 800 |
| 3,036 | ||
WEG | 600 |
| 3,871 | ||
| 11,790 | ||||
Information Technology — 0.0% |
| ||||
Cielo | 800 |
| 693 | ||
Materials — 1.3% |
| ||||
Klabin | 500 |
| 1,564 | ||
Suzano* | 400 |
| 2,766 | ||
Vale | 2,400 |
| 19,991 | ||
| 24,321 | ||||
Utilities — 0.2% |
| ||||
Cia de Saneamento Basico do Estado de Sao Paulo* | 200 |
| 1,500 | ||
Equatorial Energia | 500 |
| 1,682 | ||
| 3,182 | ||||
TOTAL BRAZIL |
| 97,010 | |||
CHILE — 0.7% |
| ||||
Consumer Discretionary — 0.1% |
| ||||
SACI Falabella | 514 |
| 1,137 | ||
Energy — 0.1% |
| ||||
Empresas COPEC* | 268 |
| 1,541 | ||
Financials — 0.2% |
| ||||
Banco de Chile | 17,262 |
| 1,399 | ||
Banco de Credito e Inversiones | 33 |
| 1,123 | ||
Banco Santander Chile | 45,657 |
| 1,768 | ||
| 4,290 | ||||
Industrials — 0.0% |
| ||||
Latam Airlines Group | 207 |
| 534 | ||
Materials — 0.1% |
| ||||
Empresas CMPC | 867 |
| 1,861 | ||
Utilities — 0.2% |
| ||||
Enel Americas | 19,579 |
| 2,403 | ||
Enel Chile | 19,330 |
| 1,315 | ||
| 3,718 | ||||
TOTAL CHILE |
| 13,081 | |||
COLOMBIA — 0.1% |
| ||||
Energy — 0.1% |
| ||||
Ecopetrol | 3,338 |
| 1,599 | ||
Financials — 0.0% |
| ||||
Bancolombia | 154 |
| 951 | ||
TOTAL COLOMBIA |
| 2,550 |
The accompanying notes are an integral part of the financial statements.
98
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
CZECH REPUBLIC — 0.1% |
| ||||
Financials — 0.1% |
| ||||
Komercni banka as* | 51 | $ | 965 | ||
Utilities — 0.1% |
| ||||
CEZ* | 109 |
| 1,780 | ||
TOTAL CZECH REPUBLIC |
| 2,745 | |||
EGYPT — 0.2% |
| ||||
Financials — 0.2% |
| ||||
Commercial International Bank Egypt SAE | 906 |
| 3,383 | ||
TOTAL EGYPT |
| 3,383 | |||
GREECE — 0.1% |
| ||||
Communication Services — 0.1% |
| ||||
Hellenic Telecommunications Organization | 166 |
| 2,000 | ||
TOTAL GREECE |
| 2,000 | |||
HUNGARY — 0.3% |
| ||||
Energy — 0.1% |
| ||||
MOL Hungarian Oil & Gas | 248 |
| 1,456 | ||
Financials — 0.2% |
| ||||
OTP Bank Nyrt | 152 |
| 4,393 | ||
TOTAL HUNGARY |
| 5,849 | |||
INDIA — 13.1% |
| ||||
Communication Services — 0.5% |
| ||||
Bharti Airtel* | 1,540 |
| 8,975 | ||
Consumer Discretionary — 0.7% |
| ||||
Bajaj Auto | 56 |
| 1,497 | ||
Eicher Motors | 9 |
| 1,558 | ||
Mahindra & Mahindra | 503 |
| 1,895 | ||
Maruti Suzuki India | 85 |
| 4,818 | ||
Tata Motors* | 1,250 |
| 1,174 | ||
Titan | 214 |
| 2,641 | ||
| 13,583 | ||||
Consumer Staples — 1.8% |
| ||||
Dabur India | 361 |
| 2,148 | ||
Godrej Consumer Products | 248 |
| 1,707 | ||
Hindustan Unilever | 625 |
| 18,990 | ||
ITC | 3,000 |
| 6,809 | ||
Nestle India | 16 |
| 3,448 | ||
| 33,102 | ||||
Energy — 2.1% |
| ||||
Bharat Petroleum | 522 |
| 2,187 | ||
Indian Oil | 1,500 |
| 1,619 | ||
Oil & Natural Gas | 961 |
| 868 |
The accompanying notes are an integral part of the financial statements.
99
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Energy (continued) |
| ||||
Reliance Industries | 2,308 | $ | 33,978 | ||
| 38,652 | ||||
Financials — 3.1% |
| ||||
Axis Bank | 1,900 |
| 9,519 | ||
Bajaj Finance | 160 |
| 4,686 | ||
Bajaj Finserv | 26 |
| 1,578 | ||
Housing Development Finance | 1,369 |
| 29,553 | ||
ICICI Bank | 2,000 |
| 8,559 | ||
State Bank of India* | 1,500 |
| 3,903 | ||
| 57,798 | ||||
Health Care — 0.5% |
| ||||
Aurobindo Pharma | 180 |
| 983 | ||
Dr Reddy’s Laboratories | 78 |
| 3,218 | ||
Piramal Enterprises | 55 |
| 683 | ||
Sun Pharmaceutical Industries | 750 |
| 3,492 | ||
| 8,376 | ||||
Industrials — 0.2% |
| ||||
Larsen & Toubro | 400 |
| 4,274 | ||
Information Technology — 3.0% |
| ||||
HCL Technologies | 900 |
| 5,192 | ||
Infosys ADR | 3,160 |
| 25,943 | ||
Tata Consultancy Services | 750 |
| 18,103 | ||
Tech Mahindra | 318 |
| 2,377 | ||
Wipro | 1,250 |
| 3,250 | ||
| 54,865 | ||||
Materials — 0.8% |
| ||||
Asian Paints | 212 |
| 4,670 | ||
Grasim Industries | 226 |
| 1,422 | ||
Hindalco Industries | 816 |
| 1,032 | ||
JSW Steel | 592 |
| 1,144 | ||
UltraTech Cement | 80 |
| 3,431 | ||
UPL | 373 |
| 1,610 | ||
Vedanta | 909 |
| 777 | ||
| 14,086 | ||||
Utilities — 0.4% |
| ||||
GAIL India | 1,400 |
| 1,417 | ||
NTPC | 1,800 |
| 2,003 | ||
Power Grid Corp of India | 1,600 |
| 3,365 | ||
| 6,785 | ||||
TOTAL INDIA |
| 240,496 |
The accompanying notes are an integral part of the financial statements.
100
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
INDONESIA — 2.8% |
| ||||
Communication Services — 0.5% |
| ||||
Telekomunikasi Indonesia Persero | 46,000 | $ | 8,912 | ||
Consumer Discretionary — 0.3% |
| ||||
Astra International | 20,000 |
| 4,782 | ||
Consumer Staples — 0.3% |
| ||||
Charoen Pokphand Indonesia | 6,300 |
| 1,908 | ||
Unilever Indonesia | 6,500 |
| 2,889 | ||
| 4,797 | ||||
Energy — 0.1% |
| ||||
United Tractors | 1,500 |
| 1,554 | ||
Financials — 1.7% |
| ||||
Bank Central Asia | 8,700 |
| 14,735 | ||
Bank Mandiri Persero | 18,000 |
| 5,165 | ||
Bank Negara Indonesia Persero | 6,700 |
| 1,569 | ||
Bank Rakyat Indonesia Persero | 50,000 |
| 9,258 | ||
| 30,727 | ||||
TOTAL INDONESIA |
| 50,772 | |||
MALAYSIA — 2.9% |
| ||||
Communication Services — 0.4% |
| ||||
DiGi.Com | 3,000 |
| 3,021 | ||
Maxis | 3,000 |
| 3,715 | ||
| 6,736 | ||||
Consumer Discretionary — 0.1% |
| ||||
Genting | 2,000 |
| 1,736 | ||
Consumer Staples — 0.1% |
| ||||
Sime Darby Plantation | 2,300 |
| 2,630 | ||
Financials — 1.5% |
| ||||
CIMB Group Holdings | 8,000 |
| 6,667 | ||
Hong Leong Bank | 500 |
| 1,558 | ||
Malayan Banking | 5,616 |
| 9,685 | ||
Public Bank | 2,600 |
| 9,569 | ||
| 27,479 | ||||
Health Care — 0.1% |
| ||||
IHH Healthcare | 2,000 |
| 2,389 | ||
Materials — 0.2% |
| ||||
Petronas Chemicals Group | 3,000 |
| 3,507 | ||
Utilities — 0.7% |
| ||||
Petronas Gas | 500 |
| 1,782 | ||
Tenaga Nasional | 3,700 |
| 10,295 | ||
| 12,077 | ||||
TOTAL MALAYSIA |
| 56,554 |
The accompanying notes are an integral part of the financial statements.
101
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
MEXICO — 3.3% |
| ||||
Communication Services — 1.0% |
| ||||
America Movil | 28,000 | $ | 16,830 | ||
Grupo Televisa | 2,000 |
| 2,354 | ||
| 19,184 | ||||
Consumer Staples — 1.2% |
| ||||
Fomento Economico Mexicano | 1,700 |
| 10,452 | ||
Grupo Bimbo, Ser A | 1,100 |
| 1,631 | ||
Wal-Mart de Mexico | 4,300 |
| 10,245 | ||
| 22,328 | ||||
Financials — 0.4% |
| ||||
Grupo Financiero Banorte, Cl O | 2,200 |
| 6,096 | ||
Grupo Financiero Inbursa, Cl O | 1,500 |
| 1,087 | ||
| 7,183 | ||||
Industrials — 0.2% |
| ||||
Alfa, Cl A | 2,200 |
| 595 | ||
Grupo Aeroportuario del Pacifico, Cl B | 200 |
| 1,093 | ||
Grupo Aeroportuario del Sureste, Cl B | 145 |
| 1,382 | ||
| 3,070 | ||||
Materials — 0.4% |
| ||||
Cemex* | 12,500 |
| 2,648 | ||
Grupo Mexico | 2,900 |
| 5,438 | ||
| 8,086 | ||||
Real Estate — 0.1% |
| ||||
Fibra Uno Administracion† | 2,800 |
| 2,222 | ||
TOTAL MEXICO |
| 62,073 | |||
PERU — 1.1% |
| ||||
Financials — 0.6% |
| ||||
Credicorp | 72 |
| 10,301 | ||
Materials — 0.5% |
| ||||
Cia de Minas Buenaventura SAA ADR | 571 |
| 4,163 | ||
Southern Copper | 169 |
| 4,759 | ||
| 8,922 | ||||
TOTAL PERU |
| 19,223 | |||
PHILIPPINES — 1.6% |
| ||||
Financials — 0.2% |
| ||||
BDO Unibank | 2,100 |
| 4,274 | ||
Industrials — 0.6% |
| ||||
Ayala | 300 |
| 2,757 | ||
JG Summit Holdings | 3,500 |
| 3,599 | ||
SM Investments | 300 |
| 4,825 | ||
| 11,181 |
The accompanying notes are an integral part of the financial statements.
102
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Real Estate — 0.8% |
| ||||
Ayala Land | 10,500 | $ | 6,235 | ||
SM Prime Holdings | 14,000 |
| 7,817 | ||
| 14,052 | ||||
TOTAL PHILIPPINES |
| 29,507 | |||
POLAND — 1.3% |
| ||||
Communication Services — 0.2% |
| ||||
CD Projekt | 60 |
| 4,176 | ||
Consumer Discretionary — 0.1% |
| ||||
LPP* | 1 |
| 1,259 | ||
Energy — 0.2% |
| ||||
Polski Koncern Naftowy ORLEN | 280 |
| 3,755 | ||
Financials — 0.7% |
| ||||
Bank Polska Kasa Opieki | 165 |
| 2,230 | ||
Powszechna Kasa Oszczednosci Bank Polski* | 825 |
| 4,493 | ||
Powszechny Zaklad Ubezpieczen | 600 |
| 4,526 | ||
Santander Bank Polska* | 32 |
| 1,337 | ||
| 12,586 | ||||
Materials — 0.1% |
| ||||
KGHM Polska Miedz* | 115 |
| 1,656 | ||
TOTAL POLAND |
| 23,432 | |||
QATAR — 1.4% |
| ||||
Financials — 1.4% |
| ||||
Masraf Al Rayan QSC | 3,750 |
| 3,770 | ||
Qatar Islamic Bank SAQ | 1,100 |
| 4,338 | ||
Qatar National Bank QPSC | 3,900 |
| 17,994 | ||
| 26,102 | ||||
Industrials — 0.2% |
| ||||
Industries Qatar QSC | 1,750 |
| 3,196 | ||
TOTAL QATAR |
| 29,298 | |||
RUSSIA — 6.0% |
| ||||
Communication Services — 0.1% |
| ||||
Mobile TeleSystems PJSC ADR | 348 |
| 2,645 | ||
Consumer Discretionary — 0.1% |
| ||||
X5 Retail Group GDR | 83 |
| 2,222 | ||
Energy — 3.4% |
| ||||
Gazprom PJSC | 8,300 |
| 19,271 | ||
LUKOIL PJSC | 345 |
| 20,818 | ||
Novatek PJSC GDR | 70 |
| 8,120 | ||
Rosneft | 950 |
| 3,822 | ||
Tatneft PJSC | 1,530 |
| 10,821 | ||
| 62,852 |
The accompanying notes are an integral part of the financial statements.
103
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Financials — 1.2% |
| ||||
Sberbank of Russia PJSC | 9,190 | $ | 22,018 | ||
Materials — 1.1% |
| ||||
Alrosa PJSC | 1,750 |
| 1,447 | ||
MMC Norilsk Nickel PJSC | 62 |
| 15,488 | ||
Novolipetsk Steel PJSC | 820 |
| 1,301 | ||
Severstal PJSC | 140 |
| 1,553 | ||
| 19,789 | ||||
TOTAL RUSSIA |
| 109,526 | |||
SOUTH AFRICA — 6.6% |
| ||||
Communication Services — 0.4% |
| ||||
MTN Group | 1,400 |
| 3,793 | ||
MultiChoice Group* | 284 |
| 1,364 | ||
Vodacom Group | 425 |
| 2,784 | ||
| 7,941 | ||||
Consumer Discretionary — 2.9% |
| ||||
Absa Group | 600 |
| 2,519 | ||
Mr Price Group | 162 |
| 1,035 | ||
Naspers, Cl N | 345 |
| 49,329 | ||
Woolworths Holdings | 658 |
| 1,017 | ||
| 53,900 | ||||
Consumer Staples — 0.5% |
| ||||
Bid | 280 |
| 3,334 | ||
Clicks Group | 168 |
| 2,424 | ||
Shoprite Holdings | 281 |
| 1,967 | ||
Tiger Brands | 109 |
| 1,129 | ||
| 8,854 | ||||
Energy — 0.1% |
| ||||
Exxaro Resources | 174 |
| 964 | ||
Financials — 1.4% |
| ||||
Capitec Bank Holdings | 26 |
| 1,281 | ||
Discovery | 244 |
| 1,065 | ||
FirstRand | 2,800 |
| 6,314 | ||
Nedbank Group | 335 |
| 1,550 | ||
Old Mutual | 3,300 |
| 2,190 | ||
Remgro | 355 |
| 2,442 | ||
RMB Holdings | 467 |
| 1,293 | ||
Sanlam | 1,216 |
| 3,478 | ||
Standard Bank Group | 1,100 |
| 6,311 | ||
| 25,924 |
The accompanying notes are an integral part of the financial statements.
104
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Industrials — 0.1% |
| ||||
Bidvest Group | 224 | $ | 1,834 | ||
Sasol* | 465 |
| 962 | ||
| 2,796 | ||||
Materials — 0.6% |
| ||||
Anglo American Platinum | 35 |
| 1,478 | ||
AngloGold Ashanti | 330 |
| 5,896 | ||
Gold Fields | 541 |
| 2,795 | ||
| 10,169 | ||||
Real Estate — 0.2% |
| ||||
Growthpoint Properties† | 1,998 |
| 1,440 | ||
NEPI Rockcastle | 269 |
| 1,130 | ||
Redefine Properties† | 3,614 |
| 480 | ||
| 3,050 | ||||
TOTAL SOUTH AFRICA |
| 113,598 | |||
SOUTH KOREA — 20.6% |
| ||||
Communication Services — 1.7% |
| ||||
Kakao | 34 |
| 4,343 | ||
NAVER | 125 |
| 17,456 | ||
NCSoft | 15 |
| 8,034 | ||
SK Telecom | 13 |
| 1,890 | ||
| 31,723 | ||||
Consumer Discretionary — 1.6% |
| ||||
Coway | 36 |
| 1,709 | ||
Fila Holdings | 32 |
| 764 | ||
Hyundai Mobis | 57 |
| 7,937 | ||
Hyundai Motor | 125 |
| 9,109 | ||
Kangwon Land | 81 |
| 1,314 | ||
Kia Motors | 250 |
| 5,339 | ||
LG Electronics | 95 |
| 3,762 | ||
| 29,934 | ||||
Consumer Staples — 0.9% |
| ||||
Amorepacific | 21 |
| 2,907 | ||
E-MART | 13 |
| 1,137 | ||
KT&G | 95 |
| 5,829 | ||
LG Household & Health Care | 8 |
| 7,360 | ||
| 17,233 | ||||
Energy — 0.3% |
| ||||
SK Innovation | 53 |
| 3,788 | ||
S-Oil | 31 |
| 1,454 | ||
| 5,242 |
The accompanying notes are an integral part of the financial statements.
105
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Financials — 1.8% |
| ||||
DB Insurance | 34 | $ | 971 | ||
Hana Financial Group | 300 |
| 5,693 | ||
Industrial Bank of Korea | 174 |
| 1,072 | ||
KB Financial Group | 358 |
| 10,161 | ||
Samsung Fire & Marine Insurance | 26 |
| 3,289 | ||
Samsung Life Insurance | 47 |
| 1,660 | ||
Shinhan Financial Group | 383 |
| 8,998 | ||
Woori Financial Group | 327 |
| 2,055 | ||
| 33,899 | ||||
Health Care — 1.1% |
| ||||
Celltrion* | 74 |
| 13,827 | ||
Celltrion Healthcare* | 35 |
| 2,553 | ||
Helixmith* | 10 |
| 564 | ||
Samsung Biologics* | 10 |
| 3,959 | ||
| 20,903 | ||||
Industrials — 1.0% |
| ||||
Hyundai Engineering & Construction | 54 |
| 1,218 | ||
Hyundai Heavy Industries Holdings | 6 |
| 973 | ||
Korea Shipbuilding & Offshore Engineering* | 26 |
| 1,679 | ||
LG | 85 |
| 4,120 | ||
Samsung C&T | 70 |
| 5,151 | ||
Samsung Heavy Industries* | 299 |
| 958 | ||
SK Holdings | 26 |
| 3,577 | ||
| 17,676 | ||||
Information Technology — 10.6% |
| ||||
LG Display* | 148 |
| 1,349 | ||
Samsung Electro-Mechanics | 50 |
| 4,013 | ||
Samsung Electronics | 3,732 |
| 146,386 | ||
Samsung SDI | 45 |
| 8,890 | ||
Samsung SDS | 23 |
| 2,825 | ||
SK Hynix | 469 |
| 32,092 | ||
| 195,555 | ||||
Materials — 1.3% |
| ||||
Hyundai Steel | 54 |
| 796 | ||
Korea Zinc | 5 |
| 1,462 | ||
LG Chemical | 40 |
| 10,022 | ||
Lotte Chemical | 12 |
| 1,902 | ||
POSCO | 68 |
| 8,993 | ||
| 23,175 | ||||
Utilities — 0.2% |
| ||||
Korea Electric Power* | 275 |
| 4,349 | ||
TOTAL SOUTH KOREA |
| 379,689 |
The accompanying notes are an integral part of the financial statements.
106
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
TAIWAN — 22.0% |
| ||||
Communication Services — 1.1% |
| ||||
Chunghwa Telecom | 4,000 | $ | 14,219 | ||
Far EasTone Telecommunications | 1,000 |
| 2,093 | ||
Taiwan Mobile | 1,000 |
| 3,303 | ||
| 19,615 | ||||
Consumer Staples — 1.0% |
| ||||
President Chain Store | 1,000 |
| 9,358 | ||
Uni-President Enterprises | 4,000 |
| 8,677 | ||
| 18,035 | ||||
Energy — 0.1% |
| ||||
Formosa Petrochemical | 1,000 |
| 2,692 | ||
Financials — 3.7% |
| ||||
Cathay Financial Holding | 6,000 |
| 7,004 | ||
Chailease Holding | 1,030 |
| 3,116 | ||
Chang Hwa Commercial Bank | 4,080 |
| 2,570 | ||
China Development Financial Holding | 9,000 |
| 2,208 | ||
CTBC Financial Holding | 12,000 |
| 7,103 | ||
E.Sun Financial Holding | 7,497 |
| 6,012 | ||
First Financial Holding | 7,070 |
| 4,594 | ||
Fubon Financial Holding | 6,000 |
| 7,450 | ||
Hua Nan Financial Holdings | 5,272 |
| 3,147 | ||
Mega Financial Holding | 8,000 |
| 7,526 | ||
Shanghai Commercial & Savings Bank | 2,000 |
| 2,602 | ||
Shin Kong Financial Holding | 7,000 |
| 1,766 | ||
SinoPac Financial Holdings | 7,000 |
| 2,558 | ||
Taishin Financial Holding | 7,145 |
| 2,764 | ||
Taiwan Cooperative Financial Holding | 6,180 |
| 3,750 | ||
Yuanta Financial Holding | 7,000 |
| 3,599 | ||
| 67,769 | ||||
Industrials — 0.1% |
| ||||
Far Eastern New Century | 2,000 |
| 1,491 | ||
Information Technology — 14.2% |
| ||||
ASE Technology Holding | 2,000 |
| 3,875 | ||
Asustek Computer | 1,000 |
| 6,762 | ||
AU Optronics* | 6,000 |
| 1,258 | ||
Catcher Technology | 1,000 |
| 6,465 | ||
Delta Electronics | 2,000 |
| 7,969 | ||
Hon Hai Precision Industry | 11,000 |
| 25,426 | ||
Innolux | 6,000 |
| 1,038 | ||
Lite-On Technology | 1,000 |
| 1,366 | ||
MediaTek | 1,000 |
| 10,829 |
The accompanying notes are an integral part of the financial statements.
107
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Information Technology (continued) |
| ||||
Novatek Microelectronics | 1,000 | $ | 5,688 | ||
Pegatron | 1,000 |
| 1,918 | ||
Quanta Computer | 2,000 |
| 3,981 | ||
Taiwan Semiconductor Manufacturing | 20,000 |
| 181,208 | ||
United Microelectronics | 8,000 |
| 3,611 | ||
| 261,394 | ||||
Materials — 1.9% |
| ||||
Asia Cement | 2,000 |
| 2,606 | ||
China Steel | 9,000 |
| 5,640 | ||
Formosa Chemicals & Fibre | 2,000 |
| 4,431 | ||
Formosa Plastics | 4,000 |
| 9,933 | ||
Nan Ya Plastics | 5,000 |
| 9,044 | ||
Taiwan Cement | 3,210 |
| 4,193 | ||
| 35,847 | ||||
TOTAL TAIWAN |
| 406,843 | |||
THAILAND — 2.8% |
| ||||
Communication Services — 0.3% |
| ||||
Advanced Info Service | 1,000 |
| 6,125 | ||
Consumer Staples — 0.5% |
| ||||
CP ALL | 5,000 |
| 9,294 | ||
Energy — 0.7% |
| ||||
PTT | 10,500 |
| 9,839 | ||
PTT Exploration & Production | 1,400 |
| 2,880 | ||
| 12,719 | ||||
Financials — 0.5% |
| ||||
Kasikornbank | 1,800 |
| 5,019 | ||
Siam Commercial Bank | 1,800 |
| 3,798 | ||
| 8,817 | ||||
Health Care — 0.1% |
| ||||
Bangkok Dusit Medical Services | 3,500 |
| 2,016 | ||
Industrials — 0.4% |
| ||||
Airports of Thailand | 4,300 |
| 6,650 | ||
Materials — 0.3% |
| ||||
PTT Global Chemical | 2,300 |
| 2,138 | ||
Siam Cement | 400 |
| 3,949 | ||
| 6,087 | ||||
Real Estate — 0.1% |
| ||||
Central Pattana | 1,300 |
| 1,693 | ||
TOTAL THAILAND |
| 53,401 | |||
TURKEY — 0.9% |
| ||||
Consumer Staples — 0.3% |
| ||||
BIM Birlesik Magazalar | 700 |
| 5,327 |
The accompanying notes are an integral part of the financial statements.
108
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(continued)
Shares | Value | ||||
COMMON STOCK (continued) |
| ||||
Energy — 0.1% |
| ||||
Tupras Turkiye Petrol Rafinerileri* | 200 | $ | 2,291 | ||
Financials — 0.5% |
| ||||
Akbank T.A.S.* | 5,000 |
| 4,249 | ||
Turkiye Garanti Bankasi* | 4,000 |
| 4,935 | ||
| 9,184 | ||||
TOTAL TURKEY |
| 16,802 | |||
UNITED ARAB EMIRATES — 0.7% |
| ||||
Communication Services — 0.2% |
| ||||
Emirates Telecommunications Group PJSC | 1,165 |
| 4,447 | ||
Financials — 0.4% |
| ||||
Abu Dhabi Commercial Bank PJSC | 1,392 |
| 1,755 | ||
First Abu Dhabi Bank PJSC | 1,901 |
| 4,994 | ||
| 6,749 | ||||
Real Estate — 0.1% |
| ||||
Emaar Properties PJSC* | 2,352 |
| 1,422 | ||
TOTAL UNITED ARAB EMIRATES |
| 12,618 | |||
UNITED KINGDOM — 0.1% |
| ||||
Consumer Staples — 0.1% |
| ||||
Magnit PJSC GDR | 242 |
| 2,169 | ||
TOTAL UNITED KINGDOM |
| 2,169 | |||
TOTAL COMMON STOCK |
| ||||
(Cost $2,294,730) |
| 1,732,619 | |||
PREFERRED STOCK(A) — 4.6% |
| ||||
BRAZIL— 3.0% |
| ||||
Communication Services — 0.2% |
| ||||
Telefonica Brasil | 400 |
| 3,814 | ||
Consumer Discretionary — 0.1% |
| ||||
Lojas Americanas* | 500 |
| 1,753 | ||
Consumer Staples — 0.1% |
| ||||
Cia Brasileira de Distribuicao* | 100 |
| 1,256 | ||
Energy — 0.5% |
| ||||
Petroleo Brasileiro | 3,400 |
| 9,144 | ||
Financials — 2.0% |
| ||||
Banco Bradesco | 3,400 |
| 13,688 | ||
Itau Unibanco Holding | 3,900 |
| 17,460 | ||
Itausa - Investimentos Itau | 3,600 |
| 6,039 | ||
| 37,187 | ||||
Materials — 0.1% |
| ||||
Gerdau | 700 |
| 1,350 | ||
Utilities — 0.1% |
| ||||
Cia Energetica de Minas Gerais | 600 |
| 1,028 | ||
TOTAL BRAZIL |
| 55,532 |
The accompanying notes are an integral part of the financial statements.
109
Schedule of InvestmentsMarch 31, 2020
KraneShares MSCI Emerging Markets ex China Index ETF(concluded)
Shares | Value | ||||
PREFERRED STOCK (continued) |
| ||||
CHILE— 0.1% |
| ||||
Materials — 0.1% |
| ||||
Sociedad Quimica y Minera de Chile | 83 | $ | 1,902 | ||
COLOMBIA — 0.1% |
| ||||
Financials — 0.1% |
| ||||
Bancolombia | 307 |
| 1,928 | ||
RUSSIA — 0.1% |
| ||||
Energy — 0.1% |
| ||||
Surgutneftegas PJSC | 4,700 |
| 2,262 | ||
SOUTH KOREA — 1.2% |
| ||||
Information Technology — 1.2% |
| ||||
Samsung Electronics | 700 |
| 23,059 | ||
TOTAL PREFERRED STOCK |
| ||||
(Cost $145,185) |
| 84,683 | |||
TOTAL INVESTMENTS — 98.7% |
| ||||
(Cost $2,439,915) |
| 1,817,302 | |||
OTHER ASSETS LESS LIABILITIES — 1.3% |
| 23,399 | |||
NET ASSETS — 100% | $ | 1,840,701 |
‡ Industries are utilized for compliance purposes, whereas sectors are utilized for reporting.
* Non-income producing security.
† Real Estate Investment Trust
(A) Currently, no stated interest rate.
ADR — American Depositary Receipt
Cl — Class
GDR — Global Depositary Receipt
PJSC — Public Joint-Stock Company
As of March31, 2020, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended March31, 2020, there have been no transfers in or out of Level 3.
The accompanying notes are an integral part of the financial statements.
110
KraneShares | KraneShares | KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value | $ | 16,254,235 |
| $ | 2,405,390,068 | * | $ | 507,342,065 |
| |||
Cash and Cash Equivalents |
| 180,466 |
|
| 6,585,369 |
|
| 190,911 |
| |||
Foreign Currency at Value |
| 5 |
|
| — |
|
| 248,460 |
| |||
Receivable for Capital Shares Sold |
| — |
|
| 33,822 |
|
| — |
| |||
Dividend and Interest Receivable |
| — |
|
| 411,801 |
|
| — |
| |||
Unrealized Appreciation on Spot |
| — |
|
| 1,657 |
|
| — |
| |||
Total Assets |
| 16,434,706 |
|
| 2,412,422,717 |
|
| 507,781,436 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Payable for Investment Securities Purchased |
| — |
|
| 4,430,562 |
|
| — |
| |||
Obligation to Return Securities Lending Collateral |
| — |
|
| 92,943,944 |
|
| — |
| |||
Payable for Capital Shares Redeemed |
| — |
|
| 7,069 |
|
| — |
| |||
Payable Authorized Participant |
| 152,025 |
|
| — |
|
| — |
| |||
Payable for Management Fees |
| 9,845 |
|
| 1,345,050 |
|
| 269,764 |
| |||
Payable for Trustees’ Fee |
| 131 |
|
| 17,090 |
|
| 4,049 |
| |||
Payable for Security Lending Fees |
| — |
|
| 41,180 |
|
| — |
| |||
Total Liabilities |
| 162,001 |
|
| 98,784,895 |
|
| 273,813 |
| |||
Net Assets | $ | 16,272,705 |
| $ | 2,313,637,822 |
| $ | 507,507,623 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital | $ | 17,916,748 |
| $ | 2,762,614,283 |
| $ | 574,135,977 |
| |||
Total Distributable Loss |
| (1,644,043 | ) |
| (448,976,461 | ) |
| (66,628,354 | ) | |||
Net Assets | $ | 16,272,705 |
| $ | 2,313,637,822 |
| $ | 507,507,623 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
| 650,000 |
|
| 51,200,000 |
|
| 17,200,000 |
| |||
Net Asset Value, Offering and | $ | 25.03 |
| $ | 45.19 |
| $ | 29.51 |
| |||
Cost of Investments | $ | 17,312,039 |
| $ | 2,577,456,979 |
| $ | 532,082,278 |
| |||
Cost of Foreign Currency |
| 5 |
|
| — |
|
| 246,835 |
| |||
*Includes Market Value of Securities |
| — |
|
| 88,942,649 |
|
| — |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
111
Statements of Assets and Liabilities(continued)
March31, 2020
KraneShares | KraneShares | KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value | $ | 12,169,311 |
| $ | 7,052,997 |
| $ | 7,060,037 |
| |||
Affiliated Investments at Value |
| 17,639 |
|
| — |
|
| — |
| |||
Foreign Currency at Value |
| 1,124,005 |
|
| 6 |
|
| 296 |
| |||
Cash and Cash Equivalents |
| 13,355 |
|
| 8,798 |
|
| 54,859 |
| |||
Dividend and Interest Receivable |
| 172,402 |
|
| — |
|
| 16,875 |
| |||
Reclaim Receivable |
| — |
|
| 373 |
|
| 1,726 |
| |||
Total Assets |
| 13,496,712 |
|
| 7,062,174 |
|
| 7,133,793 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Payable for Investment Securities Purchased |
| 566,023 |
|
| — |
|
| — |
| |||
Payable for Capital Shares Redeemed |
| — |
|
| — |
|
| 23,290 |
| |||
Payable for Management Fees |
| 6,758 |
|
| 2,928 |
|
| 5,285 |
| |||
Payable for Trustees’ Fee |
| 100 |
|
| 123 |
|
| 67 |
| |||
Total Liabilities |
| 572,881 |
|
| 3,051 |
|
| 28,642 |
| |||
Net Assets | $ | 12,923,831 |
| $ | 7,059,123 |
| $ | 7,105,151 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital | $ | 13,369,799 |
| $ | 7,133,748 |
| $ | 13,507,600 |
| |||
Total Distributable Loss |
| (445,968 | ) |
| (74,625 | ) |
| (6,402,449 | ) | |||
Net Assets | $ | 12,923,831 |
| $ | 7,059,123 |
| $ | 7,105,151 |
| |||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
| 400,000 |
|
| 300,000 |
|
| 400,002 |
| |||
Net Asset Value, Offering and | $ | 32.31 |
| $ | 23.53 |
| $ | 17.76 |
| |||
Cost of Investments | $ | 12,284,928 |
| $ | 6,981,383 |
| $ | 9,337,877 |
| |||
Cost of Affiliated Investments |
| 17,716 |
|
| — |
|
| — |
| |||
Cost of Foreign Currency |
| 1,120,974 |
|
| 4 |
|
| 306 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
112
Statements of Assets and Liabilities(continued)
March31, 2020
KraneShares | KraneShares | KraneShares | ||||||||||
Assets: |
|
|
|
|
|
| ||||||
Investments at Value | $ | 23,057,839 | * | $ | 1,580,036 |
| $ | 17,638,373 | * | |||
Cash and Cash Equivalents |
| 117,145 |
|
| 81,620 |
|
| 69,430 |
| |||
Foreign Currency at Value |
| 1,471 |
|
| 21 |
|
| 11 |
| |||
Dividend and Interest Receivable |
| 52,071 |
|
| — |
|
| 17,994 |
| |||
Reclaim Receivable |
| 4,674 |
|
| — |
|
| 41,017 |
| |||
Total Assets |
| 23,233,200 |
|
| 1,661,677 |
|
| 17,766,825 |
| |||
Liabilities: |
|
|
|
|
|
| ||||||
Obligation to Return Securities Lending Collateral |
| 735,292 |
|
| — |
|
| 640,629 |
| |||
Payable for Management Fees |
| 13,030 |
|
| 1,143 |
|
| 10,373 |
| |||
Payable for Security Lending Fees |
| 168 |
|
| — |
|
| 107 |
| |||
Payable for Trustees’ Fee |
| 141 |
|
| 13 |
|
| 143 |
| |||
Total Liabilities |
| 748,631 |
|
| 1,156 |
|
| 651,252 |
| |||
Net Assets | $ | 22,484,569 |
| $ | 1,660,521 |
| $ | 17,115,573 |
| |||
Net Assets Consist of: |
|
|
|
|
|
| ||||||
Paid-in Capital | $ | 32,636,230 |
| $ | 3,768,785 |
| $ | 24,205,149 |
| |||
Total Distributable Loss |
| (10,151,661 | ) |
| (2,108,264 | ) |
| (7,089,576 | ) | |||
Net Assets | $ | 22,484,569 |
| $ | 1,660,521 |
| $ | 17,115,573 |
| |||
Outstanding Shares of Beneficial |
| 1,150,002 |
|
| 100,002 |
|
| 900,002 |
| |||
Net Asset Value, Offering and Redemption Price Per Share | $ | 19.55 |
| $ | 16.60 |
| $ | 19.02 |
| |||
Cost of Investments | $ | 27,671,991 |
| $ | 1,699,129 |
| $ | 21,175,028 |
| |||
Cost of Foreign Currency |
| 1,477 |
|
| 9 |
|
| 11 |
| |||
*Includes Market Value of Securities on Loan |
| 700,238 |
|
| — |
|
| 616,897 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
113
Statements of Assets and Liabilities(concluded)
March31, 2020
KraneShares | KraneShares | KraneShares | KraneShares | |||||||||||||
Assets: |
|
|
|
|
|
|
|
| ||||||||
Investments at Value | $ | 32,114,733 |
| $ | 10,896,084 |
| $ | 1,041,150 |
| $ | 1,817,302 |
| ||||
Cash and Cash Equivalents |
| 11,608 |
|
| 132,443 |
|
| 570 |
|
| 12,800 |
| ||||
Foreign Currency at Value |
| 55 |
|
| — |
|
| — |
|
| 64 |
| ||||
Dividend and Interest Receivable |
| 276 |
|
| 175,293 |
|
| 1,523 |
|
| 10,599 |
| ||||
Reclaim Receivable |
| — |
|
| — |
|
| 81 |
|
| 763 |
| ||||
Total Assets |
| 32,126,672 |
|
| 11,203,820 |
|
| 1,043,324 |
|
| 1,841,528 |
| ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||||||
Payable for Management Fees |
| 16,829 |
|
| 6,712 |
|
| 682 |
|
| 811 |
| ||||
Payable for Trustees’ Fee |
| 210 |
|
| 82 |
|
| 8 |
|
| 16 |
| ||||
Payable for Security Lending Fees |
| 27 |
|
| — |
|
| — |
|
| — |
| ||||
Total Liabilities |
| 17,066 |
|
| 6,794 |
|
| 690 |
|
| 827 |
| ||||
Net Assets | $ | 32,109,606 |
| $ | 11,197,026 |
| $ | 1,042,634 |
| $ | 1,840,701 |
| ||||
Net Assets Consist of: |
|
|
|
|
|
|
|
| ||||||||
Paid-in Capital | $ | 39,702,661 |
| $ | 11,935,858 |
| $ | 1,611,985 |
| $ | 2,500,050 |
| ||||
Total Distributable Loss |
| (7,593,055 | ) |
| (738,832 | ) |
| (569,351 | ) |
| (659,349 | ) | ||||
Net Assets | $ | 32,109,606 |
| $ | 11,197,026 |
| $ | 1,042,634 |
| $ | 1,840,701 |
| ||||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) |
| 1,350,002 |
|
| 300,001 |
|
| 50,002 |
|
| 100,002 |
| ||||
Net Asset Value, Offering and Redemption Price Per Share | $ | 23.78 |
| $ | 37.32 |
| $ | 20.85 |
| $ | 18.41 |
| ||||
Cost of Investments | $ | 29,662,605 |
| $ | 11,829,160 |
| $ | 1,044,188 |
| $ | 2,439,915 |
| ||||
Cost of Foreign Currency |
| 55 |
|
| — |
|
| — |
|
| 64 |
|
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
114
KraneShares | KraneShares | KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income | $ | 111,773 |
| $ | 6,777,088 |
| $ | 14,276,334 |
| |||
Interest Income |
| 1,175 |
|
| 85,217 |
|
| 109,220 |
| |||
Security Lending Income |
| — |
|
| 5,794,534 |
|
| — |
| |||
Less: Foreign Taxes Withheld |
| (11,198 | ) |
| — |
|
| (1,430,171 | ) | |||
Total Investment Income |
| 101,750 |
|
| 12,656,839 |
|
| 12,955,383 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
| 75,279 |
|
| 12,698,497 |
|
| 4,789,948 |
| |||
Trustees’ Fees |
| 1,401 |
|
| 219,856 |
|
| 75,308 |
| |||
Security Lending Fees† |
| — |
|
| 579,613 |
|
| — |
| |||
Insurance Expense |
| 32 |
|
| 24,330 |
|
| 6,457 |
| |||
Total Expenses |
| 76,712 |
|
| 13,522,296 |
|
| 4,871,713 |
| |||
Management Fee Waiver† |
| — |
|
| — |
|
| (1,228,199 | ) | |||
Net Expenses |
| 76,712 |
|
| 13,522,296 |
|
| 3,643,514 |
| |||
Net Investment Income (Loss) |
| 25,038 |
|
| (865,457 | ) |
| 9,311,869 |
| |||
Net Realized Gain on: |
|
|
|
|
|
| ||||||
Investments |
| 82,221 |
|
| 35,661,480 |
|
| (5,026,776 | ) | |||
Foreign Currency Translations |
| (26,947 | ) |
| (22,720 | ) |
| (1,030,396 | ) | |||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| 55,274 |
|
| 35,638,760 |
|
| (6,057,172 | ) | |||
Net Change in Unrealized Appreciation on: |
|
|
|
|
|
| ||||||
Investments |
| (1,543,284 | ) |
| (225,886,395 | ) |
| (39,734,142 | ) | |||
Foreign Currency Translations |
| — |
|
| (111 | ) |
| 1,624 |
| |||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Translations |
| (1,543,284 | ) |
| (225,886,506 | ) |
| (39,732,518 | ) | |||
Net Realized and Unrealized Loss on Investments and Foreign Currency Translations |
| (1,488,010 | ) |
| (190,247,746 | ) |
| (45,789,690 | ) | |||
Net Decrease in Net Assets Resulting from Operations | $ | (1,462,972 | ) | $ | (191,113,203 | ) | $ | (36,477,821 | ) |
† 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.
115
Statements of Operations(continued)
For the year ended March31, 2020
KraneShares | KraneShares | KraneShares | ||||||||||
Investment Income: | $ | 560 |
| $ | 157,566 |
| $ | 717,302 |
| |||
Dividend Income |
|
|
|
|
|
| ||||||
Dividend from Affiliated Investment |
| 6,239 |
|
| — |
|
| — |
| |||
Interest Income |
| 529,046 |
|
| 325 |
|
| 1,976 |
| |||
Less: Foreign Taxes Withheld |
| (1,645 | ) |
| (12,431 | ) |
| (73,817 | ) | |||
Total Investment Income |
| 534,200 |
|
| 145,460 |
|
| 645,461 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
| 120,039 |
|
| 50,282 |
|
| 131,865 |
| |||
Trustees’ Fees |
| 2,177 |
|
| 900 |
|
| 2,097 |
| |||
Insurance Expense |
| 216 |
|
| 73 |
|
| 245 |
| |||
Total Expenses |
| 122,432 |
|
| 51,255 |
|
| 134,207 |
| |||
Management Fee Waiver† |
| (21,183 | ) |
| (14,392 | ) |
| — |
| |||
Net Expenses |
| 101,249 |
|
| 36,863 |
|
| 134,207 |
| |||
Net Investment Income |
| 432,951 |
|
| 108,597 |
|
| 511,254 |
| |||
Net Realized Gain (Loss) on: |
|
|
|
|
|
| ||||||
Investments |
| 22,109 |
|
| 831 |
|
| (1,409,027 | ) | |||
Affiliated Investments |
| (16,004 | ) |
| — |
|
| — |
| |||
Foreign Currency Translations |
| (707,385 | ) |
| (254 | ) |
| (269 | ) | |||
Net Realized Gain (Loss) on Investments, Affiliated Investments and Foreign Currency Translations |
| (701,280 | ) |
| 577 |
|
| (1,409,296 | ) | |||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
| ||||||
Investments |
| (280,467 | ) |
| (621,308 | ) |
| (1,258,589 | ) | |||
Affiliated Investments |
| 6,916 |
|
| — |
|
| — |
| |||
Foreign Currency Translations |
| (15,228 | ) |
| 63 |
|
| (558 | ) | |||
Net Change in Unrealized (Depreciation) on Investments, Affiliated Investments and Foreign Currency Translations |
| (288,779 | ) |
| (621,245 | ) |
| (1,259,147 | ) | |||
Net Realized and Unrealized Loss on Investments, Affiliated Investments and Foreign Currency Translations |
| (990,059 | ) |
| (620,668 | ) |
| (2,668,443 | ) | |||
Net Decrease in Net Assets Resulting from Operations | $ | (557,108 | ) | $ | (512,071 | ) | $ | (2,157,189 | ) |
† 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.
116
Statements of Operations(continued)
For the year ended March31, 2020
KraneShares | KraneShares | KraneShares | ||||||||||
Investment Income: |
|
|
|
|
|
| ||||||
Dividend Income | $ | 294,880 |
| $ | 143,986 |
| $ | 590,629 |
| |||
Interest Income |
| 478 |
|
| 251 |
|
| 1,298 |
| |||
Security Lending Income |
| 27,796 |
|
| — |
|
| 71,331 |
| |||
Less: Foreign Taxes Withheld |
| (27,815 | ) |
| (3,690 | ) |
| (46,626 | ) | |||
Total Investment Income |
| 295,339 |
|
| 140,547 |
|
| 616,632 |
| |||
Expenses: |
|
|
|
|
|
| ||||||
Management Fees† |
| 182,002 |
|
| 23,846 |
|
| 183,424 |
| |||
Trustees’ Fees |
| 2,646 |
|
| 330 |
|
| 3,118 |
| |||
Security Lending Fees† |
| 2,782 |
|
| — |
|
| 7,125 |
| |||
Insurance Expense |
| 330 |
|
| 47 |
|
| 381 |
| |||
Total Expenses |
| 187,760 |
|
| 24,223 |
|
| 194,048 |
| |||
Net Expenses |
| 187,760 |
|
| 24,223 |
|
| 194,048 |
| |||
Net Investment Income |
| 107,579 |
|
| 116,324 |
|
| 422,584 |
| |||
Net Realized Gain on: |
|
|
|
|
|
| ||||||
Investments |
| (456,903) |
|
| (233,701 | ) |
| 731,312 |
| |||
Foreign Currency Translations |
| (1,632 | ) |
| 178 |
|
| (1,538 | ) | |||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| (458,535 | ) |
| (233,523 | ) |
| 729,774 |
| |||
Net Change in Unrealized Appreciation on: |
|
|
|
|
|
| ||||||
Investments |
| (2,901,729 | ) |
| (401,853 | ) |
| (1,324,365 | ) | |||
Foreign Currency Translations |
| (949 | ) |
| 12 |
|
| (777 | ) | |||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Translations |
| (2,902,678 | ) |
| (401,841 | ) |
| (1,325,142 | ) | |||
Net Realized and Unrealized Loss on Investments and Foreign Currency Translations |
| (3,361,213 | ) |
| (635,364 | ) |
| (595,368 | ) | |||
Net Decrease in Net Assets Resulting from Operations | $ | (3,253,634 | ) | $ | (519,040 | ) | $ | (172,784 | ) |
† 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.
117
Statements of Operations(concluded)
For the year or period ended March31, 2020
KraneShares | KraneShares | KraneShares | KraneShares | |||||||||||||
Investment Income: |
|
|
|
|
|
|
|
| ||||||||
Dividend Income | $ | 259,420 |
| $ | — |
| $ | 13,042 |
| $ | 82,355 |
| ||||
Interest Income |
| 2,075 |
|
| 708,517 |
|
| 142 |
|
| 146 |
| ||||
Security Lending Income |
| 1,824 |
|
| — |
|
| 902 |
|
| — |
| ||||
Less: Foreign Taxes Withheld |
| (19,879 | ) |
| (690 | ) |
| (716 | ) |
| (10,624 | ) | ||||
Total Investment Income |
| 243,440 |
|
| 707,827 |
|
| 13,370 |
|
| 71,877 |
| ||||
Expenses: |
|
|
|
|
|
|
|
| ||||||||
Management Fees† |
| 187,953 |
|
| 82,939 |
|
| 12,422 |
|
| 13,781 |
| ||||
Trustees’ Fees |
| 2,554 |
|
| 1,722 |
|
| 191 |
|
| 302 |
| ||||
Security Lending Fees† |
| 181 |
|
| — |
|
| 90 |
|
| — |
| ||||
Insurance Expense |
| 449 |
|
| 141 |
|
| 52 |
|
| — |
| ||||
Total Expenses |
| 191,137 |
|
| 84,802 |
|
| 12,755 |
|
| 14,083 |
| ||||
Management Fee Waiver† |
| (25,814 | ) |
| — |
|
| — |
|
| (2,376 | ) | ||||
Net Expenses |
| 165,323 |
|
| 84,802 |
|
| 12,755 |
|
| 11,707 |
| ||||
Net Investment Income |
| 78,117 |
|
| 623,025 |
|
| 615 |
|
| 60,170 |
| ||||
Net Realized Gain (Loss) on: |
|
|
|
|
|
|
|
| ||||||||
Investments |
| (3,808,970 | ) |
| 127,239 |
|
| (215,238 | ) |
| (20,138 | ) | ||||
Foreign Currency Translations |
| (5,630 | ) |
| — |
|
| 519 |
|
| (2,576 | ) | ||||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| (3,814,600 | ) |
| 127,239 |
|
| (214,719 | ) |
| (22,714 | ) | ||||
Net Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
|
|
| ||||||||
Investments |
| 2,531,274 |
|
| (1,171,693 | ) |
| (108,888 | ) |
| (622,613 | ) | ||||
Foreign Currency Translation |
| 18 |
|
| — |
|
| (100 | ) |
| (560 | ) | ||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| 2,531,292 |
|
| (1,171,693 | ) |
| (108,988 | ) |
| (623,173 | ) | ||||
Net Realized and Unrealized Loss on Investments and Foreign Currency Translations |
| (1,283,308 | ) |
| (1,044,454 | ) |
| (323,707 | ) |
| (645,887 | ) | ||||
Net Decrease in Net Assets Resulting from Operations | $ | (1,205,191 | ) | $ | (421,429 | ) | $ | (323,092 | ) | $ | (585,717 | ) |
† See Note 3 in Notes to Financial Statements.
(1) Commenced Operations on April 12, 2019.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
118
KraneShares CICC China Leaders | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 25,038 |
| $ | 73,945 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| 55,274 |
|
| (330,149 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (1,543,284 | ) |
| 172,753 |
| ||
Net Decrease in Net Assets Resulting from Operations |
| (1,462,972 | ) |
| (83,451 | ) | ||
Distributions |
| (39,838 | ) |
| (445,172 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 20,344,770 |
|
| — |
| ||
Redeemed |
| (5,369,307 | ) |
| (1,753,543 | ) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| 14,975,463 |
|
| (1,753,543 | ) | ||
Total Increase (Decrease) in Net Assets |
| 13,472,653 |
|
| (2,282,166 | ) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 2,800,052 |
|
| 5,082,218 |
| ||
End of Year | $ | 16,272,705 |
| $ | 2,800,052 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 750,000 |
|
| — |
| ||
Redeemed |
| (200,000 | ) |
| (50,000 | ) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| 550,000 |
|
| (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.
119
Statements of Changes in Net Assets(continued)
KraneShares CSI China Internet ETF | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) | $ | (865,457 | ) | $ | 3,207,090 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| 35,638,760 |
|
| (192,395,663 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (225,886,506 | ) |
| (63,848,491 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (191,113,203 | ) |
| (253,037,064 | ) | ||
Distributions: |
| (1,580,181 | ) |
| (52,775,933 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 1,377,877,818 |
|
| 1,491,668,993 |
| ||
Redeemed |
| (946,051,196 | ) |
| (739,973,651 | ) | ||
Increase in Net Assets from Capital Share Transactions |
| 431,826,622 |
|
| 751,695,342 |
| ||
Total Increase in Net Assets |
| 239,133,238 |
|
| 445,882,345 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 2,074,504,584 |
|
| 1,628,622,239 |
| ||
End of Year | $ | 2,313,637,822 |
| $ | 2,074,504,584 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 28,300,000 |
|
| 32,250,000 |
| ||
Redeemed |
| (21,200,000 | ) |
| (14,800,000 | ) | ||
Net Increase in Shares Outstanding from Share Transactions |
| 7,100,000 |
|
| 17,450,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
120
Statements of Changes in Net Assets(continued)
KraneShares Bosera MSCI China A | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 9,311,869 |
| $ | 7,821,817 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (6,057,172 | ) |
| (36,526,206 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (39,732,518 | ) |
| (17,097,577 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (36,477,821 | ) |
| (45,801,966 | ) | ||
Distributions: |
| (9,500,578 | ) |
| (10,889,028 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 237,310,081 |
|
| 542,064,331 |
| ||
Redeemed |
| (287,859,292 | ) |
| (234,661,691 | ) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (50,549,211 | ) |
| 307,402,640 |
| ||
Total Increase (Decrease) in Net Assets |
| (96,527,610 | ) |
| 250,711,646 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 604,035,233 |
|
| 353,323,587 |
| ||
End of Year | $ | 507,507,623 |
| $ | 604,035,233 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 7,550,000 |
|
| 16,750,000 |
| ||
Redeemed |
| (9,300,000 | ) |
| (8,050,000 | ) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (1,750,000 | ) |
| 8,700,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
121
Statements of Changes in Net Assets(continued)
KraneShares E Fund China | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 432,951 |
| $ | 473,954 |
| ||
Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Translations |
| (701,280 | ) |
| (488,707 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Affiliated Investments and Foreign Currency Translations |
| (288,779 | ) |
| (332,349 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (557,108 | ) |
| (347,102 | ) | ||
Distributions |
| — |
|
| (704,248 | ) | ||
Return of Capital |
| (521,147 | ) |
| (28,559 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 1,658,813 |
|
| 6,871,858 |
| ||
Redeemed |
| (6,478,959 | ) |
| — |
| ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (4,820,146 | ) |
| 6,871,858 |
| ||
Total Increase (Decrease) in Net Assets |
| (5,898,401 | ) |
| 5,791,949 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 18,822,232 |
|
| 13,030,283 |
| ||
End of Year | $ | 12,923,831 |
| $ | 18,822,232 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 50,000 |
|
| 200,000 |
| ||
Redeemed |
| (200,000 | ) |
| — |
| ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (150,000 | ) |
| 200,000 |
|
(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.
122
Statements of Changes in Net Assets(continued)
KraneShares MSCI All China Index ETF | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 108,597 |
| $ | 22,681 |
| ||
Net Realized Gain on Investments and Foreign Currency Translations |
| 577 |
|
| 59,468 |
| ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (621,245 | ) |
| 300,685 |
| ||
Net Increase (Decrease) in Net Assets Resulting from |
| (512,071 | ) |
| 382,834 |
| ||
Distributions: |
| (115,192 | ) |
| (43,104 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 1,316,745 |
|
| 3,333,442 |
| ||
Increase in Net Assets from Capital Share Transactions |
| 1,316,745 |
|
| 3,333,442 |
| ||
Total Increase in Net Assets |
| 689,482 |
|
| 3,673,172 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 6,369,641 |
|
| 2,696,469 |
| ||
End of Year | $ | 7,059,123 |
| $ | 6,369,641 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 50,000 |
|
| 150,000 |
| ||
Net Increase in Shares Outstanding from Share Transactions |
| 50,000 |
|
| 150,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
123
Statements of Changes in Net Assets(continued)
KraneShares MSCI One Belt One | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 511,254 |
| $ | 558,784 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (1,409,296 | ) |
| (3,080,305 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (1,259,147 | ) |
| 42,282 |
| ||
Net Decrease in Net Assets Resulting from Operations |
| (2,157,189 | ) |
| (2,479,239 | ) | ||
Distributions: |
| (523,629 | ) |
| (553,422 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| — |
|
| 2,531,004 |
| ||
Redeemed |
| (11,535,830 | ) |
| (10,224,309 | ) | ||
Decrease in Net Assets from Capital Share Transactions |
| (11,535,830 | ) |
| (7,693,305 | ) | ||
Total Decrease in Net Assets |
| (14,216,648 | ) |
| (10,725,966 | ) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 21,321,799 |
|
| 32,047,765 |
| ||
End of Year | $ | 7,105,151 |
| $ | 21,321,799 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| — |
|
| 100,000 |
| ||
Redeemed |
| (500,000 | ) |
| (450,000 | ) | ||
Net Decrease in Shares Outstanding from Share Transactions |
| (500,000 | ) |
| (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.
124
Statements of Changes in Net Assets(continued)
KraneShares Emerging Markets | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) | $ | 107,579 |
| $ | (5,737 | ) | ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (458,535 | ) |
| (4,658,595 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (2,902,678 | ) |
| (1,646,885 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (3,253,634 | ) |
| (6,311,217 | ) | ||
Distributions: |
| (337,518 | ) |
| — |
| ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 11,065,406 |
|
| 31,316,594 |
| ||
Redeemed |
| (13,669,916 | ) |
| (20,153,426 | ) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (2,604,510 | ) |
| 11,163,168 |
| ||
Total Increase (Decrease) in Net Assets |
| (6,195,662 | ) |
| 4,851,951 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 28,680,231 |
|
| 23,828,280 |
| ||
End of Year | $ | 22,484,569 |
| $ | 28,680,231 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 500,000 |
|
| 1,250,000 |
| ||
Redeemed |
| (600,000 | ) |
| (900,000 | ) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (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.
125
Statements of Changes in Net Assets(continued)
KraneShares MSCI China | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 116,324 |
| $ | 116,395 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (233,523 | ) |
| (1,570,720 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (401,841 | ) |
| 441,845 |
| ||
Net Decrease in Net Assets Resulting from Operations |
| (519,040 | ) |
| (1,012,480 | ) | ||
Distributions: |
| (108,818 | ) |
| (107,314 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| — |
|
| 2,265,922 |
| ||
Redeemed |
| (1,768,056 | ) |
| (4,248,046 | ) | ||
Decrease in Net Assets from Capital Share Transactions |
| (1,768,056 | ) |
| (1,982,124 | ) | ||
Total Decrease in Net Assets |
| (2,395,914 | ) |
| (3,101,918 | ) | ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 4,056,435 |
|
| 7,158,353 |
| ||
End of Year | $ | 1,660,521 |
| $ | 4,056,435 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| — |
|
| 100,000 |
| ||
Redeemed |
| (100,000 | ) |
| (200,000 | ) | ||
Net Decrease in Shares Outstanding from Share Transactions |
| (100,000 | ) |
| (100,000 | ) |
(1) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
126
Statements of Changes in Net Assets(continued)
KraneShares Electric Vehicles and | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 422,584 |
| $ | 305,894 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| 729,774 |
|
| (2,855,760 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (1,325,142 | ) |
| (996,927 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (172,784 | ) |
| (3,546,793 | ) | ||
Distributions: |
| (391,574 | ) |
| (382,192 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 1,039,945 |
|
| 10,157,198 |
| ||
Redeemed |
| (16,385,856 | ) |
| — |
| ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (15,345,911 | ) |
| 10,157,198 |
| ||
Total Increase (Decrease) in Net Assets |
| (15,910,269 | ) |
| 6,228,213 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 33,025,842 |
|
| 26,797,629 |
| ||
End of Year | $ | 17,115,573 |
| $ | 33,025,842 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 50,000 |
|
| 450,000 |
| ||
Redeemed |
| (750,000 | ) |
| — |
| ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (700,000 | ) |
| 450,000 |
|
(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.
127
Statements of Changes in Net Assets(continued)
KraneShares MSCI All China | ||||||||
Year Ended | Year Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 78,117 |
| $ | 24,544 |
| ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (3,814,600 | ) |
| (6,156,072 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| 2,531,292 |
|
| (248,794 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
| (1,205,191 | ) |
| (6,380,322 | ) | ||
Distributions: |
| (54,459 | ) |
| (136,712 | ) | ||
Capital Share Transactions:(1) |
|
|
|
| ||||
Issued |
| 14,879,626 |
|
| 52,247,029 |
| ||
Redeemed |
| (20,514,237 | ) |
| (10,724,139 | ) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (5,634,611 | ) |
| 41,522,890 |
| ||
Total Increase (Decrease) in Net Assets |
| (6,894,261 | ) |
| 35,005,856 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year |
| 39,003,867 |
|
| 3,998,011 |
| ||
End of Year | $ | 32,109,606 |
| $ | 39,003,867 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| 600,000 |
|
| 2,150,000 |
| ||
Redeemed |
| (1,000,000 | ) |
| (550,000 | ) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (400,000 | ) |
| 1,600,000 |
|
(1) Includes transaction costs related to creations and redemptions.
The accompanying notes are an integral part of the financial statements.
128
Statements of Changes in Net Assets(continued)
KraneShares CCBS China Corporate | ||||||||
Year Ended | Period Ended March 31, 2019(1) | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income | $ | 623,025 |
| $ | 431,819 |
| ||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations |
| 127,239 |
|
| (12,382 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (1,171,693 | ) |
| 238,617 |
| ||
Net Increase (Decrease) in Net Assets Resulting from |
| (421,429 | ) |
| 658,054 |
| ||
Distributions |
| (601,337 | ) |
| (374,120 | ) | ||
Return of Capital |
| — |
|
| (49,368 | ) | ||
Capital Share Transactions:(2) |
|
|
|
| ||||
Issued |
| — |
|
| 11,985,226 |
| ||
Increase in Net Assets from Capital Share Transactions |
| — |
|
| 11,985,226 |
| ||
Total Increase (Decrease) in Net Assets |
| (1,022,766 | ) |
| 12,219,792 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year/Period |
| 12,219,792 |
|
| — |
| ||
End of Year/Period | $ | 11,197,026 |
| $ | 12,219,792 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| — |
|
| 300,001 |
| ||
Net Increase in Shares Outstanding from Share Transactions |
| — |
|
| 300,001 |
|
(1) Commenced operations on June 26, 2018.
(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.
129
Statements of Changes in Net Assets(continued)
KraneShares Emerging Markets | ||||||||
Year Ended | Period Ended | |||||||
Operations: |
|
|
|
| ||||
Net Investment Income (Loss) | $ | 615 |
| $ | (7,486 | ) | ||
Net Realized Loss on Investments and Foreign Currency Translations |
| (214,719 | ) |
| (327,821 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (108,988 | ) |
| 105,842 |
| ||
Net Decrease in Net Assets Resulting from Operations |
| (323,092 | ) |
| (229,465 | ) | ||
Distributions |
| (18,337 | ) |
| (752 | ) | ||
Return of Capital |
| (611 | ) |
| — |
| ||
Capital Share Transactions:(2) |
|
|
|
| ||||
Issued |
| — |
|
| 5,708,901 |
| ||
Redeemed |
| (3,091,737 | ) |
| (1,002,273 | ) | ||
Increase (Decrease) in Net Assets from Capital Share Transactions |
| (3,091,737 | ) |
| 4,706,628 |
| ||
Total Increase (Decrease) in Net Assets |
| (3,433,777 | ) |
| 4,476,411 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of Year/Period |
| 4,476,411 |
|
| — |
| ||
End of Year/Period | $ | 1,042,634 |
| $ | 4,476,411 |
| ||
Share Transactions: |
|
|
|
| ||||
Issued |
| — |
|
| 250,002 |
| ||
Redeemed |
| (150,000 | ) |
| (50,000 | ) | ||
Net Increase (Decrease) in Shares Outstanding from Share Transactions |
| (150,000 | ) |
| 200,002 |
|
(1) Commenced operations onAugust 29, 2018.
(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.
130
Statements of Changes in Net Assets(concluded)
KraneShares | ||||
Period Ended | ||||
Operations: |
|
| ||
Net Investment Income | $ | 60,170 |
| |
Net Realized Loss on Investments and Foreign Currency Translations |
| (22,714 | ) | |
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations |
| (623,173 | ) | |
Net Decrease in Net Assets Resulting from Operations |
| (585,717 | ) | |
Distributions: |
| (73,632 | ) | |
Capital Share Transactions:(2) |
|
| ||
Issued |
| 2,500,050 |
| |
Increase in Net Assets from Capital Share Transactions |
| 2,500,050 |
| |
Total Increase in Net Assets |
| 1,840,701 |
| |
Net Assets: |
|
| ||
Beginning of Period |
| — |
| |
End of Period | $ | 1,840,701 |
| |
Share Transactions: |
|
| ||
Issued |
| 100,002 |
| |
Net Increase in Shares Outstanding from Share Transactions |
| 100,002 |
|
(1) Commenced operations on April 12, 2019.
(2) Includes transaction costs related to creations and redemptions.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
131
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset | Net | Net Realized | Total from | Distribution | Distribution | Return | ||||||||
KraneShares CICC China Leaders 100 Index ETF(1) | ||||||||||||||
2020 | 28.00 | 0.06 | (2.98) | (2.92) | (0.05) | — | — | |||||||
2019 | 33.88 | 0.66 | (2.09) | (1.43) | (0.68) | (3.77) | — | |||||||
2018(2) | 34.06 | 0.24 | 7.22 | 7.46 | (0.30) | (7.34) | — | |||||||
2017 | 28.02 | 0.21 | 6.54 | 6.75 | (0.33) | — | (0.38) | |||||||
2016# | 34.20 | 0.18 | (3.21) | (3.03) | (0.25) | (2.89) | (0.01) | |||||||
KraneShares CSI China Internet ETF | ||||||||||||||
2020 | 47.04 | (0.02) | (1.79) | (1.81) | (0.04) | — | — | |||||||
2019 | 61.11 | 0.10 | (12.90) | (12.80) | (0.01) | (1.26) | — | |||||||
2018(2) | 42.21 | (0.19) | 19.43 | 19.24 | (0.34) | — | — | |||||||
2017 | 35.76 | (0.27) | 7.13 | 6.86 | (0.30) | — | (0.11) | |||||||
2016 | 34.18 | (0.20) | 1.84 | 1.64 | (0.06) | — | —(6) | |||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||
2020 | 31.88 | 0.47 | (2.34) | (1.87) | (0.50) | — | — | |||||||
2019 | 34.47 | 0.60 | (2.27) | (1.67) | (0.52) | (0.40) | — | |||||||
2018(2) | 28.38 | 0.21 | 6.22 | 6.43 | (0.18) | (0.16) | — | |||||||
2017 | 30.37 | (0.01) | (0.67) | (0.68) | — | (0.85) | (0.46) | |||||||
2016 | 53.55 | 0.62 | (13.67) | (13.05) | (0.41) | (9.72) | — | |||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||
2020 | 34.22 | 0.81 | (1.75) | (0.94) | — | — | (0.97) | |||||||
2019 | 37.23 | 1.31 | (2.29) | (0.98) | (1.95) | — | (0.08) | |||||||
2018(2) | 32.82 | 1.07 | 3.34 | 4.41 | — | — | — | |||||||
2017 | 34.18 | 0.61 | (1.96) | (1.35) | — | — | (0.01) | |||||||
2016 | 34.81 | 1.01 | (1.39) | (0.38) | (0.21) | (0.01) | (0.03) |
* | 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. |
# | After the close of the markets on September 13, 2016, the Fund effected a 2 for 1 share split. Per share data has been adjusted to reflect the share split. |
(1) | Effective November 1, 2018, the KraneShares Zacks New China ETF is renamed the KraneShares CICC China Leaders 100 Index ETF. |
(2) | March 29, 2018 represents the last business day of the Fund’s reporting period in 2018. |
(3) | As of July 28, 2017, pursuant to the terms of an Expense Limitation Agreement, the Adviser has contractually agreed to reduce its management fee and/or reimburse the Fund in an amount equal to the fees paid by the Fund to counsel to the Independent Trustees of the Trust until July 31, 2018. |
(4) | During the year ended March 31, 2019, the Fund participated in securities lending, generating $9,746,130 in security lending income. The expense ratios include $968,632 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69% and 0.70%, respectively. |
The accompanying notes are an integral part of the financial statements.
132
Total from | Net | Total | Net Assets | Ratio of | Ratio of | Ratio of Net | Portfolio | |||||||
(0.05) | 25.03 | (10.45) | 16,273 | 0.69 | 0.69 | 0.23 | 126 | |||||||
(4.45) | 28.00 | (0.62) | 2,800 | 0.70 | 0.70 | 2.21 | 181 | |||||||
(7.64) | 33.88 | 22.57 | 5,082 | 0.71(3) | 0.71(3) | 0.64 | 105 | |||||||
(0.71) | 34.06 | 24.54 | 3,406 | 0.84 | 0.84 | 0.55 | 86 | |||||||
(3.15) | 28.02 | (9.71) | 2,803 | 0.73 | 0.73 | 0.60 | 575 | |||||||
(0.04) | 45.19 | (3.85) | 2,313,638 | 0.73(5) | 0.73(5) | (0.05) | 33 | |||||||
(1.27) | 47.04 | (20.44) | 2,074,505 | 0.75(4) | 0.76(4) | 0.20 | 70 | |||||||
(0.34) | 61.11 | 45.62 | 1,628,622 | 0.70(3) | 0.70(3) | (0.33) | 29 | |||||||
(0.41) | 42.21 | 19.44 | 291,257 | 0.81 | 0.81 | (0.72) | 35 | |||||||
(0.06) | 35.76 | 4.77 | 194,869 | 0.72 | 0.72 | (0.56) | 27 | |||||||
(0.50) | 29.51 | (5.98) | 507,508 | 0.59 | 0.80 | 1.52 | 91 | |||||||
(0.92) | 31.88 | (4.01) | 604,035 | 0.60 | 0.80 | 2.05 | 106 | |||||||
(0.34) | 34.47 | 22.68 | 353,324 | 0.60 | 0.80 | 0.61 | 52 | |||||||
(1.31) | 28.38 | (2.04) | 52,494 | 0.72(7) | 0.84(7) | (0.04) | 95 | |||||||
(10.13) | 30.37 | (27.18) | 4,555 | 0.93(8) | 1.18(8) | 1.18 | 116 | |||||||
(0.97) | 32.31 | (2.75) | 12,924 | 0.57^ | 0.70^ | 2.46^ | — | |||||||
(2.03) | 34.22 | (2.52) | 18,822 | 0.58^ | 0.70^ | 3.76^ | — | |||||||
— | 37.23 | 13.44 | 13,030 | 0.77^(3)(9) | 0.89^(3)(9) | 3.10^ | — | |||||||
(0.01) | 32.82 | (3.95)(10) | 9,845 | 0.95^ | 1.07^ | 1.84^ | — | |||||||
(0.25) | 34.18 | (1.11) | 18,799 | 0.57^ | 0.69^ | 2.92^ | 717 |
(5) During the year ended March 31, 2020, the Fund participated in securities lending, generating $5,794,534 in security lending income. The expense ratios include $579,613 in security lending fees paid to the Adviser. Had these fees been excluded, the expense ratios would have been 0.69% and0.69%, respectively.
(6) Amount was less than $0.005 per share.
(7) As of February 17, 2017, pursuant to the terms of an Expense Limitation Agreement, the Adviser had contractually agreed to waive its management fee by 0.20% of the Fund’s average daily net assets.
(8) Pursuant to an Investment Advisory Agreement between the Trust and the Adviser, the Fund paid the Adviser a fee, calculated daily and paid monthly, at an annual rate of 0.78% of the average daily net assets of the Fund (prior to March 24, 2016, the Fund paid the Adviser at an annual rate of 1.10% of the average daily net assets of the Fund). Effective March 24, 2016, pursuant to the terms of an Expense Limitation Agreement, the Adviser had contractually agreed to reduce its management fee to 0.68% of the Fund’s average daily net assets until July 31, 2017.
(9) The expenses during the year include a one-time, non-recurring expense. Had this expense not been included, the net and gross expense ratios for the period would have been 0.59% and 0.71%, respectively.
(10) Fund received reimbursement from third-party for dilution to shareholders for an accounting error. Absent the reimbursement, total return would have been (4.44)%.
The accompanying notes are an integral part of the financial statements.
133
Financial Highlights(continued)
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset | Net | Net Realized | Total from | Distribution | Distribution | Return | ||||||||
KraneShares MSCI All China Index ETF | ||||||||||||||
2020 | 25.48 | 0.36 | (1.93) | (1.57) | (0.38) | — | — | |||||||
2019 | 26.96 | 0.18 | (1.23) | (1.05) | (0.43) | — | — | |||||||
2018(1) | 22.56 | 0.45 | 4.28 | 4.73 | (0.33) | — | — | |||||||
2017 | 21.66 | 0.37 | 1.88 | 2.25 | (0.70) | (0.47) | (0.18) | |||||||
2016 | 25.63 | 0.29 | (3.86) | (3.57) | (0.35) | (0.05) | — | |||||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||||
2020 | 23.69 | 0.70 | (5.58) | (4.88) | (1.05) | — | — | |||||||
2019 | 25.64 | 0.48 | (1.82) | (1.34) | (0.61) | — | — | |||||||
2018(1)(3) | 25.00 | 0.08 | 0.59(6) | 0.67 | (0.03) | — | — | |||||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||||
2020 | 22.94 | 0.10 | (3.07) | (2.97) | (0.42) | — | — | |||||||
2019 | 26.48 | (0.00) | (3.54) | (3.54) | — | — | — | |||||||
2018(1)(5) | 25.00 | (0.03) | 1.51(6) | 1.48 | — | — | — | |||||||
KraneShares MSCI China Environment Index ETF | ||||||||||||||
2020 | 20.28 | 0.70 | (3.29) | (2.59) | (1.09) | — | — | |||||||
2019 | 23.86 | 0.39 | (3.61) | (3.22) | (0.36) | — | — | |||||||
2018(1)(8) | 25.00 | (0.09) | (1.05) | (1.14) | — | — | — | |||||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||||
2020 | 20.64 | 0.33 | (1.51) | (1.18) | (0.44) | — | — | |||||||
2019 | 23.30 | 0.21 | (2.62) | (2.41) | (0.25) | — | — | |||||||
2018(1)(10) | 25.00 | 0.02 | (1.72) | (1.70) | — | — | — | |||||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||||
2020 | 22.29 | 0.07 | 1.48 | 1.55 | (0.06) | — | — | |||||||
2019 | 26.65 | 0.02 | (4.30) | (4.28) | (0.04) | (0.04) | — | |||||||
2018(1)(12) | 25.00 | (0.03) | 1.68 | 1.65 | — | — | — |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of standard creation and redemption transaction fees associated with creation units. |
† | Annualized. |
†† | Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of in-kindtransfers. |
^ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses from investments in other investment companies. |
‡ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses from investments in other investment companies, except for investments in the KraneShares Bosera MSCI China A Share ETF. |
(1) | March 29, 2018 represents the last business day of the Fund’s reporting period in 2018. |
(2) | As of July 28, 2017, pursuant to the terms of an Expense Limitation Agreement, the Adviser has contractually agreed to reduce its management fee and/or reimburse the Fund in an amount equal to the fees paid by the Fund to counsel to the Independent Trustees of the Trust until July 31, 2018. |
The accompanying notes are an integral part of the financial statements.
134
Total from | Net | Total | Net Assets | Ratio of | Ratio of | Ratio of Net | Portfolio | |||||||
(0.38) | 23.53 | (6.30) | 7,059 | 0.49 | 0.69 | 1.47 | 7 | |||||||
(0.43) | 25.48 | (3.52) | 6,370 | 0.67 | 0.69 | 0.74 | 62 | |||||||
(0.33) | 26.96 | 20.99 | 2,696 | 0.63^(2) | 0.72^(2) | 1.75^ | 3 | |||||||
(1.35) | 22.56 | 11.24 | 2,256 | 0.37^ | 0.73^ | 1.70^ | 25 | |||||||
(0.40) | 21.66 | (14.00) | 2,166 | 0.91‡ | 1.12‡ | 1.27‡ | 1 | |||||||
(1.05) | 17.76 | (21.78) | 7,105 | 0.80 | 0.80 | 3.03 | 30 | |||||||
(0.61) | 23.69 | (4.94) | 21,322 | 0.79 | 0.79 | 2.05 | 72 | |||||||
(0.03) | 25.64 | 2.67 | 32,048 | 0.79^†(2)(4) | 0.80^†(2)(4) | 0.52^†(4) | 1†† | |||||||
(0.42) | 19.55 | (13.29) | 22,485 | 0.81 | 0.81 | 0.46 | 56 | |||||||
— | 22.94 | (13.37) | 28,680 | 0.80 | 0.80 | (0.02) | 119 | |||||||
— | 26.48 | 5.92 | 23,828 | 0.79†(2)(7) | 0.79†(2)(7) | (0.23)†(7) | —†† | |||||||
(1.09) | 16.60 | (13.17) | 1,661 | 0.79 | 0.79 | 3.81 | 53 | |||||||
(0.36) | 20.28 | (13.28) | 4,056 | 0.79 | 0.80 | 1.92 | 147 | |||||||
— | 23.86 | (4.56) | 7,158 | 0.78†(2)(9) | 0.79†(2)(9) | (0.78)†(9) | 36†† | |||||||
(0.44) | 19.02 | (6.15) | 17,116 | 0.72 | 0.72 | 1.57 | 53 | |||||||
(0.25) | 20.64 | (10.19) | 33,026 | 0.70 | 0.70 | 0.98 | 74 | |||||||
— | 23.30 | (6.80) | 26,798 | 0.70†(11) | 0.70†(11) | 0.43†(11) | 18†† | |||||||
(0.06) | 23.78 | 6.95 | 32,110 | 0.69 | 0.79 | 0.32 | 101 | |||||||
(0.08) | 22.29 | (15.99) | 39,004 | 0.79 | 0.79 | 0.08 | 71 | |||||||
— | 26.65 | 6.60 | 3,998 | 0.82†(13) | 0.82†(13) | (0.82)†(13) | —†† |
(3) The Fund commenced operations on September 7, 2017.
(4) The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.79% and 0.53%, respectively.
(5) The Fund commenced operations on October 11, 2017.
(6) 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.
(7) The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.78% and (0.22)%, respectively.
(8) The Fund commenced operations on October 12, 2017.
(9) The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.78%, 0.79% and (0.78)%, respectively.
(10) The Fund commenced operations on January 18, 2018.
(11) The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.69%, 0.69% and 0.44%, respectively.
(12) The Fund commenced operations on January 31, 2018.
(13) The expense ratio includes interest expense. Had this expense been excluded, the ratios would have been 0.79%, 0.79% and (0.79)%, respectively.
The accompanying notes are an integral part of the financial statements.
135
Financial Highlights(concluded)
Selected Per Share Data & Ratios
For the Years/Periods Ended March 31 (unless otherwise indicated)
For a Share Outstanding Throughout Each Period
Net Asset | Net | Net Realized | Total from | Distribution | Distribution | Return | ||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||||
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) | —(2) | (0.18) | |||||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||||
2020 | 22.38 | 0.01 | (1.16) | (1.15) | (0.37) | — | (0.01) | |||||||
2019(3) | 25.00 | (0.04) | (2.58) | (2.62) | —(2) | — | — | |||||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||||
2020(4) | 25.00 | 0.60 | (6.45) | (5.85) | (0.74) | — | — |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of standard creation and redemption transaction fees associated with creation units. |
† | Annualized. |
†† | Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of in-kindtransfers. |
(1) | The Fund commenced operations on June 26, 2018. |
(2) | Amount was less than $0.005 per share. |
(3) | The Fund commenced operations on August 29, 2018. |
(4) | The Fund commenced operations on April 12, 2019. |
The accompanying notes are an integral part of the financial statements.
136
Total from | Net | Total | Net Assets | Ratio of | Ratio of | Ratio of Net | Portfolio | |||||||
(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†† | |||||||
(0.38) | 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†† | |||||||
(0.74) | 18.41 | (24.31) | 1,841 | 0.50† | 0.60† | 2.54† | 5†† |
The accompanying notes are an integral part of the financial statements.
137
1. ORGANIZATION
KraneShares Trust (the “Trust”) is a Delaware Statutory Trust formed on February3, 2012. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. As of March31, 2020, the Trust had seventeen operational series. The financial statements herein and the related notes pertain to the KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF, KraneShares Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF (each, a “Fund” and collectively, the “Funds”). KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF are diversified Funds, as defined under Section 5(b)(1) of the Investment Company Act of 1940; while the KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF and KraneShares Emerging Markets Healthcare Index ETF are non-diversified Funds. Krane Funds Advisors, LLC (“Krane” or the ‘‘Adviser’’), a Delaware limited liability company, serves as the investment adviser for the Funds and is subject to the supervision of the Board of Trustees (the ‘‘Board’’). The Adviser is responsible for managing the investment activities of the Funds, the Funds’ business affairs and other administrative matters. The Adviser may use sub-advisers (each, a “Sub-Adviser” or collectively, the “Sub-Advisers”) to perform the day-to-day management of the Funds.
China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited owns a majority stake in Krane. Central Huijin Investment Limited, a mainland Chinese-domiciled entity, currently holds approximately 44.3% 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 50,000 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.
138
Notes to Financial Statements(continued)
The investment objective of each Fund in the table below is to seek investment results that generally correspond (before fees and expenses) to its respective index listed below (each, an “Underlying Index”):
KraneShares Fund | Index | |
KraneShares CICC China Leaders 100 Index ETF | CSI CICC Select 100 Index | |
KraneShares CSI China Internet ETF | CSI Overseas China Internet Index | |
KraneShares Bosera MSCI China A Share ETF | MSCI China A Index | |
KraneShares E Fund China Commercial Paper ETF | CSI Diversified High Grade Commercial Paper Index | |
KraneShares MSCI All China Index ETF | MSCI China All Shares Index | |
KraneShares MSCI One Belt One Road Index ETF | MSCI Global China Infrastructure Exposure Index | |
KraneShares Emerging Markets Consumer Technology Index ETF | Solactive Emerging Market Consumer Technology Index | |
KraneShares MSCI China Environment Index ETF | MSCI China IMI Environment 10/40 Index | |
KraneShares Electric Vehicles and Future Mobility Index ETF | Solactive Electric Vehicles and Future Mobility Index | |
KraneShares MSCI All China Health Care Index ETF | MSCI China All Shares Health Care 10/40 Index | |
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | Solactive USD China Corporate High Yield Bond Index | |
KraneShares Emerging Markets Healthcare Index ETF | Solactive Emerging Markets Healthcare Index | |
KraneShares MSCI Emerging Markets ex China Index ETF | MSCI Emerging Markets ex China Index |
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, including without limitation, the management, administration and distribution fees, are accrued daily and taken into account for purposes of determining NAV. The NAV per share for each Fund normally is calculated by the Administrator and determined as of the regularly scheduled close of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern Time) on each day that the Exchange is open.
In calculating the values of each Fund’s portfolio securities, securities listed on a securities exchange, 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 at the last reported sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at the time as of which the Fund’s NAV is calculated if a security’s exchange is normally open at that time). If there is no such reported sale, such securities are valued at the most recently reported bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such
139
Notes to Financial Statements(continued)
values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. The value of a swap contract is equal to the obligation (or rights) under the swap contract, which will generally be equal to the net amounts to be paid or received under the contract based upon the relative values of the positions held by each party to the contract as determined by the applicable independent, third party pricing agent. Exchange-traded options are valued at the last reported sales price on the exchange on which they are listed. If there is no such reported sale on the valuation date, long positions are valued at the most recent bid price, and short positions are valued at the most recent ask price. Futures are valued at the settlement price established by the board of trade on which they are traded. Foreign currency forward contracts are valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s spot rate and the 30-, 60-, 90- and 180-day forward rates provided by an independent pricing agent. The exchange rates used for valuation are captured as of the close of the London Stock Exchange each day normally at 4:00 p.m. Greenwich Mean Time. Prices for most securities held by a Fund are provided daily by independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Fund seeks to obtain bid and ask prices from two broker-dealers who make a market in the portfolio instrument and determines the average of the two. As of and during the year ended March31, 2020, the Funds did not hold options, swaps and 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 at the last reported sale price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. If there is no such reported sale, such securities are valued at the most recently reported bid price.
Securities for which market prices are not ‘‘readily available,’’ or are not deemed to reflect current market values, or are debt securities where no evaluated price is available from the Trust’s third-party pricing agents pursuant to established methodologies, are fair valued in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using ‘‘fair value’’ pricing may include, but are not limited to: the security’s trading has been halted or suspended; the security’s primary trading market is temporarily closed; or the security has not been traded for an extended period of time. A Fund may fair value certain of the foreign securities held by a Fund each day a Fund calculates its NAV.
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.
140
Notes to Financial Statements(continued)
With respect to trade-halted securities, the Trust typically will fair value a trade-halted security by adjusting the security’s last market close price by the security’s sector performance, as measured by a predetermined index, unless Krane recommends and the Trust’s Fair Valuation Committee determines to make additional adjustments. Certain foreign securities exchanges have mechanisms in place that confine one day’s price movement in an individual security to a pre-determined price range based on that day’s opening price (‘‘Collared Securities’’). Fair value determinations for Collared Securities will generally be capped by Krane 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.
Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different than the value that could actually be realized upon the sale of the security or that another fund that uses market quotations or its own fair value procedures to price the same securities. In addition, fair value pricing could result in a difference between the prices used to calculate a Fund’s NAV and the prices used by the Underlying Index. This may adversely affect a Fund’s ability to track the Underlying Index.
Trading in securities on many foreign exchanges is normally completed before the close of business on each Business Day. In addition, securities trading in a particular country or countries may not take place on each Business Day or may take place on days that are not Business Days. Changes in valuations on certain securities may occur at times or on days on which 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 you will not be able to purchase or sell your shares. Fund shares are purchased or sold on a national securities exchange at market prices, which may be higher or lower than NAV. No secondary sales will be made to brokers or dealers at a concession by the Distributor or by a Fund. Purchases and sales of shares in the secondary market, which will not involve a Fund, will be subject to customary brokerage commissions and charges. Transactions in Fund shares will be priced at NAV only if you purchase or redeem shares directly from a Fund in Creation Units.
As of March31, 2020, the total market value of securities valued in accordance with Fair Value Procedures is as follows:
KraneShares Fund | Fair Valued | % of Net Assets | |||
KraneShares CICC China Leaders 100 Index ETF | $ | 0 | 0.0% | ||
KraneShares Bosera MSCI China A Share ETF |
| 260,655 | 0.1% | ||
KraneShares MSCI All China Index ETF |
| 3,374 | 0.0% | ||
KraneShares MSCI One Belt One Road Index ETF |
| 30,731 | 0.4% | ||
KraneShares MSCI China Environment Index ETF |
| 1,061 | 0.1% |
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly,
141
Notes to Financial Statements(continued)
the fair value hierarchy gives the highest priority to quoted prices (unadjusted)in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date.
Level 2 — Other significant observable inputs (including quoted prices in non-active markets, quoted prices for similar investments, fair value of investments for which the Funds have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term, and short-term investments valued at amortized cost).
Level 3 — Significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments, broker quotes, fair value of investments for which the Funds do not have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term).
Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement. For details of the investment classification, refer to each Fund’s Schedule of Investments.
FEDERAL INCOME TAXES — It is each Fund’s intention to qualify or continue to qualify as a regulated investment company for federal income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute annually all or substantially all of its taxable income and gains to shareholders. Accordingly, no provisions for federal income taxes have been made in the financial statements.
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 March31, 2020, 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 12months.
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.
142
Notes to Financial Statements(continued)
Dividend income received from affiliated funds is recognized on the ex-dividend date and is recorded as income distributions in the Statement of Operations. Capital gain distributions received from affiliated funds are recognized on ex-dividend date and are recorded on the Statement of Operations as such. Costs used in determining realized gains and losses on the sales of affiliated funds are on the basis of specific identification. See details on the Statements of Operations.
FOREIGN CURRENCY — The books and records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars at the relevant rates of exchange prevailing on the respective dates of such transactions. The Funds do not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. The Funds report certain foreign-currency-related transactions as components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income for Federal income tax purposes.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS — The Funds distribute their net investment income at least annually. Any net realized capital gains are distributed annually. All distributions are recorded on the ex-dividend date.
CASH OVERDRAFT CHARGES — Per the terms of an agreement with Brown Brothers Harriman & Co. (“BBH”),the Funds’ Custodian, if a Fund has a cash overdraft on a given day, it will be assessed an overdraft charge of LIBOR plus 2.00%. Cash overdraft charges are included in “Interest Expense” on the Statements of Operations.
SECURITIES LENDING — The Funds may lend securities from their portfolios to brokers, dealers and other financial institutions. In connection with such loans, a Fund remains the beneficial owner of the loaned securities and continues to receive payments in amounts approximately equal to the interest, dividends or other distributions payable on the loaned securities. A Fund also has the right to terminate a loan at any time. A Fund does not have the right to vote on securities while they are on loan. Loans of portfolio securities will not exceed 33 1/3% of the value of a Fund’s total assets (including the value of all assets received as collateral for the loan). A Fund will receive collateral consisting of cash in the form of U.S. dollars, foreign currency, or securities issued or fully guaranteed by the U.S. Government which will be maintained at all times in an amount equal to at least 102% on domestic securities and 105% on international securities of the current market value of the loaned securities. If the collateral consists of cash, a Fund will reinvest the cash and pay the borrower a pre-negotiated fee or “rebate” from any return earned on the investment. Should the borrower of the securities fail financially, a Fund may experience delays in recovering the loaned securities or exercising its rights in the collateral. In a loan transaction, a Fund will also bear the risk of any decline in value of securities acquired with cash collateral. Krane and a sub-adviser are subject to potential conflicts of interest because the compensation paid to them increases in connection with any net income received by a Fund from a securities lending program. Each Fund pays Krane 10% of any net monthly income received from the investment of cash collateral and loan fees received from borrowers in respect of each securities loan (net of any amounts paid to the custodian and/or securities lending agent or rebated to borrowers) (see Note 3).
143
Notes to Financial Statements(continued)
The following table discloses the securities on loan as of March31, 2020:
KraneShares Fund | Market Value of | Cash Collateral for | ||||
KraneShares CSI China Internet ETF | $ | 88,942,649 | $ | 92,943,944 | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
| 700,238 |
| 735,292 | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| 616,897 |
| 640,629 |
CREATION UNITS — The Funds issue and redeem Shares at NAV and only in large blocks of Shares (each block of Shares for a Fund is a Creation Unit of 50,000 Shares, or multiples thereof).
Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the 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 will be charged.
The following table discloses Creation Unit breakdown for the year ended March31, 2020:
KraneShares Fund | Creation | Standard | Value at | Standard | Maximum | ||||||||
KraneShares CICC China Leaders 100 Index ETF | 50,000 | $ | 1,700 | $ | 1,251,500 | $ | 1,700 | 2.00% | |||||
KraneShares CSI China Internet ETF | 50,000 |
| 500 |
| 2,259,500 |
| 500 | 2.00% | |||||
KraneShares Bosera MSCI China A Share ETF | 50,000 |
| 7,500 |
| 1,475,500 |
| 7,500 | 2.00% | |||||
KraneShares E Fund China Commercial Paper ETF | 50,000 |
| 1,000 |
| 1,615,500 |
| 1,000 | 2.00% | |||||
KraneShares MSCI All China Index ETF | 50,000 |
| 4,900 |
| 1,176,500 |
| 4,900 | 2.00% | |||||
KraneShares MSCI One Belt One Road Index ETF | 50,000 |
| 3,600 |
| 888,000 |
| 3,600 | 2.00% | |||||
KraneShares Emerging Markets Consumer Technology Index ETF | 50,000 |
| 1,500 |
| 977,500 |
| 1,500 | 2.00% | |||||
KraneShares MSCI China Environment Index ETF | 50,000 |
| 800 |
| 830,000 |
| 800 | 2.00% | |||||
KraneShares Electric Vehicles and Future Mobility Index ETF | 50,000 |
| 800 |
| 951,000 |
| 800 | 2.00% | |||||
KraneShares MSCI All China Health Care Index ETF | 50,000 |
| 1,200 |
| 1,189,000 |
| 1,200 | 2.00% | |||||
KraneShares CCBS China Corporate High Yield Bond USD Index Fund | 50,000 |
| 1,000 |
| 1,866,000 |
| 1,000 | 2.00% | |||||
KraneShares Emerging Markets Healthcare Index ETF | 50,000 |
| 2,100 |
| 1,042,500 |
| 2,100 | 2.00% | |||||
KraneShares Emerging Markets ex China Index ETF | 100,000 |
| 17,500 |
| 1,841,000 |
| 17,500 | 2.00% |
____________
* As a percentage of the Creation Unit(s) purchased.
144
Notes to Financial Statements(continued)
CASH AND CASH EQUIVALENTS — Idle cash and currency balances may be swept into various overnight sweep accounts and are classified as cash equivalents on the Statement of Assets and Liabilities. These amounts, at times, may exceed United States federally insured limits. Amounts swept are available on the next business day.
3. RELATED PARTY TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT — The Adviser serves as investment adviser to each Fund pursuant to an Investment Advisory Agreement between the Trust on behalf of each Fund and the Adviser (the “Agreement”). Under the Agreement, Krane is responsible for reviewing, supervising and administering each Fund’s investment program and the general management and administration of the Trust. In addition to these services, to the extent a Fund engages in securities lending, Krane will: (i) assist the securities lending agent of the Fund (the “Agent”) to determine which securities are available for loan, (ii) monitor the Agent’s activities to ensure that securities loans are effected in accordance with Krane’s instructions and in accordance with applicable procedures and guidelines adopted by the Board, (iii) make recommendations to the Board regarding the Fund’s participation in securities lending; (iv) prepare appropriate periodic reports for, and seek appropriate periodic approvals from, the Board with respect to securities lending activities, (v) respond to Agent inquiries concerning the Agent’s activities, and (vi) such other related duties as Krane deems necessary or appropriate (this provision became effective with respect to the Funds on the later of October5, 2017, or the date the Fund commenced operations). The Board of Trustees of the Trust supervises Krane and establishes policies that Krane must follow in its management activities.
The Agreement requires the Adviser to pay all operating expenses of the Funds, except: (a) interest and taxes (including, but not limited to, income, excise, transaction, transfer and withholding taxes); (b) expenses of the Funds incurred with respect to the acquisition and disposition of portfolio securities and the execution of portfolio transactions, including brokerage commissions and short sale dividend or interest expense; (c) expenses incurred in connection with any distribution plan adopted by the Trust in compliance with Rule 12b-1 under the Investment Company Act, including distribution fees; (d) “Acquired Fund Fees and Expenses” (as defined by Form N-1A under the 1940 Act); (e) litigation expenses; (f) the compensation payable to the Adviser under the Agreement; (g) compensation and expenses of the Independent Trustees (including any fees of independent legal counsel to the Independent Trustees); and (h) any expenses determined to be extraordinary expenses by the Board. In addition, effective on the later of October5, 2017, or the date the Fund commenced operations, under the Agreement, while the fees and expenses related to the Funds’ securities lending-related activities reduce the gross revenues and income of the Funds from such activities, they are not fees and expenses for which Krane is responsible.
Each Agreement provides that each Fund pays a unitary (or unified) fee to the Adviser for advisory and management services provided to the Fund, subject to the exceptions noted herein. In this context, there exists a risk that a Trust service provider will seek recourse against the Trust if is not timely paid by Krane for the fees and expenses for which it is responsible, which could materially adversely affect the Funds. Pursuant to the Agreement between the Trust and the Adviser, the Funds below pay the Adviser a fee, which is calculated daily and paid monthly, at the following annual rates, based on a percentage of the average daily net assets of each Fund. In addition, as compensation for the services provided by the Adviser in connection with any securities lending-related activities, each Fund pays the Adviser 10% of the monthly investment income received from the investment
145
Notes to Financial Statements(continued)
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 Fund | Management | |
KraneShares CICC China Leaders 100 Index ETF | 0.68% | |
KraneShares CSI China Internet ETF | 0.68% | |
KraneShares Bosera MSCI China A Share ETF | 0.78% | |
KraneShares E Fund China Commercial Paper ETF | 0.68% | |
KraneShares MSCI All China Index ETF | 0.68% | |
KraneShares MSCI One Belt One Road Index ETF | 0.78% | |
KraneShares Emerging Markets Consumer Technology Index ETF | 0.78% | |
KraneShares MSCI China Environment Index ETF | 0.78% | |
KraneShares Electric Vehicles and Future Mobility Index ETF | 0.68% | |
KraneShares MSCI All China Health Care Index ETF | 0.78% | |
KraneShares CCBS China Corporate High Yield Bond USD Index Fund | 0.68% | |
KraneShares Emerging Markets Healthcare Index ETF | 0.78% | |
KraneShares MSCI Emerging Markets ex China Index ETF | 0.58% |
Pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to waive its management fee for the KraneShares Bosera MSCI China A Share ETF by 0.20% of the Fund’s average daily net assets. This contractual fee waiver will continue until August1, 2020, and may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Pursuant to the terms of a Fee Waiver Agreement, the Adviser has contractually agreed to reduce its management fee for the KraneShares E Fund China Commercial Paper ETF by 0.12% of the Fund’s average daily net assets until August1, 2020. The Fee Waiver Agreement may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Effective April12, 2019, pursuant to the terms of a Fee Waiver Agreement, Krane has contractually agreed to waive its advisory fee for the KraneShares MSCI All China Index ETF by 0.20% of the Fund’s average daily net assets and reduce its management fee in an amount equal to any Acquired Fund Fees and Expenses incurred by the Fund from its investments in the KraneShares Bosera MSCI China A Share ETF. This Fee Waiver Agreement will continue until August1, 2020. The Fee Waiver Agreement may only be terminated prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Investment Advisory Agreement for the Fund is terminated.
Effective May30, 2019, Krane has contractually agreed to waive its management fee for the KraneShares MSCI All China Health Care Index ETF by 0.14% of the Fund’s average daily net assets. Krane has contractually agreed to waive its management fee for the KraneShares MSCI Emerging Markets ex China Index ETF by 0.10% of the Fund’s average daily net assets. The Fee Waiver Agreements will continue until August1, 2020, and may only be terminated prior thereto by the Board.
Effective March31, 2020, Krane has contractually agreed to waived its management fee for the KraneShares Emerging Markets Consumer Technology Index ETF by 0.10% of the Fund’s average daily assets. The Fee Waiver Agreement will continue until August21, 2021, and may only be terminated prior thereto by the Board.
146
Notes to Financial Statements(continued)
The Adviser and each Sub-Adviser bear all of their own costs associated with providing these advisory services.
SUB-ADVISORY AGREEMENT — Bosera Asset Management (International) Co., Ltd. (“Bosera”), operating out of Hong Kong, serves as the Sub-Adviser to the KraneShares Bosera MSCI China A Share ETF and is responsible for the day-to-day management of the Fund, subject to the supervision by the Adviser and the Board. For the services Bosera provides to KraneShares Bosera MSCI China A Share ETF, the Adviser pays Bosera a fee equal to 50% of the net revenue the Adviser receives from the Fund.
CCB Securities Ltd. (“CCBS”), located at 18/F CCB Centre, 18 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong, serves as the sub-adviser of KraneShares CCBS China Corporate High Yield Bond USD Index ETF. CCBS is responsible for the day-to-day investment management of the Fund, subject to the supervision of Krane and the Board. The Adviser has entered into a Sub-Advisory Agreement with CCBS pursuant to which the Adviser has agreed to pay CCBS a fee equal to 50% of net revenue earned by the Adviser from the Fund. For these purposes, net revenue is defined as gross revenue less gross fund-related expenses (including any waiver by the Adviser of its compensation under the investment advisory agreement and any payments or reimbursements by Krane of the Fund’s expenses).
E Fund Management (Hong Kong) Co., Limited (‘‘E Fund”), operating out of Hong Kong, serves as the Sub-Adviser to the KraneShares E Fund China Commercial Paper ETF and is responsible for the day-to-day management of the Fund, subject to the supervision by the Adviser and the Board. For the services E Fund provides to KraneShares E Fund China Commercial Paper ETF, the Adviser pays E Fund a fee equal to 50% of the net revenue the Adviser receives from the Fund.
DISTRIBUTION AGREEMENT — SEI Investments Distribution Co. (the “Distributor”), a wholly-owned subsidiary of SEI Investments Company, and an affiliate of the administrator, serves as the Funds’ distributor of Creation Units pursuant to a Distribution Agreement. The Distributor does not maintain any secondary market in Fund shares.
The Trust has adopted a Distribution and Service Plan (“Plan”) pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Plan, each Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year for certain distribution-related activities. For the year ended March31, 2020 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.
147
Notes to Financial Statements(continued)
4. INVESTMENT TRANSACTIONS
For the year ended March31, 2020, the purchases and sales of investments in securities excluding in-kind transactions, long-term U.S. Government and short-term securities were:
KraneShares Funds | Purchases | Sales and | ||||
KraneShares CICC China Leaders 100 Index ETF | $ | 28,427,942 | $ | 13,508,147 | ||
KraneShares CSI China Internet ETF |
| 708,896,988 |
| 611,794,993 | ||
KraneShares Bosera MSCI China A Share ETF |
| 545,972,228 |
| 595,004,954 | ||
KraneShares E Fund China Commercial Paper ETF |
| — |
| — | ||
KraneShares MSCI All China Index ETF |
| 1,607,925 |
| 494,279 | ||
KraneShares MSCI One Belt One Road Index ETF |
| 4,937,979 |
| 11,175,336 | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
| 13,030,040 |
| 14,045,819 | ||
KraneShares MSCI China Environment Index ETF |
| 1,553,439 |
| 3,280,615 | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| 13,836,671 |
| 17,083,722 | ||
KraneShares MSCI All China Health Care Index ETF |
| 25,122,601 |
| 30,268,145 | ||
KraneShares CCBS China Corporate High Yield Bond USD Index Fund |
| 8,671,784 |
| 8,087,963 | ||
KraneShares Emerging Markets Healthcare Index ETF |
| 1,058,433 |
| 4,099,469 | ||
KraneShares MSCI Emerging Markets ex China Index ETF |
| 2,616,142 |
| 125,988 |
During the year ended March31, 2020, there were no purchases or sales of long-term U.S. government securities for the Funds.
For the year ended March31, 2020, in-kind transactions associated with creations and redemptions were:
Purchases | Sales and | Realized | ||||||||
KraneShares CSI China Internet ETF | $ | 1,038,993,134 | $ | 707,156,148 | $ | 89,214,428 |
| |||
KraneShares MSCI All China Index ETF |
| 228,015 |
| — |
| — |
| |||
KraneShares MSCI One Belt One Road Index ETF |
| — |
| 5,313,765 |
| (26,781 | ) | |||
KraneShares Emerging Markets Consumer Technology Index ETF |
| 6,960,519 |
| 8,617,984 |
| 1,189,941 |
| |||
KraneShares MSCI China Environment Index ETF |
| — |
| 109,428 |
| (13,801 | ) | |||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| 779,547 |
| 12,559,350 |
| 1,557,167 |
| |||
KraneShares MSCI All China Health Care Index ETF |
| — |
| 450,453 |
| (2,295 | ) | |||
KraneShares Emerging Markets Healthcare Index ETF |
| — |
| 57,500 |
| 3,830 |
|
148
Notes to Financial Statements(continued)
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, reclassification of long term capital gain distribution on REITs, investments in PFICs, net operating loss, perpetual bond adjustments and distribution reclassification. The permanent difference that is credited or charged to Paid-in Capital and Distributable Earnings for the fiscal year ended March31, 2020 are primarily related to redemptions in-kind.
KraneShares Funds | Distributable | Paid-in Capital | ||||||
KraneShares CSI China Internet ETF | $ | (2,691,292 | ) | $ | 2,691,292 |
| ||
KraneShares E Fund China Commercial Paper ETF |
| 373,106 |
|
| (373,106 | ) | ||
KraneShares MSCI One Belt One Road Index ETF |
| 124,104 |
|
| (124,104 | ) | ||
KraneShares Emerging Markets Consumer Technology Index ETF |
| (596,079 | ) |
| 596,079 |
| ||
KraneShares MSCI China Environment Index ETF |
| 34,413 |
|
| (34,413 | ) | ||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| (1,315,016 | ) |
| 1,315,016 |
| ||
KraneShares MSCI All China Health Care Index ETF |
| (3,830 | ) |
| 3,830 |
| ||
KraneShares Emerging Markets Healthcare Index ETF |
| 2,295 |
|
| (2,295 | ) |
These reclassifications have no impact on net assets or net asset value per share.
149
Notes to Financial Statements(continued)
The tax character of dividends and distributions paid during the years or periods ended March31, 2020 and March31, 2019 were as follows:
KraneShares Funds | Ordinary | Long-Term | Return of | Totals | ||||||||
KraneShares CICC China Leaders 100 Index ETF | ||||||||||||
2020 | $ | 39,838 | $ | — | $ | — | $ | 39,838 | ||||
2019 |
| 244,415 |
| 200,757 |
| — |
| 445,172 | ||||
|
|
|
| |||||||||
KraneShares CSI China Internet ETF | ||||||||||||
2020 | $ | 1,580,181 | $ | — | $ | — | $ | 1,580,181 | ||||
2019 |
| 620,213 |
| 52,155,720 |
| — |
| 52,775,933 | ||||
|
|
|
| |||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||
2020 | $ | 9,500,578 | $ | — | $ | — | $ | 9,500,578 | ||||
2019 |
| 10,176,902 |
| 712,126 |
| — |
| 10,889,028 | ||||
|
|
|
| |||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||
2020 | $ | — | $ | — | $ | 521,147 | $ | 521,147 | ||||
2019 |
| 704,248 |
| — |
| 28,559 |
| 732,807 | ||||
|
|
|
| |||||||||
KraneShares MSCI All China Index ETF | ||||||||||||
2020 | $ | 115,192 | $ | — | $ | — | $ | 115,192 | ||||
2019 |
| 43,104 |
| — |
| — |
| 43,104 | ||||
|
|
|
| |||||||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||
2020 | $ | 523,629 | $ | — | $ | — | $ | 523,629 | ||||
2019 |
| 553,422 |
| — |
| — |
| 553,422 | ||||
|
|
|
| |||||||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||
2020 | $ | 337,518 | $ | — | $ | — | $ | 337,518 | ||||
2019 |
| — |
| — |
| — |
| — | ||||
|
|
|
| |||||||||
KraneShares MSCI China Environment Index ETF | ||||||||||||
2020 | $ | 108,818 | $ | — | $ | — | $ | 108,818 | ||||
2019 |
| 107,314 |
| — |
| — |
| 107,314 | ||||
|
|
|
| |||||||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||
2020 | $ | 391,574 | $ | — | $ | — | $ | 391,574 | ||||
2019 |
| 382,192 |
| — |
| — |
| 382,192 | ||||
|
|
|
| |||||||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||
2020 | $ | 54,459 | $ | — | $ | — | $ | 54,459 | ||||
2019 |
| 136,712 |
| — |
| — |
| 136,712 | ||||
|
|
|
| |||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||
2020 | $ | 570,699 | $ | 30,638 | $ | — | $ | 601,337 | ||||
2019 |
| 374,120 |
| — |
| 49,368 |
| 423,488 | ||||
|
|
|
| |||||||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||
2020 | $ | 18,337 | $ | — | $ | 611 | $ | 18,948 | ||||
2019 |
| 752 |
| — |
| — |
| 752 | ||||
|
|
|
| |||||||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||
2020 | $ | 73,632 | $ | — | $ | — | $ | 73,632 |
150
Notes to Financial Statements(continued)
As of March31, 2020, the components of tax basis distributable earnings (accumulated losses) were as follows:
KraneShares | KraneShares | KraneShares | KraneShares E | KraneShares | ||||||||||||||||
Undistributed Ordinary Income | $ | 393 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||
Capital Loss Carryforwards |
| (486,901 | ) |
| (126,978,517 | ) |
| (20,470,797 | ) |
| (22,499 | ) |
| (128,223 | ) | |||||
Qualified Late-Year Loss Deferrals |
| (44,278 | ) |
| (2,468,358 | ) |
| (1,106,511 | ) |
| — |
|
| (4,302 | ) | |||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency |
| (1,113,255 | ) |
| (319,529,591 | ) |
| (45,051,042 | ) |
| (114,949 | ) |
| 57,898 |
| |||||
Other Temporary Differences |
| (2 | ) |
| 5 |
|
| (4 | ) |
| (308,520 | ) |
| 2 |
| |||||
Total Distributable Losses | $ | (1,644,043 | ) | $ | (448,976,461 | ) | $ | (66,628,354 | ) | $ | (445,968 | ) | $ | (74,625 | ) |
KraneShares | KraneShares | KraneShares | KraneShares | KraneShares | ||||||||||||||||
Undistributed Ordinary Income | $ | 29,653 |
| $ | 72,145 |
| $ | 3,783 |
| $ | 27,506 |
| $ | — |
| |||||
Capital Loss Carryforwards |
| (3,963,507 | ) |
| (3,721,922 | ) |
| (1,830,124 | ) |
| (3,212,141 | ) |
| (7,682,624 | ) | |||||
Qualified Late-Year Loss Deferrals |
| — |
|
| — |
|
| — |
|
| — |
|
| (46,292 | ) | |||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency |
| (2,468,594 | ) |
| (6,501,885 | ) |
| (281,923 | ) |
| (3,904,940 | ) |
| 135,861 |
| |||||
Other Temporary Differences |
| (1 | ) |
| 1 |
|
| — |
|
| (1 | ) |
| — |
| |||||
Total Distributable Losses | $ | (6,402,449 | ) | $ | (10,151,661 | ) | $ | (2,108,264 | ) | $ | (7,089,576 | ) | $ | (7,593,055 | ) |
151
Notes to Financial Statements(continued)
KraneShares | KraneShares | KraneShares | ||||||||||
Undistributed Ordinary Income | $ | 193,052 |
| $ | — |
| $ | 14,062 |
| |||
Capital Loss Carryforwards |
| — |
|
| (509,318 | ) |
| (5,648 | ) | |||
Unrealized Depreciation on Investments and Foreign Currency |
| (983,862 | ) |
| (60,034 | ) |
| (667,763 | ) | |||
Other Temporary Differences |
| 51,978 |
|
| 1 |
|
| — |
| |||
Total Distributable Losses | $ | (738,832 | ) | $ | (569,351 | ) | $ | (659,349 | ) |
Qualified late year ordinary and Post-October capital losses (including currency and specified gain/loss items) represent losses realized from January1, 2020 through March31, 2020 and November1, 2019 through March31, 2020, respectively, that in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
Other temporary differences primarily consist of late year and specified loss deferrals, PFIC mark to market, perpetual bond adjustments, and book adjustments not recognized for tax.
The Funds have capital losses carried forward as follows:
KraneShares Funds | Short-Term | Long-Term | Total | ||||||
KraneShares CICC China Leaders 100 Index ETF | $ | 486,901 | $ | — | $ | 486,901 | |||
KraneShares CSI China Internet ETF |
| 117,447,514 |
| 9,531,003 |
| 126,978,517 | |||
KraneShares Bosera MSCI China A Share ETF |
| 2,191,666 |
| 18,279,131 |
| 20,470,797 | |||
KraneShares E Fund China Commercial Paper ETF |
| 22,287 |
| 212 |
| 22,499 | |||
KraneShares MSCI All China Index ETF |
| 9,169 |
| 119,054 |
| 128,223 | |||
KraneShares MSCI One Belt One Road Index ETF |
| 2,418,188 |
| 1,545,319 |
| 3,963,507 | |||
KraneShares Emerging Markets Consumer Technology Index ETF |
| 2,983,669 |
| 738,253 |
| 3,721,922 | |||
KraneShares MSCI China Environment Index ETF |
| 1,172,876 |
| 657,248 |
| 1,830,124 | |||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| 2,270,727 |
| 941,414 |
| 3,212,141 | |||
KraneShares MSCI All China Health Care Index ETF |
| 4,948,994 |
| 2,733,630 |
| 7,682,624 | |||
KraneShares Emerging Markets Healthcare Index ETF |
| 509,318 |
| — |
| 509,318 | |||
KraneShares MSCI Emerging Markets ex China |
| 5,648 |
| — |
| 5,648 |
During the year ended March31, 2020, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI All China Index ETF and KraneShares MSCI One Belt One Road Index ETF, utilized $6,840, $5,866 and $93,297 of capital loss carryforwards, respectively, to offset capital gains.
152
Notes to Financial Statements(continued)
The differences between book and tax-basis unrealized appreciation and depreciation are attributable primarily to the tax deferral of losses on wash sales and investments in passive foreign investment companies. The federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Funds at March31, 2020 were as follows:
KraneShares Funds | Federal Tax | Aggregated | Aggregated | Net Unrealized | ||||||||||
KraneShares CICC China Leaders 100 Index ETF | $ | 17,367,490 | $ | 438,876 | $ | (1,552,131 | ) | $ | (1,113,255 | ) | ||||
KraneShares CSI China Internet ETF |
| 2,724,919,543 |
| 236,945,206 |
| (556,474,681 | ) |
| (319,529,475 | ) | ||||
KraneShares Bosera MSCI China A Share ETF |
| 552,394,730 |
| 42,897,773 |
| (87,950,438 | ) |
| (45,052,665 | ) | ||||
KraneShares E Fund China Commercial Paper ETF |
| 12,302,674 |
| 27,231 |
| (142,955 | ) |
| (115,724 | ) | ||||
KraneShares MSCI All China Index ETF |
| 6,995,025 |
| 874,168 |
| (816,196 | ) |
| 57,972 |
| ||||
KraneShares MSCI One Belt One Road Index ETF |
| 9,528,040 |
| 414,720 |
| (2,882,723 | ) |
| (2,468,003 | ) | ||||
KraneShares Emerging Markets Consumer Technology Index ETF |
| 29,558,200 |
| 934,681 |
| (7,435,042 | ) |
| (6,500,361 | ) | ||||
KraneShares MSCI China Environment Index ETF |
| 1,861,971 |
| 144,950 |
| (426,885 | ) |
| (281,935 | ) | ||||
KraneShares Electric Vehicles and Future Mobility Index ETF |
| 21,541,475 |
| 1,311,512 |
| (5,214,614 | ) |
| (3,903,102 | ) | ||||
KraneShares MSCI All China Health Care Index ETF |
| 31,978,872 |
| 4,275,842 |
| (4,139,981 | ) |
| 135,861 |
| ||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF |
| 11,879,946 |
| 110,970 |
| (1,094,832 | ) |
| (983,862 | ) | ||||
KraneShares Emerging Markets Healthcare Index ETF |
| 1,101,076 |
| 167,405 |
| (227,331 | ) |
| (59,926 | ) | ||||
KraneShares MSCI Emerging Markets ex China Index ETF |
| 2,484,505 |
| 45,962 |
| (713,165 | ) |
| (667,203 | ) |
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
153
Notes to Financial Statements(continued)
the taxation of non-resident investors are quickly evolving and certain of the tax regulations to be issued by the PRC State Administration of Taxation and/or the PRC Ministry of Finance to clarify matters may apply retrospectively. Such retroactively applied rules may be adverse to the Funds and their shareholders. It is also unclear how China’s value added tax (“VAT”) may be affected by tax treaty provisions. If such a tax is collected, the expenses will be passed on and borne by the Funds. The imposition of such taxes, as well as future changes in applicable PRC tax law, may adversely affect the Funds. If the Funds expect VAT to be imposed, they reserve the right to establish a reserve for such tax. If the Funds establish such a reserve but are not ultimately subject to the tax, shareholders who redeemed or sold their shares while the reserve was in place will effectively bear the tax and may not benefit from the later release, if any, of the reserve. Conversely, if the Funds do not establish such a reserve but ultimately are subject to the tax, shareholders who redeemed or sold their shares prior to the tax being withheld, reserved or paid will have effectively avoided the tax, even if they benefited from investments in a Fund. Effective November17, 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 November17, 2014.
On November7, 2018, China’s Ministry of Finance and the State Administration of Taxation jointly issued Circular 108. This circular announced a three year exemption from corporate income tax withholding (“WHT”) and Value Added Tax (“VAT”) for China-sourced bond interest derived by overseas institutional investors. The WHT and VAT exemptions apply from November7, 2018 to November6, 2021.
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”. The following risks pertain to all Funds, unless otherwise noted.
Cash and Cash Equivalents Risk — The Fund may hold cash or cash equivalents. Generally, such positions offer less potential for gain than other investments. Holding cash or cash equivalents, even strategically, may lead to missed investment opportunities. This is particularly true when the market for other investments in which the Fund may invest is rapidly rising. If the Fund holds cash uninvested it will be subject to the credit risk of the depositing institution holding the cash.
CHINA RISK — The Chinese economy is generally considered an emerging market and can be significantly affected by economic and political conditions in China and surrounding Asian countries. In addition, the Chinese economy is export-driven and highly reliant on trade. A downturn in the economies of China’s primary trading partners could slow or eliminate the growth of the Chinese economy and adversely impact the Fund’s investments. The Chinese government strictly regulates the payment of foreign currency denominated obligations and sets monetary policy. The Chinese government may introduce new laws and regulations that could have an adverse effect on the Fund. Although China has begun the process of privatizing certain sectors of its economy, privatized entities may lose money and/or be re-nationalized.
In the Chinese securities markets, a small number of issuers may represent a large portion of the entire market. The Chinese securities markets are subject to more frequent trading halts, low trading
154
Notes to Financial Statements(continued)
volume and price volatility. Further, the Chinese economy is heavily dependent upon trading with key partners. Recent developments in relations between the United States and China have heightened concerns of increased tariffs and restrictions on trade between the two countries. An increase in tariffs or trade restrictions or even the threat of such developments, could lead to significant reduction in international trade, which could have a negative impact on China’s export industry and a commensurately negative impact on the Fund.
The RMB Bond market is volatile with a risk of trading suspensions in particular securities and government interventions. Trading in RMB Bonds may be suspended without warning and for lengthy periods. Information on such trading suspensions, including as to their expected length, may be unavailable. Securities affected by trading suspensions may be or become illiquid. In recent years, Chinese entities have incurred significant levels of debt and Chinese financial institutions currently hold relatively large amounts of non-performing debt. Thus, there exists a possibility that widespread defaults could occur, which could trigger a financial crisis, freeze Chinese debt and finance markets and make certain Chinese securities illiquid.
CHINESE CREDIT RATINGS RISK (KraneShares E Fund China Commercial Paper ETF and KraneShares CCBS China Corporate High Yield Bond USD Index ETF) — The debt securities included in Underlying Index securities, and therefore the securities held by the KraneShares E Fund China Commercial Paper ETF Fund, will generally be rated by Chinese ratings agencies (and not by U.S. nationally recognized statistical ratings organizations (“NRSROs”)). The rating criteria and methodology used by Chinese rating agencies may be different from those adopted by NRSROs and international credit rating agencies. Therefore, such rating systems may not provide an equivalent standard for comparison with securities rated by NRSROs or other international credit rating agencies.
CONCENTRATION RISK — Because the Fund’s assets are expected to be concentrated in an industry or group of industries to the extent that the Underlying Index concentrates in a particular industry or group of industries, the Fund is subject to loss due to adverse occurrences that may affect that industry or group of industries or sector. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single industry or a group of related industries, and the securities of companies in that industry or group of industries could react similarly to these or other developments. Depending on the composition of each Fund’s Underlying Index, the Fund may be subject to principal risks, as outlined in each Fund’s prospectus. Each Fund may have significant exposure to other industries or sectors over time.
CURRENCY RISK — The Fund’s NAV is determined on the basis of the U.S. dollar, therefore, the Fund may lose value if a security denominated in another currency 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 for the purpose of purchasing portfolio investments. This may hinder the Fund’s performance, including because any delay could result in the Fund missing an investment opportunity and purchasing securities at a higher price than originally intended, or incurring cash drag.
DEPOSITARY RECEIPTS RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares
155
Notes to Financial Statements(continued)
Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF) — The Fund may hold the securities of Chinese and other non-U.S. companies in the form of depositary receipts, including American Depositary Receipts and Global Depositary Receipts. Investing in depositary receipts entails the risks associated with foreign investments. The underlying securities of the depositary receipts in the Fund’s portfolio are subject to fluctuations in foreign currency exchange rates that may affect the value of the Fund’s portfolio. In addition, the value of the securities underlying the depositary receipts may change materially when the U.S. markets are not open for trading, which will affect the value of the depositary receipts. Like direct investments in foreign securities, investments in depositary receipts involve political and economic risks distinct from those associated with investing in the securities of U.S. issuers.
Emerging Markets Risk — The Fund’s investments in emerging markets are subject to greater risk of loss than investments in developed markets. This is due to, among other things, greater market volatility, greater risk of asset seizures and capital controls, lower trading volume, political and economic instability, greater risk of market shutdown and more governmental limitations on foreign investments than typically found in developed markets. The economies of emerging markets, and China in particular, may be heavily reliant upon international trade and may suffer disproportionately if international trading declines or is disrupted.
ETF Risk. As an ETF, the Fund is subject to the following risks:
Authorized Participants Concentration Risk. The Fund has a limited number of financial institutions that may act as Authorized Participants. To the extent they cannot or are otherwise unwilling to engage in creation and redemption transactions with the Fund and no other Authorized Participant steps in, shares of the Fund may trade like closed-end fund shares at a significant discount to net asset value (“NAV”) and may face delisting from the Exchange.
Cash Transactions Risk. Like other ETFs, the Fund sells and redeems its shares only in large blocks called Creation Units and only to “Authorized Participants.” Unlike many other ETFs, however, the Fund expects to effect its creations and redemptions at least partially or fully for cash, rather than in-kind securities. Thus, an investment in the Fund may be less tax-efficient than an investment in other ETFs as the Fund may recognize a capital gain that it could have avoided by making redemptions in-kind. As a result, the Fund may pay out higher capital gains distributions than ETFs that redeem in-kind. Further, paying redemption proceeds in cash rather than through in-kind delivery of portfolio securities may require the Fund to dispose of or sell portfolio investments to obtain the cash needed to distribute redemption proceeds at an inopportune time.
International Closed Market Trading Risk. Because certain of the Fund’s investments trade in markets that are closed when the Fund and Exchange are open, there are likely to be deviations between current pricing of an underlying security and stale pricing, resulting in the Fund trading at a discount or premium to NAV greater than those incurred by other ETFs.
New Fund Risk (KraneShares MSCI Emerging Markets ex China Index ETF). The Fund is new. If the Fund does not grow large in size once it commences trading, it will be at greater risk than larger funds of wider bid-ask spreads for its shares, trading at a greater premium or discount to NAV, liquidation and/or a stop to trading.
Premium/Discount Risk. There may be times when the market price of the Fund’s shares is more than the NAV intra-day (at a premium) or less than the NAV intra-day (at a discount). As
156
Notes to Financial Statements(continued)
a result, shareholders of the Fund may pay more than NAV when purchasing shares and receive less than NAV when selling Fund shares. This risk is heightened in times of market volatility or periods of steep market declines. In such market conditions, market or stop loss orders to sell Fund shares may be executed at prices well below NAV.
Secondary Market Trading Risk. Investors buying or selling shares in the secondary market will normally pay brokerage commissions, which are often a fixed amount and may be a significant proportional cost for investors buying or selling relatively small amounts of shares. Secondary market trading is subject to bid-ask spreads and trading in Fund shares may be halted by the Exchange because of market conditions or other reasons. If a trading halt occurs, a shareholder may temporarily be unable to purchase or sell shares of the Fund. In addition, although the Fund’s shares are listed on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained or that the Fund’s shares will continue to be listed.
EQUITY SECURITIES RISK —The values of equity securities are subject to factors such as market fluctuations, changes in interest rates and perceived trends in stock prices. Equity securities are subject to volatile changes in value and their values may be more volatile than other asset classes. In the event of liquidation, equity securities are generally subordinate in rank to debt and other securities of the same issuer.
FIXED INCOME SECURITIES RISK(KraneShares E Fund China Commercial Paper ETF and KraneShares CCBS China Corporate High Yield Bond USD Index ETF)—Fixed income securities are subject to credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will not make timely interest payments or repay the principal of the debt issued (i.e., it defaults on its obligations). Interest rate risk refers to fluctuations in the value of a debt resulting from changes in the level of interest rates. When interest rates go up, the prices of most debt instruments go down; and when interest rates go down, the prices of most debt instruments go up. Debt instruments with longer durations tend to be more sensitive to interest rate changes, typically making them more volatile. The current low-interest-rate environment heightens the risks associated with rising interest rates.
FOREIGN SECURITIES RISK — Investments in securities of non-U.S. issuers may be less liquid than investments in U.S. issuers as foreign trading markets are not typically as active as U.S. markets and may have less governmental regulation and oversight. For example, non-U.S. issuers may be subject to different accounting, auditing, financial reporting and investor protection standards than U.S. issuers. As a result, there may be less information publicly available about non-U.S. issuers. Investments in non-U.S. securities also involve risk of loss due to foreign currency fluctuations and political or economic instability. Foreign markets also may have clearance and settlement procedures that make it difficult for the Funds to buy and sell securities. These factors could result in a loss to the Funds by causing the Funds to be unable to dispose of an investment or to miss an attractive investment opportunity, or by causing the Funds’ assets to be uninvested for some period of time.
FRONTIER MARKETS RISK — Frontier market countries generally have smaller economies and less developed capital markets or legal, regulatory and political systems than traditional emerging market countries. As a result, the risks of investing in emerging market countries are magnified in frontier market countries.
GEOGRAPHIC FOCUS RISK — The Funds’ investments will be focused in a particular country, countries, or region and therefore a Fund may be susceptible to adverse market, political, regulatory, and
157
Notes to Financial Statements(continued)
geographic events affecting that country, countries or region. Such geographic focus also may subject the Fund to a higher degree of volatility than a more geographically diversified fund.
HIGH PORTFOLIO TURNOVER RISK (KraneShares CICC China Leaders 100 Index ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF and KraneShares MSCI All China Health Care Index ETF) — The Fund may incur high turnover rates, which may increase the Fund’s brokerage commission costs and negatively impact the Fund’s performance. Such portfolio turnover also may generate net short-term capital gains.
INVESTMENT IN INVESTMENT COMPANIES RISK (KraneShares EFund China Commercial Paper ETF) — The Fund utilizes a cash sweep program (the “Cash Sweep Program”). In the Cash Sweep Program, at least a portion of the Fund’s uninvested cash balance is used to purchase shares of funds that are registered in China, but not in the U.S., and that provide daily liquidity, including the E Fund Money Market Fund. The Fund may also invest in other similar investment companies that are registered in China and provide daily liquidity (collectively, the “PRC Investment Companies”). The Fund’s investments in the PRC Investment Companies are, in conjunction with other investments in investment companies (other than U.S. money market funds), subject to the limitations imposed by Section 12(d)(1) and the rules thereunder. The PRC Investment Companies are intended to provide liquidity, increased diversity of holdings, and a return on investment that is similar to the return on investments in underlying index constituents. Investments in the PRC Investment Companies are subject to the risks faced by them, which include credit risk, interest rate risk, currency risk, foreign investment risk, and custody risk. The PRC Investment Companies are PRC-domiciled funds and the Fund, therefore, will not enjoy the protections of the United States securities laws, including the 1940 Act, with respect to its investments in the PRC Investment Companies. In addition, E Fund is subject to conflicts of interest in allocating Fund assets to PRC Investment Companies that are sponsored by E Fund or its affiliates.
Investment in Investment Companies Risk — The Fund may invest in other investment companies, including those advised, sponsored or otherwise serviced by the Adviser, the Sub-Adviser and/or their affiliates. The Fund will indirectly be exposed to the risks of investments by such funds. Moreover, the Fund will incur its pro rata share of the underlying fund’s expenses. The Adviser and the Sub-Adviser are subject to conflicts of interest in allocating Fund assets to investment companies that are advised, sponsored or otherwise serviced by the Adviser and the Sub-Adviser and/or their affiliates. To the extent that the Fund invests in investment companies or other pooled investment vehicles that are not registered pursuant to the 1940 Act, including foreign investment companies, it will not enjoy the protections of the 1940 Act.
Large Capitalization Company Risk (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF) — Investments in large capitalization companies may go in and out of favor based on market and economic conditions and may underperform other market segments. Some large capitalization companies may be unable to respond quickly to new competitive challenges and attain the high growth rate of successful smaller companies, especially during extended periods of economic
158
Notes to Financial Statements(continued)
expansion. As such, returns on investments in stocks of large capitalization companies could trail the returns on investments in stocks of small and mid-capitalization companies.
LIQUIDITY RISK — Certain of the Funds’ investments are subject to liquidity risk, which exists when an investment is or becomes difficult to purchase or sell at a reasonable time or price. If a transaction is particularly large or if the relevant market is or becomes illiquid, it may not be possible to initiate a transaction or liquidate, which may cause the Funds to suffer significant losses and difficulties in meeting redemptions. If a number of securities held by the Funds halt trading, it may have a cascading effect and cause the Funds to halt trading. Volatility in market prices will increase the risk of the Funds being subject to a trading halt.
Management Risk — Because the Fund may not fully replicate the Underlying Index and may hold less than the total number of securities in the Underlying Index, the Fund is subject to management risk. This is the risk that Krane or its subadviser’s E Fund’s security selection process, which is subject to a number of constraints, may not produce the intended results.
MARKET RISK — The values of the Fund’s holdings could decline generally or could underperform other investments. In addition, there is a risk that policy changes by the U.S. Government, Federal Reserve, and/or other government actors could cause volatility in global financial markets, negative sentiment and higher levels of Fund redemptions, which could have a negative impact on the Fund and could result in losses. Geopolitical and other risks, including environmental and public health risks may add to instability in world economies and markets generally. Changes in value may be temporary or may last for extended periods. Further, the Fund is susceptible to the risk that certain investments may be difficult or impossible to sell at a favorable time or price. Market developments may also cause the Fund’s investments to become less liquid and subject to erratic price movements. Such market developments may also cause the Fund to encounter difficulties in timely honoring redemptions, especially if market events cause an increased incidence of shareholder redemptions.
Non-Diversified Fund Risk (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares E Fund China Commercial Paper ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF, KraneShares CCBS China Corporate High Yield Bond USD Index ETF and KraneShares Emerging Markets Healthcare Index ETF) — Because the Fund is non-diversified and may invest a greater portion of its assets in fewer issuers than a diversified fund, changes in the market value of a single portfolio holding could cause greater fluctuations in the Fund’s share price than would occur in a diversified fund. This may increase the Fund’s volatility and cause the performance of a single portfolio holding or a relatively small number of portfolio holdings to have a greater impact on the Fund’s performance.
Passive Investment Risk — The Fund is not actively managed, does not seek to “beat” the Underlying Index and does not take temporary defensive positions when markets decline. Therefore, the Fund may not sell a security due to current or projected underperformance of a security, industry or sector. There is no guarantee that the Underlying Index will create the desired exposure. The Underlying Index may not contain an appropriate mix of securities, but the Fund’s investment objective and principal investment strategies impose limits on the Fund’s ability to invest in securities not included in the Underlying Index.
SECURITIES LENDING RISK — To the extent a Fund lends its securities, it may be subject to the following risks: (1) borrowers of the Funds’ securities typically provide collateral in the form of cash
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Notes to Financial Statements(continued)
that is reinvested in securities; (2) the securities in which the collateral is invested may not perform sufficiently to cover the return collateral payments owed to borrowers; (3) delays may occur in the recovery of securities from borrowers, which could interfere with the Funds’ ability to vote proxies or to settle transactions; and (4) there is the risk of possible loss of rights in the collateral should the borrower fail financially.
Small and Mid-Capitalization Company Risk (KraneShares CICC China Leaders 100 Index ETF, KraneShares CSI China Internet ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares Emerging Markets Healthcare Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF) — Investing in the securities of small and medium capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization companies and more established companies. Since small and medium-sized companies may have limited operating histories, product lines and financial resources, the securities of these companies may lack sufficient market liquidity and can be sensitive to expected changes in interest rates, borrowing costs and earnings.
Tax Risk — In order to qualify for the favorable tax treatment generally available to regulated investment companies, the Fund must satisfy certain income, asset diversification and distribution requirements each year. If the Fund were to fail to qualify as a regulated investment company, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income, which would adversely affect the Fund’s performance.
Tracking Error Risk — The Fund’s return may not match or achieve a high degree of correlation with the return of the Underlying Index. This may be due to, among other factors, the Fund holding cash under certain circumstances in lieu of Underlying Index securities, such as when the Fund is subject to delays converting U.S. dollars into a foreign currency to purchase foreign securities. The Fund may not be able to invest in certain components of the Underlying Index due to legal restrictions imposed by foreign governments or other regulatory reasons. In addition, securities included in the Underlying Index may be suspended from trading. To the extent that the Fund employs a representative sampling strategy or calculates its NAV based on fair value prices and the value of the Underlying Index is based on securities’ closing prices on local foreign markets, the Fund’s ability to track the Underlying Index may be adversely affected. Changes in currency exchange rates or delays in converting currencies may also cause tracking error.
VALUATION RISK — Independent market quotations for the non-U.S. securities held by the Funds may not be readily available and such securities may be fair valued. Fair valuation is subjective and different market participants may assign different prices to the same security. As a result, there is a risk that the Funds may not be able to sell a security at the price assigned to the security by the Fund. In addition, the securities in which the Funds invest may trade on days that the Funds do not price their shares; as a result, the value of Fund shares may change on days when investors cannot purchase or sell their holdings.
7. OTHER
At March31, 2020, all shares issued by the Funds were in Creation Unit aggregations to Authorized Participants through primary market transactions (e.g., transactions directly with the Funds). However, the individual shares that make up those Creation Units are traded on the NYSE Arca Exchange
160
Notes to Financial Statements(concluded)
(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. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820). The new guidance includes additions and modifications to disclosures requirements for fair value measurements. For public entities, the amendments are effective for financial statements issued for fiscal years beginning after December15, 2019, and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the financial statements.
10. SUBSEQUENT EVENTS
The Funds have evaluated the need for additional disclosures and/or adjustments resulting from subsequent events. Based on this evaluation, other than the above, no additional disclosures or adjustments were required to the financial statements as of the date the financial statements were issued.
161
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, each a fund comprising KraneShares Trust (collectively, the Funds), including the schedules of investments, as of March31, 2020, the related statements of operations for the year or period then ended listed in the Appendix, the statements of changes in net assets for each of the years or periods in the two year period then ended listed in the Appendix, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods 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 March31, 2020, the results of its operations for the year or period then ended listed in the Appendix, the changes in its net assets for each of the years or periods in the two-year period then ended listed in the Appendix, and the financial highlights for each of the years or periods listed in the Appendix, in conformity with U.S. generally accepted accounting principles. The financial highlights for the year ended March31, 2016 were audited by other independent registered public accountants whose report, dated May31, 2016, expressed an unqualified opinion on those financial highlights.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 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 also included confirmation of securities owned as of March31, 2020, 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
May29, 2020
162
Report of Independent Registered Public Accounting Firm(concluded)
Appendix
Funds with commencement of operations prior to March 31, 2018:
KraneShares CICC China Leaders 100 Index ETF
KraneShares CSI China Internet ETF
KraneShares Bosera MSCI China A Share ETF
KraneShares E Fund China Commercial Paper ETF
KraneShares MSCI All China Index ETF
Statement of operations for the year ended March31, 2020
Statements of changes in net assets for each of the years in the two-year period ended March31, 2020
Financial highlights for each of the years in the four-year period ended March31, 2020
KraneShares MSCI One Belt One Road Index ETF
KraneShares Emerging Markets Consumer Technology Index ETF
KraneShares MSCI China Environment Index ETF
KraneShares Electric Vehicles and Future Mobility Index ETF
KraneShares MSCI All China Health Care Index ETF
Statement of operations for the year ended March31, 2020
Statements of changes in net assets for each of the years in the two-year period ended March31, 2020
Financial highlights for each of the years or periods in the three-year period ended March31, 2020
Funds with commencement of operations during the year ended March 31, 2019:
KraneShares CCBS China Corporate High Yield Bond USD Index ETF
Statement of operations for the year ended March31, 2020
Statements of changes in net assets and the financial highlights for the year ended March31, 2020 and the period from June26, 2018 (commencement of operations) through March31, 2019
KraneShares Emerging Markets Healthcare Index ETF
Statement of operations for the year ended March31, 2020
Statements of changes in net assets and the financial highlights for the year ended March31, 2020 and the period from August29, 2018 (commencement of operations) through March31, 2019
Fund with commencement of operations during the year ended March 31, 2020:
KraneShares MSCI Emerging Markets ex China Index ETF
Statements of operations and changes in net assets and the financial highlights for the period from April12, 2019 (commencement of operations) through March31, 2020
163
Trustees and Officers of the Trust (Unaudited)
March 31, 2020
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 March31, 2020.
Name, Address | Position(s) | Principal Occupation(s) | Number of | Other | ||||
Interested Trustee(2) | ||||||||
Jonathan Krane(1) 280 Park Avenue 32nd Floor New York, NY 10017 (1968) | Trustee and Chairman of the Board, No set term; served since 2012 | Chief Executive Officer of Krane Funds Advisors, LLC from 2011 to present. Principal of Krane Capital LLC from 2009 to 2011. Chief Executive Officer of Emma Entertainment from 2004 to 2009. | 22 | None | ||||
Independent Trustees(2) | ||||||||
John Ferguson 280 Park Avenue 32nd Floor New York, NY 10017 (1966) | Trustee, No set term; served since 2012 | Chief Operating Officer of Shrewsbury River Capital from 2017 to 2020. Chief Operating Officer of Kang Global Investors LP (hedge fund adviser) from 2014 to 2016. President of Alden Global Capital, LLC (hedge fund adviser) from 2012 to 2014 (formerly, Chief Operating Officer from 2011 to 2012). Senior Managing Director and Chief Operating Officer of K2 Advisors, L.L.C. from 2005to 2011. | 22 | None | ||||
Matthew Stroyman 280 Park Avenue 32nd Floor New York, NY 10017 (1968) | 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. | 22 | None | ||||
Patrick P. Campo 280 Park Avenue 32nd Floor New York, NY 10017 (1970) | 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. | 22 | None |
164
Trustees and Officers of the Trust (Unaudited)(continued)
March 31, 2020
Name, Address | Position(s) | Principal Occupation(s) | Number of | Other | ||||
Officers(2) | ||||||||
Jonathan Krane 280 Park Avenue 32nd Floor New York, NY 10017 (1968) | Principal Executive Officer and Principal Financial Officer, No set term; served since 2012 | Chief Executive Officer of Krane Funds Advisors, LLC from 2011 to present. Chief Executive of Krane Portfolio Advisors, LLC from 2018 to present. | 22 | None | ||||
Jennifer Tarleton (formerly Krane) 280 Park Avenue 32nd Floor New York, NY 100170 (1966) | Vice President and Secretary, No set term; served since 2012 | Vice President of Krane Funds Advisors, LLC from 2011 to present. | 22 | None | ||||
Michael Quain 280 Park Avenue 32nd Floor New York, NY 10017 (1957) | Chief Compliance Officer and Anti-Money Laundering Officer, No set term; served since June 2015 | Principal/President of Quain Compliance Consulting, LLC from 2014 to present. First Vice President of Aberdeen Asset Management Inc. from May 2013 to September 2013. | 22 | None | ||||
James Hoffmayer(3) SEI Investments Company One Freedom Valley Drive Oaks, PA 19456 (1973) | Assistant Treasurer, No set term; served since 2017 | Controller and Chief Financial Officer of SEI Investments Global Funds Services from 2016 to present. Senior Director, Funds Accounting and Fund Administration of SEI Investments Global Funds Services from September 2016 to present. Senior Director of Fund Administration of SEI Investments Global Funds Services from 2014 to present. | 18 | None |
165
Trustees and Officers of the Trust (Unaudited)(concluded)
March 31, 2020
Name, Address | Position(s) | Principal Occupation(s) | Number of | Other | ||||
Officers(2) | ||||||||
Jonathan Shelon 280 Park Avenue 32nd Floor New York, NY 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. | 22 | None |
(1) Mr.Krane is an “interested” person of the Trust, as that term is defined in the 1940 Act, by virtue of his ownership and controlling interest in the Adviser.
(2) Each Trustee serves until his or her successor is duly elected or appointed and qualified.
(3) These officers of the Trust also serve as officers of one or more funds for which SEI Investments Company or an affiliate acts as investment manager, administrator or distributor.
166
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 (October1, 2019 to March31, 2020).
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.
167
Disclosure of Fund Expenses (Unaudited)(concluded)
Beginning | Ending | Annualized | Expenses | |||||||||
KraneShares CICC China Leaders 100 Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 960.00 | 0.69 | % | $ | 3.38 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.55 | 0.69 |
|
| 3.49 | ||||
KraneShares CSI China Internet ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,091.90 | 0.72 | % | $ | 3.77 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.40 | 0.72 |
|
| 3.64 | ||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 998.80 | 0.60 | % | $ | 3.00 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,022.00 | 0.60 |
|
| 3.03 | ||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,020.30 | 0.58 | % | $ | 2.93 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,022.10 | 0.58 |
|
| 2.93 | ||||
KraneShares MSCI All China Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,019.00 | 0.49 | % | $ | 2.47 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,022.55 | 0.49 |
|
| 2.48 | ||||
KraneShares MSCI One Belt One Road Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 816.70 | 0.80 | % | $ | 3.64 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.00 | 0.80 |
|
| 4.04 | ||||
KraneShares Emerging Markets Consumer Technology Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 915.40 | 0.81 | % | $ | 3.88 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,020.95 | 0.81 |
|
| 4.09 | ||||
KraneShares MSCI China Environment Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,012.10 | 0.80 | % | $ | 4.02 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.00 | 0.80 |
|
| 4.04 | ||||
KraneShares Electric Vehicles and Future Mobility Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 939.90 | 0.73 | % | $ | 3.54 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.35 | 0.73 |
|
| 3.69 | ||||
KraneShares MSCI All China Health Care Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,128.20 | 0.65 | % | $ | 3.46 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.75 | 0.65 |
|
| 3.29 | ||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 945.20 | 0.70 | % | $ | 3.40 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.50 | 0.70 |
|
| 3.54 | ||||
KraneShares Emerging Markets Healthcare Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,043.00 | 0.80 | % | $ | 4.09 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,021.00 | 0.80 |
|
| 4.04 | ||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 777.70 | 0.49 | % | $ | 2.18 | ||||
Hypothetical 5% Return |
| 1,000.00 |
| 1,022.55 | 0.49 |
|
| 2.48 |
(1) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period from 10/01/19-03/31/20).
168
Notice To Shareholders (Unaudited)
For shareholders that do not have a March31, 2020 tax year end, this notice is for informational purposes only. For shareholders with a March31, 2020 tax year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended March31, 2020, the Funds are designating the following items with regard to distributions paid during the year.
Return of | Long-Term | Ordinary | Total | Qualifying for | Qualifying | U.S. | Interest | Short Term | Foreign Tax | |||||||||
KraneShares CICC China Leaders 100 Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.00% | 100.00% | 0.00% | 0.92% | 0.00% | 21.75% | |||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 6.82% | 100.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||||||||
KraneShares Bosera MSCI China A Share ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.00% | 100.00% | 0.00% | 0.75% | 0.00% | 13.08% | |||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||||
100.00% | 0.00% | 0.00% | 100.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||||||||
KraneShares MSCI All China Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.34% | 94.89% | 0.00% | 0.21% | 0.00% | 9.74% | |||||||||
KraneShares MSCI One Belt One Road Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.00% | 93.26% | 0.00% | 0.25% | 0.00% | 12.36% | |||||||||
KraneShares Emerging Markets Consumer Technology Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.33% | 50.71% | 0.00% | 0.07% | 0.00% | 7.61% | |||||||||
KraneShares MSCI China Environment Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.00% | 31.73% | 0.00% | 0.18% | 0.00% | 3.28% | |||||||||
KraneShares Electric Vehicles and Future Mobility Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 33.45% | 100.00% | 0.00% | 0.20% | 0.00% | 9.19% | |||||||||
KraneShares MSCI All China Health Care Index ETF(7) | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.00% | 100.00% | 0.00% | 0.87% | 0.00% | 26.74% | |||||||||
KraneShares CCBS China Corporate High Yield Bond USD Index ETF | ||||||||||||||||||
0.00% | 5.09% | 94.91% | 100.00% | 0.00% | 0.00% | 0.00% | 0.28% | 100.00% | 0.00% | |||||||||
KraneShares Emerging Markets Healthcare Index ETF(7) | ||||||||||||||||||
3.22% | 0.00% | 96.78% | 100.00% | 0.00% | 37.29% | 0.00% | 0.06% | 0.00% | 0.00% | |||||||||
KraneShares MSCI Emerging Markets ex China Index ETF | ||||||||||||||||||
0.00% | 0.00% | 100.00% | 100.00% | 0.21% | 44.81% | 0.00% | 0.13% | 0.00% | 12.61% |
(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.
169
Notice To Shareholders (Unaudited)(concluded)
(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 KraneShares CICC China Leaders 100 Index ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares MSCI All China Index ETF, KraneShares MSCI One Belt One Road Index ETF, KraneShares Emerging Markets Consumer Technology Index ETF, KraneShares MSCI China Environment Index ETF, KraneShares Electric Vehicles and Future Mobility Index ETF, KraneShares MSCI All China Health Care Index ETF and KraneShares MSCI Emerging Markets ex China Index ETF intend to pass through a foreign tax credit to their shareholders. For the fiscal year ended March 31, 2020, the total amount of foreign source income is $44,753, $10,707,133, $121,611, $583,605, $375,018, $119,164, $284,659, $80,467, $100,472, respectively. The total amount of foreign tax to be paid is $11,076, $1,430,000, $12,431, $73,817, $27,815, $3,690, $39,616, $19,879 and $10,624, respectively. The allocable share of foreign tax credit will be reported on Form 1099-DIV.
170
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 midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated. The Funds’ Market Price may be at, above or below their NAV. The NAV of the Funds will fluctuate with changes in the market value of their holdings. The Market Price of the Funds will fluctuate in accordance with changes in their NAV, as well as market supply and demand of Fund Shares.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Funds on a given day, generally at the time NAV is calculated. A premium is the amount that the Funds are trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Funds are trading below the reported NAV, expressed as a percentage of the NAV. Shareholders may pay more than NAV when they buy Fund Shares and receive less than NAV when they sell those Shares, because Shares are bought and sold at Market Price.
Further information regarding premiums and discounts is available on the Funds’ website athttp://kraneshares.com. The premium and discount information contained on the website represents past performance and cannot be used to predict future results.
171
KraneShares Trust:
280 Park Avenue 32nd Floor
New York, New York 10017
1-855-857-2638
http://kraneshares.com/
Investment Adviser:
Krane Funds Advisors, LLC
280 Park Avenue 32nd Floor
New York, New York 10017
Distributor:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
Administrator:
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
This information must be preceded or accompanied by a current prospectus for the Funds described.
KraneShares Trust:
280 Park Avenue 32nd Floor
New York, New York 10017
KRS-AR-001-0700
Item 2. | Code of Ethics. |
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, controller or principal accounting officer or any person who performs a similar function. During the period covered by the report, there were no amendments to the code of ethics, and the Registrant did not grant any waivers from a provision of the code of ethics.
Item 3. | Audit Committee Financial Expert. |
(a) (1) The Registrant’s Board of Trustees has determined that the Registrant has an audit committee financial expert serving on the audit committee.
(a) (2) The audit committee financial expert, John Ferguson, is an independent trustee as defined in Form N-CSR Item 3 (a) (2).
Item 4. | Principal Accountant Fees and Services. |
Fees billed by KPMG LLP (“KPMG”) related to the Registrant.
KPMG billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
2020 | 2019 | ||||||
All fees and services to the Registrant that were pre-approved | All fees and services to service affiliates that were pre- approved | All other fees and services to service affiliates that did not require pre- approval | All fees and services to the Registrant that were pre-approved | All fees and services to service affiliates that were pre- approved | All other fees and services to service affiliates that did not require pre- approval | ||
(a) | Audit Fees
| $312,400 | $0 | N/A | $232,400 | $0 | N/A |
(b) | Audit-Related Fees
| $0 | $0 | N/A | $0 | $0 | N/A |
(c) | Tax Fees(1)
| $67,658 | $0 | N/A | $42,660 | $0 | N/A |
(d) | All Other Fees
| $0 | $0 | N/A | $0 | $0 | N/A |
Notes:
(1) These services included tax return preparation and tax compliance for the Funds.
(e)(1) Pursuant to the requirements of the Sarbanes Act, the SEC adopted Rule 2-01 under Regulation S-X, which, among other things, requires a fund’s audit committee to pre-approve certain audit and non-audit services that are provided by its independent auditors in order to ensure the auditors’ independence. The Registrant’s Board of Trustees has established an Audit Committee that has been charged with, among other things, assisting the Board of Trustees in its oversight of: the Registrant’s independent auditors; preapproving all audit and non-audit services provided by the Registrant’s independent auditors; the integrity of the Funds’ financial statements; the independent auditors’ qualifications and independence; and the use of appropriate accounting principles.
(e)(2) Percentage of fees billed applicable to non-audit services approved pursuant to the “de minimis” exception of Rule 2-01(c)(7)(i)(C) were as follows for KPMG:
2020 | 2019 | |
Audit-Related Fees | 0% | 0% |
Tax Fees | 0% | 0% |
All Other Fees | 0% | 0% |
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by KPMG for the last two fiscal years were $67,658 and $42,660, respectively.
(h) During the past fiscal year, all non-audit services provided by the Registrant’s principal accountant to either the Registrant's investment adviser or to entities controlling, controlled by, or under common control with the Registrant’s investment adviser that provides ongoing services to the Registrant were pre-approved by the Audit Committee of the Registrant's Board of Trustees. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.
Items 5. | Audit Committee of Listed Registrants. |
The Registrant has a separately-designated standing Audit Committee, which is composed of the Registrant's Independent Trustees, Messrs. Patrick Campo, John Ferguson and Matthew Stroyman.
Item 6. | Schedule of Investments |
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable to open-end management investment companies.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies |
Not applicable to open-end management investment companies.
Item 9. | Purchases of Equity Securities by Closed-End Management Company and Affiliated Purchasers. |
Not applicable to open-end management investment companies.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees during the period covered by this report.
Item 11. | Controls and Procedures. |
(a) The Registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR § 270.30a-3(c)) as of a date within 90 days of the filing date of the report, are effective based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR § 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act of 1934 (17 CFR § 240.13a-15(b) or § 240.15d-15(b)).
(b) There has been no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR § 270.30a-3(d)) that occurred during the most recent fiscal half-year period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable to open-end management investment companies.
Items 13. | Exhibits. |
(a)(1) | Code of Ethics attached hereto. |
(b) | Officer certification as required by Rule 30a-2(b) under the 1940 Act, as amended (17 CFR 270.30a-2(b)) also accompany this filing as an exhibit. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KraneShares Trust | |
By: | /s/ Jonathan Krane |
Jonathan Krane | |
Principal Executive Officer |
Date: June 8, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan Krane |
Jonathan Krane | |
Principal Executive Officer |
Date: June 8, 2020
By: | /s/ Jonathan Krane |
Jonathan Krane | |
Principal Financial Officer |
Date: June 8, 2020